Fed’s Rate Cuts Will Help Home Buyers

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Mortgage Rates have dropped to near 3-year lows and only adds incentive to the already flourishing housing market. Wednesday the Federal Reserve cut interest rates for the first time since the downfall in 2008. The federal fund rate (the rate the banks charge on another for short-term borrowing) will now stay between 2% and 2.25%.

“These low interest rates will partly help with housing affordability over the short-term. Both rents and home prices have been consistently outpacing income growth. The only way to mitigate housing-cost challenges as a long-term solution is to bring more supply of both multifamily and single-family homes to the market,” adds Lawrence Yun, chief economist for the National Association of REALTORS®.

According to Yun those that will see a benefit from the Fed’s move will be types of financing other than the 30-year loans. The 30-year loan is already at a low 4% making the rate change cause very little difference in mortgage savings. Those with adjustable-rate mortgages and commercial real estate loans will most likely see the major benefits.

The change will help home buyers with the rising home prices. A buyer who can spend $1,500 on a monthly mortgage payment can now afford a purchase price of $402,500 instead of the $367,500 home price with last years rates.

“Last year, buyers would have needed an additional $145 a month on top of the $1,500 to afford a $402,500 home,” says Danielle Hale, realtor.com®’s chief economist.

This is great news for today’s home buyer. There are some parts of the country where this decision will give a buyer an extra $35,0000 in purchasing power. With home prices up 6% nationally that increase in purchase power will help keep the threat of another economic downturn.

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Backyard Tips for an Awesome Summer

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Sunny long warm days with no school can only mean its summertime. What a great time to enjoy the outdoors. The backyard is a perfect spot to relax and enjoy the outdoors in the comfort of your own home. Here are several tips to follow to get your backyard in tip top summer shape.

Start with general maintenance. During the spring start to cut the grass weekly and trim back any unruly plants. While cutting the grass and trimming the shrubs, fertilize both to help them along with vibrant growth. Do a little spring cleaning around the outside by cleaning the gutters, mulching the flower beds and repair any thing that needs a lift such as a fence a pipe or landscaping walls.

Pressure Washers can help clean your backyard in more ways than one. First start with stubborn dirt and mold on patios, walkways and landscaping walls. If you have a grill or a deck both can be cleaned with a pressure washer making it ready for the summer.

Treat your outdoor area like a living space. Pretend it is a bonus room or extension of your home and decorate it. A great start would be to purchase sturdy outdoor furniture and decor. Outdoor rugs can give a pop of color and be a great focal point for your outdoor space.

Green is said to be a calming color so add some to your outdoor living space. This area can be a haven for plants and flowers which will also add a splash of color to your outdoor design. For someone with a green thumb it can also be a relaxing and rewarding hobby.

Summer wouldn’t be summer without an outdoor BBQ. Make sure your grill is in working order and clean. If springtime comes and your grill looks shabby then you need to get to work. Hot soapy water can really clean the grease and dirt off. Many homeowner’s also like to build fire-pits. These can create a cozy atmosphere at night and be used to cook up some of your favorite treats.

If you are really into backyard living build an outdoor shower. This is a great way to cool off on the hot summer days and nights. With the right materials, you can build a solar-powered shower that has running warm water! This is a great way to also save on energy bills and is a perfect feature if you have a backyard pool.

Last tip is a must to have especially on a summer night. Light up the backyard using solar-powered lamps and rope lights. For the pathways use small solar lamps. What a great way to spruce up the party outdoors.

Remember summertime fun can be right out your back door!

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Cash Is Not The Only Way To Buy A Home

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Many home buyers today use cash to purchase a piece of residential real estate. However in recent years the trend for all cash payments is on the decline. Since 2014 all-cash home buyers have trended down because of the less competitive current housing market and lower mortgage rates.

In June of this year, 16% of home buyers paid all cash compared to the 23% reported in February of this year. The National Association of Realtors reported most home buyers are purchasing by taking out a mortgage. The Mortgage Bankers Association reported that home loan applications are 9.5% higher than this time last year.

Bidding wars are starting to be a thing of the past. Redfin reported seeing just 12% of purchase offers in competitive bids in 2019 wherein 2018 51.7% of purchase offers were in a bidding war. When bidding wars were the rage, people would pull out cash to purchase homes enticing sellers over other offers they might have on the table.

Investors have also started too cool off in the housing market. The National Association of Realtors concluded that investor purchases have declined to 11.1% from 11.3% within the past year. Investors are not as inclined to purchase homes because many believe that the prices have peaked. According to CoreLogic the average home price has risen 55.2% in the past six years. Not only that but prices are 12.6% above their pre-housing crash peak.

“Investors naturally have become more cautious,” says Lawrence Yun, chief economist of the National Association of Realtors.

The stock market has also played a roll in all-cash deals. The big sell-off in stocks might have scared many all-cash home buyers. In the past, a drop in share values has been a catalyst for a coming recession.

Mortgage rates have plummeted making it a great time to apply for a loan. Home loans have become much more affordable. Freddie Mac reported that the 30-year fixed mortgage rate is down to 3.75% where this same exact time last year it was a 4.54%.

“Making a cash purchase means the buyer is exposed dollar for dollar to any decline in home prices,” says Ian Shepherdson, chief economist of Pantheon Macroeconomics.

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10 Benefits to Downsizing

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When I think of downsizing, I think of empty nesters. These days that is not always the case. Many families are looking for a less materialistic lifestyle. There are many benefits to living in a smaller home such as less energy cost, less time to clean and overall are just less expensive. If this is a route you might want to go, here are 10 tips to alleviate the daunting task of downsizing.

Never “guesstimate” when downsizing. Calculate, by measuring the space you are working with and the furniture you will be adding to the space. Like an architect or interior designer, draw the space on a scale plan and see what will fit and what will need to go.

Take your time! Planning ahead and taking your time can make the task of downsizing a lot easier. Most of us have attachment to our worldly possessions so it is an emotional thing to get rid of some of our treasures. Take a few months, if time allows you, to go through your stuff. You will avoid the mad rush of getting the job done. If you are in a rush, you might throw things away you will need or not get rid of enough and have to pay for storage.

Make an itemized list of everything. This way there is no discrepancy with how much and what you are working with. Organize the list by three categories which are keep, give away and unsure. When making the list, go room by room starting with the smallest room such as the pantry or laundry room. The unsure can be looked at again after you have gone through everything and determined how much you have already gotten rid of.

Look at what you actually use on a daily basis. This helps when you are struggling with downsizing your possessions. To do this, take tools and utensils out of where they are stored and place them in a box. When you use them, put them back in their normal storage space. After a month, if the box has something in it, it means you do not use it on a regular basis. This will help ease the decision of getting rid of something.

Rethink the way you might use things that only come out on special occasions. For example, you have a set of tableware that is used for special occasions. Keep that tableware and use it daily. Donate your everyday tableware. Keep just one set of things such as plates, bowls, and cutlery.

Recycle your “give away” items. You can do this by selling them, giving them away or donating them. Remember one man’s trash is another man’s treasure. For the more expensive items try to sell them either online or in a yard sale. For other items such as clothes, books and smaller items, donate them. There are many charity shops always looking for these items. Give things away to friends and families. If you still have stuff left over, stick it in the front yard with a free sign on it.

On moving day ask for help. Sometimes we get wrapped up in the emotional side of such a big change and a helping hand can help us. Whether it be a soft shove in the right direction to help you decide what to give away or help on moving day.

Keep your good habits up. Once you are settled in your smaller home, treat it as your sanctuary. Do not fall back into old habits and fill it up with clutter. A less materialistic lifestyle can be very liberating.

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