The Economy’s report card from 2015!

From The Wall Street Journal:

A surge in U.S. incomes last year delivered the first significant raise for the typical family after seven years of stagnant and declining earnings, the result of sustained job growth finally lifting a broad swath of American households.

The median household income—the level at which half are above and half are below—rose 5.2%, or $2,798, to $56,516, from a year earlier, after adjusting for inflation, the Census Bureau said Tuesday.

The increase was the largest annual gain recorded since the yearly survey of incomes began in 1967, though it didn’t fully close the gap left by last decade’s recessions. Median household incomes stood 1.6% shy of the 2007 level, before the last recession took its toll, and 2.4% below the all-time high reached in 1999.

The figures show how several years of robust employment growth, including 2.4 million people who gained full-time work last year, helped regain ground lost after an especially wrenching downturn, particularly for lower-income households. Longer hours, higher wages and lower inflation also have contributed to the improvement.

One question now is whether a sustained upturn is under way, or whether these gains are likely to peter out as the economy nears full employment, especially given a continuing slide in measured worker productivity.

“It has been a long slog from the depths of the Great Recession, but things are finally starting to improve for many American households,” said Chris Christopher Jr., an economist at IHS Global Insight, a research firm.

At the current pace, median household incomes could surpass their 2007 level next year, according to forecasts by IHS, concluding a lost decade for workers.

The official poverty rate in 2015 was 13.5%, down from 14.8% in 2014, the Census report said. That was still slightly higher than in 2008 and up from 11.3% in 2000. More than 43.1 million Americans were living in poverty last year. The poverty level was $24,257 for a family of four.

Meanwhile, the report showed fewer people lacked health insurance in 2015 than the previous year, largely because of expanded access through the Obama administration’s Affordable Care Act. The Census Bureau found 29 million people, or 9.1% of Americans, lacked health insurance in 2015. That is down from 33 million people, or 10.4% of the population, in 2014. The uninsured rate has dropped significantly since 2008, when millions more Americans lacked coverage.

Democrats celebrated the report during a campaign season that has been marked by deep economic unease among voters in both parties.

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Home owners believe it’s a good time to sell: read why!

Fifty-two percent of home owners say now is a good time to sell in their neighborhood. This is up from 34 percent who said so last year, according to a survey conducted by the real estate brokerage Redfin.

What’s more, 58 percent of home owners believe sellers have more power than buyers in the market right now. Redfin researchers note this is nearly the highest level of seller confidence they’ve recorded.

The top reasons sellers say they want to sell now:

  • I want a larger or nicer home: 40%
  • I am relocating to a new city: 24%
  • I want to pull out my profit: 21%
  • I want a smaller or less expensive home: 20%
  • I have had a change in family status: 19%
  • I want to move to a better school district: 15%

“Many move-up buyers have told me they are buying now to take advantage of low mortgage rates,” says William Porterfield, a real estate professional with Redfin in Little Rock, Ark. “Buyers are trying to get as much home as possible before rates rise.”

Still, some Americans expressed concerns about selling, mainly about finding a new home to buy when they sell their own.

The following were Americans’ top concerns about selling:

  • I might not find another home I want: 30%
  • Prices might fall before I sell: 26%
  • I might not find another home I can afford: 25%
  • General economic conditions might discourage buyers: 23%
  • The appraisal might come in low: 19%

Pricing Matters

When it comes to setting the price for their home, 55 percent of home owners say they will price in the middle range based on comparable sales. However, 19 percent of home owners said they would price high, citing that negotiation is inevitable. Also, 12 percent of home owners said they would price high because if the market didn’t value their home, they would wait until it did.

“While we’re noticing a shift among sellers in terms of their confidence in getting their homes sold quickly and for good prices, it’s up to the agent as their advocate to keep their expectations grounded and recommend a pricing strategy that is most likely to get the best value for their home,” says Sascha Gummersbach, a Redfin real estate agent in Atlanta. “A seller’s market doesn’t grant home owners a license to skip things like valuable upgrades, home staging or setting a price based on comparable homes in their neighborhood.”

Five pieces of priceless advice to 1st time home buyers!

1. Find out how much you can borrow

Many factors impact the amount of money that your bank is willing to lend you. This includes your income, down payment, credit score, outgoings and current debts along with many other variables.

This is one of the most crucial stages of the home buying process, so seek legitimate advice that allows you to plan appropriately. Realistically, you should do this before you start seriously looking at properties so that you know which homes to look at.

2. Do your research

Regardless of whether you are a first-time home buyer, getting an idea of what’s on the market is essential. Don’t always just look at a house’s face value; investigate what is going on in the surrounding areas, including future development plans, transport links, schools, crime rates and facilities.

The last thing you want to do is buy a house only to find out that an airport is being built next door.

3. Never underestimate the knowledge of mom and dad

The homebuying process was much different back when our parents bought their first home; however, you should never underestimate how knowledgeable they are on the general process.

Don’t be scared to ask for help, as they might have information and experience in handling issues that you might not have even considered. If you are lucky, they might be able to help you financially, so you should consult with them from the start.

4. Account for additional costs

It can be easy to forget the ancillary costs that come with buying a house, other than paying off your mortgage every month. Before you fully secure the property, consider the cost of taxes, valuation fees, agent fees, closing costs, HOA fees, etc.

In addition, take into consideration your other monthly outgoings such as utility bills, taxes, cable, insurance, and of course, the upfront cost of moving into and furnishing your home.

5. Don’t settle for the first property you see

There are very few people who manage to find a house that ticks all the boxes on the wish list, so make a list of the most important features that you aren’t willing to compromise on.

It can be tempting to move into a house that is already decorated and save yourself a few weeks of DIY. But it’s not worth it if you find out you will have to replace the whole central heating system three months down the line. Learn the difference between cosmetic issues and real ones.

Great news for home sellers this Summer!

All major U.S. regions except the Midwest saw an uptick in existing-home sales last month, the National Association of REALTORS® reported Wednesday. As tight inventories continue to plague many markets, the median sales price for all housing types climbed to an all-time high of $239,700 in May — up 4.7 percent from a year earlier — as buyer demand outweighs housing supply.

Total existing-home sales, which are completed transactions for single-family homes, townhomes, condos, and co-ops, increased 1.8 percent month-over-month to a seasonally adjusted annual rate of 5.53 million in May. Sales are now up 4.5 percent from a year ago and are at the highest annual pace since February 2007. This is the third consecutive month for gains in existing-home sales.

“This spring’s sustained period of ultra-low mortgage rates has certainly been a worthy incentive to buy a home, but the primary driver in the increase in sales is more home owners realizing the equity they’ve accumulated in recent years and finally deciding to trade up or downsize,” says Lawrence Yun, NAR’s chief economist. “With first-time buyers still struggling to enter the market, repeat buyers using the proceeds from the sale of their previous home as their down payment are making up the bulk of home purchases right now.”

Yun says sales likely will maintain their current pace throughout the summer, assuming there are no further decreases in job growth that could prompt a pause among repeat buyers.

You need to buy a home this Summer! Read why!

1. Prices Will Continue to Rise

CoreLogic’s latest Home Price Index reports that home prices have appreciated by 5.9% over the last 12 months. The same report predicts that prices will continue to increase at a rate of 5.3% over the next year. The Home Price Expectation Survey polls a distinguished panel of over 100 economists, investment strategists, and housing market analysts. Their most recent report projects home values to appreciate by more than 3.2% a year for the next 5 years.

The bottom in home prices has come and gone. Home values will continue to appreciate for years. Waiting no longer makes sense.

2. Mortgage Interest Rates Are Projected to Increase 

Freddie Mac’s Primary Mortgage Market Survey shows that interest rates for a 30-year mortgage have remained around 4%. Most experts predict that they will begin to rise over the next 12 months. TheMortgage Bankers Association, Freddie Mac & the National Association of Realtors are in unison, projecting that rates will be up almost a full percentage point by this time next year.

An increase in rates will impact YOUR monthly mortgage payment. A year from now, your housing expense will increase if a mortgage is necessary to buy your next home. 

3. Either Way You are Paying a Mortgage

As a 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.”

4. It’s Time to Move On with Your Life

The ‘cost’ of a home is determined by two major components: the price of the home and the current mortgage rate. It appears that both are on the rise.

But what if they weren’t? Would you wait?

Look at the actual reason you are buying and decide whether it is worth waiting. Whether you want to have a great place for your children to grow up, you want your family to be safer or you just want to have control over renovations, maybe now is the time to buy.

If the right thing for you and your family is to purchase a home this year, buying sooner rather than later could lead to substantial savings.

Home Titles can have issues! Here’s a few!

Mechanic liens: These are liens placed against a property that a general contractor or someone who worked to improve the home filed before beginning the work. This is to ensure the contractor gets paid, and the lien is to be released when the job is complete. The procedure for how mechanic liens are filed and processed vary widely from state to state. But problems can surface with these liens when the contractor doesn’t file a “satisfaction” of the lien and, thereby, the lien remains on the property title. Some mechanic liens will expire after a certain amount of time. Regardless, if a mechanic lien is still present when trying to go to settlement, the process can be time-consuming and could prompt a delay in closing.

Bankruptcies: This can be cause a problem, for example, when a seller buys a home while single but then marries someone with a recent bankruptcy. The title company must ensure the new spouse has signed off on the deed and also that the bankruptcy case has been discharged. If not, the title company would need to petition the court to release the property from the bankruptcy process.

Divorces: This often causes problems when a divorced spouse doesn’t remember to remove a lien for child support, even though the debt may have been resolved long ago.  Also, lien issues may arise from past-due spousal support or delinquent taxes.

A room with a view!

On a lazy afternoon, you curl up in the sofa in front of the window, with your Kindle and a cup of steaming Earl Grey. Can life get any better? Yes! Add a breathtaking view in front of you. Perfect!

It’s no surprise that a view makes a home more attractive to buyers. But a view of what, exactly? Ocean waves, snowy mountains, or just the trees in your own backyard?

It turns out that homes with a view of the urban jungle sell the fastest—at just 83 days on the market. If you guessed that homes with ocean views would be most in demand, well, they sit on the market for 98 days on average. But let’s get real; the median price of $749,000 for an oceanfront home is clearly not for everyone.

With your Realtor by your side, let’s make an offer!

Making an Offer
Once you find a home you like, your agent should help you to put together an offer that will be formalized in the purchase and sales agreement, a binding contract between you and the seller.

Consider how aggressive you want to be in negotiations and how competitive the market is (after all, until your offer has been accepted, the seller can take other offers). If you’re hoping to conserve cash, then consider making a stipulation that the seller contribute to closing costs — the amount varies depending on the type of mortgage and down payment amount, but can range from 3 to 9 percent of the sale price.

Also decide whether you want your offer to be subject to the home passing inspection, and what type of inspection. A traditional home inspection covers any flaws in the property so that you know exactly what you’re getting into. You can also include a pest inspection, radon testing, and a bunch of other options.

I was prepared for an endless back-and-forth with the seller (maybe I watch too much TV), but our negotiation was short. We made an offer, the seller countered, and our agent advised us to come back with our “best and final” offer to let the seller know that we were done negotiating. They accepted.

The benefits of downsizing are many, but can come at cost!

Hidden cost No. 1: Taxes

Depending on how long you’ve lived in your home, when you sell the place, a large portion of your equity may go straight to federal and state capital-gains taxes. Many folksdownplay or underestimate this heavy lift. You can exclude up to $500,000 of profit from the sale of your home if you’re a married couple filing jointly, or $250,000 if you’re single. (Your profit is the sale price minus its selling expenses and “tax basis”—that is, what you paid when you originally purchased it, plus the cost of any improvements you’ve made to the property.)

The IRS offers some guidelines on how to calculate capital gains, but you’ll still want to consult a tax adviser to find out how much you’re going to walk away with when you sell your home, says Rae Wayne, a Realtor® with the Bizzy Blondes team in Los Angeles.

Additionally, if you’re buying your next property, you might have to pay more in property taxes depending on where you’re moving. But if this is a retirement move you’re making, you may be in luck: Some cities offer property tax relief to seniors, so find out from your adviser if a discount is available and whether you qualify.

Hidden cost No. 2: Repairs

Depending on how long you’ve lived in your home, you might have plenty of deferred maintenance to deal with. So to get the most value for your house, you’ll need to make repairs before putting your property on the market. You may also have some cosmetic issues that need attention. Maybe lots of ’em.

“A lot of homeowners just let landscaping slip,” says Nancy Newquist-Nolan, a Realtor with Pacific Coast Realty in Santa Barbara, CA, who specializes in downsizing. “Older homeowners in particular just don’t have the energy.”

Is that you? When Jeb Bush was labeled “low energy” during the Republican primaries, did you nod sadly in recognition? Then it’s worth hiring a professional to do basic landscaping, including removing weeds, planting flowers, and pruning hedges and trees. Improving your home’s landscape can raise its value by up to 12%, according to research from Virginia Tech.

Moreover, painting the front door, replacing the mailbox, and updating light fixtures are low-cost upgrades that can boost curb appeal substantially.

Hidden cost No. 3: Moving

Unless you can get friends or family to help you (and at this point in your life, do you really want to?), you’ll probably hire a moving company when you downsize. Just keep this in mind: The average professional move costs a not-at-all-small $12,230, according to Worldwide ERC, an association that tracks mobility costs.

But there are a number of ways you can save.

Timing is crucial. Summer is peak moving season, since most families want to move when their children are out of school. And trust us, surge pricing isn’t unique to Uber. So avoid the priciest periods if possible: You’ll save if you can relocate during the winter. Moreover, a mid-month move will help cut costs, since movers are busiest during the beginning and end of the month when leases turn over, says Scott Michael, president and CEO at American Moving & Storage Association.

Another way to cut costs is simply to comparison shop: Get in-home quotes from at least three companies, Michael advises. Transporting valuables like antiques? Make sure you’re covered if something breaks. Since legal coverage varies by state, look into purchasing “full replacement value” protection from the moving company, says Michael. Also, some homeowners insurance policies cover items when in transit, so check your coverage.

If you’re making a local move, you’ll likely pay by the hour, so make the process as seamless as possible, says Regina Leeds, a professional organizer and author of “Rightsize … Right Now!: The 8-Week Plan to Organize, Declutter, and Make Any Move Stress-Free.”

To conserve time, pack smaller items yourself, label boxes and furniture to indicate their designated room, and supply workers with handwritten instructions the day of the move.

“The less questions movers have to ask you, the faster they’ll go,” and the more you’ll save, says Leeds.

Since long-distance moves are typically priced based on weight, you can shave costs by unloading your “clutter” before moving.

Hidden cost No. 4: Storage

Having trouble parting with some of your possessions? You may be tempted to put them into a storage unit, but Newquist-Nolan says it’s a waste of money.

“When you downsize, you should be able to reduce your possessions to fit your new living space,” she says.

Leeds recommends going room to room and making a list of everything you’re going to get rid of, including furniture, clothing, and canned foods.

“You want to have space in your next home for new mementos,” says Leeds.

Be brutal—you’ll be happy you were. You have three options when paring down your belongings, according to Newquist-Nolan: Give them to family, sell them (either on eBay or in a yard sale), or make a donation and receive a tax write-off. Some organizations (e.g., the Salvation Army) will pick up donations from your house, making it a hassle-free decision. If you’re going to simplify, simplify.

Hidden cost No. 5: Living expenses in your new locale

This one is a big wild card. Some living expenses are fixed, like condo dues or homeowners association fees, and thus easier to budget for; in other cases, your cost of living might go up—sometimes way up—if you’re making a long-distance move.

Online calculators can give you a rough estimate of what you’ll be paying, but you can get a better sense of how much things cost by visiting your prospective town.

“Check out the supermarkets, restaurants, and shopping centers,” says Wayne, “and talk to as many people as possible to get a feel for what it’s like to live there.” After all, small is the new big. Just make sure it’s the right kind of small.

The features active first time home buyers are looking for!

Mid-Atlantic real estate professionals are bullish on the housing market this spring, particularly due to the growing number of first-time home buyers entering the market.

In its 2016 Mid-Atlantic Housing Market Survey, MRIS – one of the nation’s largest multiple listing services – found that 57 percent of nearly 750 real estate professionals recently surveyed expect this spring to be busier than last year. The majority of the respondents cited low mortgage rates as the main reason they believe buyers will act faster this year than last year.

Eighty-eight percent of respondents predict there will be more first-time buyers this year too. With that growth, how do you appeal to first-time buyers with your listings? Respondents rated the following home features as the most important to first-time home buyers:

  1. Updated kitchen and bath: 81%
  2. An open floor plan: 59%
  3. Low-maintenance features: 43%
  4. Walkable communities: 36%
  5. Energy efficiency: 20%
  6. Strength of cell phone service or WiFi: 19%