Where Do The Experts Think Home Values Are Headed?

Future Home Values: Where Do The Experts Think They Are Headed? Posted: 22 Feb 2016 04:00 AM PST 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. The results of their latest survey: Home values will appreciate by 3.7% over the course of 2016, 3.3% in 2017 and 3.2% in the next two years, and finally 3.1% in 2020 (as shown below). That means the average annual appreciation will be 3.3% over the next 5 years. The prediction for cumulative appreciation slowed slightly from 21.6% to 17.7% by 2020. The experts making up the most bearish quartile of the survey still are projecting a cumulative appreciation of 10.9%. Bottom Line Individual opinions make headlines. We believe the survey is a fairer depiction of future values. SOURCE: the smart guys at KCM.com

 

Real Estate is a Great Investment - In Both Personal Happiness and Wealth

Real Estate Shines as an Investment in 2015

A survey by The Joint Center of Housing Studies at Harvard University reveals that when a family is buying a home they consider the financial benefits of homeownership along with the social benefits. The survey mentions things like:

• Paying rent does not make sense
• Homeownership provides a good financial opportunity
• Owning a home helps you building family wealth
• Buying a home is investing in your retirement
• Home equity gives you something to borrow against

So how did homeownership match up against other investments in 2015? Here is a chart that compares its return on investment against precious metals and the stock market last year:

Bottom Line

Not only did homeownership offer all its social benefits. It also was a great investment financially.

SOURCE: KCM.com

Homeownership Builds Wealth and Offers Stability

The most recent Housing Pulse Survey released by the National Association of Realtors revealed that the two major reasons Americans prefer owning their own home instead of renting are:

1. They want the opportunity to build equity.
2. They want a stable and safe environment.

Building Equity

In a recent article, John Taylor, CEO of the National Community Reinvestment Coalition, explained that those who lack the opportunity to become homeowners have a weakened ability to reinvest their wealth:

“We traditionally have been huge supporters of homeownership. We see it as a way to provide stability for households but also as an asset-building strategy. If you continue to be a renter, locked out of the homeownership arena, increasingly those things are further and further out of reach. They’re joined at the hip. They perpetuate each other.”

Family Stability

Does owning your home really create a more stable environment for your family?
A survey of property managers conducted by rent.com last month disclosed two reasons tenants should feel less stable with their housing situation:

• 68% of property managers predict that rental rates will continue to rise in the next year by an average of 8%.
• 53% of property managers said that they were more likely to bring in a new tenant at a higher rate than negotiate and renew a lease with a current tenant they already know.

We can see from these survey results that renting will provide anything but a stable environment in the near future.

Bottom Line

Homeowners enjoy a more stable environment and at the same time are  given the opportunity to build their family’s net worth.

SOURCE: the smart guys at KCM.com

The American Dream

Homeownership is Still a Huge Part of the “American Dream”

There have been some who have voiced doubt as to whether or not the younger generations still consider buying a home as being part of the “American Dream”. A study by Merrill Lynch puts that doubt to rest.
According to their research, every living generation still believes that owning a home is in fact important. Here are the numbers:

This should not surprise us as many studies have revealed the benefits enjoyed by the families who own their own home. One such study was done by the Joint Center of Housing Studies at Harvard University that addressed a major financial benefit to owning your own home: forced savings. The report explains:

“Since many people have trouble saving and have to make a housing payment one way or the other, owning a home can overcome people’s tendency to defer savings to another day.”

The Merrill Lynch study proves this point with the following data on home equity (a form of savings):

Bottom Line

There are many reasons that owning a home makes sense. The financial reasons are powerful. As one participant in the Merrill Lynch study put it:

“When I was younger, I always worried about that monthly mortgage payment. Now that I am retired, I have the peace of mind of knowing I own my home free and clear.”

 SOURCE: The Smart Guys at www.KCM.com

The Difference An Hour Can Make

Every Hour in the US Housing Market: 

• 634 Homes Sell
• 347 Homes Regain Positive Equity
• Median Home Values Go Up $1.46
• SOURCE: The Smart Guys at www.kcm.com

Buying a Home Remains 35% Less Expensive than Renting!

In the latest Rent vs. Buy Report from Trulia, they explained that homeownership remains cheaper than renting with a traditional 30-year fixed rate mortgage throughout the 100 largest metro areas in the United States.
The updated numbers actually show that the range is from an average of 16% in Honolulu (HI), all the way to 55% in Sarasota (FL), and 35% Nationwide!

The other interesting findings in the report include:

• Interest rates have remained low and even though home prices have appreciated around the country, they haven’t greatly outpaced rental appreciation. “In the past year, these two trends have made homeownership even more affordable compared with renting.”
• Some markets might tip in favor of renting if home prices increase at a greater rate than rents and if – as most economists expect – mortgage rates rise, due to the strengthening economy.
• Nationally, rates would have to rise to 10.6% for renting to be cheaper than buying – and rates haven’t been that high since 1989.  

Bottom Line

Buying a home makes sense socially and financially. Rents are predicted to increase substantially in the next year, lock in your housing cost with a mortgage payment now.

SOURCE: the smart guys at www.KCM.com

Where Will Home Prices Be Next Year?

 

Some interesting facts:

• 25 states are forecasted to achieve higher levels of appreciation in the next 12 months than already achieved in the last year.
• 25 state and the District of Columbia are forecasted to experience a slow in appreciation.
• All 50 states & D.C. are forecasted to achieve some level of positive price appreciation.

Even though each state is appreciating at different levels, you need to know the Cost of Waiting until next year to buy your dream home!

SOURCE: The smart guys at KeepingCurrentMatters.com