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Four Ways To Prepare For The Coming Real Estate Downturn

While there’s no reason for real estate operators to panic, adequately addressing a down market is an essential part of business survival. If you aren’t so certain you’ve got the right plan in place, these and other proven strategies can prove incredibly valuable for ensuring that dips in the market won’t have your real estate business taking a dive. ... but stay moving. While this may seem like it puts you at a disadvantage, by staying active and visible in this buyer’s market, you’ll attract more of these interested buyers than your competition does. Putting a small slice of your capital into extra marketing can keep your name visible in the midst of all the action, and you’ll keep business coming in to maintain the bottom line. Fill low- to mid-tier vacancies. Collecting rent in these times is a steady paycheck, and every unit that’s full means another month we can keep on operating to the best of our abilities. This also means that whatever vacancies you have in a down market are a problem to be dealt with. Even if it means lowering rent somewhat to fill a long-empty apartment, having a regular tenant writing you checks every month is an absolutely necessary asset. A rash decision can be hurtful even in times of plenty, so as we stare down the upcoming real estate recession it’s important to stay confident and stay steady.

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Student Loan Debt Still Impacting Millennial Homebuyers

Student loan debt, currently estimated at 1.56 trillion is still impacting Millennial homebuyers according to a recent report from Bankrate.com. According to the report “31 percent of Americans say they currently have or have had student loan debt stemming from their own education.” It goes on to reveal, "an additional 13 percent of American adults financed another family member’s school expenses through student loans.” People responding to Banknote’s survey, 31% report they have delayed homeownership. No matter how many possible solutions are tossed around Washington and beyond on reducing the crushing burden of student loan debt, it remains one of the top reasons Millennials (23-38) are putting off buying a home. Consider that 39% of the respondents earn an annual income of $80,000 and over. Bankrate.com’s Senior Economic Analyst Mark Hamrick based in Washington sees it this way. Michael Pulver, senior vice president residential mortgage manager at Genesee Regional Bank in Rochester, New York sees some light emerging from this very dark tunnel. “What we have been seeing is an increase in the number of Millennials who do want to move from renting to buying. There are now some better programs out there with minimized down payment requirements –less than 3% down. This increases the affordability to be able to get into a home for that Millennial buyer. Here in upstate New York affordability is good.” Consider a current listing price of $127,900 for a 1,454 square foot colonial with hardwood floors and “updated kitchen.” Rick Ross, longtime college educational financing consultant has some insightful thoughts on the subject.

Everything You Need To Know About The Fannie Mae HomeStyle Loan

However, before you commit to a loan, you should research as much as you can about the loan program. Read it over to get a sense of whether or not this loan program is right for you. What is the Fannie Mae HomeStyle loan? The Fannie Mae HomeStyle loan is a conventional loan that is aimed at making renovations to an existing property easier for buyers. By combining these costs, you'll be able to save on interest payments and closing costs. How the loan works The HomeStyle loan is unique in that, rather than being based off the current value of the home like most other mortgages, it allows buyers to borrow against the "after repaired value" (ARV) of the home, which estimates what the home will be worth once all the renovations have been completed. The remainder of the funds is disbursed to the vendors once the work has been completed and inspected by a qualified professional. This loan does allow for the homeowners to take on a portion of the work by themselves. Pros and cons of the Fannie Mae HomeStyle loan Pros The renovation costs get bundled into your mortgage so you only have one monthly payment Cancelable mortgage insurance once you have more than 20% equity in the property You can use it on any type of property, including vacation homes and investment properties You can use the funds for any type of renovation, including those with luxury items Cons These mortgages can't be used to tear down and reconstruct a house, only to make renovations to an existing property Stricter qualifying standards in terms of credit score and debt-to-income ratio Borrowers must submit a construction plan for approval before their loan can close Due to the extra steps required with this loan, it often takes longer to close than a traditional mortgage The Fannie Mae HomeStyle loan vs. the FHA 203(k) loan Unlike the FHA 203(k) loan, the HomeStyle loan can be used to cover any type of renovation that you can dream up, including ones showcase "luxury" items like pools or hot tubs. In addition, the HomeStyle loan requires a down payment of at least 5%, whereas the 203(k) loan only requires a down payment of 3.5%.

Is Your City Prepared For The Opportunity Zone Impact?

In the meantime, what are local governments and municipalities doing to prepare for an acceleration of Opportunity Zone investments? Under its guidance, 30 cities to date have drafted Investment Prospectuses, clearly outlining their preparations for OZ impact. “We are helping cities highlight assets, partnerships and investible projects and businesses that will directly help the communities and families to whom the legislation was targeted,” says Aaron Thomas, Accelerator for America’s Director of Economic Development and Opportunity Zones. Getty By having cities draw up Investment Prospectuses, Thomas explains, “We’re saying, ‘If you’re going to put capital into these communities, here are the communities that are ready, and these are the things the community actually wants to do.' During the first quarter of 2019, Maryland Governor Larry Hogan and his administration created an OZ Task Force that just held its first of many-planned regional summits to “align Opportunity Zone goals with state and local economic and cultural priorities,” According to a statement by Lt. Gov. Boyd K. Rutherford. Workforce development grants and technology investments are being put into place, and millions of dollars have been allocated by the State of Maryland to support various aspects of OZ revitalization, from affordable housing construction to demolition funding of dilapidated structures. All of these examples should give communities and residents reason to be hopeful that good change is coming: that jobs will be created and that necessary investments will materialize. And yet, some cities still aren’t on board with Opportunity Zones. Says Aaron Thomas of Accelerator for America, “The potential downsides are precisely why it’s important that the people and organizations already living and working within Opportunity Zones lead the way in improving these communities.” When private capital and communities work closely together, the best outcomes are the likely result.

Prices In These Cities Have Seen The Biggest Increases Since The Housing Downturn

Good news, Denver. The real estate research site, HSH.com, uses the Federal Housing Finance Agency's Home Price Index to determine which markets have, or haven't, recovered and the latest analysis shows that Denver has seen the greatest amount of growth. As house prices start to slow around the country it is worth looking at which markets are still holding their own in a down market. Their analysis also showed that five markets have seen home values double. Here are the five metro areas that have seen home values more than double since their low point. Cape Coral-Fort Myers, FL (up 101.13% from bottom) Stockton, CA (+118.18%) Las Vegas-Henderson-Paradise, NV (+145.26%) Sacramento-Roseville-Folsom, CA (+100.56%) North Port-Sarasota-Bradenton, FL (+104.51%) One overall piece of good news was that the metro area that has shown the least recovery, Las Vegas, is only down by about 9% compared to its peak. Meaning, on the list of ten least-recovered cities it had the smallest gap compared to its peak. Thus, the worst performing city today (Las Vegas) is still better than the "best of the worst" about ten years ago. For more info and to see the cities that have recovered the least, check out the full report. Follow me on Twitter @amydobsonRE

Do 46 Million Millennials Know They Are Mortgage Ready?

However, that does not mean that they do not still aspire to achieve those things. History shows that people tend to buy their first home around age 30. Nearly 5 million millennials will turn 30 in the next two years. This is also one of the many reasons why the millennial homeownership rate has continued to grow over the past few years. 48.4% of Americans between the ages of 30-34 now own a home. There are over 46 million millennials (33% of the generation) who are considered “Mortgage Ready”, meaning they meet the qualifications to be approved for a mortgage today! The biggest question is: Do they know it? …Unfortunately, many renters don’t investigate homeownership simply because they don’t believe it’s an option.” The good news is that more and more millennials are realizing that they can afford a home now. This is more than any other generation. Members: Sign in now to set up your Personalized Posts & start sharing today!

Where to Buy Single-Family Rentals in 2019

Investors are still finding the single-family rental market a lucrative business. The average annual gross rental yield for a single-family home (that is, the annualized gross rent income divided by the median purchase price) was 8.8 percent in the first quarter of 2019, up from 8.7 percent a year prior, according to ATTOM Data Solutions’ Q1 2019 Single-Family Rental Market report, analyzing 432 counties with populations of at least 100,000. “Buying single-family homes to rent them out is a better deal for investors so far this year than it was at the same time in 2018, as profit margins are rising in a majority of counties across the United States,” says Todd Teta, chief product officer at ATTOM Data Solutions. “Last year, at this time, investors were seeing returns drop in three-quarters of the counties that were analyzed. ATTOM Data Solutions ranked the best U.S. markets for buying single-family rental properties this year. The counties with the highest rental returns in the first quarter were: Baltimore City, Md. : 24.5% Bibb County, Ga. (in the Macon metro): 21.9% Cumberland, N.J. (Vineland-Bridgeton metro): 21.2% Winnebago, Ill. (Rockford metro): 17.1% Wayne County, Mich. (Detroit metro): 17.1% Cuyahoga County, Ohio (Cleveland metro): 12% Allegheny County, Pa.: 10.9% Cook County, Ill. (Chicago metro): 9.7% Philadelphia County, Pa.: 9.4% Rental returns rose compared to a year ago in more than half of the counties ATTOM researchers analyzed. The report also identified the single-family rental markets most poised for growth. The high-growth markets include Wayne County, Mich. (Detroit); Cuyahoga County, Ohio (Cleveland); Allegheny County, Pa. (Pittsburgh); Milwaukee County, Wis.; and Marion County, Ind. (Indianapolis).

What Credit Score Do You Need To Buy A House?

The reality is they are misinformed! Here is the breakdown according to Experian: 16% Very Poor (300-579) 18% Fair (580-669) 21% Good (670-739) 25% Very Good (740-799) 20% Exceptional (800-850) Randy Hopper, Senior Vice President of Mortgage Lending for Navy Federal Credit Union said, “Just because you have a low credit score doesn’t mean you can’t purchase a home. The Federal Housing Administration (FHA) now requires a minimum FICO® score of 580 if you want to qualify for the low down payment advantage. The US Department of Agriculture (USDA) does not set a minimum credit score requirement, but most lenders require a score of at least 640. It is true that the average FICO® score for all closed loans in January was 726, but there are plenty of people taking advantage of the low credit score requirements. Here is the average FICO® Score of closed FHA Loans since April 2012 according to Ellie Mae: As you can see, that number has been dropping for the last seven years. As a matter of fact, the average FHA Purchase FICO® Score reported in January 2019 was 675! One of the challenges is that Americans are unsure about their credit score. Bottom Line At least 84% of Americans have a score that would allow them to buy a house. Members: Sign in now to set up your Personalized Posts & start sharing today!

Homeownership is a Cornerstone of the American Dream

“The rumors of my death are greatly exaggerated.” The famous quote attributed to Mark Twain can apply to homeownership in the United States today. After the crash, that percentage continued to fall for the next ten years. That led to speculation that homeownership was no longer seen as a major component of the American Dream. That belief became so widespread that the term “renters’ society” began to be used by some to define American consumers. However, the latest report by the Census Bureau on homeownership shows that over the last two years, the percentage of homeowners has increased in each of the last eight quarters. Going forward… It appears the homeownership rate will continue to increase. The 2019 Aspiring Home Buyers Profile recently released by the National Association of Realtors revealed that 84% of non-owners want to own a home in the future. That percentage increased from 73% earlier last year. Bottom Line In the United States, the concept of homeownership as part of the American Dream is very much alive and well. Members: Sign in now to set up your Personalized Posts & start sharing today!

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The Three Rs In Your Homeowner’s Association

But homeowner associations have their own version of the Three Rs called Rules, Regulations and Resolutions. These are the policies and procedures that define HOA standards. Rarely if ever are the Three Rs clearly or fully defined in the governing documents. Any proposed rule or regulation must comply with the governing documents. That requires an amendment voted upon by the members. An example of a policy resolution: Many governing documents are unclear with regard to homeowner association versus owner maintenance responsibilities. There are many variations on this theme that could be answered in a policy resolution that defines each item according to who is responsible. The resolution should first cite the relevant provisions of the governing documents and any applicable state statute, especially those sections which give the homeowner association authority to establish policies. About amending the governing documents. The Three Rs can be enacted by the board but amending the governing documents must be approved by the members by the percentage indicated in the governing documents.