March 24, 2020

Stock Market vs Housing Market 2020

Why the Stock Market Correction Probably Won’t Impact Home Values



With the housing crash of 2006-2008 still visible in the rear-view mirror, many are concerned the current correction in the stock market is a sign that home values are also about to tumble. What’s taking place today, however, is nothing like what happened the last time. The S&P 500 did fall by over fifty percent from October 2007 to March 2009, and home values did depreciate in 2007, 2008, and 2009 – but that was because that economic slowdown was mainly caused by a collapsing real estate market and a meltdown in the mortgage market.

This time, the stock market correction is being caused by an outside event (the coronavirus) with no connection to the housing industry. Many experts are saying the current situation is much more reminiscent of the challenges we had when the dot.com crash was immediately followed by 9/11. As an example, David Rosenberg, Chief Economist with Gluskin Sheff + Associates Inc., recently explained:

“What 9/11 has in common with what is happening today is that this shock has also generated fear, angst and anxiety among the general public. People avoided crowds then as they believed another terrorist attack was coming and are acting the same today to avoid getting sick. The same parts of the economy are under pressure ─ airlines, leisure, hospitality, restaurants, entertainment ─ consumer discretionary services in general.”

Since the current situation resembles the stock market correction in the early 2000s, let’s review what happened to home values during that time.Why the Stock Market Correction Probably Won’t Impact Home Values | MyKCMThe S&P dropped 45% between September 2000 and October 2002. Home prices, on the other hand, appreciated nicely at the same time. That stock market correction proved not to have any negative impact on home values.

Bottom Line

If the current situation is more like the markets in the early 2000s versus the markets during the Great Recession, home values should be minimally affected, if at all.

Posted in Miscellaneous
March 23, 2020

Housing Market | This Is NOT Like the Last Time

5 Simple Graphs Proving This Is NOT Like the Last Time

5 Simple Graphs Proving This Is NOT Like the Last Time | MyKCM

With all of the volatility in the stock market and uncertainty about the Coronavirus (COVID-19), some are concerned we may be headed for another housing crash like the one we experienced from 2006-2008. The feeling is understandable. Ali Wolf, Director of Economic Research at the real estate consulting firm Meyers Research, addressed this point in a recent interview:

“With people having PTSD from the last time, they’re still afraid of buying at the wrong time.”

There are many reasons, however, indicating this real estate market is nothing like 2008. Here are five visuals to show the dramatic differences.

1. Mortgage standards are nothing like they were back then.

During the housing bubble, it was difficult NOT to get a mortgage. Today, it is tough to qualify. The Mortgage Bankers’ Association releases a Mortgage Credit Availability Index which is “a summary measure which indicates the availability of mortgage credit at a point in time.” The higher the index, the easier it is to get a mortgage. As shown below, during the housing bubble, the index skyrocketed. Currently, the index shows how getting a mortgage is even more difficult than it was before the bubble.5 Simple Graphs Proving This Is NOT Like the Last Time | MyKCM

2. Prices are not soaring out of control.

Below is a graph showing annual house appreciation over the past six years, compared to the six years leading up to the height of the housing bubble. Though price appreciation has been quite strong recently, it is nowhere near the rise in prices that preceded the crash.5 Simple Graphs Proving This Is NOT Like the Last Time | MyKCMThere’s a stark difference between these two periods of time. Normal appreciation is 3.6%, so while current appreciation is higher than the historic norm, it’s certainly not accelerating beyond control as it did in the early 2000s.

3. We don’t have a surplus of homes on the market. We have a shortage.

The months’ supply of inventory needed to sustain a normal real estate market is approximately six months. Anything more than that is an overabundance and will causes prices to depreciate. Anything less than that is a shortage and will lead to continued appreciation. As the next graph shows, there were too many homes for sale in 2007, and that caused prices to tumble. Today, there’s a shortage of inventory which is causing an acceleration in home values.5 Simple Graphs Proving This Is NOT Like the Last Time | MyKCM

4. Houses became too expensive to buy.

The affordability formula has three components: the price of the home, the wages earned by the purchaser, and the mortgage rate available at the time. Fourteen years ago, prices were high, wages were low, and mortgage rates were over 6%. Today, prices are still high. Wages, however, have increased and the mortgage rate is about 3.5%. That means the average family pays less of their monthly income toward their mortgage payment than they did back then. Here’s a graph showing that difference:5 Simple Graphs Proving This Is NOT Like the Last Time | MyKCM

5. People are equity rich, not tapped out.

In the run-up to the housing bubble, homeowners were using their homes as a personal ATM machine. Many immediately withdrew their equity once it built up, and they learned their lesson in the process. Prices have risen nicely over the last few years, leading to over fifty percent of homes in the country having greater than 50% equity. But owners have not been tapping into it like the last time. Here is a table comparing the equity withdrawal over the last three years compared to 2005, 2006, and 2007. Homeowners have cashed out over $500 billion dollars less than before:5 Simple Graphs Proving This Is NOT Like the Last Time | MyKCMDuring the crash, home values began to fall, and sellers found themselves in a negative equity situation (where the amount of the mortgage they owned was greater than the value of their home). Some decided to walk away from their homes, and that led to a rash of distressed property listings (foreclosures and short sales), which sold at huge discounts, thus lowering the value of other homes in the area. That can’t happen today.

Bottom Line

If you’re concerned we’re making the same mistakes that led to the housing crash, take a look at the charts and graphs above to help alleviate your fears.

Posted in Miscellaneous
March 23, 2020

Covid-19 | Blood Team Open House Protocol

Check out our live video from our CEO/Lead Listing Agent Michael Blood about how we are changing up our Open House protocols during this challenging time in order to continually meet our clients need and continue to provide the service you have come to know and expect from us here at the Blood Team. 

 

Blood Team Realty on Facebook

Posted in Miscellaneous
March 23, 2020

Covid-19 | Blood Team Action Plan

We hope this letter finds you and your loved ones doing well during these challenging times. Please rest assured that as the COVID-19 situation continues to unfold, our number #1 priority is the safety and well-being of our clients, staff, and families.

 

In cooperation with CDC recommendations, we would like to share the following updates with you:

  • Our office location is closed for public traffic until further notice.
  • Most of our team is currently working remotely.
  • Day-to-day business activities are continuing as usual.
  • We are now offering online appointments, agent-led live showings, and virtual tours.
  • Office phones are still available for calls Monday-Friday from 8:30am-5:00pm. You may leave a message or email us at thebloodteam@kw.com after hours, and a team member will respond as quickly as possible.

 

In conjunction with our Office adjustments, we are also making some changes to our Open House procedures.

 

First and foremost, if you are experiencing fever, chills, coughing, sneezing, or any other symptoms of illness, we kindly ask that you reschedule your showing and not attend open houses.

 

For your piece of mind...

  • All surfaces will be disinfected prior to showings
  • Doors will be left open to minimize contact (if possible)
  • 2 Agents from the Blood Team will be in attendance. One agent will be outside to control the number of parties entering the property at the same time, brief you on protocol, and sign you in. The other will be inside and may offer kindly reminders as you tour the property.

 

What we ask of you..

  • Use hand sanitizer BEFORE and AFTER you view the property
  • Do NOT sit on any furniture
  • Avoid touching appliances and opening cabinets, closets, and drawers
  • Minimize all surface contact as much as possible
  • Respect social distancing practices

 

We encourage you to stay current by visiting the CDC's website: https://www.cdc.gov

 

We appreciate your understanding and remain committed to providing you with the same level of quality service you’ve come to expect from the Blood Team.

 

“Alone, we can do so little; together, we can do so much” – Helen Keller

 

Stay safe everyone!

 

Thank You,

Michael & Sandra Blood

 

Posted in Miscellaneous
Feb. 3, 2020

Why you should get pre-approved

Three Reasons Why Pre-Approval Is the First Step in the Homebuying Journey

Three Reasons Why Pre-Approval Is the First Step in the 2020 Homebuying Journey | MyKCM

 

When the number of buyers in the housing market outnumbers the number of homes for sale, it’s called a “seller’s market.” The advantage tips toward the seller as low inventory heats up the competition among those searching for a place to call their own. This can create multiple offer scenarios and bidding wars, making it tough for buyers to land their dream homes – unless they stand out from the crowd. Here are three reasons why pre-approval should be your first step in the homebuying process.

1. Gain a Competitive Advantage

Low inventory, like we have today, means homebuyers need every advantage they can get to make a strong impression and close the deal. One of the best ways to get one step ahead of other buyers is to get pre-approved for a mortgage before you make an offer. For one, it shows the sellers you’re serious about buying a home, which is always a plus in your corner.

2. Accelerate the Homebuying Process

Pre-approval can also speed up the homebuying process, so you can move faster when you’re ready to make an offer. In a competitive arena like we have today, being ready to put your best foot forward when the time comes may be the leg-up you need to cross the finish line first and land the home of your dreams.

3. Know What You Can Borrow and Afford

Here’s the other thing: if you’re pre-approved, you also have a better sense of your budget, what you can afford, and ultimately how much you’re eligible to borrow for your mortgage. This way, you’re less apt to fall in love with a home that may be out of your reach.

Freddie Mac sets out the advantages of pre-approval in the My Home section of their website:

“It’s highly recommended that you work with your lender to get pre-approved before you begin house hunting. Pre-approval will tell you how much home you can afford and can help you move faster, and with greater confidence, in competitive markets.”

Local real estate professionals also have relationships with lenders who can help you through this process, so partnering with a trusted advisor will be key for that introduction. Once you select a lender, you’ll need to fill out their loan application and provide them with important information regarding “your credit, debt, work history, down payment and residential history.”

Freddie Mac also describes the ‘4 Cs’ that help determine the amount you’ll be qualified to borrow:

  1. Capacity: Your current and future ability to make your payments
  2. Capital or Cash Reserves: The money, savings, and investments you have that can be sold quickly for cash
  3. Collateral: The home, or type of home, that you would like to purchase
  4. Credit: Your history of paying bills and other debts on time

While there are still many additional steps you’ll need to take in the homebuying process, it’s clear why pre-approval is always the best place to begin. It’s your chance to gain the competitive edge you may need if you’re serious about owning a home.

Bottom Line

Getting started with pre-approval is a great way to begin the homebuying journey. Let’s get together today to make sure you’re on the fastest path to homeownership!

The Blood Team
MA: 978-433-8800 | NH: 603-966-0025

Posted in Home Buying Tips
Jan. 20, 2020

The market and how it effects you

Housing Inventory Vanishing:

What Is the Impact on You?

Housing Inventory Vanishing: What Is the Impact on You? | MyKCM

Find out what your home may be worth: HERE

The real estate market is expected to do very well this year as mortgage rates remain at historic lows. One challenge to the housing industry is the lack of homes available for sale. Last week, move.com released a report showing that 2020 is beginning with the lowest available housing inventory in two years. The report explains:

“Last month saw the largest year-over-year decline of housing inventory in almost three years with a dramatic 12 percent decline, pushing the number of homes for sale in the U.S. to the lowest level since January 2018.”

The report also revealed that the decline in inventory stretches across all price points, as shown in the following graph:Housing Inventory Vanishing: What Is the Impact on You? | MyKCMGeorge Ratiu, Senior Economist at realtor.com, explains how this drop in available homes for sale comes at a time when more buyers are expected to enter the market:

“The market is struggling with a large housing undersupply just as 4.8 million millennials are reaching 30-years of age in 2020, a prime age for many to purchase their first home. The significant inventory drop…is a harbinger of the continuing imbalance expected to plague this year's markets, as the number of homes for sale are poised to reach historically low levels.”

The question is: What does this mean to you?

If You’re a Buyer…

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

If You’re a Seller…

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

Bottom Line

The housing market will remain strong throughout 2020. Understand what that means to you, whether you’re buying, selling, or doing both.

 

 

Find out what your home may be worth HERE or get started below!

 

Posted in Miscellaneous
Jan. 16, 2020

The best time to buy is now!

Homes Are More Affordable Today, Not Less Affordable

Homes Are More Affordable Today, Not Less Affordable | MyKCM

 

There’s a current narrative that owning a home today is less affordable than it has been in the past. The reason some are making this claim is because house prices have substantially increased over the last several years.

It’s not, however, just the price of a home that matters.

Homes, in most cases, are purchased with a mortgage. The current mortgage rate is a major component of the affordability equation. Mortgage rates have fallen by over a full percentage point since December 2018. Another major piece of the affordability equation is a buyer’s income. The median family income has risen by approximately 3% over the last year.

The National Association of Realtors (NAR) releases a monthly Housing Affordability Index. The latest index shows that home affordability is better today than at almost any point over the last 30 years. The index determines how affordable homes are based on the following:

“A Home Affordability Index value of 100 means that a family with the median income has exactly enough income to qualify for a mortgage on a median-priced home. An index of 120 signifies that a family earning the median income has 20 percent more than the level of income needed pay the mortgage on a median-priced home, assuming a 20 percent down payment so that the monthly payment and interest will not exceed 25 percent of this level of income (qualifying income).”

The higher the index, therefore, the more affordable homes are. Here is a graph showing the index since 1990:Homes Are More Affordable Today, Not Less Affordable | MyKCM

Obviously, affordability was better during the housing crash when distressed properties – foreclosures and short sales – sold at major discounts (2009-2015). Outside of that period, however, homes are more affordable today than any other year since 1990, except for 2016.

The report on the index also includes a section that calculates the mortgage payment on a median priced home as a percentage of the median national income. Historically, that percentage is just above 21%. Here are the percentages since June of 2018:Homes Are More Affordable Today, Not Less Affordable | MyKCMAgain, we can see that affordability is much better today than the historical average and has been getting better over the last year and a half.

Bottom Line

Whether you’re thinking about buying your first home or moving up to the home of your dreams, don’t let the false narrative about affordability prevent you from moving forward. From an affordability standpoint, this is one of the best times to buy in the last 30 years.

Nov. 20, 2019

Buyers Are Looking Now

Are You Ready to List Your Home?



Inventory on the market today is low, especially among existing homes in the entry and middle-level tiers of the market. It is hovering well below the 6-month supply typically found in a more normal market, as shown in the graph below:Buyers Are Looking Now. Are You Ready to List Your Home? | MyKCMWith inventory being one of the biggest housing market challenges today, finding a starter home right now isn’t easy. According to the Q3 Housing Trends Report from the National Association of Homebuilders (NAHB), 68% of those searching for a home think their search will get harder or stay about the same over the next 12 months.

The same study reveals,

“In Qtr3’19, buyers actively engaged in the process of buying a home are more likely to have spent at least 3 months searching (58%) than a year earlier (55%).”

 This is certainly no surprise, given the current inventory status. So, what’s the good news? The NAHB continues to say,

“If still unable to find a home in the next few months, the next step for most long-time searchers is to continue looking for the ‘right’ home in the same preferred location (52%). The next step for 35% is to expand their search area and for 16% is to accept a smaller/older home. Only 15% will give up looking.”

What does this mean for homeowners?

 If you’re thinking of selling your home, buyer demand is high – and those looking in your neighborhood aren’t planning on giving up anytime soon. The majority of potential buyers who are still searching for their dream home are eager, willing, and ready to buy, so maybe it’s time to list your house and make your move.

Bottom Line

With buyer demand as high as it is today, and inventory in the entry and middle-tier markets remaining low, it’s never been a better time to move up. Let’s get together to determine if now is your time to sell.

Posted in Miscellaneous
Oct. 25, 2019

Hometown Charity Hoedown 2019

On October 19th, 2019

we had an amazing night.

   

A night for fun, dancing, time together with our friends and family but even more important to help raise money. Our goal was to raise money to be donated to a local charity, non-profit or family in need and we did just that! We raised just over $3,800! The majority of funds raised will be donated to Molly who was the top voted choice during our event for the donation and a portion will be donated to Pepperell Pach and Pepperell Fourth.

  

We were beyond amazed with the outpouring of love, support and donations that came in once we announced the event publicly. We had over 20 baskets donated for the raffle, numerous of locals who donated their time for setup, donated money to help cover some of the overhead costs of the event, food donations and so much more, which in the end brought our total to donate higher than anticipated. 

Raffle Table #1 Raffle Table #2 Raffle Table #3 Raffle Table #4

Our night also wouldn't have been so successful without our amazing DJ of the night.

   

DJ Jamo (Chris Jamieson) really carried the tone throughout the night. From the music choices, the photobooth and his creative twist on musical chairs, we are pretty sure we can speak on everyone's behalf that he really lit up the night! Another fantastic highlight of the night was a single song karaoke moment by Michael Blood. He started the night saying if he was feeling it, he would do it at some point. Well, he felt it and totally rocked "Hardworking Man!"

We ended the night by announcing the winner of best dressed of the night which was awared to  Patrick Coppinger.

 Patrick Coppinger - Best Dressed 

Of course, the night would not have been complete without the top hit of the year by doing The Git Up Dance. 

 

A huge shoutout to all those who helped make this event possible.

Thank you again!
We can't wait for next year.

 

Should you be interested in doing a raffle basket or donating towards the 2020 Hometown Charity Hoedown for next year please email Elizabeth@bloodteamrealty.com with HOEDOWN2020 in the subject line and we will add you to our list and reach out next year once we start planning our exciting event again!

     

   

Oct. 24, 2019

Cost of rent is increasing

Think Prices Have Skyrocketed?

Look at Rents.

 

Much has been written about how residential real estate values have increased since the housing market started its recovery in 2012. However, little has been shared about what has taken place with residential rental prices. Let’s shed a little light on this subject.

 

In the most recent Apartment Rent Report, RentCafe explains how rents have continued to increase over the last twelve months because of a large demand and a limited supply.

 

 “Continued interest in rental apartments and slowing construction keeps the national average rent on a strong upward trend.”

 

Zillow, in its latest Rent Index, agreed that rents are continuing on an “upward trend” across most of the country, and that the trend is accelerating:

 

“The median U.S. rent grew 2% year-over-year, to $1,595 per month. National rent growth is faster than a year ago, and while 46 of the 50 largest markets are showing deceleration in annual home value growth, annual rent growth is accelerating in 41 of the largest 50 markets.”

 

The Zillow report went on to detail rent increases since the beginning of the housing market recovery in 2012. Here is a graph showing the increases:Think Prices Have Skyrocketed? Look at Rents. | MyKCM

 

Bottom Line

It is true that home prices have risen over the past seven years, increasing the cost of owning a home. However, the cost of renting a home has also increased over that same time period.

Posted in Miscellaneous