Selling a home in 2016? Here's what you need to know

If you expect to put your home on the block at some point in 2016, here are some key factors for you to keep in mind before you address issues and concerns to make the best possible deal.

It's a seller's market ...

Many homeowners remember the fallout that the housing bust had on real-estate prices. Even though most investors think of the financial crisis as having hit its peak in 2008 and early 2009, it took three more years for home prices to hit bottom.

Yet since early 2012, prices have climbed higher, and the Case-Shiller National Home Price Index is coming within spitting distance of matching its highs from 2006 and 2007.

Where you live is a key factor in determining just how much of a seller's market you can expect. Hot markets like San Francisco have seen some housing-boom-era practices return to favor, with many reports of bidding wars that result in offers well above the asking price.

By contrast, areas where economic prospects are less favorable have never fully recovered from the housing bust. The more lucrative a region's economic future appears to be, the easier you can expect it to be to sell a home.

... but mortgages could get more expensive

One key factor in how much sellers receive for their homes is how much buyers can afford. Low mortgage rates have helped fuel price increases in recent years.

But some now fear that with the Federal Reserve having begun a new cycle of rate increases, a move higher for mortgage rates could make homes less affordable.

So far, the tiny quarter-point boost that the Fed made in mid-December hasn't pushed mortgage rates appreciably higher. Historically, though, tightening has generally led to increased rates on mortgage loans. Sellers need to be prepared for greater difficulty for prospective buyers trying to get financing.

Tax benefits still favor home sales

The biggest tax break for ordinary taxpayers is still the exclusion on capital gains for the sale of a personal residence. Single taxpayers can exclude up to $250,000 in gains from the sale of a home from tax, and joint filers get a double-sized exclusion of $500,000.

To qualify, you have to meet a couple of tests. First, the property in question has to be your main home. In addition, to get the full exclusion, you have to have lived in the home for at least 24 months in the past five years.

You can't have claimed a home-sale exclusion on tax returns for the previous two years. In some cases, partial exclusions are available, but getting specific tax advice from your accountant or tax professional is essential to make sure you're aware of all the tax implications of a home sale.

Get help at the right price

Most homeowners use a real-estate agent to help market and sell their homes. Historically, the typical 6% commission on home sales was sacrosanct, but some agents have increasingly been willing to negotiate lower commissions for their services.

Flat-fee brokerages have also popped up, offering a fixed cost that sellers can count on that's often lower than the percentage-based commission would be.

The issue raises a huge debate in the real-estate community, with full-service agents arguing that they fully earn their commissions by bringing in more potential buyers and eventually getting higher sale prices.

Yet with some agencies offering incentives to buyers and sellers that reduce net commission costs, sellers should realize that they have leverage in coming up with a deal that works for them.

Selling a home is a monumental event, and it can introduce a number of complicated financial considerations. Being aware of those considerations and making a plan to deal with them will help the selling process go a lot more smoothly.

CNN ARTICLE

Ken Keegan Real Estate Broker
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Pending Home Sales Nudge Forward in October

 

 

Pending home sales were mostly unchanged in October, but shifted marginally higher after two straight months of declines, according to theNational Association of Realtors®. Gains in the Northeast and West were offset by declines in the Midwest and South.

The Pending Home Sales Index,* a forward-looking indicator based on contract signings, inched 0.2 percent to 107.7 in October from an upwardly revised 107.5 in September and is now 3.9 percent above October 2014 (103.7). The index has increased year-over-year for 14 consecutive months.

Lawrence Yun, NAR chief economist, says pending sales have plateaued this fall as buyers struggle to overcome a scant number of available homes for sale and prices that are rising too fast in some markets. "Contract signings in October made the most strides in the Northeast, which hasn't seen much of the drastic price appreciation¹ and supply constraints that are occurring in other parts of the country," he said. "In the most competitive metro areas – particularly those in the South and West – affordability concerns remain heightened as low inventory continues to drive up prices."   

According to Yun, although contract activity has slightly trended downward since the spring, the ongoing strengthening of several local job markets continues to fuel the improved demand for buying that has now pushed existing-sales above a 5 million sales pace for eight consecutive months.

"Areas that are heavily reliant on oil-related jobs are the exception and have already started to see some softness in sales because of declining energy prices," adds Yun.

Yun presented his 2016 economic outlook and housing forecast earlier this month at the2015 REALTORS® Conference & Expo in San Diego. With demand expected to remain stable through the final two months of the year, he forecasts existing-home sales to finish 2015 at a pace of 5.30 million – the highest since 2006.

Although further expansion in existing-sales is expected next year, ongoing inventory shortages and affordability pressures from rising prices and mortgage rates will likely temper sales growth to around 3 percent (5.45 million) in 2016. Home prices are expected to slightly moderate from a 6 percent increase in 2015 to 5 percent next year.

"Unless sizeable supply gains occur for new and existing homes, prices and rents will continue to exceed wages into next year and hamstring a large pool of potential buyers trying to buy a home," says Yun.

The PHSI in the Northeast rose 4.5 percent to 93.6 in October, and is now 6.8 percent above a year ago. In the Midwest the index declined 1.0 percent to 103.9 in October, but remains 3.3 percent above October 2014. 

Pending home sales in the South decreased 1.7 percent to an index of 118.1 in October and are now 0.3 percent below last October. The index in the West climbed 1.7 percent in October to 106.2, and is 10.4 percent above a year ago.

The National Association of Realtors®, "The Voice for Real Estate," is America's largest trade association, representing 1 million members involved in all aspects of the residential and commercial real estate industries.

Realtor.org Article

 

Ken Keegan Real Estate Broker
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How to buy a home without a 20% down payment

Don't have tens of thousands of dollars in savings? That doesn't mean there's no hope of becoming a homeowner.

Home prices are on the rise, making it harder for buyers to cobble together a 20% down payment.

With the national average listing price for a four-bedroom, two-bathroom home at $302,632, according to Coldwell Banker Real Estate, home buyers need to come up with $60,526 to put 20% down.

But there are options for buyers who don't have that kind of cash sitting in the bank.

1. Apply for an FHA loan

The Federal Housing Administration backs mortgages that require as little as 3.5% down.

Anyone can apply, though you'll usually need good credit.

There are a few downsides though. For starters, the lower down payments can mean more paperwork and will translate into higher monthly payments since borrowers are financing more, warned real estate broker Brendon DeSimone.

Plus, you'll need to pay mortgage insurance on the loan in addition to your principal and interest, which raises monthly payments even more.

But those extra payments are lower than they once were. At the start of 2015, the government reduced mortgage insurance premiums on some FHA loans, which increased the pool of borrowers.

"The fee change made more people see the FHA option as a financial alternative," said according to Jonathan Smoke, chief economist for Realtor.com.

2. Look to see what Uncle Sam offers.

The Department of Veteran's Affairs guarantees home loans with 0% down for current and former service members.

The loans come with competitive interest rates and no private mortgage insurance premium, but borrowers could pay some fees at closing.

The Department of Agriculture has a home loan program to increase homeownership in more rural and less-populated areas. USDA loans do not require putting any money down, but there are eligibility requirements, including income and property size.

Many cities and municipalities offer down payment assistance programs to help potential buyers, according to Smoke. "Some of the programs are based on profession, where you are living, income qualification ratios ... they want to encourage people to buy."

3. Ask family members for a loan.

Tapping a relative for a large sum of money can be awkward, but setting up a loan is sometimes an enticing offer for both parties.

With many retirees earning very little interest on their money, a personal mortgage can offer a steady stream of income.

"If a parent has the money in an interest-bearing account earning darn near zero, this might be an option to increase their yield and help their child out at the same time," said Eric Hutchinson, certified financial planner at United Capital Financial Advisers.

Experts advise laying out the loan terms, including a payback schedule and interest rate, in writing. To make a loan legitimate to the IRS, the interest rate needs to be comparable to what banks charge.

"Consider your child a junk bond ... take a 10-year Treasury note yield and add two to three percent," advised Timothy Watters, certified financial planner at Watters Financial Services.

Buyers will have to disclose all loans to their mortgage lender.

4. Get the money gifted

Some well-off parents would rather see their inheritance money in action while they're still alive, said Hutchinson.

The gift tax is currently $14,000 per person, which means a parent can give a married couple up to $28,000, without triggering taxes.

Borrowers that go this route will have to provide their mortgage issuer with a letter from the giver that states the money doesn't have to be repaid, and may need to show their financial statements as well.

5. Dip into retirement funds ... cautiously

Another place to look for the money: try tapping your retirement account, if you have one. But use caution to avoid paying penalties.

Some 401(k) plans allow participants to take out 50% of their vested balance (up to $50,000) as a tax-free loan, according to Hutchinson. The loan needs to be repaid on a given timeline -- usually five years. But there's a big caveat: If you leave the company before the loan is paid back, you will likely owe the entire balance within 60 days. If you can't pay, the amount will be treated as an early withdrawal and you'll owe regular income taxes, plus a penalty.

Qualified first-time home buyers can also tap a traditional IRA account up to $10,000 without facing the 10% penalty. You will pay taxes on the amount withdrawn. If you have a Roth IRA and it's been open for at least five years, the distribution (up to $10,000) is tax free. Roths also allow you to withdraw your contributions for any reason without incurring tax or a penalty.

Original CNN Article

Ken Keegan Real Estate Broker
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Home Sellers Net Highest Profits in 8 Years

Rising home prices over the last few years are finally putting more money back into home sellers’ pockets. Home owners who sold during the third quarter saw an average price gain of $40,658 – or 17 percent – from the purchase price of their property – the highest average price increase for sellers since the third quarter of 2007, according to RealtyTrac’s Third Quarter 2015 U.S. Home Sales Report.

“An increasing number of home owners in 2015 have been cashing out the home equity they’ve gained during the housing recovery of the past three years,” says Daren Blomquist, vice president at RealtyTrac. “That may be a good decision because the data points to a plateauing market going forward. Home price appreciation is slowing, a trend that will continue if interest rates rise in the coming months as expected. Meanwhile the threat of rising interest rates combined with lowered premiums for buyers using FHA loans is spurring more demand.”

In its analysis of 171 counties nationwide, RealtyTrac found that the following counties saw sellers, on average, see some of the largest gains in the third quarter:

• San Francisco County, Calif.: 58.7% gain
• San Mateo County, Calif. (San Francisco metro area): 55.7%
• Santa Clara County, Calif. (San Jose metro area): 47.7%
• Alameda County, Calif.: 43.1%
• New York County, N.Y.: 41.6%

RealtyTrac’s report also showed the following counties posted the largest year-over-year increases in home prices:

• San Mateo County, Calif.: up 17.6%
• New York County, N.Y.: up 16.1%
• Santa Clara County, Calif.: up 15.7%
• Weld County, Colo. (Greeley metro area): up 14.6%
• San Francisco County, Calif.: up 13.3%

Realtor.org Article

Ken Keegan Real Estate Broker
(910) 523-0903 mobileEmail Mewww.KenKeegan.com Click here for more information on Brunswick, County Real Estate St. James Plantation

Real estate today: Older buyers, more bathrooms

After years of flunking, the American housing market finally merits a B+ grade.

Good news abounds: In August, new home sales are at their highest level since 2008. Homebuilder confidence is back to its best level in a decade and even mortgage applications are climbing again.

And data released Tuesday shows construction crews are starting on homes at the fastest pace since the recession.

Put all that together and the housing market is finally starting to be a real boost to the U.S. economy -- and stock market -- instead of a drag.

But today's real estate market is a very different place than before the recession.

American home buyers are getting older and homes are getting bigger.

The median age of a homebuyer has gone from 35 to 43

The median age of a homebuyer in 1985 was 35.

When the housing boom was nearing its peak in 2005, the median homebuyer's age was 39. Now it's 43, according to U.S. Census data.

"We consistently tell that story of people delaying homeownership," says Skylar Olsen, senior economist at Zillow. "People are delaying things that pre-date homeownership -- like getting married later and having children later."

Homes are getting bigger

Homebuilders are catering to more middle aged buyers by building larger homes.

Since 2000, the typical American home for sale had about 1,800 square feet. That's remained fairly steady over time.

But new homes that are just being built typically have 2,200 square feet, according to an analysis by the National Association of Home Builders. Potential homebuyers say they want a place that is at least that large.

So what's going into all that extra space?

More bathrooms.

"Builders are adding more bathrooms. You want a little bit more privacy," says Olsen.

Multi-family homes are also booming as people buy homes as investment properties to rent out. In the late 1980s, people would rent for four years before purchasing their first home. Now it's at least six years.

Large homes often translate to more money for builders. No wonder the stock market funds that track homebuilders are soaring this year.

The iShares U.S. Home Construction ETF (ITB), SPDR S&P Homebuilders ETF (XHB) and iShares Residential Real Estate Capped ETF (REZ) are all up about 6% or more in 2015. That's much better than the overall stock market, which is negative for the year.

Student debt doesn't explain housing trends

The other common explanation for this big shift in American real estate is that young people have too much debt to buy homes, especially from student loans.

But economists at Zillow took a look at the probability that someone would buy a home if they have zero debt all the way up to $50,000 in student loans.

They found that higher student debt had almost no impact on the decision to buy a home.

Banks were very willing to lend to young people who had bachelor's degree or higher, a recognition that these people would be likely to earn good salaries and pay off their loans.

The one exception was people who earned only an associate's degree. There was a 75% chance of buying a home if they had no student debt.

But that fell to less than 60% chance of purchasing property if they had $50,000 in loans.

It's an economic reality that workers with at least a bachelor's degree now earn about $65,000 on average a year, compared to less than $50,000 a year for those with only an associate's degree.

CNN Article

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New home sales highest since 2008

New home sales for single families totaled 552,000 homes last month. That's the best monthly figure since February 2008 and an encouraging sign of the housing market's momentum.

It was nearly a 6% increase from July, which was also revised up, according to the Census Bureau.

Still, the figure is a far cry from the historic average: the average monthly number of new home sales over the last 30 years is 706,000 according to Peter Boockvar, chief market strategist at the Lindsey Group.

"Today's figure is encouraging but we've got a LONG way to go," Boockvar wrote in a note to clients.

Some economists believe there could be an uptick in home buying as prospective home owners try to lock in a low mortgage rate before the Federal Reserve raises interest rates.

The average rate on a 30-year fixed mortgage in August was 3.9%, very low on a historical basis. A decade ago the rate was about 5.8% and 20 years ago it was 7.8%. When the Fed raises rates, theexpectation is that rates on mortgages will gradually move up too.

The central bank is now expected to raise rates in either October or December.

CNN Article

Ken Keegan Real Estate Broker
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Brunswick County Association of REALTORS® releases July 2015 Real Estate Statistics

 

Brunswick County saw a considerable increase in residential real estate sales and average sales price in July 2015 compared to the previous year, according to statistics released today by the Brunswick County Association of REALTORS®.

 

“July is showing another healthy increase in units sold and average sales prices and is the second best month in total sales this year, behind June,” said Cynthia Cumbie, interim CEO of the Brunswick County Association of REALTORS®.

 Total sales jumped 37 percent between July 2014 and June 2015, according to the latest statistics, going from $46.8 million to $64 million.

 The number of units sold went from 204 in July of 2014 to 259 this July, a 27 percent increase, BCAR reported. The average sales price jumped 7.9 percent, from $229,405 to $247,460.

Cumbie stated the average number of days property spends on the market is also steadily decreasing, dropping at least 2 percent each month this year and about 18 percent lower than last year.

Another sign of improvement in the market is the number of pending residential sales, Cumbie said.

“The residential pending numbers are at their highest in the past 25 months and up almost 18 percent over June to 350 pending residential listings in July,” she explained. “If pending sales were to continue at this pace, we would be out of inventory in about six months.”

Two of the biggest sales markets are Boiling Spring Lakes, which has 3.9 months of residential inventory based on pending sales, and the Calabash/Carolina Shores area, which reports 3.6 months of inventory.

Brunswick County

Single Family Sales -- Listings

• July 2014:  349
• July 2015:  462
• Change:   32.4%

Single Family Sales -- Units Sold

• July 2014:  204
• July 2015:  259
• Change:  27%

Single Family Sales -- Average Sale Price

• July 2014:  $229,405
• July 2015:  $247,460
• Change:  7.9%

Single Family Sales -- Total Sales Volume

• July 2014:  $46,798,565
• July 2015:  $64,092,050
• Change:  37%

Lot Sales -- Units Sold

• July 2014:  78
• July 2015:  75
• Change:  -3.8%

Lot Sales -- Average Sale Price

• July 2014:  $77,899
• July 2015:  $64,482
• Change:  -17.2%

These numbers reflect sales within the Brunswick County MLS. Some sales in Brunswick County are included in a neighboring MLS and may not be reflected in this analysis.

 

Ken Keegan Real Estate Broker
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St. James enters final process of land acquisition for access to Middleton Boulevard

The Town of St. James will now enter into negotiations with private landowners to facilitate an extension of St. James Drive to Middleton Boulevard, thus providing an exit for residents south of Polly Gully Bridge if something were to make that structure impassable.

  

Town council, following a 20-minute closed session on Tuesday, authorized mayor Becky Dus and mayor pro-tem Bruce Maxwell to meet on its behalf with LaDane Enterprises LLC principal LaDane Williamson and her brother DeCarol Williamson of DCW III LLC to seek either the purchase of a 13-acre tract or an easement across that parcel. A 100-foot right-of-way is required for construction of a 1,000-foot-long road, at town expense, to connect a developer-funded extension of St. James Drive to Middleton.

 

Talks between the Williamsons and the Town of St. James had proceeded smoothly until December 2014, when the state notified the parties that a 130-acre parcel owned by the Williamsons would be subject to a declaration of “enhanced value” should any or all of the tract be sold. The state had paid the Williamsons a reported $800,000 when right-of-way for Middleton Boulevard was purchased because it severed the 130 acres—bounded by Middleton on the west and St. James Plantation of the east—from the remainder of a 3,500-acre property owned by the Williamson heirs.

But the Town of St. James was only interested in the southernmost portion—13 acres, separated by wetlands—on which the access road had been plotted,  and approved by the N.C. Department of Transportation.

Earlier this year, the Town of St. James initiated an eminent domain proceeding that would allow the town to acquire the needed right-of-way at a cost to be determined by a Brunswick County Superior Court judge. An appraisal was required; the state at first said the entire 130-acre tract must be appraised, but relented.

At Tuesday’s council meeting, the “enhanced value” of the 13-acre tract was reported to be $94,900.

If the town is unsuccessful in negotiating a sale or easement price, the option of eminent domain remains in play.

Original Article from State Port Pilot

Ken Keegan Real Estate Broker
(910) 523-0903 mobileEmail Mewww.KenKeegan.com Click here for more information on Brunswick, County Real Estate St. James Plantation