Whether You Rent or Buy, You’re Paying a Mortgage

There are some people that have not purchased a home because they are uncomfortable taking on the obligation of a mortgage. Everyone should realize that, unless you are living with your parents rent free, you are paying a mortgage - either yours or your landlord’s.

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As The Joint Center for Housing Studies at Harvard University explains:

“Households must consume housing whether they own or rent. Not even accounting for more favorable tax treatment of owning, homeowners pay debt service to pay down their own principal while households that rent pay down the principal of a landlord plus a rate of return.  

That’s yet another reason owning often does—as Americans intuit—end up making more financial sense than renting.”

Christina Boyle, a Senior Vice President, Head of Single-Family Sales & Relationship Management at Freddie Mac, explains another benefit of securing a mortgage vs. paying rent:

“With a 30-year fixed rate mortgage, you’ll have the certainty & stability of knowing what your mortgage payment will be for the next 30 years – unlike rents which will continue to rise over the next three decades.”

As an owner, your mortgage payment is a form of ‘forced savings’ which allows you to have equity in your home that you can tap into later in life. As a renter, you guarantee the landlord is the person with that equity.

Interest rates are still at historic lows, making it one of the best times to secure a mortgage and make a move into your dream home. Freddie Mac’s latest report shows that rates across the country were 3.43% last week.

Bottom Line

Whether you are looking for a primary residence for the first time or are considering a vacation home on the shore, now may be the time to buy.

You may qualify for a mortgage sooner than you think, with credit scores as low as 600s, and downpayment as little as 3-5%!  Don't wait, it doesn't hurt to talk to a mortgage professional or real estate agent today to start planning for the future!

Contact Jay Cermak Top Fort Lauderdale Real Estate Agent with Keller Williams at 954.235.3589 and schedule a FREE Real Estate consultation.

Serving all of your South Florida and Fort Lauderdale Real Estate Needs!

U.S. Real Estate Market Update: 4 Stats That PROVE This Is NOT 2005 All over Again

Recent research by the National Association of Realtors (NAR) examined certain red flags that caused the housing crisis in 2005, and then compared them to today’s real estate market. Today, we want to concentrate on four of those red flags.

1. Price to Rent Ratio
2. Price to Income Ratio
3. Mortgage Transactions
4. House Flipping

All four categories were outside historical norms in 2005. Home prices were way above normal ratios when compared to both rents and incomes at the time.

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NAR explained that mortgage transactions as a percentage of all home sales were also at a higher percentage:

“Loose credit was one of the main culprits of the housing crisis. Mortgage lending expanded dramatically as unhealthy housing speculation reached its peak and was met by the highest level of credit availability as measured by the Mortgage Bankers Association. The index measures the overall mortgage credit condition by the share of home sales financed by mortgages. This metric does not capture credit quality, but it does set a view of the importance of financing in supporting the housing market.”

House flipping was rampant in 2005. As NAR’s research points out:

“Heightened flipping activity is a clear indication of speculation in the real estate market. A property is considered as a speculative flip if the property is sold twice within 12 months and with positive profit. Flipping is a normal part of a healthy housing market. In an inflated housing market, expectations about short-term profit from pure price appreciation are very high; therefore, the level of flipping activity would show evidence of being heightened.”

Here are the categories with percentages reflecting the unrealistic ratios & numbers of 2005 as compared to the current market. Remember, a negative percentage reflects a positive gain for the market.

Bottom Line

They say hindsight is 20/20… Today, experts are keeping a close watch on the potential red flags that went unnoticed in 2005.  Keep in mind the media typically reports on the real estate news for an entire company and in my experience they don't look at actual closed sales, which in Broward County have been steady for the past decade!  Typically the report on the number of active homes for sale which doesn't always sell, however that is the most dramatic change in the real estate business by numbers is typically the amount of inventory for sale.

To find out the true story in your local neighborhood contact a local realtor who can show you the data and is trained to interpret the market and what's happening locally.  You wouldn't be happy if a weather man told you it's 75 and sunny all throughout America....so why do we believe the news when they say whats happening to the real estate market in the U.S.?

I study the Real Estate Market Nationally, then by County, then by City, and then when it comes to the purchase or sale of your house I narrow down to the most recent sales and study the trends for that neighborhood.​

Contact Jay Cermak Top Fort Lauderdale Real Estate Agent with Keller Williams at 954.235.3589 and schedule a FREE Real Estate consultation.  

Serving all of your South Florida and Fort Lauderdale Real Estate Needs!

Real Estate Real Life vs. Reality TV: 5 Myths Explained

Have you ever been flipping through the channels, only to find yourself glued to the couch in an HGTV ‘show hole’*? We’ve all been there… watching entire seasons of “Love it or List it,” “Fixer Upper,” “House Hunters,” “Flip or Flop,” “Property Brothers,” and so many more, just in one sitting.

When you’re in the middle of your real estate themed show marathon, you might start to think that everything you see on TV must be how it works in real life, but you may need a reality check.

Reality TV Show Myths vs. Real Life:

Myth #1: Buyers look at 3 homes and make a decision to purchase one of them.

Truth: There may be buyers who fall in love and buy the first home they see, but more often than not the process of buying a home means touring more than three homes.

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Myth #2: The houses the buyers are touring are still for sale.

Truth: The reality is being staged for TV. Many of the homes being shown are already sold and are off the market.

Myth #3: The buyers haven’t made a purchase decision yet.

Truth: Since there is no way to show the entire buying process in a 30-minute show, TV producers often choose buyers who are further along in the process and have already chosen a home to buy.

Myth #4: If you list your home for sale, it will ALWAYS sell at the Open House.

Truth: Of course this would be great! Open Houses are important to guarantee the most exposure to buyers in your area, but are only a PIECE of the overall marketing of your home. Just realize that many homes are sold during regular listing appointments as well. 

Myth #5: Homeowners make a decision about selling their home after a 5-minute conversation.

Truth: Similar to the buyers portrayed on the shows, many of the sellers have already spent hours deliberating the decision to list their home and move on with their life/goals.

Bottom Line

Having an experienced professional on your side while navigating the real estate market is the best way to guarantee that you can make the home of your dreams a reality!

Contact Jay Cermak Top Fort Lauderdale Real Estate Agent at 954.235.3589 and let our team help you achieve your American Dream!

Serving all of South Florida and Fort Lauderdale Areas for all of your buying and selling Real Estate Needs.

*Show Hole - A side effect of binge-watching. Symptoms include a sense of emptiness and depression brought on by realizing you just wasted a good portion of your life watching several seasons of a TV show or an entire movie franchise all at once when you could have managed your time better.

How Do Rising Prices Impact Your Home Equity?

Yesterday, we shared the results of the latest Home Price Expectation Survey byPulsenomics. One of the big takeaways from the survey is that over the next five years, home prices will appreciate 3.5% per year on average, and cumulatively will grow by around 18%.

So what does this mean for homeowners and their equity position?

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For example, let’s assume a young couple purchased and closed on a $250,000 home in January of this year. If we only look at the projected increase in the price of that home, how much equity would they earn over the next 5 years?

Since the experts predict that home prices will increase by 4.5% this year alone, the young homeowners will have gained over $11,000 in equity in just one year.

Over a five-year period, their equity will increase by over $46,000! This figure does not even take into account their monthly principal mortgage payments. In many cases, home equity is one of the largest portions of a family’s overall net worth.

Bottom Line

Not only is homeownership something to be proud of, it also offers you and your family the ability to build equity you can borrow against in the future. If you are ready and willing to buy, find out if you are able to today!

One of our Favorite parts of this job, is helping Americans achieve the American Dream of Homeownership. Sometimes multiple homes! This is what drives our business, knowing we are helping others set a goal to build financial wealth through homeownership and helping them navigate through every step of the process.

Contact Jay Cermak Top Fort Lauderdale Real Estate Agent at 954.235.3589 and let our team help you achieve your American Dream!

Serving all of South Florida and Fort Lauderdale Areas for all of your buying and selling Real Estate Needs.

Where Are Home Prices Headed Over the Next 5 Years?

Today, many real estate conversations center on housing prices and where they may be headed. That is why we like the Home Price Expectation Survey.

Every quarter, Pulsenomics surveys a nationwide panel of over one hundred economists, real estate experts, and investment & market strategists about where they believe prices are headed over the next five years. They then average the projections of all 100+ experts into a single number.

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The results of their latest survey:

Home values will appreciate by 4.5% over the course of 2016, 3.6% in 2017 and about 3.2% in the next two years, and finally 2.9% in 2020 (as shown below). That means the average annual appreciation will be 3.5% over the next 5 years.

The prediction for cumulative appreciation increased slightly from 24.7% to 26.3% by 2020. The experts making up the most bearish quartile of the survey are still projecting a cumulative appreciation of 11.1%.

What does this mean for you?  If you buy a home today for $250,000 than in 2020 your investment could be worth: 

Bulls 26.3% Appreciation = $315,750 home value in 2020

All Projections 18.7% Appreciation = $296,750 home value in 2020

Bears 11.1% Appreciation = $277,500 home value in 2020

Any of these situations would be great right?  Your purchase today is worth more than you bought it for!

Great news if you buy a home Today!

The not so great news is if you wait to buy a home, home values are going up EVERYWHERE!  So if you wait too long you may not be able to afford the place you want to live in now!

Bottom Line

Individual opinions make headlines. We believe the survey is a fairer depiction of future values.

If you are ready to discuss your real estate options schedule a Real Estate Consultation with Jay Cermak Top Fort Lauderdale Real Estate Agent with Keller Williams Realty at 954.235.3589!

Serving all of your South Florida and Fort Lauderdale Real Estate Needs!

Luxury Home Sales & the Impact of the Stock Market

In a recent post, CoreLogic looked at the correlation between stocks and the sales of upper-end properties ($1 Million+ sales price). The report revealed:

 “The powerful ‘wealth effects’ generated by the rapid rise in equities between 2009 and 2015 drove a large rise in the sales of homes that sold for $1 million or more.

Historically, sales of homes priced $1 million or more averaged 1.2 percent of all home sales. The spread between high-end sales and equities widened during the housing bubble but then moved more closely in unison. By the time the equity markets had peaked in May 2015, the $1 million or more share of the market had nearly doubled, averaging 2.2 percent for the remainder of the year.”

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This makes sense. As people see their wealth increasing, they feel more confident in their purchasing power. And, of course, that would also impact their decisions regarding real estate. The stock market dipped earlier this year and there was quite a bit of anecdotal evidence that the upper-end market was beginning to soften.

As we can see in the chart below, the market is again flourishing. That may rejuvenate the luxury market as we move through the rest of the year.

As we proceed through 2016 and enter 2017, the strength of the stock market will be a key factor in the strength of the luxury market. If the stock market falters, look for high-end sales to slow. If the market advances, as it has shown signs of doing most recently, the high-end market will advance.

Whether you are thinking of Buying or Selling a Home contact a professional realtor who cares about you and your time.

Contact Jay Cermak Top Fort Lauderdale Real Estate Agent with Keller Williams Realty at 954-235-3589 and schedule a FREE Real Estate Consultation.

Serving all of your South Florida and Fort Lauderdale Real Estate Needs!

Real Estate Values Today Compared to Pre-2008 Peak

This housing market has many people talking about home values; where they are and where they are headed. It’s also interesting to look back and see how home prices compare to values prior to the housing crisis.

Every quarter, Freddie Mac releases their House Price Index. The index usually provides monthly home values for:

• the nation as a whole
• each of the 50 states
• 367 metropolitan statistical areas

This quarter, the report also included a look at today’s home values as compared to Pre-2008 values. Here is a graphic that breaks down the numbers on a state-by-state basis:

Home Prices are at or above the Pre-2008 Peak in 26 States! The good news is eventually all of these states will be back to above the pre-2008 peak for prices! Most of the states or only 5% away.

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Florida is still 18% below what the prices were in 2008, however this is not everywhere. There are some cities and neighborhoods that are already above the 2008 prices. The only sure way to know if your home is above the 2008 home values is to get a Comparative Market Analysis to know whats happening in your neighborhood and what buyers are willing to pay for your home.

Whether you are thinking of Buying or Selling a Home contact a professional realtor who cares about you and your time.

Contact Jay Cermak Top Fort Lauderdale Real Estate Agent with Keller Williams Realty at 954-235-3589 and schedule a FREE Real Estate Consultation.

Serving all of your South Florida and Fort Lauderdale Real Estate Needs!