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Scary Things

Real Estate Today opens doors for buyers and sellers with critical and credible information on the real estate market. It’s fast paced and fact packed with experts, interviews, call-ins, field reports, and timely market conditions.

Lawrence Yun, Chief Economist at the National Association of REALTORS®

Lawrence Yun, Chief Economist at the National Association of REALTORS®

Dan Wagner, REALTOR® – Part 1

Dan Wagner, REALTOR® and Senior Vice President of Government Relations at the Inland Real Estate Group in Chicago. The past treasurer of the Illinois REALTORS®, and the past president of the Chicago Association of REALTORS®

“Hot or Not,” with Melissa Dittmann Tracey – Part 1

Melissa Dittmann Tracey is the author of REALTOR® Magazine’s popular Styled Staged & Sold blog.

Keith Gumbinger, Vice President at HSH.com

Keith Gumbinger, Vice President at HSH.com, the nation’s leading source for consumer mortgage and finance information.

Sascha Segan – PCMag.com – Cell Boosters

Sascha Segan, Lead Analyst at PCMag.com…delivering Laboratory-based, independent reviews of the latest products and services.

Renting to Owning

Back now, with our special show “Scary Things.”
All about the things that creep you out – when it comes to real estate….and – all the reasons there’s really nothing to be afraid of!
We’re going to wrap up this hour of the show with one of the biggest and most fundamental fears out there. That terrifying moment, when you consider leaving the rental apartment behind, and buying a home of your own.

Now THAT – can be pretty frightening!

Some people who are renting – tell us one thing in particular is especially scary: and that is, not knowing all the expenses involved in buying a home. Are there hidden costs out there? Will they be writing check after check – and end up regretting their decision to buy?

It’s a valid point – considering that as a renter, they write one check a month to the landlord, maybe some for utilities and insurance – and they’re done. Renters understand that. But a whole house? Hmmmmm. Will they be able to afford it? Or will it be – a bottomless pit – they throw money into every month?

Let’s take a look at that. Beginning with the fact that worrying about money? Is pretty normal. The National Foundation for Credit Counseling did a survey a few years back, and found that FOUR out of FIVE people who responded said personal finances keep them awake at night. At least sometimes.

So sure. Spending all that money on a house can be frightening. And so is the idea of paying all the bills. But like many of the scary things we’ve talked about on today’s show, when you fully understand all the facts, it’s really not so scary after all.

So let’s address those fears – step by step. OK? step number one: when you first sit down with your Realtor, ask them about the expenses you may be facing – as a home owner.
Your Realtor will be glad to help. They have the experience, and the local market knowledge to help you understand exactly what to expect.

They will help you separate “fear’ from ‘fact.’

Starting – with the down payment.

The fear is – you won’t be able to come up with the down payment. Many people think you need 20% of the purchase price, to buy a home. Well, that’s the fear – but here’s the fact: People can get a mortgage with a down payment as low as 3 percent. So it’s not as scary as it seems.

OK? Now, once you’ve BOUGHT the place, you have to be able to afford to LIVE in it.

The fear? You’ll be house poor. But the fact is? These days lenders look VERY carefully at the financial picture of everyone who gets a mortgage. In today’s market lenders won’t let you become house poor, because that would be risky. And after the crash 10 years ago lenders don’t do risky anymore.
And most lenders will require your total monthly debt, including your mortgage, credit cards, car loans and student loans – is not going to take up your whole paycheck! They’ll insist that you will have money left – for utilities, groceries, gas, and even vacations. That’ll help keep you – from being house poor!

Another fear: the place will fall apart. But the fact is, when you buy a house you’ll get an inspection – so you will know its condition before you commit!
The home inspector’s job is to make sure the property is safe, and in good condition. They will identify any problems that could represent big bills in the future. Like a roof that only has a few years lifespan left. So before you decide to buy the place, you’ll have a pretty good idea about what kind of shape it’s in, and whether you’ll be facing any big bills in the future.

So yes, making the jump from renting to owning a home of your own is a lot to think about. But scary? Not so much. Because if you know what your household expenses will be, and you make a budget, and you stick to it? You’ll always be ready, and you’ll never be surprised – or frightened – by the costs involved in owning your own home.

And by the way if you get a 30-year fixed mortgage, you’ll know exactly what your mortgage payment will be every single year. It will never go up.

Compare that to seeing your rent increase again and again. You never really know when you’re renting how much more you’ll be paying in the years ahead. Whether you’ll be able to afford the place. Or whether you have to move out and find something else if it gets too expensive. Now that, is truly a really scary thing.

Kris Kiser – OPEI – Battery vs. Gas

Kris Kiser, CEO of the Outdoor Power Equipment Institute

Dan Wagner, REALTOR® – Part 2

Dan Wagner, REALTOR® and Senior Vice President of Government Relations at the Inland Real Estate Group in Chicago. The past treasurer of the Illinois REALTORS®, and the past president of the Chicago Association of REALTORS®

“Hot or Not,” with Melissa Dittmann Tracey – Part 2

Melissa Dittmann Tracey is the author of REALTOR® Magazine’s popular Styled Staged & Sold blog.

Laura Adams, analyst at AceableAgent – Savings Fears

Laura Adams, analyst at AceableAgent, a leader in online real estate education.

Gerri Detweiler – Credit

Gerri Detweiler, the Director of Education at NAV – which provides credit scores and more to consumers and businesses across America.

A Cup of Comfort

And we are back, with our special show, “Scary Things.” Our annual tribute to Halloween, filled with all the things in real estate that might terrify you. And how, once you know the facts? There’s really nothing to be afraid of!

As I said earlier, we’ve done this show every year since Real Estate Today started up. And it’s always been a fun, lighthearted look at the things about real estate that make people nervous. Down payments. Qualifying for a mortgage. And, borrowing hundreds of thousands of dollars and agreeing to pay it back over three decades??? Now that can give some people the cold sweats.

But of course, in today’s world, those things aren’t much, compared to the pandemic. And while some people aren’t really that afraid of the pandemic, others are.

And there’s no right way or wrong way to feel about it. Because it’s how you feel and that matters.

But here’s something to think about.

In this challenging time, real estate isn’t the scary thin g – it’s actually the reassuring thing. A source of security and safety. We all know that in today’s world, real estate is thriving. We’ve talked about why many times on the show. But just to recap.

Real estate is booming right now for two main reasons. The first? Mortgage interest rates are at record lows. Under 3% for well qualified borrowers. That’s unbelievable. And that’s bringing millions of people into the market. And every one of them, who locks in at today’s rates, can enjoy incredibly low mortgage payments every month for up to three decades. That is phenomenal.

The other reason real estate is thriving is that we’re in what’s being described as a new economy. In which more people can work from home than ever before. And those people no longer need to live within driving distance of the office. They can live anywhere. And so millions of people across the country are moving.

Moving into a better house, with more space. Moving into the suburbs, or the countryside, where there aren’t as many people as there are in the big city. And some people are just accelerating their plans to buy a second home or retirement home. Which will not only allow them a little more fresh air, but will allow them to take advantage of those low mortgage interest rates at the same time.

So our show “Scary Things” has had to evolve. Because instead of being about the things in real estate that are scary, in today’s world, it’s about how real estate can help comfort people, help reassure them, and help protect their finances while the pandemic continues.

And it underlines the fact that 2020 will be a year for the record books. Real estate has always had its ups and downs. But it’s never had the UPS that it’s had in 2020.

So, with interest rates below 3%? And millions of people all across America moving, perhaps the only really scary thing about real estate this year is the fear of missing out…and letting one of the silver linings in this stormy year pass you by.

Top News of the Week

“Housing Starts Up, Builder Confidence Hits Another Record High”
“Lumber Prices May Be Cooling”
“FHA Extends Forbearance Deadline”
“Mortgage Rates Set New Record; But Fewer Can Get That Rate”
“Redfin CEO Anticipates ‘Insane’ Demand to Continue in ’21”
“Election’s Impact on Housing Finance? Anyone’s Guess”
“MIT Study: Black Americans Pay More to Own a Home”
“Barely Old Enough to Drink or Vote, Gen Z is Buying Up Houses”
“Scarcity is The New Normal”
“Bidding Wars May Be Cooling”
“Eviction Orders Still Going Out in Nevada, Despite Moratorium”
“Experts Consider Climate Change Impact on Real Estate”
“One Way Housing Market Has Been Altered This Year”
“Many Younger Buyers Get Help From Mom and Dad: Survey”
“New Partnership to Fight LGBTQ Housing Discrimination”
“Curb Appeal Boosters”

“Housing Starts Up, Builder Confidence Hits Another Record High”

Housing starts were up 1-point-9 percent in September, the government says. That may have been slightly below Wall Street expectations, but analysts are still encouraged..

Building permits were up more than 5-percent.

Charlie Dougherty, an economist with Wells Fargo who covers housing, told Yahoo Finance that the outlook is still bright:

Meanwhile, builder confidence has hit another new record. The National Association of Home Builders / Wells Fargo Housing Market Index for October came in at a reading of 85, up two points from the previous month’s record. Any number over 50 is considered positive.

NAHB CEO Jerry Howard, also speaking on Yahoo Finance, said builders are riding a wave of social change:

“Lumber Prices May Be Cooling”

One of the strongest headwinds builders have faced all year is the skyrocketing price of lumber. But now there are signs prices are coming back down.

From April to September, prices rose 170-percent, adding 16-thousand dollars to the price of a new home.

Now, thanks to increase timber production, the website TradingEconomics.com reports that prices have fallen as much as 45-percent from their September High.

“FHA Extends Forbearance Deadline”

Single-family homeowners with an FHA mortgage now have two more months to seek mortgage for forbearance.

Those homeowners who may be struggling financially now have until December 31st to submit an initial forbearance request.

the Department of Housing and Urban Development’s original deadline was October 30th.

HUD has now extended it, bringing it in line with its extended foreclosure moratorium.

“Mortgage Rates Set New Record; But Fewer Can Get That Rate”

And while we’re speaking of new records being set, mortgage rates recently fell to a new low, according to Freddie Mac.

The 30-year fixed-rate dipped to an average 2-point-81 percent, the 10th new record set this year.

The previous record low, an average 2-point-86 percent, was set in mid-September.

But not every would-be home buyer is able to take advantage of those incredibly low rates, says Realtor.com senior economist George Ratiu:

Experts say it’s those low mortgage rates that are helping drive home prices higher.

“Redfin CEO Anticipates ‘Insane’ Demand to Continue in ’21”

Home buyer demand in 2020 has been, as Redfin CEO Glen Kelman puts it, quote,, “absolutely insane.”

But will it last? Kelman said on CNBC:

Kelman also worries, however, that many struggling Americans have been effectively locked out of the market because of lenders’ higher credit standards.

“Election’s Impact on Housing Finance? Anyone’s Guess”

One expert in the lending industry is optimistic about housing in 2021.

But LoanDepot executive Dan Hanson cautions, we don’t know what’s going to happen next week:

The Trump Administration is on a path toward privatizing Fannie Mae and Freddie Mac.

Hanson spoke in a HousingWire podcast.

“MIT Study: Black Americans Pay More to Own a Home”

New research shows that it costs more to be a black homeowner in America.

Experts at MIT found that black homeowners pay, on average, more in mortgage interest, more for mortgage insurance, and higher property taxes than other homeowners.

Black families also have a harder time refinancing their mortgages, the study found.

Over the life of a typical loan, the difference is in the thousands, and the study authors say that further exacerbates the wealth gap between white and black homeowners.

“Barely Old Enough to Drink or Vote, Gen Z is Buying Up Houses”

America’s youngest home buyers are making their mark.

New research by LendingTree finds that 18-to-23-year-olds, members of Generation Z, are flocking into markets like Salt Lake City, where LendingTree says Gen Z’ers make up over 8-percent of those applying for a purchase mortgage.

Oklahoma City, Indianapolis, and St. Louis are also popular Gen Z landing spots.

The average age of a Gen Z buyer — 21-point-5. Their average down payment: 33-thousand dollars.

“Scarcity is The New Normal”

When it comes to the number of homes for sale on the market, scarcity is, for now, the new normal, says one expert.

Mauricio Umansky, founder and CEO of The Agency, told Yahoo Finance we might as well get used to low inventory and bidding wars:

Umansky says another strong trend he is seeing right now is the purchase of second, and even third, homes, as people find substitutes for luxury hotels or resorts.

“Bidding Wars May Be Cooling”

The superheated competition among home buyers has cooled just a bit in the fall.

Redfin, for example, reports that in September, 56-percent of the offers its agents wrote ended up in a bidding war. That was down from 59-percent in August.

Redfin says it’s the first decline in bidding wars in at least five months.

“Eviction Orders Still Going Out in Nevada, Despite Moratorium”

There is a federal eviction moratorium in place through the end of the year, but in Nevada, many renters are finding they are still getting eviction notices.

And state officials may not be able to help.

Nevada Attorney General Aaron Ford told KSNV-TV in Las Vegas

The federal moratorium protects any renter who’s financially impacted by the pandemic.

“Experts Consider Climate Change Impact on Real Estate”

We’ve all heard by now how the pandemic is prompting many people to leave big cities for the suburbs. But there may also be another, lower profile migration happening. And it’s because of climate change.

Experts at the Urban Land Institute’s recent 2020 fall conference tried to forecast the impact on real estate if large numbers of people move because of increasing threat of natural disasters or rising sea levels.

And while they agree it is likely to alter the real estate industry, both residential and commercial, it is far less certain exactly how that will happen.

“One Way Housing Market Has Been Altered This Year”

One thing’s for sure about 2020 – lots of conventional real estate wisdom is going to be revised.

Dallas-area Realtor Rogers Healy said on the TD Ameritrade Network that the 2020 market is hard to define:

To prove his point about how “crazy” the market is, Healey says that this fall, there have actually been bidding wars over multimillion-dollar luxury homes, something he has never seen before.

“Many Younger Buyers Get Help From Mom and Dad: Survey”

Sounds like the Bank of Mom And Dad is doing a lot of business these days.

According to a survey by the financial services company Legal and Genera, 43-percent of home buyers under the age of 35 got part or all of their down payment from their parents or other family members.

And where do Mom and Dad get the money?

Some use a home equity line of credit, borrowing against their own home to help their kids get one.

Experts quoted by Forbes.com advise, though, that homeowners borrow against their home’s equity with caution.

“New Partnership to Fight LGBTQ Housing Discrimination”

The newly formed LGBTQ+ Real Estate Alliance is partnering with the National Fair Housing Alliance

Their joint goal is to find and eliminate housing discrimination based on sexual orientation and gender identity.

The two groups say they will also engage in education and training efforts.

“Curb Appeal Boosters”

“Curb appeal” is very real, and experts say you can boost your home’s curb appeal with a few simple upgrades.

Experts quoted by Realtor.com say, for example, that a fresh coat of paint on your front door will help.

So Will adding solar lighting to the sidewalk leading to your front porch.

And some experts believe that a well-landscape yard can add as much as 10-percent to the value of your home.

Hot Links

THE NATIONAL ASSOCIATION OF REALTORS®
HouseLogic.com
REALTOR®.com
REALTOR®.com Real Estate Apps
Smart Home Today with Stephen Gasque

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