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No Bubble Here! How New Mortgage Standards Are Helping

by Kevin Kalbach

No Bubble Here! How New Mortgage Standards Are Helping | Simplifying The Market

No Bubble Here! How New Mortgage Standards Are Helping

Real estate is shifting to a more normal market; the days of national home appreciation topping 6% annually are over and inventories are increasing which is causing bidding wars to almost disappear. Some see these as signs that the market will soon come tumbling down as it did in 2008.

As it becomes easier for buyers to obtain mortgages, many are suggesting that this is definite proof that banks are repeating the same mistakes they made a decade ago. Today, we want to assure everyone that we are not heading to another housing “bubble & bust.”

Each month, the Mortgage Bankers’ Association (MBA) releases a measurement which indicates the availability of mortgage credit known as the Mortgage Credit Availability Index (MCAI). According to the MBA:

“The MCAI provides the only standardized quantitative index that is solely focused on mortgage credit. The MCAI is calculated using several factors related to borrower eligibility (credit score, loan type, loan-to-value ratio, etc.).” *

The higher the measurement, the easier it is to get a mortgage. During the buildup to the last housing bubble, the measurement sat at around 400. In 2005 and 2006, the measurement more than doubled to over 800 and was still at almost 600 in 2007. When the market crashed in 2008, the index fell to just over 100.

Over the last decade, as credit began to ease, the index increased to where it is today at 186.7 – still less than half of what it was prior to the buildup of last decade and less than one-quarter of where it was during the bubble.

Here is a graph depicting this information (remember, the higher the index, the easier it was to get a mortgage):

No Bubble Here! How New Mortgage Standards Are Helping | Simplifying The Market

Bottom Line

Though mortgage standards have loosened somewhat during the last few years, we are nowhere near the standards that helped create the housing crisis ten years ago.

*For more information on the MCAI, including methodology, FAQs, and other helpful resources, please click here.

Don't get caught in the Rental Trap in 2019!

by Kevin Kalbach

Don’t Get Caught in the Rental Trap in 2019

Don't Get Caught in the Rental Trap in 2019 | MyKCM

Every year around this time, we take time to reflect and plan for next year. If you are renting your current home but have dreams of homeownership, your plan for the new year may include buying, and you wouldn’t be alone!

According to the 2018 Bank of America Homebuyer Insights Report, 74% of renters plan on buying in the next 5 years, with 38% planning to buy in the next 2 years!

When those same renters were asked why they disliked renting, 52% said that rising rental costs were their top reason, and 42% of renters believe that their rent will rise every year. The full results of the survey can be seen below:

Don't Get Caught in the Rental Trap in 2019 | MyKCM

It’s no wonder that rising rental costs came in as the top answer! The median asking rent price has risen steadily over the last 30 years, as you can see below!

Don't Get Caught in the Rental Trap in 2019 | MyKCM

There is a long-standing rule that a household should not spend more than 28% of its incomeon housing expenses. With nearly half of renters (48%) surveyed already spending more than that, and with their rents likely to rise again… why are they renting?

When asked why they haven’t purchased a home yet, not having enough saved for a down payment (44%) came in as the top response. The report went on to reveal that nearly half of all respondents believe that “a 20% down payment is required to buy a home.”

If the majority of those who believe they haven’t saved a large enough down payment believe that they need 20% down to buy, that means a large number of renters may be able to buy now!

Bottom Line

If you are one of the many renters who is fed up with rising rents but may be confused about what is required to buy in today’s market, let’s get together to help you on your path to homeownership.

 

Affordability 

Want to know how much you can afford? Call Kyle Geisser at Home State Bank TX- (815) 482-4404

Fall Home Sale Tips

by Kevin Kalbach

Greetings,

Can you believe we are already in the fall season? When thinking or buying a home in the fall there are a few things to keep in mind. Fall brings a lot of different things to mind, Cooler weather, leaves falling, tree colors are beautiful, and football is in full swing.

When selling your home in the fall, one of the best ways to get people to come into your home for a showing is by capitalizing on the fall season and create an inviting exterior and nice curb appeal.

We have compiled a few tips for you. 

Many people buying a home are available to view homes in the evenings and weekends. As the days get shorter, we have found that a little extra lighting such as solar lights or flood lights outside really dresses up the home, can allow a safe trip around the entire exterior and can be placed to draw the eyes to the highlights of the home.  

For those of us that enjoy decorating for the holidays, please remember to keep the decorations tasteful and simple with bright colors. Also, Making sure your decorations do not block large portions of the home or walkways, especially those items that need to be staked down.

Inside the home please make sure that the home doesn't appear cluttered or too busy and if you would like to add some fall scents to your home, 3 of the most popular scents are pumpkin spice, cinnamon apple, and smore.... but if you leave them hungry … you may have to leave a treat for them. :)

Have a great fall and if you need any help or resources we are here to help. 

 

 

Super Sub-divisions Saturday

by Kevin Kalbach

Happy Spring!!! I hope everyone is getting ready for warmer weather - it is coming. I promise!! 

Starting Saturday April 14th we will start sharing information about different subdivisions in McHenry County and Lake County. The information will give you a great opportunity to see what different communities have to offer, how taxes fluctuate, Price ranges in different areas and other great information that will help you decide if this neighborhood is the best one for you and your family!! 

If you would like your neighborhood featured please feel free to reach out and tell me a little about your neighborhood. 

 

Blessings, 

 

Kevin Callback Kalbach

Should I Buy a Home Now?

by Kevin Kalbach

I'm often asked if this is a good time to buy a home. Some clients are concerned that home prices may fall down the road, while others are convinced that home prices will go up.

Home prices are one factor in determining your cost of ownership, but so are interest rates and financing availability. Even though interest rates have fluctuated, they are still near historic lows. Since your monthly mortgage payment is a combination of paying down your principal and paying the interest owed, a one point rise in interest rates could cost tens of thousands of dollars over the life of your mortgage!

While a home is a major investment, it is also the center of your personal life. It's important to live in a home that reflects your taste and values, yet is within your financial "comfort zone." To that end, it may be more important to lock in today's relatively low interest rates while they are still available.

Please give me a call if I can be of any assistance in determining how much home you can afford in today's market.

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Kevin Kalbach Group
Kevin Kalbach Group Realty Executives Cornerstone
7115 Virginia Rd. #107
Crystal Lake IL 60014
7082773913
815-321-4250
Fax: 815-459-1112

Contact 815-321-4250