Author: Christy Walton

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Chances of Another Foreclosure Crisis? “About Zero Percent.”

Chances of Another Foreclosure Crisis? “About Zero Percent.” | MyKCM

There seems to be some concern that the 2020 economic downturn will lead to another foreclosure crisis like the one we experienced after the housing crash a little over a decade ago. However, there’s one major difference this time: a robust forbearance program.

During the housing crash of 2006-2008, many felt homeowners should be forced to pay their mortgages despite the economic hardships they were experiencing. There was no empathy for the challenges those households were facing. In a 2009 Wall Street Journal article titled Is Walking Away From Your Mortgage Immoral?, John Courson, Chief Executive of the Mortgage Bankers Association, was asked to comment on those not paying their mortgage. He famously said:

“What about the message they will send to their family and their kids?”

Courson suggested that people unable to pay their mortgage were bad parents.

What resulted from that lack of empathy? Foreclosures mounted.

This time is different. There was an immediate understanding that homeowners were faced with a challenge not of their own making. The government quickly jumped in with a mortgage forbearance program that relieved the financial burden placed on many households. The program allowed many borrowers to suspend their monthly mortgage payments until their economic condition improved. It was the right thing to do.

What happens when forbearance programs expire?

Some analysts are concerned many homeowners will not be able to make up the back payments once their forbearance plans expire. They’re concerned the situation will lead to an onslaught of foreclosures.

The banks and the government learned from the challenges the country experienced during the housing crash. They don’t want a surge of foreclosures again. For that reason, they’ve put in place alternative ways homeowners can pay back the money owed over an extended period of time.

Another major difference is that, unlike 2006-2008, today’s homeowners are sitting on a record amount of equity. That equity will enable them to sell their houses and walk away with cash instead of going through foreclosure.

Bottom Line

The differences mentioned above will be the reason we’ll avert a surge of foreclosures. As Ivy Zelman, a highly respected thought leader for housing and CEO of Zelman & Associates, said:

“The likelihood of us having a foreclosure crisis again is about zero percent.”

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Homes for Sale Are Rapidly Disappearing

Homes for Sale Are Rapidly Disappearing | MyKCM

Through all the challenges of 2020, the real estate market has done very well, and purchasers are continuing to take advantage of historically low mortgage rates. Realtor Magazine just explained:

“While winter may be typically a slow season in real estate, economists predict it isn’t likely to happen this year…Low inventories combined with high demand due to record-low mortgage rates is sending buyers to the market in a flurry.”

However, one challenge for the housing industry heading into this winter is the dwindling number of homes available for sale. Lawrence Yun, Chief Economist for the National Association of Realtors (NAR), recently said:

“There is no shortage of hopeful, potential buyers, but inventory is historically low.”

In addition, Danielle Hale, Chief Economist for realtor.com, notes:

“Fewer new sellers coming to market while a greater than usual number of buyers continue to search for a home causes inventory to continue to evaporate.”

One major indicator the industry uses to measure housing supply is the months’ supply of inventory. According to NAR:

“Months’ supply refers to the number of months it would take for the current inventory of homes on the market to sell given the current sales pace.”

Homes for Sale Are Rapidly Disappearing | MyKCM

Historically, six months of supply is considered a normal real estate market. Going into the pandemic, inventory was already well below this mark. As the year progressed, the supply has was reduced even further. Here is a graph showing this measurement over the last year:

What does this mean if you’re a buyer?

Be patient during your home search. It may take time to find a home you love. Once you do, be ready to move forward quickly. Get pre-approved for a mortgage, be prepared to make a competitive offer from the start, and understand how the shortage in inventory has led to more bidding wars. Calculate just how far you’re willing to go to secure a home if you truly love it.

What does this mean if you’re a seller?

Realize that, in some ways, you’re in the driver’s seat. When there’s a shortage of an item at the same time there’s a strong demand for it, the seller is in a good position to negotiate. Whether it’s the price, moving date, possible repairs, or anything else, you’ll be able to ask for more from a potential purchaser at a time like this – especially if you have multiple interested buyers. Do not be unreasonable, but understand you probably have the upper hand.

Bottom Line

The housing market will remain strong throughout the winter and heading into the spring. Know what that means for you, whether you’re buying, selling, or doing both.

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Realtors® Expo: 2020 Market Was ‘Exceptional,’ Biden Homebuyer Credit Will Aid with Down Payments

November 17, 2020 Media Contact: Quintin Simmons 202-383-1178

Source: NAR

WASHINGTON (November 17, 2020) – The housing industry has exceeded expectations for 2020 and the marketplace will continue to see home price and sales growth in the coming year, National Association of Realtors® Chief Economist Lawrence Yun said at the 2020 REALTORS® Conference & Expo(link is external).

“The housing market has been exceptional in 2020, with demand soaring alongside low interest rates and a shift toward remote work for a good number of the labor force,” Yun told attendees of the Residential Economic Issues & Trends Forum on Tuesday.

Home sales set a number of records this year despite – and in some cases, because of – the coronavirus pandemic. Yun, who is also senior vice president of research at NAR, commented on record-setting home price growth occurring across much of the country.

“The consequent rise in home prices has boosted wealth accumulation for homeowners,” Yun said. “But the opposite side of this will mean the continued decline of housing affordability and will limit future homeownership opportunities for young adults if housing supply is not greatly increased.”

While U.S. gross domestic product is down as a result of the COVID-19 outbreak, Yun noted that overall incomes have received a boost from federal stimulus issued earlier this year. Additionally, some households saw a net increase in their savings while much of the country was under stay-at-home orders and consumer spending dropped. Yun projected Tuesday that this increase in collective savings will ultimately stimulate the economy once a coronavirus vaccine is created and distributed.

Yun is forecasting 20% total growth in new home sales in 2020 alongside a 3% overall increase in existing-home sales. Anticipating the favorable climate will bleed into next year, Yun expects new home sales to jump 21% and existing-home sales to climb at least 9% in 2021. “The second-order housing demand arising from remote work flexibility and changing housing preference will continue next year,” he noted.

Mortgage rates are likely to see a 3.0% gain by the end of the year, and a 3.1% jump in 2021. By the end of 2020, home prices will have risen by 6%, with an additional 3% of growth expected in 2021, Yun said.

As the nation prepares for a new president to take office next year, Yun dissected housing proposals already put forth by the likely President-elect Joe Biden.

“The Biden Presidency could bring several impactful changes to the housing market,” Yun said. “The homebuyer tax credit he proposed as a candidate would help Americans cover their down payment costs and is likely firmer assurance of government guarantees to mortgages backed by Fannie Mae and Freddie Mac.

“In addition, new appointees at the Federal Reserve are likely to pursue an expansionary monetary policy for a longer period, which should keep interest rates stable over the next few years,” he said. “However, the much-needed increase in supply could be hampered by a removal of the 1031-exchange, which facilitates land sales for homebuilding.”

The National Association of Realtors® is America’s largest trade association, representing more than 1.4 million members involved in all aspects of the residential and commercial real estate industries.

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Tips to Sell Your House Safely Right Now [INFOGRAPHIC]

Tips to Sell Your House Safely Right Now [INFOGRAPHIC]

Tips to Sell Your House Safely Right Now [INFOGRAPHIC] | MyKCM

Some Highlights

  • Your agent now has over 6 months of experience selling houses during the pandemic and can make the process easier and safer for you today.
  • COVID-19 protocols and technology usage recommendations from the National Association of Realtors (NAR) are making it possible to sell houses right now, while agents continue to abide first and foremost by state and local regulations.
  • Let’s connect to discuss how to sell your house safely in today’s housing market.
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NAR Board of Directors Approves New Personal Conduct Policy Addressing Discrimination

Changes to combat hate speech will ensure Realtor® Code of Ethics extends beyond real estate-related activities

Media Contact:  Wesley Shaw 202-383-1193
Source: NAR

CHICAGO (November 13, 2020) – The Board of Directors for the National Association of Realtors® today voted in favor of a motion presented by NAR’s Professional Standards Committee making it a violation for Realtors® to use harassing or hate speech toward any of the protected classes under Article 10 of NAR’s Code of Ethics. Those include race, color, religion, sex, handicap, familial status, national origin, sexual orientation and gender identity. The Professional Standards Committee recommendations come as NAR works to reaffirm its commitment to fair housing and position its members to lead America’s real estate industry in the fight against discrimination and inequality.

“I applaud NAR’s Board of Directors and our Professional Standards Committee for their efforts to raise the bar on the professionalism and private speech of America’s 1.4 million Realtors®,” said NAR President Vince Malta, broker at Malta & Co., Inc., in San Francisco, CA. “Combatting and overcoming bigotry and injustice starts with each of us. Realtors® today took tangible steps to ensure we are held to the highest possible standard while providing a mechanism of enforcement for those who violate our new policies.”

Local, state and national Realtor® associations received various complaints about discriminatory speech posted online by Realtors® earlier this year, particularly on social media. In subsequent months, NAR’s Professional Standards Committee and Interpretations Procedures Advisory Board met to consider the Code of Ethics’ applicability to discriminatory speech and conduct beyond a Realtor®’s real estate duties.

Following months of meetings and deliberations, NAR’s Advisory Board recommended that its Code of Ethics apply to every action a Realtor® takes, whether personal or professional.

Any complaint alleging a violation of Article 10 as illustrated by Standard of Practice 10-5 can now be brought to a hearing panel at a local Realtor® association, which will be asked to assess the circumstances of each individual case. Overall, although the proposal seeks to extend enforcement of the Code beyond its current limits of real estate transactions and real estate-related activities, this added reach will not increase a Realtor® or Realtor®-Principal’s liability under the law.

Moving forward, NAR’s Professional Standards Committee will continue working to develop case interpretations to assist members and professional standards enforcement volunteers in understanding the Code’s applicability.

The National Association of Realtors® is America’s largest trade association, representing more than 1.4 million members involved in all aspects of the residential and commercial real estate industries.

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Personally, I think it’s about darned time. I must wonder how far that NAR/Local Associations will go in pursuing cases of hate speech made by REALTORS. I hope that it means that crummy people will be removed from NAR, but won’t bet on it. – CMW

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VA Home Loans: Helping Heroes Find a Home

VA Home Loans: Important Housing Benefits for Veterans | MyKCM

Today, on Veterans Day, we honor those who have served our country and thank them for their continued dedication to our nation. In the United States, there are many valuable benefits available to Veterans, including VA home loans. For over 75 years, VA home loans have provided millions of Veterans and their families the opportunity to purchase their own homes.

As we consider the full impact of VA home loans, it’s important to both understand these great options for Veterans and to share them with those we know who may be able to benefit most. For a variety of different reasons, many Veterans don’t use their VA home loan options, so being knowledgeable about what’s available and how they work may be a game-changer for many.

Facts about 2019 VA Home Loans (most current data):

  • 624,546 home loans were guaranteed by the Veterans Administration.
  • 306,879 VA home loans were made without a down payment.
  • 2,055 grants totaling $118 million were provided to help seriously disabled Veterans purchase, modify, or construct a home to meet their needs.

VA Home Loans Often Offer:

  • No down payment options as long as the sales price isn’t higher than the home’s appraised value.
  • Better terms and interest rates than loans from other lenders.
  • Fewer closing costs, which may be paid by the seller.

Bottom Line

The best thing you can do today to celebrate Veterans Day is to share this information with those who can potentially benefit from these loan options. Let’s connect today to discuss your questions about VA home loan benefits. Thank you for your service.

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Why the 2021 Forecast Doesn’t Call for a Foreclosure Crisis

Why the 2021 Forecast Doesn’t Call for a Foreclosure Crisis | MyKCM

As the current forbearance mortgage relief options come to an end, many are wondering if we’ll face a foreclosure crisis next year. This is understandable, especially for those who remember the housing crisis that began in 2008. The reality is, plans have been put in place through forbearance to ensure history doesn’t repeat itself.

This year, homeowners are able to request 180 days of mortgage relief through forbearance. Upon expiration of that timeframe, they’re also entitled to request 180 additional days, bringing the total to 360 days of deferred payment eligibility. As forbearance expires, homeowners should stay in touch with their lender, because creating a plan for the deferred payments is a critical next step to avoiding foreclosure. There are multiple options for homeowners to pursue at this point, and with the right planning and communication with the lender, foreclosure doesn’t have to be one of them.

Many homeowners are concerned that they’ll have to pay the deferred payments back in a lump sum payment at the end of forbearance. Thankfully, that’s not the case. Fannie Mae explains:

“You don’t have to repay the forbearance amount all at once upon completion of your forbearance plan…Here’s the important thing to remember: If you receive a forbearance plan, you will have options when it comes to repaying the missed amount. You don’t have to pay the forbearance amount at once unless you are able to do so.”

Why the 2021 Forecast Doesn’t Call for a Foreclosure Crisis | MyKCM

When looking at the percentage of people in forbearance, we can also see that this number has been decreasing steadily throughout the year. Fewer people than initially expected are still in forbearance, so the number of homeowners who will need to work out alternative payment options is declining (See graph below):This means there are fewer and fewer homeowners at risk of foreclosure, and many who initially applied for forbearance didn’t end up needing it. Mike Fratantoni, Senior Vice President and Chief Economist at the Mortgage Bankers Association (MBA), explains:

“Nearly two-thirds of borrowers who exited forbearance remained current on their payments, repaid their forborne payments, or moved into a payment deferral plan. All of these borrowers have been able to resume – or continue – their pre-pandemic monthly payments.”

For those who are still in forbearance and unable to make their payments, foreclosure isn’t the only option left. In their Homeowner Equity Insights Report, CoreLogic indicates:

“In the second quarter of 2020, the average homeowner gained approximately $9,800 in equity during the past year.”

Many homeowners have enough equity in their homes today to be able to sell their houses instead of foreclosing. Selling and protecting the overall financial investment may be a very solid option for many homeowners. As Ivy Zelman, Founder of Zelman & Associates, mentioned in a recent podcast:

“The likelihood of us having a foreclosure crisis again is about zero percent.”

Bottom Line

If you’re currently in forbearance or think you should be because you’re concerned about being able to make your mortgage payments, reach out to your lender to discuss your options and next steps. Having a trusted and knowledgeable professional on your side to guide you is essential in this process and might be the driving factor that helps you stay in your home.

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Is it Safe to Sell My House Right Now?

Is it Safe to Sell My House Right Now? | MyKCM

In today’s real estate market, the buzz is all about how it’s a great time to sell your house. Buyer demand is high, and there simply aren’t enough homes available to buy to meet that growing need. This means now is the time to make a move so you can close the deal on your ideal terms.

Even in today’s strong sellers’ market, there are homeowners who are choosing not to sell due to ongoing concerns around the health crisis, financial uncertainty, and life in general. According to Zillow, here are the top three reasons homeowners who are thinking of selling sometime in the next three years are not putting their houses on the market right now:

  • 34% – Life is too uncertain right now
  • 31% – Financial uncertainty
  • 25% – COVID-19 health concerns

If you identify with any of these, you’re not alone. Whether it’s the future of your employment situation or simply being uncomfortable having guests in your home for showings, life feels a lot different than it did at this time last year. The good news is, real estate professionals have spent the majority of 2020 figuring out how to sell homes safely, and it’s paying off for those who are choosing to move this year.

Real estate agents are doing two things very well to make selling your house possible:

1. Agents Are Implementing Technology in the Process

While abiding by state and local regulations as a top priority, real estate agents are making sales happen safely and effectively by leveraging key pieces of technology. Agents know exactly what today’s buyers and sellers need and how to put the necessary digital steps in place. For example, agents have capitalized on the technology buyers find most helpful when deciding on a new home:

  • Virtual tours
  • Accurate and detailed listing information
  • Detailed neighborhood information
  • High-quality listing photos
  • Agent-led video chats

They’re listening to their audience and leveraging the tools that help buyers get an initial look at a home without having to step inside. This helps reduce the number of people entering your home, so only those who are very seriously interested need to take the next step: in-person showings.

2. Agents Are Facilitating Safe and Effective In-Person Showings

After leveraging technology, if you have serious buyers who still want to see your house in person, agents are following the guidelines set by the National Association of Realtors (NAR) and utilizing safe ways to proceed. Here are a few of them, understanding again that the agent’s top priority is always to follow­ state and local restrictions first:

  • Limiting in-person activity
  • R­­­equiring guests to wash their hands or use an alcohol-based sanitizer
  • Removing shoes or covering them with booties
  • Following CDC guidance on social distancing and wearing face coverings

Getting comfortable with your agent – a true trusted advisor – taking these steps under the modern-era safety standards might be your best plan. This is especially important if you’re in a position where you need to sell your house sooner rather than later.

As Jeff Tucker, Senior Economist for Zillow notes:

“Homeowners who feel life is uncertain right now may think they can still get a strong price if they delay selling until they have more clarity. The catch is that waiting to sell may raise the cost of a trade-up. This fall’s record low mortgage rates, which make a trade-up more affordable on a monthly basis, are not guaranteed to last.”

Bottom Line

In this new era in our lives, things are shifting quickly, and virtual strategies for sellers may be your ideal option. Opening your doors up to new approaches could be game-changing when it comes to selling your house while the market is leaning in your favor. Let’s connect so you have your trusted real estate professional (that’s me) to help you safely and effectively navigate all that’s new when it comes to making your next move.