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Kalinski: How buying and selling a home will change in the Roaring 20s
As we enter a new decade, the massive wave of technological advancements fueled by entrepreneurial tech companies has reshaped consumers’ expectations. Companies such as Uber and Amazon have both dramatically shortened the time that people expect to wait for gratification and raised consumers’ expectations with 
regard to the ease and smoothness of the experience. That is, consumers now expect to press a button and have whatever it is that they want delivered to them in a matter of a couple days (Amazon shipments), hours, or even minutes (Uber rides); moreover, they want to be able to track their shipment’s progress through a simple, pleasing interface on their phones.
While consumers now expect smooth, pleasant and near instant gratification in most aspects of their lives, the real estate home sale process still typically takes 30 to 45 days and — due to its complexity, legal ramifications, and the fact that it is an ongoing negotiation between multiple parties — it is usually neither frictionless nor “fun.” This growing friction between consumers’ expectations and the longer duration and complexity of completing a real estate transaction has made the industry ripe for innovation. What follows are the likely developments that will make real estate transactions faster and easier over the coming decade.
1. The home search-to-closing customer journey. The days of agents-as-gatekeepers of real estate listings are gone. These days, most buyers start their search online and look at up to hundreds of homes to educate themselves. When they get serious, though, about 90 percent of buyers (and sellers) choose to use an agent to help them with the home buying/selling process.
Why is that? It’s because Realtors realized that they needed to change their value proposition to buyers and sellers in order to stay relevant and, well, valuable. One of the challenges for buyers and sellers is that, with the exponential growth of information available on the internet, the amount of “noise” has grown exponentially as well, but the valuable information (the “signal”) has become harder to find. Today’s Realtors have things that are in short supply online: hyperlocal and market knowledge, a network of trusted vendors and professionals, expert negotiation skills, a refined process to make the home buying/selling experience less painful, etc. These skilled Realtors who have adapted to consumers’ shifting expectations provide their clients with better technology, a smoother process, and expert advice. Those agents who fail to adapt will eventually exit the business.
Other innovators, such as so-called iBuyers, will make you an offer, often within a day, to buy your home for cash quickly. This convenience, however, comes at a cost, as many iBuyers will likely cost you two-to-five times more out-of-your-pocket than using a Realtor would.
2. The loan experience. Typically, the longest (and perhaps most annoying) part of a real estate transaction is the loan process. Many lenders can take 30 days or more to complete their due diligence, including their assessment of your loan-worthiness and an appraisal of the home, before approving a home purchase loan. Anyone who has been through this process knows how frustrating and slow it can be.
Fortunately, at least for many people, this process may get a lot shorter and easier. Lenders are using artificial intelligence (AI) to conduct automated appraisals on properties and help with assessing buyer’s applications. For “in the box” situations, with well-qualified “W2 employees” buying homes that the AI algorithms can value with a high degree of confidence, the underwriting process can be dramatically shortened without the need for a physical appraisal. This is already a reality — last fall, we represented buyer clients whose lender did not require an appraisal on the home they were buying and gave them very fast loan approval.
3. The title and closing process. Almost everything can seemingly be accomplished these days online from the comfort of your home. However, at least in Colorado, you still need to physically go to the title company and hand-sign a stack of documents in front of its notary public (how barbaric, right?). Well, this isn’t actually the title company’s fault, as many lenders — and state law — still require physical notarization of certain documents.
The good news is that this may change in 2020, if the Colorado legislature passes a bill similar to Senate Bill 18-109, which would allow optional remote notarization of documents. If such a bill were to become law, then notarizations could be done using audio-video recording of the document signing (kind of like signing over Skype or FaceTime, but with more layers of security). Thus, you would be able to close on the purchase/sale of your home from anywhere in the world, so long as you have a good internet connection.
Conclusion. The players in the real estate industry have (finally) recognized that consumers’ expectations and demands have shifted and are innovating quickly to make the home buying and selling process faster, easier, and more enjoyable (or, at least, less painful). Within the next few years, many people will be able to buy/sell a home in half the time or less than it takes on average today, and with a lot less disruption to their lives.
Originally posted by Jay Kalinski is broker/owner of Re/Max of Boulder.
Where have all the buyers gone?
A well-functioning market consists of two sides: suppliers who offer a particular good for sale and consumers who purchase those goods. In the Boulder Valley residential real estate market since 2012, there have been more consumers looking to buy homes than there were sellers offering homes for sale, which has led to a long appreciation period for homes. Now, however, it appears that the number of buyers is dropping as is their willingness to pay ever-increasing prices.
Spotting the trend
First, how do we know that there are fewer buyers in the market? The most direct measure of buyer activity that my company tracks (courtesy of Broker Associate Mike Malec) is the number of showings per available listing. From examining the data, it is fairly easy to see that this year’s showing activity is markedly below the recent boom years, but is still above the levels present during the recession.
Second, to further substantiate this decline in buyer activity, we can look at more indirect measures, such as average sales prices, available inventory of homes on the market, and average time a home will be on the market before sale. Each of these markers indicates a decline in buyer activity. Through May of this year, the average price of a single-family home in Boulder has fallen 0.6 percent, while the average attached unit has fallen 4 percent, compared to the same timeframe last year. This indicates that there are fewer buyers competing for available homes to the point where home appreciation rates have stalled. At the same time, the amount of homes available on the market has increased nearly 20 percent for single-family homes and almost 50 percent for attached ones, while the average time on the market for single family homes has gone up 5 percent and nearly 20 percent for attached ones. These statistics indicate that those buyers in the market are becoming choosier and are able to take their time making decisions.
Based on the above discussion, it seems that there are fewer buyers in the market and that those who are in the market are more cautious, but why?
Economic Conditions?
It does not appear that our local economic conditions explain the drop in buyer activity. According to the State Demographer’s office, people are continuing to move into Boulder and Broomfield counties, albeit at a slower rate than previous years (though the city of Boulder has seen its population declining in the last two years). And local unemployment levels continue to be historically low.
Economic conditions at the national level are softening, to the point where the Fed is discussing interest rate cuts, so these conditions may play some role. But, interest rates are actually about half a percent lower than they were at this time last year, which would appear to weaken that argument.
Could it be the weather?
Another possible explanation I’ve heard is that our unusually cold and snow winter could have suppressed buyer demand as people were less willing to trudge through the snow to go see houses. While this is plausible, all else being equal, we would have expected to see that pent up demand being released as the weather improves, but we just have not seen that play out in the data yet.
The takeaway
Whatever the cause of the decline in buyer activity may be, local real estate legend Larry Kendall of the Group Inc. Real Estate in Fort Collins always says that buyers are the smartest people in the market, so they may be acting as the proverbial canary in a coal mine, meaning that they could be a leading indicator that our market is shifting from a seller’s market to either a balanced or buyer’s market. If you are a seller, be wary of pricing above the market in these shifting conditions.
Originally posted by Jay Kalinski is broker/owner of Re/Max of Boulder.
Re/Max of Boulder owner to launch new Louisville office
LOUISVILLE — Jay Kalinski, owner of Re/Max of Boulder, is opening a new real estate agency in Louisville under the Re/Max Elevate banner.
The Re/Max Elevate office, set to celebrate a grand opening May 1, is at 724 Main St.
Kalinski said agents had been clamoring for an office in eastern Boulder County because many live in that area and many have clients looking for homes in places such as Louisville, Lafayette, Firestone and Frederick.
“Over time, more and more of our agents have been working outside of the city of Boulder and outside of Boulder County,” Kalinski said,
And while the company considered opening the office in other nearby towns, “Louisville seemed to be a consensus choice,” he said.
The Re/Max Elevate office, technically a separate franchise from Re/Max of Boulder Inc., will launch with 15 agents. A handful are transferring from the Boulder offices, but most are newly recruited agents.
Kalinski said the office may be able to support as many 20 or 25 agents. For comparison, Re/Max of Boulder has about 115 agents.
Kalinski said the Louisville office will likely not be the last new location for his team.
“We’re in growth mode and looking to expand,” he said.
The decision on where to target for the company’s next office will — like the Louisville decision — be driven by input from agents and clients, he said.
Originally posted by Lucas High
January Home Sales Chill, Fundamentals Solid
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Home sales for Boulder-area real estate got off to a slow start in 2019 despite fairly mild January weather, resulting in decreased sales compared with a year ago.
Single-family homes posted 184 sales, a decrease of 20.3 percent compared with 231 homes sold in the same month last year. Sales of condominiums and townhomes dropped 23.0 percent for the same period with 71 units sold vs. 92.
“The market saw a pretty significant slowdown that started mid-November and continued through January,” says Ken Hotard, senior vice president of public affairs for the Boulder Area Realtor® Association. “The fundamentals are still solid—inventory improved and interest rates aren’t going up quickly,” he says, noting that interest rates are historically low and affordable at around five percent or below for a 30-year fixed mortgage.
Month-over-month single-family home sales dropped 39 percent in January with 184 homes sold compared to 302 in December. Townhome/condo sales were a bit stronger, nearly matching December sales with a .013 percent decrease – 71 units sold vs. 72.
Inventory jumped 15.7 percent for single-family homes with 722 homes for sale in January compared with 624 in December. Attached dwellings showed even greater improvement, rising 18.1 percent—241 units vs. 204.
Hotard explains that for now the statistics represent a series of events. “Once we get enough data, we’ll start to see trends,” he says.
“There seems to be uncertainty in the market and buyers are thinking I can stay where I am and look for a better opportunity in the future,” says Hotard. “It’s a story that’s repeating itself in a number of markets across the country.”
Yet Boulder-area prices continue to rise or hold steady, job growth and the employment rate remain strong, and Boulder County is still a desirable place to live.
“Our strong fundamentals should attract buyers as we move through February.”
Originally posted by Tom Kalinski Founder RE/MAX of Boulder on Tuesday, March 14th, 2019.
City housing proposal may be Faustian bargain
There is a serious shortage of homes in Boulder, as is evidenced by the roughly 65,000 people who commute in and out of Boulder on a daily basis. About half of these people would live in Boulder if they could, but are forced to “drive until they qualify” for a home, which increases their carbon footprint, commute times, and overall stress level. It is clear that creative solutions are needed to address this crucial issue.
The Boulder City Council’s proposed pilot program to “help” middle income families purchase market rate homes is, while creative, a Faustian bargain, in my opinion. In the current iteration supported by members of the city council, the city would use a “loan-loss reserve fund” to guaranty second mortgages that would allow people to purchase more home than they would qualify for by themselves. (An earlier version from a 2016 white paper would have had the city use its bonding power to raise money to buy a percentage of a purchaser’s home, which the city would get back at closing, plus some amount of appreciation).
If the program stopped there, I would applaud the city’s effort for trying to get more families into homes that would be owner occupied. But here is where the Faustian bargain sets in. In exchange for the city’s assistance, the buyer would have to “voluntarily” agree to deed restrict the home they just purchased to be permanently affordable.
Let us consider the consequences of this for the individual or family who purchases a home under this program:
- All of the burdens. The buyers now have all of the burdens of homeownership. For example, if the furnace breaks or the roof wears out, the burden falls on the homeowner to replace them. If the home loses value, it is ostensibly the homeowner who bears the loss when they look to resell. And remember, in this fantasy, a lender is going to agree to loan buyers more money than the lender thinks they can reasonably afford because the city is going to guaranty a portion of the loan, which means the buyers will likely have more financial strain and be at a higher risk of default. Whether the city can sufficiently incentivize a bank to overlook that they would likely be overextending buyers financially remains to be seen.
- Limited rewards. While the homeowner is saddled with the burdens and risks of ownership, they do not reap the full reward of their home’s appreciation — the city sees to this through its deed restriction. Suppose homeowners do an outstanding job of upgrading and maintaining their home, and the market rises over the 10 years they own their home, the owners will not receive the fruits of their labor and good fortune of an appreciating market. Instead, the city will cap their appreciation at some percentage likely well below the market.
For the majority of Americans, their home is their biggest asset and primary source of wealth creation. The effect of the city’s program, then, is to make families who avail themselves of this program poorer over time relative to those who purchased homes on the open market.
It is, in my opinion, this asymmetry of unlimited risk and handicapped reward underlying the program that makes it so insidious.
If this wasn’t bad enough, let us now consider the consequences of this for the housing market in Boulder in general. The more unfortunate souls the city “helps” via this program, the fewer homes will be available on the open market. If the supply of homes is further restricted via this program, and demand for housing remains strong (remember the 30,000 commuters who would like to live in Boulder?), then the result will be home prices rising even faster. So, in an effort to create a number of “permanently affordable” homes, the city will make the rest of Boulder much more expensive.
Originally posted on BizWest. Jay Kalinski is broker/owner of Re/Max of Boulder.
The importance of property rights and good governance
The Boulder City Council’s recent handling of their attempted “emergency” vote to limit “McMansions” provides an excellent opportunity to step back and consider the importance of property rights and principles of good governance.
Why do we as a society care about property rights?
Primarily, we care about property rights because they are inextricably linked to increasing our collective prosperity. “On average, GDP per capita, measured in
terms of purchasing power parity, is twice as high in nations with the strongest protection of property than in those providing only fairly good protection,” according to a study of property rights published by the Heritage Foundation. The reason this is so is because people are more willing to improve their property to its highest and best use when they know their rights are protected.
Conversely, when people do not feel secure in their property rights, when they feel the government can change or remove their rights without due process and fairness, people are not as willing to make improvements to their property and collective prosperity falls.
Good governance
From the above, we see that good governance is critical to protecting property rights and improving collective prosperity, but what is good governance made of? According to the United Nations, the characteristics of good governance include participation, rule of law, transparency, responsiveness, and accountability, among others. Standing in opposition to good governance are arbitrariness and capriciousness.
Let’s look at the definitions of these words and consider which terms most aptly describe the City Council’s recent actions.
Arbitrary:
• Definition: based on random choice or personal whim, rather than any reason or system; (of power or a ruling body) unrestrained and autocratic in the use of authority.
• The term arbitrary describes a course of action or a decision that is not based on reason or judgment but on personal will or discretion without regard to rules or standards. An arbitrary decision is one made without regard for the facts and circumstances presented, and it connotes a disregard of the evidence.
• Antonym: democratic
Capricious:
• Definition: given to sudden and unaccountable changes of mood or behavior; unpredictable and subject to whim.
• Antonym: consistent
A summary of the facts
On Oct. 15, Councilwoman Lisa Morzel requested that the council consider the following day an “emergency” temporary ordinance to stop the city from processing permits for homes over 3,500 square feet on lots 10,000 square feet or larger (clearly, a “McMansion” is much smaller than an actual mansion). At the time, Morzel declined to articulate the cause of the emergency; nevertheless, the council added it to their agenda for the following day. On Oct. 16, the City Council considered the motion and heard from 22 people, almost all of whom spoke in opposition to the motion. Apparently because Councilwoman Cindy Carlisle was absent and an emergency motion requires a two-thirds majority to pass, council declined to vote on the measure, but noted that the issue may be considered again in December.
Evaluating the City Council’s actions
It does not appear to me that the above actions were consistent with the good governance principles. One day’s notice did not allow all interested stakeholders to participate, lacked transparency because no reason for emergency action was articulated, and appears to have been taken in an attempt to avoid accountability.
Instead, the City Council’s apparent ambush-style attack on property rights appears to meet the very definitions of arbitrary and capricious — two terms that most governing bodies would not seek to embody. First, rather than having an articulated reason that the issue of “McMansions” is suddenly an emergency, the decision to consider the issue on one-day’s notice appears to be based on a “personal whim, rather than any reason,” perhaps better explained by a “sudden and unaccountable change of mood.” Second, applying the moratorium only to homes over 3,500 square feet on lots 10,000 square feet or larger seems arbitrary (disregarding the facts and circumstances) when one considers that a person owning a 9,999 square foot lot could still build a 4,100 square foot home.
An appeal for good governance
Reducing the potential value of people’s property (likely their most valuable asset) is a serious diminution of their rights, and while the City Council likely has the authority to do so, such action should only be taken, if at all, after a process conducted in accordance with the principles of good governance.
Originally posted on BizWest. Jay Kalinski is broker/owner of Re/Max of Boulder.
Boulder County Home Sales Soar into Late Summer
Home sales in Boulder-area single-family and attached housing markets rose in August along with the late summer heat index.
Single-family home sales increased 10 percent in August 2018 compared to July with 460 homes sold in Boulder-area markets vs. 418. Sales for condominiums and townhomes climbed 15 percent with 146 units sold vs. 127.
Meanwhile, Denver-metro home sales went in the opposite direction, slowing significantly over the same period, according to the Denver Post.
It’s testament to the state of Boulder Valley real estate market, according to Ken Hotard, senior vice president of public affairs for the Boulder Area Realtor® Association.
“We have our own little market here. While Denver dipped, Boulder Valley showed strong growth in sales, despite ongoing rising prices and inventory squeeze,” says Hotard.
Year-to-date sales also continue to climb steadily. Single-family home sales grew 1.7 percent through August 2018 compared to last year – 3,154 homes sold vs. 3,100. Attached homes followed a similar track, improving 1.6 percent year-to-date – 1,154 sold in 2018 compared with 1,135 in 2017.
Inventory dropped 2.0 percent for single-family homes – 993 units in August 2018 vs. July’s 1,013. But condo/townhomes available for sale grew 11.2 percent with 268 units available in August vs. 241 the previous month.
Hotard attributes the unceasing increase in real estate sales and prices to the area’s strong economy and continued job growth, along with a desirable quality of life. “Significant companies are hiring in Boulder, like Zayo, Google, Twitter – and the natural foods industry is strong,” he adds.
Interest rates are slowly pushing upward, which traditionally results in a slowdown in rising home prices and sales. But Boulder Valley’s housing market may not readily respond to interest rate increases.
“It’s unknown what the tipping point is for interest rates affecting our housing market. And with 35 percent of Boulder County homes bought with cash, rising interest rates may not have a significant effect locally,” says Hotard.
Looking ahead to the final quarter of the year, Hotard expects sales to continue to match those of last year, unless “something unusual happens.”
“We seem to be operating on an upward trend and it’s hard to see what would stop it. The real challenge for Boulder County is providing the housing and transportation infrastructure to support job growth.”
Originally posted here by Tom Kalinski Founder RE/MAX of Boulder on Tuesday, October 2nd, 2018 at 10:46am.
The danger of Boulder’s CAVE people thinking
Let’s face it, what happens in Boulder affects the rest of Boulder Valley in terms of housing, transportation, economics and myriad other dimensions. If you want to know where your neighborhood is headed, it’s informative to know what Boulder is doing, even if you live in say, Erie. And, if you even casually follow Boulder politics these days, you might be perplexed and concerned by the (seemingly) increasingly bizarre actions coming from Boulder’s City Council.
For a council that purports to support the environment, public safety, and inclusivity, its recent actions don’t seem to match its rhetoric. In my opinion, however, its actions make sense when you understand the true underlying motivations and desires — and to do that, you have to understand Boulder’s CAVE people.
Who are Boulder’s CAVE people and what do they want?
Simply put, I call these people “Citizens Against Virtually Everything” (CAVE), and they seem to have the ear of the majority of the current council. It appears that the plurality of Boulder’s CAVE people arrived in Boulder in the 1960s and ‘70s as students, hippies, ski bums, etc. They decided to stay, bought homes here, and have become relatively well off as Boulder’s home price appreciation outstripped virtually everywhere else in the country. At the same time, they seem not to like the multiple dimensions of growth Boulder has enjoyed over the last several decades; indeed, their strongest desire is apparently to see Boulder return to as it was “back then,” with fewer people, fewer businesses, less crowding, etc. Their apparent goals, then, are to slow, stop, or reverse growth of all kinds in Boulder. Their tactics appear to be to (disingenuously?) cloak themselves in the rhetoric of environmentalism, populism, and liberalism in order to achieve these goals.
Recent examples of CAVE people tactics and their effects:
1. South Boulder Flood Mitigation Plan. The 2013 flood brought the issue of flood mitigation to the front of everyone’s minds in Boulder Valley, but the study of how to best deal with this issue in South Boulder goes back well before then. After nearly a decade of study, and more than $2 million in fees and environmental studies, and extensive public engagement, the City Council had a few feasible flood mitigation plans, one of which (500-Year Variant 2), had the support of the University of Colorado (the property owner), the city’s Water Resources Advisory Board, and general public. One would think, then, that it would be an easy decision for the City Council to support. One, however, would be wrong.
Recently, the Boulder City Council voted to proceed with a different flood mitigation plan, one that is opposed by CU, disregards expert testimony, the preferences of the city’s Water Resources Advisory Board, and general public sentiment.
Why would the council disregard science, experts, reason, common sense and nearby residents? Using the lens of CAVE people logic, it may be because they believe that taking a position in opposition to all of these things will greatly slow the process of CU developing that land, which fits the goals of “slow, stop, reverse.”
2. Sales Tax Revenue. Cities like Boulder depend on sales tax revenue as an important component of their budgets. Earlier this year, Boulder reported a $4 million budget shortfall, attributable primarily to flattening sales tax in the city — at a time when nearby cities are enjoying double digit growth in their sales tax revenues. Members of the City Council held a study session on the topic on July 10 in which some members declared that they apparently want fewer visitors to Boulder (both tourists and locals from neighboring cities). They expressed these opinions even with the knowledge that locals already visit downtown Boulder an average of seven times per month, but tourists spend several times what locals do per visit.
Why, in a city that prides itself on being welcoming and at a time when sales tax revenues are falling, would members of council declare an apparent desire for fewer tourist (and accompanying tax dollars)?
3. Increased housing density. Council members often voice their support for efforts to provide inclusive housing, reduce Boulder’s carbon footprint, and improve our city’s environmental sustainability; however, when it comes to increased density — the thing that would arguably go the farthest toward achieving those aspirations — the council’s words do not match their deeds. Boulder’s draconian housing restrictions, including the 1 percent cap on annual residential growth (which we’ve never actually hit), blanket height restrictions, severe occupancy limits, among other measures, has forced our workforce to largely live outside the city. This, in turn, causes the more than 60,000 daily commutes into and out of Boulder. By simply ameliorating some of these harsh policies, and allowing a modicum of sustainable and smart development, Boulder could include more of its workforce within city limits and could considerably lessen its environmental impact.
Why, then, has the city actively resisted efforts that would address these critical housing and environmental issues? One possibility — CAVE people logic: if it is extremely difficult to add housing density, not only will it slow population growth, it will force workers into longer commutes and growing frustration. Over time, businesses will relocate to areas more accessible to their workforce, and there will be fewer people, fewer jobs, less congestion… like it was “back then.”
What’s to come?
Rather than building a bridge to the future, Boulder’s CAVE people seem intent on digging a trench to the past. In fact, their efforts seem to be achieving results — not only did Boulder run a budget deficit, but its population actually decreased between 2016 and 2017. There is no stasis for cities — they are either growing or dying. It seems the CAVE people are succeeding at pushing their agenda of “slow, stop, reverse,” through council. And if they win, all of us who are truly for the environment, public safety, and inclusivity will lose.
Jay Kalinski is broker/owner of Re/Max of Boulder.
Originally posted by BizWest on Wednesday, June 1st, 2018. Original found here.
Boulder Valley housing holds strong amidst July pullback
Boulder-area housing continues to reach new heights, shrugging off a pullback in July sales.
“Prices in Boulder Valley are at an all-time high in both single-family and attached homes. Also inventory challenges are ongoing. Despite both of those realities, housing demand is absolutely holding,” says Ken Hotard, senior vice president of public affairs for the Boulder Area REALTOR® Association.
The City of Boulder July average sales price reached more than $1.3 million – a 15.4 percent increase for the year. Median price hit $984,648. While Boulder’s prices are the highest, every area in Boulder County saw an increase in average sales price ranging from 3.5 percent in Superior to 17.7 percent in Niwot year-to-date.
However, July sales slowed from the previous month, following the typical late summer pattern of a month-over-month slowdown. Sales declined for single-family and attached homes in July compared to June, 2018. Single-family home sales in the Boulder-area markets dropped 16 percent—418 vs. 498 units—while condominium and townhome sales fell 32.8 percent—127 units vs. 189.
Hotard says this year’s July slowdown is a little more pronounced than last year.
Even so, year-to-date single-family home sales were virtually unchanged with a 1.0 percent increase compared to the prior year with 2,666 homes sold compared to 2,639. Attached home sales over the same period improved 5.8 percent; 914 vs. 864 units sold.
Inventory held its own. There was essentially no change in single-family home inventory levels, which rose .8 percent across Boulder County in July compared to June, 2018 with 1,013 vs. 1,004 homes available for sale. Condo/townhome inventory grew 1.3 percent in July compared to the previous month with 241 units for sale vs. 238.
Hotard notes there is potentially downward pressure on the market with interest rates trending upward and prices rising faster than wages in the area.
“But with demand as it is, we’re just going to keep moving forward,” he says.
Hotard adds that real estate is a “dynamic industry and Realtors are responding to the challenges by continuing to advise their clients on successful strategies for selling and purchasing homes.”
Originally posted here by Tom Kalinski Founder RE/MAX of Boulder on Monday, August 27th, 2018 at 2:45pm.
5 Tips for Millennials Buying a Home
When it comes to homeownership, millennials are no different than other generations. Many would love to buy a home, according to findings by SmartAsset. To achieve that dream, one of the looming issues that they must overcome is saving for a down payment. This can be especially challenging in the Boulder-Denver metro area where rents are high. Also, millennials often have student loan payments contend with, which impacts savings.
Although mortgage interest rates are increasing, they are still relatively historically low, and they are empowering millennials to invest in property. To buy a home, millennials need to plan how to overcome obstacles. Here are five tips on how to get organized and make a plan that will succeed, reported by SmartAsset.
Do the Math
Know the 28/36 rule. Mortgage lenders typically require that your mortgage payment, property taxes, and insurance total no more than 28 percent of your monthly gross income. Then, your mortgage payment and your total debt payments, including college loans and credit card debt should not be more than 36 percent of your gross income. Get out your spreadsheet and calculate what this means for you. Knowing your spending limits helps target your search for the right home.
Get Your Documents Together
Getting a loan and closing on a home requires certain documents. Go ahead and pull everything you need together and put it in a file. Usually for a home purchase you need your government issued ID, most up-to-date credit report, a verification form from your employer, W-2 forms, federal tax returns, and bank and asset statements.
Get Your Down Payment Together
Plan to pay the biggest down payment you can afford. The down payment amount determines the length of your mortgage and its monthly rate. Typically, the down payment is between three to 20 percent. The bigger your down payment, the lower your loan amount will be. Increasing your down payment has benefits: a higher down payment makes it possible to get a lower loan at a lower interest rate. Putting more money down usually gives you the ability to borrow more.
Consider Taxes, Property Insurance, Closing Costs and Other Expenses
These necessary expenses factor into the price of the home you can afford. Be sure to calculate home insurance and property tax rates in Colorado and in the county you are exploring. Closing costs include loan origination, underwriting, appraisal, title insurance, wire and courier, and other fees.
Study the Area
Discover which neighborhood is best for you. Study the value of surrounding properties. This will help you know if the home you want is comparably priced to other homes in the area. Working with a knowledgeable Realtor provides insight and perspective on neighborhoods and home values. Be sure to find a Realtor who can help you navigate the search for a home and purchasing process.
To read the full article, visit https://smartasset.com/mortgage/millennial-home-buying-guide.
To find a home and realtor for you, visit http://www.boulderco.com.
Originally posted here by RE/MAX of Boulder on Friday, July 6th, 2018 at 10:11am.
