Forever Home?
On the House
Charlie Lawson – GCS Title
Bank of America released its inaugural Homebuyer Insights Report and there was a stat that really jumped out at me: 35% of the people 18 or older surveyed who want to buy a home in the future say they plan to retire wherever they buy. Some of our parents – and probably a lot of our grandparents – lived in one home for most of their adult lives, but the last few decades have seen people buying, selling and moving every 3-7 years. Here are some of the other responses to the survey questions along with some important talking points that we as real estate professionals need to be sure consumers hear and understand:
32% of Millennials said they will wait to pay down debt before buying a home
We need to stress that paying off debt isn’t the only aspect of qualifying for a mortgage and how important it is to make an overall plan for debt, credit and payment-preparedness. “Waiting to pay down debt” doesn’t mean you’re qualified – there are more pieces to the puzzle.
66% of Millennials said they would likely need assistance from their parents to buy their first home
It’s important to include rules and parameters for gift money as well as highlight and publicize the various down payment assistance programs available in our state, cities and counties.
75% of first-time homebuyers said they would skip bypass a starter home in favor of something more desirable
Going from renter to homeowner is a big step for anyone, so making a larger leap from the starting block will require more strategic planning. Again, talking to a lender far in advance of when a consumer *thinks* they’ll be ready to buy is the best way to learn about and maximize opportunity.
My team and I are here to help our Realtor and Loan Officer partners communicate the current conditions and issues in our market as well as help spread the word about the incredible benefits of homeownership. Let’s talk!
~Charlie
- Published in On the House
SAD: Seasonal Approval Disorder?
You’ve probably heard of Seasonal Affective Disorder (SAD) that affects people’s moods and happiness levels in the winter months when there’s less sunshine. That in mind, some researchers wanted to know if sunshine or clouds affected mortgage loan approvals (not making this up). Folks at the University of Washington compared loan approvals on unexpectedly sunny days to those on unexpectedly cloudy days and found some interesting things: 1) The number of approvals on the sunny days was higher and 2) The “sunny day approvals” also proved more likely to go into default. Anyone who has ever gone through the process of getting a mortgage might (and probably should) freak out to hear this and wonder, “After all the paperwork, scrutiny, explanations and proof of everything, it comes down to SUNSHINE?” It’s not quite that simple, but UW felt their data was strong enough to publicize. UW Associate Finance Professor Ran Duchin says, “The cool thing about this data is that for all the applications that are approved, we could actually trace the performance of those loans being originated, after they’re approved.” Duchin says this data should motivate lenders to investigate “to what extent should we automate some of the decision-making processes … to avoid this sort of human factor, these mistakes.”
I know from years of doing business and working with the finest loan officers and lending institutions that this research makes for an interesting news item, but it’s not even close to the whole story. Things like the weather shouldn’t affect your loan approval or experience as a borrower. One way to make sure you’re not harmed by a “fair weather lender” is to deal with experienced professionals. Get recommendations and research loan officers and companies before making a decision and don’t make an “impulse application” online without due diligence. Anyone who’s ever gotten a mortgage understands how helpful “live humans” are when the process gets stressful and complicated (and that’s practically the definition of “mortgage process”). Ask us! We can connect you with the best of the best.
~Charlie
- Published in On the House
Urban or ‘Burban?
A few weeks ago we pointed out that Minneapolis made a Top 10 List for downtowns to buy a home in and this week it’s all about the suburbs. The National Association of Realtors (NAR) is constantly conducting surveys and publishing consumer sentiment and preferences. NAR’s latest report found that 85% of current homeowners and 75% of current renters prefer a suburban single-family house versus 15% of homeowners and 21% of renters aiming to buy a residence in an urban area. Anyone who has noticed the number of units being built in our Minneapolis-Saint Paul downtown areas might disagree with this comment from NAR’s chief economist Lawrence Yun: “The American Dream for most consumers is not a cramped, 500-square-foot condo in the middle of the city, but instead a larger home within close proximity to the jobs and entertainment an urban area provides.”
The last thing I want to do is pit urban lifestyle against life in the ‘burbs – to each his or her own. But that’s just it – we at GCS Title and our Realtor and Loan Officer partners are all about helping you own – whatever type of property best suits your personal taste and situation. Homeownership is still the way many Americans build their worth and financial futures, so don’t let trends, general media reports or anyone else besides a qualified professional help you make the huge decision of what – whether – where or when to buy your own home. Of course we navigate you through your closing, but we also work closely with amazing professionals every day and we’re happy to help you find the right real estate and lending professional to get your questions answered! ~Charlie
- Published in On the House
Bulls & Bears in the House
On the House
Charlie Lawson
Bulls & Bears in the House
There seems to be a difference of opinion between people who own homes and people who would like to buy them. The National Association of Realtors puts out what they call the Housing Opportunities and Market Experience (HOME) Survey every quarter and the latest one shows different attitudes between homeowners and potential buyers when it comes to timing. Check out the differences:
75% of potential buyers believe now is a good time to buy a home
56% of current homeowners believe now is a good time to sell a home – down from 61% during Q4 2015)
These numbers indicate a bigger appetite for buying homes than selling, but confidence is also slipping a bit regarding the economy:
48% of households feel the U.S. economy is improving – down from 50% in Q4 2015
To make a lame Wall Street reference, you could say that the bears own houses and the bulls are renting; but the last stat from the survey seems to show that everyone seems a little uneasy about the economy which is not uncommon in an election year (and this one is turning out to be a doozy). Lack of inventory (homes for sale) in certain price ranges has been an issue and widely reported and discussed for some time. The important takeaway for the public not to make assumptions because market conditions vary – even by neighborhood. We as real estate and lending professionals need to make sure we arm potential buyers and sellers with the latest local information so they can decide whether or not it is in fact a good time for them to buy or sell. ~Charlie
- Published in On the House, Uncategorized
Is This a Good Time?
On the House
Charlie Lawson
We see polls and surveys in the news all the time. Have you ever participated in one? Ever wonder ‘who the people are’ answering the questions that create the statistics and basis for stories and hype – both good and bad? I can’t answer that here, but there is something a bit funny in the National Association of Realtors (NAR) March 2016 Home Survey – along with some interesting factors that renters and homeowners should consider. First, here are some results:
75% of U.S. Households believe now is a good time to buy a home
44% believe this strongly
I would love to know how that question was asked. After getting an affirmative answer to the buying/timing question, I wonder if the pollster said something like, “Are you sure about that?” Here’s another great nugget that hits close to home: 80% of people in the Midwest believe now is a good time to buy, compared with 77-percent in the south, 74-percent in the Northeast and 61-percent in the West. Even with 31-percent of respondents believing now is a good time to buy a home not specifying they believe that strongly, this is encouraging news for the spring and summer market season locally.
The public is “in the mood for home buying.” As real estate and lending professionals, we need to make sure they have all the information they need to move forward and make choices. Where shall we start? Neon signs and sandwich boards with “buy versus rent” comparisons won’t cut it, but working together to reach the public will. Let’s reach out together! ~Charlie
- Published in On the House
Trendy – Not Spendy
On the House
Charlie Lawson – GCS Title
Trendy – Not Spendy
Minneapolis got a big shout out from Realtor.com by being included in their recent list of “The Top 10 Trendiest Cities That You Can Still Afford to Buy In.” They made the list based on different things that appeal to and impact hipsters (their word – not mine) – which I’ll interpret as the group the rest of us refer to as Millennials. Minneapolis came in at #5 in this list that boasts a high number of yoga studios and bike shops per capita. Don’t laugh – there’s more to this and good news for the normal folk too.
Outside of Minnesota, the entire Minneapolis-Saint Paul Metropolitan area is referred to as “Minneapolis” and while it’s not fair to Saint Paul or the other cool spots in the ‘burbs, it’s unavoidable. Just like the pro sports teams use the concept of “community benefit” to get us to pay for stadiums, publicity like this is great for our whole metro market that extends far beyond the Minneapolis city limits. (And we are getting a new stadium soon too.) The key word in this list is “afford” though. The idea that jobs, salaries and home prices fall into a range where a significant number of people can become homeowners is great news not just for real estate professionals, but for our communities at large. Think about pride of ownership in neighborhoods, the likelihood that people will live, work and volunteer close to home and the long term boost to people’s financial health that owning a home can bring.
Every week my research team and I bring you news, facts, stats and ideas that boost not only our business, but the reason most of us got into it in the first place: To help people achieve the American Dream. So, let’s make sure we claim some bragging rights and spread the word. ~Charlie
The whole list: 1. Salt Lake City 2. Richmond, Va. 3. Asheville, NC 4. Pittsburgh 5. Minneapolis 6. Ann Arbor, 7. Cincinnati 8. St. Louis 9. New Orleans 10. Charleston, SC
- Published in On the House, Uncategorized
Almost a Quarter
We’re in the last month of first quarter 2016 already, we’re anxiously awaiting the change of season, the Home & Garden Show is underway and everybody’s talking about the “Spring Housing Market.” – And if they’re not talking about it, those of us in the business should be! We are heading into the busiest (and most fun) time of year and before we know it, Realtors, Loan Officers and consumers will be trying to take care of business and take advantage of our amazing Minnesota summers. We’ve got time to get ready for the spring market and make sure we get the most out of it before it goes by too fast – like the warm, green months always do. What needs to be done now? For consumers, whether or not they own homes, the first two steps are easy:
1. Talk to a professional real estate agent. For January, CoreLogic reports that home values rose 1.3% from December to January and they’re up 6.9% year-over-year in January. Homeowners may decide it’s time to make a move of some sort they didn’t realize was possible and renters need to explore the markets where they’d eventually like to buy.
2. Talk to an experienced Loan Officer. Financing is often a process that takes planning and time – especially for first-time buyers. Homeowners should also get a mortgage review to check equity postion and make sure they have the best loan in the current conditions.
For industry professionals, let’s work together to reach the people who can truly benefit from home value and seasonal market acceleration. My team and I can connect you with partners in your area, those who have similar goals and specialties and help coordinate co-branded outreach to help as many people as we can. I always want to know how GCS is doing from the closing side, but I also want to know how you’re doing and to work together to create business. Spring is around the corner. Let’s heat up our efforts before everything thaws out!
~ Charlie
- Published in On the House
Where are you “FRM?”
I’m not asking where you were born and raised, but rather where your Fixed Rate Mortgage (FRM) is. There are three groups of people I’m talking to here: 1) People who have a mortgage – there are questions you need to be asking, 2) Renters – there are questions you too need to be asking and if you don’t – well, you may regret that later and 3) Our Realtor and Loan Officer partners to gather their support in communicating the following important news.
To satisfy the regulators, I will note that there are serious rules about quoting mortgage interest rates in publications and marketing materials, so I won’t do that directly here. But the Primary Mortgage Market Survey from government-sponsored enterprise Freddie Mac as of February 18 shows interest rates for 30-year FRMs at under four-percent and rates for 15-year FRMs at under three-percent. See for yourself: http://www.freddiemac.com/pmms/
GCS isn’t a mortgage company, so you may be wondering why I’m blogging about this. The reason I – and all of my amazing staff – are in this business is because we love helping people make their dreams of homeownership come true, being there to help them through the process and seeing them enjoy all the benefits from making that important investment. Ask anyone at GCS why they do and like their jobs and they will tell you the same.
Time to tie all this together: A time will come when mortgage interest rates will rise and it will become more expensive to purchase or refinance a home. This will limit options for people across the board – whether they’re buying their first home, moving up, moving on, downsizing, buying a vacation home or even wanting to reorganize their assets for other purposes. I think it’s so important for renters and homeowners to talk to experienced real estate and lending professionals and ask questions about their current situation and what they would like to do in the next 1, 5 and 10 years. It’s highly likely that rates will change (not in a good way!) and there will be fewer choices. Professional Realtors and Loan Officers are not in business to make a sale no matter what…they believe their job is to help you be successful over the long term and be your advisors whether or not you’re buying, selling or refinancing at a specific time. Choosing and checking in with trusted real estate and lending professionals should be part of your routine. We at GCS happen to know quite a few of them and can help you connect.
~Charlie
- Published in On the House
Not Our Problem…
Most people in California’s Bay Area don’t have the income necessary to afford homes there. The “U.S. Sustainable Home Price Report—Fourth Quarter-2015” from Fitch Ratings says that home prices in San Francisco are “unsupportable by area incomes.” The report mentions parts of Florida and Texas that have the same issue, though not as severely. While we certainly don’t have that problem here in Minnesota, there does seem to be a constant challenge with regard to what people know and *think* they know about qualifying for a mortgage and how owning versus renting benefits one’s overall financial picture.
It’s easy to see why the public may be suspicious of Realtors’ and Loan Officers’ motives when they tout the benefits of homeownership when following up on a lead – it’s human nature to conclude someone is just trying to sell you something and discount what they’re saying. That’s why we as industry professionals have to be talking about this every day to everyone. Questions that can start conversations and really reinforce the benefit of owning over renting are things like:
“Do you think it’s better to put money in the bank or spend and never see it again?”
“What if your biggest monthly cost also doubled as savings?”
We certainly hope homeownership doesn’t exceed people’s reach here in our neck of the woods or anywhere for that matter. Starting these dialogues with the public is never a bad idea – whether or not they have decided they are “in the market for a home.” Naturally, we’re always trying to build and increase business, but part of our job is sharing the understanding of how important the product we deal with (homes) is to the benefit of the clients – past, current or “eventual” – we serve.
~Charlie
- Published in On the House
We’ve Sprung!
Ladies and gentlemen it’s official. The Super Bowl is over and Minnesota homebuyers and MN home sellers are ready to take their next steps toward buying or selling a MN home now. The spring market has sprung! I know it’s still a wee-bit chilly outside – still great for enjoying our Minnesota winter sports like my personal favorite of snowmobiling – but these MN home sellers and MN home buyers and itching to start the process today so that they can be into their new MN homes as soon as that snow melts.
Why does this matter if you’re looking at buying or selling a MN home? It means that if you’ve been waiting for more inventory to come on the real estate market, you’re likely to start seeing it now. It also means that you’re likely to start seeing more competition among those listings from other MN homebuyers who are looking at and interested in the same homes.
As interest rates and home prices remain extremely affordable, the MN spring housing market it heating up! It’s time to get in the game today if you’re ready to own a home this early spring or early summer. Got questions or need to get connected to a real estate agent or mortgage professional in your area? We have had the pleasure of working with some of Minnesota’s absolute best. Let us know if you need a recommendation!
~ Charlie
- Published in On the House