Month: July 2021

Financial Tips, Market Update

Today’s Real Estate Market Explained Through 4 Key Trends

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Today’s Real Estate Market Explained Through 4 Key Trends | MyKCM

As we move into the second half of the year, one thing is clear: the current real estate market is one for the record books. The exact mix of conditions we have today creates opportunities for both buyers and sellers. Here’s a look at four key components that are shaping this unprecedented market.

A Shortage of Homes for Sale

Earlier this year, the number of homes available for sale fell to an all-time low. In recent months, however, inventory levels are starting to trend up. The latest Monthly Housing Market Trends Report from realtor.com says:

“In June, newly listed homes grew by 5.5% on a year-over-year basis, and by 10.9% on a month-over-month basis. Typically, fewer newly listed homes appear on the market in the month of June compared to May. This year, growth in new listings is continuing later into the summer season, a welcome sign for a tight housing market.”

This is good news for buyers who crave more options. But even though we’re experiencing small gains in the number of available homes for sale, inventory remains a challenge in most states. That’s why it’s still a sellers’ market, giving homeowners immense leverage when they decide to make a move.

Buyer Competition and Bidding Wars

Today’s ongoing low supply, coupled with high demand, creates a market characterized by high buyer competition and bidding wars. Buyers are going above and beyond to make sure their offer stands out from the crowd by offering over the asking price, all cash, or waiving some contingencies. The number of offers on the average house for sale broke records this year – and that’s great news for sellers.

Today’s Real Estate Market Explained Through 4 Key Trends | MyKCM

The latest Confidence Index from the National Association of Realtors (NAR) says the average home for sale receives five offers (see graph below):For buyers, the best way to put a compelling offer together is by working with a local real estate professional. That agent can act as your trusted advisor on what terms are best for you and what’s most appealing to the seller.

Home Price Appreciation

The competition among buyers is driving prices up. Over the past year, we’ve seen home price appreciation rise across the country. According to the most recent Home Price Index (HPI) from CoreLogic, national home prices increased 15.4% year-over-year in May:

“The May 2021 HPI gain was up from the May 2020 gain of 4.2% and was the highest year-over-year gain since November 2005. Low mortgage rates and low for-sale inventory drove the increase in home prices.”

Rising home values are a big part of why real estate remains one of the top sought-after investments for Americans. For potential sellers, it also means it’s a great time to list your house to maximize the return on your investment.

A Rise in Home Values and Equity

The equity in a home doesn’t just grow when a homeowner pays their mortgage – it also grows as the home’s value appreciates. Thanks to the jump in price appreciation, homeowners across the country are seeing record-breaking gains in home equity. CoreLogic recently reported:

“…homeowners with mortgages (which account for roughly 62% of all properties) have seen their equity increase by 19.6% year over year, representing a collective equity gain of over $1.9 trillion, and an average gain of $33,400 per borrower, since the first quarter of 2020.”

That’s a major perk for households to leverage. Homeowners can use that equity to accomplish major life goals or move into their dream homes.

Bottom Line

If you’re thinking about buying or selling, there’s no time like the present. Let’s connect to talk about how you can take advantage of the conditions we’re seeing today to meet your homeownership goals.

Shawna O’Brien
shawna.obrien@talktotucker.com
317-506-0039
F.C. Tucker Geist Fishers

My REVIEWS

REVIEW! FIRST TIME HOMEBUYERS HAVE A CALM & SMOOTH EXPERIENCE.

by indianapolisareahomesforsaleLeave a Comment on REVIEW! FIRST TIME HOMEBUYERS HAVE A CALM & SMOOTH EXPERIENCE.

Highly likely to recommend|5.0

07/20/2021
Bought a Single Family home in 2021 in Indianapolis, IN.

Local knowledge *****
Process expertise *****
Responsiveness *****
Negotiation skills *****

It was my Fiancé and I’s first time buying a home, and throughout the entire process Shawna brought such a calming presence. On top of that she was incredibly responsive, timely, and knew just how much information to give us to keep us informed but not overwhelmed. Additionally, Shawna was able to move through an expedited close timeline (about 3 weeks), with no pause or hesitation.

I personally cannot recommend Shawna enough for someone who is looking for more than just a Realtor, but also a confidant and friend.

Buyer Tips, Financial Tips, Market Update, Seller Tips

3 Charts That Show This Isn’t a Housing Bubble

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With home prices continuing to deliver double-digit increases, some are concerned we’re in a housing bubble like the one in 2006. However, a closer look at the market data indicates this is nothing like 2006 for three major reasons.

3 Charts That Show This Isn’t a Housing Bubble | MyKCM

1. The housing market isn’t driven by risky mortgage loans.

3 Charts That Show This Isn’t a Housing Bubble | MyKCM

Back in 2006, nearly everyone could qualify for a loan. The Mortgage Credit Availability Index (MCAI) from the Mortgage Bankers’ Association is an indicator of the availability of mortgage money. The higher the index, the easier it is to obtain a mortgage. The MCAI more than doubled from 2004 (378) to 2006 (869). Today, the index stands at 130. As an example of the difference between today and 2006, let’s look at the volume of mortgages that originated when a buyer had less than a 620 credit score.Dr. Frank Nothaft, Chief Economist for CoreLogic, reiterates this point:

“There are marked differences in today’s run up in prices compared to 2005, which was a bubble fueled by risky loans and lenient underwriting. Today, loans with high-risk features are absent and mortgage underwriting is prudent.”

2. Homeowners aren’t using their homes as ATMs this time.

During the housing bubble, as prices skyrocketed, people were refinancing their homes and pulling out large sums of cash. As prices began to fall, that caused many to spiral into a negative equity situation (where their mortgage was higher than the value of the house).

Today, homeowners are letting their equity build. Tappable equity is the amount available for homeowners to access before hitting a maximum 80% combined loan-to-value ratio (thus still leaving them with at least 20% equity). In 2006, that number was $4.6 billion. Today, that number stands at over $8 billion.

3 Charts That Show This Isn’t a Housing Bubble | MyKCM

Yet, the percentage of cash-out refinances (where the homeowner takes out at least 5% more than their original mortgage amount) is half of what it was in 2006.

3. This time, it’s simply a matter of supply and demand.

FOMO (the Fear Of Missing Out) dominated the housing market leading up to the 2006 housing bubble and drove up buyer demand. Back then, housing supply more than kept up as many homeowners put their houses on the market, as evidenced by the over seven months’ supply of existing housing inventory available for sale in 2006. Today, that number is barely two months.

Builders also overbuilt during the bubble but pulled back significantly over the next decade. Sam Khater, VP and Chief Economist, Economic & Housing Research at Freddie Mac, explains that pullback is the major factor in the lack of available inventory today:

“The main driver of the housing shortfall has been the long-term decline in the construction of single-family homes.”

3 Charts That Show This Isn’t a Housing Bubble | MyKCM

Here’s a chart that quantifies Khater’s remarks:Today, there are simply not enough homes to keep up with current demand.

Bottom Line

This market is nothing like the run-up to 2006. Bill McBride, the author of the prestigious Calculated Risk blog, predicted the last housing bubble and crash. This is what he has to say about today’s housing market:

“It’s not clear at all to me that things are going to slow down significantly in the near future. In 2005, I had a strong sense that the hot market would turn and that, when it turned, things would get very ugly. Today, I don’t have that sense at all, because all of the fundamentals are there. Demand will be high for a while because Millennials need houses. Prices will keep rising for a while because inventory is so low.”

Shawna O’Brien
shawna.obrien@talktotucker.com
317-506-0039
F.C. Tucker Geist Fishers

My REVIEWS

REVIEW! SATISFIED SELLERS OF THE FAMILY HOME THEY BUILT.

by indianapolisareahomesforsaleLeave a Comment on REVIEW! SATISFIED SELLERS OF THE FAMILY HOME THEY BUILT.

Highly likely to recommend|5.0

07/01/2021
Sold a Single Family home in 2021 in Indianapolis, IN.

Local knowledge *****
Process expertise *****
Responsiveness *****
Negotiation skills *****

We had an excellent selling experience with Shawna O’Brien!
After 2 days, we had a solid offer on the table in which she explained in detail and we ultimately ended up accepting. As with all home sales, we did have unexpected bumps that caught us off guard, but Shawna kept in close contact with the buyer’s agent and always kept us informed to keep us in sight of the end goal which was the sale of our home at maximum value.

We were very happy with Shawna’s professionalism and attention to detail throughout our process, and would highly recommend her to anyone who is buying or selling a home. If you want someone that will exceed expectations, she is your agent!

Thank you to Shawna and the F.C. Tucker company for a great experience.

Seller Tips

Selling Your House? Make Sure You Price It Right.

by indianapolisareahomesforsaleLeave a Comment on Selling Your House? Make Sure You Price It Right.
3 Things To Prioritize When Selling Your House | MyKCM

There’s no denying we’re in a sellers’ market. With low inventory and high buyer demand, homes today are selling above the asking price at a record rate. According to the latest Realtors Confidence Index Survey from the National Association of Realtors (NAR):

  • Homes typically sell within 17 days (compared to 26 days one year ago).
  • The average home sold has five offers to pick from.
  • 54% of offers are over the asking price.

Because so many buyers are competing for so few homes, bidding wars are driving up home prices. According to an average of leading expert projections, existing home prices are expected to increase by 8.9% this year.

Yet even in today’s red-hot sellers’ market, it’s important to price your house right. While it may be tempting to price your house on the high side to capitalize on this trend, doing so could limit your house’s potential.

Why Pricing Your House Right Matters

Here’s the thing – a high price tag doesn’t mean you’re going to cash in big on the sale. While you may be trying to maximize your return, the tradeoff may be steep. A high list price is more likely to deter buyers, sit on the market longer, or require a price drop that can raise questions among prospective buyers.

Instead, focus on setting a price that’s fair. Real estate professionals know the value of your home. By pricing your house based on its current condition and similar homes that have recently sold in your area, your agent can help you set a price that’s realistic and obtainable – and that’s good news for you and for buyers.When you price your house right, you increase your home’s visibility, which drives more buyers to your front door. The more buyers that tour your home, the more likely you’ll have a multi-offer scenario to create a bidding war. When multiple buyers compete for your house, that sets you up for a bigger win.

Bottom Line

When it comes to pricing your house, working with a local real estate professional is essential. Let’s connect so we can optimize your exposure, your timeline, and the return on your investment, too.

Shawna O’Brien
shawna.obrien@talktotucker.com
317-506-0039
F.C. Tucker Geist Fishers

SOLD!

SOLD! FIRST TIME HOMEBUYERS SECURE AN AMAZING UPDATED BROAD RIPPLE CHARMER!

by indianapolisareahomesforsaleLeave a Comment on SOLD! FIRST TIME HOMEBUYERS SECURE AN AMAZING UPDATED BROAD RIPPLE CHARMER!

A wonderful couple I helped a couple years ago referred me to a lovely engaged couple ready to purchase their first home. They interviewed a couple realtors and chose me. YAY! We had a lot of fun looking around Broad Ripple. It’s a fabulously fun area with so many local businesses in walking distance BUT you need to have a critical eye when looking at homes of a certain age, wear & tear, etc.

This home was amazing! The seller had completely renovated and improved upon all the big ticket items and the basement was the biggest, nicest, cleanest, most user friendly basement I’d seen in a Broad Ripple home. I called the list agent, asked a lot of questions about what would make us a top contender in this competitive market and we got the house!

The buyers didn’t pay one cent over appraised value and that’s a HUGE WIN right now with buyers bidding over ask price AND appraised value. It was so fun hanging with these two smart, responsible clients and I’m going to miss talking with them so frequently.

#homebuying #homeownership #homeforsale #firsthome #indianapolis #beaggressive #hirearealtor #indyhomesforsale #TrustYourAgent #HireAnAgent #TrustYourRealtor #GetPreapproved

Shawna O’Brien
shawna.obrien@talktotucker.com
317-506-0039
F.C. Tucker Geist Fishers

Buyer Tips, Seller Tips

What To Expect As Appraisal Gaps Grow

by indianapolisareahomesforsaleLeave a Comment on What To Expect As Appraisal Gaps Grow
What To Expect as Appraisal Gaps Grow | MyKCM

In today’s real estate market, low inventory and high demand are driving up home prices. As many as 54% of homes are getting offers over the listing price, based on the latest Realtors Confidence Index from the National Association of Realtors (NAR). Shawn Telford, Chief Appraiser at CoreLogic, elaborates:

“The frequency of buyers being willing to pay more than the market data supports is increasing.”

While this is great news for today’s sellers, it can be tricky to navigate if the price of your contract doesn’t match up with the appraisal for the house. It’s called an appraisal gap, and it’s happening more in today’s market than the norm.

According to recent data from CoreLogic, 19% of homes had their appraised value come in below the contract price in April of this year. That’s more than double the percentage in each of the two previous Aprils.

What To Expect as Appraisal Gaps Grow | MyKCM

The chart below uses the latest insights from NAR’s Realtors Confidence Index to showcase how often an issue with an appraisal slowed or stalled the momentum of a house sale in May of this year compared to May of last year.If an appraisal comes in below the contract price, the buyer’s lender won’t loan them more than the house’s appraised value. That means there’s going to be a gap between the amount of loan the buyer can secure and the contract price on the house.

In this situation, both the buyer and seller have a vested interest in making sure the sale moves forward with little to no delay. The seller will want to make sure the deal closes, and the buyer won’t want to risk losing the home. That’s why it’s common for sellers to ask the buyer to make up the difference themselves in today’s competitive market.

Bottom Line

Whether you’re buying or selling, let’s connect so you have an ally throughout the process to help you navigate the unexpected, including appraisal gaps.

Shawna O’Brien
shawna.obrien@talktotucker.com
317-506-0039
F.C. Tucker Geist Fishers

Financial Tips, Market Update

Are We In A Housing Bubble? Experts Say No.

by indianapolisareahomesforsaleLeave a Comment on Are We In A Housing Bubble? Experts Say No.

Are We in a Housing Bubble? Experts Say No.

Are We in a Housing Bubble? Experts Say No. | MyKCM

The question of whether the real estate market is a bubble ready to pop seems to be dominating a lot of conversations – and everyone has an opinion. Yet, when it comes down to it, the opinions that carry the most weight are the ones based on experience and expertise.

Here are four expert opinions from professionals and organizations that have devoted their careers to giving great advice to the housing industry.

The Joint Center for Housing Studies in their The State of the Nation’s Housing 2021 report:

“… conditions today are quite different than in the early 2000s, particularly in terms of credit availability. The current climb in house prices instead reflects strong demand amid tight supply, helped along by record-low interest rates.”

Nathaniel Karp, Chief U.S. Economist at BBVA:

“The housing market is in line with fundamentals as interest rates are attractive and incomes are high due to fiscal stimulus, making debt servicing relatively affordable and allowing buyers to qualify for larger mortgages. Underwriting standards are still strong, so there is little risk of a bubble developing.”

Bill McBride of Calculated Risk:

“It’s not clear at all to me that things are going to slow down significantly in the near future. In 2005, I had a strong sense that the hot market would turn and that, when it turned, things would get very ugly. Today, I don’t have that sense at all, because all of the fundamentals are there. Demand will be high for a while, because Millennials need houses. Prices will keep rising for a while, because inventory is so low.”

Mark Fleming, Chief Economist at First American:

“Looking back at the bubble years, house prices exceeded house-buying power in 2006 nationally, but today house-buying power is nearly twice as high as the median sale price nationally…

Many find it hard to believe, but housing is actually undervalued in most markets and the gap between house-buying power and sale prices indicates there’s room for further house price growth in the months to come.”

Bottom Line

All four strongly believe that we’re not in a bubble and won’t see crashing home values as we did in 2008. And they’re not alone – Goldman Sachs, JP Morgan, Morgan Stanley, and Merrill Lynch share the same opinion.

Shawna O’Brien
shawna.obrien@talktotucker.com
317-506-0039
F.C. Tucker Geist Fishers