This Weekend: Choose what you’ll save for.

I found this great article about immediate gratification when it comes to savings. Give it a read.

By Shifrah Combiths

Apartment Therapy Weekend Projects is a guided program designed to help you get the happy, healthy home you’ve always wanted, one weekend at a time. Sign up now for email updates so you never miss a lesson.

As a mom to five kids, I spend a good deal of time considering behavior management strategies. While I do, of course, have to dole out consequences for bad choices, I’ve found, like all the experts say, that positive reinforcement really is the best way to create lasting behavior change.

When a good choice is met with a reward, your brain associates the good feeling with the action and the behavior is reinforced. Your brain, seeking the same feel-good result, encourages you to repeat the behavior that led to it. Eventually, choosing the desired behavior becomes a well-worn pathway.

The same psychological framework is true for adults, and you can use positive reinforcement to manage your own behavior. Knowing that you thrive on hits of the feel-good hormone dopamine gives you new power to stop bad habits and start new ones. Sometimes the only difference between failing at forming a new habit and it becoming part of who you are is just a matter of giving yourself a little reward each time you succeed in choosing it. What great news!

This weekend we’re going to apply the concept to a behavior that nearly everyone wishes to improve: how you spend money.

The idea here is to shift a money-saving mindset from a denial to an opportunity: thew opportunity to put that saved money toward something specific you’re excited about.

This weekend, choose categories or objects and create line items in your budget or even separate accounts for them. These could be things like a new couch, a vacation, a fancy scanner to deal with your physical papers once and for all (just me?), or even paying down a particular debt.

Each time you forego a treat at Starbucks, for example, put the money you saved immediately toward one of your goals. This way, saving money will feel like treating yourself, the savings will add up, and soon, not frivoling away your money will become a well-worn path in your brain and second-nature behavior. Happy saving!

It’s a Sellers’ Market [INFOGRAPHIC]

It’s a Sellers’ Market [INFOGRAPHIC] | MyKCM

Some Highlights

  • Over the past year, homeowners have gained an unprecedented opportunity to sell with great success while buyer demand is soaring.
  • With homes selling twice as fast as they did last year at this time, getting multiple offers, and rising in price, homeowners are in the driver’s seat.
  • Let’s connect today if you’re ready to learn about the leverage you have as a seller in today’s housing market.

Are There Going to Be More Homes to Buy This Year?

Are There Going to Be More Homes to Buy This Year? | MyKCM

If you’re looking for a home to purchase right now and having trouble finding one, you’re not alone. At a time like this when there are so few houses for sale, it’s normal to wonder if you’ll actually find one to buy. According to the National Association of Realtors (NAR), across the country, inventory of available homes for sale is at an all-time low – the lowest point recorded since NAR began tracking this metric in 1982. There are, however, more homes expected to hit the market later this year. Let’s break down the three key places they’ll likely come from as 2021 continues on.

1. Homeowners Who Didn’t Sell Last Year

In 2020, many sellers decided to pause their moving plans for a number of different reasons. From health concerns about the pandemic to financial uncertainty, plenty of homeowners decided not to move last year.

Now that vaccines are being distributed and there’s a light at the end of the COVID-19 tunnel, it should bring some peace of mind to many potential sellers. As Danielle Hale, Chief Economist at realtor.comnotes:

“Fortunately for would-be homebuyers, we expect sellers to return to the market as we see improvement in the economy and progress against the coronavirus.”

Many of the homeowners who decided not to sell in 2020 will enter the market later this year as they begin to feel more comfortable showing their house in person, understanding their financial situation, and simply having more security in life.

2. More New Homes Will Be Built

Last year was a strong year for home builders, and according to the National Association of Home Builders (NAHB), 2021 is expected to be even better:

“For 2021, NAHB expects ongoing growth for single-family construction. It will be the first year for which total single-family construction will exceed 1 million starts since the Great Recession.”

With more houses being built in many markets around the country, homeowners looking for new houses that meet their changing needs will be able to move into their dream homes. When they sell their current houses, this will create opportunities for those looking to find a home that’s already built to do so. It sets a simple chain reaction in motion for hopeful buyers.

3. Those Impacted Financially by the Economic Crisis

Many experts don’t anticipate a large wave of foreclosures coming to the market, given the forbearance options afforded to current homeowners throughout the pandemic. Some homeowners who have been impacted economically will, however, need to move this year. There are also homeowners who didn’t take advantage of the forbearance option or were already in a foreclosure situation before the pandemic began. In those cases, homeowners may decide to sell their houses instead of going into the foreclosure process, especially given the equity in homes today. Lawrence Yun, Chief Economist at NAR, explains:

“Given the huge price gains recently, I don’t think many homes will have to go to foreclosure…I think homes will just be sold, and there will be cash left over for the seller, even in a distressed situation. So that’s a bit of a silver lining in that we don’t expect a massive sale of distressed properties.”

As we can see, it looks like we’re going to have an increase in the number of homes for sale in 2021. With fears of the pandemic starting to ease, new homes being built, and more listings coming to the market prior to foreclosure, there’s hope if you’re planning to buy this year. And if you’re thinking of selling and making a move, doing so while demand for your house is high might create an outstanding move-up option for you.

Bottom Line

Housing demand is high and supply is low, so if you’re thinking of moving, it’s a great time to do so. There are likely many buyers who are looking for a home just like yours, and there are options coming for you to find a new house too. Let’s connect today to see how you can benefit from the opportunities available in our local market.

HOA Document Help

Photo by HRD

Going through HOA documents is a complete pain. Going through the financials  is even worse. I am pretty sure that the Geneva Convention has it listed under inhumane forms of torture.

It is, however, a necessary trial that all condominium and HOA managed community residents must undergo.

The reason is that the buyers must make an informed decision whether or not to invest in the property and in the accompanying HomeOwners’ Association. The danger of not studying the documents is that the HOA could be insolvent. That means that if and when an emergency strikes, the HOA will be forced to create a special assessment for the homeowners that could mean thousands of  dollars out of pocket.

Even routine maintenance is possibly subject to a special assessment or even put off until there are funds to upgrade the property if the HOA does not have the funds to cover costs.

There is help, though! We have A Guy. We have THE Guy. His name is Carson and for a reasonable fee (trust me, it’s totally reasonable when the other option is a surprise $20,000 bill) he will examine the HOA financial documents and provide a report on the financial viability, solvency, and stability of the Association. We always recommend this service to our buyers so they can protect themselves.

To order a report or learn more about the services Carson offers, go to CIDA REPORT.

Buyers should also read the CCR’s, Bylaws, Rules, and all of the other accompanying documents of the HOA as they will state everything that the homeowners need to know, like when and where dues are sent, when trash cans need to be put away, and if homeowners are required to dance naked on hot coals under the new moon.

Please don’t just sign the form that the documents have been received. Please read them. Carefully.

The Reason Mortgage Rates Are Projected to Increase and What It Means for You

The Reason Mortgage Rates Are Projected to Increase and What It Means for You | MyKCM

We’re currently experiencing historically low mortgage rates. Over the last fifty years, the average on a Freddie Mac 30-year fixed-rate mortgage has been 7.76%. Today, that rate is 2.81%. Flocks of homebuyers have been taking advantage of these remarkably low rates over the last twelve months. However, there’s no guarantee rates will remain this low much longer.

Whenever we try to forecast mortgage rates, we should consider the advice of Mark Fleming, Chief Economist at First American:

“You know, the fallacy of economic forecasting is don’t ever try and forecast interest rates and/or, more specifically, if you’re a real estate economist mortgage rates, because you will always invariably be wrong.”

The Reason Mortgage Rates Are Projected to Increase and What It Means for You | MyKCM
The Reason Mortgage Rates Are Projected to Increase and What It Means for You | MyKCM

Many things impact mortgage rates. The economy, inflation, and Fed policy, just to name a few. That makes forecasting rates difficult. However, there’s one metric that has held up over the last fifty years – the relationship between mortgage rates and the 10-year treasury rate. Here’s a graph detailing this relationship since Freddie Mac started keeping mortgage rate records in 1972:There’s no denying the close relationship between the two. Over the last five decades, there’s been an average 1.7-point spread between these two rates. It’s this long-term relationship that has some forecasters projecting an increase in mortgage rates as we move throughout the year. This is based on the recent surge in the 10-year treasury rate shown here:The spread between the two is now 1.53, indicating mortgage rates could rise. Actually, a bump-up in rate has already begun. As Joel Kan, Associate VP of Economic Forecasting for the Mortgage Bankers Association, reveals:

“Expectations of faster economic growth and inflation continue to push Treasury yields & mortgage rates higher. Since hitting a survey low in December, the 30-year fixed rate has slowly risen, & last week climbed to its highest level since Nov 2020.”

How high might they go in 2021?

No one knows for sure. Sam Khater, Chief Economist for Freddie Mac, recently suggested:

“While there are multiple temporary factors driving up rates, the underlying economic fundamentals point to rates remaining in the low 3% range for the year.”

What does this mean for you?

Whether you’re a first-time buyer or you’ve purchased a home before, even an increase of half a point in mortgage rate (2.81 to 3.31%) makes a big difference. On a $300,000 mortgage, that difference (including principal and interest) is $82 a month, $984 a year, or a total of $29,520 over the life of the home loan.

Bottom Line

Based on the 50-year symbiotic relationship between treasury rates and mortgage rates, it appears mortgage rates could be headed up this year. It may make sense to buy now rather than wait.