Trend of Low Inventories

low-inventoryWhen you are saying that the Cary North Carolina market has a low inventory it depends on what you are comparing it too.  Are you comparing it to the number of homes on the market last year at the same time?  Are you comparing it to homes in a price range? Or even homes in a certain area?

According to Reuters, “U.S. home sales fell more than expected in December as the supply of houses on the market dropped to a record low, pushing up prices and sidelining some potential first-time buyers”.  They also said, A shortage of affordable homes for sale will frustrate the ambitions of many first-time buyers.  First-time home buyers are forced to stay in rental market longer than planned.  This information was provided by Matthew Pointon, property economist at Capital Economics in New York.

“We expect little growth in sales in 2018, given tight inventories,” said Gregory Daco, chief U.S. economist at Oxford Economics in New York.  Affordability is crimped by rising mortgage rates, posing an additional headwind to sales.

The Cary North Carolina market will fluctuate depending on price and area of the property.   A 6 month supply of property often considered to be a balance market by that National Association of REALTORS®.   When homes sell faster than 6 months it is considered to be a seller’s market.  Likewise, when homes take longer than 6 months to sell that is considered a buyers’ market.

Everyone knows that supply and demand affect price.  When the so called “Housing Bubble”, the demand decreased so much that the supply increased to 4 million houses or more.  The prices of homes took a beating.    Also, the increased inventories of foreclosures, short sales, bank refusing to loan and the home building industries lack on new housing starts all contributed to very low home prices.

“New construction has showed signs of perking up, but remains well below estimates of demand,” said Aaron Terrazas, as senior economist at Zillow. “More importantly, builders face rising labor, materials and land costs making it difficult to build at a price point attractive to entry-level buyers”.

Since that time the economy has improved, and banks have started to lower requirements, interest rates have stayed low and foreclosures have slowed.  Inventory nationwide is reduced to approximately 2 million homes.  When demand is at a constant level and inventory is reduced, home prices trend upwards.   This is because there are the same number of buyers trying to buy less number of homes.

Mortgage rates are now climbing each week in 2018 and consumer confidence level is going up.  This means that Cary North Carolina market is having an increase in demand.   Buyers are now noticing that home prices are increasing.

Spring is almost here and that is the normal busy time of year.  Home prices are going up and inventory is dropping.  So it is time to decide what you want to do before it is too late.

Check Out The Current Market Updates For Our Area

If you’re curious to know what inventory conditions are for your specific market, contact us with the price range and area and I’ll send you a report.

Could Rising Interest Rates Affect Home Buyers?

From  .75 percent to 1.00 percent, the Federal Reserve raised its benchmark (federal funds rate) interest rate range by .25 percent. That’s a quarter of a point, and the Federal Reserve is expected to continue to nudge rates higher throughout the course of the year. In fact, Federal Reserve officials plan to raise rate ranges a quarter-point three times this year. However, this is the highest rate raise since 2008.

Interest rates were raised because there’s a confidence the economy is improving, and it’ll improve further. This is good news, because federal reserve rising interest ratesconfidence in the economy means new jobs, economic growth, and lowered unemployment. Unemployment was already at 4.7% in February 2017, which the Federal Reserve considers nearly full employment. Wages are on the rise, too! Average hourly wages rose 2.8% over the last year. Good news, right?

Real estate professionals have worried over the potential affects rising interest rates might have on the housing market. The recovery of the U.S. housing market hasn’t been straight forward; will rising interest rates affect market growth? It’s entirely possible the Federal Reserve’s rate hike could positively affect the housing market.

Here’s Why

The spring looms as one of the busiest times of the year in the real estate market. At the very least, the recent rate raise and the impending rate raises later in the year might encourage uneasy home-buyers to finally pull the plug. Spurring them off the fence and into a sale, potential home buyers will want to make their purchase before rates raise any higher. Reverse consumer psychology in play.

This will potentially increase the demand for houses through the summer, driving enough sales, possibly, to positively effect the economy in the long term. But what about mortgage rates?

Mortgages and Lending Standards

If the Federal Reserve raised short-term interest rates, then mortgages will be affected. However, higher interest rates may encourage lenders to loosen their strings. That means they’re more likely to loosen their lending standards because higher interest rates provide a cushion against risk for the lenders. Tight lending standards, in the past, have meant that even if someone has great credit they very well may not get a mortgage. This has been a major obstacle for would-be homeowners.

With refinance originations falling, lenders are also more likely to compensate by providing more access to credit.

As the interest rate hike by the Federal Reserve was predicted by financial experts and industry analysts, it has actually already been built into rates such as mortgages. Although the rising interest rate by the Federal Reserve isn’t the same thing as interest on a mortgage rate, it can put pressure on mortgage rates. Fortunately, for now, many real estate industry experts don’t expect the Fed’s move to impact the current move of mortgage rates. So while the Fed controls short-term interest rates, their decisions can partially impact long-term interest rates for mortgages.  Although rates ticked up in the last month, currently they have settled back down.

A typical, average rate on a 30-year fixed mortgage loan is around 4.2% currently. Though it’s risen since the election of President Trump, rates are still low. During the last big economic growth spurt (think 2001-2007), mortgage rates were between 5% and 7%.

Future Things to Pay Attention to With Rising Interest Rates

rising interest ratesAlthough the Federal Reserve raised short-term interest rates and the affects aren’t immediate, it’s important to pay attention to interest rate hikes because they can affect the future. There’s no reason to rush immediate decisions as interest rates rising on mortgages should be fairly gradual.
Home prices will eventually rise due to factors that cause higher interest rates. These factors include greater demand, higher incomes (thank the rising wages), as well as pressure on prices. Although home prices are near historic lows with low mortgage interest rates accompanying them, it’s expected that house prices will rise in the future. As interest rates rise, your buying power decreases.

If you’re in an adjustable rate loan, it may be time for you to seek a fixed-rate loan. They can help by affording you the peace of mind your payment amount will not change. While there’s no need to jump to make decisions now, it’s wise to keep an ear to the ground for information on rising rates and how they may affect you.

Affordability of homes may take a hit, too. However, all of these foreseeable future issues with affordability, interest rates, and rising prices can be navigated with a trusted real estate professional.

Find Your Real Estate Expert

At Real Estate Experts, we aim to help you navigate the waters of home ownership. As well as the process of buying, renting, and selling properties. If you’re a buyer financing your first home or refinancing your current home, there are opportunities to save money. We can help you learn about adjustable rate mortgages.

Our seasoned team members work together to provide outstanding service to our buyers and sellers. All the while we work to develop a unique partnership to better care for our clients. If you are looking to buy or sell, let one of our top realtors assist you today.  Give us a call at 919-813-6449 or send us an email to  info@realestateexperts.net to find out more about living in the Triangle. Visit realestateexperts.net to view current homes for sale in the area.

How to improve your FICO score

Many people ask, how do I improve my FICO score and what is a FICO score anyway? Two very important questions for those looking to buy a home or who are at least curious about bettering their credit. Improving your FICO score — otherwise known as a credit score —  takes time and effort, just like anything else in this world. In this post, we will explain a little about FICO scores, tips for improving it, and useful tools to help you keep track of your credit score.

What exactly is a FICO Score?

The FICO score is a credit score.  It includes a combination of all the information found in your credit report. That includes information from the 3 major reporting bureaus.

Your FICO score is made up of the following:

Payment History: 35% of your overall FICO

Total Amounts Owed: 30%of your overall FICO

Length of Credit History: 15% of your overall FICO

New Credit: 10% of your overall FICO

Type of Credit in Use: 10% of your overall FICO

To find out what is impacting your FICO score you will want to review your credit reports.

Tips for Improving a FICO Score

There are multiple factors that way on your credit score and some way heavier than others. The tools we are going to share in this post will help you understand what those factors are. Here are a few tips to get you started:

  • Check Your Credit Reports: Fixing errors in your credit report can give you the most immediate score boost.
  • Pay Your Bills on Time: This one has a High Impact and should be taken seriously.
  • Keep Balances Low: They call this your “Utilization Score” and this factor ways heavy as well
  • Build Up Credit History: To create a good credit history, you’ll need to have open lines of credit that you use and pay off responsibly each month.
  • Pay off any Old Debts: If you owe money to the debt collectors, you better believe anyone you try to get a loan from will know about that debt. Take care of these items. 

What tools can help you track your FICO Score?

This information used to be a whole lot harder to get a hold of, but times have changed and the internet has opened the door to so many awesome tools. Many banks and credit cards now offer FICO scores as a Dashboard option within your online account. They run the score every quarter on most bank sites, but this could vary. There is also the universal way of getting your yearly scores, and that is by obtaining a free copy of your credit report from each of the three main credit reporting agencies — Equifax, TransUnion, and Experian — at www.annualcreditreport.com.

Then there are the online sites like Credit Karma which give you free access to your credit scores, reports and monitoring. Once you know where you stand, they help you figure out your next move. Maybe you need to dispute an error on your credit report. They could help with that. Maybe you’re paying too much in interest. They could help with that too. As you can see there are many new options available to monitor your FICO score so that the credit score improvement process can begin.

 

FICO Score Final Thoughts

Now that you know a little more than you did 5 minutes ago, what are you going to do with your newly acquired knowledge? Are you going to use this knowledge to better your odds of getting approved for a credit card? Are you thinking of buying a new car and you need to improve some things first? Maybe you are ready to buy that first home, and you are trying to make sure it’s feasible.  Whatever the case, we hope this information was helpful and ask that you reach out to us with any questions.

If you think you are ready for home ownership, contact Teresa Parker, Loan Officer at Cunningham & Company Mortgage BankersNMLS # 2024 at (919) 697-2598 or Teresap@cunninghammortgage.com. She can help you decide if it makes financial sense, and how to get started.

Cunningham Mortgage & Real Estate Experts are partners.  We help you find the home of your dreams and help you navigate through the home buying process and Cunningham Mortgage expertly helps you through the complicated lending process.

To see Real Estate Experts’ newest listings, click here, and feel free to give us a call anytime at 919-813-6449 or send us an email to  info@realestateexperts.net.

You may also want to read the following related posts:  Home Loan Preapproval vs. Home Loan PrequalificationRenting vs Buying – Which Is Better For You?, or Which Home Loans Are The Best?

Does a 0.5% Rise in Interest Rates Equal a 5% Rise in Price?

SincRising Interest Ratese the election, interest rates are rising and they will have a direct effect on the cost of housing. There is a rule of thumb that a ½% change in an interest rate is approximately equal to a 5% change in price.

As the interest rates go up, it will cost you more to live in the very same home, or to keep the payment the same, you’ll have to buy a lower priced home.

Before rates rise too much, this may be the best time to buy a home whether you’re going to use it for your principal residence or a rental property. Low interest rates and lower prices make housing more affordable.

Affects of interest rates on home prices

The Impact of Rising Interest Rates on Home Ownership

Many home buyers understand that rising home prices can affect their ability to buy.  Many people, however, don’t realize that rising interest rates have an even greater impact.  For the last few years, interest rates have been at historic lows.

According to Erik Martin, a reporter with The Mortgage Reports, “Housing agency Freddie Mac recently predicted that mortgage rates will rise to 4.0% in 2017. That’s more than 50 basis points (0.50%) higher than the current mortgage rate average.”

As illustrated above, as interest rates rise, your buying power decreases.   In this case, to keep your mortgage payment the same, a buyer would need to either put down more money, bring in a co-borrower for help, or look at a different form of financing than a conventional loan, such as an adjustable rate mortgage or an 80/10/10 piggy back loan.

If interest rates rise a full 1%, the typical buyer would need to spend $35,000 less on their home purchase.  This is significant!  In many places, home values are rising too so this amounts to a double whammy for home buyers.

Our recommendation at Real Estate Experts is to watch mortgage rates very closely.  If you are looking to buy, let one of our top realtors help you find the home of your dreams.

What Is A Buyer Ready Loan Program and Should You Do This?

Loan Application Approved Showing Credit Agreement

Searching for a new home is an exciting yet sometimes lengthy endeavor…and when you finally find the home of your dreams, the last thing you’ll want to deal with are unexpected delays or complications with your loan. That’s why Real Estate Experts has partnered with Cunningham & Company Mortgage Bankers, who offer a unique “Buyer Ready Loan Program” to help you avoid many unnecessary headaches related to your loan.

“Our Buyer Ready Program will allow you to start the loan process while you’re shopping for a house,” says Theresa Parker, a preferred lender with Cunningham & Company. “You can actually get full credit approval before you’ve even found the house of your dreams. We will fully credit underwrite you and have you ready, so that when you find your perfect home, your loan is ready as well.” Not to be confused with simply being “prequalified” for a loan, Buyer Ready approval means you will receive mortgage credit approval as you search for your new home. Additionally, it ensures full loan approval within the Due Diligence period and protects your Due Diligence fee and Earnest Money deposit.

Working with you, Cunningham & Company will determine a realistic loan request through Buyer Ready, which will typically lean towards a larger amount to allow some flexibility during your search. “If a client is looking at a home with a sale price of $275,000, I will suggest we bump that up and look at getting approved at a $300,000 sale price, so that if she or he finds the home of their dreams that happens to be $285,000, then we’re still ready to go,” says Theresa.

The Buyer Ready Program can also be indispensable in a competitive offer situation. In the case of two buyers who fall in love with the same house, offering the same amount, it’s a sure bet that the homeowner is going to sell to the client that presents the certificate he received from Buyer Ready stating that he has been fully preapproved. “I’ve seen this happen time and time again,” says Theresa. “I have had clients who have brought equal offers as multiple other buyers on the same property. The reason that they were the ones that were successful in their offer was 100 percent attributed to the Buyer Ready Program.”

Ready to apply? Contact Broker Jodi Bakst or Paul Barrett to begin the search for your dream home and start your loan process while you are house hunting: 919.928.5131, jodi@realestateexperts.net, or paul@realestateexperts.net. Visit them online at www.realestateexperts.net.