5 Simple Graphs Proving This Is NOT Like the Last Time

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Carolina Living Real Estate your Realtor’s For Life

Carolina Living Real Estate| Charlotte Real Estate

With all of the volatility in the stock market and uncertainty about the Coronavirus (COVID-19), some are concerned we may be headed for another housing crash like the one we experienced from 2006-2008. The feeling is understandable. Ali Wolf, Director of Economic Research at the real estate consulting firm Meyers Research, addressed this point in a recent interview:

“With people having PTSD from the last time, they’re still afraid of buying at the wrong time.”

There are many reasons, however, indicating this real estate market is nothing like 2008. Here are five visuals to show the dramatic differences.

1. Mortgage standards are nothing like they were back then.

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During the housing bubble, it was difficult NOT to get a mortgage. Today, it is tough to qualify. The Mortgage Bankers’ Association releases a Mortgage Credit Availability Index which is “a summary measure which indicates the availability of mortgage credit at a point in time.” The higher the index, the easier it is to get a mortgage. As shown below, during the housing bubble, the index skyrocketed. Currently, the index shows how getting a mortgage is even more difficult than it was before the bubble.

2. Prices are not soaring out of control.

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Below is a graph showing annual house appreciation over the past six years, compared to the six years leading up to the height of the housing bubble. Though price appreciation has been quite strong recently, it is nowhere near the rise in prices that preceded the crash.There’s a stark difference between these two periods of time. Normal appreciation is 3.6%, so while current appreciation is higher than the historic norm, it’s certainly not accelerating beyond control as it did in the early 2000s.

3. We don’t have a surplus of homes on the market. We have a shortage.

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The months’ supply of inventory needed to sustain a normal real estate market is approximately six months. Anything more than that is an overabundance and will causes prices to depreciate. Anything less than that is a shortage and will lead to continued appreciation. As the next graph shows, there were too many homes for sale in 2007, and that caused prices to tumble. Today, there’s a shortage of inventory which is causing an acceleration in home values.

4. Houses became too expensive to buy.

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The affordability formula has three components: the price of the home, the wages earned by the purchaser, and the mortgage rate available at the time. Fourteen years ago, prices were high, wages were low, and mortgage rates were over 6%. Today, prices are still high. Wages, however, have increased and the mortgage rate is about 3.5%. That means the average family pays less of their monthly income toward their mortgage payment than they did back then. Here’s a graph showing that difference:

5. People are equity rich, not tapped out.

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In the run-up to the housing bubble, homeowners were using their homes as a personal ATM machine. Many immediately withdrew their equity once it built up, and they learned their lesson in the process. Prices have risen nicely over the last few years, leading to over fifty percent of homes in the country having greater than 50% equity. But owners have not been tapping into it like the last time. Here is a table comparing the equity withdrawal over the last three years compared to 2005, 2006, and 2007. Homeowners have cashed out over $500 billion dollars less than before:During the crash, home values began to fall, and sellers found themselves in a negative equity situation (where the amount of the mortgage they owned was greater than the value of their home). Some decided to walk away from their homes, and that led to a rash of distressed property listings (foreclosures and short sales), which sold at huge discounts, thus lowering the value of other homes in the area. That can’t happen today.

Bottom Line

If you’re concerned we’re making the same mistakes that led to the housing crash, take a look at the charts and graphs above to help alleviate your fears.

Impact of the Coronavirus on the U.S. Housing Market

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Impact of the Coronavirus on the U.S. Housing Market | MyKCM

The Coronavirus (COVID-19) has caused massive global uncertainty, including a U.S. stock market correction no one could have seen coming. While much of the news has been about the effect on various markets, let’s also acknowledge the true impact it continues to have on lives and families around the world.

With all this uncertainty, how do you make powerful and confident decisions in regard to your real estate plans?

The National Association of Realtors (NAR) anticipates:

“At the very least, the coronavirus could cause some people to put home sales on hold.”

While this is an understandable approach, it is important to balance that with how it may end up costing you in the long run. If you’re considering buying or selling a home, it is key to educate yourself so that you can take thoughtful and intentional next steps for your future.

For example, when there’s fear in the world, we see lower mortgage interest rates as investors flee stocks for the safety of U.S. bonds. This connection should be considered when making real estate decisions.

According to the National Association of Home Builders (NAHB):

“The Fed’s action was expected but perhaps not to this degree and timing. And the policy change was consistent with recent declines for interest rates in the bond market. These declines should push mortgage interest rates closer to a low 3% average for the 30-year fixed rate mortgage.”

This is exactly what we’re experiencing right now as mortgage interest rates hover at the lowest levels in the history of the housing market.

Bottom Line

The full impact of the Coronavirus is still not yet known. It is in times like these that working with an informed and educated real estate professional can make all the difference in the world.

2020 New Year’s Resolutions for a Safer and More Secure Home

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Carolina Living Real Estate|Charlotte Real Estate

The start of each year provides an opportunity for setting new goals and resolutions to accomplish. And what better resolution is there than boosting the safety and security of your home? That’s why we’ve put together this list of solutions to consider that can make 2020 the safest year yet for you and your family:

Getting a New Furnace

We’ll start with one factor that most families don’t think about until there’s an obvious problem: the furnace. This year, have a professional come out and look at your furnace to make sure it’s in good condition. If your home’s furnace is old or malfunctioning in some way, it can pose a number of dangers for your household.

The most significant threat is carbon monoxide poisoning, as this invisible, odorless gas can cause serious—potentially fatal—health issues. A bad furnace can also lead to an increase of pathogens, mold, and dust circulating in your home, which can cause breathing problems for people in your household. Furthermore, if a furnace is not working properly, it can become a fire hazard.

HomeAdvisor notes the average cost of installing or replacing a furnace is currently between $2,543 and $6,121. Whether you pay within this range or pay more or less will depend on what type of furnace is installed. For instance, an electric furnace can run you anywhere from $1,700 to $7,000, while a gas furnace typically costs $2,000 to $10,000.

When you’re shopping for different types of furnaces, remember that labor will usually cost $500 to $2,000, depending on the furnace you choose and the scope of the work involved.

Having Your Roof Inspected

The roof is your home’s first line of defense against the elements. As Medium explains, it’s also a critical structural component, and if it’s compromised in any way, it can lead to severe structural problems which can pose safety concerns for you and your family. Call a professional inspector to look your roof over for any issues. If your roof is getting old, has missing or damaged shingles, or displays any other problems, you should have it repaired or replaced appropriately.

Upgrading Your Security System

One of the most effective ways to protect your family and property is to invest in a quality home security system. There are many smart security systems on the market that can reduce the likelihood of your home falling victim to burglary or other property crimes.

Go for a security package that includes features like surveillance cameras, door and window sensors, and a doorbell camera. Many systems can be installed DIY-style, and monitoring runs from free to $59.99 per month, depending on the service and features selected.

Taking Additional Safety Precautions

A lot of maintaining a safe home comes down to the people living in it. To keep your family safe and secure, consider these precautions:

  • Always keep exterior doors and windows locked.
  • Make sure your entry doors are stable, and replace the door or add support if necessary.
  • Trick burglars when no one is home by setting timers to turn your lights on and/or by using a fake TV simulator.
  • Ask a neighbor to pick up your mail and park their car in your driveway when you’re on vacation.
  • Keep your valuables well-hidden from outside observers.
  • Add motion sensors and warning signs to your front yard and backyard.

Nothing is more important than ensuring the safety of your family and property. Get professionals out to look at your furnace and roof, and have them repaired or replaced accordingly. Also, research the many types of home security options on the market, and choose what will work best for your family’s needs. Finally, be sure to follow essential protocols that will help protect your home, both when you’re at home and away.

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Charlotte|Big Demand for Small Homes

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Big Demand for Small Homes | MyKCM

Movies, tv shows, and celebrities often have us dreaming of owning large homes, but the reality for most people is quite different.

Since 2015, the square footage of newly built houses has been shrinking, according to Yahoo Finances. This is not projected to change as we continue into the beginning of the year.

“We expect this downsizing trend to continue in 2020, driven by a confluence of economic and demographic trends.”

Why are smaller homes trending now?

As noted in the article, there are a few main reasons for this demand:

  • “Many of today’s younger, millennial home buyers have expressed a preference for denser, more urban homes that are more walkable to shared amenities.”
  • “Today’s older homeowners are expressing a desire for smaller, less maintenance-heavy and more accessible (read: less stairs) homes as they age and move into newer homes.”

With these two demographic groups surging through the market, the demand for this type of home is rising. If you’re a homeowner with a smaller-scale house, now may be a great time to sell, as the demand for this end of the market is surely on the rise.

Bottom Line

The demand for smaller houses will continue to rise throughout 2020. Let’s get together to discuss what the housing inventory looks like in your neighborhood. It might be time for you to take advantage of this trend!

Expert Insights on the 2020 Housing Market

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Expert Insights on the 2020 Housing Market | MyKCM

When closing out another year, it’s normal to wonder what’s ahead for the housing market. Though there will be future inventory issues, we expect interest rates to stay low and appreciation to continue.

Here’s what three experts are saying we’ll likely see in 2020:

Danielle Hale, Chief Economist at realtor.com

“I think the biggest surprise from the forecast is how long the market is staying in this low inventory environment, especially as Millennials are in a major home-buying phase…sellers will contend with flattening price growth and slowing activity with existing home sales down 1.8%. Nationwide you can look to flat home prices with an increase of less than 1%.”

Mike Fratantoni, Chief Economist at Mortgage Banker Association (MBA)

“Interest rates will, on average, remain lower…These lower rates will in turn support both purchase and refinance origination volume in 2020.”

Skylar Olsen, Director of Economic Research at Zillow

“If current trends hold, then slower means healthier and smaller means more affordable. Yes, we expect a slower market than we’ve become accustomed to the last few years…consumers will continue to absorb available inventory and the market will remain competitive in much of the country.”

As we can see, we’re still going to have a healthy market. It is forecasted to be a more moderate (or normal) market than the last few years, but strong enough for Americans to continue to believe in homeownership and to capitalize on the opportunities that come with low interest rates.

Bottom Line

If you’re wondering what’s happening in our local market, let’s get together today.

The Biggest Issue Facing Housing Next Year

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The Biggest Issue Facing Housing Next Year | MyKCM

This coming year the housing market will be defined by 3 things- inventory, interest rates, and appreciation.  But the biggest issue the housing market will face in 2020 is an inventory shortage.  There aren’t enough homes on the market for buyers, especially on the lower end of the market. This is a topic that has come up frequently within the past several months.

Based on what is forecasted, we know that interest rates are projected to remain low and that appreciation is expected to continue as we move into 2020.  Additionally, the upcoming election will provoke many unique perspectives on the health of the US housing market. The challenge will be understanding what is actually happening and how you can best position yourself if you are thinking of buying or selling your home.

Here are several perspectives to consider on the inventory issue facing housing next year:

According to realtor.com:

“Despite increases in new construction, next year will once again fail to bring a solution to the inventory shortage that has plagued the housing market since 2015. Inventory could reach a historic low as a steady flow of demand, especially for entry level homes, and declining seller sentiment combine to keep a lid on sales transactions.”

Diana Olick at CNBC:

“Inventory has been falling annually for five straight months, after it recovered slightly toward the end of last year, due to a spike in mortgage rates. Rates began falling again by spring of this year. Homebuilders have been increasing production slowly, but it’s not enough to meet the increasingly strong demand.”

George Ratiu, Senior Economist with realtor.com

“As millennials — the largest cohort of buyers in U.S. history — embrace homeownership and take advantage of this year’s unexpectedly low mortgage rates, demand is outstripping supply, causing inventory to vanish. The housing shortage is felt acutely at the entry-level of the market, where most millennials are looking to break into the market for their first home.”

Bottom Line

The most important thing you can do is understand what is happening in your local market. You may not be able to avoid some of the issues brought on by low inventory, but you can be educated and prepared. Let’s connect and discuss the options that make the most sense for you and your family.

Choosing The Right Homeowners Insurance Deductible

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The information included below is provided by CarefulCents.com

The world of insurance is often a confusing one. There are a lot of things to consider, and there is typically a lot of jargon involved that does little to clear things up. However, one thing we can all agree on is that insurance is necessary, and also that it can be expensive.

Beyond that, though, there are still a lot of questions.

One of the most common questions we find people ask about insurance, especially homeowners insurance, deals with the deductible. What is it? How does it work? How does it affect your premium? And, perhaps most importantly, when you’re choosing a policy, which deductible should you go for?

Answering all these questions will help you not only make a smart decision when it comes time to selecting a deductible, but it will also help you better understand homeowners insurance in general, which will make you a smarter shopper who is more capable of finding the best deal.

Read the rest of the article to learn everything you need to know about choosing your deductible.

As Always, contact Carolina Living Real Estate for comprehensive real estate advice and assistance. We are professional, experienced, patient and knowledgeable.

Home Improvement: Convert Your Garage Into an Awesome Home Office

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If you are in need of a home office space, consider a garage conversion. A typical garage is a great size for a nice home office where you can have some peace to get some work done. So, follow these tips to convert your garage to an incredible home office.

What If You Don’t Have a Garage?

If you don’t have a garage (or your garage is just too full), but you have space on your property for a small structure, you should consider erecting a building. When building a structure to accommodate your dream office, you can choose from a variety of different materials, the most popular choices being wood and steel. Wood is definitely beautiful, and it’s also an energy-efficient natural insulator. Wood also absorbs sound rather than amplifying it, so it can minimize echo in office spaces. On the other hand, rain and snow can cause wood to warp and rot. Also, termites, carpenter ants, and other insects can damage wood frames.

Steel is extremely strong and can withstand earthquakes, strong winds, and torrential rains. When wet, it doesn’t warp, expand, or attract fungus. Steel is also not flammable, and it’s resistant to insects. Steel buildings are typically faster and easier to erect than wood structures because the steel parts are pre-cut and ready to assemble.

Whether you are using your existing garage space or erecting a new building, these tips will help you create a beautiful home office space.

Pick Your Flooring

Your garage probably has a concrete floor, and you can just clean it, polish it, and be done with it — or you can go a completely different route. Engineered wood, vinyl flooring, carpeting, and ceramic tile are all suitable options for your home office. If you are upgrading to one of these choices, you may need to install a subfloor before laying down your new flooring.

Insulate and Drywall

If the walls of your space aren’t finished, you’ll want to add insulation and drywall. This is a great DIY project that most anyone who is handy can do. You’ll need to fill in any cracks and gaps with expanding foam, add the fiberglass insulation, and then screw and glue the drywall. Dumpsters.com offers detailed instructions on how to insulate your garage.

Add Electrical Outlets and Lighting

Your garage may not be equipped with enough outlets for your home office. If you need more outlets, call in the pros; electricity is not something you want to mess around with if you don’t really know what you are doing. An electrician can add additional overhead lighting to the space as well as a circuit to your breaker panel if necessary.

Put in Heating and Cooling

The pricey option would be to extend your existing HVAC system to an attached garage space or add a new separate system to your detached building. The more reasonable choice would simply be to use a space heater in the winter and portable air conditioner in the summer. Fortunately, you can find affordable options at your home improvement store.

Get WiFi

Your office definitely needs reliable internet service. Your home WiFi might work well if you are converting an attached garage, but you may need to move the router closer to the garage. However, if your home WiFi is too weak to reach your new office space, you can buy a stronger router, a WiFi network extender, or a powerline network adapter to get a better signal.

Converting a garage to an office space doesn’t have to be time-consuming or expensive. And now for the fun part: decorating. Check local furniture stores, estate sales, and online shops to find furniture that fits your needs and your design style. From modern stand-up desks to classic, stately pieces, you are sure to find something you love. Add a cozy couch, fun wall décor, and other accent furniture to make the space your own.

Photo via Unsplash

5 Tips for Starting Your Charlotte Area Home Search

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5 Tips for Starting Your Home Search | MyKCM

In today’s market, low inventory dominates the conversation in many areas of the country. It can often be frustrating to be a first-time homebuyer if you aren’t prepared. Here are five tips from realtor.com’s article, “How to Find Your Dream Home—Without Losing Your Mind.”

1. Get Pre-Approved for a Mortgage Before You Start Your Search

One way to show you’re serious about buying your dream home is to get pre-qualified or pre-approved for a mortgage. Even if you’re in a market that is not as competitive, understanding your budget will give you the confidence of knowing whether or not your dream home is within your reach. This will help you avoid the disappointment of falling in love with a home well outside your price range.

2. Know the Difference Between Your ‘Must-Haves’ and ‘Would-Like-To-Haves’

Do you really need that farmhouse sink in the kitchen to be happy with your home choice? Would a two-car garage be a convenience or a necessity? Before you start your search, list all the features of a home you would like. Qualify them as ‘must-haves’, ‘should-haves’, or ‘absolute-wish list’ items. This will help you stay focused on what’s most important.

3. Research and Choose a Neighborhood Where You Want to Live

Every neighborhood has unique charm. Before you commit to a home based solely on the house itself, take a test-drive of the area. Make sure it meets your needs for “amenities, commute, school district, etc. and then spend a weekend exploring before you commit.”

4. Pick a House Style You Love and Stick to It

Evaluate your family’s needs and settle on a style of home that will best serve those needs. Just because you’ve narrowed your search to a zip code doesn’t mean you need to tour every listing in that vicinity. An example from the article says, “if you have several younger kids and don’t want your bedroom on a different level, steer clear of Cape Cod–style homes, which typically feature two or more bedrooms on the upper level and the master on the main.”

5. Document Your Home Visits

Once you start touring homes, the features of each individual home will start to blur together. The article suggests keeping your camera handy and making notes on the listing sheet to document what you love and don’t love about each property you visit.

Bottom Line

In a high-paced, competitive environment, any advantage you can give yourself will help you on your path to buying your dream home.

How To Get Comfortable In A New City

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Moving Homes: How to Get Comfortable in a New City

Moving is sometimes a necessary part of life. While it can be exciting and adventurous, it can also be stressful to develop a new routine in an unfamiliar city. To help avoid the added anxiety during this process, make sure you go into it prepared.

Visit Before the Move

The last thing you want is to move house, need something badly that was forgotten, and not know where to buy a replacement. With that in mind, Trulia suggests trying to visit your new place before you move to get a feel for its ins and outs, as well as make note of local resources. For added support, look to build a network there so you can hit the ground running. If possible, ask friends, family, and even coworkers if they know anyone who would like to meet up with you. Should they have a few contacts you can use, you can chat with them before you deal with the chaos of moving, and you’ll have someone to call if you need advice.

Prep Your Home for Arrival

Of course, the best time to do any work on your property is while it’s empty. So, if your house needs remodeling, attempt to get everything done before it’s filled with your possessions. Then, it’s a matter of prioritizing behind-the-scenes work over the aesthetic tasks of new floors, counters, or a new coat of paint. If you need the home rewired, for example, it could be an extensive project since it involves upgrading the main service panel, installing circuits for each appliance, and adding in electrical outlets.

Get Into the Neighborhood

Getting used to your new area is especially important if you have children and pets. To help them adjust to a fresh routine and atmosphere, try taking them out for walks to learn the neighborhood. If you have kids, they might be interested in meeting other children, so keep an eye out for any community classes, groups, or the local Boy Scouts and Girl Scouts. Similarly, your pets will need plenty of attention and distraction, and dogs might benefit from regular visits to the park. Still, indoor pets may simply need you close to feel reassured, so try to take a few days off of work to get them used to their surroundings.

Decorate for Comfort

One way to get comfortable quickly in an unfamiliar environment is to decorate. To get started, you could focus on giving each room a consistent color scheme. As you decorate and add personal touches to make your property feel like home, try to keep practicality in mind. If you need extra storage, add aesthetic baskets here and there, or place hooks on doors. For added comfort, you could bring out art or decorative pieces that remind you of home, and place them where they can be seen. Even if you end up moving them later, viewing them will give you a reassuring warmth as you go about your day.

Minimize Clutter Before It Starts

Having a chaotic environment breeds stress, and unpacking is going to be just that—chaotic. So, to help minimize any issues developing, take some time to plan out where things will go, particularly items that create clutter. By knowing where items belong, you prevent pile-ups from happening. For instance, you might want to invest in pieces to help you store items, such as a file for loose papers or extra shelving in the kitchen to sort plates and plasticware. It may seem like additional effort, but it can be worth it to ensure your home is a pleasant environment.

Turn to These Additional Resources

The following resources are either required by law or can help you to further familiarize yourself with your new city:

  • Updated your auto insurance. Your zip code can determine the cost of your premiums. So if you live in a highly-populated area, know the rates can be higher. You can reduce the cost of auto insurance by bundling your policies and shopping around.
  • Look for a new dentist in your area.
  • Find a parent-approved daycare center for your kids.
  • Make sure you find a good veterinarian.
  • Stick to your fitness goals by applying for a local gym membership.

Just because you changed houses doesn’t mean you can’t feel at home. With the right preparation, as well as staying active in your new community, you can ease your transition. It will take work, but all worthwhile things do.

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