Monthly Archives: August 2019

Housing Inventory In Kansas Remains Low

For the month of July inventory remained low, hampering the number of homes sold. Options for buyers are limited. While the average sale price is down from June 2019 ($237,350), prices are up from July 2018 ($214,711).

The number of days homes are on the market has remained steady at 48 days, only one day less than a year ago.

Mortgage rates continue to fall. Freddie Mac reported the national average commitment rate on a 30-year conventional fixed-rate mortgage was 3.6% down from 3.85% in June. This .25% decrease could have significant impact on the amount of interest paid over the lifetime of the loan.

Housing Stats

Take Inventory of Your Belongings Before a Disaster Strikes

As a homeowner, your abode is your pride and joy, and considering how hard you’ve worked to get to this point, how couldn’t it be? After spending countless months—let’s be honest, years—decorating and curating your home, you want to be sure everything is accounted for in case a disaster occurs. Surprisingly, only around half of homeowners have a home inventory, based on a poll from the Insurance Information Institute. This rate has stayed rather stagnant over the past decade, and it’s time for that to change.

Disasters don’t give us a warning. Without a home inventory, you would have to file every single one of your possessions immediately after experiencing something truly awful. Not to mention any forgotten items will be gone forever. Public insurance adjuster Davd Moore offers some insight when sharing, “You can lose thousands of dollars because you didn’t include everything.”

Documenting all of your belongings certainly may seem like an intimidating undertaking, but with the right assistance and resources it can be totally manageable. As of March 2019, natural catastrophes caused an estimated $52.3 billion in losses in the U.S. With only half of Americans proactively taking inventory, that is a lot of sentimental possessions being unaccounted for. So, if you’re wondering if it’s worth it to make a home inventory list—the answer is yes.

Sure, you may have a good idea of what you own, but are you aware of the value of all your assets? It can be difficult to put a price on everything you have accumulated over your lifetime, which is exactly why documenting everything is so essential to be fairly reimbursed if you suffer losses from any natural or man-made disasters. A woman who lost her home after the devastating Tubbs Fire, Alice Plichcik, shares, “You don’t realize how much you have lost until you try to replace everything.”

Here are six steps to help make the process of inventorying your belongings as easy as possible.

1. Handle One Room at a Time

 Baby steps are key here. On the bright side, this process may give you the push you need to declutter a bit. When beginning to take inventory, choose one room or a section of your house at a time. Starting this process is the biggest step, so take your time! Try focusing on one area of your home a day, or even a week, to make it seem less stressful and overwhelming in the long run.

2. Start with Bigger Items and Work Your Way to Smaller Items

As cherished as your bookshelves and crammed closets are, starting with your more expensive and larger items will make this task more tolerable. Your big ticket items will need the most amount of attention and time, so it’s best to get those out of the way first so the remaining items seem more approachable to catalogue.

natural disaster

3. Organize Your List by Category

Keeping this list organized is crucial. It is hard to comprehend how many items you own until you’re writing them down and all of a sudden your list has reached page 20. In order to keep this inventory document as organized as possible, try listing your valuables by categories such as electronics, furniture, etc.

4. Get a Little Help from Your Phone

 You’re not alone here, and becomes very clear when you start to look into the variety of apps created to help homeowners take inventory of their belongings. If you’re looking to speed things up, give Encircle a try. With this app you’ll focus on one room at a time by quickly snapping some photos of your space and then going back to add details on individual items. Another noteworthy app is Nest Egg, which will cost you $4 for the full version, but is well worth it. While it will take you longer to enter in all of the details of your things, it offers benefits such as giving you a heads up that a warranty is nearing expiration, or that something on loan is due back soon. Both of these apps, and most that are offered, are password protected so there is no need to fear your private information getting out.

5. Use Photo +/ Video

A video is actually an excellent option if you are worried about how tedious this process will be. Taking a detailed video of each room in your home will help jog your memory if there is anything you’ve missed. Additional details such as serial numbers and/or model numbers for expensive pieces is important to jot down but a video is a great start, or alternatively you could take a more in depth video and get a close-up shot of these details on your items. If you hung onto a receipt for an item, you can even get that on the video as well to be reimbursed for the exact price. Many insurance companies accept this type of recording during a claim—some even prefer it. If you’re choosing this route, just double check that your insurance company accepts a video, like State Farm does for example. Photos are also very helpful in keeping things cohesive when putting together a list. Many apps previously mentioned allow you to insert photos along with the details of the object to help keep things organized.

inventory

6. Keep a Copy (Somewhere Safe!)

One advantage to using an app or a Google Doc rather than a list is that it is secure in the cloud or your drive. If making a list on another program on your computer, be sure to put a copy on an external hard drive and keep it in a safe spot.

Life happens, and unfortunately, disasters do as well. If you’re responsible and proactive when it comes to your beloved possessions, then there is no reason to live in fear of potential damage. Whether you’ve lived in your home for 50 years or are just beginning your homeownership journey, you can start your home inventory list today and prepare for your future. As the director of insurance for the Consumer Federation of America, Robert Hunter, says, “The whole idea of insurance is to make you whole, not under-pay you or over-pay you.” Your home inventory is something you will continue to work on as you obtain more belongings. Once you get started, the rest will come easily. Anytime you splurge on a new electronic, or upgrade a worn out appliance, just be sure to update your list so you’re always prepared for the worst. Don’t put off a task now that you’ll certainly regret later.

8 Signs It’s Time to Become a Homeowner

If you’ve been renting homes for close to a decade now, you’re most likely tired of the monthly expenses that are essentially being thrown out the window. Imagine having a home to call your own: a yard to host Summer barbeques, renovating your kitchen without someone else’s approval, and most importantly no more rent checks. Becoming a homeowner is a big decision, so you want to make sure it’s right for you. If you’re on the fence, we have 8 signs that it may just be time to take the plunge into homeownership. 

1. You have a good credit score

This is one of the most important factors when it comes to becoming a homeowner. In order to even take the first step towards homeownership, you’ll need to have a strong credit score. A good FICO credit score is typically about 670. With a score in this range, lenders will view you as low risk for defaulting on loans, which makes you a great candidate for a mortgage. Not to mention the mortgage pricing you’ll receive will directly impact the monthly payments you’ll be making for the life of the loan. As CEO of Growella (now known as HomeBuyer), Dan Green, straightforwardly explains, “If your credit score is not optimal, you’ll pay more for a mortgage…your credit score today will have a huge impact on the homes you’re looking at and can afford. It may be sensible to wait to buy and work on your credit.”

If your credit score still needs some help—don’t fret! One in three Americans have a credit score below 670, so you’re not alone. Start by checking on your credit with a free credit report. Take some time to work on improving your score by making your credit card payments on time, avoid opening new credit lines (unless you’re working towards establishing a credit history), and don’t let your balances exceed 30% of your maximum credit limits.

2. You have enough money for a down payment

The majority of home sales require a down payment. Your loan type will play a huge factor in the requirements when it comes to your down payment, but that payment can range from 5% to 30% of the cost of your new home. There are many programs and FHA loans that assist new qualifying buyers when it comes to these costs, although having the ability to put down more on your home can increase your odds of being approved for a loan and further help you to lock down better interest rates. The Sr. VP of Mortgage Lending at Navy Federal Credit Union shares, “It is, therefore, critically important to factor into your budget the source of your down payment.” With the slew of lenders, nonprofits, and agencies that provide financing options and assistance programs to help out new homeowners put together a down payment, there are options for everyone.

3. you have money saved in an account

Aside from the large expense of actually buying a home, a lot of other, often unexpected expenses creep up when you’re moving into your new house. Closing costs for one tend to amount to an additional 2-5 percent of your homes sale price, which is then split between the buyer and the seller at closing. Well after the down payment and the closing costs are finalized, you’ll quickly realize the various maintenance and upkeep payments here and there. Having a savings dedicated to home issues can give you ease if something pricey breaks unexpectedly, like your furnace for instance which can cost upwards of $6,000.

4. You’re committed to where you live

There is no need to sign a lifelong contract that you’ll stay in one place forever, but it’s smart to at least be committed to staying put for the next five years or so if you’re planning on purchasing a home. Buying a home is most likely the greatest significant financial commitment you’ll ever make, so you’ll want to make sure you’re ready to settle down and get comfortable in your town. If you’ve kicked the travel bug and you’re confident you want to stick around one place for a while, then taking the stride towards homeownership is a great option for you.

New homeowners

5. You’re prepared for the maintenance that comes with owning a home

Anytime something goes awry in your rental property, you’ll give your landlord or super a call to fix it. Just remember when you own your own property—you’re the person that will need to handle those problems, or you’ll need to hire someone who will. Aside from the time and labor this will involve, it’s also pricey. Having savings will help to relieve financial stress, but don’t forget the labor element as well. Taking care of day-to-day upkeep and issues yourself will save you money, but consider finding experts for the larger issues so you aren’t dedicating too much of your time and energy to your home.

6. You’re tired of only dreaming of home renovation projects

There are endless rules when it comes to modifying your rental home. Some landlords even give you a hard time about hammering a nail into the wall for a family photo. If you’re ready to say goodbye to the stress that comes along with your security deposit, owning a home will do just that. Having control over your home is freeing and offers endless options making it nearly impossible to get sick of your home. Just keep in mind that with renovations often comes repairs, so you not only have to be prepared to have control over your property, but also responsibility. Feel like painting your room bright red? Go for it!

7. Your debt is under control

Contrary to popular belief, it is okay to have debt. About 300 million Americans are in debt. That doesn’t mean you can’t build equity and buy a home. What it does mean, is that you have to have to have a handle on your debt. If you have a clear payment plan with an end date in view, then homeownership may be right up your alley. Loan companies don’t expect borrowers to be debt-free, they mostly just want to ensure you don’t have too much debt in relation to your income. In other words; they want to know if you can afford to take on an additional mortgage payment. Companies determine this by using a debt-to-income ratio, which shows how much of your monthly income contributes to paying off debts. To buy a home, ideally your ratio should be less than or equal to 36 percent. If you’re not sure how in control you are of your debt, find your debt-to-income ratio by adding together your monthly income and then dividing that by the sum total of your recurring monthly debts, minus rent.

8. The timing is right

There is no rush when it comes to buying a home. You want to be sure that it’s exactly what you want, where you want, and the price you want. The housing market is ever changing, so keep a close eye on the market, chat with your realtor and determine when the best time is to start the homebuying process. It’s best to be in a comfortable living situation when you begin exploring your options because it could take upwards of 6 months until you’re settled into your new home.

You’ll always give yourself reasons not to buy a home, whether it’s due to fear of change, insecurities about your finances, or perhaps you’re just not ready. But if the majority of the signs listed above have popped up as of late, it very well may be time to start looking at the reasons why you should buy a home.

Home Prices Slip in Some Metro Areas

Despite home prices increasing in 91 percent of U.S. Markets, it’s what’s happening in the other nine percent that is most telling.

That’s because where the prices are slipping are in some of the costliest markets, according to a report on the second quarter of 2019 released by the National Association of REALTORS® (NAR) in August.

High cost regions out West, like San Jose-Sunnyvale, Santa Clara and San Francisco-Oakland-Hayward in California and urban Honolulu in Hawaii, saw their prices drop from the same time in 2018, an indicator that would-be homebuyers are more likely to not purchase a home now, when the amount of affordable properties is scarily low.

Americans seem more resistant to overpaying for homes now as housing prices rapidly outpaced incomes. Couple that with such a limited supply of lower-end properties, potential buyers are tending to remain in that “potential” category and not shifting into the “homeowner” category.

“Housing unaffordability will hinder sales irrespective of the local job market conditions,” Lawrence Yun, chief economist for NAR, said in the report. “This is evident in the very expensive markets as home prices are either topping off or slightly falling.”

“New home construction is greatly needed however home construction fell in the first half of the year.”

On the whole though, prices increased in 162 of the 178 metropolitan markets measured in the NAR report. On the whole, the median price increase for a pre-owned, single family home jumped to $279,600, a 4.3 percent increase from 2018.

According to the report, 10 metro areas experienced double-digit percentage increases, including moderate-cost metro areas of Boise City-Nampa, Idaho; Abilene, Texas; Columbia, Mo.; Burlington-South Burlington, Vt. and Atlantic City-Hammonton, N.J.

“New home construction is greatly needed however home construction fell in the first half of the year,” Yun said. “This leads to continuing tight inventory conditions, especially at more affordable price points. Home prices are mildly reaccelerating as a result.”

In total, 93 of the markets studied saw a price increase of at least five percent.

The five most expensive housing markets in the second quarter were San Jose-Sunnyvale-Santa Clara, Calif. ($1,330,000), San Francisco/Oakland/Hayward, Calif. ($1,050,000), Anaheim/Santa Ana/Irvine, Calif. ($835,000), Honolulu ($785,500), and San Diego/Carlsbad, Calif. ($655,000).

The five lowest-cost metro areas in the second quarter were Decatur, Ill. ($97,500), Youngstown/Warren/Boardman, Ohio ($107,400), Cumberland, Md. ($117,800), Binghamton, N.Y. ($119,300) and Elmira, N.Y. ($119,400).

DECLINING AFFORDABLITY

Despite estimates that suggest the median family income has increased to $78,366 in the second quarter, the faster growth of home prices caused a decrease in affordability from the first quarter of 2019.

Statistically, a buyer making a down payment on a home of 5 percent would need an income of $62,192 to purchase a home at the national median price. The required income comes down for larger down payments ($58,918 for 10 percent down, $52,372 for 20 percent down).

Compare that though for someone trying to buy a home in San Jose though. Families who want to avoid paying no more than 25 percent on mortgage payments, need an annual income of $295,832. In San Francisco it’s only slightly better at $233,552.

According to the report, 1.93 million existing homes were for sale in the U.S. at the end of the second quarter, which is on par with 2018.

“The exceptionally low mortgage rates will help with housing affordability over the short run, Yun said. “But if the low interest rates are due to weakening economic confidence, as reflected from a correction in the stock market, then the low rates will not help with job growth and will eventually hinder home buying and home construction.

 

WeWork Makes Big Investment in the Northwest Arkansas Metropolitan Area

When the Northwest Arkansas Metropolitan Area was considered one of the 25 fastest-growing metros in the United States according to the U.S. Census Bureau in 2016, WeWork took notice.

The co-working space giant had been sniffing around for a new locale for another ground-up project like their first successful development, Dock 72, in Brooklyn, N.Y.

Partnering with local developer City Center LLC, WeWork announced last Spring that it will develop a 200,000 square-foot WeWork space Bentonville, known as Bentonville Square.

Unlike the Brooklyn project though, this one’s office space will belong entirely to WeWork and WeWork will also choose the tenants for the ground floor retail space.

“Northwest Arkansas is on a significant upswing both in growth and in education. Across the state, Arkansas has made coding and computer science classes a requirement for all public high school students since 2015.”

What made Bentonville so attractive to WeWork as compared to other possible destinations around the country?

For one, Bentonville is also the location of the home office for Walmart, and a headquarters of that size and scale is attractive to WeWork. Walmart encourages its vendors to set up shop in Bentonville in order to establish a better relationship.

That means there is an overwhelming need for office space for all of these partner companies – which is where WeWork wants to swoop in and provide the needed space requirements.

But more importantly, Northwest Arkansas is on a significant upswing both in growth and in education.

Across the state, Arkansas has made coding and computer science classes a requirement for all public high school students since 2015.

Having this education better prepares Arkansas students to be ready to work once their schooling is done. One of the missions for WeWork is to cultivate that homegrown talent and use it as a way of bettering the community by creating a sharing culture and community involvement.

With Walmart planning a remodeling of its own headquarters to become more technologically advanced and more employee-friendly, a lot of the commuting to and from Bentonville will likely be done via bicycle on the Razorback Greenway, a dedicated bike trail that connects Bentonville to neighboring towns like Fayettevile, Springdale and Rogers.

Part of the growth of Northwestern Arkansas has been due to the development of the bike trail, as many young professionals appreciate the ability to bike to and from work rather than have to drive or use some sort of public transit.

A lot of newer office space development in the Northwest Arkansas Metro area is being built with office showers and wall hangers for bicycles to accommodate this culture.

Couple that with the aesthetic quality of the bike trail, and home values are increasing. Some estimates for homes along the tree-lined trail see a value increase of about $8,000.

Combine Walmart’s home base, the Greenway and other growth in the area and it has led to a significant spike in multifamily development.

According to the Bentonville website, $304 million more in permits were issued in 2018 than in 2017, an increase of 62 percent.

“With growth set to double by 2035, Northwest Arkansas is primed to be a regional powerhouse, and its highly educated workforce is at the heart of this potential.”

WeWork isn’t alone in trying to capitalize on this boom in Northwest Arkansas.

A report released in the Spring by the University of Arkansas Center for Business Research showed new office supply of 136,000 square feet added in the second half of 2018 in Northwest Arkansas with an office vacancy rate drop to 8.4 percent, the lowest the area has had since 2004.

But WeWork is hoping to capitalize on a combination of local residents who are better trained for the workforce who want to stay in Northwest Arkansas and who might enjoy the perks and benefits of the Greenway.

“As we explored the market, it quickly became obvious Northwest Arkansas was a market primed for continuous growth with untapped demand,” James Slade, Vice President of Architecture for WeWork told Bisnow recently. “With growth set to double by 2035, Northwest Arkansas is primed to be a regional powerhouse, and its highly educated workforce is at the heart of this potential.”

Real Estate Industry Vulnerable to Cyberattacks

The news is seemingly filled with stories of data breaches, cyberattacks and compromised social media accounts.

Everyone is vulnerable in one way or another, and that is no different when it comes to the real estate industry – and that includes brokers, agents, and yes, homebuyers themselves.

According to an FBI Internet Crime report released in June, business email compromise attacks (BEC’s) on real estate increased by a whopping 1,110 percent.

These BEC’s stole almost $150 million from the real estate industry alone in 2018. Combined with other cyberattacks by hackers, both homebuyers and real estate agencies lost $969 million in 2017.

Hackers obtain sensitive information via a complex effort consisting of false identities.

How It Happens

For example, a hacker might pose as a potential homebuyer via email to a real estate agent to garner a response from an agent or broker. This “phishing” expedition will provide the hackers with key email information – such as an agency’s branding, electronic signature, and other useful information to seem legitimate.

Then, once they have forged this information into a dummy email address, they can pose as a member of the agency to generate conversation with another company that could lead to the electronic transfer of large sums of money.

Because these transfers have deadlines, proper vetting is often not completed and lower level security measure that are in place don’t flag these communications as a cause for concern.

Hackers tend to target companies that are new to the real estate market, or have a sizeable number of employees, which creates a situation where oversight of a business transaction could be missed.

Once the company has been infiltrated by the hacker, they will pose as someone who does frequent business on behalf of the company – like a broker, or an attorney – and use other information that can be found publicly online – usually through a social media platform like Facebook, Instagram or even LinkedIn – to create an online clone of the individual to help better impersonate them in email communication.

Once this hacker is deemed trustworthy, they are often granted access to multiple parties within a transaction, allowing them to spread their web of deceit and be able to further gain access to personal information and ultimately the money that is stolen.

Commercial Real Estate Not Immune

Commercial Real Estate companies are also prime to be hacked and stolen from, according to a report in the Commercial Observer.

That report indicated that although more than 33 percent of real estate firms have been victimized by a cyberattack, that representatives of the more than 50 percent of those polled said they were not adequately prepared to prevent an attack like that from occurring.

On the commercial front, a lack of understanding and an unwillingness to budget for security enhancements when the company is still making good money year-over-year by sticking to the status quo are the biggest problems.

But, as more and more commercial properties are developed with modern technology in building automation that manages all aspects of the building from the elevators to it’s heating and air conditioning, more modernized buildings are equally at risk because there are now more digital access points for hackers to get into a company’s digital infrastructure.

A cyberattacker can find a way to create the evacuation of a newly built or recently modernized skyscraper by accessing the electricity system of a building, turning off all the power and forcing a mass evacuation.

A lot of Fortune 500 companies have turned to hiring an information security officer to deal with the prevention of cybersecurity initiatives. This has helped, but it’s an expensive endeavor that most real estate agencies couldn’t afford themselves.

It’s a tough spot to be in for most agencies, and potential homebuyers and sellers need to be aware. As these kinds of data breaches are becoming the norm, everyone needs to remain vigilant in an effort to stop them from happening.

Kansans now pay the state $60 million more in taxes Following Governor’s Veto

The recent governor’s veto raised taxes on middle-class Kansans. Federal tax reform in 2017 doubled the standard deduction, however, the State of Kansas did not. Filers who take the higher standard deduction on their federal taxes, must accept the lower standard deduction on their state taxes. Kansans are now forced to pay the state $60 million more each year in taxes and are voided the opportunity to itemize at the state level.

Due to federal tax reform in 2017, fewer middle-class Kansans are able to itemize charitable, medical, and expenses related to homeownership when they take the federal standard deduction. In Kansas, when filers take the standard deduction at the federal level, they must also take the less generous standard deduction at the state level. The problem? Fewer middle-class Kansans are able to itemize their state return and are now paying in more taxes.

We Support Homeownership

Although many Kansans can easily itemize by the state standard ($7,500 for married filing joint), they simply do not have enough itemizations to exceed the new federal limits ($24,400 in 2019 for married filing joint). The result? Kansas is taking in excess tax revenue and hard-working Kansans are left unable to take tax deductions that, in the past, the Kansas Legislature has worked diligently to preserve.

Kansas Legislators passed two versions of a tax bill that would preserve this tax deduction. However, both bills were ultimately vetoed by Governor Kelly. Data provided by the Kansas Legislative Research Department shows following the change in the federal tax code, Kansas is now raking in an additional $60 million after the voiding of Kansas itemized tax deductions was allowed to happen.

These tax incentives encourage people to invest in Kansas. Homeownership strengthens our state, our communities and our families.  Legislators must act on our behalf to preserve these incentives… because homeownership matters and without it – the American Dream dies. Reach out to your local legislator and let them know you support building a stronger Kansas. Sign the Homeownership Petition today.