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A Stunning $441 Billion Paid in Rent

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A Stunning $441 Billion Paid in Rent | Simplifying The Market A recently released study revealed that a whopping $441 Billion was spent on rents in the U.S. in 2014. This represents an increase of over $20 Billion from the year before. As shown on the chart below, rents have increased consistently over the last 20+ years. Median Rents Since 1988 | Simplifying The Market However, the recent increases have been astounding.

Why such a jump?

Many Millennials have postponed the purchase of their first home while waiting for the economy to recover. This has increased demand and dramatically lowered vacancy rates. In a recent article on the MarketWatch, economics reporter Ruth Mantell explains:
“Landlords have ramped up rents by the fastest pace in six years, with national vacancy rates the lowest in two decades.”
Zillow Chief Economist Stan Humphries let us know that increases will continue:
“Another increase in total rent paid similar to that seen this year isn't out of the question. In fact, it's probable."
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4 Reasons to Buy Before Spring

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4 Reasons to Buy Before Spring | Simplifying The Market The holiday season is behind us, time to focus on what exciting new experiences 2015 can bring! If you are planning on becoming a homeowner, or moving up to the home of your dreams in 2015, here are four great reasons to consider buying a home now, instead of waiting until spring.

1. Prices Will Continue to Rise

The Home Price Expectation Survey polls a distinguished panel of over 100 economists, investment strategists, and housing market analysts. Their most recent report projects appreciation in home values over the next five years to be between 15.1% (most pessimistic) and 32.8% (most optimistic). The bottom in home prices has come and gone. Home values will continue to appreciate for years. Waiting no longer makes sense. 

2. Mortgage Interest Rates Are Projected to Increase

Although Freddie Mac’s Primary Mortgage Market Survey shows that interest rates for a 30-year mortgage have softened recently, most experts predict that they will begin to rise over the next 12 months. The Mortgage Bankers Association, Fannie Mae, Freddie Mac & the National Association of Realtors are in unison projecting that rates will be up almost a full percentage point by the end of 2015. An increase in rates will impact YOUR monthly mortgage payment. Your housing expense will be more a year from now if a mortgage is necessary to purchase your next home.

3. Either Way You are Paying a Mortgage

As a paper from the Joint Center for Housing Studies at Harvard University explains:
“Households must consume housing whether they own or rent. Not even accounting for more favorable tax treatment of owning, homeowners pay debt service to pay down their own principal while households that rent pay down the principal of a landlord plus a rate of return. That’s yet another reason owning often does—as Americans intuit—end up making more financial sense than renting.”

4. It’s Time to Move On with Your Life

The ‘cost’ of a home is determined by two major components: the price of the home and the current mortgage rate. It appears that both are on the rise. But, what if they weren’t? Would you wait? Look at the actual reason you are buying and decide whether it is worth waiting. Whether you want to have a great place for your children to grow up, you want your family to be safer or you just want to have control over renovations, maybe it is time to buy. If the right thing for you and your family is to purchase a home this year, buying sooner rather than later could lead to substantial savings.
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Where will Mortgage Rates be Headed in 2015?

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Where will Mortgage Rates be Headed in 2015? | Simplifying The Market We finished 2014 with the 30 year fixed mortgage rate at 3.87% as per Freddie Mac. This is very close to the historic lows in the spring of 2013. However, the Mortgage Bankers Association projects mortgage rates to be about 5% by the end of 2015. The website Investopedia agrees and gives some perspective on the 5% rate:
“Barring another financial and housing market implosion, and if the economy continues to improve, expect interest rates to rise in the latter half of 2015. If they do jump to the 5% range it will be a modest hike when compared to historical averages. Rates will still be far below the approximately 8.5% 30-year fixed-rates mortgages have averaged since 1971 when Freddie Mac started tracking them. Rates averaged 6% in the years leading up to the recession.”
Here are the latest 2015 mortgage rate projections from Fannie Mae, Freddie Mac, the Mortgage Bankers’ Association and the National Association of Realtors: Interest Rates 2015 | Simplifying The Market
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#1 Reason to Sell Now

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#1 Reason to Sell Now | Simplifying The Market If you are one of the many homeowners out there who are debating putting their home on the market in 2015, don’t miss out on the opportunity that currently exists. There will be significantly less competition in the winter months than in the spring. According to the National Housing Survey released by Fannie Mae, 45% of homeowners “say mortgage rates will go up in the next 12 months.”

What Does This Mean?

Homeowners are unaware that interest rates are projected to go up by all four major reporting institutions – This is big news for move-up buyers reflecting the overall amount of housing inventory that will be on the market. If existing homeowners believe that mortgage interest rates are not going to increase, then they won’t be inclined to make a move by putting their home up for sale, meaning less competition for sellers who list now.

Don’t Wait!

The study also revealed that:
“Those who say it is a good time to buy a house rose to 68%” & “the share of respondents who think it would be difficult to get a home mortgage today decreased by 3 percentage points.”
As Doug Duncan, senior vice president and chief economist at Fannie Mae explains:
“We expect consumer attitudes toward housing to improve as the pickup in the overall economy lifts employment and income prospects.“

Bottom Line

There are buyers out there who are ready to make a move. If your goal this year is to move up to your dream home, what are you waiting for?
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