Get One While You Can: New-Home Prices Have Fallen to a 12-Month Low

For years, all home buyers have heard is that prices are going up, up, and away. But the cost of buying a newly constructed abode has fallen to its lowest price point of the last 12 months. So if you've been wanting to buy a home that's never been touched by another owner, we give you permission do a happy dance.

The median price of a new home dropped nearly 6.9% from March to April to reach $312,400, according to a joint report by the U.S. Census Bureau and the U.S. Department of Housing and Urban Development. That was only up 0.4% from April 2017, less than inflation.

"This could be a sign that builders are trying to build at lower price points," says realtor.com® Chief Economist Danielle Hale. That would be a boon to the many would-be homeowners, particularly first-time buyers or those on a tight budget, who are being priced out of the market. "The largest share of home buyers and home shoppers in the market are looking to buy entry-level homes."

Hale pointed out that 5% of new-home sales were for abodes priced under $150,000. That may not sound like much, but it's the largest share we've seen at that super-desirable price point since August 2016.

However, new homes were still about 24.8% more expensive than the $250,400 median cost of an existing home (one that has previously been lived in), according to the most recent data available from the National Association of Realtors®.

That's because new homes have pricier finishes and appliances, with no wear and tear on anything. Plus, land, labor, and building materials costs have been on the rise.

Meanwhile, the number of new homes sold and for sale dipped 1.5% from the previous month to about 662,000, according to the report. They rose, however, 11.6% from the same month a year earlier.

(Realtor.com® looked only at the seasonally adjusted numbers in the report. These have been smoothed out over 12 months to compensante for ups and downs at certain times of year.)

The Midwest saw the biggest annual bump in the number of homes sold or for sale in April.  About 91,000 home hit the market or were closed on in April, rising a whopping 26.4% from the same month a year earlier, but remaining flat from the previous month.

The West came in second, with a 18.9% year-over-year rise. But the 176,000 abodes for sale or sold were down 7.9% from March.

In the South, the 355,000 homes on the market or changing hands were up 6% annually and increased 0.3% from the previous month. In the Northeast, the number was up 5.3% year-over-year and 11.1% month-over-month, with 40,000 new homes.

"The absolute level of [new-home] sales remains quite low compared to current demand levels and the overall population. But you can’t sell what hasn’t been built," Freddie Mac Deputy Chief Economist Len Kiefer said in a statement. "As long as single-family home construction remains at a low level, so too will new home sales."

Contact The McLeod Group Network for all your Real Estate needs. 971.208.5093 or mcleodgroupoffice@gmail.com.

By: Realtor.com and Clare Trapasso

Moving Up to Your Dream Home? Don’t Wait!

Mortgage interest rates have risen by more than half of a point since the beginning of the year, and many assume that if mortgage rates rise, home values will fall. History, however, has shown this not to be true.

Where are home values today compared to the beginning of the year?

While rates have been rising, so have home values. Here are the most recent monthly price increases reported in the Home Price Insights Report from CoreLogic:

·         January: Prices were up 0.5% over the month before.

·         February: Prices were up 1% over the month before.

·         March: Prices were up 1.4% over the month before.

Not only did prices continue to appreciate, the level of appreciation accelerated over the first quarter. CoreLogic believes that home prices will increase by 5.2% over the next twelve months.

How can prices rise while mortgage rates increase?

Freddie Mac explained in a recent Insight Report:

“In the current housing market, the driving force behind the increase in prices is a low supply of both new and existing homes combined with historically low rates. As mortgage rates increase, the demand for home purchases will likely remain strong relative to the constrained supply and continue to put upward pressure on home prices.”

Bottom Line

If you are thinking about moving up to your dream home, waiting until later this year and hoping for prices to fall may not be a good strategy. Let’s get together and discuss your options - 971.208.5093 or mcleodgroupoffice@gmail.com.

By: KCM Crew

482 Goldenleaf Court: Santiam Canyon Home with Open Floor Plan!

Salem-Keizer OR Home For Sale
482 Goldenleaf Court, Lyons, OR  97358

A hidden gem in the beautiful Santiam Canyon! The finest in one level living awaits in this open floor plan at 482 Goldenleaf Court loaded with tasteful amenities and upgrades….4 bedrooms, 3 full baths, easy care flooring, high ceilings, and neutral paint colors. Your first stop on this impressive home tour is the sun filled living room with an elegant and comfortable atmosphere that flows right into the eat in kitchen for easy entertaining and function.  Tons of cabinet space, a center island, bar seating and a spacious dining area with sliders to the deck highlight this space. The carpeted family room adds so much bonus living space with so many options! A soothing master suite comes complete with lots of closet space and a private bath with dual vanity. There are two ample sized bedrooms and a shared bath. Keep things organized in the laundry room with sink and cabinetry. The separate studio apartment with kitchenette, full bath and outside entry is ideal for an in-law suite, long term guests or a growing family. This private backyard is a sweet treat offering a large covered deck for grilling and chilling, impeccable landscaping, a firepit to toast s’mores and tons of room to roam on 0.67 acres. The 24x36 shop, garden shed and a triple carport are perfect for all your storage needs. There is truly something for everyone is this lovely Lyons OR home!

The McLeod Group Network has distinguished themselves as a leader in the Salem Oregon real estate market. As a full service, real estate team - focused on working with our Seller and Buyer clients to help achieve their real estate goals!

We bring a keen eye for the details of buying or selling a Salem Oregon home and seemingly boundless determination and energy, which is why our clients benefit from our unique brand of real estate service. Rooted in Tradition, focused on the Future –The McLeod Group Network will help make the most of your Salem Oregon real estate experience. With over 40 years of combined experience, you can rest assured that your real estate transaction will be handled and cared for with the utmost respect and attention to detail. Give us a call today 503-798-4001 and discover the difference we can make during your family's move.

Homeownership: “A Man Is Not a Complete Man, Unless He Owns a House”

The famous quote by Walt Whitman, “A man is not a whole and complete man, unless he owns a house and the ground it stands on,” can be used to describe homeownership in America today. The Census revealed that the percentage of homeowners in America has been steadily climbing back up since hitting a 50-year low in 2016. The homeownership rate in the first quarter of 2018 was 64.2%, higher than last year’s 63.6%.

Chief Economist, Dr. Ralph McLaughlin, in his VUE Blog gave these new homeownership numbers some context:

“The trend is clear: the homeownership rate has been ticking up for five consecutive quarters, and the number of new renter households has fallen for four consecutive quarters. Owner-occupied households grew by 1.345 million from a year ago, while the number of renters actually fell by 286,000 households.
The fact that we now have four consecutive quarters where owner households increased while renter households fell is a strong sign households are making a switch from renting to buying. This is a trend that multifamily builders, investors, and landlords should take note of.”

In a separate article comparing the rental population in America to the homeowner population, Realtor.com also concluded that the gap is now shrinking:

“The U.S. added 1.3 million owner households over the last year and lost 286,000 renter households, the fourth consecutive quarter in which the number of renter households declined from the same quarter a year earlier. That could pose challenges for apartment landlords, who are bracing this year for one of the largest infusions of new rental supply in three decades.”

America’s belief in homeownership was also evidenced in a survey conducted by Pew Research. They asked consumers “How important is homeownership to achieving the American Dream?”

The results:

• 43% said homeownership was essential to the American Dream
• 48% said homeownership was important to the American Dream
• Only 9% said it was not important

Bottom Line

Homeownership has been, is, and always will be a crucial part of the American Dream.

Contact The McLeod Group Network today to find your dream home! 971.208.5093 or mcleodgroupoffice@gmail.com.

 

By: KCM Crew

Renting Out an In-Law Unit: Pros and Cons for Homeowners Hoping to Turn a Profit

An in-law unit can be a major selling point when you're buying a house. It's the perfect guesthouse for short-term visits (your adult children coming for Christmas) or long-term stays (Grandma moving in with you). But what can you do with your in-law unit while it's sitting empty? Some homeowners opt to rent it out.

Nothing sounds sweeter than extra monthly cash flow, but is it really that simple? Let's dive into the pros and cons of renting out your in-law unit and what you can expect to deal with as a property manager.

What is an in-law unit?

To qualify as an in-law unit, this part of the house should have its own entrance, bathroom, and kitchen or kitchenette, says Stephanie Trevizo, a real estate agent and landlord in Los Angeles.

If your home listing says it comes with an in-law unit, you should make sure it legally qualifies as one in your municipality.

"This can usually be done by calling your local housing authority or city," Trevizo says.

Benefits of renting out an in-law unit

As Trevizo points out, homeowners stand to make extra income with a space they're not already using, and they can do so with relatively little intrusion on their everyday lives. Because of their separate entrance, in-law units offer homeowners privacy and a sense of distance from their renters, something that wouldn't happen if you were renting out a room in your home.

In-law units are also attractive to renters, which can make it easier for you to find a tenant. Because an in-law unit is part of a home, it's likely located in a community largely made up of single-family homes.

"Some [renters] choose these types of units to get into certain school districts," Trevizo notes. "The landlords tend to be more flexible than a management company at an apartment complex."

What's more, if you've already furnished your in-law unit for visits from your guests, you have the advantage of being able to list it as a furnished unit for short-term rental on sites such as Airbnb or HomeAway.

Then again, the separate entrance and all-in-one amenities (e.g., private bathroom and kitchen) make most in-law units great for extended-stay rentals as well, says Rob Stephens, co-founder and general manager of Avalara MyLodgeTax, a company that provides lodging tax compliance solutions for property managers.

If you know the unit will sit vacant for a while, an in-law unit can be turned into a more traditional rental, with long-term monthly or even yearly leases.

Disadvantages of in-law unit rentals

Before renting out your in-law unit, you must ask yourself if you're ready to deal with a tenant in your personal space. Separate entrance and bathroom aside, the tenant will still be living on your property, so you're both certainly going to have some personal interaction at some point.

There are also a few other questions to consider, says Kimberly Smith, a broker with AvenueWest Global Franchise, in Denver. For example, will the tenants' noise bother you or your noise bother them? Will you feel safe? Are you comfortable renting to someone with a pet? Do you have enough room for them to park their car, or will that require daily communication?

Because renting out an in-law unit is legally equivalent to renting out any other piece of property, you do need to follow the laws of your local municipality, Stephens says. In the case of a short-term rental such as an Airbnb, you may be required to collect occupancy taxes, register guests, and sometimes obtain a license from your local authorities.

"Requirements to register and the occupancy tax rate that needs to be collected vary by city, county, and state across the U.S.," Stephens says. "In some areas, you may only need to complete one registration form and remit taxes to one tax agency. In other markets, there are usually three to four different registrations that need to be completed, which include some form of licensing with the separate city, county, and state agencies. In about half the markets across the U.S., you will need some form of business or rental license. In other markets, you simply need to register and pay the occupancy taxes, not obtain a license."

In other words, you'll need to check with the city, county, and state where your home is located before you decide to become a landlord, even if it's for the short term.

Renting out your in-law unit could also have an effect on your homeowner insurance policy, so it's important to call your insurance agent before you put up that rental ad. Because renting is defined as a business activity, your typical homeowner policy will not cover losses related to your rental, Stephens warns.

One final consideration, and this is a big one: the responsibility that comes with maintaining a property.

"This could mean late-night phone calls about problems the tenants are having with the home," Trevizo warns.

As the property manager, you'll be on the hook for a number of things, including collecting rent, setting lease terms, handling repairs and emergencies, dealing with security deposits, and filing taxes on the property.

"There is always the risk that you may have to evict a tenant, which could be costly and time-consuming," Trevizo says.
Contact The McLeod Group Network for all your Real Estate needs! 971.208.5093 or mcleodgroupoffice@gmail.com.

By and photo credit: Realtor.com, Jeanne Sager

Home Inspections: What to Expect

So you made an offer, it was accepted, and now your next task is to have the home inspected prior to closing. Oftentimes, agents make your offer contingent on a clean home inspection.

This contingency allows you to renegotiate the price you paid for the home, ask the sellers to cover repairs, or even, in some cases, walk away. Your agent can advise you on the best course of action once the report is filed.

How to Choose an Inspector

Your agent will most likely have a short list of inspectors that they have worked with in the past that they can recommend to you. HGTV recommends that you consider the following 5 areas when choosing the right home inspector for you:

1. Qualifications – find out what’s included in your inspection and if the age or location of your home may warrant specific certifications or specialties.
2. Sample Reports – ask for a sample inspection report so you can review how thoroughly they will be inspecting your dream home. The more detailed the report, the better in most cases.
3. References – do your homework – ask for phone numbers and names of past clients who you can call to ask about their experiences.
4. Memberships – Not all inspectors belong to a national or state association of home inspectors, and membership in one of these groups should not be the only way to evaluate your choice. Membership in one of these organizations often means that continued training and education are provided.
5. Errors & Omission Insurance – Find out what the liability of the inspector or inspection company is once the inspection is over. The inspector is only human after all, and it is possible that they might miss something they should have seen.

Ask your inspector if it’s okay for you to tag along during the inspection, that way they can point out anything that should be addressed or fixed.

Don’t be surprised to see your inspector climbing on the roof or crawling around in the attic and on the floors. The job of the inspector is to protect your investment and find any issues with the home, including but not limited to: the roof, plumbing, electrical components, appliances, heating & air conditioning systems, ventilation, windows, the fireplace and chimney, the foundation, and so much more!

Bottom Line

They say ‘ignorance is bliss,’ but not when investing your hard-earned money into a home of your own. Work with McLeod Group Network, who you can trust to give you the most information possible about your new home so that you can make the most educated decision about your purchase. 971.208.5093 or mcleodgroupoffice@gmail.com.

By: KCM Crew

4 Reasons Why Today’s Housing Market is NOT 2006 All Over Again

With home prices rising again this year, some are concerned that we may be repeating the 2006 housing bubble that caused families so much pain when it collapsed. Today’s market is quite different than the bubble market of twelve years ago. There are four key metrics that explain why:

1.    Home Prices

2.    Mortgage Standards

3.    Mortgage Debt

4.    Housing Affordability

1. HOME PRICES

There is no doubt that home prices have reached 2006 levels in many markets across the country. However, after more than a decade, home prices should be much higher based on inflation alone.

Frank Nothaft is the Chief Economist for CoreLogic (which compiles some of the best data on past, current, and future home prices). Nothaft recently explained:

“Even though CoreLogic’s national home price index got to the same level it was at the prior peak in April of 2006, once you account for inflation over the ensuing 11.5 years, values are still about 18% below where they were.” (emphasis added)

2. MORTGAGE STANDARDS

Some are concerned that banks are once again easing lending standards to a level similar to the one that helped create the last housing bubble. However, there is proof that today’s standards are nowhere near as lenient as they were leading up to the crash.

The Urban Institute’s Housing Finance Policy Center issues a Housing Credit Availability Index (HCAI).According to the Urban Institute:

“The HCAI measures the percentage of home purchase loans that are likely to default—that is, go unpaid for more than 90 days past their due date. A lower HCAI indicates that lenders are unwilling to tolerate defaults and are imposing tighter lending standards, making it harder to get a loan. A higher HCAI indicates that lenders are willing to tolerate defaults and are taking more risks, making it easier to get a loan.”

The graph below reveals that standards today are much tighter on a borrower’s credit situation and have all but eliminated the riskiest loan products.

3. MORTGAGE DEBT

Back in 2006, many homeowners mistakenly used their homes as ATMs by withdrawing their equity and spending it with no concern for the ramifications. They overloaded themselves with mortgage debt that they couldn’t (or wouldn’t) repay when prices crashed. That is not occurring today.

The best indicator of mortgage debt is the Federal Reserve Board’s household Debt Service Ratio for mortgages, which calculates mortgage debt as a percentage of disposable personal income.

At the height of the bubble market a decade ago, the ratio stood at 7.21%. That meant over 7% of disposable personal income was being spent on mortgage payments. Today, the ratio stands at 4.48% – the lowest level in 38 years!

4. HOUSING AFFORDABILITY

With both house prices and mortgage rates on the rise, there is concern that many buyers may no longer be able to afford a home. However, when we look at the Housing Affordability Index released by the National Association of Realtors, homes are more affordable now than at any other time since 1985 (except for when prices crashed after the bubble popped in 2008).

Bottom Line

After using four key housing metrics to compare today to 2006, we can see that the current market is not anything like the bubble market.

Contact The McLeod Group Network for all your Real Estate needs! 971.208.5093 or mcleodgroupoffice@gmail.com.

By: KCM Crew