My Blog

The Inspection Period: What is it?

9/4/2018

When the day comes to make an offer on a new home there's a lot to consider. Fortunately the current quality and functionality of the home are not one of the issues at hand on that day. All there is  to consider on the day an offer is made is if the house looks like a good fit! The week and a half after an offer is accepted is the time to determine if the home meets all standards both mechanically and physically. This time is called the Inspection Period.

Something many potential homebuyers may not realize is that after an offer is made on a home there's ample time to inspect the home and determine if the initial offer still seems fair. This determination is the buyers to make based on any and all inspections done. The type of inspections is totally up to the buyer and there's all manner of experts that can evaluate any aspect of a home. If an inspection report is not satisfactory then a buyer may cancel, or re-negotiate with the seller without risking any earnest money.

Despite the fact that buying a home is "at your own risk" there are many resources out there so that every buyer can be armed with knowledge and experience when buying a home.

Great News about the Home$tart Program!

8/29/2018

The Missouri Housing Development Commission had run out of Home$tart Grant funds at the beginning of August, but we just found out that my main mortgage originator's bank was allocated an additional $100,000 in funds!  So we can help out 20 more borrowers with a $5000 grant. They get a $5000 grant that is forgiven in 5 years and they can use it with any loan program so they can get a much better rate than MHDC/KHAP most of the time.  It can also be used towards down payment or closing costs, it’s just a flat grant.  So for instance if someone is buying a $120,000 home on FHA it would cover their 3.5% down ($4200) and still leave $800 towards closing costs.   It is hands down the best program out there for folks who need some help with the down payment and are eligible income wise. Get in touch with me if you want to know more!

 

http://www.mhdc.com/homes/index.htm

 

The Missouri Housing Development Commission

7/24/2018

There are lots of assistance options for Missourians looking to purchase their first home. The Missouri Housing Development Commission(MHDC) alone offers multiple programs. Non-profit corporations are another good place to seek help when looking to buy for the first time. Today I'm going to look at the MHDCs offerings.

The First Place Homebuyer Program is a great place to begin your search for assistance. It offers qualifying first time buyers the opportunity to receive a forgivable loan for closing costs and down payment. The loan will be completely forgiven if the borrower lives in the house for ten years.

Mortgage Credit Certificates are also available from the MHDC to first time home owners who are living in their home. These certificates allow a portion of the mortgage interest to be redeemed in the form of a non-refundable tax credit. 

The Next Step Program is another option for Missourians to work towards the goal of owning a home. Borrowers who do not meet the requirements for the First Place Program may be able to receive assistance when purchasing in "Opportunity Areas" defined by census tracts. Reduced interest rates and help meeting the needs for down payment are some of the program's benefits.

Veterans also qualify for the First Place Program even if they already own a home.

The Home Repair Opportunity Program, or HeRO for short, gives low and moderate income homeowners in non-metropolitan areas assistance for home maintenance and repair projects. It is a great opportunity to get repairs completed that a homeowner may not have the funds to complete in a timely manner.

Missouri really offers a wide range of opportunities for assistance to first time homebuyers. If you are considering buying your first home in the future I encourage you to visit www.MHDC.com and explore the options. Then get in touch with any questions.

First-Time Homebuyer Savings Account Act Signed into Law

7/17/2018

There's great news out of Jefferson City for all prospective first-time home buyers in Missouri. On January 1st 2019 a new tool will be available to save money for down payments on a first home. It will provide a financially advantageous savings account to better prepare buyers to enter the real estate market for the first time.  The rules for implementing this program are currently being drafted now that the bill creating it was signed by the governor on July 13th, 2018. Who says Friday the 13th is unlucky?

 

I'm currently monitoring any new news about the implementation, rules, benefits and risks of this program and will keep my tribe updated. I know there's a lot of renters out there that could use something like this. Don’t keep me a secret if you know of anyone who may need this or any other first time home buyer programs. There's a plethora of option out there to help get into your first home sooner than you would expect.

Lumber Prices Hit All Time High

7/10/2018

 

The price of lumber has risen close to 10% this year hitting an all time high. With new tariffs on Canadian wood products now pressuring the market prices may go even higher. Home construction prices have also risen as builders feel the squeeze in others materials such as drywall and concrete. Home improvement projects will also be impacted by these rising commodity prices. Trim, flooring, framing and roofing materials have all seen a spike in price over the last year.

 

So what can a prospective homeowner or homebuilder do to mitigate the rising costs? Ask about cheaper wood if you have cedar wood or other woods that have seen larger than average spikes in price. Wood alternatives, such as laminate flooring, are also an option. You can also downsize your project. For example, having a smaller square foot deck than you would like may not be desirable it's one way to go ahead and get a project done with a limited budget. For home improvement projects financing the difference in cost is another option. Home prices have been rising recently too. If you have equity it may be an option to cash some of it out to compensate for rising materials costs.

 

As the rise in lumber prices pushes up the price of newly constructed homes more buyers may look more to the preexisting market. Simply not shopping for a house made of new lumber is another way to avoid the cost of new lumber. Although if materials prices continue to rise the cost of all homes will eventually follow suit.

 

Pending Home Sales Index Explained

7/3/2018

Many consumers are unaware of the metrics available to measure real estate market activity. That's understandable and is the reason you may want to get in touch with a good real estate consultant ;). However today I wanted to take a quick look at a single number that's easy to understand. If you want to take the first step into understanding the market at a deeper level the Pending Home Sales Index (PHS) is a good place to start. 

 

The PHS measures housing contract activity. It is based on signed real estate contracts on existing homes, including condos and co-ops. Due to a typical 30-60 day gap between contract signing and closing of the sale the PHS is a forward looking market indicator. The baseline for the index is 100. A reading above 100 tends to indicate a historically higher level of home sales activity. The opposite is true for a number lower than 100. 

 

The current national index for May 2018 sits at 105.9, the market is moving fast. However, this number is a 2.2% reduction compared to this time last year. So we may be seeing the beginnings of a slowdown. The Midwest region has seen a 2.5% slowdown since last year to a reading of 101.4. So a smaller number of people are signing real estate sale contracts, but still more contracts than the historical average. 

 

It appears that the Kansas City real estate market is cooling off after a feverish pace of contract activity in the first half of the year. For buyers it means possibly a bit more time to consider the listings available. For sellers it may mean expecting a bit more time on the market before an acceptable offer emerges. 

The Challenges of Downsizing

6/26/2018

I recently heard a story about someone selling a large home and moving into a smaller one. As they were cleaning out some of the things that would not fit into the new house they decided to call an estate auction company to take a look at some of their belongings. It turned out some of the items in the pile to be donated were antiques worth quite a bit. In addition to selling a few collectibles the couple was able to pay for a large down payment on their new property with just items from the old property.

Many are considering moving into smaller homes, especially millennials and the baby boomer generation. The allure of less space to maintain is a powerful motivator to move. However transitioning into a small home can bring many challenges. One of them being what to do with the things that won't fit in the new, smaller, home. Homeowners or estate administrators working on behalf of a family member or friend will want to get as much for their possessions as possible. Return on investment of large items like furniture or electronics can really ad up. Here's a quick list of things to consider when downsizing.

Take inventory first. Go around the house and take a bunch of pictures if needed. Then you can spread them all out and start to make spreadsheets or lists of what you have to deal with. Give things estimated values. Mark things with emotional value that will not be sold. Sometimes inventory can be a tough emotional process if you are going through the home of a family member. Keep in mind inventory is necessary for estate tax purposes when dealing with an inherited estate. No matter the reason for downsizing staying organized is very important.

Consider selling the furniture with the house. If the furniture is in good repair and in style it may be best to just remove all the personal items and sell the home with everything that's left. If the location is predominately second homes or vacation properties it may even be a desirable feature. Some buyers just want a totally move in ready home.

Talk to a reputable real estate sales consultant, or Realtor. They will know what auction companies are the best to assess you homes contents. Some auction houses specialize in liquidating the contents of a home. You may think that some of the things in a home are not valuable but it can be surprising. Antiques and collectibles with real demand can be hiding in plain sight if you are unfamiliar with the estate.

Just be sure to retain as much value as possible.

Interest Rates are Moving Up

6/14/2018

 

We knew it was coming. The FED raised interest rates Wednesday .25 percent increasing the benchmark rate from 1.75 to 2 percent. It also signaled that two more increases were likely this year, a faster pace of rate hikes than previously predicted. This rise in the benchmark rate is likely to signal a rise in mortgage rates.

 

So what are the implications for the the Kansas City real estate market?

 

Home buyers are already challenged with lower inventory relative to the recent past and increased mortgage application rates bringing more buyers into the market. I anticipate this will cause mortgage applications to rise further in the short term as more buyers fear their time may be running out to get lower rates. As more buyers are prompted to enter the market before it's too late supply could be reduced further. However rising rates also begin to price borrowers out of the market reducing demand.

 

Homeowners looking to put their properties on the market will need to be aware that less buyers will actually be able to afford their home as interest rates rise. This increases the risk of unqualified buyers making an offer such as a buyer who was pre-qualified when rates were lower but now can no longer afford the home due to increased borrowing costs. In a tight real estate market such as Kansas City multiple offers are not uncommon and rejecting the poor offers can sometimes be just as important as taking the best one.

 

Generally rising borrowing costs tend to slow down markets. The Kansas City homes market is certainly moving fast in 2018. The average time a home is on the market is down 13.5% compared to last year. Rising rates may begin to give buyers more time to consider their offers.

 

As always knowledge is power and advantage in a complicated market. If you or anyone you know needs any questions answered don't hesitate to give me a call or email.

The Kansas City Homes Market

6/1/2018

 

Hello, and thanks for reading the first blog post here at KC Market Solutions. What you will find here are tips on home maintainence, observations on the real estate market in Kansas City Missouri, current events in Kansas City and much more. Most of the time you are going to be reading about real estate, but you never know....

I figured I would start off this series with a general look at the housing market here in KC and my thoughts on the current market.

As anyone who has been watching the housing market knows real estate is moving fast. April 2018 saw the average durration on the market hit only 8 days for pre-existing homes. That represents a 16.3% decline compared to April 2017. Inventory also shrunk compared to last year by 23.8%. Currenlty there are two months supply of homes on the market in Kansas City. The average selling price of a home is also up 8.2% compared to last year. Higher prices, lower inventory and less time on the market are all making this a very favorable market for sellers.

Buyers acxtually have some good news too though. Interest reates have not seen the upward trajectory many have predicted. Rates are up compared to a year ago however they have retreated from the April highs. The 30 year fixed is sitting at approximatly 4.56% as of May 31st2018. That's a 10 basis point drop from last month. Despite the fact that rates have ticked higher in the last 12 months mortgage applications are higher compared to last year with more consumers seeking financing to buy. This increase may have contributed to the lack of inventory noted above.

Overall the real estate market in KC is healthy and active. Buyers, and particularly their agents, may have to work a little harder to get the right home under contract. It's going to be a great Summer!

 

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