Berks County Market Update: 2013 in Review
2014 is off and running! And it appears to be a very good start. But before we get ahead of ourselves, let’s take a moment to recap the Berks Real Estate Market for 2013.
3724 homes sold in Berks County during 2013. That’s a 6.7% increase over sales in 2012. That’s great news! Our predictions as we look into our crystal ball for this year projects 3-4% more sales than last year. We’re coming back! It’s not gangbusters, but it is progress in a positive direction!
We are often asked … ”Are values increasing?” The answer to that isn’t an easy one. There are some communities that are beginning to see appreciation. Unfortunately, some aren’t. Here’s the “average” home value information. In 2012, the average home sale price in Berks County was $157,600 and in 2013 the average was $162,000. That increase was more due to the fact that a greater number of higher priced homes were selling. Don’t misunderstand, that’s a good thing, but we’re not seeing appreciation in all markets. If you’re curious about the value of your home, call me. I’d be happy to stop out, take a look at your home and complete a Market Analysis so you have accurate information, specifically related to your real estate.
One of the real positives in the 2013 market was that homes were selling faster than in 2012. The average days on market (from the day a home is listed until it goes “under contract”) during 2013 was 97 days. Comparing that to 116 during 2012, it demonstrates that the market is strengthening. And as a side note, during the last half of 2013 days on the market was under 90. Very encouraging!
Interest rates remained very attractive and today rates are in the 4.25%-4.50% range. That statement does come with a caveat, however. It is predicted by many in the news media that rates may increase into the 5% range during 2014. If you’ve thought about making a move, timing is important. Don’t wait too long.
Commercial real estate began to make some strides forward during 2013. Number of sold properties increased by 17%. Like residential real estate, values haven’t quite begun to move up. We believe, forward thinking investors are making the right moves by purchasing now before prices begin to surge.
Lastly, land sales are generally stagnant. There continues to be an oversupply of lots for sale. Good time to buy? That’s what we think! ◊
New Mortgage Lending Regulations
By Chris Nein – NMLS #128621 MORTGAGE AMERICA
Below is some information on the new government mandated mortgage lending guidelines. While the guidelines are more stringent than during the “go-go” real estate market of the early 2000’s, mortgage money is very available.
On January 10, 2014 the Qualified Mortgage Rule went into effect. In 2008 and 2009 President Obama signed a new law formulated by Senator Christopher Dodd (D-Conn) and US Representative Barney Frank (D-Mass) into Federal Law. It is commonly known as “Dodd-Frank.” It contains regulations which control mortgage lending in our nation. These regulations are slowly but surely being phased in over time, and another set of rules this law dictates began on January 10, 2014.
These rules create a phase now known as a “qualified mortgage” or risk action by the federal government and liability to the public.
Loans that were intended to help borrowers in special financial circumstances such as “interest only” and “negative amortization,” were previously abused by borrowers to take out loans larger than they could really afford and will no longer be offered in our nation.
Loans with terms longer than 30 years may help lower the monthly payment for some prospective home owners, but will now result in a mortgage not being termed a “qualified mortgage” and unlikely to be offered by any lender. Balloon mortgages, where a borrower receives a fixed rate loan at a lower rate in return for a balloon payment later in the term of the loan, will also be a casualty of the new federal regulation concerning qualified mortgages. The new federal qualified mortgage rules also create a national limit in the percentage of a home buyer’s income which may be debt, and placed it at 43%. If a potential borrower’s monthly debt obligations total more than 43% when compared to gross pay, it is not likely any lender may approve that mortgage loan. The new law also limits the amount of fees and points paid by the borrower to 3%. To some, this protects the consumer from being overcharged, while others claim this will limit mortgage choices for lower income households.
Consumer protection was the goal of the Dodd-Frank Act signed by President Obama which became the law on July 21, 2010 and continues its incremental roll out with these latest requirements which commenced on January 10, 2014. In exchange for generating QM loams, lenders will be given some degree of legal protection from law suits. ◊
How to Pay Off Your Mortgage Faster
Consumers have over $15 trillion in residential mortgage debt.*
A mortgage is often the largest debt that one undertakes and as a result, many homeowners look to pay it off as soon as they can. In addition to reducing overall debt, paying off your mortgage early enables you to purchase a second home or investment property. Try one of these strategies to reduce your mortgage principal.
Make Bi-Weekly Payments
Bi-weekly payments involve 26 half-payments each year instead of the standard 12 full payments. By making 13 full payments each year, you’ll pay down the principal sooner and reduce the amount of interest you’ll pay over the long run.
Increase Your Mortgage Payment
You can also increase the amount you pay towards the principal of the payment each month. Most people have higher incomes a few years into their mortgage than they did when they first took it out. Keeping your payment on par with your increases in income will help reduce your mortgage amount significantly and may also reduce the amount of your monthly payment over time.
Make Additional Payments
If bi-weekly payments or increasing your monthly mortgage payments are not feasible, try to make extra payments when you can. If you have extra money at the end of the year, put it toward your principal.
The majority of consumers who have a mortgage feel it’s important to pay it off as soon as possible, especially if nearing retirement. **
*Sources: The Globe and Mail, CNBC | **Sources: Scotiabank, US News and World Report
If you’re considering paying off your mortgage early, consider the following: