Best-Investment

Real Estate Again Seen as Best Investment

We are almost back to ‘pre-housing crash’ home values. The inventories of distressed properties (foreclosures & short sales) are shrinking dramatically. The economy is improving. The job numbers are headed in the right direction.

The big question that still remains: Have Americans regained their confidence in real estate as a worthy investment?

According to a survey conducted by Princeton Survey Research Associates, Americans have put real estate back into first place as the best of all investments.

Here are the results of the survey:

Best Investment | Keeping Current Matters

Bottom Line

Homeownership never lost its place as a key component of the American Dream for a host of financial and non-financial reasons. It is good to see that it has regained the top spot as best overall investment.

 

Article by KCM

 


 

 

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Red Rock Management & Real Estate Investment
www.RedRockManagementLV.com
Info@RedRockManagementLV.com
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American-Dream-

Homeownership is Still a Huge Part of the “American Dream”

There have been some who have voiced doubt as to whether or not the younger generations still consider buying a home as being part of the “American Dream”. A study by Merrill Lynch puts that doubt to rest.

According to their research, every living generation still believes that owning a home is in fact important. Here are the numbers:

Homeownership is an important part of the American Dream | Keeping Current Matters

This should not surprise us as many studies have revealed the benefits enjoyed by the families who own their own home. One such study was done by the Joint Center of Housing Studies at Harvard University that addressed a major financial benefit to owning your own home: forced savings. The report explains:

“Since many people have trouble saving and have to make a housing payment one way or the other, owning a home can overcome people’s tendency to defer savings to another day.”

The Merrill Lynch study proves this point with the following data on home equity (a form of savings):

Average Home Equity | Keeping Current Matters

Bottom Line

There are many reasons that owning a home makes sense. The financial reasons are powerful. As one participant in the Merrill Lynch study put it:

“When I was younger, I always worried about that monthly mortgage payment. Now that I am retired, I have the peace of mind of knowing I own my home free and clear.”

 

Article from www.keepingcurrentmatters.com

 


 

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Red Rock Management & Real Estate Investment
www.RedRockManagementLV.com
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Family-Wealth-

Family Wealth Grows as Home Equity Builds

 

With residential real estate values rising quite substantially in most parts of the country over the last few years, many homeowners are seeing a major increase in their family’s wealth as equity continues to build in their house.

A recent study by the Joint Center of Housing Studies at Harvard University revealed that home equity grew nicely last year and has grown dramatically over the last five years…

Inflation & Home Equity | Keeping Current Matters

Buyers looking today may not see the same build-up in equity but could still do quite well.

Let’s assume you went into contract in the next six weeks and closed on a $250,000 home in January. If we take the house value projections from the last Home Price Expectation Survey, here is how your equity would grow over the next four years:

 

 

 

Home Price Expectation Survey Equity | Keeping Current Matters

 

 

 

 

 

 


 

 

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Red Rock Management & Real Estate Investment
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Price

House Hasn’t Sold Yet? Take Another Look at the Price

The residential housing market has been hot. Home sales have bounced back solidly and are now at their second highest pace since February 2007. Demand remains strong going into the winter. Many real estate professionals are reporting that multiple offers are occurring regularly and listings are actually selling above listing price. What about your house?

If your house hasn’t sold, it is probably the price.

If your home is on the market and you are not receiving any offers, look at your price. Pricing your home just 10% above market value dramatically cuts the number of prospective buyers that will even see your house. (See Chart)

Proper Pricing Pyramid | Keeping Current Matters

Bottom Line

The housing market is hot. If you are not seeing results you want, sit down with your agent and revisit the pricing conversation.

Article by Keeping Current Matters

 

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Red Rock Management & Real Estate Investment
www.RedRockManagementLV.com
Info@RedRockManagementLV.com
FREE Property Management Consultation– CALL 702-622-8668

Prices-It-Right

How to Get the Most Money from the Sale of Your House

Every homeowner wants to make sure they maximize the financial reward when selling their home. But, how do you guarantee that you receive maximum value for your house? Here are two keys to insuring you get the highest price possible.

1. Price it a LITTLE LOW

This may seem counterintuitive. However, let’s look at this concept for a moment. Many homeowners think that pricing their home a little OVER market value will leave them room for negotiation. In actuality, this just dramatically lessens the demand for your house. (see chart)

Impact of Price on Visibility | Keeping Current Matters

Instead of the seller trying to ‘win’ the negotiation with one buyer, they should price it so demand for the home is maximized. In that way, the seller will not be fighting with a buyer over the price but instead will have multiple buyers fighting with each other over the house.

In a recent article on realtor.com, they gave this advice:

“Aim to price your property at or just slightly below the going rate. Today’s buyers are highly informed, so if they sense they’re getting a deal, they’re likely to bid up a property that’s slightly underpriced, especially in areas with low inventory.”

2. Use a Real Estate Professional

This too may seem counterintuitive. The seller may think they would net more money if they didn’t have to pay a real estate commission. Yet, studies have shown that typically homes sell for more money when handled by a real estate professional.

Recent research posted by the Economists’ Outlook Blog revealed:

“The median selling price for all FSBO homes was $210,000 last year. When the buyer knew the seller in FSBO sales, the number sinks to the median selling price of $151,900. However, homes that were sold with the assistance of an agent had a median selling price of $249,000 – nearly $40,000 more for the typical home sale.”

Median Selling Price FSBO vs Agent | Keeping Current Matters

Bottom Line

Price it at or slightly below the current market value and hire a professional. That will guarantee you maximize the price you get for your house.

 

Article by Keeping Current Matters

 

 

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Red Rock Management & Real Estate Investment
www.RedRockManagementLV.com
Info@RedRockManagementLV.com
FREE Property Management Consultation– CALL 702-622-8668

Home-Equity-

The Importance of Home Equity to a Family

There has been much written about how dramatically home values have increased over the last several years. With the increase in values, comes an increase in the equity each home owning family now has. The Joint Center of Housing Studies at Harvard University recently reported that, after taking inflation into account, aggregate home equity has increased 60% since 2010. Home equity is the major component of most family’s overall wealth.

Why is this so important?

Throughout history, families have tapped into their homes for many important reasons. Perhaps it was to get seed capital to start a new business; perhaps to help finance their children’s college education; perhaps to get needed medical attention not covered by insurance.

Up to ten years ago, families were able to use the equity in their homes to better the living situation for themselves and their family. More small businesses were created. College students weren’t forced to take on massive student debt. People could get needed medical care.

This hasn’t been the case over the last ten years as families found themselves in a position of having zero equity or, even worse, negative equity post the housing collapse. However, that is about to change.

Using your home as an ATM is not a good idea.

We realize that there are inherent risks to tapping into the equity in your home especially if you do it for the wrong reasons. Back in 2005-2007, homeowners were using their homes as their own personal ATM machine to buy depreciating assets like cars, boats and jet skis. This reckless behavior should never be repeated.

However, using your equity (aka family wealth) to invest in yourself, your children or other family members that could use help still makes sense. And the good news is that more and more families can do this as home values continue to increase.

Bottom Line

Home equity gives families an additional financial option when money is needed. The proper use of this family wealth can be used to grow generational wealth.

Article by Keeping Current Matters

 


 

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Red Rock Management & Real Estate Investment
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Importance-Pro-

Selling Your Home? The Importance of Using a Real Estate Professional

When a homeowner decides to sell their house, they obviously want the best possible price with the least amount of hassles. However, for the vast majority of sellers, the most important result is to actually get the home sold.

In order to accomplish all three goals, a seller should realize the importance of using a real estate professional. We realize that technology has changed the purchaser’s behavior during the home buying process. For the past three years, 92% of all buyers have used the internet in their home search according to the National Association of Realtors’ most recent Profile of Home Buyers & Sellers.

However, the report also revealed that 95% percent of buyers that used the internet when searching for a home purchased their home through either a real estate agent/broker or from a builder or builder’s agent. Only 2% purchased their home directly from a seller whom the buyer didn’t know.

Buyers search for a home online but then depend on an agent to find the actual home they will buy (53%) or negotiate the terms of the sale & price (48%) or understand the process (60%).

The plethora of information now available has resulted in an increase in the percentage of buyers that reach out to real estate professionals to “connect the dots”. This is obvious, as the percentage of overall buyers who used an agent to buy their home has steadily increased from 69% in 2001.

Bottom Line

If you are thinking of selling your home, don’t underestimate the role a real estate professional can play in the process.

 

Article by Keeping Current Matters

 


 

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Red Rock Management & Real Estate Investment
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Home-equity-KCM

The Bond Between Money and Real Estate

The mortgage and real estate markets are directly impacted by the directions of the bond market. What is a bond? The very root definition of a bond is that it is a form of a loan. A bond represents a promise by the borrower (the bond issuer) to repay the amount borrowed in addition to a rate of interest, and at a specific rate in the future.

Bonds have an interest rate, a dollar amount, and a current price. Treasury Notes usually have terms of between one and ten years. U.S. Treasury Bonds have terms of between 10 and 30 years.

Bonds and Mortgage Rates

The U.S. bond market affects fixed mortgage rates more than any other financial entity, including the Federal Reserve. As the U.S. stock market has been very volatile the past decade, more investors (individuals, financial institutions, the Federal Reserve through “Quantitative Easing” strategies, and foreign governments) have invested trillions of dollars in the U.S. bond market.

The increased demand for U.S. bond debt has helped drive down the yields on long term 10 and 30 year bonds to all-time record lows in recent years. The greater the demand to purchase U.S. bonds, then the lower the yield on those same bonds. 30 year fixed mortgage loans are tied to the 10 year Treasury Bond. The Federal Reserve controls short-term interest rates which influence such things as adjustable rate mortgages, the Prime Rate, credit card rates, business loans, and automobile loans.

On average, most 30 year fixed mortgage loans rarely last longer than 10 years before being paid off in full or refinanced. As a result, the closest financial instrument which has similar risks is the 10 year Treasury Constant Maturity. This is why 30 year fixed mortgage rates are tied to or monitored by tracking the direction of the 10 year Treasury Bond.

The bond market is a place where governments and corporations go when they need to borrow money. These borrowing entities are then matched with people or institutions willing to lend money to them. Bond prices and bond yields move in opposite directions.

Bonds and Inflation

real estate investing inflation

One of the greatest fears of the bond market is the threat of inflation. Inflation reduces the future buying power of fixed interest payments received by bond investors, which lowers the value of bonds. Any positive economic news such as low unemployment rates or increased retail sales may weaken the bond market as this may imply the threat of future inflation. Conversely, negative economic news may strengthen the bond market.

Do you ever wonder why a positive day on Wall Street such as a 400 point increase in the Dow Jones index also may drive up long term fixed mortgage rates? Here is the simple explanation of a complex situation: Individual and institutional investors may move their funds from bond or money market accounts. They may, in turn, redirect those funds into individual stocks or mutual fund accounts due to positive news, lowered unemployment figures, positive quarterly economic numbers, or other factors.

The increased demand for stocks on any given day will increase the stock market index levels. In turn, bond prices may drop as demand for bonds has decreased on that same day. Remember, bond prices and yields are inverse to one another just like a see-saw. As bond prices drop, bond yields and mortgage rates then rise as well.

The Primary Investors and Issuers of Bonds

Who or what entities are the primary investors in the various forms of bonds available? Individuals, mutual funds, investment banks, savings banks, pension funds, and foreign individuals, institutions, and governments. Japan and China together may have purchased the largest portion of U.S. government bonds after the Federal Reserve in recent years.

Who Issues Bonds?

unclesamThe U.S. government is the single largest issuer in our country with many, many trillions of dollars’ worth of Treasury securities currently outstanding. The federal government issues securities with terms of short, medium, and long-term periods. States, municipalities, agencies, and corporations may also issue various forms of bonds. The U.S. Bond is backed by the “full faith and credit” of the U.S. government. As a result, government bonds and notes are generally considered the safest investments available today.

The U.S. government, by way of the U.S. Treasury, issues bonds to fund public projects and to finance the deficit when the government spends more than it receives in tax revenues. The Treasury’s securities market is the most cost effective way for financing government operations at the lowest cost possible. The low yields on Treasury yields over the past several years have kept 30 year fixed mortgage rates near or at all-time lows. As long as there are enough investors who keep purchasing our government bonds, then both bond yields and fixed mortgage loans may continue to remain low.

listenupHowever, if investors begin to fear the potential of runaway inflation, a U.S. government which spends too much, or a weakening U.S. Dollar, then we may have fewer bond investors in the future. At that point, then long term fixed rates may be headed higher, regardless of how low our Federal Reserve cuts short-term interest rates. Inflation may be the greatest ally to boosting real estate values, but it is somewhat of an enemy to the bond market.

So, we must hope for a balanced or key equilibrium point which works best for ongoing improving real estate values and near record low mortgage rates.

 

Article by Rick Tobin – REIClub

 

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Hidden-Equity

Home Equity: You May Have More Than You Think

CoreLogic recently released their 2015 2nd Quarter Equity Report which revealed that 759,000 properties had regained equity in the last quarter. That means that 91% of allmortgaged properties (approximately 45.9 million) are now in a positive equity position. Anand Nallathambi, president and CEO of CoreLogic, reported:

“For much of the country, the negative equity epidemic is lifting. The biggest reason for this improvement has been the relentless rise in home prices over the past three years which reflects increasing money flows into housing and a lack of housing stock in many markets.”

Obviously, this is great news for the financial situation of many homeowners.

But, do they realize their equity position has changed?

A recent study by Fannie Mae suggests that many homeowners are unaware that their equity position has changed…in some cases dramatically. For example, their study showed that 23% of Americans still believe their home is in a negative equity position when, in actuality, only 9% of homes are in that position.

The study also revealed that, though 69% of homes had “significant equity” (greater than 20%), only 37% of Americans realize it.

Significant Equity | Keeping Current Matters

This means that 32% of Americans with a mortgage fail to realize the opportune situation they are in. With a sizeable equity position, many homeowners could easily move into a housing situation that better meets their current needs (moving to a larger home or downsizing).

Fannie Mae spoke out on this issue in their report:

“Homeowners who underestimate their homes’ values not only underestimate their home equity, they also likely underestimate 1) how large a down payment they could make with their home equity, 2) their chances of qualifying for mortgages, and, therefore, 3) their opportunities for selling their current homes and for buying different homes.”

Bottom Line

Every homeowner should be aware of the true equity in their house and also realize the opportunities that go along with it. If you are unsure of the savings you currently have built up in your home, contact a real estate professional to help ascertain that number. You may be surprised.

 

Article by Keeping Current Matters

 

 


 

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Red Rock Management & Real Estate Investment
www.RedRockManagementLV.com
Info@RedRockManagementLV.com
FREE Property Management Consultation– CALL 702-622-8668

Baby-Boomers-

Baby Boomers Finding Freedom In Retirement

Within the next five years, Baby Boomers are projected to have the largest household growth of any other generation during that same time period, according to the Joint Center for Housing Studies of Harvard. Let’s take a look at why…

In a recent Merrill Lynch study“Home in Retirement: More Freedom, New Choices” they surveyed nearly 6,000 adults ages 21 and older about housing. 

Crossing the “Freedom Threshold”

Throughout our lives, there are often responsibilities that dictate where we live. Whether being in the best school district for our children, being close to our jobs, or some other factor is preventing a move, the study found that there is a substantial shift that takes place at age 61.

The study refers to this change as “Crossing the Freedom Threshold”. When where you live is no longer determined by responsibilities, but rather a freedom to live wherever you like. (see the chart below)

Crossing The Freedom Threshold | Keeping Current Matters

As one participant in the study stated:

“In retirement, you have the chance to live anywhere you want. Or you can just stay where you are. There hasn’t been another time in life when we’ve had that kind of freedom.”

On the Move

According to the study, “an estimated 4.2 million retirees moved into a new home last year alone.” Two-thirds of retirees say that they are likely to move at least once during retirement.

The top reason to relocate cited was “wanting to be closer to family” at 29%, a close second was “wanting to reduce home expenses”. See the chart below for the top 6 reasons broken down.

Merrill Lynch Moving In Retirement | Keeping Current Matters

Not Every Baby Boomer Downsizes

There is a common misconception that as retirees find themselves with fewer children at home, they will instantly desire a smaller home to maintain. While that may be the case for half of those surveyed, the study found that three in ten decide to actually upsize to a larger home.

Some choose to buy a home in a desirable destination with extra space for large family vacations, reunions, extended visits, or to allow other family members to move in with them.

“Retirees often find their homes become places for family to come together and reconnect, particularly during holidays or summer vacations.”

Bottom Line

If your housing needs have changed or are about to change, meet with a local real estate professional in your area who can help with deciding your next step.

 

Article by Keeping Current Matters

 

 


 

 

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