How much of my income goes towards housing?

How much of my income goes towards housing?

With rates rising and home price growth starting to slow, I started to consider how much income is used towards housing in this current economic climate. Mortgage rates are trending upwards to near the highs of 2011 at 4.98 percent, home prices are still rising but at a slower pace, and the median income has been steadily rising although an even more modest pace than house prices. These factors go into how much of a person’s income goes towards housing expenditures and whether housing is a burden for potential homebuyers. This blog will highlight some of the factors and show states and regions where housing is less of a financial burden.

Home Price vs Median Family Incomes

Home prices since 2000 started to outpace incomes but started to turn towards the end of 2007, until home prices plummeted during the Great Recession. In 2008, incomes grew making it favorable for potential homeowners to buy a home. It took home prices about 4 years to recover, beginning in 2012. Around 2014 home price growth began to bloom and once again, prices started to outpace incomes. This pace has continued until recently, as home price growth has slowed making owning a home affordable. As of the second quarter of 2018, family incomes have increased by 52 percent since 2000, while housing prices have increased by 95 percent, or nearly doubled the level in 2000.

Payment to Income and Mortgage Rates

Let us look at the amount of money homeowners had to commit from their income to be able to afford a home. In 2000, when interest rates were 7.90 percent, homeowners had to spend about 19.6 percent of their income to be able to afford a home. In 2006 when rates were around 6.50 percent, homeowners had to spend 22 and up to 24 percent of their income on a home. In the wake of the Great Recession in 2009-2010, mortgage rates started to fall, so the share of income that went to paying a mortgage declined. In 2013 when rates were down to 3.47 percent, the mortgage payment on a median priced home was 11 percent of the median family income, putting less pressure on household incomes. Since that time rates have continued to decline, much to the benefit of potential homeowners. Anything above 30 percent is considered burdensome on households, but below that range would be typically affordable. On a regional level, the West requires a higher portion of your income, which has eclipsed the 35 percent mark. The Midwest, being the most affordable region, requires the least percentage of median family incomes. The Midwest started around 15 percent and, at times, dipped below 10 percent and is currently hovering back around 15 percent.

Payment to Income Ratio

A ratio between 2.5 and 4 is normal and healthy price to income ratio for the housing market. As of August 2018, the median price of existing homes sold was 3.5 percent of the median family income. The Harvard University Joint Center for Housing Studies (JCHS) produced a map showing the US home price to income ratios. The ratios range from under two to over eight. As the map below illustrates, costal markets have much higher ratios, indicating significantly higher home prices compared with incomes. The West Coast region has affordability issues, with several areas posting ratios above eight, including San Diego, Los Angeles and the San Francisco metropolitan area. Small pockets in the Northeast reach above five, mostly clustered around New York City and Boston. The Miami/ South Florida Region also posts low affordability. In comparison, The Midwest region has ratios in the 2-3 range, in line with historical averages.

Jobs Generated vs GDP Growth Rate

The Gross domestic product (GDP) has hovered around 3 percent and has had to withstand the tech bubble, wars and several crises. In 2009, both jobs and GDP took a dive but rebounded the following year. GDP and jobs have grown solidly after the Great Recession. Unemployment has been below 6 percent ever since 2014, which is good for economic progress and potential homebuyers.

Even with rising rates and higher home prices, potential homebuyers have plenty of reason to join the market. Real Estate is still affordable in several states and regions. The job market is strong, GDP is at a healthy level and consumer confidence is high. New homes and existing inventory figures are now improving, although still modestly, but the increase in inventory is helping tame price growth.

It’s Easy Being Green: How to Add This Year’s Hottest Hues of Green to Your Décor

It’s Easy Being Green: How to Add This Year’s Hottest Hues of Green to Your Décor

Photo Credit: Crate and Barrel

By Laura Love Bardell, guest contributor

This year in home decor, green is really having a moment. Far from being a short-lived trend, however, this verdant color is definitely here to stay. Luckily for us, green goes with just about everything, and it’s easy to incorporate into any room of your home.

Add some life.

The simplest way to add green into your home decor is with botanicals, which blend effortlessly into any color scheme. Place a cluster of potted succulents on the coffee table, and fill that empty corner behind the sofa with a statement fiddle leaf fig tree. In spaces that lack sufficient natural light for live plants, consider faux varieties. With advances in manufacturing techniques, many artificial plants look just as convincing as the real thing and require no maintenance.

Accessorize.

In rooms with a neutral color palette, use green accessories to add a pop of color or texture. Swap out existing window treatments with curtains featuring botanical leaf prints or patterns. Layer throw pillows and blankets on the living room sofa. Avoid choosing all solid color pillows as the effect can be a bit flat; instead opt for complementary patterns and textures for a fresh, updated look.

Style your bookcase or end table with a vibrant emerald centerpiece bowl, or intersperse green vases with on-trend marble decor on the console table for a chic, of-the-moment look. For a bolder statement, consider a kelly-green statement wall, palm print wall decals, or a luxe velvet sofa in a rich olive hue.

Mix it up.

Beyond neutral palettes, green works beautifully in any number of color schemes. Many shades mix easily with black and white; use this combination for a classic, timeless aesthetic. Juxtapose a muted lime green with pops of red, orange, and yellow for a playful, energized space. Paler hues mix well with pastels or jewel tones offer a rich, vibrant look.

ABOUT THE AUTHOR: Laura Love Bardell  writes for  Crate and Barrel,  where  she creates design-savvy content on the latest home-furnishing trends. Laura enjoys giving tips for how to use furniture creatively for any space, big or small.

In Which States Did Properties Sell Most Quickly in August 2018?

In Which States Did Properties Sell Most Quickly in August 2018?

In a monthly survey of REALTORS®, respondents reported that properties were typically on the market for 29 days, just a day shorter time compared to one year ago (30 days), according to the  August 2018 REALTORS® Confidence Index Survey.[1] This indicates that in many states, the supply of homes for sale is still inadequate compared to the demand for homes. However, the difference in median days in the current month compared to the same month last year has started to narrow as homebuying demand has eased and the inventory of homes for sale has slightly increased. In January and February of this year, properties were selling about one week less compared to the length of time in the same period one year ago.

During the June–August 2018, properties typically sold within one month in 32 states and in the District of Columbia. Properties sold most quickly in the states of South Dakota (19 days), Washington (20 days), Colorado (21 days), Utah (21 days), Ohio (21 days), Idaho (22 days), Massachusetts (21 days), and Rhode Island (21 days).

 

Based on listing time on Realtor.com[2], properties sold more quickly in 385 out of 500 metro areas (77 percent)—still most of metro areas, but fewer than the number of metro areas that had year-on-year faster selling time in August 2017 (405 metros). Compared to the median days on market one year ago, properties sold more quickly in August 2018 even in the high-price areas of San Jose-Sunnyvale-Sta. Clara, San Francisco-Hayward, and San Diego-Carlsbad.

 

Scroll down the list of metro areas in the interactive table below or hover over the map to view the median number days properties were listed on Realtor.com in July 2018 and one year ago.

 


About the Realtors® Confidence Index Survey

 

The RCI Survey gathers information from REALTORS® about local market conditions based on their client interactions and the characteristics of their most recent sales for the month. The August 2018 survey was sent to 50,000 REALTORS® who were selected from NAR’s1.3 million members through simple random sampling and to 8,386 respondents in the previous three surveys who provided their email addresses. There were 4,639 respondents to the online survey which ran from September 1-11, 2018. NAR weights the responses by a factor that aligns the sample distribution of responses to the distribution of NAR membership. The REALTORS® Confidence Index is provided by NAR solely for use as a reference. Resale of any part of this data is prohibited without NAR’s prior written consent. For questions on this report or to purchase the RCI series, please email: Data@realtors.org.

 

[1] In generating the median days on market at the state level, NAR uses data for the last three surveys to have close to 30 observations. Small states such as AK, ND, SD, MT, VT, WY, WV, DE, and D.C., may have fewer than 30 observations.

[2] To access Realtor.com data, go to https://www.realtor.com/research/data/.

 

 

How to Understand Home Staging Pricing and Proposals: Do’s and Don’ts

How to Understand Home Staging Pricing and Proposals: Do’s and Don’ts

By Audra Slinkey, Home Staging Resource

A lot of real estate agents are looking for a good, reliable home stager that can magically transform their listings into the price point their seller is hoping to achieve.  The trouble and confusion sometimes comes when the real estate professional asks a few home stagers to “bid” or present a proposal on their vacant home.

BEFORE

 

AFTER

Photo credit: HSR Certified Helen Bartlett of Refined Interior Staging Solutions in Kansas City

The vacant staging proposal price can range anywhere from $1,500 to $8,000 for a smaller home, so do you just pick the best priced stager?

I think we can all agree that there is a BIG difference between Walmart and Restoration Hardware when it comes to furnishings, so choosing a home stager on price alone is not a good idea … here’s why.

BEFORE

AFTER

Photo Credit: HSR Certified Corrine Kaas of Harmonizing Homes

The professionally certified and trained home stager ranks the home based on “luxury level” and places the most ideal furnishings that kind of buyer would “expect” in the home.  In each area across the country, there is a certain buyer “expectation” that corresponds to price point and location.

DO make sure the furnishings enhance and correspond with the buyer expectation for that home.

BEFORE

AFTER

Photo credit: HSR Certified Donna Dazzo of Designed to Appeal in New York City

It’s not a matter of simply choosing a couch/chair/coffee table/rug to go into the space … it’s an art form. Professional stagers tend to base their price on the VALUE of the furnishings that go into that home. This is how they calculate their return on investment (ROI) and cover their costs, so that their business will be around in a year. This is also how they are able to stay on trend, turn over older furnishings, and present the home in a fresh, modern way every time.

BEFORE

AFTER  

Photo credit: HSR Certified Leia Ward of LTW Design in Connecticut

DON’T choose on price alone. 

Going with the lowest priced staging proposal could mean you are getting low priced furnishings, which ultimately could hurt the sale of the home. Here are a couple questions to ask a home stager rather than base your choice on price:

BEFORE

 

AFTER

Photo credit: HSR Certified Glenda Evers of Elite Interiors

DO ask them what kind of “look” can I expect to go in this home?

This is their chance to show and talk you through their expertise and show you their work. If they fumble or choose a style that does not fit the style or luxury level of the home, then I would question their credibility and training.

BEFORE

AFTER

Photo credit: HSR Certified Jeff Johnson of the Home Staging Pros in Florida

DO ask them if they buy wholesale?

The certified stager knows how to buy wholesale and can get AMAZING prices on luxury furnishings (thus more bang for your buck!) But some home stagers are not certified or trained in this kind of advanced shopping.

I train on this extensively, and here’s an example of the kind of pricing you can get by going to the market. I love the look of layered rugs and this zebra hide rug costs only $99 at the market … what?!

 

DON’T base your choice on experience alone. 

Staging will always be an art form and some of the most talented stagers I’ve seen who do not sacrifice on quality of materials are brand new to the industry. Their heart and soul is placed into that home and it shows.  Take a chance and try someone new.

BEFORE

AFTER

Photo credit: HSR Grad Leslie Anderson of Leslie Anderson Interiors in Virginia

A good rule of thumb is to consider spending a little less or around 1 percent the value of the home on vacant staging in order for the staging to match the luxury level of the home. The million-plus dollar home needs to be staged like a million bucks …. buyers expect this.

BEFORE

AFTER

Photo credit: HSR Grad Birgit Anich of BA Staging and Interiors in Connecticut

If the seller’s furnishings are over 10 years old then DO have them consider “moving out” beforehand, so that they can make an extra 5 to 10 percent the value of the home in the sale.  According to recent staging statistics, the seller who spends close to 1 percent on staging usually sees over a 10 percent return on investment. There does appear to be a connection between spending more and getting more.

BEFORE

 

AFTER

Photo credit: HSR Grad Corrine McKendrick of Pacific Home Design

Photo credit: HSR Grad Corrine McKendrick of Pacific Home Design

DO educate the seller on how they can get the best price for their home by staging.

I’m seeing a lot of smart agents educating their sellers on this critical cost, sometimes even paying it up front (for the cash poor seller) and then charging it in closing as part of their fee. We all know that markets go up and down, but the real estate agent who consistently puts the best marketed and priced product on the market for the sellers, is the one that will be around forever.

To find home stagers that do the kind of work featured above, visit Directory of Certified Home Stagers and Designers.

ABOUT THE AUTHOR: Audra Slinkey is president and founder of the Home Staging Resource, an advanced home staging and redesign certification training company.  Slinkey has been awarded the “Most Innovative Product of the Year Award” three times for her training and serves on the board of the Real Estate Staging Association. Slinkey is a published author and international speaker on staging, color, and design. She is proud and privileged to help create and mentor thousands of staging and design businesses across the globe.

Wallpaper for the Fifth Wall: A Modern Fix for Popcorn Ceilings?

Wallpaper for the Fifth Wall: A Modern Fix for Popcorn Ceilings?

By Melissa Dittmann Tracey, REALTOR(R) Magazine

Some home designers want to make a bigger statement with the ceiling, and they’re turning to wallpaper to do it. Wallpaper is once again growing in popularity for walls, and some designers are now experimenting with it to dress up the ceiling too.

Some designers are using it to transform a ceiling’s living space with wallpaper in minimalist designs or in metallic. It can add texture and certainly some drama to a space.

Some designers are using floor-to-ceiling wallpaper all in the same print. Others may have the walls all painted white or a light color and then use a wallpapered ceiling to jazz up the room. Faux tin on the ceilings can be a way to create a statement ceiling too.

Use with caution, however: A dark or bold of wallpaper could make a ceiling appear lower.

But for spaces that can pull it off, a wallpapered ceiling can look chic. Plus, if you have a listing with dreaded popcorn ceilings, this can be a way to give the ceiling a modern, yet less expensive update. Check out some of these examples from designers at Houzz.

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