East Tennessee Real Estate & Neighborhood Source
Are you planning on selling your house in Knoxville in 2019? You will no doubt have more than 4 questions on your mind, but knowing the answers to these will get you started with confidence! Let’s get together to answer these and any other questions you may have!
Contact me, Troy Stavros with CornerStone Realty Associates at 865-999-0925 today!
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Have questions or want to get the process started? Contact me, Troy Stavros with CornerStone Realty Associates at 865-999-0925!
Last week, the National Association for Business Economics released their February 2019 Economic Policy Survey. The survey revealed that a majority of the panel believe an economic slowdown is in the near future:
“While only 10% of panelists expect a recession in 2019, 42% say a recession will happen in 2020, and 25% expect one in 2021.”
Their findings coincide with three previous surveys calling for a slowdown sometime in the next two years:
That raises the question: Will the Knoxville real estate market be impacted like it was during the last recession?
A recession does not equal a housing crisis. According to the dictionary definition, a recession is:
“A period of temporary economic decline during which trade and industrial activity are reduced, generally identified by a fall in GDP in two successive quarters.”
During the last recession, prices fell dramatically because the housing collapse caused the recession. However, if we look at the previous four recessions, we can see that home values weren’t negatively impacted:
Most experts agree with Ralph McLaughlin, CoreLogic’s Deputy Chief Economist, who recently explained:
“There’s no reason to panic right now, even if we may be headed for a recession. We’re seeing a cooling of the housing market, but nothing that indicates a crash.”
The housing market is just “normalizing”. Inventory is starting to increase and home prices are finally stabilizing. This is a good thing for both buyers and sellers as we move forward.
If there is an economic slowdown in our near future, there is no need for fear to set in. As renowned financial analyst, Morgan Housel, recently tweeted:
“An interesting thing is the widespread assumption that the next recession will be as bad as 2008. Natural to think that way, but, statistically, highly unlikely. Could be over before you realized it began.”
There are some people who haven’t purchased homes because they are uncomfortable taking on the obligation of a mortgage. However, everyone should realize that unless you are living with your parents rent-free, you are paying a mortgage – either yours or your landlord’s.
As Entrepreneur Magazine, a premier source for small business, explained in their article, “12 Practical Steps to Getting Rich”:
“While renting on a temporary basis isn’t terrible, you should most certainly own the roof over your head if you’re serious about your finances. It won’t make you rich overnight, but by renting, you’re paying someone else’s mortgage. In effect, you’re making someone else rich.”
With home prices rising, many renters are concerned about their house-buying power. Mike Fratantoni, Chief Economist at MBA, explained:
“The spring homebuying season is almost upon us, and if rates stay lower, inventory continues to grow, and the job market maintains its strength, we do expect to see a solid spring market.”
As an owner, your mortgage payment is a form of ‘forced savings,’ which allows you to build equity in your home that you can tap into later in life. As a renter, you guarantee the landlord is the person building that equity.
As mentioned before, interest rates are still at historic lows, making it one of the best times to secure a mortgage and make a move into your dream home. Freddie Mac’s latest reportshows that rates across the country were at 4.46% last week.
Whether you are looking for a primary residence for the first time or are considering a vacation home on the shore, now may be the time to buy. Contact Troy Stavros with CornerStone Realty Associates at 865-999-0925 to start formulating a plan and get you into your dream home!
The largest obstacle renters face when planning to buy a home is saving for a down payment. This challenge is amplified by rising rents, which has eaten into the amount of money renters have leftover for savings each month after paying expenses.
In combination with higher rents, survey after survey has shown that non-homeowners (renters and those living rent-free with family or friends) believe they need to save upwards of 20% for their down payment!
According to the “Barriers to Accessing Homeownership” study commissioned in partnership between the Urban Institute, Down Payment Resource, and Freddie Mac, 39% of non-homeowners and 30% of those who already own a home believe they need more than a 20% down payment.
The percentage of those who are aware of low down payment programs (those under 5%) is surprisingly low at 12% for non-homeowners and 13% for homeowners.
In a recent Convergys Analytics report, they found that 49% of renters believe they need at least a 20% down payment.
The median down payment on loans approved in 2018 was only 5%! Those waiting until they have over 20% may already have enough saved to buy now!
There are over 45 million millennials (33%) who are mortgage ready right now, meaning their income, debt, and credit scores would all allow them to qualify for a mortgage today!
If your five-year plan includes buying a home, let’s get together to determine what it will take to make that plan a reality. You may be closer to your dream than you realize! Contact Troy Stavros with CornerStone Realty Associates at 865-999-0925 to start formulating a plan and get you into your dream home!
Recently, David Greene, co-host of the BiggerPockets podcast and a nationally renowned author and speaker, wrote an article in Forbes explaining how investing in real estate could help build wealth. Many of the points he made also apply to a family owning their own home. Here are a few:
“The rising of home prices over time, is how the majority of wealth is built in real estate. This is the ‘home run’ you hear of when people make a large windfall of money. While prices fluctuate, over the long run real estate values have always gone up, always, and there is no reason to think that is going to change.
One thing to consider when it comes to real estate appreciation affecting your ROI is the fact that appreciation combined with leverage offers huge returns. If you buy a property for $200,000 and it appreciates to $220,000, your property had made you a 10% return. However, you likely didn’t pay cash for the property and instead used the bank’s money. If you consider that you may have put 10% down ($20,000), you actually have doubled your investment, a 100% return.”
“By nature, real estate is one of the easiest assets to leverage I have ever come across—maybe the easiest. Not only is it easy to leverage the financing of it, but the terms are incredible compared to any other kind of loan. Interest rates are currently below 5%, down payments can be 20% or less, and loans are routinely amortized over 30-year periods.”
“One of the best parts of investing in real estate is the fact that … you’re slowly paying down your loan balance with each payment to the bank… After enough time passes, a good chunk of every payment comes off the loan balance, and wealth is created.”
“Forced equity is a term used to refer to the wealth that is created when an investor does work to a property to make it worth more…
Example of this would be adding a third or fourth bedroom to a property with only two, adding a second bathroom to a property with only one, or adding more square footage to a property with less than the surrounding houses.”
Though Green was talking about investors, the same could be said about a family upgrading their own home.
Green put it best by saying:
“There are many ways to build wealth in America, but real estate might be the safest, steadiest and simplest way to do so.”
To read the full article, click here.
Contact Troy Stavros with CornerStone Realty Associates at 865-999-0925 to start formulating a plan and get you into your dream home!