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

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.

 

Property Owners Have Been Big Winners in Texas Legislature This Year

The Texas Legislature passed several property tax reform laws to benefit current and future property owners in the Lone Star State.

Over the past several years, property owners in Texas had endured one property tax increase after another. These property owners would complain consistently – arguing that their appraisals were wrong or that their property tax statements were confusing or misleading.

This was making owning a home in Texas less and less affordable.

But Senate Bill 2, which was signed into law by Gov. Greg Abbott in June, will provide homeowners with more transparency and better information about taxation, appraisals and the best way to challenge, or protest those appraisals, if necessary.

Property tax bills are calculated using the property’s appraised value and the tax rates set by each of the taxing entities where the property is located. Cities, counties, school districts and other local governments use property tax revenue to fund their annual budgets.

“The most talked about portion of the bill was the provision that now requires most cities and counties to hold elections if they wish to raise property tax revenue by more than 3.5 percent over the previous year.”

Higher property values are usually borne out of economic growth and prosperity for a local community. An example in Texas is in the San Antonio area, where Bexar County residents saw an average increase of 8.7 percent on their property value this year.

The new law will give property owners more information about the process used to set the tax rates that determine their property tax bills.

Senate Bill 2 makes a variety of changes to the property tax system and the appraisal process, making it easier for homeowners to understand and also giving voters a say in how much local governments municipalities can raise property taxes each year.

Tax rates and other information now must be available in convenient online databases that are accessible to the public and searchable by property address and owner.

The most talked about portion of the bill was the provision that now requires most cities and counties to hold elections if they wish to raise property tax revenue by more than 3.5 percent over the previous year.

This rate is currently at 8 percent, and voters must currently petition to hold an election. Now these elections will be automatic.

There is an exclusion for taxes levied on new construction, which allows for the growth rate to be averaged over three years, meaning some taxes can exceed that 3.5 percent increase without an election.

School Finance Reform

House Bill 3 was signed into law by Gov. Abbott, providing a massive overhaul of Texas’ long-floundering school finance system.

“You could not overstate the magnitude of the law that I’m about to sign because this is a monumental moment in public education history in the state of Texas,” Abbott said back in June. “We did something that was considered to be highly improbable, and that is to be able to transform public education in the state of Texas without a court order forcing us to do so.

“This one law does more to advance education in the state of Texas than any law that I have seen in my adult lifetime in the state of Texas.”

House Bill 3 included approximately $6.5 billion in new public education spending in Texas plus an additional $5.1 billion earmarked for lowering property tax bills in the state.

The money budgeted for this landmark legislation includes pay increases for teachers, a funding of full-day pre-kindergarten classes for 4-year-old students, and a steep reduction in Texas’ Robin Hood program, which allows for wealthier school districts to subsidize poorer school districts.

In addition, school districts that want to create merit programs for their teachers now can, awarding bonuses between $3,000 and $12,000 annually. This program also creates incentives for teachers to work in rural school districts or in districts of high need.

As for the property taxes, early estimates are that homeowners will see an average 8-cent tax rate reduction in 2020 and 13-cent reduction in 2021.

Reducing Agricultural Rollback Tax

In Texas, many property owners maintain their land as agricultural before they develop it for another purpose.

Agricultural tax valuations that were put in place to help farmers can help lower their property’s taxable value.

However, when a property switches to non-agricultural use, it is usually dinged with an agriculture rollback tax.

Currently, this tax is the difference between taxes paid on the property’s agricultural value and the taxes it would have incurred on its higher market value for the previous five years. In addition, the property owner would currently pay interest of 7 percent for each year from the date the taxes would have been due.

This year, the Texas Legislature passed House Bill 1743, which amends the tax code in Texas to reduce the number of years in the rollback of taxes from five to three and to reduce the interest rate from 7 percent to 5 percent.

This new law takes effect on September 1, 2019.

More Wins for Property Owners

 This has been a banner year for property owners in Texas as far as new legislation. In addition to the aforementioned changes:

  • The legislature has ended the practice of forced annexation across the entire state.
  • More resources will be available for property owners affected by disasters and disaster recovery and prevention plans are being put into place.
  • Buyers will be getting more detailed information about a property’s flooding history.
  • A law was passed to continue the Texas Real Estate Commission’s protection of real estate consumers.

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.

average sale price across Kansas up 7 percent

If you’re considering selling your home, now is a great time. Low inventory levels have led to declining sales, but increased property prices. With few options, homes are selling at premium prices. From June 2018 to 2019, the average sale price across Kansas was up 7 percent.

With homes on the market for an average of only 50 days (no change from 2018), homes are not only selling for higher prices, but also selling quickly. For buyers, historically low interest rates in July sweetened the incentive to invest in homeownership.

Housing Stats

Housing Stats: Median Prices Rose For All Miami-Dade Property Types In June

Miami Housing Marketing Report – June 2019

In June, Miami-Dade County mid-market single-family home sales increased, and median prices rose for all property types in June, according to the MIAMI Association of Realtors and the Multiple Listing Service system.

Posted by Home Ownership Matters on Tuesday, August 6, 2019

Miami-Dade County mid-market single-family home sales increased, and median prices rose for all property types in June, according to the MIAMI Association of Realtors (MIAMI) and the Multiple Listing Service (MLS) system.

Total sales declined last month mainly due to lack of supply in certain price points, but they are expected to increase in the future because of declining mortgage rates, increased consumer confidence and demand from high earners in tax-burdened states.

“From luxury to more affordable homes, Miami real estate offers unique and diverse neighborhoods for all types of homebuyers,” MIAMI Chairman of the Board José María Serrano said. “Locking in a mortgage at today’s sub-4% rates will prove valuable now and in the future. MIAMI Realtors have the expertise to help consumers in their home search.”