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What Regrets Are Most Common Among New Home Buyers?

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In an article published by TheMReport.com, a study from Zillow revealing some of the top regrets of home buyers are described.  To begin, it seems that younger, and possibly less experienced, home buyers are more likely to feel some sort of remorse after purchasing a house.  In fact, 81% of home owners under 34 years old have some sort of regret. 

The article states, “Zillow notes that the lower level of satisfaction among younger buyers could be due to their inexperience with the home buying process. Additionally, many of these buyers are likely still living in their first home, and 29% of young homeowners regret rushing the process, compared with 12% of older buyers.” Another source of regret for buyers is a higher than desired mortgage rate and the type of mortgage they were able to secure. 

Very few homeowners, however, report wishing they would have simply rented instead of buying.  “The American Dream of homeownership is still alive and well, and younger buyers who are building families and forging their careers must stretch their budgets to achieve it,” said Zillow Director of Economic Research Skylar Olsen.

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How is the New Housing Market Faring So Far in 2019?

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The 2019 real estate market is approaching the halfway point of the year and recent statistics published jointly by the Census Bureau and Department of Housing and Urban Development reveal an interesting mix of ups and downs within the new housing market.  The good news is that new house prices have increased 8.8% from last May.  However, disappointing drops in the sale of new single family homes was also reported, they fell 6.9% 

An article published by Bloomberg, reported by Reade Pikert, offers some explanation behind these conflicting statistics.  A detailed view of the home sales decline reveals that the home that are experiencing the decline in sales are almost all priced below $300,000.  Thus suggesting there is a shortage of “affordable” properties. 

Additionally, sales of existing homes took a dip in April, yet the number of sales of pre-construction properties reached the highest level since 2017.  Pickert indicates, “New-home purchases account for about 10% of the market and are calculated when contracts are signed. They are considered a timelier barometer than purchases of previously-owned homes, which are calculated when contracts close.”

Despite the mixed reviews of the new housing market’s 2019 performance thus far, it seems investors remain optimistic.  The article states, ”A gauge of U.S. homebuilding-industry stocks erased losses after the data and was up about 0.3% despite losses in the broader market, suggesting investors were focusing on the upward revisions to new home sales.”

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Is Zillow’s Co-Marketing Program Illegal?

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Many in the market for a new home look to the web when beginning their search.  Most likely, Zillow.com is one of the site visited by prospective buyers.  Not only can these house hunters view homes for sale in their desired neighborhood, recently they have also been shown advertisement for “premier” agents and brokers.  According to an article published by the Miami Herald, these real estate professionals “ …pay hundreds or thousands of dollars a month in advertising fees to the company. Premier agents need not be the highest volume or most successful agents in their area; they simply need to pay for the label.”

The program then expanded about 6 years ago, and introduced a program allowing agents to share advertising costs by partnering with lenders.  It was a win win for agents, who were able to have much of their advertising cost covered, and lenders, who could get a foot in the door with prospective home buyers.  However, it is now being reviewed to determine if this program violates the Real Estate Settlement Procedures Act which “prohibits payment of fees for business referrals among realty, mortgage and title industry providers that are not for services actually rendered”, according to journalist Kenneth R Harney. 

In fact, a judge in the U.S. district court in Seattle determined that, “the court can draw a reasonable inference that Zillow designed the co-marketing program to allow agents to provide referrals to lenders in violation of RESPA.” The class-action lawsuit filed will hear from both whistle blowers alleging violations and certainly Zillow defending its program’s legality.

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What Influences Mortgage Rates?

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Keeping up with the ups and downs of mortgage rates can be daunting.  As home owners consider refinancing their home and buyers try to determine the right time to purchase a home and secure a mortgage rate, it can feel like they are aiming at a moving target and aren’t sure when to actually lock in a rate.  It can make many wonder what causes the rates to fluctuate?  The answer is, many factors impact the mortgage rates.

In an article published by Bankrate, Deborah Khearns thoroughly details several of the reasons mortgage rates increase and decrease over time.  As many know, the Federal Reserve can play a roll in mortgage rate changes.  As the article states, “The Federal Reserve doesn’t set mortgage rates but, sometimes, their decisions can indirectly influence them.”

It is probably pretty obvious that the economy and its current conditions influence the mortgage rates.  It may be surprising, however, to learn that it’s a bad economy that actually helps improve mortgage rates for buyers.  As the economy becomes less favorable, investors tend to move toward safer investments like bonds.  According to Greg Mc Bride, Bankrate’s chief financial analyst, increased number of bond investors results in “…pushing bond prices higher but the yields on those bonds lower.”

The article goes on to discuss the influence of inflation and origination costs as well as the borrower’s financial and credit history and the impact of those on rates.  Read the entire article.

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Is the Real Estate Market Starting to Turn?

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The 2019 spring real estate market is in full swing and many home owners and prospective home buyers may be wondering what this year’s market has in store for them.  Will home buyers be able to list their home and quickly receive a full-priced offer, maybe even multiple offers?  Will prospective home buyers be competing against many other buyers and have to make quick and above list price offers? 

Despite the fact that there are reports indicating we are on the horizon of another hot real estate market season, data from Trulia predicts something quite different. Trulia has collected data that reflects home prices have been in a steady decline since the beginning of 2018.  This trend is the first indicator that the housing market may be entering into a “cyclical downturn”.  In an article published by Housing Wire, Alcynna Lloyd quotes Trulia, “’Cyclical housing market downturns occur roughly every 10 years, and they typically don’t happen overnight. Instead, they play out steadily over a few years, first showing up in sales volumes and later—usually a year or two later—in prices,’ Trulia writes.”

Fear not, however, that we are in store for a declining market similar to the one that occurred a decade ago.  The article goes on to detail the findings of the Trulia analysis, indicating home prices should only slightly decline and are more likely to just see “flat-to-modest housing price growth”.  Yet, home owners should expect their home to sell not quite as quickly and should certainly be prepared to enter in more vigorous negotiations with buyers in order to finalize a sale.

Since these changes are not expected to be extreme or immediate, more likely gradual and result in slow steady declines or even flat growth, only time will tell how this potential change plays out.

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Generous Incentives Available for Home Buyers

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Before deciding to purchase a home, it would be wise to research incentive programs offered by lenders; programs can offer qualified home buyers a few thousand dollars to put toward down payments, closing costs, and other fees associated with purchasing a home.

An article published by Housing Wire details a program offered by Bank of America which, according to reporter Ben Lane, can provide as much as $10,000 to a borrower.   In fact, the article states, “Bank of America is committing $5 billion to help boost homeownership for “low- to moderate-income and multicultural homebuyers and communities” across the country, the bank announced Tuesday.” 

Their Neighborhood Solutions program can provide up to $10,000 to qualified borrowers to apply toward closing costs.   Additionally, the America’s Home Grant program is being expanded to offer lender credits up to $7500.  These are funds that the bank is not requiring be repaid by the borrower. 

In additional to credits towards purchase, buyers can look for competitive mortgage rates and low down payment requirements geared toward low and moderate income borrowers.  According to D. Steve Boland, head of consumer lending at Bank of America. “We know many of our clients want the power to own their first home, which can sometimes be challenging. One of the ways we’re helping is through our suite of affordable homeownership solutions and professional resources, which aid them in overcoming barriers and put sustainable homeownership within reach.”

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Studies reveal positive news for home buyers in 2019

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The spring real estate market is in full swing.  Sellers have begun the process of listing their homes with the hopes of a quick sale.  Buyers search listings, schedule showings and begin to decide on a home to purchase.  So far, in 2019, it appears home buyers are making the decision on which home to purchase faster than they were last year at this time.

In fact, a study completed by Redfin, revealed that in 2019 buyers’ time to close is three days less than in 2018.  According to an article published by the MReport, “Some of the factors responsible for home buyers being able to close on their homes faster in 2019 compared to previous years included, a rise in housing supply, a slower growth rate of home prices, and a less competitive market, according to Redfin.”

The fact that the supply of homes for sale has increased and there are more buyers than sellers often means that sellers will accept the first offer they receive.  Unfortunately, some sellers just have to wait longer to receive that offer while competing against a larger number of other sellers.  The article reports that homes are spending about two days more on the market compared to 2018.

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How Does Illinois State Tax Rates Compare to the Rest of the U.S?

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Its time to prepare to file taxes and as Illinois residents review the amount they pay in taxes, they may wonder if all Americans gasp at how much of their money goes to their state in taxes.  While many Americans feel their overall tax responsibility is more than they would like, Illinois residents may have one of the best reasons to complain about the amount they pay.

Wallethub.com recently compiled a list of all 50 states and the District of Colombia and ranked them in order of state and local tax rates.  Illinois ranked number 50 in that list.  Meaning, Illinois came second to only New Jersey in the states with the highest tax rates.  Taking into account real estate tax, vehicle property tax, income tax as well as sales tax, Illinois is the second highest in terms of state and local taxes.

In fact, according to an article published on abc7chicago.com, “…the Illinois tax rate is 38.51 percent higher than the national average of 10.76 percent.”   Read the entire article and view the other 50 state rankings here.

Photo Credit: Roman Boed

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Why is National Delinquency Rate is Important?

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The national delinquency rates on home is a number that may not be tracked diligently by real estate professionals.  It isn’t as widely tracked as mortgage interest rates, average days to close and housing price fluctuations, but it may offer insight to the health of the American economy.

The Mortgage Bankers Association released the most recent national delinquency rate and it is lower than it’s been in 18 years.  According to an article published by the Chicago Tribune, “That’s a big deal, because when large numbers of owners do the opposite – stop paying on their home loans for months at a time — the entire economy feels the effects. Spiking delinquencies in 2007-2008 ushered in the global financial crisis and spawned tidal waves of foreclosures that devastated borrowers and their communities.”    

It sounds like it is some great news, but what has caused the number of delinquencies to drop?  Perhaps, and most likely, we can thank the underwriting rules that were tightened up back in 2010.  Specifically, mortgage lenders are requiring a high FICO score to qualify, avoiding approving mortgages to high risk borrowers more likely to default.   These changes, coupled with continued low rates, a healthy economy and a drop in unemployment are helping ensure more home owners stay on track with their payments.

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Filing Taxes? What You Can and Can’t Deduct This Year

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As Americans begin to gather tax documents preparing to file taxes, many might notice things look different than they have in years past.  The tax reform bill that was passed at the end of 2017 may affect deductions and refunds for many Americans.  Specifically, the standardized deduction amount has changed and some of the costs associated with home ownership may or may not be tax deductible this year.

In an article published by House Logic, a detailed summary of the tax deductions as they relate to many of the common home buying and home ownership costs is provided.  For example, when it comes to the closing costs associated with purchasing a home, homeowners purchasing a home for less than $750,000 will find that closing costs, mortgage interest paid and some loan origination fees are tax deductible.  However, it might not be beneficial to itemize these costs if they don’t total more than the standard deduction.  Further, several home purchase expenses are not tax deductible, such as attorney fees, home inspections, and title fees to name a few.

Some other categories of home expenses covered in the article are home equity loan interest, which can only be deducted when the funds are used to improve the property and the total loan amount doesn’t exceed $750,000.  State and Local taxes, damage to home after a natural disaster, moving expenses, use of a home office and student loans are also covered. 

Homeowners and all American filing taxes this year should pay special attention to these changes and how they affect their tax return.  Read the entire article.

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