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Homes More Affordable Today than 1985-2000

Homes More Affordable Today than 1985-2000 | Simplifying The Market

Rising home prices have many concerned that the average family will no longer be able to afford the most precious piece of the American Dream – their own home.

However, it is not just the price of a home that determines its affordability. The monthly cost of a home is determined by the price and the interest rate on the mortgage used to purchase it.

Today, mortgage interest rates stand at about 4.5%. The average annual mortgage interest rate from 1985 to 2000 was almost double that number, at 8.92%. When comparing affordability of homeownership over the decades, we must also realize that incomes have increased.

This is why most indexes use the percentage of median income required to make monthly mortgage payments on a typical home as the point of comparison.

Zillow recently released a report comparing home affordability over the decades using this formula. The report revealed that, though homes are less affordable this year than last year, they are more affordable today (17.1%) than they were between 1985-2000 (21%). Additionally, homes are more affordable now than at the peak of the housing bubble in 2006 (25.4%). Here is a chart of these findings:

Homes More Affordable Today than 1985-2000 | Simplifying The Market

What will happen when mortgage interest rates rise?

Most experts think that the mortgage interest rate will increase to about 5% by year’s end. How will that impact affordability? Zillow also covered this in their report:

Homes More Affordable Today than 1985-2000 | Simplifying The Market

Rates would need to approach 6% before homes became less affordable than they had been historically.

Bottom Line

Though homes are less affordable today than they were last year, they are still a great purchase while interest rates are below the 6% mark.

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VA Loans: Making a Home for the Brave Possible

VA Loans: Making a Home for the Brave Possible | Simplifying The Market

Since the creation of the Veterans Affairs (VA) Home Loans Program, over 22 million veterans have achieved the American Dream of homeownership. Many veterans do not know the details of the program and therefore do not take advantage of the benefits available to them.

If you are a veteran or you know someone who is, here is a breakdown of the VA Home Loan benefits that can be used to achieve the American Dream!

Top 5 Benefits of a VA Home Loan

  1. The greatest benefit of a VA Loan is that borrowers can buy a home with a 0% down payment. In 2016, 82% of all VA Loans put down 0%!
  2. Primary Mortgage Insurance (PMI) is not required! (Most other loans with down payments under 20% require PMI, which adds additional costs to your monthly housing expense!)
  3. Credit Score requirements are also lower for VA Home Loans. The average FICO® score of a borrower for an approved VA Loan is 620, compared to 676 (FHA) or 753 (Conventional).
  4. There is also a limitation on a veteran buyer’s closing costs. Sellers can pay all of a buyer’s loan-related closing costs and up to 4% in concessions in some cases.
  5. Even with interest rates rising, VA Loans continue to have the lowest average interest rates of all loan types.

Who Qualifies for a VA Home Loan?

One of the most important first steps when applying for a VA Home Loan is obtaining your Certificate of Eligibility (COE). “The COE verifies to the lender that you are eligible for a VA-backed loan.”

You Can Apply for a VA Loan if You:

  • Serve 90 consecutive days during wartime
  • Serve 181 consecutive days during peacetime
  • Have more than 6 years in the National Guard or Reserves
  • Are the spouse of a service member who has died in the line of duty or as the result of a service-related disability

You Can Use a VA Loan To:

  • Purchase a Home
  • Purchase a Condo
  • Build a Home
  • Refinance an existing home loan
  • Make improvements to a home by installing energy-related features or making energy-efficient improvements

Bottom Line

For more information or to find out if you or a loved one would qualify to use the VA Home Loan Benefit, let’s get together! Thank you for your service!

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Why Should You Use A Professional to Sell Your Home?

Why Should You Use A Professional to Sell Your Home? | Simplifying The Market

When homeowners decide to sell their houses, they obviously want to get the best possible price for their home with the least amount of hassles along the way. However, for the vast majority of sellers, the most important result is actually getting their homes sold.

In order to accomplish all three goals, a seller should realize the importance of using a real estate professional. We realize that technology has changed a buyer’s behavior during the home buying process. According to the National Association of Realtors’ 2018 Home Buyer & Seller Generational Trends Report, the first step that “42% of recent buyers took in the home buying process was to look online at properties for sale.”

However, the report also revealed that 94% of buyers who used the internet when searching for homes ultimately purchased their homes through either a real estate agent/broker or from a builder or builder’s agent. Only 2% of buyers purchased their homes directly from a seller whom they didn’t know.

Buyers search for a home online but then depend on an agent to find the home they will buy (52%), to negotiate the terms of the sale (47%) & price (38%), or to help understand the process (60%).

The plethora of information now available has resulted in an increase in the percentage of buyers who reach out to real estate professionals to “connect the dots.” This is obvious, as the percentage of overall buyers who have used agents to buy their homes has steadily increased from 69% in 2001.

Bottom Line

If you are thinking of selling your home, don’t underestimate the role a real estate professional can play in the process.

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Buying This Summer? Be Prepared for Bidding Wars

Buying This Summer? Be Prepared for Bidding Wars | Simplifying The Market

Summer is traditionally a busy season for real estate. Buyers come out in force and homeowners list their houses for sale hoping to capitalize on those buyers who are looking to purchase before the new school year. This year will be no different!

Buyers have already been out in force looking for their dream homes and more are on their way. The challenge is that the inventory of homes for sale has not kept up with demand, which has led to A LOT of competition for the homes that are available.

A recent article by the National Association of Realtors touched on the current market conditions:

“Realtors® in areas with strong job markets report that consumer frustration is rising. Home shoppers are increasingly struggling to find an affordable property to buy, and the prevalence of multiple bids is pushing prices further out of reach.”

Realtor.com went on to explain why buyers are flocking to the market in such big numbers:

“A booming economy and stable employment in most parts of the country have created a new generation of eager home buyers – and led to fevered price battles spilling over into some unexpected, smaller markets.”

Javier Vivas, Director of Economic Research for Realtor.com had this to say about competition:

Multiple-offer scenarios are no longer reserved to the usual big, fast-moving markets…demand for homes has spilled outward into secondary, smaller markets, and more buyers are gearing up to face fierce competition in more places around the country.”

Realtor.com looked at the number of homes that were selling above asking price to determine which markets were heating up. Below are the Top 10:

  • Akron, OH
  • Worcester, MA
  • Lexington, KY
  • Irvine, CA
  • Greensboro, NC
  • Sioux Falls, SD
  • Madison, WI
  • Louisville, KY
  • Tacoma, WA
  • Little Rock, AR

Bottom Line

Let’s get together to discuss our exact market conditions so that we can help you create a strategy to secure your new home in this competitive atmosphere!

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5 Reasons Millennials Choose to Buy a Home [INFOGRAPHIC]

5 Reasons Millennials Choose to Buy a Home [INFOGRAPHIC] | Simplifying The Market

Some Highlights:

  • “The majority of millennials said they consider owning a home more sensible than renting for both financial and lifestyle reasons — including control of living space, flexibility in future decisions, privacy and security, and living in a nice home.”
  • The top reason millennials choose to buy is to have control over their living space, at 93%.
  • Many millennials who rent a home or apartment prior to buying their own homes dream of the day when they will be able to paint the walls whatever color they’d like or renovate an outdated part of their living space.

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Next Recession in 2020? What Will Be the Impact?

Next Recession in 2020? What Will Be the Impact? | Simplifying The Market

Economists and analysts know that the country has experienced economic growth for almost a decade. They also know that a recession can’t be too far off. A recent report by Zillow Research shed light on a survey conducted by Pulsenomics in which they asked economists, investment strategists and market analysts how they felt about the current housing market. That report revealed the possible timing of the next recession:

Experts largely expect the next recession to begin in 2020.”

That timing concurs with a recent survey of economists by the Wall Street Journal:

“The economic expansion that began in mid-2009 and already ranks as the second-longest in American history most likely will end in 2020 as the Federal Reserve raises interest rates to cool off an overheating economy, according to forecasters surveyed.”

Here is a graph comparing the opinions of those surveyed by both the Wall Street Journal and Pulsenomics:

Next Recession in 2020? What Will Be the Impact? | Simplifying The Market

Recession DOES NOT Equal Housing Crisis

According to the Merriam-Webster Dictionary, a recession is defined as follows:

“A period of temporary economic decline during which trade and industrial activity are reduced, generally identified by a fall in GDP in two successive quarters.”

A recession means the economy has slowed down markedly. It does not mean we are experiencing another housing crisis. Obviously, the housing crash of 2008 caused the last recession. However, during the previous five recessions home values appreciated.

Next Recession in 2020? What Will Be the Impact? | Simplifying The Market

According to the experts surveyed by Pulsenomics, the top three probable triggers for the next recession are:

  • Monetary policy
  • Trade policy
  • A stock market correction

A housing market correction was ranked ninth in probability. Those same experts also projected that home values would continue to appreciate in 2019, 2020, 2021 and 2022.  

Others agree that housing will not be impacted like it was a decade ago.

Mark Fleming, First American’s Chief Economist, explained:

“If a recession is to occur, it is unlikely to be caused by housing-related activity, and therefore the housing sector should be one of the leading sources to come out of the recession.”

And U.S. News and World Report agreed:

“Fortunately – and hopefully – the history of recessions and current issues that could harm the economy don’t lead many to believe the housing market crash will repeat itself in an upcoming decline.”

Bottom Line

A recession is probably less than two years away. A housing crisis is not.

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Featured Story Of The Month in The Nutley Journal

Realty Executives Elite Homes is The Featured Story of The Month

Matthew De Fede

By Chuck O’Donnell
Staff Writer
Each year, tech-savvy customers who have grown up during the Internet Age and are fluent in social-media platforms such as Facebook, Twitter and Instagram make up more and more of Matthew De Fede’s clientele. As a Realtor, he has needed to constantly innovate new ways to meet these potential clients where they live – on their phones – in order to bring them where he lives — Nutley.
Whether it’s data mining, precision advertising or value-added videos, De Fede has been at the vanguard of a new approach to the real estate industry. By continually integrating technology into his business, Realty Executives Elite Homes, De Fede has been able to market his services to more people, better serve his clients and set himself apart from other agents.
“I get asked all the time by my regional directors, ‘Who’s your competition in town?’” De Fede said. “I go, ‘Well if you think about it, I don’t really have any because nobody is playing in that space.’ I’m Amazon, they’re Bradlees.”
Gone are the days, De Fede said, when the only way someone in the market could get information was to wander into a real estate office and thumb through the massive binder of properties listed in the Multiple Listing Service, or MLS in real estate parlance. Also gone are the days of sitting at a desk and waiting for a phone to ring.
Today, some transactions are done by a click, a text or an email.
For example, prospective buyers who see a charming house on, say, Grant Avenue or High Street, don’t even have to set foot outside their cars to get a close-up look on the interior. By punching in a code, they can take a virtual tour on their phone.
“But what happens with that, that actual lead, or that client’s information automatically gets sorted over to the listening agent via text message so we can follow up,” De Fede said. “So our whole advantage is speed to lead. So as soon as somebody signs in there, we’re on the phone two minutes later (saying), ‘Hey, we saw you saw the home. Would you like to get an actual tour of it?’ So that’s technology that we’re pioneering. Nobody else in town has that.”
Retargeting has also been an effective tool. Here’s how it works. De Fede will take a new listing, do all the photography, put it all on the MLS and give it its own website. That allows him to encode a targeting cookie that can seek potential buyers.
“So now we take that and put it on Facebook and we boost it, boost it a certain area, a certain demographic,” De Fede said. “So, if we are selling a home that’s $350,000, a first-time homebuyer, we’re not going to look for people making salaries of $500,000 and up. We’re going to look at a certain salary, if they’re getting engaged, did they just have a baby, are they looking to move. What are their behaviors? We target their behaviors.”
He said 85 percent of his clients are people from New York who are looking to settle down and start a family in Nutley. They sometimes take a virtual tour or two and ride off back to the city. De Fede, however, can retarget them whether they are riding the subway or walking in Time Square.
“Now they leave, a couple of days later, they’re surfing the web,” he said. “Ads are popping up on Home Depot. They’re popping up on Kohl’s. They’re popping up on all different sites.”
The future is video, he said. It has an immediacy that people will continually crave. Within two years, he predicts, Facebook will be nothing but videos. In time, he thinks he’ll be Facetiming with customers around the country, selling them homes.
“It’s going to be the push-button mentality of, ‘Hey, I like this home. Can you walk me through it? I want to buy it,’” De Fede said. “Click a button and, boom, I have a mortgage. That’s where we’re heading. What’s going to happen is it’s going to kill off those people who don’t adapt, and there’s a large amount of people who haven’t adapted to the technology that’s already in place.”
De Fede, who has been a Realtor for about 15 years, remembers going to arcades and comic book shops in Nutley during the golden-lit days of his childhood. His family has called this 3.5 square-mile town home for some 80 years.
He wasn’t always destined for greatness, however. He describes himself as an F student who was placed in remedial reading. In high school, however, his guidance counselor recognized his artistic talents and talked him into switching into a vocational school.
De Fede’s life changed. He felt a sense of purpose. His self-esteem rose, and he was getting A’s across the board.
He went to college and studied illustration. Soon, he was working for several corporations as an art director. He also started working with real-estate agents, buying two or three properties a year. He realized he could probably do it without their help, so he went and got his license.
“I liked it,” he said. “Then I said, ‘Wait a minute, what if I merge two of my passions: real estate; and marketing design and marketing. That’s how my business came about. So, I look at this as an ad agency. I have it up on the wall: We’re a tech-driven ad agency. That’s exactly what we are.”
The technology part of it came while he was working for ad agencies in the early 1990s. When AOL and dial-up were cutting-edge technology, he and a friend learned HTML and learned how to create websites. De Fede was doing it on the side until he got hired to create sites for Ford and a few TV networks.
And now Realty Executive brings together his areas of expertise and his various passions. That allows him to be hands-on in every aspect of the business, from marketing to advertising to customer service to selling.
“That’s the advantage,” he said. “That’s the cornerstone of the business because the knowledge and stuff that I have done in the past, I’m implementing into my business every day. Larger companies, competitors, they have to go out and hire an agency.”
And he’s confident it will help him reach even more potential homebuyers, wherever they may live.
Realty Executives Elite Homes is located at 653 Franklin Ave. in Nutley. Matthew De Fede can be reached at 973-846-0065, office; or 862-228-0054, cell. His email is matthewdefede@realtyexecutives.com.

What’s the Median Home Value in Your State?

What’s the Median Home Value in Your State? | Simplifying The Market

If you’ve entered the real estate market as a buyer or a seller, you’ve inevitably heard the mantra “location, location, location” in reference to identical homes increasing or decreasing in value based on where they’re located.

In today’s housing market where home prices are appreciating quickly, it’s important to know that not every home appreciates at the same rate. The map below demonstrates that point on a state-by-state basis using data from the National Association of Realtors.

What’s the Median Home Value in Your State? | Simplifying The Market

Demand often dictates value, even for houses in the same area of the country! High demand for starter and trade-up homes have driven prices up in these categories by nearly 10% over the past year, while those in the premium markets have appreciated at closer to 6%.

Bottom Line

If you are debating whether or not to buy and/or sell a home this year, let’s get together to help you figure out exactly what’s going on in our market.

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Are You Wondering If You Can Buy Your First Home?

Are You Wondering If You Can Buy Your First Home? | Simplifying The Market

There are many people sitting on the sidelines trying to decide if they should purchase a home or sign a rental lease. Some might wonder if it makes sense to purchase a house before they get married or start a family, some might think they are too young, and still, some others might think their current incomes would never enable them to qualify for a mortgage.

We want to share what the typical first-time homebuyer actually looks like based on the National Association of Realtors’ most recent Profile of Home Buyers & Sellers. Here are some interesting revelations on the first-time buyer:

Are You Wondering If You Can Buy Your First Home? | Simplifying The Market

Bottom Line

You may not be much different than many people who have already purchased their first homes. Let’s meet to determine if your dream home is within your grasp today.

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