Further Proof This Isn’t a Housing Bubble

Further Proof This Isn’t a Housing Bubble | Keeping Current Matters

Current increases in home prices were (and still are) the result of the well-known concept of supply & demand and should not lead to conversations of a new housing bubble. Below, look at home prices as compared to current incomes.

Here is a graph showing the monthly mortgage payment on a median priced home in the U.S. over the last 25 years:

Further Proof This Isn’t a Housing Bubble | Keeping Current Matters

Mortgage payments are currently well below the historic average over that time period. Purchasers are not overextending themselves to buy a home like they did on the run-up to the housing crash.

Lawrence Yun, the Chief Economist at the National Association of Realtors, recently explained in a Forbes article:

“Even though home prices are climbing far above people’s income, exceptionally low mortgage rates have permitted people to buy a home without overstretching their budget. For someone making a 20% down payment, the monthly mortgage payment at today’s mortgage rates would take up 15% of a person’s gross income. During the bubble years, it was reaching 25% of income. The long-term historical average is around 20%. Therefore, a middle-income household does not need to overstretch their budget much if at all to buy a typical home.”

Bottom Line

Due to low interest rates, demand for housing has dramatically increased. This has caused a jump in home prices. However, low interest rates have also allowed the monthly cost of buying a home to remain well below historic norms. We are in a strong housing market, not a housing bubble.

What If I Wait Until Next Year To Buy A Home?

What If I Wait Until Next Year To Buy A Home? | Keeping Current Matters

As a seller, you will be most concerned about ‘short term price’ – where home values are headed over the next six months. As either a first-time or repeat buyer, you must not be concerned only about price but also about the ‘long term cost’ of the home.

Let us explain.

There are many factors that influence the ‘cost’ of a home. Two of the major ones are the home’s appreciation over time, and the interest rate at which a buyer can borrow the funds necessary to purchase their home. The rate at which these two factors can change is often referred to as “The Cost of Waiting”.

What will happen over the next 12 months?

According to CoreLogic’s latest Home Price Index, prices are expected to rise by 5.5% by this time next year.

Additionally, Freddie Mac’s most recent Economic Commentary & Projections Table predicts that the 30-year fixed mortgage rate will appreciate to 4.5% in that same time.

What Does This Mean to a Buyer?

Here is a simple demonstration of what impact these projected changes would have on the mortgage payment of a home selling for approximately $250,000 today:

What If I Wait Until Next Year To Buy A Home? | Keeping Current Matters

Housing Market To “Spring Forward” This Year

Housing Market To “Spring Forward” This Year | Keeping Current Matters

Just like our clocks this weekend in the majority of the country, the housing market will soon “spring forward!” Similar to tension in a spring, the lack of inventory available for sale in the market right now is what is holding back the market.

Many potential sellers believe that waiting until Spring is in their best interest, and traditionally they would have been right.

Buyer demand has seasonality to it, which usually falls off in the winter months, especially in areas of the country impacted by arctic temperatures and conditions.

That hasn’t happened this year.

Demand for housing has remained strong as mortgage rates have remained near historic lows.

The National Association of Realtors (NAR) recently reported that the top 10 dates sellers listed their homes in 2015 all fell in April, May or June.

Those who act quickly and list now could benefit greatly from additional exposure to buyers prior to a flood of more competition coming to market in the next few months.

Bottom Line

If you are planning on selling your home in 2016, meet with a local real estate professional to evaluate the opportunities in your market.

Study Again Finds Home Ownership to be a Better Way of Producing Wealth

Study Again Finds Homeownership to be a Better Way of Producing Wealth | Keeping Current Matters

According to the latest Beracha, Hardin & Johnson Buy vs. Rent (BH&J) Index home ownership is a better way to produce greater wealth, on average, than renting.

The BH&J Index is a quarterly report that attempts to answer the question:

Is it better to rent or buy a home in today’s housing market?

The index examines the entire US housing market and then isolates 23 major markets for comparison. The researchers use a “’horse race’ comparison between an individual that is buying a home and an individual that rents a similar quality home and reinvests all monies otherwise invested in home ownership.”

Ken Johnson Ph.D., Real Estate Economist & Professor at Florida Atlantic University, and one of the index’s authors states:

“The nation as a whole is in buy territory. Continued near record low mortgage rates, unsteady stock market performance, and rents (on average) now out pacing the cost of ownership (maintenance, taxes, insurance, etc.) all combine to favor owning and building wealth through home equity over renting and reinvesting in a portfolio of stocks and bonds.”

Dallas, Denver and Houston currently remain deep in rent territory but, “there is some degree of good news from these markets for homeowners as the cost of renting is now increasing at a faster rate than the cost of home ownership — reducing the advantage of renting over buying.” 

Bottom Line

Buying a home makes sense socially and financially. Rents are predicted to increase substantially in the next year, so lock in your housing cost with a mortgage payment now.

To Find Out More About the Study: The BH&J Index and other FAU real estate activities are sponsored by Investments Limited of Boca Raton. The BH&J Index is published quarterly and is available online at http://business.fau.edu/buyvsrent.

How To Get The Most Money When Selling Your House

How To Get The Most Money When Selling Your House | Keeping Current Matters

Every homeowner wants to make sure they maximize their financial reward when selling their home. But how do you guarantee that you receive maximum value for your house? Here are two keys to ensuring you get the highest price possible.

1. Price it a LITTLE LOW

This may seem counter intuitive. However, let’s look at this concept for a moment. Many homeowners think that pricing their home a little OVER market value will leave them room for negotiation. In actuality, this just dramatically lessens the demand for your house (see chart below).

How To Get The Most Money When Selling Your House | Keeping Current Matters

Instead of the seller trying to ‘win’ the negotiation with one buyer, they should price it so that demand for the home is maximized. In that way, the seller will not be fighting with a buyer over the price, but instead will have multiple buyers fighting with each other over the house.

Realtor.com, gives this advice:

“Aim to price your property at or just slightly below the going rate. Today’s buyers are highly informed, so if they sense they’re getting a deal, they’re likely to bid up a property that’s slightly under priced, especially in areas with low inventory.”

2. Use a Real Estate Professional

This too may seem counter intuitive. The seller may think they would net more money if they didn’t have to pay a real estate commission. With this being said, studies have shown that homes typically sell for more money when handled by a real estate professional.

Research posted by the Economists’ Outlook Blog revealed that:

“The median selling price for all FSBO homes was $210,000 last year. When the buyer knew the seller in FSBO sales, the number sinks to the median selling price of $151,900. However, homes that were sold with the assistance of an agent had a median selling price of $249,000 – nearly $40,000 more for the typical home sale.”

How To Get The Most Money When Selling Your House | Keeping Current Matters

Bottom Line

Price your house at or slightly below the current market value and hire a professional. That will guarantee you maximize the price you get for your house.

Future Home Values: Where Do The Experts Think They Are Headed?

Future Home Values: Where Do The Experts Think They Are Headed? | Keeping Current Matters

Today, many real estate conversations center on housing prices and where they may be headed. That is why we like the Home Price Expectation Survey.

Every quarter, Pulsenomics surveys a nationwide panel of over one hundred economists, real estate experts and investment & market strategists about where they believe prices are headed over the next five years. They then average the projections of all 100+ experts into a single number.

The results of their latest survey:

Home values will appreciate by 3.7% over the course of 2016, 3.3% in 2017 and 3.2% in the next two years, and finally 3.1% in 2020 (as shown below). That means the average annual appreciation will be 3.3% over the next 5 years.

Future Home Values: Where Do The Experts Think They Are Headed? | Keeping Current Matters
The prediction for cumulative appreciation slowed slightly from 21.6% to 17.7% by 2020. The experts making up the most bearish quartile of the survey still are projecting a cumulative appreciation of 10.9%.

Future Home Values: Where Do The Experts Think They Are Headed? | Keeping Current Matters

Bottom Line

Individual opinions make headlines. We believe the survey is a fairer depiction of future values.

Do You Know How Much Equity You Have In Your Home? You May Be Surprised!

Do You Know How Much Equity You Have In Your Home? You May Be Surprised! | Keeping Current Matters

CoreLogic’s latest Equity Report revealed that 256,000 properties regained equity in the third quarter of 2015. This is great news for the country, as 92% of all mortgaged properties are now in a positive equity situation.

Price Appreciation = Good News For Homeowners

Frank Nothaft, CoreLogic’s Chief Economist, explains:

“Home price growth continued to lift borrower equity positions and increase the number of borrowers with sufficient equity to participate in the mortgage market. In the last three years, borrowers with at least 20 percent equity have increased by 11 million, a substantial uptick that is driving rapid growth in home equity originations.” 

Anand Nallathambi, President and CEO of CoreLogic, believes this is a great sign for the market in 2016 as well, as he had this to say:

“Homeowner equity is the largest source of wealth for many Americans. The rise in home prices, expected to be at least 5% in 2016, will continue to build wealth and confidence across America. As this process continues, it will provide support for the housing market and the broader economy throughout [the] year.”


This is great news for homeowners! But, do they realize that their equity position has changed?

study by Fannie Mae suggests that many homeowners are not aware that they have regained equity in their home as their investment has increased in value. For example, their study showed that 23% of Americans still believe their home is in a negative equity position when, in actuality, CoreLogic’s report shows that only 8% of homes are in that position (down from 9% in Q2).

The study also revealed that only 37% of Americans believe that they have “significant equity” (greater than 20%), when in actuality, 74% do!

Do You Know How Much Equity You Have In Your Home? You May Be Surprised! | Keeping Current Matters

This means that 37% of Americans with a mortgage fail to realize the opportune situation they are in. With a sizable equity position, many homeowners could easily move into a housing situation that better meets their current needs (moving to a larger home or downsizing).

Fannie Mae spoke out on this issue in their report:

“Homeowners who underestimate their homes’ values not only underestimate their home equity, they also likely underestimate 1) how large a down payment they could make with their home equity, 2) their chances of qualifying for mortgages, and, therefore, 3) their opportunities for selling their current homes and for buying different homes.”

Bottom Line

If you are one of the many who are unsure how much equity you have built in your home, don’t let that be the reason you fail to move on to your dream home in 2016!

The Gardner Report | Fourth Quarter 2015

The Gardner Report | WWA Q2 2015










The following analysis of the Western Washington real estate market is provided by Windermere Real Estate Chief Economist Matthew Gardner. I hope that this information may assist you with making better-informed real estate decisions. For further information about the housing market in your area, please don’t hesitate to contact me.


The Washington State economy has added almost 370,000 jobs since the lowest point of the recession at the start of 2010. Additionally, total employment is 176,000 jobs higher than seen at the 2008 peak. With a vast majority of our metropolitan areas having fully recovered from the job losses seen during the recession, I expect to see somewhat more modest job growth in the coming year. That being said, our economy will continue to expand, which will be a benefit to our region’s housing market.


  • There were 16,895 home sales during the fourth quarter of 2015, up by 4.6% from the same period in 2014. Sales activity is starting to slow somewhat but this is due to inventory constraints.
  • The growth in sales was most pronounced in Cowlitz and Lewis Counties and double-digit growth was also seen in Thurston County. Sales declines were seen in Grays Harbor County and Skagit County, but only minimally.
  • The number of home sales grew in all but two counties, with the average number of sales up by almost 6% from the same period in 2014.
  • I am not surprised to see some decline in sales start to appear. Listing activity was down by 28% compared to the fourth quarter of 2014, and there were no counties where there were more homes for sale in Q4-2015 versus Q4-2014.

Annual Change in Home Sales


  • Prices in the region rose by an average of 9.3% on a year-over-year basis but were 0.4% lower than seen in the third quarter of 2015.
  • Unsurprisingly, no counties saw a drop in average home prices compared to fourth quarter last year.
  • When compared to the fourth quarter of 2014, San Juan County again saw the fastest price growth with an increase of 37.6%. However, this county is notorious for extreme swings given the huge variations in prices in the San Juan Islands. Double-digit percentage gains were also seen in five other counties.
  • As long as inventory constraints persist, it is likely that price growth will continue. That said, modest increases in interest rates, in combination with declining affordability conditions in several markets, will likely slow price appreciation.

Annual Change in Home Sale Prices


  • The average number of days it took to sell a home dropped by nine days when compared to the third quarter of 2014.
  • It took an average of 78 days to sell a home in the fourth quarter of this year—down from the 91 days it took to sell a home in fourth quarter of last year.
  • There were just two markets where the length of time it took to sell a home did rise, but the increases were minimal. Jefferson County saw an increase of eight days while Mason County rose by two days.
  • King County remains the only market where it takes less than a month to sell a home.

Average Days on Market


This speedometer reflects the state of the region’s housing market using housing inventory, price gains, sales velocities, interest rates, and larger economics factors. For the fourth quarter of 2015, I have left the needle at the same position as the previous quarter. In as much as the market is still very heavily in favor of sellers, I fear that some markets are reaching price points that will test affordability. Furthermore, while inventory levels are likely to see some growth in 2016, it will not be enough to satisfy demand, adding further upward pressure to prices.

Overall, 2015 was a stellar year with sales volumes and home prices moving higher across the board. In 2016, I believe we’ll see some growth in sales activity, as well as continued price growth­—just at more modest levels than last year. Interest rates are going to rise moderately through the year, but still remain very competitive when compared to historic averages. In other words, any increase in interest rates should not be a major obstacle for home buyers.

Looking forward, I believe 2016 will be a year of few surprises. Because it is an election year, I do not expect to see any significant governmental moves that would have a major impact on the U.S. economy or the housing market.


Matthew Gardner is the Chief Economist for Windermere Real Estate, specializing in residential market analysis, commercial/industrial market analysis, financial analysis, and land use and regional economics. He is the former Principal of Gardner Economics, and has over 25 years of professional experience both in the U.S. and U.K.


Rents Still Skyrocketing

Rents Still Skyrocketing | Keeping Current Matters

Zillow recently revealed that the 43 million renter households in the US spent $535 billion on rent in 2015. Aggregate numbers like these often make it difficult to truly assess a situation. For more clarity, we want to share some points that were made in a Wall Street Journal article earlier this month.

The article made two important points:

1. Rents are increasing faster than the last several years:

 “Apartment rents increased faster last year than at any time since 2007.”

2. Rent increases are accelerating

“Another report from Axiometrics Inc., a Dallas-based apartment research company, showed that rents increased 4.7% in the fourth quarter compared with the same quarter a year earlier, the strongest year-end performance since 2005”.

Here is a graph to illustrate the rate of increase over the last several years:

Average Effective Rent in the US | Keeping Current Matters

For more information visit: http://www.simplifyingthemarket.com/?a=82044-abc6e35bc5b93763f5bbf33f5af11693