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Why Homebuyers Are So Optimistic About Our Market

Why are homebuyers more optimistic than they have been in the past few years? There are three main reasons.

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Here’s a paradox for you: Right now, homebuyer confidence is at an all-time high, according to a survey performed by Fannie Mae. Furthermore, an increasing number of people, particularly renters, think now is a good time to buy a home. Yet at the same time, housing inventory remains very tight. It’s down 6.5% nationally from last year. Home prices are also up 6.9% nationally over last year.

In other words, homebuyers are optimistic at a time that seems to be favoring sellers. So, what's going on? Why are homebuyers so optimistic all of a sudden? Here are three possible explanations:

1. Lending is loosening up. Over the past several years, mortgage rates have seen historical lows. This has meant that homes are actually more affordable, in spite of the increase in prices. However, lending has been very tight. Fortunately, that’s changing. Lenders are approving mortgages at the highest rate since 2011, with 77% of mortgages for home purchases approved.

2. Jobs are looking good. At the moment, fewer homebuyers are worried about losing their jobs, according to the same Fannie Mae survey. It's not just job security that's contributing to greater optimism about buying a home. Overall income is higher, making homes more affordable by comparison. The median household currently has 150% of the income needed to buy a median home, compared to a historical average of just 125%.

3. Long-time renters are ready to buy. Millennials, the generation of people born after 1980, have largely opted out of homeownership until now. They have been renting for a longer time, putting them higher up on the pay scale compared to previous generations of first-time homebuyers. But now, many millennials are finally hitting an age when they are willing to commit to buying instead of renting. This is reflected in the Fannie Mae report, which states that much of the increase in homebuyer optimism comes from current renters.
Now is indeed the right time to buy.
What all does this mean for you? If you're looking to buy a home, all of the above reasons should give you confidence that now is indeed the right time to buy.

If you have any more questions about our Phoenix market or you’re thinking about buying or selling a home, don’t hesitate to reach out to me. I look forward to hearing from you soon.

5 Ways to Invest in Real Estate

Real estate investing is on the rise. Here are five different ways you can get involved.

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Investing in real estate is no longer restricted to the super wealthy. According to a recent survey, real estate investors now make up 15% of the population. That translates to almost 50 million individuals who invest in at least one property other than their primary residence.

In fact, 89% of U.S. investors are interested in putting their money in real estate because of benefits such as cash flow, tax incentives, leverage, and value appreciation that come with investing in multiple properties.

Are you curious about investing in real estate? If so, here are five different ways you can get started:

1. Buy and rent
This is probably the most traditional way to invest in real estate. It simply involves buying a property and renting it out. Now is a good time for this kind of investing because rental rates are on the rise (8% since last year) but the downside of this investing approach is the time and effort needed to manage and maintain your investment.

2. Buy and sell
Also known as home flipping, this involves buying a property and reselling it soon after for a profit. Home flipping has offered a record-breaking 49% return in 2016. Click here to get our Wholesale Property list.

3. Real estate investment groups
Real estate investment groups are organizations that buy a set of properties and then sell them to individual investors.The main benefit of this approach is that you typically do not need to act as the landlord because the investment group handles property management for you (for a fee of course).

4. Crowdfunding sites
Recently, there's been an explosion of sites such as Prosper and Lending Club, which allow individuals to invest in various real estate development projects. Through crowdfunding sites, you can be a part of a large-scale property investment while investing only a moderate amount of money. On the other hand, crowdfunding sites act as a middleman and charge fees which can eat into your profits.

5. REITs
Real estate investment trusts (REITs) are like mutual funds for real estate.They typically pay high dividends. However, they also do not offer all of the typical benefits of investing in real estate, such as increased leverage and tax benefits.
Home flipping offered a record-breaking 49% return in 2016.
Each of these investing approaches offers a tradeoff between possible profits, risks, and costs.

The one constant is that you can minimize your risks with due diligence and by consulting with an experienced real estate professional.

If you have any questions for us or you’re interested in investing in real estate yourself, don’t hesitate to give me a call or send me an email. I look forward to hearing from you.

Our Top 3 Tips for First-Time Homebuyers

Buying your first home can be exciting and overwhelming. To protect yourself during this process, follow our top three tips.

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Buying your first home can be a very exciting time that requires a great deal of commitment. After all, a home is an investment that can have repercussions for years to come.

Here are the top three tips to protect yourself during this exciting but crucial period:

1. Know what you can afford. The fact is that your mortgage is only part of what you need to pay when you buy a home. There are a number of other expenses involved, such as closing costs, property taxes, insurance, maintenance costs, and HOA fees.

We can give you a good idea of what all of those costs will entail ahead of time so you can prepare for those expenses. That way, you can compare those expenses to your income and current monthly expenses. Knowing what you can afford helps you buy a home without getting bogged down in debt.
Knowing what you can afford prevents you from getting bogged down in debt.
2. Choose your lender wisely. I cannot emphasize this enough. Don’t just choose a lender based on the interest rate or loan. A competent, trustworthy lender will offer you advice to help you find a loan that best fits your finances. They will also tell you about special homebuyer programs that may benefit you and provide a range of programs that will fit your personal financial circumstances.

Your lender will give you a PQF, also known as a pre-qualification form. The state of Arizona requires that all homebuyers have this form in order to make an offer on a home. The PQF also shows the seller that you are a bonafide, serious buyer.

How do you find the right lender? I strongly advise that you go with a lender that someone personally recommends to you. Talk to your friends and see who they worked with. You can also talk to me; I’ll put you in touch with one of our preferred mortgage partners. We have longstanding relationships with knowledgeable, experienced lenders that we trust to do a good job for our clients.

3. Don’t overlook the details. There are a lot of details involved in the home buying process, and overlooking any one of them can lead to a critical and costly mistake.

For example, I always advise buyers to get a professional home inspection separate from an appraisal. The lender requires the appraisal. Yes, an inspection will set you back a few hundred dollars, but it could save you thousands of dollars down the line and prevent you from buying a home that you might regret.

It’s also important to understand the fine print in the various contracts you might be signing. We always take our clients through the contract step by step. That way, you know what you’re signing before you put your name on the dotted line. Trust me, there are no dumb questions. We will spell everything out for you.

The process of buying a home can be intimidating, especially when it’s your first home. That’s why professional real estate agents are here to help.

While these three tips are important, they are only the start of what you need to watch out for when buying your first home. If you have any additional questions about this process, just give me a call or send me an email. I would be happy to help you!