What Is the #1 Financial Benefit of Homeownership?

There are many financial and non-financial benefits of homeownership, and the greatest financial one is wealth creation. Homeownership has always been the first rung on the ladder that leads to forming household wealth. As Freddie Mac explains:

Homeownership has cemented its role as part of the American Dream, providing families with a place that is their own and an avenue for building wealth over time. This wealth is built, in large part, through the creation of equity Building equity through your monthly principal payments and appreciation is a critical part of homeownership that can help you create financial stability.

Odeta Kushi, Deputy Chief Economist at First American, also notes:

“The wealth-building power of homeownership shows that home is not only where your heart is, but also where your wealth is For the majority of households that transition into homeownership, the most recent data reinforces that housing is one of the biggest positive drivers of wealth creation.

Last week, CoreLogic released their latest Homeowner Equity Insights Report, which reveals the surge in wealth created over the last twelve months through increased home equity. The report makes five key points:

1. Roughly 38% of all homes are mortgage-free
2. The average equity gain of mortgaged homes in the last year was $26,300
3. The current average equity of mortgaged homes is greater than $200,000
4. There was a 16.9% increase in total homeowner equity
5. Total homeowner equity reached over $1.5 trillion

Heres a map that shows the equity gains by state:Increasing equity is giving homeowners the power to better manage the challenges of the pandemic, especially for those spending more time at home. In the report, Frank Nothaft, Chief Economist for CoreLogic, explains:

This equity growth has enabled many families to finance home remodeling, such as adding an office or study, further contributing to last years record level in home improvement spending.”

The financial advantage homeowners have has not gone unnoticed. In the same report, Frank Martell, President and CEO of CoreLogic, states:

This growing bank of personal wealth that homeownership affords was noticed by many but in particular for first-time buyers who want a piece of the cake.

Increasing wealth benefits more than just homeowners.

Last year, the Rosen Consulting Group released a report outlining the benefits of homeownership. In that report, they explained what an increase in net worth which they call the wealth effect means to the economy:

In economic literature, the wealth effect is a term used to describe the fact that individuals have a tendency to increase their spending habits when their actual or perceived wealth increases. For homeowners, the latent savings achieved by building equity in their home and the growth in home values over time both contribute to increased net worth. Through the wealth effect, this in turn translates to households having a greater ability and willingness to spend money across a wide range of other types of goods and services that spur business activity and provide a positive multiplier effect that creates jobs and income throughout the economy.

Bottom Line

Homeownership builds wealth through equity, and this creates a positive impact for homeowners and their communities. Lets connect today if you're ready to invest in a home of your own.

 

What Is the Strongest Tailwind to Todays Recovering Economy?

Last year started off with a bang. Unemployment was under 4%, forecasters were giddy with their projections for the economy, and the residential housing market had the strongest January and February activity in over a decade.

Then came the announcement on March 11, 2020, from the World Health Organization declaring COVID-19 a worldwide pandemic. Two days later, the White House declared it a national emergency. Businesses and schools were forced to close, shelter-in-place mandates were enacted, and the economy came to a screeching halt. As a result, unemployment in this country skyrocketed to 14.9%.

A year later, the economy is recovering, and the U.S. has regained more than half of the jobs that were originally lost. However, some businesses are still closed, and many schools are still struggling to reopen. Despite the past and current challenges, there is one industry that's proven to be a tailwind helping to counter all of these headwinds to our economy. That industry is housing. Remarkably, the residential real estate market (including existing homes and new construction) has flourished over the last twelve months. Sales are up, prices are appreciating, and more new homes are being built. The housing market has been a pillar of strength in an otherwise slowly recovering economy.

How does the real estate market help the economy?

At the beginning of the pandemic, the National Association of Realtors (NAR) released a report that explained:

Real estate has been, and remains, the foundation of wealth building for the middle class and a critical link in the flow of goods, services, and income for millions of Americans. Accounting for nearly 18% of the GDP, real estate is clearly a major driver of the U.S. economy.

The report calculated the total economic impact of real estate-related industries on the economy as well as the expenditures that resulted from a single home sale. At a national level, their research revealed that a single newly constructed home had an economic impact of $88,416.

Heres how it breaks down:The map below shows the impact by state:The impact of an existing home sale is approximately $40,000.

Real estate has done more for our economic wellbeing than virtually any other industry over the last year. Its been a beacon of light during a very challenging time in our nations history.

Bottom Line

Whether you're buying a newly constructed home or one that already exists, you're making a positive economic impact in your local community and its a step toward your homeownership goals as well.

 

 

What Are Smart Locks?

Home security is important. As smart technologies continue to grow in popularity, an increasing number of homeowners are turning to higher-tech solutions to meet their home security needs. While options like smart cameras and connected doorbells are becoming much more common, not as many homeowners realize that it’s possible to upgrade their doors with smart locks as well. These locks come in a variety of designs, offering some pretty interesting options to those who want to take their home security to the next level.

What Are Smart Locks?

As the name implies, smart locks are door locks that have “smart” connected functions. This means that you can lock and unlock the locks remotely without the need to physically unlock it with a key. They often offer status monitoring as well, allowing you to see whether your doors are locked or unlocked (and in some cases, even whether the door is open or closed.) While there are fully electronic smart locks available that can only be opened remotely, the majority of consumer smart locks feature a physical keyhole and/or a numeric keypad for access as well.

For most smart locks, you can lock, unlock, and monitor them using a smartphone app or a connected hub device such as Google Home or Amazon Alexa. Remote key fobs (similar to those you see with most cars) may also be used to control the lock remotely. Some locks also incorporate biometric features, allowing you to lock or unlock the device by touching a fingerprint reader.

Smart Lock Advantages

There are a number of benefits to installing smart locks on your doors. By allowing you to unlock the door remotely instead of having to use a key, you can get into or out of the house faster when your hands are full or in emergency situations. This remote feature also comes in handy if you realize that you forgot to lock the door when leaving the house or if you need to have someone stop by and pick something up for you while you’re away.

Smart locks also give you a greater degree of control over who can and can’t access your home and when that access is granted. Many models connect with other devices such as smart doorbells or connected camera systems, letting you see who’s at the door before making the decision whether to lock or unlock. In many cases you can even include the smart locks in smart home routines that you’ve programmed on other devices, having them lock or unlock at certain times or when certain routines are run. This can improve the overall security of your home, allowing the doors to lock automatically when potential threats are detected or at times when no one should be visiting.

Installing Smart Locks

Most smart locks aren’t much more difficult to install than standard lock units, though they are likely to have more post-installation setup required. Many smart locks function as a deadbolt, though they may incorporate the doorknob and standard door lock as well. Depending on the model of smart lock being installed, additional components such as a solar panel and battery unit may be included in the installation as well. These components may be integrated into the lock mechanism, or they may be separate.

Once a smart lock is installed, it still needs to be configured to work with your app or other devices. This is usually a pretty straightforward process, similar to pairing a device with your phone via Bluetooth, though some users may experience problems during installation or integration into an existing smart home setup. After setup is complete, the locks should function without issue, using encrypted digital keys over a wireless or Bluetooth connection.

If you need help picking out the best smart lock for your home or getting it installed, HomeKeepr can get you that help. Sign up for an account today to connect with pros in your area who can help you pick the perfect lock for your home and make sure that it’s installed and set up correctly. It only takes a moment and best of all it’s free.

To Renovate or Not To Renovate Before You Sell

When thinking about selling, homeowners often feel they need to get their house ready with some remodeling to make it more appealing to buyers. However, with so many buyers competing for available homes right now, renovations may not be as vital as they would be in a more normal market. Here are two things to keep in mind if you're thinking of selling this season.

1. There aren't enough homes for sale right now.

A normal market has a 6-month supply of houses for sale, but todays housing inventory sits far below that benchmark. According to the National Association of Realtors (NAR), there's only a 1.9-month supply of homes available today. As a result, buyer competition is high and homes are only on the market for about 21 days, during which time many receive multiple offers from hopeful buyers.

In a competitive market that's moving so quickly, it makes sense to sell your house when buyers are scooping homes up as fast as they're being listed. Spending costly time and money on renovations before you sell might just mean you'll miss your key window of opportunity. While certain repairs on your house may be important, your best move right now is to work with a real estate advisor to determine which improvements are truly necessary, and which ones are not likely to be deal-breakers for buyers.

Today, many buyers are more willing to take on home improvement projects themselves in order to get the home they're after, even if it means putting in a little extra work. Home Advisor explains:

When it comes to the number of home improvement projects completed, Gen Z homeowners are leading the pack, completing an average of 3.5 projects. Millennials closely follow Gen Z, taking on an average of 3.3 projects, followed by Gen X at 2.8 projects. Boomers completed an average of 2 projects, and the Silent Generation completed the fewest projects, on average, at 1.8 per household. Compared to 2019, millennials are spending 60% more on home improvement and doing on average 30% more projects.

In this market, it may be wise to let future homeowners remodel the bathroom or the kitchen to make design decisions that are best for their specific taste and lifestyle. As a seller, your dollars and time might be better spent working on small cosmetic updates, like refreshing some paint and power washing the exterior. Instead of over-investing in your home with upgrades that the buyers may change anyway, work with a real estate professional to determine the key projects that will maximize your listing, without overdoing it.

2. Focus on getting a good return on your investment.

When planning any bigger projects to tackle, you and your real estate agent will want to discuss the potential return on your investment and if those projects are worth the cost. Some homes do need a kitchen or bathroom renovation, roof repairs, or other major work, but definitely not all of them. You might be surprised by how well your house could fair in todays sellers market. Hanley Wood states:

The 2020 Cost vs. Value report shows a predictable increase in costs for all 22 remodeling projects but a consistent dip in the perceived value of those projects at the time of home sale, as estimated by real-estate professionals in more than 100 metro areas across the U.S. This results in a slight downturn on the return on investment for nearly all projects relative to the trends we saw in last years report.

Ideally, homeowners getting ready to move should try to avoid over-investing in big renovations if they wont make that money back when they sell their house. According to the 2020 State of Home Spending report from Home Advisor:

The average household spending on home services rose to $13,138, an increase over last years survey results, where homeowners who did projects spent $9,081 on average in 2019.

Before you renovate, contact a local real estate professional to see if its the best course of action. You may find out that putting your house on the market as-is will help you sell quickly, and it may result in the best return on your investment. Every home is different, but a conversation with your agent is mission-critical to make sure you make the right moves when selling this season.

Bottom Line

Were in a strong sellers market, and that means you have the leverage to sell your house on your terms. Lets connect today to determine if renovating is really the best way to spend your time and money before you sell.

5 Reasons to Sell Your House This Spring

When selling a house, most homeowners hope for a quick and profitable transaction that puts them in a position to make a great move. If you're waiting for the best time to win as a seller, the market is calling your name this spring. Here are five reasons why this is the perfect time to sell your house if you're ready.

1. There's high demand from homebuyers.

Buyer demand is strong right now, and buyers are active in the market. ShowingTime, which tracks the average number of buyer showings on residential properties, recently announced that buyer showings are up 51.5% compared to this time last year. Daniil Cherkasskiy, Chief Analytics Officer at ShowingTime, notes:

As anticipated, demand for real estate remains elevated and continues to be affected by low levels of inventory On average, each home is getting 50 percent or more requests this year compared to January of last year. As we head into the busy season, its likely well push into even more extreme territory until the supply starts catching up with demand.

When your house is positioned to get a ton of attention from competitive buyers, you're in the best spot possible as the seller.

2. There aren't enough houses for sale.

Purchaser demand is so high, the market is running out of available houses for sale. Recently, realtor.com reported:

Nationally, the inventory of homes for sale in February decreased by 48.6% over the past year, a higher rate of decline compared to the 42.6% drop in January. This amounted to 496,000 fewer homes for sale compared to February of last year.

The National Association of Realtors(NAR) also reveals that, while home sales are skyrocketing, the inventory of existing homes for sale is continuing to drop dramatically. Houses are essentially selling as fast as they're hitting the market in fact, NAR reports that the average house is on the market for only 21 days.

Its this imbalance between high buyer demand and a low supply of houses for sale that gives sellers such an advantage. A seller will always negotiate the best deal when demand is high and supply is low. That's exactly what's happening in the real estate market today.

3. You have a lot of leverage in todays market.

Clearly, many more people are interested in buying than selling this spring, creating the ultimate sellers market. When this happens, homeowners in a position to sell have the upper hand in negotiations.

According to NAR, agents are reporting an average of3.7 offers per house and an increase in bidding wars. As a seller, this means the ball is in your court so much so that you can use your leverage to negotiate the best possible contract. Demand is there, and now is the perfect time to sell for the most favorable terms.

4. Its a great way to use your home equity.

According to the latest data from CoreLogic, as of the third quarter of 2020, the average homeowner gained $17,000 in equity over the past year, and that number continues to grow as home values appreciate. Equity is a type of forced savings that grows during your time as a homeowner and can be put toward bigger goals like buying your next dream home.

Mark Fleming, Chief Economist at First American ,notes:

As homeowners gain equity in their homes, they are more likely to consider using that equity to purchase a larger or more attractive home the wealth effect of rising equity. In todays housing market, fast rising demand against the limited supply of homes for sale has resulted in continued house price appreciation.

5. Its a chance to find a home that meets your needs.

So much has changed over the past year, including what many of us need in a home. Spending extra time where we currently live is enabling many of us to re-evaluate homeownership and what we find most important in a home.

Whether its a house that has the features suited to working remotely, space for virtual or hybrid schooling, a home gym or theater, or something else, selling this spring gives you a chance to make a move and find the home of your dreams.

Bottom Line

Todays housing market belongs to the sellers. If you've considered making a move but have been waiting for the right market conditions, your wait may be over. Lets connect so you'll be positioned to win when you sell your house this spring.

 

How Upset Should You Be about 3% Mortgage Rates?

Last Thursday, Freddie Mac announced that their 30-year fixed mortgage rate was over 3% (3.02%) for the first time since last July. That news dominated real estate headlines that day and the next. Articles talked about the negative impact it may have on the housing market. However, we should realize two things:

1. The bump-up in rate should not have surprised anyone. Many had already projected that rates would rise slightly as we proceeded through the year.

2. Freddie Macs comments about the rate increase were not alarming:

The rise in mortgage rates over the next couple of months is likely to be more muted in comparison to the last few weeks, and we expect a strong spring sales season.

A muted rise in rates will not sink the real estate market, and most experts agree that it will be a strong spring sales season.

What does this mean for you?

Obviously, any buyer would rather mortgage rates not rise at all, as any upward movement increases their monthly mortgage payment. However, lets put a 3.02% rate into perspective. Here are the Freddie Mac annual mortgage rates for the last five years:

• 2016: 3.65%
• 2017: 3.99%
• 2018: 4.54%
• 2019: 3.94%
• 2020: 3.11%

Though 3.02% is not as great as the sub-3% rates we saw over the previous seven weeks, its still very close to the all-time low (2.66% in December 2020).

And, if we expand our look at mortgage rates to consider the last 50 years, we can see that todays rate is truly outstanding. Here are the rates over the last five decades:

• 1970s: 8.86%
• 1980s: 12.7%
• 1990s: 8.12%
• 2000s: 6.29%
• 2010s: 4.09%

Being upset that you missed the best mortgage rate ever is understandable. However, don't throw the baby out with the bathwater. Buying now still makes more sense than waiting, especially if rates continue to bump up this year.

Bottom Line

Its true that you may not get the same rate you would have five weeks ago. However, you will get a better rate than what was possible at almost any other point in history. Lets connect today so you can lock in a great rate while they stay this low.

 

 

Easy Ways to Make Your Home More Pet Friendly

Pets play a large part in many families. While these fuzzy (and sometimes not-so-fuzzy) friends can bring a lot of fun and companionship, keeping pets happy and healthy can take a lot of work as well. One way to keep this under control is to improve the overall pet-friendliness of your home. Much like babyproofing before bringing home a new child helps to prevent accidents and other problems, putting in some time to make your home more pet friendly now will save a lot of headaches and other issues down the line.

Pet-Friendly Homes

There are a few different concerns you should consider when trying to come up with ways to make your home more pet friendly. Think about whether there are any areas of the home that your pet might get hurt or sick if they get into. Do you have a pet that’s likely to chew on things? Stop to consider what those things it chews on are made of. Take an inventory of all the things that you don’t want your pet to damage or break; how many of them can’t be replaced?

As you can see, pet friendliness includes more than just restricting access to certain parts of the home. A truly pet-friendly home is one that will keep your pet safe in many ways while also protecting important items from your pets. There are a few different ways to go about this, of course, and there is no one right answer when it comes to how you should approach making your home more pet friendly.

Common Pet-Proofing Techniques

The way that you approach pet proofing and making your home more pet friendly will depend in large part on how your home is designed and decorated. With that said, here are a few ideas to serve as starting points for your pet-friendly revamp.

• Check the interior of your home for peeling paint or similar problems, especially if you have an older home. Some paints contain materials that could be toxic for pets, so removing peeling paint areas and giving everything a fresh coat of pet-safe paint can help to keep your companions safe.
• Secure potentially dangerous areas like stairwells, fireplaces, and crawlspace access points. Replace rusted or loose coverings to make sure that they can’t be pulled back or shaken free by a determined pet. Then install baby gates or other barriers as needed which will allow you to get through but prevent passage by those without opposable thumbs.
• Lock up cleaners and other chemicals where your pets can’t access them. Some scented cleaners may smell like food to pets, and even non-toxic chemicals can still make pets sick or cause other problems if ingested. If you have medications in the home, they should be locked up similarly.
• Get a trash can with a sturdy lid, preferably one that can be operated hands free. This will not only keep trash from being spread out in your home but can also keep pets from eating things that they really shouldn’t.

Of course, this is just the start of ways to secure your home and make it safe for your pets. Regardless of the specifics, though, the end goal is to make sure that there are fewer things within reach of your pets that could potentially cause them harm.

Pet-Friendly Remodeling

In some cases, more extensive work might be required for your home to be truly pet friendly. Stop and consider whether any changes need to be made to your home’s layout to eliminate hazards or otherwise protect your pets and keep them out of places they don’t need to be. You should also talk to contractors, landscapers, and others to make sure that you’re choosing pet-friendly materials and plants for your home.

If you need to do some remodeling but want to make sure that it’s as pet friendly as possible, HomeKeepr can help. Sign up for a free account today to find contractors and other pros who not only know their business but know how to make your home safe for your pets as well.