National Mortgage News: Foreclosure Starts Surged in September

Foreclosure starts and filings have spiked on both a quarterly and monthly basis since the federal moratorium ended.

Mortgage servicers started 10,289 foreclosures in September, up 23% from August’s 8,348and 106% year-over-year, according to Attom Data Solutions. In the third quarter, 25,209 foreclosures were started, shooting up 32% from the second quarter and 67% from the year before. It represented the first quarterly increase over 10% since 2014 and the highest since Attom started tracking in 2005, besting 28% in 1Q 2009.

Filings — defined as default notices, bank repossessions or auctions — followed similar patterns, with 45,517 properties impacted in the third quarter, rising 34% from 2Q and 68% from 3Q 2020. Meanwhile, 19,609 mortgaged properties filed in September, jumping 24% from 15,838 in August and 102% from one year ago.

nmn10132021-attom

However, the numbers still trail far behind pre-pandemic levels. Foreclosure activity stands about 70% below September 2019 and 60% lower than 3Q 2019, according to Rick Sharga, executive vice president at Attom affiliate RealtyTrac. The increased activity will likely continue going forward as a large share of forbearance plans terminate.

“There are hundreds of thousands of borrowers scheduled to exit forbearance in the next two months, and it’s possible that we might see a higher percentage of those borrowers default on their loans,” Sharga said in the report.

At the state level, California had the most foreclosure starts in 3Q with 3,434, followed by Texas with 2,827, Florida with 2,546, New York with 1,363 and Illinois with 1,362. Among the 220 housing markets Attom tracked, the most starts came in New York with 1,456, Chicago with 1,122, Los Angeles with 1,102, Miami with 992 and Houston with 866.

Repossessions through completed foreclosures totaled 7,574 in the third quarter, marking rises of 22% quarterly — the first quarterly jump since 1Q 2016 — and 46% annually. September also saw gains in real estate owned properties, as it 2,682 increased 8% monthly and 33% year-over-year. Illinois had the most REOs in the quarter with 965, trailed by 564 in Florida and 480 in Pennsylvania.

cc_FB_header2

Canine Companions Partners with the Department of Veterans Affairs to Assist Veterans with PTSD

Long awaited legislation that will positively impact veterans with post-traumatic stress disorder was signed by President Biden. The Senate passed H.R. 1448, the Puppies Assisting Wounded Servicemembers (PAWS) for Veterans Therapy Act. The Act allows the Department of Veterans Affairs (VA) to provide service dogs and provisions for their care to assist veterans with PTSD. According to the VA Suicide Prevention Annual Report, nearly 18 servicemembers take their own lives each day as a result of these internal scars.
Canine Companions, the largest provider of service dogs, partnered with the VA to provide service dogs in a four-year study on the efficacy of trained service dogs for PTSD. Canine Companions placed a total of 59 service dogs and 40 emotional support dogs with study veterans, totaling 45% of all dogs placed through the study. The results were staggering – Veterans paired with service dogs showed less suicidal ideation and more improvement in mental health than those paired with emotional support dogs.
“The importance of the results of the study – and its impact on the PAWS for Veterans Therapy Act – cannot be understated,” says Canine Companions CEO Paige Mazzoni. “Service dogs provide a significant therapeutic benefit for veterans with PTSD.”
The results of the previous study laid the groundwork for future legislation – like H.R. 1448 – to further assist veterans utilizing service dogs to mitigate symptoms of PTSD.
Department of Defense now has the authority to use trained service dogs as a treatment option for veterans with PTSD – an option that was not previously available despite the profound results of the previous study.
The Act will allow veterans with PTSD and other mental health diagnoses to be eligible for VA service dog veterinary insurance benefits, which also covers equipment and travel expenses associated with service dog ownership.
“As a founding member of Assistance Dogs International, we are pleased to see that all ADI-accredited organizations’ veteran clients living with PTSD will now have access to the same insurance benefits as veteran clients with physical wounds,” Mazzoni continues.
For servicemembers relying on a task-trained service dogs for PTSD, the H.R. 1448 is a giant leap towards supporting veterans and their service dogs in an equitable way. It might mean the difference between having a veteran who won’t be here tomorrow and having one that will.
Learn more about Canine Companions Veterans Initiative at canine.org/veterans.

How an Appraisal Gap Can Impact Your Home Purchase

What Buyers and Sellers Need To Know About the Appraisal Gap

What Buyers and Sellers Need To Know About the Appraisal Gap | MyKCM

It’s economy 101 – when supply is low and demand is high, prices naturally rise. That’s what’s happening in today’s housing market. Home prices are appreciating at near-historic rates, and that’s creating some challenges when it comes to home appraisals.

In recent months, it’s become increasingly common for an appraisal to come in below the contract price on the house. Shawn Telford, Chief Appraiser for CoreLogic, explains it like this:

Recently, we observed buyers paying prices above listing price and higher than the market data available to appraisers can support. This difference is known as ‘the appraisal gap . . . .’”

Why does an appraisal gap happen?

Basically, with the heightened buyer demand, purchasers are often willing to pay over asking to secure the home of their dreams. If you’ve ever toured a house you’ve fallen in love with, you understand. Once you start to picture yourself and your furniture in the rooms, you want to do everything you can to land the property, including putting in a high offer to try to beat out other would-be buyers.

When the appraiser comes in, they look at things a bit more objectively. Their job is to assess the inherent value of the home, so they’re going to study the facts. Dustin Harris, Appraiser Coach, drives this point home:

It’s important for everyone to understand that the appraiser’s job in the end is to remain that unbiased third party, to truly tell the client what that home is worth in the current market, regardless of what decisions have been made on the price side of things.”

In simple terms, while homebuyers may be willing to pay more, appraisers are there to assess the market value of the home. Their goal is to make sure the lender isn’t loaning more money than the home is worth. It’s objective, rather than emotional.

In a highly competitive market like today’s, having a discrepancy between the two numbers isn’t unusual. Here’s a look at the increasing rate of appraisal gaps, according to data from  CoreLogic (see graph below):What Buyers and Sellers Need To Know About the Appraisal Gap | MyKCM

What does this mean for you?

Ultimately, knowledge is power. The best thing you can do is understand appraisal gaps may impact your transaction if you’re buying or selling. If you do encounter an appraisal below your contract price, know that in today’s sellers’ market, the most common approach is for the seller to ask the buyer to make up the difference in price. Buyers, be prepared to bring extra money to the table if you really want the home.

Above all else, lean on your real estate agent. Whether you’re a buyer or seller, your trusted advisor is your ally if you come up against an appraisal gap. We’ll help you understand your options and handle any additional negotiations that need to happen.

Bottom Line

In today’s real estate market, it’s important to stay informed on the latest trends. Let’s connect so you have an ally to help you navigate an appraisal gap to get the best possible outcome.

Homeownership: Reconsidering What We Want to Call Home

What’s Motivating People To Move Right Now?

What’s Motivating People To Move Right Now? | MyKCM

This year, Americans are moving for a variety of reasons. The health crisis has truly reshaped our lifestyles and our needs. Spending so much more time in our current homes has driven many people to reconsider what homeownership means and what they find most valuable in their living spaces.

According to the 2020 Annual National Movers Study:

“For customers who cited COVID-19 as an influence on their move in 2020, the top reasons associated with COVID-19 were concerns for personal and family health and wellbeing (60%); desires to be closer to family (59%); 57% moved due to changes in employment status or work arrangement (including the ability to work remotely); and 53% desired a lifestyle change or improvement of quality of life.”

With a new perspective on homeownership, here are some of the reasons people are reconsidering where they live and making moves right now.

1. Working from Home

Remote work became the new norm, and for some, it’s persisting longer than initially expected. Many in the workforce today are discovering they don’t need to live so close to the office anymore and they can get more for their money if they move a little further outside the city limits. Apartment List notes:

“The COVID pandemic has sparked a rebound in residential migration: survey data suggest that 16 percent of American workers moved between April 2020 and April 2021, up from 14 percent in 2019 and the first increase in migration in over a decade… One of the major drivers in this trend is remote work, which expanded greatly in response to COVID and will remain prevalent even after the pandemic wanes. No longer tethered to a physical job site, remote workers were 53 percent more likely to move this past year than on-site workers.”

If you’ve tried to convert your guest room or your dining room into a home office with minimal success, it may be time to find a larger home. The reality is, your current house may not be optimally designed for this kind of space, making remote work very challenging.

2. Room for Fitness & Activities

Staying healthy and active is a top priority for many Americans, and dreams of having space for a home gym are growing stronger. A recent survey of 4,538 active adults from 122 countries noted the three fastest-growing fitness trends amongst active adults:

  • At-home fitness equipment (up 50%)
  • Personal trainers/nutritionists (up 48%)
  • Online fitness courses, classes, and subscriptions (up 17%)

Having room to maintain a healthy lifestyle at home – physically and mentally – may prompt you to consider a new place to live that includes space for at-home workouts, hobbies, and activities for your household.

3. Outdoor Space

Better Homes & Gardens recently released the outdoor living trends for this year, and three of them are:

  • Outdoor Kitchens: 60% of homeowners are looking to add outdoor kitchens.
  • Edible Garden: Millions of people began gardening during the pandemic . . . to supplement pantries with homegrown fruits, vegetables, and herbs.
  • Secluded Spaces: As outdoor activity increases, so does the need for privacy.

You may not, however, currently have the space you need for these designated areas – inside or out.

Bottom Line

If you’re clamoring for more room to accommodate your changing needs, making a move may be your best bet, especially while you can take advantage of today’s low mortgage rates. It’s a great time to get more home for your money, just when you need it most.

Where Do Experts Say the Housing Market is Heading?

Driving the Economy Forward

Where Do Experts Say the Housing Market Is Heading? | MyKCM

As we enter the middle of 2021, many are wondering if we’ll see big changes in the housing market during the second half of this year. Here’s a look at what some experts have to say about key factors that will drive the industry and the economy forward in the months to come.

realtor.com

“. . . homes continue to sell quickly in what’s normally the fastest-moving time of the year. This is in contrast with 2020 when homes sold slower in the spring and fastest in September and October. While we expect fall to be competitive, this year’s seasonal pattern is likely to be more normal, with homes selling fastest from roughly now until mid-summer.”

National Association of Realtors (NAR)

Sellers who have been hesitant to list homes as part of their personal health safety precautions may be more encouraged to list and show their homes with a population mostly vaccinated by the mid-year.”

Danielle Hale, Chief Economist at realtor.com

“Surveys showed that seller confidence continued to rise in April. Extra confidence plus our recent survey finding that more homeowners than normal are planning to list their homes for sale in the next 12 months suggest that while we may not see an end to the sellers’ market, we might see the intensity of the competition diminish as buyers have more options to choose from.”

Freddie Mac

We forecast that mortgage rates will continue to rise through the end of next year. We estimate the 30-year fixed mortgage rate will average 3.4% in the fourth quarter of 2021, rising to 3.8% in the fourth quarter of 2022.”

Bottom Line

Experts are optimistic about the second half of the year. Let’s connect today to talk more about the conditions in our local market.

Home Equity Options: Should I Move or Refinance?

Maximizing Your Home Equity Gains

Should I Move or Refinance? | MyKCM

The level of equity homeowners have is at an all-time high. According to the U.S. Census, over 38% of owner-occupied homes are owned free and clear, meaning they don’t have a mortgage. Those with a mortgage are seeing their equity skyrocket too. Every time real estate values increase, homeowners get a dollar-for-dollar gain in their home equity.

According to the first-quarter 2021 U.S. Home Equity Report from ATTOM Data Solutions:

“17.8 million residential properties in the United States were considered equity-rich, meaning that the combined estimated amount of loans secured by those properties was 50 percent or less of their estimated market value.

The count of equity-rich properties in the first quarter of 2021 represented 31.9 percent, or about one in three, of the 55.8 million mortgaged homes in the United States. That was up from 30.2 percent in the fourth quarter of 2020, 28.3 percent in the third quarter and 26.5 percent in the first quarter of 2020.”

This surge in home equity has given most homeowners the opportunity to use that equity in one of two ways:

  1. Refinance to cash out some of the equity or lower their current payment
  2. Move to a home that better fits their current needs

Let’s break down the possibilities.

1. Refinance

An abundance of equity and record-low mortgage rates can make refinancing a home very easy. Some homeowners choose to refinance so they can lower their payments. Others convert a portion of the equity to cash while keeping their monthly payment the same.

There are many homeowners who could take advantage of lower rates and higher levels of equity, but they haven’t yet. According to an Economic & Housing Research Note from earlier this month, there were over five million homeowners with a loan funded by Freddie Mac who would benefit by refinancing their loan. As of January 2021, there were:

  • 452,122 loans with an average mortgage rate of 6.17%
  • 1,027,834 loans with an average mortgage rate of 4.39%
  • 3,687,780 loans with an average mortgage rate of 4.21%

With mortgage rates currently hovering around 3%, any of these homeowners would benefit from refinancing. They could lower their payments by hundreds of dollars per month or cash out large sums of equity while keeping their monthly payment the same.

Example:

If a homeowner has a $200,000 fixed-rate mortgage with a 6% interest rate and refinances that loan to a 3% interest rate, their monthly mortgage payment (principal and interest) will go from $1,199 per month to $843 per month – a savings of $356 a month, or $4,272 each year.

On the other hand, if they keep their mortgage payment the same, they could cash out a significant amount of their equity.

2. Move into your dream home

The past year prompted many households to redefine what a dream home really means, and it’s something different to everyone. Those who have a high mortgage rate could use their equity as a down payment and perhaps buy their next home without significantly raising their mortgage payment.

Example:

Suppose a person bought a house for $216,000 at the height of the market in 2006. (The median home price in May of 2006). If they put 10% down and took out a mortgage of $194,400 at 6.41% (the average rate in 2006), the monthly mortgage payment (principal and interest) would have been $1,217.

According to the National Association of Realtors (NAR), a typical single-family home has grown in value by approximately $150,000 over the last fifteen years. That means the $216,000 house would be worth about $366,000 today.

After deducting selling expenses, they would be left with about $130,000 ($150,000 minus approximately $20,000 in selling expenses).

A seller could take that equity and use it as a down payment on a new house. Let’s assume they purchased a home for $450,000 (roughly $80,000 more than the value of their current home). If they put the $130,000 down, they could take out a mortgage of $320,000 with a 3% interest rate. The monthly mortgage payment (principal and interest) would be $1,349. Therefore, they could buy a home worth $80,000 more than the one they have today and only spend an extra $132 per month.

Bottom Line

Whether you’re refinancing your house or moving to a new home, your current mortgage rate and your level of equity are crucial in your decision-making process. Look at your mortgage documentation to find out your interest rate, and then let’s connect to determine the potential equity in your home. You may be surprised by the opportunities you have.

How Floor Plans Can Help Sell a Home

A Simple Floor Plan Can Demonstrate How Exceptional a Home Truly Is.

In addition to other effective marketing tools used to sell homes that include photos, virtual tours, staging, and virtual open houses, the simple floor plan allows potential buyers to decide if a home will meet their needs quickly and without any uncertainty. Once a buyer can determine comfort and usability of the space,  they can then peruse photos, property layouts, and other media to fill in the details that will help solidify their decision. A floor plan is an excellent marketing tool that can assist a realtor in helping their listing stand out from other competitor property listings, as it helps buyers see the structure of the home in addition to how the rooms communicate with one another.

Industry experts from Moreover, Reddit, Rightmove, and City-Data also share positive pro-floor plan opinions:

Adding a floor plan to a real estate listing can increase click-throughs from buyers by 52%.

A floor plan can save a lot of driving and looking.

A floor plan qualifies a buyer before even seeing the home.

1039 SWEETBROOK WAY ORLANDO FL 32828

Being sensitive to the buyer’s needs and considerate of their time.

Realtors who add real estate floor plans to their listings’ marketing materials will turn any buyer into a grateful one when it saves their time. Getting valuable insights about a property is mutually beneficial for both agent and buyer. Why wouldn’t any real estate professional want to offer the buyer all the possible information and visual assets before arranging an in-person visit? By consistently providing floor plans, it will become easier for buyers to understand if they like a home’s layout or not.

While a floorpan doesn’t tell the whole story, there is a lot that can be determined from it, and it also goes a long way with helping buyers who may be handicapped or disabled and have a difficult time attending in-person visits.  A floor plan helps to narrow down options in these cases by displaying the home’s accessibility or lack thereof.

In other situations, when buyers have multiple home visits per day, they may forget certain distinctions between two options. This is where a floor plan can impress a specific property into the buyer’s memory. The buyer already visualized himself in that property by utilizing that defined structure to help him envision his future life in that house. Hence, an emotional connection is formed and should be taken into account when selling properties to buyers.

Creating a well defined, quality floor plan is straightforward with the right tools.

NextHome SunRaye Realty employs Matterport 3D technology to create high-quality, web-ready floor plans that include detailed output. The simple visual has more useful impact than virtual tours as it provides the most detailed information from a critical perspective. Whether you are looking to sell your home or purchase a new one, floor plans provide a valuable visual that will assist you remarkably.

 

2021-home-buyers-and-sellers-generational-trends-03-16-2021 (dragged)

 

Are Interest Rates Expected to Rise Over the Next Year?

Interest Rate Projections from Housing Market Experts

Are Interest Rates Expected to Rise Over the Next Year? | MyKCM

So far this year, mortgage rates continue to hover around 3%, encouraging many hopeful homebuyers to enter the housing market. However, there’s a good chance rates will increase later this year and going into 2022, ultimately making it more expensive to borrow money for a home loan. Here’s a look at what several experts have to say.

Danielle Hale, Chief Economist, realtor.com:

Our long-term view for mortgage rates in 2021 is higher. As the economic outlook strengthens, thanks to progress against coronavirus and vaccines plus a dose of stimulus from the government, this pushes up expectations for economic growth . . . .”

Lawrence Yun, Chief Economist, National Association of Realtors (NAR):

In 2021, I think rates will be similar or modestly higher . . . mortgage rates will continue to be historically favorable.”

Freddie Mac:

We forecast that mortgage rates will continue to rise through the end of next year. We estimate the 30-year fixed mortgage rate will average 3.4% in the fourth quarter of 2021, rising to 3.8% in the fourth quarter of 2022.”

Below are the most recent mortgage rate forecasts from four top authorities – Freddie Mac, Fannie Mae, the Mortgage Bankers Association (MBA), and NAR:Are Interest Rates Expected to Rise Over the Next Year? | MyKCM

Bottom Line

If you’re planning to buy a home, purchasing before mortgage interest rates rise may help you save significantly over the life of your home loan.

 

Will the Housing Market Maintain Its Momentum?

Housing Market Forecast Through 2022

 Will the Housing Market Maintain Its Momentum? | MyKCM

Last week’s Existing Home Sales Report from the National Association of Realtors (NAR) shows sales have dropped by 3.7% compared to the month before. This is the second consecutive month that sales have slumped. Some see this as evidence that the red-hot real estate market may be cooling. However, there could also be a simple explanation as to why existing home sales have slowed – there aren’t enough homes to buy. There are currently 410,000 fewer single-family homes available for sale than there were at this time last year.

Lawrence Yun, Chief Economist at NAR, explains in the report:

“The sales for March would have been measurably higher, had there been more inventory. Days-on-market are swift, multiple offers are prevalent, and buyer confidence is rising.”

Yun’s insight was supported the next day when the Census Bureau released its Monthly New Residential Sales Report. It shows that newly constructed home sales are up 20.7% over the previous month.

Buyer demand remains strong. With more of the adult population becoming vaccinated and job creation data showing encouraging signs, existing-home inventory is expected to grow in the coming months.

What will this mean for home sales going forward?

Fannie Mae, Freddie Mac, and the Mortgage Bankers Association (MBA) have all forecasted that total home sales (existing homes and new construction) will continue their momentum both this year and next. Here’s a graph showing those projections:Will the Housing Market Maintain Its Momentum? | MyKCM

Bottom Line

Living through a pandemic has caused many to re-evaluate the importance of a home and the value of homeownership. The residential real estate market will benefit from both as we move forward.

What is Means To Be in a Sellers’ Market

Housing Inventory and Buyer Competition

What It Means To Be in a Sellers’ Market | MyKCM

If you’ve given even a casual thought to selling your house in the near future, this is the time to really think seriously about making a move. Here’s why this season is the ultimate sellers’ market and the optimal time to make sure your house is available for buyers who are looking for homes to purchase.

The latest Existing Home Sales Report from The National Association of Realtors (NAR) shows the inventory of houses for sale is still astonishingly low, sitting at just a 2-month supply at the current sales pace.

Historically, a 6-month supply is necessary for a ‘normal’ or ‘neutral’ market in which there are enough homes available for active buyers (See graph below):What It Means To Be in a Sellers’ Market | MyKCMWhen the supply of houses for sale is as low as it is right now, it’s much harder for buyers to find homes to purchase. As a result, competition among purchasers rises and more bidding wars take place, making it essential for buyers to submit very attractive offers. This is typical in a sellers’ market.

As this happens, home prices rise and sellers are in the best position to negotiate deals that meet their ideal terms. If you put your house on the market while so few homes are available to buy, it will likely get a lot of attention from hopeful buyers.

Today, there are many buyers who are ready, willing, and able to purchase a home. Low mortgage rates and a year filled with unique changes have prompted buyers to think differently about where they live – and they’re taking action. The supply of homes for sale is not keeping up with this high demand, making now the optimal time to sell your house.

Bottom Line

Home prices are appreciating in today’s sellers’ market. Making your home available over the coming weeks will give you the most exposure to buyers who will actively compete against each other to purchase it.