Category Archives: Market Conditions

Inflation and Expectations

Consumers’ Inflation and Expectations Rise

Consumers’ Inflation and Expectations Rise
RISMEDIA, Tuesday, September 13, 2016— The August 2016 Survey of Consumer Expectations shows an increase in both short-term and medium-term inflation expectations. In particular, the median year-ahead inflation expectations reached its highest level of the year. Median expected household income growth also increased (for the third month in a row) to its highest level since May of 2015. Labor market expectations were mixed: Expectations about finding a job and earnings growth both improved, but the perceived probability of losing a job and expectations about the unemployment rate both increased slightly.

Median year-ahead inflation expectations rebounded from 2.5 percent in July to 2.8 percent in August, the highest measure of the year. Median inflation expectations at the three-year ahead horizon also increased, from 2.5 percent in July to 2.7 percent in August. This increase in both time-horizons was consistent across age, education and income groups.

Median one-year home price expectations remained steady at 3.3 percent. Median year-ahead gasoline price change expectations declined from 4.9 percent in July to 4.6 percent in August, their lowest level since January of this year. Expectations for changes in the price of food and rent both increased by 0.2 percentage points, to 4.8 percent and 5.7 percent respectively. The median expected change in the cost of medical care increased slightly by 0.1 percentage point to 9.3 percent. Expectations about changes in the price of a college education rose from 6.8 percent in July to 7.3 percent in August, the highest level since November of 2015.

Median year-ahead expected earnings growth rebounded in August, increasing to 2.4 percent from 2.2 percent in July. The increase was driven mostly by higher income and middle-aged (40 to 60) respondents. Median uncertainty about year-ahead earnings growth increased slightly, to a level not seen since January 2015.

The mean perceived probability of losing one’s job in the next 12 months increased slightly from 15.0 percent in July to 15.2 percent in August. The mean probability of leaving one’s job voluntarily in the next 12 months rose from 21.0 percent to 23.4 percent. Both increases were led by respondents older than 40 years, but the increase in leaving one’s job voluntarily was especially notable among lower-income respondents.

The mean perceived probability of finding a job (if one’s current job were lost) increased 0.2 percentage points from last month to 53.5 percent, approaching the average value observed over the past year.

The mean perceived probability that the unemployment rate will be higher one year from now increased from 37.5 percent to 39.5 percent, its highest value since March 2014.

Median expected household income growth continued to increase for the third month in a row, rising to 2.9 percent, up from 2.8 percent in July and 2.4 percent in May. This is the highest level recorded since May of 2015. The increase was driven by younger (under 40) and lower income and education respondents.

Median household spending growth expectations decreased to 3.3 percent from 3.8 percent in July, breaking the upward movement observed since March 2016. This decline was driven by respondents older than 40 and those with lower income.

Respondents were slightly more pessimistic about perceived (over the past 12 months) and expected (over the coming 12 months) credit availability. The average perceived probability of missing a minimum debt payment over the next three months decreased slightly to 13.9 percent from 14.1 percent in July, but remaining well above average 2015 and 2016 levels.

The mean perceived probability of a higher average year-ahead interest rate on savings accounts decreased 0.1 percentage points in August to 28.7 percent, continuing the downward trend that started in December 2015.

Respondents felt worse about their current household financial situation in August compared to July, but they were slightly more optimistic about their year-ahead prospects. The proportion of respondents who feel to be financially worse off (compared to year ago) increased by 1.6 percentage points to 23.9 percent, while the proportion of respondents who expect to be financially better off in a year (compared to today) increased by 1.3 percentage points to 37.4 percent.

For more information, visit www.newyorkfed.org.

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US Households’ Income Change

US households’ income shows biggest jump since recession, no change in income inequality

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“(Bloomberg) – Fresh yearly data from the U.S. Census Bureau showed median, inflation-adjusted household income rose 5.2 percent to $56,516 in 2015, the highest level since $57,423 in 2007, when the recession began. Gains were spread across the income spectrum and by race, while women’s earnings inched closer to men’s.”
Positive changes in projected household incomes, and increases in consumer confidence will influence the Federal Reserve when they meet again to consider increases in the interest rate.
The Presidential election will likely influence when interest rates change, but rest assured, change is coming. This is important to those of us in real estate because rate changes influence a buyer’s affordability. One mortgage rate point is equivalent to approximately 10% change in affordability or purchasing power. This impacts both buyers and sellers.
Please contact us if we can assist you in understanding market variations and current housing trends.
Yours truly, Ann & John

Have things really changed since I last bought or sold a home

Dice buy sell

The answer is, most likely, YES.  The average time a home owner stays in their current home ranges from 5-9 years according to the National Association of Realtors (up from 3-5 years during the years prior to 2008). If you have not been in the housing market recently you will experience notable differences with this process. Your Realtor can provide a complete guide to the process of buying or selling a home today.

You will also find market conditions are continually changing. There are certain areas where transactions are fast and furious. Yet there are other locations where housing seems to move more slowly, still catching up with the most recent marketplace nuances, or competing with new construction increases. The good news is that we are experiencing positive changes that will continue to support strong home sales.

Don’t forget, it is still important to have the property looking as good as you can in order to generate interest. Most buyers, not investors, are looking for a turn-key product; a home that doesn’t require a lot of work before of after the move. It is important to remain compelling with your price. Know the value of your house and price it near where you think it is going to sell. Buyers should feel like they will be missing an opportunity if they fail to act.

As always, to better understand changes in the real estate market, start with your most trusted advisor. Or call us for more detailed information regarding your personal housing needs.

News from our Prosperity Home Mortgage Lender

Let’s Review Your Mortgage for Savings Opportunities;

This is a follow up to the email I sent you last week.  As you may or may not  know, mortgage rates have yet again, hit a new low.   Based upon the terms of the 30 Year Jumbo loan we completed in February of 2015, this may be a perfect time to review your loan program to determine if we can save you money. Even if you have already refinanced or closed on a new loan recently, you still may be able to benefit.  I’d be happy to provide a complimentary review at your convenience.

How much could you save?  The table below shows the principal and interest payments on your loan compared to other loan products on February 9, 2016. Rates fluctuate every day, so these options may only be available for a short time.

 

Loan Program Rate APR Monthly
Payment
Monthly
Savings
Your Current 30 Year Jumbo Loan 3.875% $ 2,144
Your loan at our
30 Year Jumbo rate
4.000% 4.018% $ 2,177 $ -33
Your loan at our
5&5 Advantage ARM rate
N/A $ 0 $ 0

By refinancing your current loan, total finance charges may be higher over the life of the loan.
These mortgage rates apply only in certain conditions. Your loan’s final rate will depend on the specific characteristics of the loan transaction and your credit profile up to the time of closing. The displayed APRs include total points and additional prepaid finance charges but do not include other closing costs. On adjustable rate loans, rates are subject to increase over the life of the loan. Rates available as of date of printing and subject to change without notice. ** Total Est. Initial Housing Payment amounts includes principal and interest for both Primary and Secondary Financing as well as tax, insurance, homeowner dues. Payment amounts include mortgage insurance if the down payment is less than 20% or the loan product is FHA. Down payment amount excludes any secondary financing.

The scenarios shown above illustrate just a few of the many loan options you have at Prosperity Home Mortgage, LLC. These options might allow you to consolidate loans, make home improvements or simply cash out on some of the equity in your home.

Prosperity Home Mortgage, LLC appreciates your business and I thank you for placing your trust in me. Please contact me at 804-855-4590 or alicia.obrien@phmloans.com to review your loan for savings opportunities or if you have any questions about your mortgage.

Sincerely,

Alicia O’Brien
Senior Mortgage Consultant
Prosperity Home Mortgage, LLC
NMLSR ID # 260889
Company NMLS ID #75164
https://www.aliciaobrien.phmloans.com

 

What’s the buzz about the TILA-RESPA Integrated Disclosure rule?

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It has begun! In case you haven’t heard, the October third deadline for compliance with the TILA-RESPA (The Truth in Lending Act (TILA) of 1968; The Real Estate Settlement Procedures Act (RESPA), a consumer protection statute first passed in 1974) Integrated Disclosure Rule implementation is underway. The Consumers Financial Protection Bureau (CFPB) has initiated mortgage initiatives designed to help you, the consumer of home ownership, understand your loan options better, give you time to review loan documents, and in essence protect you from costly surprises at the closing table.

Basically, the mortgage disclosure rule replaces four disclosure forms with two new ones; the Loan Estimate and the Closing Disclosure. These disclosures are forms that you get when you work with a lender to get a mortgage. The new forms are designed to be easier to read, and to understand the terms of your mortgage before accepting them. The rule also requires that you get three business days to review your Closing Disclosure and ask questions before you close on a mortgage, or delays in the closing process will be triggered.

So, what does this mean for you the consumer? Perhaps nothing more than some additional time needed when securing certain loans in order to purchase a home – at least for the next several months while the process becomes the new routine. With tighter lending guidelines and new disclosures, it will be imperative for you to quickly meet the deadlines for those documents your financial institution requires to process a loan. Certain circumstance may trigger delays, so it is imperative to be organized and provided documentation early. It will also likely mean you will need a more communicative and streamline approach in selecting your real estate “team” – your real estate professional, your lender, and your closing attorney or settlement company – when purchasing a home.

As always, to better understand these most recent changes to your home-buying process, start with your most trusted real estate professional, or call us for more detailed information.

Excerpts From an Interview with Susan Carvell with Richmond Times Dispatch

Tracking Trends

The real estate market is ever-changing — keeping buyers, sellers and Realtors busy trying to keep up with the latest trends and forecasts. Since the start of a new season is always a good time to reflect on what’s happening in the market, we recently asked Ann and John VanderSyde, a husband and wife team with Virginia Properties, a Long & Foster Company, to share their thoughts  on what’s happening in Richmond.

Ann and John
Ann & John

As a team specializing in residential real estate, are you noticing any specific trends right now?

John: There are some specific areas – The Fan, the Museum District, the Near West End, Bellevue, and neighborhoods close-in – where we’re seeing an increase in quick contracts and multiple offers.

Ann: We’ve been in situations where sellers have had 5-10 contracts to look at when they’re making their decision.

Is this something you’ve just begun seeing?

John: Just recently, since spring, I’d say.

Ann: What’s happening is that there’s not a lot of inventory in these areas and there are a lot of buyers who have been waiting and wanting to buy. So there is just far more demand than there is supply at the moment. I think that in those particular areas, the trend in general is that many people are looking for walkable neighborhoods. People don’t want to have to get in their car to get groceries, or go get coffee or walk to a destination. They want the lifestyle that comes along with being relatively close to where they live their lives.

John: The combination of an urban atmosphere and walkability is very appealing to a younger crowd, or for people who are looking to down-size their home and want to be closer into town for convenience.

Ann: And we’ve had a lot of relocation work, people coming in from out of town. Typically they’re not buying their first house and they may be coming in with one of the larger companies. They’re also looking for walkability. They really want that urban feel.

So would you say that walkability is a new trend?

Ann: I think it’s been growing, especially since the economy started improving. During the real estate bubble people were looking for bigger homes – they wanted space, they were gravitating to that. I think as a result of where the economy has been, people are now a little more conservative. They’d rather be closer to where they live and work without adding in a commute.

John: I don’t think it’s a new trend; I think it’s a more pronounced trend. It’s happening with more frequency.

Ann: I think it goes along with people being a little more careful with their money. They’d rather have a house closer-in, even if it’s a little smaller, one that they can make nicer improvements on a smaller scale.

John: And the interesting thing I picked up on is that the prices of the houses in these areas aren’t skyrocketing. The prices are improving, but in order to generate the interest that develops into multiple offers, sellers are still pricing their homes compellingly and letting the purchaser chase the price and bid the house up.

Ann: It’s exciting to see the activity picking up. A lot of sellers feel more confident about getting their house sold now. So I think there are people putting their house on the market now that for the last couple years have really held off. They just didn’t feel like it was in their best interest. The inventory has not caught up with the demand but I think sellers are gaining some confidence.

Several years ago people were looking for luxury amenities. Has that changed at all? Have people scaled back a little on what they’re looking for in the house itself?

John: Well there are people out there who will compromise a little bit if they’re looking to do some work themselves; in general, purchasers still are looking for a “diamond.”

Ann: Many are looking for what I’d call a “jewel box,” they don’t need all of the expansive space but they still want the home to be updated.

John: Most people are not looking for a project, but they’re willing to compromise on space in order to get a little nicer finish.

Do you find that the houses in the hot selling areas fall into that category?

John: In many instances, yes. We’re seeing homes sell that wouldn’t have sold a year or two ago because they needed work – the sellers couldn’t get the price then because they knew people were not compromising on condition. Now I think there are people out there who are willing to do some work in order to get into a location that they want.

Ann: I think that the prices are going up and some people can’t afford to buy in an area they want to be in – with a finished house that might be their ideal. So they’ll purchase a house and take on the projects.

John: Although buyers will still not jump into just anything. It’s got to be the right house.

Is there a trend in amenities right now?

John: We just had an open house in Chesterfield and I would say that 90 percent of the people who came thorough were drawn to it because it had a basement.

Ann: I think that people still notice the kitchen. People still want a nice master suite and they want it to be nicely done. People are split on whether they want just the tub or the shower, but a nice master suite is a plus. Especially in some of the smaller homes in the Fan and the Museum District, where oftentimes the home only has one bathroom upstairs – houses with two bathrooms are huge. It doesn’t mean that people won’t take a one-bath house.  But we always tell people that having two baths, where one is part of a suite, is a good investment. It will make their house much easier to sell.

I also think people like to entertain and they don’t like to be limited. They like having an additional room, somewhere where people can gather – an area that can be a family room and a living room.

John: If there is a basement, especially with enough ceiling height that it could be finished, they’re looking for that as additional family space – potentially easily expandable living space. That’s another little trend I think.

Is there any staging advice you’re giving now that people are responding to?

John: The first and foremost thing that we cannot emphasize enough is paint. If people would just spend a couple hundred to a thousand dollars in paint – it pays for itself.

Home Couple in our-new-homeAnn: We always use the expression, $30 in the can, $3,000 on the walls. It does a tremendous amount to make a house feel fresh and clean and gives the buyer the feeling that they don’t have to touch every room.

John: And it doesn’t have to be white on white.

Ann: I recommend soft neutrals, earthtones are nice, and people particularly like grey tones now. The other big staging emphasis is decluttering. Pack up what you’re going to be moving anyway; go ahead and put things in boxes and get a POD or storage unit. Houses show better with something as opposed to a vacant house.

John: Usually we can work with the furniture that they have for the staging. We may ask a seller to take out some things or we’ll just rearrange what they have. These are pretty simple things that don’t cost a lot.

Ann: We try to do as much preparation as we can up front. As a seller you get one chance with the buyer. If they’re not impressed or emotionally engaged with your house the first time, they won’t be back. So you really want to make the best first impression. It’s important to make the entry attractive. Give it some curb appeal– clean up the yard, the beds, put down mulch. Add simple things like a new doormat or a new mailbox. We give our sellers a checklist so that they can at least hit the most important things.

 

Anything else you’d like to note for our readers?

Ann: A lot of buyers will get started on their own just looking around and getting familiar with different areas through what’s online.  But I feel  that when someone gets serious about purchasing a home that they find a buyer’s agent and they get representation – somebody’s who’s looking out for their best interests. The buying process had gotten so much more complicated and there are new changes coming out in August with closing statements, and new requirements that the attorneys and the lenders will have to follow; it’s only going to get more complicated. It’s to the consumers’ benefit to have somebody representing their interests and guiding them through the process. That’s really my advice on both sides, because even as a seller,  with the market getting better and houses selling – having someone who’s going to market your house and get more potential buyers in there is going to benefit you in the long run.

I would think that advice would be especially important for first-time buyers.

Ann: Absolutely. They’re really focused on what they can get with for money. They start out with the hope of being in a particular area, but then when they look there and they realize what’s available they might compromise – or decide they might go to a different area to get more of what they’re looking for. We try to keep that wide open for them so that they really do have options. Richmond has so many wonderful neighborhoods – there are so many good options.

John: There’s definitely something for everybody. You can find generally what you’re looking for in a couple of different locations.

 

Competitive Markets and Multiple Offers are on the Rise!

News Paper - RealEstate

Have you heard about, or better yet, been faced with stiff competition in certain housing markets around Richmond, VA that are leading to multiple bid situations? Some areas seem to barely receive a notice, while others are overcome with such frenzied activity that it is leading to numerous offers and extremely competitive contracts that go well above asking price. Certain locations are so thin with little or no inventory that when a property hits the market, buyers begin to line up, quite literally, in the street.

 

Buyer-anxiety and the pace of movement around these homes is so extreme that it seems reminiscent of housing boom conditions from just a few short years ago. It’s almost impossible to believe situations like this can exist today – with one exception – it is not across the board in all locations! In most instances low inventory is leading to very strong home sales, but the price of these homes is not skyrocketing. In fact, price increases have been, on average, quite modest. Yet there are pockets which appear to be progressively heated.

 

In all instances, sellers need to be prepared for these conditions by remaining realistic about sales prices; keep a calm head and price your home compellingly. Perceived value is the key to generating interest. The market is working in your favor, let purchasers pursue the price. Preparation also remains important. Don’t underestimate the need to have the property looking its best in order to attract more traffic.

 

Purchasers need to be prepared to act quickly. They should have their finances squared away with a reputable lender. If they have more cash to put as a down payment they will be perceived as a more desirable prospect. Cash is still King! Minimize your contingencies in order to be more appealing, but be intelligent about choosing what to do or what to omit from an offer.  Put your best foot forward immediately in order to be a front-runner and to generate a response. You will also want to be available to your Realtor in order to respond quickly to anything that may arise.

 

To increase your chances of success, choose an experienced REALTOR to be your advocate. Call on us if we can help you!

Competitive Markets and Multiple Offers are on the Rise!

Quad Photo Logo as jpeg image_3-7-14

 

Have you heard about, or better yet, been faced with stiff competition in certain housing markets around Richmond, VA that are leading to multiple bid situations? Some areas seem to barely receive a notice, while others are overcome with such frenzied activity that it is leading to numerous offers and extremely competitive contracts that go well above asking price. Certain locations are so thin with little or no inventory that when a property hits the market, buyers begin to line up, quite literally, in the street.

 

Buyer-anxiety and the pace of movement around these homes is so extreme that it seems reminiscent of housing boom conditions from just a few short years ago. It’s almost impossible to believe situations like this can exist today – with one exception – it is not across the board in all locations! In most instances low inventory is leading to very strong home sales, but the price of these homes is not skyrocketing. In fact, price increases have been, on average, quite modest. Yet there are pockets which appear to be progressively heated.

 

In all instances, sellers need to be prepared for these conditions by remaining realistic about sales prices; keep a calm head and price your home compellingly. Perceived value is the key to generating interest. The market is working in your favor, let purchasers pursue the price. Preparation also remains important. Don’t underestimate the need to have the property looking its best in order to attract more traffic.

 

Purchasers need to be prepared to act quickly. They should have their finances squared away with a reputable lender. If they have more cash to put as a down payment they will be perceived as a more desirable prospect. Cash is still King! Minimize your contingencies in order to be more appealing, but be intelligent about choosing what to do or what to omit from an offer.  Put your best foot forward immediately in order to be a front-runner and to generate a response. You will also want to be available to your Realtor in order to respond quickly to anything that may arise.

 

To increase your chances of success, choose an experienced REALTOR to be your advocate. Call on us if we can help you!

Ask_the_expert_2015-05-08_1509

Will it be a Buyer’s or a Seller’s Market in 2015?

 Dice buy sell

 

    A serious look into an ever-changing Real Estate Market, like the one projected for 2015, indicates we should be up for anything. Ann and I are reading trends and forecasts which suggest market conditions slightly favoring sellers in the coming months. Low inventory with an increase in consumer activity (once the weather clears) will support modest price increases and the likelihood of more competitive bid situations.

 

The housing marketplace is a non-linear force that is not subject to the laws of gravity. Described as less volatile and easier to understand than the stock market, housing is equally as unpredictable and more subject to the emotional whims of a consumer. The buyer vs. seller advantage may not be as it appears from one month to the next; real estate is locally driven, so it is area specific, and will also cycle according to price points.

 

For instance, conditions changed several times during the course of 2014; as the market improved buyers and sellers were anticipating home sales to favor sellers. There were subtle changes in the fall market that evolved to favor purchasers late in the year. This seems to have happened in spite of generally low inventory in the resale market. Conservative purchasers were taking their time when considering what to buy, without any perceived pressure to purchase quickly, and did not turned out in as high numbers as hope in order to favor sellers.

 

Although modest in terms of value increases, the total volume of projected home sales is very positive for 2015.  While it is still early in the year, a noticeable uptick in activity is present in the marketplace. So hang on, things could start moving at a rapid pace very soon – we are on the cusp of the spring market, when not only the temperatures heat up – improved consumer confidence, pent-up demand, low mortgage interest rates, and new homes coming on the market are a good recipe for activity.

 

Contact your trusted real estate advisor for the most accurate evaluation of Real Estate and housing trends available in the marketplace today. We are happy to assist you too!

 

Ann & John VanderSyde
Ann & John VanderSyde

This Blog will be featured in RTD “Ask the Expert” Article on Sunday 3/1/2015