Will Forbearance Plans Lead to a Tsunami of Foreclosures?

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Carolina Living Real Estate Tips

Will Forbearance Plans Lead to a Tsunami of Foreclosures? | MyKCM

At the onset of the economic disruptions caused by the COVID pandemic, the government quickly put into place forbearance plans to allow homeowners to remain in their homes without making their monthly mortgage payments. Today, almost three million households are actively in a forbearance plan. Though 29.4% of those in forbearance have continued to stay current on their payments, many have not.

Yanling Mayer, Principal Economist at CoreLogic, recently revealed:

“A distributional analysis of forborne loans’ payment status reveals that more than one third (39.1%) of all forborne loans are now 150+ days behind payment, while as many as 1-in-4 (25.5%) are 180+ days past due.”

These homeowners have been given permission to not make their payments, but the question now is: how many of them will be able to catch up after their forbearance program ends? There’s speculation that a forthcoming wave of foreclosures could be the result, and that could lead to another crash in home values like we saw a decade ago.

However, today’s situation is different than the 2006-2008 housing crisis as many homeowners have tremendous amounts of equity in their homes.

What are the experts saying?

Over the last 30 days, several industry experts have weighed in on this subject.

Michael Sklarz, President at Collateral Analytics:

“We may very well see a meaningful increase in the number of homes listed for sale as these borrowers choose to sell at what is arguably an intermediate top in the market and downsize to more affordable homes rather than face foreclosure.”

Odeta Kushi, Deputy Chief Economist at First American:

“The foreclosure process is based on two steps. First, the homeowner suffers an adverse economic shock…leading to the homeowner becoming delinquent on their mortgage. However, delinquency by itself is not enough to send a mortgage into foreclosure. With enough equity, a homeowner has the option of selling their home, or tapping into their equity through a refinance, to help weather the economic shock. It is a lack of sufficient equity, the second component of the dual trigger, that causes a serious delinquency to become a foreclosure.”

Don Layton, Senior Industry Fellow at the Joint Center for Housing Studies of Harvard University:

“With a greater cushion of equity, troubled homeowners have dramatically improved options: a greater ability to access funding (e.g. home equity lines) to keep paying monthly expenses until family finances might recover, improved ability to qualify for and support a loan modification, and, if push comes to shove, the ability to sell the home and monetize their increased net worth while reducing monthly payment obligations. So, what should lenders and servicers expect: a large number of foreclosures or only a modest increase? I believe the latter.”

With today’s positive equity situation, many homeowners will be able to use a loan modification or refinance to stay in their homes. If not, some will go to foreclosure, but most will be able to sell and walk away with their equity.

Won’t the additional homes on the market impact prices?

Distressed properties (foreclosures and short sales) sell at a significant discount. If homeowners sell instead of going into foreclosure, the impact on the housing market will be much less severe.

We must also realize there is currently an unprecedented lack of inventory on the market. Just last week, realtor.com explained:

“Nationally, the number of homes for sale was down 39.6%, amounting to 449,000 fewer homes for sale than last December.”

It’s important to remember that there weren’t enough homes for sale even then, and inventory has only continued to decline.

The market has the potential to absorb half a million homes this year without it causing home values to depreciate.

Bottom Line

The pandemic has led to both personal and economic hardships for many American households. The overall residential real estate market, however, has weathered the storm and will continue to do so in 2021.

What Are Experts Saying about Home Prices?

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More From Your Charlotte and Lake Norman Preferred Agents!

What Are Experts Saying about Home Prices? | MyKCM

Last week, a very well-respected real estate analytics firm surprised many with their home price projection for the next twelve months. CoreLogic, in their latest Home Price Index said:

“The economic downturn that started in March 2020 is predicted to cause a 6.6% drop in the HPI by May 2021, which would be the first decrease in annual home prices in over 9 years.”

The forecast was surprising as it was strikingly different than any other projection by major analysts. Six of the other eight forecasts call for appreciation, and the two who project depreciation indicate it will be one percent or less.

What Are Experts Saying about Home Prices? | MyKCM

Here is a graph showing all of the projections:There’s a simple formula to determine the future price of any item: calculate the supply of that item in ratio to the demand for that item. In housing right now, demand far exceeds supply. Last week mortgage applications to buy a home were 33% higher than they were at the same time last year. The available inventory of homes for sale is 31% lower than it was last year. Normally, these numbers should call for homes to continue to appreciate.

Bottom Line

Because of the uncertainty with the pandemic, any economic prediction is extremely difficult. However, looking at the limited supply of homes for sale and the tremendous demand for housing, it is difficult to disagree with the majority of analysts who are calling for price appreciation.

How Will You Cover the Cost of Home Repairs?

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Carolina Living real Estate

If you don’t have thousands saved to replace your roof, there’s a good chance you should start paying attention to potential home repairs and how much they cost. According to the Simple Dollar, something as seemingly simple as pulling off old shingles and replacing them with new can easily exceed that amount. And that’s only one project. Keep reading for insight on how to get yourself in a financial position to handle common home repairs. And keep in mind that it’s not a question of if these issues will arise, but when.

When to plan home repairs

You can’t always plan ahead for these things, but you can incorporate some important work into planned projects. If you have a home renovation scheduled, for example, you have an opportunity to make your home safer and bring it up to current code requirements. While it will add to your overall renovation costs, having things like the plumbing and electrical updated while the walls are already open will save you in the long-run. As an added benefit, upgrades like better insulation and more efficient plumbing will lower your energy consumption, saving you even more.

If a remodel is in the works, you could find that significant repairs will outgrow affordability. In this case, buying a new home could be a better choice. Not only would you get to enjoy your new home, but you may have less maintenance to worry about.

How Much Money Do I Need?

The amount of money you should put aside each year for home upkeep, including for emergency repairs, is different depending on the age of your home, where you live, and how much work you can do yourself. Most homeowners can expect to spend just under $3,000 each year on home improvements. About half of that will go toward replacement items or to fix ones that are broken. Keep in mind that some years you may spend much less, while others you will feel as though you’re writing a check every week. Most home repair and renovation experts recommend that homeowners sock away about 1 percent of their home’s value each year to prepare for future problems.

When Saving Isn’t an Option

Sometimes, things pop up out of the blue. Even if you have been putting aside money, major projects, such as having to have the electrical system replaced or digging up your mainline plumbing, can cost $10,000 or more. Robinson’s Plumbing Service explains that plumbers can charge upward of $450 per linear foot to excavate sewer pipes. And if you think your home insurance is going to cover a sewage backup, you are probably wrong.

In these cases, it may be necessary to look to your home’s equity to help you cover these repairs. If you have enough home equity, you may qualify for a refinance loan such as a PennyMac refi that will provide cash for remodeling jobs even if your credit score isn’t flawless. This will give you the injection of cash you need and plenty of time to pay it off.

The Hidden Costs

During an emergency like the sewer backup mentioned above, you likely aren’t thinking clearly. You may be in a panic and willing to hire the first contractor that shows up with a wrench in hand. Unfortunately, doing so may wind up costing you more than you’re willing to finance. Keep in mind that, even as water is filling up your lawn (or worse), that is your responsibility to get a firm quote in writing from any contractor who would like to do the work. Failure to do so may result in even more costs down the road. Keep in mind, too, that most reputable contractors won’t ask for payment before doing the work. As inconvenient as it may be, if your contractor insists on a check before the work begins, keep looking.

DIY Repairs to Avoid

As a homeowner, you likely want to save where you can. And that’s great, especially if you know your way around the toolbox. Simple repairs aside, it’s a good idea to let professionals handle major systems, such as your HVAC or plumbing. These areas, along with the electrical system, require years of expertise and updated knowledge of local building codes to repair correctly. There’s no problem with replacing broken stair treads or a busted deck board, but anything that your family relies on for their health and safety should be left to the pros.


Home repairs are an inevitable part of homeownership. It is no secret that things wear out and need eventual replacement. To weather these occurrences, regularly put money aside for home repairs. The sooner you begin putting money aside, the sooner you can tackle a problem and keep a bad situation from getting worse. And if all else fails, it may be better to move on. You may find now is the perfect time to build the home of your dreams.

Image via Pixabay

New Index Reveals Impact of COVID-19 on Real Estate

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More From Your Charlotte Area Realtors

New Index Reveals Impact of COVID-19 on Real Estate | MyKCM

Earlier this month, realtor.com announced the release of their initial Housing Recovery Index, a weekly guide showing how the pandemic has impacted the residential real estate market. The index leverages a weighted average of four key components of the housing industry, tracking each of the following:

  1. Housing Demand – Growth in online search activity
  2. Home Price – Growth in asking prices
  3. Housing Supply – Growth of new listings
  4. Pace of Sales – Difference in time-on-market

The index then compares the current status “to the last week of January 2020 market trend, as a baseline for pre-COVID market growth. The overall index is set to 100 in this baseline period. The higher a market’s index value, the higher its recovery and vice versa.”

New Index Reveals Impact of COVID-19 on Real Estate | MyKCM

The graph below charts the index by showing how the real estate market started out strong in early 2020, and then dropped dramatically at the beginning of March when the pandemic paused the economy. It also shows the strength of the recovery since the beginning of May.It’s clear to see that the housing market is showing promising signs of recovery from the deep economic cuts we experienced earlier this spring. As noted by Dean Mon, Chairman of the National Association of Home Builders (NAHB):

“As the nation reopens, housing is well-positioned to lead the economy forward.”

The data today indicates the housing market is already on the way up.

Bottom Line

Staying connected to the housing market’s performance over the coming months will be essential, as we continue to evaluate exactly how the housing market is doing in this uncharted time ahead.

Charlotte: Are You Ready for the Summer Housing Market?

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Are You Ready for the Summer Housing Market? | MyKCM

As the health crisis started making its way throughout our country earlier this spring, sellers have been cautious about putting their homes on the market. This hesitation stemmed primarily from fear of the spread of the coronavirus, and understandably so. This abundant caution has greatly impacted the number of homes for sale and slowed the pace of a typically busy spring real estate season. Mark Fleming, Chief Economist at First American notes:

“As more homeowners are reluctant to list their homes for sale amid the pandemic, the supply of homes available to potential home buyers continues to dwindle.”

With many states beginning a phased approach to reopening, virtual best practices and health and safety guidelines for the industry are in place to increase the comfort level of buyers and sellers. What we see today, though, is that sellers are still making a very calculated return to the market. In their latest Weekly Housing Trends Report, realtor.com indicates:

“New listings: On the slow path to recovery. Nationwide the size of declines held mostly steady this week, dropping 23 percent over last year, a slight increase over last week but still an improvement over the 30 percent declines in the first half of May.”

Although we’re starting to inch our way toward more homes for sale throughout the country, the number of homes on the market is still well below the demand from buyers. In the same report, Javier Vivas, Director of Economic Research for realtor.com shares:

“Sellers have yet to come back in full force, limiting the availability of homes for sale. Total active listings are declining from a year ago at a faster rate than observed in previous weeks, and this trend could worsen as buyers regain confidence and come back to the market before sellers.”

Lawrence Yun, Chief Economist at the National Association of Realtors (NAR) seems to agree:

“In the coming months, buying activity will rise as states reopen and more consumers feel comfortable about homebuying in the midst of the social distancing measures.”

What we can see today is that homebuyers are more confident than the sellers, and they’re ready to make up for lost time from the traditional spring market. Summer is gearing up to be the 2020 buying season, so including your house in the mix may be your best opportunity to sell yet. Interest in your house may be higher than you think with so few sellers on the market today. As Vivas says:

“More properties will have to enter the market in June to bring the number of options for buyers back to normal levels for this time of the year, nationwide and in all large markets.”

Bottom Line

If you’re ready to sell your house this summer, let’s connect today. Buyers are interested and they may be looking for a house just like yours.

Questions to Ask When Considering Selling You Home

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These questions will help you decide whether you’re ready for a home that’s larger or in a more desirable location. If you answer yes to most of the questions, you may be ready to move.

Have you built substantial equity in your current home?
Check your annual mortgage statement or call your lender to find out how much you’ve paid down. Usually you don’t build up much equity in the first few years of your mortgage, as monthly payments are mostly interest. But if you’ve owned your home for five or more years, you may have significant, unrealized gains.

Has your income or financial situation changed?
If you’re making more money, you may be able to afford higher mortgage payments and cover the costs of moving. If your income has decreased, you may want to consider downsizing.

Have you outgrown your neighborhood?
The neighborhood you pick for your first home might not be the same one in which you want to settle down for good. You may have realized that you’d like to be closer to your job or live in a better school district.

Are there reasons why you can’t remodel or add on?
Sometimes you can create a bigger home by adding a new room or building up. But if your property isn’t large enough, your municipality doesn’t allow it, or you’re simply not interested in remodeling, then moving to a bigger home may be your best option.

Are you comfortable moving in the current housing market?
If your market is hot, your home may sell quickly and for top dollar, but the home you buy will also be more expensive. If your market is slow, finding a buyer may take longer, but you’ll have more selection and better pricing as you seek your new home. Ask your real estate professional what they see happening locally.

Are interest rates attractive?
Low rates help you buy “more” home, and also make it easier to find a buyer for your current place.

Is the effort and cost of maintaining your current home becoming difficult to manage?

Roby Robertson, A REALTOR ® can help you decide whether a smaller house, condo, or rental would be appropriate.

Choosing The Right Homeowners Insurance Deductible

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The information included below is provided by CarefulCents.com

The world of insurance is often a confusing one. There are a lot of things to consider, and there is typically a lot of jargon involved that does little to clear things up. However, one thing we can all agree on is that insurance is necessary, and also that it can be expensive.

Beyond that, though, there are still a lot of questions.

One of the most common questions we find people ask about insurance, especially homeowners insurance, deals with the deductible. What is it? How does it work? How does it affect your premium? And, perhaps most importantly, when you’re choosing a policy, which deductible should you go for?

Answering all these questions will help you not only make a smart decision when it comes time to selecting a deductible, but it will also help you better understand homeowners insurance in general, which will make you a smarter shopper who is more capable of finding the best deal.

Read the rest of the article to learn everything you need to know about choosing your deductible.

As Always, contact Carolina Living Real Estate for comprehensive real estate advice and assistance. We are professional, experienced, patient and knowledgeable.

Home Improvement: Convert Your Garage Into an Awesome Home Office

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If you are in need of a home office space, consider a garage conversion. A typical garage is a great size for a nice home office where you can have some peace to get some work done. So, follow these tips to convert your garage to an incredible home office.

What If You Don’t Have a Garage?

If you don’t have a garage (or your garage is just too full), but you have space on your property for a small structure, you should consider erecting a building. When building a structure to accommodate your dream office, you can choose from a variety of different materials, the most popular choices being wood and steel. Wood is definitely beautiful, and it’s also an energy-efficient natural insulator. Wood also absorbs sound rather than amplifying it, so it can minimize echo in office spaces. On the other hand, rain and snow can cause wood to warp and rot. Also, termites, carpenter ants, and other insects can damage wood frames.

Steel is extremely strong and can withstand earthquakes, strong winds, and torrential rains. When wet, it doesn’t warp, expand, or attract fungus. Steel is also not flammable, and it’s resistant to insects. Steel buildings are typically faster and easier to erect than wood structures because the steel parts are pre-cut and ready to assemble.

Whether you are using your existing garage space or erecting a new building, these tips will help you create a beautiful home office space.

Pick Your Flooring

Your garage probably has a concrete floor, and you can just clean it, polish it, and be done with it — or you can go a completely different route. Engineered wood, vinyl flooring, carpeting, and ceramic tile are all suitable options for your home office. If you are upgrading to one of these choices, you may need to install a subfloor before laying down your new flooring.

Insulate and Drywall

If the walls of your space aren’t finished, you’ll want to add insulation and drywall. This is a great DIY project that most anyone who is handy can do. You’ll need to fill in any cracks and gaps with expanding foam, add the fiberglass insulation, and then screw and glue the drywall. Dumpsters.com offers detailed instructions on how to insulate your garage.

Add Electrical Outlets and Lighting

Your garage may not be equipped with enough outlets for your home office. If you need more outlets, call in the pros; electricity is not something you want to mess around with if you don’t really know what you are doing. An electrician can add additional overhead lighting to the space as well as a circuit to your breaker panel if necessary.

Put in Heating and Cooling

The pricey option would be to extend your existing HVAC system to an attached garage space or add a new separate system to your detached building. The more reasonable choice would simply be to use a space heater in the winter and portable air conditioner in the summer. Fortunately, you can find affordable options at your home improvement store.

Get WiFi

Your office definitely needs reliable internet service. Your home WiFi might work well if you are converting an attached garage, but you may need to move the router closer to the garage. However, if your home WiFi is too weak to reach your new office space, you can buy a stronger router, a WiFi network extender, or a powerline network adapter to get a better signal.

Converting a garage to an office space doesn’t have to be time-consuming or expensive. And now for the fun part: decorating. Check local furniture stores, estate sales, and online shops to find furniture that fits your needs and your design style. From modern stand-up desks to classic, stately pieces, you are sure to find something you love. Add a cozy couch, fun wall décor, and other accent furniture to make the space your own.

Photo via Unsplash

5 Tips for Starting Your Charlotte Area Home Search

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Let Carolina Living Real Estate Help You With Your Next Real Estate Decision

5 Tips for Starting Your Home Search | MyKCM

In today’s market, low inventory dominates the conversation in many areas of the country. It can often be frustrating to be a first-time homebuyer if you aren’t prepared. Here are five tips from realtor.com’s article, “How to Find Your Dream Home—Without Losing Your Mind.”

1. Get Pre-Approved for a Mortgage Before You Start Your Search

One way to show you’re serious about buying your dream home is to get pre-qualified or pre-approved for a mortgage. Even if you’re in a market that is not as competitive, understanding your budget will give you the confidence of knowing whether or not your dream home is within your reach. This will help you avoid the disappointment of falling in love with a home well outside your price range.

2. Know the Difference Between Your ‘Must-Haves’ and ‘Would-Like-To-Haves’

Do you really need that farmhouse sink in the kitchen to be happy with your home choice? Would a two-car garage be a convenience or a necessity? Before you start your search, list all the features of a home you would like. Qualify them as ‘must-haves’, ‘should-haves’, or ‘absolute-wish list’ items. This will help you stay focused on what’s most important.

3. Research and Choose a Neighborhood Where You Want to Live

Every neighborhood has unique charm. Before you commit to a home based solely on the house itself, take a test-drive of the area. Make sure it meets your needs for “amenities, commute, school district, etc. and then spend a weekend exploring before you commit.”

4. Pick a House Style You Love and Stick to It

Evaluate your family’s needs and settle on a style of home that will best serve those needs. Just because you’ve narrowed your search to a zip code doesn’t mean you need to tour every listing in that vicinity. An example from the article says, “if you have several younger kids and don’t want your bedroom on a different level, steer clear of Cape Cod–style homes, which typically feature two or more bedrooms on the upper level and the master on the main.”

5. Document Your Home Visits

Once you start touring homes, the features of each individual home will start to blur together. The article suggests keeping your camera handy and making notes on the listing sheet to document what you love and don’t love about each property you visit.

Bottom Line

In a high-paced, competitive environment, any advantage you can give yourself will help you on your path to buying your dream home.

How To Get Comfortable In A New City

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Moving Homes: How to Get Comfortable in a New City

Moving is sometimes a necessary part of life. While it can be exciting and adventurous, it can also be stressful to develop a new routine in an unfamiliar city. To help avoid the added anxiety during this process, make sure you go into it prepared.

Visit Before the Move

The last thing you want is to move house, need something badly that was forgotten, and not know where to buy a replacement. With that in mind, Trulia suggests trying to visit your new place before you move to get a feel for its ins and outs, as well as make note of local resources. For added support, look to build a network there so you can hit the ground running. If possible, ask friends, family, and even coworkers if they know anyone who would like to meet up with you. Should they have a few contacts you can use, you can chat with them before you deal with the chaos of moving, and you’ll have someone to call if you need advice.

Prep Your Home for Arrival

Of course, the best time to do any work on your property is while it’s empty. So, if your house needs remodeling, attempt to get everything done before it’s filled with your possessions. Then, it’s a matter of prioritizing behind-the-scenes work over the aesthetic tasks of new floors, counters, or a new coat of paint. If you need the home rewired, for example, it could be an extensive project since it involves upgrading the main service panel, installing circuits for each appliance, and adding in electrical outlets.

Get Into the Neighborhood

Getting used to your new area is especially important if you have children and pets. To help them adjust to a fresh routine and atmosphere, try taking them out for walks to learn the neighborhood. If you have kids, they might be interested in meeting other children, so keep an eye out for any community classes, groups, or the local Boy Scouts and Girl Scouts. Similarly, your pets will need plenty of attention and distraction, and dogs might benefit from regular visits to the park. Still, indoor pets may simply need you close to feel reassured, so try to take a few days off of work to get them used to their surroundings.

Decorate for Comfort

One way to get comfortable quickly in an unfamiliar environment is to decorate. To get started, you could focus on giving each room a consistent color scheme. As you decorate and add personal touches to make your property feel like home, try to keep practicality in mind. If you need extra storage, add aesthetic baskets here and there, or place hooks on doors. For added comfort, you could bring out art or decorative pieces that remind you of home, and place them where they can be seen. Even if you end up moving them later, viewing them will give you a reassuring warmth as you go about your day.

Minimize Clutter Before It Starts

Having a chaotic environment breeds stress, and unpacking is going to be just that—chaotic. So, to help minimize any issues developing, take some time to plan out where things will go, particularly items that create clutter. By knowing where items belong, you prevent pile-ups from happening. For instance, you might want to invest in pieces to help you store items, such as a file for loose papers or extra shelving in the kitchen to sort plates and plasticware. It may seem like additional effort, but it can be worth it to ensure your home is a pleasant environment.

Turn to These Additional Resources

The following resources are either required by law or can help you to further familiarize yourself with your new city:

  • Updated your auto insurance. Your zip code can determine the cost of your premiums. So if you live in a highly-populated area, know the rates can be higher. You can reduce the cost of auto insurance by bundling your policies and shopping around.
  • Look for a new dentist in your area.
  • Find a parent-approved daycare center for your kids.
  • Make sure you find a good veterinarian.
  • Stick to your fitness goals by applying for a local gym membership.

Just because you changed houses doesn’t mean you can’t feel at home. With the right preparation, as well as staying active in your new community, you can ease your transition. It will take work, but all worthwhile things do.

Image courtesy of Pexels