Are You Paying Someone Else's Mortgage?

If you are still renting, the clever folks from KCM have some news for you.

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 our parents rent free, you are paying a mortgage - either your mortgage or your landlord’s.
As a recent paper from 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.”
Also, if you purchase with a 30-year fixed rate mortgage, your ‘housing expense’ is locked in over the thirty years for the most part. If you rent, the one guarantee you will have is that your rent will increase over that same thirty year time period.

Whether you are looking for a primary residence for the first time or are considering a vacation home on the shore, owning might make more sense than renting since prices and interest rates are still at bargain prices.
SOURCE: KCM.COM

Vacation Home Sales Soar

Some interesting stats from the folks at KCM.com:

The American desire to own a second home as a vacation home is alive and well!
The National Association of Realtors analysis of U.S. Census Bureau data shows there are approximately 8 million vacation homes in the U.S. Their 2014 Investment and Vacation Home Buyers Survey shows vacation home sales improved substantially in 2013.
NAR Chief Economist Lawrence Yun said favorable conditions are driving second-home sales:
“Growth in the equity markets has greatly benefited high net-worth households, thereby providing the wherewithal and confidence to purchase recreational property,” he said. “However, vacation-home sales are still about one-third below the peak activity seen in 2006.”
Here are the key findings from the report:

Raw Numbers

• Vacation-Home sales rose 29.7 percent to 717,000 from 553,000 in 2012
• Sales accounted for 13% of all transactions last year, up from 11% in 2012
• The median price was $168,700, compared with $150,000 in 2012, reflecting a greater number of more expensive recreational property sales in 2013
• 42% of vacation homes purchased in 2013 were distressed homes (in foreclosure or short sale)

Buyer Profile

• The typical vacation-home buyer was 43 years old
• The median household income was $85,600
• Buyers plan to own their recreational property for a median of 6 years
• 33% said they were likely to purchase another vacation home within two years
• 82% of all second-home buyers said it was a good time to buy (compared with 67% of primary residence buyers)

Reasons for Purchasing

Lifestyle factors remain the primary motivation for vacation-home buyers:

• 87% want to use the property for vacations or as a family retreat
• 31% plan to use it as a primary residence in the future
• 28% wanted to diversify their investments or saw a good investment opportunity
• 23% plan to rent to others

Location

• 41% of vacation homes purchased last year were in the South
• 28% in the West
• 18% in the Northeast
• 14% in the Midwest

The vacation homebuyer purchased a property that was a median distance of 180 miles from their primary residence (down from 435 in 2012)

• 46% were within 100 miles
• 34% were more than 500 miles

Financing

• 38% of vacation-home buyers paid cash in 2013
• The median down payment was 30%, up from 27% in 2012

Homeowner's Net Worth is Over 30x Greater Than Renter's.

Federal Reserve conducted a study on Homeownership. Here are 4 important findings revealed in their report:

• The average American family has a net worth of $77,300
• Of that net worth, 61.4% ($47,500) of it is in home equity
• A homeowner’s net worth is over thirty times greater than that of a renter
• The average homeowner has a net worth of $174,500 while the average net worth of a renter is $5,100

The Fed study found that homeownership is still a great way for a family to build wealth in America.

A Home’s Cost vs. Price...the Sesame Street version

Here is some straight talk from my pals at KCM crew. They are so good at getting to the point. Here is the Sesame Street version of the economics of home ownership:

We have often talked about the difference between COST and PRICE. As a seller, you will be most concerned about ‘short term price’ – where home values are headed over the next six months. As either a first time or repeat buyer, you must not be concerned about price but instead about the ‘long term cost’ of the home. Let us explain.
Recently, we reported that a nationwide panel of over one hundred economists, real estate experts and investment & market strategists projected that home values would appreciate by approximately 8% from now to the end of 2015.
Additionally, Freddie Mac’s most recent Economic Commentary & Projections Table predicts that the 30 year fixed mortgage rate will be 5.7% by the end of next year.

What Does This Mean to a Buyer?

Here is a simple demonstration of what impact these projected changes would have on the mortgage payment of a home selling for approximately $250,000 today:

Who Says Millennials are not Buying Houses?

I'm passing along this very important research from the smart crew at KCM. If you're thinking about selling your home in the near future, this is important info for you to have. Call me if you'd like to know the value of your home in today's market.

 

We have often gone against the grain to promote the fact that Millennials have a stronger belief in homeownership than previous generations. Some have strongly disagreed. Well, a new study from the National Association of Realtors (NAR) found Millennials now account for the greatest market share of recent home purchases.
NAR’s Home Buyer and Seller Generational Trends Study for 2014, revealed that Millennials comprised 31 percent of recent purchases, leading all other age groups. Here are the percentages for other generations:

• 30% - Generation X
• 30% - Boomer Generation
• 9% - Silent Generation

NAR chief economist Lawrence Yun explained:
“Given that Millennials are the largest generation in history after the baby boomers, it means there is a potential for strong underlying demand. Moreover, their aspiration and the long-term investment aspect to owning a home remain solid among young people.”
Other findings from the report:

• 87% of recent buyers age 33 and younger said they consider their home purchase a “good financial investment”
• Millennials were most likely to have a simple desire to own a home of their own as their motive for purchasing
• The median age of recent Millennial buyers was 29
• The median income was $73,600.
• 87% purchased an existing home, and they plan to stay in their homes for a median 10 years.
• Younger buyers relied more heavily than older groups on real estate agents to help them navigate the process.

Bottom Line
Millennials are in the market and recognize the importance of using a real estate professional to guide them to the closing table.

SOURCE: KCM.com

WHERE ARE HOME PRICES HEADED?

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 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
The latest survey was released last week. Here are the results:

• Home values will appreciate by 4.5% in 2014.
• The average annual appreciation will be 3.94% over the next 5 years
• The cumulative appreciation will be 19.7% by 2018.
• Even the experts making up the most bearish quartile of the survey still are projecting a cumulative appreciation of almost 11% by 2018.

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

SOURCE: KCM.COM

Discover The North Fork …A Quick Tour of The Area  

 

Riverhead, gateway to both the North Fork and the Hamptons, includes the towns of Baiting Hollow, Aquebogue and Jamesport, and is home to some of the island’s best golf clubs, vineyards, and local farm stands.

Handy to  the LIE, it is also boasts the 2,700-acre Pine Barrens Preserve, the Atlantis Marine World Aquarium and the Tanger Outlet Mall, a 165-plus store discount outlet.

 

 

 

Southold has a rich heritage, dating back to 1640. It is New York’s oldest English settlement and home to some of the best surviving examples of domestic English architecture in the United States.

Amid acres of farmland and sandy beaches, well-kept historic homes provide an idyll for those interested in the natural beauty of the island. In 1973, the first winery on Long Island was established in Cutchogue.

The area is known for its vineyards and wine culture. Wineries throughout the region are open year-round for tours and tastings.

 

From West to East, Southold includes the towns of: Laurel, Mattituck, Cutchogue (New Suffolk and Nassau Point), Peconic, Southold, East Marion and Orient.

Greenport, a mariner’s dream, is a village unto itself, its streets lined with artsy shops, galleries and fine restaurants. The North Ferry carries visitors and locals across the Peconic Bay  to Shelter Island.

 

Rates are low. Prices are at their winter lows, too. Come on out and let me help you find your North Fork Dream Home.

 

 

Call Your North Fork Expert: Vicky Germaise 631.298.6146