4 Proven Ways Real Estate Can Build Sizable Family Wealth

4 Proven Ways Real Estate Can Build Sizable Family Wealth | MyKCM

Recently, David Greene, co-host of the BiggerPockets podcast and a nationally renowned author and speaker, wrote an article in Forbes explaining how investing in real estate could help build wealth. Many of the points he made also apply to a family owning their own home. Here are a few:

1. Appreciation

“The rising of home prices over time, is how the majority of wealth is built in real estate. This is the ‘home run’ you hear of when people make a large windfall of money. While prices fluctuate, over the long run real estate values have always gone up, always, and there is no reason to think that is going to change.

One thing to consider when it comes to real estate appreciation affecting your ROI is the fact that appreciation combined with leverage offers huge returns. If you buy a property for $200,000 and it appreciates to $220,000, your property had made you a 10% return. However, you likely didn’t pay cash for the property and instead used the bank’s money. If you consider that you may have put 10% down ($20,000), you actually have doubled your investment, a 100% return.”

2. Leverage

“By nature, real estate is one of the easiest assets to leverage I have ever come across—maybe the easiest. Not only is it easy to leverage the financing of it, but the terms are incredible compared to any other kind of loan. Interest rates are currently below 5%, down payments can be 20% or less, and loans are routinely amortized over 30-year periods.”

3. Paying Off the Debt

“One of the best parts of investing in real estate is the fact that … you’re slowly paying down your loan balance with each payment to the bank… After enough time passes, a good chunk of every payment comes off the loan balance, and wealth is created.”

4. Forced Equity

“Forced equity is a term used to refer to the wealth that is created when an investor does work to a property to make it worth more…

Example of this would be adding a third or fourth bedroom to a property with only two, adding a second bathroom to a property with only one, or adding more square footage to a property with less than the surrounding houses.”

Though Green was talking about investors, the same could be said about a family upgrading their own home.

Bottom Line

Green put it best by saying:

There are many ways to build wealth in America, but real estate might be the safest, steadiest and simplest way to do so.”

3 Things You Need in a Shifting Real Estate Market

3 Things You Need in a Shifting Real Estate Market | MyKCM

 

Whether you are thinking of selling your house or buying a home, today’s real estate headlines can be confusing – perhaps even concerning. What is actually happening with mortgage rates? Are home values dropping or are they just rising at a slower pace? What impact will the economy have on the housing market?

If you are either a buyer or seller (or both), you need to know what it will mean to your family if you go ahead with the move. You need to understand three things:

1. What is happening in the housing market right now?

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THE IMPORTANCE OF HOMEOWNERSHIP TO THE AMERICAN DREAM

The Importance of Homeownership to the American Dream | MyKCM

 

For centuries, people in this country have seen homeownership as part of the American Dream. Whether they were born here or immigrated from another country, they wanted to own a piece of America. With so many prominent societal changes over the last few decades, it is fair to ask if people in America still feel the same way about owning a home. The answer was made abundantly clear in two separate reports released earlier this month.

In their market trends report, As Housing Trends Shift, So Does Renter, Buyer and Seller SentimentTrulia revealed that:
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3751 East MANSE, Pahrump, NV – Just Listed

3751 East MANSE, Pahrump, NV

Just Listed

Presented By:

Teresa Parker

Urban Nest Realty
775-209-3097
Licensed In: NV
License #: S0170006

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$ Click for current price
2 BEDROOMS | 2 Baths(2 full ) BATHROOMS | 1120 SqFt

TWO ONE + ACRE PARCELS TO BE INCLUDED IN THIS SALE! One Parcel Is A Corner Lot, Mountain Views, Circular Driveway, Trees, Two Car Attached Garage, One Separate Garage, One Day Shade, Water Softener, Swamp Cooler, Reverse Osmosis To Be Included. Easy Access To Hwy 160

How Much Has Your Home Increased in Value?

Home values have risen dramatically over the last twelve months. In CoreLogic’s most recent Home Price Index Report, they revealed that national home prices have increased by 6.2% year-over-year.

CoreLogic broke down appreciation even further into four price ranges, giving us a more detailed view than if we had simply looked at the year-over-year increases in national median home price.

The chart below shows the four price ranges from the report, as well as each one’s year-over-year growth from July 2017 to July 2018 (the latest data available).

How Much Has Your Home Increased in Value? | Simplifying The Market

It is important to pay attention to how prices are changing in your local market. The location of your home is not the only factor which determines how much your home has appreciated over the course of the last year.

Lower-priced homes have appreciated at greater rates than homes at the upper ends of the spectrum due to demand from first-time home buyers and baby boomers looking to downsize.

Bottom Line

If you are planning to list your home for sale in today’s market, let’s get together to go over exactly what’s going on in your area and your price range.

WANT A FREE HOME VALUATION?… JUST TEXT 95861 TO 888-264-1910

Buying a Home Young is the Key to Building Wealth

Buying a Home Young is the Key to Building Wealth | MyKCM

Homeowners who purchase their homes before the age of 35 are better prepared for retirement at age 60, according to a new Urban Institute study. The organization surveyed adults who turned 60 or 61 between 2003 and 2015 for their data set.

“Today’s older adults became homeowners at a younger age than today’s young adults. Half the older adults in our sample bought their first house when they were between 25 and 34 years old, and 27 percent bought their first home before age 25.”

The full breakdown is in the chart below:

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The Best Month to Sell a House?

You may have heard that the housing market is softening. There is no doubt that buyer traffic has decreased. There are fewer purchasers in the market than there were last month and at this time last year. What you may not have heard, however, is that there is still a severe shortage of listing inventory in many regions of the country.

In a recent interview discussing the housing market, First American’s Chief Economist Mark Fleming put it simply:

“The biggest challenge is really the availability of supply.”

When we look at available inventory numbers released by the National Association of Realtors (NAR), we see that the actual number of homes for sale has decreased in each of the last five months.

The Best Time to List Your House? TODAY! | Simplifying The Market

What does this mean to you as a seller?

The best time to sell is when there is less competition. That guarantees you a better price and fewer hassles in the transaction.

Bottom Line

If you are thinking of selling your house this year, the best time to put it on the market might be right now. Let’s get together to evaluate the demand for your house in our market! Call me at 775-209-3097 or get an instant FREE home valuation for your Pahrump home now!

Homes For Sale in Pahrump

New Pahrump Listing in Burson Ranch!

3882 E Garfield Dr, Pahrump, NV

$ Click for current price
3 BEDROOMS |

BEAUTIFUL 2017 Burson Ranch Home, Ready For Your Family To Move In!, Three Bedroom, Two Full Bath, Granite Counter-tops, Desert Landscaping, NO TIME TO WASTE, THIS HOME WON’T LAST!

Presented By:

Teresa Parker

Urban Nest Realty
775-209-3097
Licensed In: NV
License #: S0170006

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  • Connect on YouTube
  • Connect on LinkedIn

Belief in Homeownership as an Investment is Far from Dead

Belief in Homeownership as an Investment is Far from Dead | Simplifying The Market

Following last year’s real estate market was like riding a rollercoaster. The market started off strong in 2018 and then softened before finishing with a mild flurry. However, one thing that did not waiver was America’s belief that owning a home makes sense from a financial standpoint.

An end-of-the-year survey by the Federal Reserve Bank’s Center for Microeconomic Data revealed that:

“The majority of households continue to view housing as a good financial investment.”

And that percentage has increased over the last three years.

Belief in Homeownership as an Investment is Far from Dead | Simplifying The Market

Bottom Line

Though there is some uncertainty as to how the real estate market will perform over the next twelve months, one thing remains very certain: America’s belief in homeownership.

Excited About Buying A Home This Year? Here’s What to Watch

Excited About Buying A Home This Year? Here's What to Watch | Simplifying The Market

So as we kick off the new year, I hope many families have made resolutions to enter the housing market in 2019. Whether you are thinking of finally ditching your landlord and buying your first home or selling your starter house to move into your forever home, there are TWO important pieces of the real estate puzzle you need to watch carefullyinterest rates & inventory.

 

Interest Rates

 

Coming from a mortgage lending background, I’ve been watching the mortgage interest rates had been on the rise for much of 2018, but they made a welcome reversal at the end of the year. According to Freddie Mac’s latest Primary Mortgage Market Survey, rates climbed to 4.94% in November before falling to 4.62% for a 30-year fixed rate mortgage last week. Despite the recent drop, interest rates are projected to reach 5% in 2019.

 

The interest rate you secure when buying a home not only greatly impacts your monthly housing costs, but also impacts your purchasing power.

 

Purchasing power, simply put, is the amount of home you can afford to buy for the budget you have available to spend. As rates increase, the price of the house you can afford to buy will decrease if you plan to stay within a certain monthly housing budget.

 

TAKE A LOOK AT THE CHART BELOW: The chart below shows the impact that rising interest rates would have if you planned to purchase a $400,000 home while keeping your principal and interest payments between $2,020-$2,050 a month.

 

Excited About Buying A Home This Year? Here's What to Watch | MyKCM

 

So with each quarter of a percent increase in interest rate, the value of the home you can afford decreases by 2.5% (in this example, $10,000).

 

Inventory

 

‘normal’ real estate market requires there to be a 6-month supply of homes for sale in order for prices to increase only with inflation. According to the National Association of Realtors (NAR), listing inventory is currently at a 3.9-month supply (still well below the 6-months needed), which has put upward pressure on home prices. Home prices have increased year-over-year for the last 81 straight months.

 

The inventory of homes for sale in the real estate market had been on a steady decline and experienced year-over-year drops for 36 straight months (from July 2015 to May 2018), but we are starting to see a shift in inventory over the last six months.

 

The chart below shows the change in housing supply over the last 12 months compared to the previous 12 months. As you can see, since June, inventory levels have started to increase as compared to the same time last year.

 

Excited About Buying A Home This Year? Here's What to Watch | MyKCM

 

This is a trend to watch as we move further into the new year. If we continue to see an increase in homes for sale, we could start moving further away from a seller’s market and closer to a normal market.

chart

Bottom Line

 

If you are planning to enter the housing market, either as a buyer or a seller, let’s get together to discuss the changes in mortgage interest rates and inventory and what they could mean for you.