The Difference in Net Worth Between Homeowners and Renters Is Widening

Becoming financially secure is an important goal for many people today, but some don't realize just how much homeownership can help them achieve that dream. A recent report, The Journey Toward Financial Freedom, surveys Americans about their perspective on financial wellness and their goals. It shows there may be a significant misconception about the role owning a home plays in building wealth:

Home ownership is one of the indicators Americans say is least connected to financial health.”

Two major personal wealth goals homeownership and net worth work hand-in-hand. Below are just a few reasons why, if you're looking for financial security, homeownership should be a top priority.

Homeownership Is an Important Cornerstone of Building Wealth

Every three years, the Federal Reserve releases the Survey of Consumer Finances which highlights the difference in wealth between homeowners and renters. The graph below shows the findings across the previous surveys including the latest data (2019), and the results are staggering:As the graph illustrates, the gap between homeowners and renters continues to widen. That's because homeownership contributes massively to an individuals overall net worth. Odeta Kushi, Deputy Chief Economist at First American, highlights this idea:

. . . between 2016 and 2019, housing wealth was the single biggest contributor to the increase in net worth across all income groups . . . .

When we look even closer at the most recent data from 2019, the average homeowners net worth is more than 40 times greater than that of the average renter (see graph below):The gap exists in large part because homeowners build equity as their home appreciates in value and they pay off a portion of their mortgage each month. When you own your home, your monthly mortgage payment is, in essence, forced savings that come back to you when you sell your home or refinance. As a renter, you'll never see a return on the money you pay out in rent every month.

If you're ready to start building your net worth, the current real estate market offers several opportunities you should consider. For example, with todays low mortgage rates, your purchasing power may be higher now than it has been in some time. That means there may be no better time than now to start working towards your homeownership goals especially since rates are anticipated to rise in the coming months.

Bottom Line

Owning a home provides one of the strongest foundations for building individual wealth and lasting financial security. If you're ready to start your path towards homeownership, lets connect today.

 

Top Landscape Plants for Fall

As the days are gradually getting shorter and the nights grow a little cooler, it’s a good time to start thinking about how you want to handle your fall landscaping. It’s possible that you’ve never really put much thought into what your fall landscaping will look like; after all, many people see fall as a time to start prepping for winter and let the look of their landscaping kind of fall by the wayside until spring. With a little bit of TLC, though, you can transform your landscaping and create a striking contrast between spring and fall without having to break the bank or spend all your time working in the yard.

One easy way to do this is to add some new plants to your landscape as the season change approaches. There are a wide range of autumn-hardy plants in both flowering and ornamental varieties, so you should be able to find some options that you like regardless of your preferences.

Flowering Plants

While many people think of flowers as a big part of spring, there are a number of flowering plants that absolutely flourish during the autumn. Many of these flowering plants are available in a wide range of colors, and some are even perennial, so you’ll get to enjoy them year after year. Here are just a few of the fall flowers you might add to your landscaping:

• Autumn Crocus
• Blue Mist Shrub
• Shasta Daisy
• Aster
• Chrysanthemum

Many summer-blooming plants also have varieties that bloom into early fall as well. There may be other options that are available locally on top of these, so be sure to check with your local nurseries to see if they have any recommendations for autumn-blooming flowers that do well in your area.

Ornamental Plants

Flowers are always a welcome addition to landscaping, but there’s something to be said for colorful and hardy ornamental plants as well. Some of these do well throughout the fall and even into the chill of winter, making them favorites when it comes to building up landscaping that will survive colder nights and chilly autumn winds. While this is far from an exhaustive list, here are a few ornamental plants that you might consider for your fall landscaping revamp:

• Chinese Lantern
• Cotoneaster
• Ornamental Kale
• Purple Fountain Grass
• Winterberry Holly

Many plants that work well as ornamental pieces in the fall will also produce beautiful flowers in the spring or early summer, making them staples of your landscaping year-round. Some also produce fruits that local wildlife can enjoy as temperatures drop and they start preparing for the winter. In most cases they can be planted either directly in the soil or in containers for an additionally striking look. As with flowering plants, be sure to check to see if there are additional options that grow well in your area and thrive in your climate zone.

Landscaping Redux

In addition to changing out the flowers in your yard, the fall can be a great time to make other changes to your landscaping as well. Everything from adding garden paths to installing outdoor lighting or planting and removing trees can be done as part of an autumn revamp to your overall landscaping. This can be done alongside floral and ornamental planting to get the most out of your autumn, and by starting in late summer or early fall you can be sure that everything is in good shape before freezing temperatures or other problems arrive.

 What Buyers and Sellers Need To Know About the Appraisal Gap

Its economy 101 when supply is low and demand is high, prices naturally rise. That's what's happening in todays housing market. Home prices are appreciating at near-historic rates, and that's creating some challenges when it comes to home appraisals.

In recent months, its become increasingly common for an appraisal to come in below the contract price on the house. Shawn Telford, Chief Appraiser for CoreLogic, explains it like this:

Recently, we observed buyers paying prices above listing price and higher than the market data available to appraisers can support. This difference is known as the appraisal gap . . . .

Why does an appraisal gap happen?

Basically, with the heightened buyer demand, purchasers are often willing to pay over asking to secure the home of their dreams. If you've ever toured a house you've fallen in love with, you understand. Once you start to picture yourself and your furniture in the rooms, you want to do everything you can to land the property, including putting in a high offer to try to beat out other would-be buyers.

When the appraiser comes in, they look at things a bit more objectively. Their job is to assess the inherent value of the home, so theyre going to study the facts. Dustin Harris, Appraiser Coach, drives this point home:

Its important for everyone to understand that the appraisers job in the end is to remain that unbiased third party, to truly tell the client what that home is worth in the current market, regardless of what decisions have been made on the price side of things.

In simple terms, while homebuyers may be willing to pay more, appraisers are there to assess the market value of the home. Their goal is to make sure the lender isn't loaning more money than the home is worth. Its objective, rather than emotional.

In a highly competitive market like todays, having a discrepancy between the two numbers isn't unusual. Here's a look at the increasing rate of appraisal gaps, according to data from CoreLogic (see graph below):

What does this mean for you?

Ultimately, knowledge is power. The best thing you can do is understand an appraisal gap may impact your transaction if you're buying or selling. If you do encounter an appraisal below your contract price, know that in todays sellers market, the most common approach is for the seller to ask the buyer to make up the difference in price. Buyers, be prepared to bring extra money to the table if you really want the home.

Above all else, lean on your real estate agent. Whether you're a buyer or seller, your trusted advisor is your ally if you come up against an appraisal gap. Well help you understand your options and handle any additional negotiations that need to happen.

Bottom Line

In todays real estate market, its important to stay informed on the latest trends. Lets connect so you have an ally to help you navigate an appraisal gap to get the best possible outcome.

What You Can Do Right Now To Prepare for Homeownership

As rent prices continue to soar, many renters want to know what they can do to get ready to buy their first home. According to recent data from ApartmentList.com:

The first half of 2021 has seen the fastest growth in rent prices since the start of our estimates in 2017. Our national rent index has increased by 11.4 percent since January . . . .

Those rising rental costs may make it seem impossible to prepare for homeownership if you're a renter. But the truth is, there are ways you can and should prepare to purchase your first home. Here's some expert advice on what to do if you're ready to learn more about how to escape rising rents.

Start Saving Even Small Amounts Now

Experts agree, setting aside what you can even smaller amounts of money into a dedicated savings account is a great starting point when it comes to saving for a down payment. As Cindy Zuniga-Sanchez, Founder of Zero-Based Budget Coaching LLC, says:

I recommend saving for a home in a sinking fund . . . . This is a savings account separate from your emergency fund that you use to save for a short or mid-term expense.

Zuniga-Sanchez adds saving in smaller increments can help make a large goal such as saving for a down payment achievable:

Breaking up your goals into smaller bite-sized pieces by saving incrementally can make a large daunting number more manageable.

Assess Your Finances and Work on Your Credit

Another tip experts recommend: take a look at your overall finances and credit score and find ways to reduce your debt. According to the HUD, the average credit score of first-time homebuyers is 716. If you're not sure what your credit score is, there are numerous online tools that can help you check. If your score is below that average, don't fret. Remember that an average means there are homeowners with credit scores both above and below that threshold.

If you find out your score is below the average, there are several ways to improve your credit before you apply for a loan. HUD recommends reducing your debt as much as you can, paying your bills on time, and using your credit card responsibly.

Start the Conversation with Your Advisor Today

Finally, its important to talk to someone who understands the market and what it takes to become a first-time homebuyer. That's where we come in. A trusted advisor can help you navigate your specific market and talk you through all the available options. Having the right network of real estate and lending professionals in your corner can help you plan for the homebuying process as well as determine what you can afford and how you can get pre-approved when you're ready.

Most importantly, we can help you understand how homeownership is achievable. As Lauren Bringle, Accredited Financial Advisor with Self Financial, says:

Don't

 write home ownership off just because you have a low income . . . . With the right tools, resources and assistance, you could still achieve your dream.

Bottom Line

If you're planning to be a homeowner one day, the best thing you can do is start preparing now. Even if you don't think you'll purchase for a few years, lets connect today to discuss the process and to set you up for success on your journey to homeownership.

 

5 Reasons Todays Housing Market Is Anything but Normal

There are many headlines out there that claim were reverting to a more normal real estate market. That would indicate the housing market is returning to the pre-pandemic numbers we saw from 2015-2019. But that's not happening. The market is still extremely vibrant as demand is still strong even while housing supply is slowly returning.

Here's the definition of normal from the Merriam-Webster Dictionary:

conforming to a type, standard, or regular pattern: characterized by that which is considered usual, typical, or routine.

Using this definition, here are five housing industry metrics that prove were nowhere near normal.

1. Mortgage Rates

If we look at the 30-year mortgage rate chronicled by Freddie Mac, we can see the average rates by decade:

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

Today, the average mortgage rate stands at 2.87%, which is very close to the historic low.

Currently, mortgage rates are anything but usual, typical, or routine.

2. Home Price Appreciation

According to Black Knight, a housing data and analytics company, the average annual appreciation on residential real estate prices since 1995 has been 4.14%.

According to the latest forecast from the National Association of Realtors (NAR), home price appreciation will hit 14.1% this year, which will be greater than any year since Black Knight began collecting this data.

Currently, home price appreciation is anything but usual, typical, or routine.

3. Months Supply of Inventory (Homes for Sale)

According to NAR:

Months supply refers to the number of months it would take for the current inventory of homes on the market to sell given the current sales pace. Historically, six months of supply is associated with moderate price appreciation, and a lower level of months supply tends to push prices up more rapidly.

As of the latest Existing Homes Sales Report from NAR, the current months supply of inventory stands at 2.6. That's less than half of a normal supply.

Currently, the supply of homes for sale is anything but usual, typical, or routine.

4. Days It Takes To Sell a Home

The days-on-market metric gives an indication of how hot a market is and how quickly homes are selling. In 2019, prior to the pandemic, the average days on market stood at 35, according to NAR. Today, that number is cut in half and is now at 17 days.

Currently, the days-on-market metric is anything but usual, typical, or routine.

5. Number of Offers per Listing

According to NAR, the number of offers per listing stood at 2.2 in 2019. Today, that number is double at 4.5.

Currently, the number of offers per listing is anything but usual, typical, or routine.

Bottom Line

When

1. Mortgage rates are near historic lows
2. Price appreciation is at historic highs
3. Housing inventory is less than half of the normal amount
4. The time it takes to sell a home is cut in half, and
5. There are twice as many offers on each house

its hard to say were in a normal market.

Your Agent Is Key When Pricing Your House

Some Highlights

• Pricing your house right takes market experience and expertise.
• To find the best list price, your agent balances current market demand, values of homes in your neighborhood, where prices are headed, and your homes condition.
• If you're ready to sell, don't guess on the price. Lets connect today so we price your house to attract multiple offers and maximize your return on investment.

 

Are Awnings Making a Comeback?

Awnings have been around for a long time; examples of awnings date back as far as ancient Egypt, and their use was common in the height of the Roman Empire. Despite their lasting popularity, modern awning use has really dropped off in recent years. Some blame gentrification, others think that it’s just a shift in design sensibilities, but whatever the reason, there haven’t been nearly as many awnings in use for a decade or more.

Is this a continuing trend, or is awning use starting to turn around? What are the reasons that people might want to get awnings? While a lot of the use of awnings comes down to personal preference, here are some of the reasons that awnings fell into disfavor… and why they just might be making a comeback.

Why the Awning Hate?

Once upon a time, awnings were all the rage. This peaked somewhere around the 1950s, where you just about couldn’t find a home or business that didn’t include awnings in any renovation plans that came up. This popularity actually played a large part in their falling out of fashion, however; awnings were so ubiquitous during this period that homes and other buildings that had awnings in place began to appear dated with a “1950’s look” that was contrary to more modern design sensibilities.

A big contributor to this was the way that many awnings of the time were made from either aluminum or fiberglass. Though the materials were popular at the time, they didn’t translate well to changing design aesthetics and ended up being synonymous with older and less popular design styles. More and more remodels opted to remove awnings as a way to update the look of buildings and make them appear more modern, resulting in a slow but steady decline in awning popularity.

Advantages of Awnings

Even though they were becoming less popular year after year, awnings still carried some significant advantages. They provide shade over windows and glass panels in doors, helping to cut back on cooling costs during the summer months. Awnings over doors also serve to block rain and other unwanted precipitation when coming or going or trying to lock or unlock the door. Despite the decreasing popularity of awnings, they also do serve a decorative purpose; much like decorative shutters, they provide a space for color or patterns on what might otherwise be a bland or single-colored wall.

Awnings can do more than protect a doorway or window, too. Larger awnings (especially retractable ones) can also be used to create shaded areas outdoors, covering a patio or otherwise giving you some added room outdoors to grill or lounge without the heat of the direct sun beating down. Some of these awnings may even have cloth screens attached to their supports, giving you a bug-free outdoor space that you can enter and exit easily.

s It Time for an Awning Renaissance?

While some consider awnings to be a dated look, awnings themselves have actually come a long way since the era that caused so many people to dislike their appearance. A lot of awnings are made from waterproof canvas or other cloth materials these days, providing a more stylistic look that can be printed on or otherwise modified to better accent your home. Gone are the days when awnings were fading eyesores; modern awnings are intended to offer both style and substance, and many are created to be more easily updated or retracted than older versions.