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3 Signs the Housing Market Is on the Rebound

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3 Signs the Housing Market Is on the Rebound | MyKCM

 

The residential real estate market has been plodding along for most of the year. However, three recent reports show the market may be on the verge of a rebound:

1. Existing Home Sales (closed sales) are up, marking two consecutive months of growth.

2. Pending Home Sales (contracts signed) are up with each of the four major regions reporting both month-over-month growth and year-over-year gains in contract activity. Here is the month-over-month growth:

  • The Northeast rose 0.7%
  • The Midwest increased 0.6%
  • The South increased 1.4%
  • The West grew 3.1%

3. Buyer Traffic (the number of people shopping for a home) is up compared to the same time last year, and for the first time in 13 months.

  • The Northeast is up 5.9%
  • The Midwest increased 1.3%
  • The South is up 2.7%
  • The West grew 2.2%

In their most recent report, ShowingTime Chief Analytics Officer, Daniil Cherkasskiy explained:

“The trend we saw in year-over-year buyer traffic in previous months continued across the United States. For all four regions there were more showings per listing this year compared to last year, making it the most competitive August in the last five years.”

Lawrence Yun, Chief Economist with the National Association of Realtors, believes the uptick in activity will continue into the future:

“It is very encouraging that buyers are responding to exceptionally low interest rates…With interest rates expected to remain low, home sales are forecasted to rise in the coming months and into 2020.”

Bottom Line

If you are thinking about selling your house, there are purchasers out there who are ready, willing, and able to buy.

More Home Loan Options Now Available For Borrowers With Bad Credit

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More Home Loan Options Now Available For Borrowers With Bad CreditFor a long time after the real estate housing crisis in 2008, buyers with a poor credit history had a difficult time finding mortgage financing. It was a problem that trapped those seeking to buy a home because so many lost their homes from the inability to pay their mortgages.

Some suffered damage to their credit history that was severe. Millions filed for bankruptcy.

Not only did mortgage lending requirements get stricter for home buyers, but the funds available for home loans were also severely reduced. Even those with a good credit history found it more difficult to qualify for mortgage financing.

Time For A Second Chance

Now, there is a much better environment for homebuyers with a bad credit history who are seeking a loan. Those with a bankruptcy on their record, which was settled at least ten years ago, will see the bankruptcy taken off their credit history. Suddenly, their credit score may increase dramatically.

Unconventional Financing

Conventional financing is available for those with decent credit. This includes attractive terms and conditions for FHA loans and other federally-based loan programs. Those with bad credit may not qualify for these loans. If they want to buy a home, their only option is to use unconventional financing, also called non-qualified mortgages (non-QM).

Unconventional financing has higher costs and no federal insurance. In 2008, these non-QM loans were a total of $65 billion per year. In 2009, this figure dropped to $10 billion and, in 2010, the low of $8 billion.

Since 2010, the availability of these non-QM loans steadily increased. By 2018, the total amount of these loans was up to $45 billion. That figure will be higher in 2019.

Is There Another Real Estate Bubble Happening?

Are we back to where we were before when the real estate market collapsed in 2008? As far as the total amount of non-QM loans, we are close. However, the qualifying standards for these loans are stricter than a decade ago.

There is less predatory lending where borrowers who do not truly qualify get a no-doc loan without proving income. Before those predatory loans often had a teaser introductory rate that quickly escalated to an amount that made it impossible for the home buyer to continue to make their mortgage payments. There are fewer of these loans now.

Summary

Besides the big picture real-estate-bubble worries, the positive news is that borrowers with a poor credit history can now participate in the housing market again.

Be prudent when considering a mortgage and carefully think about the ability to make the monthly payments. Read all the details of the loan requirements carefully. Use competent professional advice from a trusted home mortgage professional to make sure there is a very clear understanding of the loan terms and conditions.

How To Create A Home-Buying Partnership

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How To Create A Home-Buying PartnershipMany want to have a home, yet find it difficult to afford one by themselves. Some people are forming home-buying partnerships to buy a home and live in it together. Here are some considerations for those interested in forming a home-buying partnership.

A home-buying partnership is a legal and personal relationship that is similar to having a permanent roommate. It has the feeling of being married to the other person in a legal way, not in a romantic way. Like any business partnership, there are advantages and disadvantages.

Advantages Of A Home-Buying Partnership

Buying a home is easier when sharing the responsibility with another person. In an equal partnership, the money needed is half and the expenses are also half of when compared to buying a home alone.

Wasting money on rent stops and the equity value may build up by owning a home over time if real estate prices increase.

Combining credit strength as co-signers may make it easier to buy a home if both parties have a decent credit history. Qualifying for a bigger home loan amount may be possible, which allows buying a larger home.

A strategy to consider is buying a duplex building, which is two homes combined into one building structure.

Disadvantages Of A Home-Buying Partnership

Getting along well with your home-buying partner is essential. Not only will you share a business relationship, but you will also see each other constantly. Having compatible lifestyles is critical to avoid personality clashes.

People who have been roommates for years and get along extremely well make great candidates for home-buying partners. This is a far better choice than doing something this serious with a person you just met.

Legal Structure

The best way to own the property is by forming a single-purpose limited liability company (LLC). The company will do nothing but own the home. An LLC is like a general partnership with the exception that it limits the liability exposure of its owners to the investment value they have in the LLC.

Ownership in an LLC is in units of the LLC. Owning half the authorized units is half the LLC. If one partner has one unit more than the other one has, that partner has decision-making control over the property.

For tax purposes, an LLC is a pass-through entity. The tax obligations and benefits pass to the owners of the LLC according to the portion of the LLC that they own.

Sudden Death, Buy-Sell Provision

This provision allows for one of the partners to buy out the other one’s ownership before it sells to a third party. This can happen automatically if one of the partners dies or becomes incapacitated. It may happen if there is a disagreement.

The idea is to use this provision so that one partner is not forced to sell the home and has the option to buy the other half of the home before it sells to another party.

Summary

These are just the basic issues about a home-buying partnership. This arrangement can be an effective way to own a home, just be very careful about how you select a partner. Use a competent real estate attorney to form the LLC properly.

And as always, consult with your trusted home mortgage professional to help you navigate through the purchase process.

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