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The Enormous Divide Between the Headline and the Truth | MyKCM

 

“I have observed that not the man who hopes when others despair, but the man who despairs when others hope, is admired by a large class of persons as a sage.” - John Stuart Mill (1840s)

Even back in the mid-1800s, people knew that negative news sells. That is still true today. All forms of media realize that they will get more eyeballs, clicks, likes, and engagement by posting something negative. However, they must realize that negative headlines impact markets.

Just last week, the National Association of Home Builders released a survey revealing:

“Negative media reports making buyers cautious was a significant problem for 48% of builders in 2018, but 62% expect it to be a problem in 2019.”

Even today, good news is headlined with a negative spin in order to get attention. Here are two recent examples from mainstream media:

Actual Headline #1Cash-out refis are back – will homes become ATMs again?

The real story: The headline is accurate - to a point. It is true that the percentage of refinances in which the homeowner received cash at the closing has increased to levels that existed in 2006. However, the actual amount of equity homeowners “cashed-out” compared to a decade ago isn’t close.

The dollar amount cashed-out last year was $63 billion. That seems like a really large number until we compare it to 2006, when homeowners cashed-out $321 billion. That is more than five times the current amount.

In 2006, people did use their homes as ATMs. They purchased new cars, boats, and lavish vacations. Today, the cashed-out equity is being used to consolidate debt, as seed capital for a new business, or to help a child with their college tuition.

Actual HeadlineConsumer Debt hits $4 Trillion. Americans are diving deeper and deeper into debt.

The real story: The first sentence of the headline is accurate. The second sentence couldn’t be further from the truth. Total consumer debt is the highest it has ever been. That’s because the population continues to grow, and so does the economy (prices and wages).

The important number is how that total debt ranks as a percentage of disposable personal incomeThat percentage is the lowest ever recorded!! People are not “diving deeper and deeper into debt”. The exact opposite is true. They have less debt now than ever before.

Bottom Line

If you are thinking about buying or selling a home, it is important that you have a true professional handling your real estate needs. Someone who knows the truth about the current economy and its potential impact on the housing market.

Last week, realtor.com released a survey of active home shoppers (those who plan to purchase their next home in 1 year or less). The survey asked their opinion on an impending recession and its possible impact on the housing market.

Two major takeaways from the survey:

  • 42% believe a recession will occur this year or next (another 16% said 2021)
  • 59% believe the housing market would fare the same or worse than it did in 2008

Why all the talk about a recession recently?

Over the last year, four separate surveys have been taken asking when we can expect the next recession to occur:

  1. The Pulsenomics Survey of Market Analysts
  2. The Wall Street Journal Survey of Economists
  3. The Duke University Survey of American CFOs
  4. The National Association of Business Economics

70% of all respondents to the four surveys believe that a recession will occur in 2019 or 2020 with an additional 18% saying 2021.

However, we must realize that a recession does not mean we will experience another housing crash. According to the dictionary definition, a recession is:

“A period of temporary economic decline during which trade and industrial activity are reduced, generally identified by a fall in GDP in two successive quarters.”

During the last recession, a dramatic fall in home values helped cause it.

However, according to research done by CoreLogic, home values weren’t negatively impacted as they were in 2008 during the previous four recessions:

Homebuyers Shouldn’t Worry About 2008 All Over Again | MyKCM

During the four recessions prior to 2008, home values depreciated only once (at a level that was less than 2%). The other three times home values appreciated, twice well above the historic norm of 3.6%.

Bottom Line

If there is an economic slowdown in our near future, there is no need for fear to set in. Most experts agree with Ralph McLaughlin, CoreLogic’s Deputy Chief Economist, who recently explained that there’s no reason to panic right now, even if we may be headed for a recession.

“We’re seeing a cooling of the housing market, but nothing that indicates a crash.”

5 Reasons to Sell Your House This Spring

by

Here are five compelling reasons listing your home for sale this spring makes sense.

1. Demand Is Strong

The latest Buyer Traffic Index from the National Association of Realtors (NAR) shows that buyer demand remains strong throughout the vast majority of the country. These buyers are ready, willing, and able to purchase… and are in the market right now! More often than not, multiple buyers are competing with each other for the same home.

Take advantage of the buyer activity currently in the market.

2. There Is Less Competition Now

Housing inventory is still under the 6-month supply needed for a normal housing market. This means that, in most of the country, there are not enough homes for sale to satisfy the number of buyers.

Historically, the average number of years a homeowner stayed in his or her home was six, but that number has hovered between nine and ten years since 2011. Many homeowners have a pent-up desire to move, as they were unable to sell over the last few years due to a negative equity situation. As home values continue to appreciate, more and more homeowners are granted the freedom to move.

Many homeowners were reluctant to list their home over the last couple of years for fear that they would not find a home to move in to. That is all changing now as more homes come to market at the higher end. The choices buyers have will continue to increase. Don’t wait until additional inventory comes to market before you to decide to sell.

3. The Process Will Be Quicker

Today’s competitive environment has forced buyers to do all they can to stand out from the crowd, including getting pre-approved for their mortgage financing. Buyers know exactly what they can afford before home shopping. This makes the entire selling process much faster and simpler. According to Ellie Mae’s latest Origination Insights Report, the time to close a loan has dropped to 47 days.

4. There Will Never Be a Better Time to Move Up

If your next move will be into a premium or luxury home, now is the time to move up! The inventory of homes for sale at these higher price ranges has created a buyer’s market. This means that if you are planning on selling a starter or trade-up home, it will sell quickly, AND you’ll be able to find a premium home to call your own!

According to CoreLogic, prices are projected to appreciate by 4.6% over the next year. If you are moving to a higher-priced home, it will wind up costing you more in raw dollars (both in down payment and mortgage payment) if you wait.

5. It’s Time to Move on With Your Life

Look at the reason you decided to sell in the first place and determine whether it is worth waiting. Is money more important than being with family? Is money more important than your health? Is money more important than having the freedom to go on with your life the way you think you should?

Only you know the answers to these questions. You have the power to take control of the situation by putting your home on the market. Perhaps the time has come for you and your family to move on and start living the life you desire.

Congratulations! You’ve found a home to buy and have applied for a mortgage! You are undoubtedly excited about the opportunity to decorate your new home! But before you make any big purchases, move any money around, or make any big-time life changes, consult your loan officer. They will be able to tell you how your decision will impact your home loan.

Below is a list of 7 Things You Shouldn’t Do After Applying for a Mortgage! Some may seem obvious, but some may not!

1. Don’t change jobs or the way you are paid at your job! Your loan officer must be able to track the source and amount of your annual income. If possible, you’ll want to avoid changing from salary to commission or becoming self-employed during this time as well.

2. Don’t deposit cash into your bank accounts. Lenders need to source your money and cash is not really traceable. Before you deposit any amount of cash into your accounts, discuss the proper way to document your transactions with your loan officer.

3. Don’t make any large purchases like a new car or new furniture for your new home. New debt comes with it, including new monthly obligations. New obligations create new qualifications. People with new debt have higher debt to income ratios… higher ratios make for riskier loans… and sometimes qualified borrowers no longer qualify.

4. Don’t co-sign other loans for anyone. When you co-sign, you are obligated. As we mentioned, with that obligation comes higher ratios as well. Even if you swear you will not be the one making the payments, your lender will have to count the payment against you.

5. Don’t change bank accounts. Remember, lenders need to source and track assets. That task is significantly easier when there is consistency among your accounts. Before you even transfer money between accounts, talk to your loan officer.

6. Don’t apply for new credit. It doesn’t matter whether it’s a new credit card or a new car. When you have your credit report run by organizations in multiple financial channels (mortgage, credit card, auto, etc.), your FICO score will be affected. Lower credit scores can determine your interest rate and maybe even your eligibility for approval.

7. Don’t close any credit accounts. Many clients have erroneously believed that having less available credit makes them less risky and more likely to be approved. Wrong. A major component of your score is your length and depth of credit history (as opposed to just your payment history) and your total usage of credit as a percentage of available credit. Closing accounts has a negative impact on both those determinants of your score.

Bottom Line

Any blip in income, assets, or credit should be reviewed and executed in a way that ensures your home loan can still be approved. The best advice is to fully disclose and discuss your plans with your loan officer before you do anything financial in nature. They are there to guide you through the process.

Did you know?

by Christy McLemore, All-Star Listing Coordinator

Did you know if you're looking for something to come in the mail, the post office scans each piece of mail and you can see what's coming to you the next day? This USPS free and convenient service can help to protect against identity theft. Visit www.informeddelivery.usps.com to quickly and easily sign up for daily emails showing pictures of what you will be receiving in your mailbox each day. If something doesn’t arrive, there is a “Report Missing Mail” button.

Did you know that there are dozens of government programs that provide grants, rebates, tax incentives, and more for energy efficient upgrades to your home? Visit www.dsireusa.org for a list of programs in your area.

Your local power company is also a great source of information for making your home more energy efficient and saving you money on your power bill.  Mississippi Power has a plethora of tips and advice on how to weatherize your home and other energy-saving ideas on their website at www.mississippipower.com.  Mississippi Power will also pay $75 toward a cost of an in-home energy assessment of your home which includes installation of energy-saving devices such as LED bulbs, smart power strips and faucet aerators. Google “Mississippi Power energy checkup” for more information and a list of qualified independent service providers in your area.

Pearl River Valley Electric Power Association also has information on how to save energy in your home as well as an interactive Home Energy Consumption calculator and games for kids on their website at www.prvepa.com

How to Save THOUSANDS in Interest on your Mortgage

by keepingcurrentmatters.com

One of the most common loans you can get to buy a home is a 30-year fixed rate mortgage. If the thought of paying for your home over the course of 30-years seems daunting, here are some easy ways to shorten that term which will actually end up saving you money over the life of your loan.

Any additional payments to the principal amount (the original sum of money borrowed in a loan), helps to cut down the amount of interest that you will pay over the life of your loan and can also help to shave years off the loan as well.

When you make ‘extra’ payments toward your loan, the key is to let your lender/bank know that you want the extra funds to go toward your principal balance as they will not automatically do this for you.

You don’t have to double your mortgage payment to make a big difference either!

If you have a 30-year mortgage on a median-priced home ($250,000) with a 5% interest rate, you’ll be responsible for a $1,342.05 monthly principal and interest payment. Over the course of the loan, if you pay your exact monthly payment, you will have paid $233,133.89 in interest alone!

Paying a Little Extra Can Pay Off Big

1. Pay an additional 1/12th of your mortgage payment every month

Benefit: In the example above, adding $111.84 to your monthly mortgage payment might not seem like a lot, but each year you will have paid one extra month’s worth of payments which will shorten the term of your loan by 4 years and 8 months, all while saving you $42,000 in interest!

2. Pay an additional $50 per month towards your mortgage

Benefit: Fifty dollars might not seem like enough to make a difference on the term of your loan, but that small amount will save you over $21,000 in interest and will take over 2 years off the end of your loan. Twenty-eight years from now, you’ll be happy to pay off your loan that much sooner!

3. Make one-time lump sum payments when you can

Benefit: If you find yourself with a little extra money after a yearly bonus, a tax return, or from investment dividends, paying that money towards the principal can cut your costs. This option, however, is less predictable than the extra monthly payments.

If you have higher interest debts, like credit cards, consider using any extra funds you have to pay those debts down before applying that money towards your mortgage. Also, if you do not plan on staying in your home for more than 10 years, paying extra toward your mortgage might not make sense.

Bottom Line

If you’re wondering what strategies would work best for you to shorten the term of your loan, let’s get together to answer your questions.

All-Star Problem Solvers

by Adam Watkins

    Over a year ago I found myself at my local gym, which is not out of the ordinary these days.  For the past 5 years or so, I have consciously made an effort to make better choices to improve my health through diet and exercise.  It has been a worthwhile journey, and one I genuinely enjoy, from which I gain a lot of satisfaction and intend to continue for the rest of my life.  For some reason - probably a bad hair day - I slipped a cap on my head on my way out the door and headed out on my mission.  It was one of my favorite hats.  I call it my "REALTOR Cap" - a navy blue cotton cap with the trademark symbol of the National Association of REALTORS proudly embroidered across the front.  It was this choice of attire that led to a conversation that I have been using to illustrate a concept to our team, my fellow REALTORS, and those we serve.  Somewhere during my workout a young man caught a glimpse of the hat while we were both in-between sets, and the conversation went something like this:

    "Hey, so, you're a REALTOR; you show people houses?" the young man asked. My response was almost instinctive and immediate, and was one that I knew he would not be prepared for. I said, "No, actually, that's not what I do."  The young man looked at me perplexed, and said, "But I thought REALTORS showed people houses."  At this point, I could tell I had thoroughly confused this fella, and sought to elaborate.  I said, "Yes, I am a REALTOR, and sometimes I do let people into houses and talk to people about the properties they might wish to purchase or sell, but that's not what I really 'do.'"  Finally, a bit exasperated, the young man asked, "Well, then what is it that you do?" My response was simple, "I solve people's problems."  

    I spent the next few moments explaining to this gym buddy of mine that the true value of what I did as a professional was not the literal opening of a door on a property so someone could see inside.  Truth is, the technologies we currently use to showcase homes and properties online make accessing the "inside" of a home something that can be done virtually in many cases.  The value in what the team and I do everyday is in our role as problem solvers.  As I explained to this young man, every circumstance that REALTORS encounter on behalf of our clients and customers involves a problem, or a series of questions, that we must use our experience and knowledge to solve or answer.

    Questions like:  What's the highest and best use for a property, and how do we find its next owner? Do we need to replace the carpet and repaint, or sell the home in as-is condition?  What is the best strategy for transitioning our aging mother out of her current property and liquidating that property to help provide for her care?  Where should we purchase a home that we can easily sell in 3 years after we've completed medical residency? How do we build an investment portfolio in real estate, and when is the best time to sell some of that portfolio?  How do we adequately qualify tenants for our investment property in order to reduce the chance of vacancies?  Or, how do I go about purchasing my first home, and do I qualify to purchase without having a down payment?

    Each of these questions represents an opportunity for the team and I to provide a solution to these problems.  This is what we do everyday.  And, because the circumstances of each client or customer who comes to us is different, it means each problem that we seek to provide solutions for is just as unique.  It's one of the beautiful things about REALTORS and The All-Star Team, REALTORS, in particular.  In spite of the plethora of information available at the touch of a fingertip, there is still no technological substitute that can take into account your unique circumstances and create solutions designed to meet your needs in a more complete way than a seasoned professional who has invested time and energy into developing skills and expertise in the field of real estate.  A professional who lives and breathes the same air as you do within the same communities is irreplaceable.  

    My hope is that when you think of The All-Star Team, REALTORS, your first thought is of a team who is capable to provide solutions to thousands of real estate problems you or your friends might encounter....again, and again.  It just so happens that Spring is an excellent season for problem solving!  Consequently, our minds are sharpened; we are ready for the task; and we are humbled by your trust.

Sincerely,

Adam and Team

Want to be a homeowner? You can do it!

by

Visit www.AllStarTeam.com/Homestead if you need more information.

Travel and Learn with the All-Star Team

by Brenda Blackwell

Anyone that knows me knows that I love to travel.  I never dreamed that when I got into real estate over 17 years ago that I would not only find a career that I love but would also get the opportunity to travel to major cities in the U.S. and abroad!  What many people do not know is that The All-Star Team is very determined that our agents keep up with the newest trends, statistics and advances in the real estate field.  Therefore, we have not missed a National Realtor’s Convention and Expo since I have been employed.  You may ask “What is so great about the National Association of Realtors Conference and Expo”?  Well, It is by far the largest and most important real estate conference in the United States.  It has been described as the Super Bowl, World Series, and Game of Thrones finale all in one!   For 4 days we mix and mingle with the top producing real estate professionals, industry experts and corporate executives.  There are over 100 education sessions spanning from topics of current real estate technology, law, staging, time management techniques, safety, marketing and sales strategies, fixing and flipping homes, nabbing the online leads, personal growth, investment forums, team-building …I could go on and on!  Plus they are all taught by powerhouses of the real estate industry.  And I cannot forget to mention the Realtor Expo which has 400 industry vendors and more classes on how to use all the new gadgets and gismos!  I’m telling you…we are pumped when we get back to Hattiesburg and loaded with new ideas and inspiration!   And to top it off…this year, Adam and DeLois have ordered the NAR Convention Sessions, because who could possibly attend everything?  Each Monday at staff meeting one of us presents a synopsis of a session that they have listened to the past week.  We just keep on learning!!!

 The conventions are always held in fantastic locations to draw as many attendees (20,000 +) as possible and to have a convention complex big enough to hold everyone.   Past conventions have been held in Orlando, Anaheim, San Diego, San Francisco, Chicago, New Orleans and Boston.   I joke with Adam and DeLois every year saying I may be retiring soon but I have to check out where the convention will be held before I make that decision!  The Boston NAR Convention 2018 was worth the wait!  And the 2019 convention will be held in San Francisco.  Even though it has been located there twice in the past, I am going to hold out on retirement at least one more year!  Linda and I always go a few days early to explore the surrounding areas.  We’ve explored Napa Valley, Sausalito, Muir Woods, Alcatraz and of course, The Fisherman’s Wharf.  But Carmel, The Hearst Castle and Yosemite National Park are on my bucket list.  Hummm… I hear they have day trips to each of these places from San Francisco.  So I bet they will be on our itinerary!

Another opportunity that working with this team has afforded me is the chance to travel abroad.  When our team makes our yearly goal, we are awarded a team trip anywhere we choose!  Past trips have included Paris, London, Hawaii, Caribbean cruises, New York City, Washington D.C., Jamestown, Williamsburg and Charlottesville, Virginia.  Going on these trips as a team is a great tactic because we truly bond with our co-workers and feel like one big family.  Ha!  I think that’s good!  No really, working here has been one of the best choices of my life and I love my co-workers!

So, in 2019 we will be using all that knowledge gained from all the classes we attended at convention and especially working hard to reach our goals.  (I’ve never been to Italy! Lol!) Just give us a call if you or someone you know is thinking of buying or selling a home!  We will be sure to give you and your referrals the All-Star treatment! 

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The All-Star Team, REALTORS brings you over 200 years of accumulated experience along with the most innovative marketing strategies in the real estate industry. We specialize in the real estate properties located in Hattiesburg, Oak Grove, Petal, Sumrall, Purvis, Columbia, and the entire Pine Belt region. Put The All-Star Team, REALTORS® to work for you as you consider your next home sale or purchase. Experience the team approach to real estate and make us your REALTOR® for life! See how The All-Star Team, REALTORS® really is bringing the Pine Belt home again and again.