Understand Your Options To Avoid Foreclosure

Even though experts agree there's no chance of a large-scale foreclosure crisis, there are a number of homeowners who may be coming face-to-face with foreclosure as a possibility. And while the overall percentage of homeowners at risk is decreasing with time (see graph below), that's little comfort to those individuals who are facing challenges today.If you haven't taken advantage of the forbearance period, it may be time to research and understand your options. It starts with knowing what foreclosure is. Investopedia defines it like this:

Foreclosure is the legal process by which a lender attempts to recover the amount owed on a defaulted loan by taking ownership of and selling the mortgaged property. Typically, default is triggered when a borrower misses a specific number of monthly payments . . .

The good news is, there are alternatives available to help you avoid having to go through the foreclosure process, including:

• Reinstatement
• Loan modification
• Deed-in-lieu of foreclosure
• Short sale

But before you go down any of those paths, its worth seeing if you have enough equity in your home to sell it and protect your investment.

Understand Your Options: Sell Your House

Equity is the difference between what you owe on the home and its market value based on factors like price appreciation.

In todays real estate market, many homeowners have far more equity in their homes than they realize. Over the last year, buyer demand has been high, but housing supply has been low. That's led to a substantial increase in home values. When prices rise, so does the amount of equity you have in your house.

According to CoreLogic, on average, homeowners gained 33,400 in equity over the last 12 months, and the average equity on mortgaged homes is now 216,000 (see map below):So, what does that mean for you? Over the past year, chances are your homes value and therefore your equity has risen dramatically. If you've been in your home for a while, the mortgage payments you've made over time chipped away at the balance of your loan. If your homes current value is higher than what you still owe on your loan, you may be able to use that increase to your advantage.

Frank Martell, President and CEO of CoreLogic, elaborates on how equity can help:

Homeowner equity has more than doubled over the past decade and become a crucial buffer for many weathering the challenges of the pandemic. These gains have become an important financial tool and boosted consumer confidence in the U.S. housing market.

Dont Go at It Alone Lean on Experts for Advice

To find out what your house is worth in todays market, work with a local real estate professional. Well be able to give you an estimate of what your house could sell for based on recent sales of similar homes in your area. Since home prices are still appreciating, you may be able to sell your house to avoid foreclosure.

If you find out that you have to pursue other options, your agent can help with that too. Well be able to connect you with other professionals in the industry, like housing counselors who can look into your unique situation and offer advice on next steps if selling isn't the best alternative.

Bottom Line

If you're a homeowner facing hardship, lets connect to explore your options and see if you can sell your house to avoid foreclosure.

Home Price Appreciation Is Skyrocketing in 2021. What About 2022?

One of the major story lines over the last year is how well the residential real estate market performed. One key metric in the spotlight is home price appreciation. According to the latest indices, home prices are skyrocketing this year.

Here are the latest percentages showing the year-over-year increase in home price appreciation:

• The House Price Index (HPI) from the Federal Housing Finance Agency (FHFA): 18.8%
• The S. National Home Price Index from S&P Case-Shiller: 18.6%
• The Home Price Insights Report from CoreLogic: 18%

The dramatic increases are seen at every price point and in all regions of the country.

Increases Are Across Every Price Point

According to the latest Home Price Index from CoreLogic, each price range is seeing at least a 19% increase year-over-year:

Increases Are Across Every Region in the Country

Every region in the country is experiencing at least a 14.9% increase in home price appreciation, according to the Federal Housing Finance Agency (FHFA):

Increases Are Across Each of the Top 20 Metros in the Country

According to the U.S. National Home Price Index from S&P Case-Shiller, every major metro is seeing at least a 13.3% growth in prices (see graph below):

What About Price Appreciation in 2022?

Prices are the result of the balance between supply and demand. The demand for single-family homes has been strong over the last 18 months. The supply of houses available for sale was near historic lows. However, there's some good news on the supply side. Realtor.com reports:

432,000 new listings hit the national housing market in August, an increase of 18,000 over last year.

There will, however, still be a shortage of supply compared to demand in 2022. CoreLogic reveals:

Given the widespread demand and considering the number of standalone homes built during the past decade, the single-family market is estimated to be undersupplied by 4.35 million units by 2022.

Yet, most forecasts call for home price appreciation to moderate in 2022. The Home Price Expectation Survey, a survey of over 100 economists, investment strategists, and housing market analysts, calls for a 5.12% appreciation level next year. Here are the 2022 home appreciation forecasts from the four other major entities:

1. The National Association of Realtors (NAR): 4.4%
2. The Mortgage Bankers Association (MBA): 8.4%
3. Fannie Mae: 5.1%
4. Freddie Mac: 5.3%

Price appreciation is expected to slow in 2022 when compared to the record highs of 2021. However, it is still expected to be greater than the annual average of 4.1% over the last 25 years.

Bottom Line

If you owned a home over the past year, you've seen your household wealth grow substantially, and you'll see another nice boost in 2022. If you're thinking of buying, consider buying now as prices are forecast to continue increasing through at least next year.

 

Fact or Fiction: Homebuyer Edition

Some Highlights

• When it comes to the current housing market, there are multiple misconceptions from what the current supply of available homes looks like to how much houses are selling for.
• It takes professionals who study expert opinions and data to truly understand the real estate market and separate fact from fiction.
• Trust the pros. If you want to understand why its still a good time to buy, lets connect today.

 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.