Berkshire Hathaway has recently been named among the top most respected and admired companies in the world by Fortune, Baron’s and Forbes! McCleary Group is thrilled to be among the leading real estate teams within the Berkshire Hathaway HomeServices network. When it comes to selling your home, McCleary Group has the widest network of local, national and international resources, giving your luxury listing the marketing and exposure it deserves.
Clients often ask McCleary Group when they should make the transition into a new home. The truth is, there is no time like the present! Jobs, increased inventory, low mortgage rates and inflation are all factors influencing the current real estate market.
JOB MARKET IMPROVING
The Bureau of Labor Statistics says the national unemployment rate in June was 4.9 percent, down from 5.3 percent this time last year. In Illinois, the jobless rate remains low, down slightly from the national average, at 4.8 percent. As the workforce steadies, consumers are more likely to make big life changes like buying a new home.
2016 has been quite a year when it comes to luxury homes for sale in the western suburbs of Chicago. As you can see from the above graph, Hinsdale, Clarendon Hills, Western Springs and Burr Ridge have all seen a significant up-tick in new listings. Traditionally, this seems to favor buyers over sellers. That said, given the pent-up demand, buyers who otherwise may have not entered the market, are motivated now more than ever.
INTEREST RATES REMAIN LOW – BUT FOR HOW LONG?
Forbes economics contributor Bill Conerly predicts we likely will be saying so-long to low mortgage rates come 2017. The Federal Reserve already began tightening short-term interest rates earlier this year. While long-term loans may not increase as rapidly, Bill predicts a gain of about 1 to 1.5 percent each year over the next two years. What does this mean for your mortgage? While there likely will not be a drastic increase, you may want to consider locking in rates sooner than later.
HEDGE AGAINST INFLATION
Owning a property is one way to hedge against inflation. The Bureau of Labor Statistics also shows the national Consumer Price Index (CPI) at 2.3 percent, which is the highest since 2012, less food and energy. As consumers pay more for goods and services, having an asset such as a home, purchased at a fixed cost, helps as the rest of the economy evolves.
If you decide you are ready to buy, McCleary Group would be happy to help you in your search. Please click here to discover the newest homes for sale in DuPage County and beyond!
To understand home ownership, it is best to be aware of what home equity means. Equity is the part of your property you actually own, usually based on a percentage. There are four ways to build equity, or your ownership stake: the purchase price, down payment, reducing the principal, and simply, time.
Your down payment is the first way to gain instant equity in your home. If you put 20 percent down, your equity ownership is 20 percent. If you put down less, not only are you earning less equity, PMI, or Private Mortgage Insurance, will also be added to your monthly mortgage bill. Moving forward, you will be paying out money not dedicated to the principal, which prolongs your path to earning equity.
Buying your home below market value is another way to earn instant equity. Depending on the area you live in, this may be difficult to do. Homes typically do not sell below market unless there is an issue, such as poor condition, lack of updates or a foreclosure. To build equity after you purchase one of these homes, invest in updates and repairs to bring your home up to neighborhood standards.
PAYING DOWN PRINCIPAL
As you pay your mortgage, a smaller percentage goes toward reducing the principal while the larger piece pays off the interest. The longer the term of your loan, the longer it will take you to build equity. Work with your lender to choose an adjustable rate or fixed rate mortgage and be realistic about how long you will live in the home.
Historically, home values tend to beat inflation by one to two percentage points. This means you can expect a rise in your home’s value to average about three to five percent each year, in a normal market. When you combine payments towards a principal reduction with buying wisely, as well as caring for your home by making any necessary updates and improvements, you will build equity steadily over time.
If you have any questions about buying or selling your home in Hinsdale or elsewhere in the western suburbs of Chicago, please feel free to reach out to McCleary Group. The team will happily answer your questions regarding home equity, what you can expect from our local market and offer up referrals to lenders if needed.