Category Archives: Finance and Taxes

Home and auto insurance coverage is steadily increasing

About the house..., Finance and Taxes

The severity and frequency of insurance claims, along with the cost of goods and services are why carriers are raising their base rates…and your coverage may not be keeping up with inflation. Rising replacement costs means that what used to be covered by your policy may no longer be sufficient.

Attached are two flyers from the Hanover Insurance Group that explain why rates are increasing and underwriting is tightening up.
Understanding Trends Impacting Homeowners Coverage

Why you may need more home and auto coverage.

How to Navigate High Mortgage Interest Rates

Buyer Information, Finance and Taxes

Mortgage interest rates are hovering at the highest levels in over 23 years, causing mortgage demand to sink to a 27-year low. Waiting for home prices to come down has had little success for homebuyers due to an unprecedented imbalance in housing supply. What can you and other homebuyers do to increase your buying power?

One advantage of higher interest rates is that they can make you money in other investments until you’re ready to buy your home. Start with a debt consolidation loan to pay off high-interest credit cards. Do some research to learn where it’s best to park some cash in savings, the term of the investment(s), and penalties for early withdrawals, if applicable.

High-yield savings accounts. Most savings accounts have variable annual percentage yields (APYs), which means the return is linked to Federal Reserve overnight funds rate changes. Currently, you can get yields between 4.00% and 5.00% APYs while a traditional savings account is 0.50% or less.

Certificate of deposit (CD) accounts. The average 12-month CD is about 1.49%, still much higher than a typical savings account. But many online financial institutions are paying 4.5% to 5% .

Corporate bonds. To raise capital, some corporations issue debt securities which means you’re loaning money to the company in return for regular income payments and the return of your initial capital when the bond reaches maturity. The benefits are lower risk for investment-grade corporate bonds, lower volatility, and greater diversification that’s not tied to the stock market.

3rd Quarter Stats… Lower sales volume with higher prices.

Current Lansing Area Sales Statistics, Finance and Taxes

Third Quarter 2023 sales statistics (July – September) showed that the average sales price of Lansing area homes increased from $231,429 to $240,458 as compared to the third quarter of 2023. This 3.9% represents an average home value increase of $9,029.

Third Quarter 2023 Sales Statistics

The fact that there were 977 fewer sales to date in 2023 (-18.6%) represents a low number of homes being offered for sale…not from any lack of enthusiasm on the part of buyers. Just about any properly priced home will receive multiple offers and be off the market within a few days. For established sellers, there is a serious reluctance to give up a 3.5% mortgage in order to enter into a now 8% mortgage on a different home. This, and unstable economic conditions is the main reason is the low number of homes to choose from.

Fall sales continue to brisk and show no sign of slowing as we move into November. Traditionally, sale begin to slow as we enter the holiday season.

Lansing Area Market View – October 30, 2023
 676 – currently listed homes for sale in the five county greater Lansing area.
 261 – homes with accepted offers. (Awaiting inspections and/or appraisal.)
 311 – homes listed as Pending. (Have completed inspections and will soon close.)
 4690 – homes that have closed since January 1, 2023. 

Current Mortgage interest rates (one percentage higher than second quarter)
  30-year fixed – 7.83% ($722 per $1000)
  15-year fixed – 7.15% ($900 per $1000)

What’s Decreasing Your Home’s Value?

Finance and Taxes, Seller Information

There’s nothing you can do about the location of your home, but that may be one of the reasons why your home’s value isn’t as high as you wish it were. What you can do is make sure other aspects of your property are desirable. When you’re selling your home, you want to meet as many homebuyer preferences as possible and keep them in mind as you search for your next home.

Noise – Traffic noise, basketball-bouncing teenagers, loud music, and construction are just a few things homebuyers don’t want to hear. Add more insulation in the walls, and replace single pane windows with sound-muffling double pane or storm windows.

Danger – A home built too close to a busy street, homes with scary guard dogs, and bars on the windows make homebuyers wary. Take your with you during showings.

High Maintenance Costs – You love your swimming pool and spa, but your homebuyer may not. Don’t make improvements that won’t resell well unless you really want them and they make sense for your home and area.

Luxury features in a starter home – If you’re selling a starter or mid-range home, luxury appliances and finishes are appealing, but homebuyers won’t pay extra for them.

Tacky neighbors – Yes, your neighbors can bring your home’s value down as well as up. Junk in the yard, peeling paint and obvious deferred maintenance can be off-putting to homebuyers. Get the other neighbors together and offer to help the homeowner, especially seniors on fixed incomes.

How Property Comparables Are Chosen

Buyer Information, Finance and Taxes, Seller Information

Whether you’re selling your home or buying a home, your Berkshire Hathaway HomeServices network professional will provide you with a comparative market analysis (CMA), a computer-generated report that shows you what homes similar to yours are selling for in your area, or how the home you’re interested in buying compares to other homes on the market.

CMAs are only available to members of the local multiple listing service, which include licensed real estate agents, brokers, appraisers, real estate attorneys, and local property tax authorities. It takes skill and experience to create a report that can help you choose a listing price range for your home or to help you make an offer on one of the homes you’re seeing. 

A CMA can be as narrow as a city block or as broad as a zip code. It can include data on homes for the latest week, month, or six-month period. It can show you homes for sale and those that have recently sold. CMAs can be made specific with search parameters that show only one-story homes, condos, or homes with swimming pools.

Occasionally, you’ll find that the CMA doesn’t have a nearby comparable. In that case, the search parameters must be widened, which may not give as true a picture of value, for the neighborhood.

You may be pleased or dismayed by what the CMA shows, but you should know that it’s an accurate depiction in real time of current market conditions—until a new comparable changes the results.

Is Home Flipping a Good Idea?

Finance and Taxes

They make it look so easy on TV. Buy a house, fix it up, and resell it for a big profit. But that’s easier said than done. Here’s what you’ll really need to be a successful home flipper:

Cash – Most flippers pay cash for properties. You can get a loan, but you’ll need good credit to qualify for enough to cover the costs of both the purchase and resale transactions, renovations, utilities, homeowner’s insurance, and to cover unexpected expenses. You should have cash to cover your carrying costs throughout the timeline of the project and a tax plan to pay or defer capital gains.

Experience – Successful flippers follow a formula—an undervalued, distressed, or unimproved and dated property that can be purchased using the 70% rule. If you plan to sell the property for $500,000 after renovations, you should pay no more than $350,000 to acquire it, plus the costs to make repairs and updates, allowing you to make a typical profit of $67,000. If the property looks as though it will cost you too much to make it sellable at $500K and still make a profit, it’s not a good candidate for flipping.

Labor and Materials – Most flippers do the work themselves, but you may need skilled labor such as electricians and plumbers. Working without a license can expose you to fines and lawsuits for faulty construction. You must be savvy about the costs of materials needed, supply chains, and have the correct equipment and insurance to work safely.

Housing Shortage Continues into June

Finance and Taxes, Market Update

Despite monetary policy changes by the Federal Reserve in early summer 2022 and winter of 2023 that caused mortgage interest rates to more than double from 3.5% to around 6.5 to 7.3%, the housing market is still moving along, in spite of record high home prices and higher mortgage interest rates. 

May 2023 sales have been brisk and show no sign of slowing as we move into June. Properly priced homes are again receiving multiple offers within a day or two of the listing date. A condition that exists when the number of buyers exceed the number of available homes for sale. The figures below are consistent with those of this month in 2022.

Lansing Area Market View – June 1, 2023
  423 – currently listed homes for sale in the five county greater Lansing area.
  228 – homes with accepted offers. (Awaiting inspections and/or appraisal.)
 398 – homes listed as Pending. (Have completed inspections and will soon close.)
1973 – homes that have closed since January 1, 2023. 

Current Mortgage interest rates
  30-year fixed – 6.57% ($6.37 per $1000)
  15-year fixed – 5.97% ($8.42 per $1000)

Mortgage Rate Increase…Home Sales are Stable

Finance and Taxes, Market Update

For sellers, sales continue to remain stable due to a continued short supply of homes to satisfy the buyer demand. However, increasing mortgage rates have reduced the number of buyers willing to make extravagant offers in a competitive bidding situation. Going forward, sellers listing their home above market value may have very few showings and see no offers.

If you’re looking to buy a home, the days of low interest mortgages below 4% have passed. Recent inflation has translated into higher interest rates with increased monthly payments. Mortgage rates have increased consistently since the start of 2022 when they were at 3.5%.
As of today (October 1st) the rate for a 30-year conventional mortgage is 6.82%.

Inflation, home prices and higher mortgage rates are impacting affordability. Causing many homebuyers to stop looking. Buyers who made unsuccessful offers during the Spring 2022 market may need to adjust their budget and their expectations. The table below illustrates the difference in monthly mortgage payments for a few common mortgage amounts.

Mortgage Amount30-year @ 6.82% (October 2022)30-year @ 3.5% (March 2022)
$150,000$979.88$673.56
$200,000$1306.50$898.08
$250,000$1633.14$1122.61
$300,000$1959.77$1347.13

Home sales in the Lansing area market remain normal for this time of year and the statistics are consistent with previous years. Of course, things may change, but rents have been steadily increasing, making it economically cheaper to buy than to rent.

Lansing Area Market View – October 1, 2022
• 714 currently listed homes for sale in the five county greater Lansing area.
• 287 homes with accepted offers. Awaiting inspections and/or appraisal.
• 351 homes listed as Pending. Have completed inspections and will soon close.
• 5161 homes that have closed since January 1, 2022.
• 7150 homes that have closed in the past 12 months.

Mortgage interest rates
30-year fixed – 6.82% ($6.53 per $1000)
15-year fixed – 5.97% ($8.89 per $1000)

Can Someone Steal Your Home Through Title/Deed Fraud?

About the house..., Finance and Taxes

With the information available in public records, cunning thieves may be able to forge documents that will give them access to the deed and title to your home.  This fraudulent ownership may allow them access to the equity in your home and possibly sell the home to someone else. While this seems highly unlikely, it is not impossible, and there are ways for homeowners to protect themselves.

Do you need to spend money on a service?

Fraudulent-Quitclaim-Deeds (1)These ads claim that anyone with forged signatures and fake IDs can file paperwork with the county’s register of deeds to transfer ownership of your property to themselves or a third party.  They then use your home as collateral against a large loan to steal your equity.  When you fail to make payments on the loan, the lender can place a lien on your home preventing you from selling, refinancing, or passing the home on to heirs.  As the ads state “Don’t lose your home or life savings.”

Home Title Lock is one of the services that says it will monitor your home’s deed 24/7 to prevent title fraud; it costs $15 a month ($150 annually).  But you can protect yourself for free.  Many Michigan counties now provide a consumer notification service.  You simply register and you will quickly receive an e-mail or text any time a document is recorded on your property.

Ingham County has a free deed fraud alert system in place.
Property Fraud Alert

Eaton County has a program called Fraud Sleuth.
Eaton County Fraud Sleuth

Clinton County uses Fraud Guard.
Fraud Guard

You don’t need to pay a company to protect you from criminals who put their names on your home title. You can protect your home for FREE.

Housing Inventory Market View – June 1st

Current Lansing Area Sales Statistics, Finance and Taxes, Market Update

Rising mortgage rates and record home prices have become the norm for the opening months of the spring housing market. Frenzied buyer demand for the few homes offered for sale since mid-March has pushed purchase prices 20% above what they were listed at.

Sellers offering homes priced below $300,000 have been receiving multiple offers above asking price with escalation clauses and appraisal guarantees.  An escalation clause provides that the buyer will pay $2000 more (example) than any other competing offer up to a set price, often 20 to 25% more than the asking price.  An appraisal guarantee assures that the buyer will pay the difference between the mortgage appraisal and the offered price. With many offers, buyer have even been waiving the inspection option.

Interest rates on a 30-year conventional mortgage have risen from 3.5% at the close of 2021 to between 5% to 5.4%.  However, increasing housing prices and interest rates has not slowed down the Lansing area real estate market enough to be noticeable.  This is probably due to rising rental rates continuing to make home ownership the better option.

Market  View – June 1, 2022
• 458 currently listed homes for sale in the five county greater Lansing area.
• 302  homes have accepted offers. Awaiting inspections and/or appraisal.
• 476 homes are listed as Pending. Have completed inspections and will soon close.
• 2486 homes have closed since January 1, 2022.
• 7331 homes have closed in the past 12 months.

Mortgage interest rates
30 year fixed – 5.1% ($5.43 per $1000)
15 year fixed – 4.31% ($7.55 per $1000)