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Tips for Single Homebuyers: How To Make Your Dream a Reality

If you’re living on your own and looking to buy a home, know that you can make your dream a reality with thoughtful planning and the right team of experts. Research from Freddie Mac shows 28% of all households (36.1 million) are sole-person, and that number is growing. Over the past 40 years, the number of sole-person households has nearly doubled, and that’s a trend that’s expected to continue. According to Freddie Mac:

Our calculation suggests that there will be an additional 5 million sole-person households in the United States by the next decade. This means 42% of the household growth will be contributed by sole-person households, . . .”

If you fall into this category, here are three tips to help you achieve your homeownership goals.

1. Know Your Credit Score

When you buy a home on your own, you have to qualify for your loan based solely on your own finances and credit history. Investopedia says:

“. . . lenders will be looking at just one credit profile: yours. Needless to say, it has to be in great shape. It is always a good idea to review your credit report beforehand, and this is especially true of solo buyers.”

It’s important to find out your score so you know where it falls. If you’re not sure if it’s strong enough or where to focus your energy to improve it, meet with a professional for expert advice on your individual situation.

2. Explore Down Payment Options

Next, look into down payment programs so you can get a feel for what you’ll need to save to buy a home. Rob Chrane, CEO of Down Payment Resource, explains:

“Buyers should discuss their program options with their loan officer and real estate agent to make sure they choose the program best suited to their personal needs.”

In this step, lean on the pros to determine what you’re eligible for and what’s right for you.

3. Think About Your Future Home and Your Needs

You should also spend time thinking about what you want. What type of home do you picture yourself in? To answer that question, Quicken Loans shares this advice:

Think about your lifestyle, what you want out of your home and your needs. Is being close to work important? Do you need a lot of yard space? Do you want an extra bedroom that you can transform into a home office? Condo or detached home? Lots of space for entertaining? It’s all up to you (and your budget).”

Again, a professional can help you balance what you want and how much you should spend on your monthly housing costs to determine what type of home is right for you.

While buying a home solo can feel like a big challenge, it doesn’t have to be. If you lean on the professionals, they can help you navigate these waters and make sure you’re able to take advantage of the great opportunities in today’s housing market (like low mortgage rates) to buy your dream home.

Bottom Line

The share of sole-person households is growing. If you’re looking to buy a home on your own, be confident that the dream is achievable. When you’re ready to begin your search, let’s connect so you have expert advice each step of the way.

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Dream Home Checklist

Pre-approved? Know what you can afford? That means it is time to start house hunting! The hunt for your dream home can stall quickly if you aren’t sure what your “dream” looks like.

It’s easy to talk in generalities about wanting a “big” house or an “older” home, but in order to have a more specific real estate search, you must think specifically about the features you want or need. Will your “big” house be 2,400 square feet or 5,000? When you say “older” home, do you mean one built pre-1950, or pre-2000?

Before continuing on the search, sit down and make a list of your needs and wants — and yes, those are two different things. Think about the things that are needed (amount of bedrooms, yard space, garage, etc.) and the rest of the things that would be nice, but you probably could live without it (pool, etc.)

It is important to note that your lists will most likely change as you learn more about your housing options. Location, such as proximity to the beach, may start as a priority, but once you see the size of ocean-front homes in your price range, the drive to the beach may be more reasonable. Unless you have an unlimited or extremely flexible budget, there will probably need to be compromises along the way.

Below are tips and questions to help you figure out what you do and don’t like about your current home, so that you can find more comfort and pleasure in your dream home. Take the time to rank specific home features in lists such as “Must Have,” “Like to Have,” and “Don’t Care.”

Know your finances

Having your finances in order before house-hunting can make all the difference in a competitive market. Determining your budget and how much financial wiggle room you have can help clarify your must-haves.Ask yourself:

  • Are you pre-approved for a mortgage?

  • What’s your price range?

  • How much do you have saved for a down payment? What about future repairs?

  • Are you willing to do extra renovations or do you want a turnkey property?

Consider your current lifestyle and plan for the future

You may have the perfect home in mind, or you may not even know where to start when imagining your future place to live. It can help to consider your basic needs and non-negotiables in a home. Consider where you live now and what your favorite things are and what you need to change. Think about the following:

  • You need space for a future nursery or a home office

  • You need any special features for your pets like a fenced-in yard

  • You need wheelchair access or limited stairs

  • You need a space for a car or is street parking sufficient

  • Walkability is important to you

  • You plan on changing jobs in the next 1-2 years

Pick your preferred home style and type

Once the basics are figured out, the groundwork for determining what features you want in a house is easier. Consider the different types of houses on the market, the neighborhoods you would like, and think of keywords that can help narrow your search. Ask yourself these questions:

  • How many stories do you want?

  • Do you want to live in a townhouse, condo or single-family house?

  • Could you live in a historic home?

  • How many bedrooms?

  • How many bathrooms?

  • Want a guest room?

  • What type of flooring do you like?

  • What architectural styles do you like best?

  • What’s your favorite room, and what makes spending time there enjoyable?

  • If you have an outdoor space, do you enjoy spending time there?

  • Do you enjoy taking care of a yard or feel burdened by it?

Choose a location

Keep in mind that paint colors to refresh the home can be changed, extensions to increase your square footage can be added, but the location of the home can’t be altered.

When finding your dream home, it’s easy to get caught up in its features, but you should also consider your surroundings:

  • Do you prefer urban, suburban or rural?

  • What city do you want to live in?

  • Do you want easy access to highways or public transportation?

  • How important is the view?

  • Can you sleep easily with traffic noise?

  • Do you want to be involved in community activities?

  • Are there parks within walking or biking distance?

  • Do the property taxes and/or HOA fees fit your budget?

Get to know the neighborhood

Think you’ve found the perfect home in the perfect area? Before buying, it’s still always a good idea to explore the neighborhood and ask yourself the following:

  • Are you happy with your neighborhood?

  • Are there enough activities going on around you — or too many?

  • Are you happy with your commute?

  • Do you have to travel far for basics such as groceries or a doctor’s appointment?

Document your visit

When it’s time to take your home tour, check the features against the checklist you made. Do you need to re-evaluate any of your must-haves? Get a feel for the home and consider anything you may have left off of your list. Remember, paint can be replaced and staged furniture will change, but there are aspects that can’t change so easily.

  • Is there enough space or too much space?

  • Where could you use more space?

  • How would you describe the layout?

  • Do you like the fixtures and finishes?

  • Are you happy with the windows (enough natural light, well-placed, too sunny)?

  • Does the home have curb appeal?

  • Does the home have adequate parking?

Once you know what you’re looking for in a home, you’ll be ready to find the right agent to partner with for your search. Identifying your priorities will help you find the perfect property. Happy house hunting!

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Buying a Townhome? Ask These Questions!

If you want to buy a house but worry about keeping up with a big yard, you may have thought about buying a townhome. Townhomes, like condos and co-ops, are CIDs, or common interest developments. In a CID, neighbors share more than just a street name – their properties are entwined as well. But unlike the more strictly governed condos and co-ops, the word “townhome” denotes more of an architectural style than anything else.

That architectural style can manifest in a few different ways depending on the region you live in, but the most common physical feature associated with townhomes, also frequently referred to as townhouses or row houses, is that they share a common wall – but not ceilings and floors – with neighboring dwellings. Instead of side yards, townhomes have what is commonly called a “party wall” that runs the length of the house. They also often share a stretch of rooftop with adjacent properties.

Like condos, townhomes are generally owned, not rented. And those owners are typically bound by some basic agreements. For example, if someone owns a unit smack in the middle of a row of townhouses, they can’t simply raze the residence and rebuild a smaller, detached house that better strikes their fancy. The owners of the adjacent townhomes have what are known as easement rights. That means that while they don’t own their neighbor’s half of the party wall, they do have certain rights where it’s concerned – and that includes its demolition, which would damage the integrity of their own portion of the wall. The same often goes for stuff like fences and driveways. But unlike condo owners, whose property maintenance is usually covered by association fees, owners of townhomes are obliged to care for the upkeep of the exterior of their homes. So in a way, living in a townhome combines condo living with single dwelling living.

If you’re thinking of buying a townhome, you’ll need to get a good gauge of the neighborhood, taking a look at everything from crime statistics to tax rates, from schools to accessibility to public transportation, just like you would with any other property. But there are also a few questions specific to townhomes that you should ask before buying one.

1: What’s the HOA Like?

Homeowners associations (HOAs) can really change the tempo of a neighborhood. If a townhome community has communal areas, say a park, parking lot or recreation center, those are probably regulated and controlled by the HOA. Front and back lawns, on the other hand, are typically your prerogative and responsibility. Rooftop maintenance may also be your concern. Under the wrong circumstances, they can be serious overhead. Find out before you buy whether that’s the case.

And while you might want to paint your townhouse in DayGlo shades, chances are about 120 percent that you’d have a homeowners association rep knocking on your door and telling you to tone it down, pronto, if you did. On the other hand, an HOA will also stop your neighbor from stealing your idea to go neon before you get the chance to.

But then there are the dues. Fees – sometimes hefty fees – might be required to fund holiday bashes (whether or not you plan on attending) and other community wants. Perhaps those common areas need regular maintenance; you’ll be pulling out your wallet yet again. Find out if there are any add-on costs to living in your intended townhome, and whether or not they’re something you feel like paying for. You’ve got a mortgage, after all. Can you afford a bunch of other bills on top of that?

In other words, if these sorts of neighborly obligations chafe you, you might want to consider another set of townhouses, or just a neighborhood unconstrained by an HOA. If you like the idea of a little order being imposed and don’t mind paying for it, an HOA might be just the thing you’re looking for.

2: What’s the Privacy Like?

In a townhouse, you’ll typically only have neighbors on either side, as opposed to on all sides if you live in a condo. But that doesn’t mean you want an amateur heavy metal band practicing in a room adjacent to your own at 2 a.m. – especially if they’re absolutely terrible. So you’ll want to explore how easily noise travels through the set of townhomes you’re considering cuddling up into. The so-called party wall doesn’t mean you’re interested in joining the party, after all.

You can do a little research – and potential future-neighbor-friendship-building – by asking others in the row how well their townhomes are soundproofed and what the tone of the neighborhood is. Do they hear others’ TVs better than they hear their own? Are transportation sounds an issue? Or is noise pollution at a minimum? If you fall into a sleeping state that others would equate to being a plank of wood, you’re good; if you’re a super light sleeper and your community is a loud one, you’ll regret this decision the first day you show up to work and people think the zombie apocalypse has begun.

3: How’s the Natural Ambiance?

Even small touches of nature can enhance an urban townhome, and those can come in a couple of forms. End units often have a little more outdoor space, like extra elbow room in the yard or an added porch or patio. But if a townhome you’re considering is sandwiched between two others instead of being the slice of bread on either end, then having a little outdoor haven is a great plus. Your yard will, however, probably have to be sparingly luxurious given that townhouses don’t tend to have much real estate beyond the building’s footprint.

Look for a nice solid fence out back – make sure it’s good and sturdy. Ask about any encroaching hedges and overhanging trees: Whose responsibility are they? A nicely landscaped setting is a plus, unless gardening is one of your primary hobbies, in which case an unfinished yard can provide you with plenty of pleasant afternoons over the next couple of years while you beautify it.

Thanks to their shared walls, most townhomes have windows only in the front and back, not on the sides, so overhead skylights are another great way to welcome the natural world into your future home. If the unit doesn’t have any, find out if you can install some. Be wary of potential neighbors who have a complete disregard for light pollution, though. In close quarters like these, anyone who likes to crank the watts late at night could do some serious damage to your sleep cycle.

4: What’s the Insurance Situation?

In some sets of townhouses, the HOA takes care of a portion of the insurance. In others, you’re on your own. So it’s important to ask what the policies are and what you’ll need to do to insure your stuff should the worst happen. Whether they’re covering it or you are, you want to make sure your belongings and your dwelling are protected should something awful occur.

Look into what types of disastrous situations are covered. Is flood damage on the list? How about harm from earthquakes? If the tectonics or the water table in your area are a bit fussy, you’ll want to be protected, and those sorts of policies are often above and beyond the standard coverage. It’s worth consulting your insurance agency to find out the specifics on your policy and beefing it up if you need to.

5: What’s in the CC&R?

Covenants, conditions and restrictions (commonly referred to as CC&Rs) are rules that come along with living in certain communities. If you’re looking at a townhome, there’s almost certainly one for the property. It’s not just the parts of the home that your neighbors can see – a CC&R can specify who can live in your home, whether you have pets, what you’re obligated to do if there’s a pest infestation, whether you can hang a clothesline outside, and other aspects of your day-to-day life.

While they can limit what you can do with your property, CC&Rs usually have benefits as well. Because of them, condominium complexes and rows of townhouses often look nicer, are safer and maintain higher property values. They can also prevent common neighborhood annoyances. The CC&R can keep your neighbors from blocking your parking space with a dumpster during a months-long construction project, digging a pool that encroaches on your patch of yard or adopting an army of noisy puppies (and then leaving their messes in the landscaping). In other words, pretty much nothing is off the table; it simply depends on the local standards. Read the CC&R documents all the way through before you sign on the dotted line.

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Surprising Shift Favors Homeowners: Buyers Now Prefer Existing Homes

Beige siding house exterior with covered porch and trimmed bushes in front. View of soft blue staircase with narrow walkway.

In April, the National Association of Home Builders (NAHB) posted an article, Home Buyers’ Preferences Shift Towards New Construction, which reported:

60% of people who were looking to buy a home in 2020 said they’d prefer new construction to an existing home.

However, it seems buyers are now shifting their preferences back to existing homes.

The latest Consumer Confidence Survey reveals the percentage of Americans planning to buy a home in the next six months is virtually the same as it was back in March. However, the percentage that plan to buy a newly constructed home is lower for that same period.

NAHB confirms this sentiment in their latest Housing Trends Report. The organization explains that existing homes are now the top preference among today’s buyers. Here’s a breakdown of those findings:Surprising Shift Favors Homeowners: Buyers Now Prefer Existing Homes | MyKCM

Why the shift?

There are several reasons why buyer preference is shifting. Here are two that impact purchasers looking to move in now:

  • The process may move faster. Builders may not be able to guarantee when the house will be complete and ready for move-in due to supply chain challenges with materials like lumber and appliances. If you buy an existing home, not only is it ready, it also likely has a refrigerator, range, and other necessary home appliances already.
  • There are no unexpected costs during the buying process. With the price of land, labor, and lumber being so volatile, many builders are including an escalation clause in the price negotiation to cover rising expenses. With an existing home, the final price you will pay is negotiated upfront.

Bottom Line

If you’re a homeowner looking to sell, your house is more attractive to a greater number of buyers as compared to earlier in the year. This might be the time for us to connect to discuss the possibility.

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Deciding To Buy A Fixer-Upper

If you are a fan of HGTV, you have probably seen your fair share of fixer-uppers. TV shows tend to make everything look easy, especially home flipping or updating. So how do you decide if a fixer upper is worth your time? Here are a few scenarios where diving in usually pays off.

1. The upgrades are simple.

First, you need to find out what types of issues are going to need updated and recognize your personal skills. If a home has foundation, electrical, or plumbing issues, chances are those aren’t easy fixes unless you are a contractor yourself. When it comes to cosmetic fixes, there is usually less of a safety risk so if you’re willing to do the work, those are the houses for you.

2. When the numbers pencil out.

You need to ask yourself if all the work you will put in is going to make the property worth as much or more after you’re finished. Sit down and run the numbers, and decide if you are willing and able to stick to a budget. If you’re handy and willing to put in the hours, your budget may be much smaller than what you would spend on a move-in ready home.

3. You have the time and resources.

Sometimes when investing in a fixer-upper, there will be work that needs done where you may not be able to be in the house. Do you have a friend of family member close by where you can crash while the house is getting rewired, or the insulation is getting installed? If not, is there wiggle room in your budget for a night or two in a hotel when there’s a small emergency with the water pipes? It is important to recognize where you are in life and if you are mentally, physically, and fiscally able to invest in a fixer-upper.

As always, let us help you find that perfect fixer-upper.

Call today: 719.822.1444

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Are Interest Rates Expected to Rise Over the Next Year?

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So far this year, mortgage rates continue to hover around 3%, encouraging many hopeful homebuyers to enter the housing market. However, there’s a good chance rates will increase later this year and going into 2022, ultimately making it more expensive to borrow money for a home loan. Here’s a look at what several experts have to say.

Danielle Hale, Chief Economist, realtor.com:

Our long-term view for mortgage rates in 2021 is higher. As the economic outlook strengthens, thanks to progress against coronavirus and vaccines plus a dose of stimulus from the government, this pushes up expectations for economic growth . . . .”

Lawrence Yun, Chief Economist, National Association of Realtors (NAR):

In 2021, I think rates will be similar or modestly higher . . . mortgage rates will continue to be historically favorable.”

Freddie Mac:

We forecast that mortgage rates will continue to rise through the end of next year. We estimate the 30-year fixed mortgage rate will average 3.4% in the fourth quarter of 2021, rising to 3.8% in the fourth quarter of 2022.”

Below are the most recent mortgage rate forecasts from four top authorities – Freddie Mac, Fannie Mae, the Mortgage Bankers Association (MBA), and NAR:Are Interest Rates Expected to Rise Over the Next Year? | MyKCM

Bottom Line

If you’re planning to buy a home, purchasing before mortgage interest rates rise may help you save significantly over the life of your home loan.

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Repurpose Items For Holiday Decor…

Before you spend your holiday savings on tinsel and twinkle lights, take another look at items you already have. By searching through your cabinets and closets, you can easily repurpose common household items into yuletide decor for your abode. Need a little inspiration? These design experts share how they style up everyday objects into festive flourishes.

Dig through the craft closet

If you’ve got extra cloth or burlap, you can use it for anything from tablecloths to a Christmas tree skirt. You can roll out brown or black butcher paper on your table like a runner. You can also tie ribbon on everything, thread it through chandeliers or banisters, or put festive printed fabric in frames.

Check the kitchen

You can fill a large glass serving bowl with whatever seasonal item you have. This is an easy way to repurpose decorations and switch up how you would normally display them. If you have flower vases, stick glass ornaments inside with a string of white lights.

Use your food

Dried fruit garland is easy and classic. Use a needle and thread to some popcorn, cranberries or dried sliced oranges, and string it up wherever you see fit. Cut up fresh fruit and put it in a pitcher before adding flowers for a centerpiece. Throw in some cloves and cinnamon sticks for added flair.

Forage in the yard

Instead of placing a star at the top of your Christmas tree, find some sticks and tie them together at the top of the tree with a bow. You can then layer pine cones throughout the tree to balance out the ornaments for an organic, natural feel.

Look around

You can give a corner of your home a holiday touch by adding seasonal pillows you can store the rest of the year, some evergreen cuttings from the yard, and a stack of wrapped gifts. Consider repurposing a metallic vase into a holiday greenery display.

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With Home Values Surging, Is it Still Affordable to Buy Right Now?

With Home Values Surging, Is it Still Affordable to Buy Right Now? | MyKCM

Housing inventory is at an all-time low. Realtor.com just reported that there are 39% fewer homes for sale today than there were last year. At the same time, buyer demand remains strong. In a recent newsletter, research analyst Ivy Zelman explained:

“Although the headwind of severe supply constraints in most markets has contributed to slight moderation in seasonally-adjusted and year-over-year new pending contract growth for two consecutive months (albeit still growing strongly), the underlying strength of buyer demand, particularly for this time of year, remains apparent.”

Whenever there’s a shortage in the supply of an item that’s in high demand, the price of that item increases. That’s exactly what’s happening in the real estate market right now. As a result, home values are surging.

This is great news if you’re planning to sell your house. On the other hand, as either a first-time or repeat buyer, this may instead seem like troubling news. Purchasers, however, should realize that the price of a house is not as important as the monthly cost. Here’s how it breaks down.

There are several factors that influence the cost of a home. Two of the major ones are:

  1. The price of the home
  2. The mortgage rate at which a buyer can borrow the funds necessary to purchase the home

How do these factors impact affordability?

The National Association of Realtors (NAR) produces a Housing Affordability Index which takes these factors into account and determines an overall affordability score for housing. According to NAR, the index:

“…measures whether or not a typical family earns enough income to qualify for a mortgage loan on a typical home at the national and regional levels based on the most recent price and income data.”

Their methodology states:

“To interpret the indices, a value of 100 means that a family with the median income has exactly enough income to qualify for a mortgage on a median-priced home. An index above 100 signifies that family earning the median income has more than enough income to qualify for a mortgage loan on a median-priced home, assuming a 20 percent down payment.”

So, the higher the index, the more affordable it is to purchase a home. Here’s a graph of the index going back to 1990:With Home Values Surging, Is it Still Affordable to Buy Right Now? | MyKCMThe blue bar represents today’s affordability. We can see that homes are more affordable now than they were from:

  • 1990 to 2008
  • 2017 to 2018

Buying a home today is just a little less affordable than it was last year, but still very affordable compared to historical housing market trends.

Note: During the housing crash from 2009 to 2015, distressed properties (foreclosures and short sales) dominated the market. Those properties were sold at large discounts not seen before in the housing market.

Why are homes still affordable today?

The number one factor impacting today’s homebuying affordability is record-low mortgage rates. There’s no doubt that prices are on the rise. However, mortgage rates have fallen dramatically. Last week, Freddie Mac announced that the average interest rate for a 30-year fixed-rate mortgage was 2.72%. Last year at this time, the average rate was 3.68%.

If you’re considering purchasing your first home or moving up to the one you’ve always hoped for, it’s important to understand how affordability plays into the overall cost of your home. With that in mind, buying while mortgage rates are as low as they are now may save you quite a bit of money over the life of your home loan.

Bottom Line

At this point, home purchase affordability is still in a historically good place. However, we need to watch price increases going forward. As Mark Fleming, Chief Economist at First American, noted in a recent post:

“Faster nominal house price appreciation can erode, or even eliminate, the boost in affordability from lower mortgage rates, especially if household income growth doesn’t keep up.”

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Three Ways Low Inventory Is a Win for Sellers

Three Ways Low Inventory Is a Win for Sellers

 

The number of houses for sale today is significantly lower than the high buyer activity in the current housing market. According to Lawrence Yun, Chief Economist for the National Association of Realtors (NAR):

“There is no shortage of hopeful, potential buyers, but inventory is historically low.”

When the demand for homes is higher than what’s available for sale, it’s a great time for homeowners to sell their house. Here are three ways low inventory can help you win if you’re ready to make a move this fall.

1. Higher Prices

With so many more buyers in the market than homes available for sale, homebuyers are frequently entering into bidding wars for the houses they want to purchase. This buyer competition drives home prices up. As a seller, this can definitely work to your advantage, potentially netting you more for your house when you close the deal.

2. Greater Return on Your Investment

Rising prices mean homes are also gaining value, which drives an increase in the equity you have in your home. In the latest Homeowner Equity Insights Report, CoreLogic explains:

“In the second quarter of 2020, the average homeowner gained approximately $9,800 in equity.”

This year-over-year growth in equity gives you the ability to put that money toward a down payment on your next home or to keep it as extra savings.

3. Better Terms

When we’re in a sellers’ market like we are today, you’re in the driver’s seat if you sell your house. You have the power to sell on your terms, and buyers are more likely to work with you if it means they can finally move into their dream home.

So, is low housing inventory a big deal?

Yes, especially if you want to sell your house at the perfect time. Today’s market gives sellers immense negotiating power. However, it won’t last forever, especially as more sellers return to the housing market next year. If you’re considering selling your house, the best time to do so is now.

Bottom Line

If you’re interested in taking advantage of the current sellers’ market, let’s connect today to determine your best move in our local market.