Category Archives: elk grove

The Truth About Housing Affordability

The Truth About Housing Affordability | MyKCM

From a purely economic perspective, this is one of the best times in American history to buy a home. Black Night Financial Services discusses this in their most recent Monthly Mortgage Monitor.

Here are two of the report’s revelations:

  1. The average U.S. home value increased by $13,500 from last year, but low interest rates have kept the monthly principal & interest payment needed to purchase a median-priced home almost equal to one year ago.
  2. Home affordability still remains favorable compared to long-term historic norms.

The report explains:

“Even though the value of the average home in the U.S. increased by about $13,500 over the last year, thanks to declining interest rates it actually costs almost exactly the same in principal and interest each month to purchase as it did this time last year.

Even taking into account the fact that affordability can vary – sometimes significantly – across the country based upon the different rates of home price appreciation we’re seeing, that’s a pretty incredible balancing act between interest rates and home prices at the national level…

Right now, it takes 20 percent of the median monthly income to cover monthly payments on the median-priced home, which is well below historical norms.”

However, the report warns that affordability will be dramatically impacted by an increase in mortgage rates.

“A half-point increase in interest rates would be equivalent to a $17,000 jump in the average home price, and bring that ratio to 21.5 percent. This increase is still below historical norms, but puts more pressure on homebuyers.”

Bottom Line

If you are ready and willing to purchase a home of your own, let’s get together to find out if you are able to. Now is a great time to jump in.

Home Sales Up Year-Over-Year

Home Sales Up Year-Over-Year | Keeping Current Matters

Some Highlights

  • This is the 48th consecutive month with year-over-year price gains.
  • Lawrence Yun, NAR’s Chief Economist says that, “The main issue continues to be a supply & affordability problem. Finding the right property at an affordable price is burdening many potential buyers.”
  • Inventory is still below historic norms at a 4.4 month supply.

How Teens Can Become Millionaires

As you approach adulthood and start to think about your future, are you really ready to be financially responsible for yourself? If you answered no, you’re not alone. The Jump$tart Coalition administered a basic financial literacy test to high school seniors, and less than half of the students correctly answered the questions. Another study found that over 75% of college students believe they are not ready to make smart financial decisions for themselves.

Pretty scary, isn’t it? If you think about it, most of your friends probably don’t know how to balance a checkbook. In fact, very few teens actually have a savings account or know what long-term investing means. Do you?

A 2009 Capital One survey discovered that 50% of teens wished they knew more about personal finances. Whether you have never stepped foot in a bank or you are actively saving and investing for your future, all it takes is a little effort and a lot of patience to become confident in your financial decisions.

A Millionaire’s Best Friend

One awesome thing that you can take advantage of is compound interest. It may sound like an intimidating term, but it really isn’t once you know what it means. Here’s a little secret: compound interest is a millionaire’s best friend. It’s really free money. Seriously. But don’t take our word for it. Just check out this story of Ben and Arthur to understand the power of compound interest.

Ben and Arthur were friends who grew up together. They both knew that they needed to start thinking about the future. At age 19, Ben decided to invest $2,000 every year for eight years. He picked investment funds that averaged a 12% interest rate. Then, at age 26, Ben stopped putting money into his investments. So he put a total of $16,000 into his investment funds.

Now Arthur didn’t start investing until age 27. Just like Ben, he put $2,000 into his investment funds every year until he turned 65. He got the same 12% interest rate as Ben, but he invested 23 more years than Ben did. So Arthur invested a total of $78,000 over 39 years.

When both Ben and Arthur turned 65, they decided to compare their investment accounts. Who do you think had more? Ben, with his total of $16,000 invested over eight years, or Arthur, who invested $78,000 over 39 years?

Believe it or not, Ben came out ahead … $700,000 ahead! Arthur had a total of $1,532,166, while Ben had a total of $2,288,996. How did he do it? Starting early is the key. He put in less money but started eight years earlier. That’s compound interest for you! It turns $16,000 into almost $2.3 million! Since Ben invested earlier, the interest kicked in sooner.

What You Can Do Now

The trick is to start as soon as possible. A survey by Charles Schwab found that 24% of teens believe that since they are young, saving money isn’t important. Looks like we just blew that theory out of the water! That same survey also discovered that only 22% of teens say they know how to invest money to make it grow. Why not change that stat and learn how to become a smart investor with your money? Talk to your parents or teachers about how to open up a long-term investment account so you can become a millionaire, too. And remember, waiting just means you make less money in the end. So get moving!

 

Thinking of Selling Your Home? Get Ready to Negotiate!

Thinking of Selling Your Home? Get Ready to Negotiate! | Keeping Current Matters

Now that the market has showed signs of recovery, some sellers may be tempted to try and sell their home on their own (FSBO) without using the services of a real estate professional.

Real estate agents are trained and experienced in negotiation. In most cases, the seller is not. The seller must realize their ability to negotiate will determine whether they can get the best deal for themselves and their family.

Here is a list of some of the people with whom the seller must be prepared to negotiate if they decide to FSBO:

  • The buyer who wants the best deal possible
  • The buyer’s agent who solely represents the best interest of the buyer
  • The buyer’s attorney (in some parts of the country)
  • The home inspection companies, which work for the buyer and will almost always find some problems with the house.
  • The termite company if there are challenges
  • The buyer’s lender if the structure of the mortgage requires the sellers’ participation
  • The appraiser if there is a question of value
  • The title company if there are challenges with certificates of occupancy (CO) or other permits
  • The town or municipality if you need to get the COs permits mentioned above
  • The buyer’s buyer in case there are challenges on the house your buyer is selling
  • Your bank in the case of a short sale

Bottom Line

The percentage of sellers who have hired a real estate agent to sell their home has increased steadily over the last 20 years. Meet with a professional in your local market to see the difference they can make in easing the process.

How to Stop Overspending at Target

You’re at Target. You only need shampoo and toothpaste.

But then you feel the gravitational pull of the Dollar Spot. Look at all those adorable, unnecessary knickknacks! You grab a few goodies for the kids and keep moving.

Then you see a gorgeous green scarf up ahead. You steer forward to take a peek. Just as you suspected, it looks perfect over your light gray pea coat. Plus, accessories are 15% off right now!

In the cart it goes.

Maybe you’ll just glance at the jewelry while you’re here . . . Any of this sounding familiar?

Name Your Dollars

Target knows their customers. And they know it’s hard to pass up a bargain—especially a cute bargain.

So how do you stop your impulse shopping and actually spend less at this mega chain?

As simple as it sounds, you must make a budget. That means give every dollar a name.

Here’s how it works: At the beginning of each month, sit down with your spouse and create a spending plan for everything from gasoline to eating out. If you want some new clothes, that’s okay, just work them into your budgeting categories ahead of time.

Once you’ve spent every dollar on paper,then you can start spending the real stuff (we like to use cash). Just don’t go over what you’ve allocated!

Related: Learn more about making a zero-based budget

Watch Out for Sales

Easier said than done, right? Target is, after all, brilliant when it comes to sales.

They offer racks upon racks of discounted clothing, reduced-price housewares at the end of every aisle, and a customizable Cartwheel app, which offers rotating deals on everything in the store you already love.

But how much is all this “saving” really costing you? Math time, people.

If you get 25% off a decorative pillow that you never intended to buy, you’re still paying 75% more than you would have! That’s called spending, not saving.

Avoid these shopping traps by making a list before you go. Then practice some self-discipline once you’re there. If an on-sale item isn’t on your list, don’t put it in your cart—Cartwheel or not.

Delay Gratification

If you’re having trouble sticking to your new budget and shopping list, use your psychic abilities. Look into the future and imagine how you’ll be using this “must-have” item a month from now.

Will your kids still be playing with that cheap paddle ball game? Will that owl statue actually fit on your fireplace? Or will those fake leather heels start rubbing blisters on your feet?

Nine times out of 10, the answer will be to put it back. But what if you still want it?Then you wait.

Work it into next month’s budget (and next month’s list) and revisit your feelings in 30 days. If you still love it, buy it without the guilt.

Related: 2 Words That Will Change the Way You Shop

Make It Work

A budget isn’t a bad thing. When done right, it actually gives you permission to buy what you want. So before you slip out to Target the next time, prepare yourself for the temptations ahead.

And if you happen to leave the store with more than you bargained for, take it back. That’s what receipts are for.

Need help making a budget? Check out Dave’s latest budgeting tools and forms.

(Courtesy of Dave Ramsey, “Top 6 Life–Changing Articles of 2015” http://www.daveramsey.com/blog/how-to-stop-overspending-target?ictid=CJFMH207)

How Long Does It Take To Save A Down Payment?

How Long Does It Take To Save A Down Payment? | Keeping Current Matters

In a recent study conducted by Builder.com, researchers determined that nationwide it would take “nearly eight years” for a first-time buyer to save enough for a down payment on their dream home.

Depending on where you live, median rents, incomes and home prices all vary. By determining the percentage a renter spends on housing in each state and the amount needed for a 10% down payment, they were able to establish how long (in years) it would take for an average resident to save.

According to the study, residents in South Dakota are able to save for a down payment the quickest in just under 3.5 years. Below is a map created using the data for each state:

Years Needed to Save 10% Down | Keeping Current Matters

What if you only needed to save 3%?

What if you were able to take advantage of one of the Freddie Mac or Fannie Mae 3% down programs? Suddenly saving for a down payment no longer takes 5 or 10 years, but becomes attainable in under two years in many states as shown in the map below.

Years Needed to Save 3% Down | Keeping Current Matters

Bottom Line

Whether you have just started to save for a down payment, or have been for years, you may be closer to your dream home than you think! Meet with a local real estate professional who can help you evaluate your ability to buy today.

Selling Your House? 5 Reasons You Shouldn’t For Sale By Owner

Selling Your House? 5 Reasons You Shouldn't For Sale By Owner | Keeping Current Matters

In today’s market, with homes selling quickly and prices rising, some homeowners might consider trying to sell their home on their own, known in the industry as a For Sale by Owner (FSBO). There are several reasons this might not be a good idea for the vast majority of sellers.

Here are five of those reasons:

1. There Are Too Many People to Negotiate With

Here is a list of some of the people with whom you must be prepared to negotiate if you decide to For Sale By Owner:

  • The buyer who wants the best deal possible
  • The buyer’s agent who solely represents the best interest of the buyer
  • The buyer’s attorney (in some parts of the country)
  • The home inspection companies, which work for the buyer and will almost always, find some problems with the house
  • The appraiser if there is a question of value

2. Exposure to Prospective Purchasers

Recent studies have shown that 89% of buyers search online for a home. That is in comparison to only 20% looking at print newspaper ads. Most real estate agents have an internet strategy to promote the sale of your home. Do you?

3. Results Come from the Internet

Where do buyers find the home they actually purchased?

  • 44% on the internet
  • 33% from a Real Estate Agent
  • 9% from a yard sign
  • 1% from newspaper

The days of selling your house by just putting up a sign and putting it in the paper are long gone. Having a strong internet strategy is crucial.

4. FSBOing has Become More and More Difficult

The paperwork involved in selling and buying a home has increased dramatically as industry disclosures and regulations have become mandatory. This is one of the reasons that the percentage of people FSBOing has dropped from 19% to 8% over the last 20+ years.

The 8% share represents the lowest recorded figure since NAR began collecting data in 1981.

5. You Net More Money when Using an Agent

Many homeowners believe that they will save the real estate commission by selling on their own. Realize that the main reason buyers look at FSBOs is because they also believe they can save the real estate agent’s commission. The seller and buyer can’t both save the commission.

Studies have shown that the typical house sold by the homeowner sells for $210,000 while the typical house sold by an agent sells for $249,000. This doesn’t mean that an agent can get $39,000 more for your home as studies have shown that people are more likely to FSBO in markets with lower price points. However, it does show that selling on your own might not make sense.

Bottom Line

Before you decide to take on the challenges of selling your house on your own, sit with a real estate professional in your marketplace and see what they have to offer.

Don’t Let Rising Rents Trap You!

Don't Let Rising Rents Trap You! | Keeping Current Matters

There are many benefits to homeownership. One of the top ones is being able to protect yourself from rising rents and lock in your housing cost for the life of your mortgage.

Don’t Become Trapped

Jonathan Smoke, Chief Economist at realtor.com recently reported on what he calls a “Rental Affordability Crisis”. He warns that,

“Low rental vacancies and a lack of new rental construction are pushing up rents, and we expect that they’ll outpace home price appreciation in the year ahead.”

The Joint Center for Housing Studies at Harvard University recently released their 2015 Report on Rental Housing, in which they reported that 49% of rental households are cost-burdened, meaning they spend more than 30% of their income on housing. These households struggle to save for a rainy day and pay other bills, such as food and healthcare.

It’s Cheaper to Buy Than Rent

In Smoke’s article, he went on to say,

“Housing is central to the health and well-being of our country and our local communities. In addition, this (rental affordability) crisis threatens the future value of owned housing, as the burdensome level of rents will trap more aspiring owners into a vicious financial cycle in which they cannot save and build a solid credit record to eventually buy a home.”

 “While more than 85% of markets have burdensome rents today, it’s perplexing that in more than 75% of the counties across the country, it is actually cheaper to buy than rent a home. So why aren’t those unhappy renters choosing to buy?”

Know Your Options

Perhaps, you have already saved enough to buy your first home. HousingWire reportedthat analysts at Nomura believe:

“It’s not that Millennials and other potential homebuyers aren’t qualified in terms of their credit scores or in how much they have saved for their down payment.

It’s that they think they’re not qualified or they think that they don’t have a big enough down payment.” (emphasis added)

Many first-time homebuyers who believe that they need a large down payment may be holding themselves back from their dream home. As we reported last week, in many areas of the country, a first-time home buyer can save for a 3% down payment in less than two years. You may have already saved enough!

Bottom Line

Don’t get caught in the trap so many renters are currently in. If you are ready and willing to buy a home, find out if you are able. Have a professional help you determine if you are eligible to get a mortgage.

Elk Grove Accepts the Cool California Challenge

Joins City-to-City Competition to Reduce Energy Consumption
Joins City-to-City Competition to Reduce Energy Consumption

Elk Grove, CA – Help our hometown earn new bragging rights and save energy by registering to participate in the CoolCalifornia Challenge.

Elk Grove could be California’s coolest city this year. It is one of 22 cities participating in the 2015-16 CoolCalifornia Challenge, a city-to-city competition encouraging residents and communities to work together to achieve California’s energy reduction and climate change goals. Other participating cities includeClaremont, San Mateo, Buellton, Indio, Burlingame, Long Beach, San Carlos, Lynwood, Martinez, South Pasadena, Redwood City, Huntington Beach, San Pablo, Benicia, Corte Madera, Mill Valley, Sausalito, El Cerrito, Fairfax, Larkspur, and Richmond. The CoolCalifornia Challenge runs through March 30, 2016.

The Challenge, organized by Energy Upgrade California, engages households in participating cities throughout the state to reduce their energy and water use at home as well as reduce their transportation emissions.

Help Elk Grove earn the title of “Coolest California City” and a portion of the $150,000 in prize money to support local sustainability efforts.  You can join the Challenge by following these 3 simple steps:

  1. Register at www.CAChallenge.org; and
  2. Create a MyEnergyUpgrade plan; and
  3. Log your energy use each month during the Challenge (electricity, natural gas, vehicle gasoline) and share energy, transportation and water conservation efforts and activities to gain points for our city.

The city with the highest number of total points by March 30, 2016 will be crowned the winner. Participants can earn points, tracked through online software, if their home or vehicle energy use is below the baseline average in their city. Extra points are earned by participants that re-set their “personal best” for home energy and vehicle fuel consumption from a previous month. And bonus points are earned by signing up for the Challenge, filling out a MyEnergyUpgrade plan, uploading a photo, inviting friends to join the Challenge, sharing energy and water saving tips on social media pages, and committing to do an energy and water saving action and writing a review of that action.

Register today at www.CAChallenge.org. For more information on the City’s participation in the CoolCalifornia Challenge contact Mona Schmidt at (916) 478-3633 or mschmidt@elkgrovecity.org.

Annual Street Repairs Scheduled to Start in Elk Grove Neighborhoods

Public Information Office, Elk Grove Police Department

**New slurry seal and asphalt overlays will restore neighborhood streets to like new condition**

Preventing potholes and keeping local streets in good condition is the goal of the City’s annual Street Repair Project. The City’s Public Works Department has announced that pavement maintenance work scheduled in several neighborhoods throughout Elk Grove will begin next week and extend through November.

Annual pavement maintenance projects extend the life of the pavement and avoid more costly repair or replacement of streets. The pavement maintenance being done this year includes asphalt slurry seal and asphalt overlay. This work includes replacing small areas of damaged pavement, sealing cracks, placement of the slurry seal or asphalt overlay treatment, and replacing striping as needed. The work will restore the surface quality to like new condition.

This work requires temporary full street closures. During the closures, residents will need to park their vehicles on adjacent streets until the roads are reopened to traffic. Barricades with “No Parking” signs will be placed on affected streets 48 hours in advance of the street closures. Residents affected by the work will also receive door hanger notices not less than 3 days in advance of the scheduled operations. A complete listing and map of the streets scheduled for repairs can be found on the City’s web site at www.elkgrovecity.org/street-repair.

Preparation activities such as crack sealing and replacement of damaged pavement will begin as early as Monday, September 28th. Slurry seal operations are expected to begin on October 22nd and continue through November 5th. Asphalt overlay and final striping will take place in late October and early November.

The City appreciates the public’s patience during these pavement maintenance activities. For more information regarding the project, please visit the web page or call the City’s Public Works hotline (916) 478-2256.