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Homes in Wisconsin

Savings plans for housing ,financial concept

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Real Estate Is a Driving Force in the Economy

As the economy recovers from this year’s health crisis, the housing market is playing a leading role in the turnaround. It’s safe to say that what we call “home” is taking on a new meaning, causing many of us to consider buying or selling sooner rather than later. Housing, therefore, has thrived in an otherwise down year.

Today’s high buyer demand combined with low housing inventory means we’re seeing home prices appreciate at an above-average pace. This demand is being driven by those who want to take advantage of historically low mortgage rates. According to Freddie Mac:

“The record low mortgage rate environment is providing tangible support to the economy at a critical time, as housing continues to propel growth.”

These factors are driving a positive impact on the economy as a whole. According to the National Association of Realtors (NAR), the real estate industry provided $3.7 billion dollars of economic impact to the country last year. To break it down, in 2019, the average newly constructed home contributed just over $88,000 per build to local economies. Across the country, real estate clearly makes a significant impact (See map below):


In addition, last week, the Bureau of Economic Analysis announced the U.S. Gross Domestic Product increased at an annual rate of 33.1% in the 3rd quarter of this year, after decreasing by 31.4% in the second quarter. There’s no doubt the growing economy is being fueled in part by the soaring housing market. Experts forecast this housing growth to carry into 2021, continuing to make a big impact on the economy next year as well.

Bottom Line

The American Dream of homeownership has continued to thrive in the midst of this year’s economic downturn, and “home” has taken on a new meaning for many of us during this time. Best of all, the housing market is making a significant impact as the economy recovers.

Information courtesy of  keepingcurrentmatters.com

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3 Graphs That Prove We’re Not Headed for a Foreclosure Crisis

We all know the saying about assumptions.

And if you don’t, well…just Google it.

With the massive surge of unemployment that happened this year, it’s natural to assume that a massive surge of foreclosures will follow.

However, history is not expected to repeat itself this time.

Here are 3 simple graphs that prove why we’re not headed for another foreclosure crisis.

The unique conditions that led to the 2008 market collapse and foreclosure crisis were in big part due to cashed-out equity. With many borrowers owing more than they could afford on their homes, mass foreclosures followed.

Today’s market, however, looks a lot different. Instead, homeowners have an abundance of equity, and lending standards are much stricter. This means that instead of foreclosing and walking away, many homeowners are in a good position to protect their investment.

Looking at this graph, we can see that of those who requested forbearance, nearly 44% have either paid off their mortgage or opted out. It also shows that of all the homeowners in forbearance, only 80,000 are at risk of moving into foreclosures.

To drive this point home, Mike Fratantoni, Senior Vice President and Chief Economist at the Mortgage Bankers Association (MBA), said:

“Nearly two-thirds of borrowers who exited forbearance remained current on their payments, repaid their forborne payments, or moved into a payment deferral plan. All of these borrowers have been able to resume – or continue – their pre-pandemic monthly payments.”

After the 2008 financial collapse, we saw the worst foreclosure crises in history. The market was flooded with homes that had defaulted on their mortgage payments, spiking all the way up to over 500,000 at the peak in 2009.

Today, we are looking at a much different story. According to Black Knight, 91% of homeowners in forbearance have 11% equity in their homes. While that may not seem like a big number, that much equity means rather than foreclose, those homeowners can not only sell their homes but walk away with gains from it.

According to Odeta Kushi, economist for First American:

“Economic distress and a lack of equity are the two triggers of a foreclosure. Each trigger by itself is necessary, but not sufficient for foreclosure. The percentage of economically distressed homeowner households is highest in COVID-19 hotspots… However, the equity built up since the Great Recession can provide an important buffer for distressed homeowners.”

The big question is: what happens when forbearance inevitably expires? Many lenders are offering to help homeowners create a plan for the deferred payments. There are multiple options that homeowners can pursue at this point, and with the right planning and communication with their lender, they may be able to avoid foreclosure, especially if they have equity in their homes.

Bottom Line

The reality of the situation is this: through all of the hardship Americans have faced this year, people are going to fall into foreclosure.

However, the last thing anyone wants right now is another foreclosure crisis like 2008, and there are many factors that suggest it’s not going to be like last time.

Anyone can drive a car really fast in a straight line. It’s those that can navigate the twists and turns that cross the finish line first.

That’s why we’ve put together the How to Succeed in a Changing Market eGuide. This free resource tells you everything you need to know about navigating a changing market so you can be the real estate agent your clients trust-especially when times are tough.

Information courtesy of: KCM Real Estate Blog

VA Home Loans

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VA Home Loans: Helping Heroes Find a Home

Today, on Veterans Day, we honor those who have served our country and thank them for their continued dedication to our nation. In the United States, there are many valuable benefits available to Veterans, including VA home loans. For over 75 years, VA home loans have provided millions of Veterans and their families the opportunity to purchase their own homes.

As we consider the full impact of VA home loans, it’s important to both understand these great options for Veterans and to share them with those we know who may be able to benefit most. For a variety of different reasons, many Veterans don’t use their VA home loan options, so being knowledgeable about what’s available and how they work may be a game-changer for many.

Facts about 2019 VA Home Loans (most current data):

624,546 home loans were guaranteed by the Veterans Administration.
306,879 VA home loans were made without a down payment.
2,055 grants totaling $118 million were provided to help seriously disabled Veterans purchase, modify, or construct a home to meet their needs.

VA Home Loans Often Offer:

No down payment options as long as the sales price isn’t higher than the home’s appraised value.
Better terms and interest rates than loans from other lenders.
Fewer closing costs, which may be paid by the seller.

Bottom Line

The best thing you can do today to celebrate Veterans Day is to share this information with those who can potentially benefit from these loan options. For more information, contact a local real estate professional who can assist you in the process. Thank you for your service.

Information courtesy of keepingcurrentmatters.com

Home ownership is the key

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Homeownership Is a Key to Building Wealth

For years, real estate has been considered the best investment you can make. A major reason for this is due to the net worth a household gains through homeownership. In fact, according to the 2019 Survey of Consumer Finance Data from the Federal Reserve, for the average homeowner:

“…a primary home accounts for 90% of the total wealth of a family in the U.S.”

How do homeowners gain wealth?
Most large purchases, like cars and appliances, depreciate in value as they age, so it’s understandable to question how owning a home can increase wealth over time. In a simple equation, the National Association of Realtors (NAR) explains how the combination of paying your mortgage and home price appreciation grow overall wealth:

Principal Payments + Price Appreciation Gains = Housing Wealth Gain

As home values increase and you make payments toward your home loan, you’ll gain wealth through equity. The same article from NAR also addresses how wealth gains tend to play out over time:

“Housing wealth accumulation takes time and is built up by paying off the mortgage debt and by price appreciation. And while home prices can fall, home prices tend to recover and go up over the longer term. As of September 2020, the median sales price of existing home sales was $311,800, a 35% gain since July 2006 when prices peaked at $230,000.”

Taking a look at how equity has grown for the typical homeowner, it’s clear to see how real estate is a sound long-term investment. NAR notes:

“Nationally, a person who purchased a typical home 30 years ago would have typically gained about $283,000 as of the second quarter of 2020.” (See graph below):

Bottom Line

Whether you’re a current homeowner planning to put your equity toward a new home or have hopes of buying your first home soon, homeownership will always be a great opportunity to build your net worth and overall wealth. Owning a home is truly an investment in your financial future.

Information courtesy of keepingcurrentmatters.com

winter flurry blog

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Winter Will Bring a Flurry of Activity to the Housing Market

In the second half of this year, the housing market surged with activity. Today, real estate experts are looking ahead to the winter season and the forecast is anything but chilly. As Lawrence Yun, Chief Economist for the National Association of Realtors (NAR), notes:

“It will be one of the best winter sales years ever.”

The typical winter slowdown in the housing market is simply not on the radar. Here’s why.

While today’s historically low mortgage rates are expected to remain low, they won’t be this low for much longer. This could be the last chance for homebuyers to secure such low rates, and they’re ready to take action. In a recent article, Bankrate explained:

“If you’re looking to buy a home…expect mortgage rates to remain low into 2021. However, the possibility of rates falling to 2.5 percent or lower has faded as the U.S. economy has rebounded.”

As long as we continue to see low-interest rates, we’ll see hopeful buyers on the hunt for their dream homes. Yun confirmed:

“The demand for home buying remains super strong…And we’re still likely to end the year with more homes sold overall in 2020 than in 2019…With persistent low mortgage rates and some degree of a continuing jobs recovery, more contract signings are expected in the near future.”

The challenge, however, is the lack of homes available for sale. With that in mind, all eyes are on homeowners to see if they’ll sell this winter or wait until spring. Danielle Hale, Chief Economist for realtor.com, says it’s best for sellers to capitalize on this moment sooner rather than later:

“We currently see buyers sticking around in the housing market much later than we usually do this fall. If that trend continues, we will see more buyers in the market this winter, too. So, this winter is likely to be a good time to sell.”

With buyers ready to stay active this winter, sellers who want to close a deal on the best possible terms shouldn’t wait until spring to put their homes on the market.

Bottom Line: Experts agree the winter housing market could potentially be bigger than ever. Whether you’re ready to buy or sell, contact a local real estate professional today so you can be in your dream home by the new year.