The real estate market is on just about everyone’s mind these days. That’s because the unsustainable market of the past two years is behind us, and the difference is being felt. The question now is, just how financially strong are homeowners throughout the country? Mortgage debt grew beyond 10 trillion dollars over the past year, and many called that a troubling sign when it happened for the first time in history.
Recently Odeta Kushi, Deputy Chief Economist at First American, answered that question when she said:
“U.S. households own $41 trillion in owner-occupied real estate, just over $12 trillion in debt, and the remaining ~$29 trillion in equity. The national “LTV” in Q2 2022 was 29.5%, the lowest since 1983.”
She continued on to say:
“Homeowners had an average of $320,000 in inflation-adjusted equity in their homes in Q2 2022, an all-time high.”
The term LTV refers to loan to value ratio. For more context, here’s how the Mortgage Reports defines it:
“Your ‘loan to value ratio’ (LTV) compares the size of your mortgage loan to the value of the home. For example: If your home is worth $200,000, and you have a mortgage for $180,000, your LTV ratio is 90% — because the loan makes up 90% of the total price.
You can also think about LTV in terms of your down payment. If you put 20% down, that means you’re borrowing 80% of the home’s value. So your LTV ratio is 80%.”
This is yet another reason we won’t see the housing market crash. Home equity allows homeowners to be in control. For example, if someone did need to sell their home, they likely have the equity they need to be able to sell it and still put money in their pocket. This was not the case back in 2008, when many owed more on their homes than they were worth.
Homeowners today have more financial strength than they have had since 1983. This is a combination of how homeowners have handled equity since the crash and rising home prices of the last two years. And this is yet another reason homeownership in any market makes sense.
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If you are just viewing this article and have not yet read Part One, please go back two weeks to the first of the series; begin there followed by Part Two a week ago. I am sharing this with you as a public service - no monetary or other consideration is exchanged between Tim and myself. Find out more about how we know each other in Part One today! Al Cannistra
Our Guest Author today: Tim Allen, BA, MM, CSA
• Except for a deductible, supplements will cost $0 Doctor & Hospital cost vs Low copays for Medic Advantage plans.• Usually, supplements have higher premiums vs lower or $0 premium.
• You may see any doctor who accepts Medicare in the United States on a supplement vs. no coverage out-of-network on an HMO, and higher cost out-of-network on a PPO. You can receive care in an emergency room anywhere in world on both plans and most but not all Urgent Care is considered in-network for both.• People who travel like the freedom of the supplement vs. cost-conscious clients who prefer low or no premiums.• There is a $233 annual Pt. B deductible vs. none on most Medicare Advantage plans.• Medigap supplements require a separate Pt. D plan but are included in most Medicare Advantage plans.
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If recent headlines about the housing market cooling and buyer demand moderating have you worried you’ve missed your chance to sell, here’s what you need to know. Buyer demand hasn’t disappeared, it’s just eased from the peak intensity we saw over the past two years.
During the pandemic, mortgage rates hit record lows, and that spurred a significant rise in buyer demand. This year, as rates increased due to factors like rising inflation, buyer demand pulled back or softened as a result. The latest data from ShowingTime confirms this trend (see graph below):
The orange bars in the graph above represent the last few months of data and the clear cooldown in the volume of home showings the market has seen since mortgage rates started to rise. But context is important. To get the full picture of where today’s demand stands, let’s look at the July data for the past six years (see graph below):
This second visual makes it clear that, while moderating compared to the frenzy in 2020 and 2021, showing activity is still beating pre-pandemic levels – and those pre-pandemic years were great years for the housing market. That goes to show there’s still demand if you sell your house today.
The key to selling in a changing market is understanding where the housing market is now. It’s not the same market we had last year or even earlier this year, but that doesn’t mean the opportunity to sell has passed.
While things have cooled a bit, it’s still a sellers’ market. If you work with a trusted local expert to price your house at the current market value, the demand is still there, and it should sell quickly. According to a recent survey from realtor.com, 92% of homeowners who sold in August reported being satisfied with the outcome of their sale.
Buyer demand hasn’t disappeared, it’s just moderated this year. If you’re ready to sell your house today, let’s connect so you have expert insights on how the market has shifted and how to plan accordingly for your sale.
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If you are just seeing this article and have not yet read Part One, please go back one week to the first of the series. I am sharing this with you all as a public service - no monetary or other consideration is exchanged between Tim and myself. Find out more about how we know each other in Part One today! Al Cannistra
Our Guest Author today: Tim Allen, BA, MM, CSA
Our 5th Client Tale involves educators in the state of Texas that were on the Teachers’ Retirement System Health Plan (known as TRS), which is a very good fit for some people. But there may be other options out there for others through private health plans that could save them a lot of money and still provide excellent coverage.
My wife and I are a good example (pictured on the left). When my wife turned 65, she was in TRS. Jane was a retired teacher paying $135 per month in premium and my premium was more than $400. As a couple, we are saving more than $400 per month on a Medigap High Deductible G supplement with a Part D plan. There is no network, so we can go to any provider that accepts Medicare without a referral. If you are interested in this, there is a form that you will need to send to TRS and we’ll be happy to tell you more about it.
• $35 Month for a female, 65-year-old non-smoker ‐ $76 Month at age 80• $40 Month for a male, 65-year-old nonsmoker ‐ $88 Month at age 80.
If you’re thinking about buying a home today, there’s welcome news. Even though it’s still a sellers’ market, it’s a more moderate sellers’ market than last year. And the days of feeling like you may need to waive contingencies or pay drastically over asking price to get your offer considered may be coming to a close.
Today, you should have less competition and more negotiating power as a buyer. That’s because the intensity of buyer demand and bidding wars is easing this year. So, if bidding wars were the biggest factor that had you sitting on the sidelines, here are two trends that may be just what you need to re-enter the market.
Over the last two years, more buyers were willing to skip important steps in the homebuying process, like the appraisal or inspection, to try to win a bidding war. But now, fewer people are waiving the inspection and appraisal.
The latest data from the National Association of Realtors (NAR) shows the percentage of buyers waiving their home inspection and appraisal is declining. And a recent survey from realtor.com confirms more sellers are accepting offers that include these conditions today. According to their August study:
This goes to show buyers are more able to include these conditions in their offers today and negotiate as needed based on the outcome of the inspection.
Generally, closing costs range between 2% and 5% of the purchase price for the home. Before the pandemic, it was a common negotiation tactic for sellers to cover some of the buyer’s closing costs to sweeten the deal. This didn’t happen as much during the peak buyer frenzy over the past two years.
Today, as the market shifts and demand slows, data from realtor.com suggests this is making a comeback. A recent article shows 32% of sellers paid some or all of their buyer’s closing costs. This may be a negotiation tool you’ll see as you go to purchase a home. Just keep in mind, limits on closing cost credits are set by your lender and can vary by state and loan type. Work closely with your loan advisor to understand how much a seller can contribute to closing costs in your area.
Regardless of the extremely competitive housing market of the past several years, today’s data suggests negotiations are starting to come back on the table. This is good news if you’re planning to enter the housing market. To find out how the market is shifting in our area, let’s connect.
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SPECIAL: This is a repost from one of my other blogs: www.SanAntonioRealEstate.blog
Introduction
My regular readers know that we keep this blog pretty much to real estate and posts that are unique one time articles. We are breaking all norms with this first post of a 3 part series - our very first trilogy if you will. And there is good reason for that.
I have known the author for more than a decade. Tim and I were introduced by a mutual acquaintance at a time of need for our family. I had an aging parent struggling with many medical expenses and high out of pocket costs. We were in need of a solution.
The first meeting was by phone and during that time Tim took note of all the current doctors and agreed to research an insurance plan that keep the medical providers intact. A couple days later, he came out to the house and presented the options. If memory serves me, his systems searched something near 500 plan options.
He found a plan that met all the criteria and that was my first introduction to a Medicare Advantage plan. It was an outstanding option and proved to be the solution we needed. Since then, Tim has helped me personally with the right plan, which we review every year and I have literally referred dozens of friends and associates to his office knowing that they are in good hands.
So, I hope you enjoy this series and if you have a need, please give Tim a call. In the interest of full disclosure, Tim is not paying for us to publish this article nor do we receive any sort of commission or other form of payment. Call this a public service from us and I hope it will help you or someone you know.
Al Cannistra
Our Guest Author today: Tim Allen, BA, MM, CSA
Welcome to Client Tales, where you will read stories about Medicare beneficiaries, what plans worked best for each one and why. With Annual Enrollment right around the corner, the goal of this series is for you to be able to know which of the various options out there might best fit your unique needs and to help you avoid costly mistakes. Any information we provide is limited to those plans we do offer in your area. Please contact Medicare.gov or 1-800-MEDICARE to get information on all your options.
Rosita and Carl are married with a monthly income of $2,000 and resources of $12,500.
Resources include checking, savings, investments, and cash value of life insurance. They do not include residence, car, your personal belongings. Rosita and Carl are on Medicare. They didn’t know it, but they could apply for Extra Help as eligible Qualifying Individuals and did not have to pay the $170.10 Part B Premium.
We helped them get Part B and the Extra Help as Qualifying Individuals so they could receive Part B at no cost. They have the full benefit of Medicare and saving a lot of money on medical and drug copays as well!
Check out this chart to see if you might qualify:
If you are eligible, you may receive Extra Help in the Medicare Savings Program which may pay your $170.10 Part B premium. You’ll receive all those extra benefits - and you may pay less for medical and drug costs!
If you think you might be eligible for this program or one that may possibly pay far more, we will help you apply but we’ll need your written authorization - Please capture this QR code:
BTW - What plan do you think worked well for Carl and Rosita? It was an HMO, and we’ll take a closer look at that after our next client.)
When client #2 Angela turned 65, she had become a Real Estate broker. Prior to retirement as an architect, she had designed and built a beautiful Padre Island home on the bay, and had a small yacht tied to her pier out back.
She could afford the most expensive Medicare plan available. What plan do you think she chose? Most people in my seminars tell me that she must have bought a supplement! But Angela chose an HMO Medicare Advantage plan. Here’s why: all her physicians and hospitals were in network, she would receive dental, vision and coverage for hearing aids. Also, she would pay no more premium at her fitness center, which would now be a part of the Silver Sneakers program. She did not mind needing a referral from her Primary Care Physician to see a specialist because she always did that anyway. She was excited that she did not have to pay the high monthly cost of a supplement. Do you see? There is no one size fits all!
An HMO is a Health Maintenance Organization which features care managed by a primary care physician who coordinates beneficiary care with specialists and puts a high priority on preventive care. People on HMO plans tend to have better health outcomes than those on other plans. Most HMO plans have $0 premium, the lowest copays, the richest benefits, and the most value-added services. So, why doesn’t everyone have an HMO? Some do not care for the required Primary Care Provider referral to see specialists. Compared to the PPO or Medicare Supplement, these plans also have smaller networks – and except for emergency room, urgent care, and travel plans with some HMOs, beneficiaries must stay within the network or insurance will not pay.
Client Tale #3 is Sally. She had an HMO when she first turned 65 and was very happy with it. She had no health issues and saw her doctor once a year for her annual physical, mammogram, pap smear and blood work.
Then she came down with Multiple Sclerosis and the specialists who were recommended to her were not in her HMO network. She didn’t have confidence in her new specialists. She started going to rehab 3 days a week at $480 per month. Her plan had a maximum out of pocket of $5,900, which she quickly used up from all the doctor and hospital visits and she worried as she saw her small savings account dwindle.
She now wanted a Medicare supplement but did not qualify because of her illness. What plan did she move to during Annual Enrollment to see the specialists that she really wanted to see?
They have larger networks than HMO plans. No referral is required. They can be used out-of- network, although that may be at a higher cost. That means an increased risk of financial loss if highly utilized: Based on the current plans in Texas, their maximum Out-of-Pocket, could be more than $12,000 if out of network. They have less value-added benefits than HMO plans. But on a positive note, some plans have national networks; Like some HMO plans, certain PPOs will even put money back into your monthly Social Security checks to help toward your Part B premium.
Do you know which plan will work well for you? But what about a G Medigap Supplement? What about a High Deductible G Medigap Supplement? Most people – even many agents are not aware of this little gem. Again, there is “no one size fits all” – but which one is a perfect fit for you? Watch for the second podcast in our series to explore more Medicare plan options. Click on this link or capture this QR code to watch a 25-minute video that will explore these options in more detail:
This podcast is my original work and the pictures within are mine exclusively or I have purchased the right to use them.
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Wishing you a happy and safe Labor Day.
Content previously posted on Keeping Current Matters
You can get them at any time with registration - using the links in the rightmost column, or get them now from my Google Workspace account.
The new guides are free to all, so share as you wish:
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Help someone you know - share the link! Reach out to us if we can help. Al Cannistra
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