Finding your Dream Home: The Cost of Waiting


As a seller, you will be most concerned about ‘short term price’ – where home values are headed over the next six months. As either a first-time or repeat buyer, you must not be concerned only about price but also about the ‘long term cost’ of the home.

Let us explain.

There are many factors that influence the ‘cost’ of a home. Two of the major ones are the home’s appreciation over time, and the interest rate at which a buyer can borrow the funds necessary to purchase their home. The rate at which these two factors can change is often referred to as “The Cost of Waiting”.

What will happen over the next 12 months?

According to CoreLogic’s latest Home Price Index, prices are expected to rise by 4.7% by this time next year.

Additionally, Freddie Mac’s most recent Economic Commentary & Projections Tablepredicts that the 30-year fixed mortgage rate will appreciate to 4.7% in that same time.

What Does This Mean to a Buyer?

Here is a simple demonstration of what impact these projected changes would have on the mortgage payment of a home selling for approximately $250,000 today:



Bottom Line

If you are ready to move forward with finding your dream home in the Hilton Head and Bluffton SC area, give Jo Anne or Tony Rizza a call at 843-301-5825. Great Hilton Head / Bluffton properties are available & waiting for you!

Fannie Mae Introduces Home Purchase Sentiment Index


Earlier this month, Fannie Mae’s Economic & Strategic Research Group announced the launch of their Home Purchase Sentiment Index (HPSI). The index will distill results from Fannie Mae’s consumer-focused National Housing Survey into a single, monthly, predictive indicator. According to Doug Duncan, Senior Vice President and Chief Economist at Fannie Mae, the goal for the new index is simple:

“The Fannie Mae Home Purchase Sentiment Index provides the market a single number to track consumer attitudes focused on the housing market. Utilizing our National Housing Survey, the only consumer sentiment survey of its kind focused on housing, the HPSI will offer insights regarding current and future-looking housing market outcomes and will complement existing data sources to inform housing-related analysis.”

Here is a graph of the findings of the HPSI from May 2011 until the current index. A higher number reflects a more positive sentiment from the consumer.



Bottom Line

Consumer sentiment has improved over the last four years, and most feel the outlook is positive. As demand continues to outpace inventory, interested buyers should contact Jo Anne or Tony Rizza at 843-301-5825 to view the great real estate properties in the Hilton Head Island/Bluffton area today!

Hilton Head Real Estate Partners
Partnering with you every step of the way.

Featured Community: Heritage at New Riverside

This month, we are featuring the new community of Heritage at New Riverside in Bluffton, SC.

heritage at new riverside

With 15 plans to choose from, these energy efficient new construction homes are great for all types of buyers. From single-story homes (1,500 sq ft) starting in the $180k’s to two-story homes (over 3,000 sq ft) first-time home buyers, young families, or retires alike are sure to find a home to fit their stage of life.

Heritage at New Riverside is just minutes from historic downtown Savannah, Old Town Bluffton, and Hilton Head Island’s beautiful beaches. This community offers residents a 365 acre community, zero entry swimming pool (with lap area), and a 5,000 SF clubhouse equipped with a full kitchen, fitness room, and event space available for rent. The community also features a 5.5 mi nature trail which cuts through the Heart of the Community.

For additional information on this great community, contact Jo Anne or Tony Rizza at 843-301-5825 to view available properties today!

Hilton Head Real Estate Partners
Partnering with you every step of the way.


Most Experts Agree: There is No Housing Bubble

There is no doubt that home prices in the vast majority of housing markets across the country are continuing to increase on a month over month basis. The following map (based on data from the latest CoreLogic pricing report) reveals the appreciation level by state:



These increases in value have caused some to be concerned about a new price bubble forming in residential real estate. Here are quotes from many of the most respected voices in the housing industry regarding the issue:

Nick Timiraos, reporter at the Wall Street Journal:

“Predictions of a new national home price bubble look unfounded for now, according to data.”

Michael Fratantoni, Chief Economist, the Mortgage Bankers Association:

“I don’t really see it as a bubble.”

Jack M. Guttentag, Professor of Finance Emeritus at the Wharton School of the University of Pennsylvania:

“My view is that we are a long way from another house price bubble.”

Rajeev Dhawan, Director of Economic Forecasting Center at J. Mack Robinson College of Business, Georgia State University:

“To have a bubble, you need to have construction rates higher than the perceived demand, which is what happened in 2003 to 2007. Right now, however, we have the reverse of that.”

Victor Calanog, Chief Economist, Reis:

“The housing market has yet to show evidence of systematic runaway asset price inflation characterized by home prices rising much faster than household income.”

David M. Blitzer, Chairman of the Index Committee for S&P Dow Jones:

“I would describe this as a rebound in home prices, not a bubble and not a reason to be fearful.”

Andrew Nelson, US Chief Economist, Colliers International:

“I don’t think there is a housing bubble.”

George Raitu, Director, Quantitative & Commercial Research, NAR:

“We do not consider the current market conditions to present a bubble.”

Christopher Thornberg, Founding Partner, Beacon Economics:

“The housing market is far from overheated.”

So why have prices been increasing?

Today, there is a gap between supply (number of houses on the market) and demand (the number of buyers looking for a new home). In any market, this would cause values to increase. Here are some experts’ comments on this issue:

Jonathan Smoke, Chief Economist:

“So does that mean we’re in a bubble? Nope, that’s just what happens when demand increases faster than supply.”

Robert Bach, Director of Research – Americas, Newmark Grubb Knight Frank:

“I don’t think the housing market is overheated based on demand and supply fundamentals.”

Mark Dotzour, Chief Economist, Real Estate Center, Texas A&M University:

“We are not in a housing bubble. We are in a situation where demand for houses is much higher than supply.”

Calvin Schnure, SVP of Research & Economic Analysis, NAREIT:

“Given all the demand and little supply the residential market is FAR from overheated.”

Bottom Line

Currently, there is an imbalance between supply and demand for housing. This has created a natural increase in  home values not a bubble in home prices.

Contact Jo Anne or Tony Rizza at 843-301-5825 to evaluate your current home’s market value or to view other great real estate properties in the Hilton Head Island/Bluffton area!

Hilton Head Real Estate Partners
Partnering with you every step of the way.

Ready to Buy a House? Ask Yourself These 3 Questions


If you are debating purchasing a home, you are surely getting a lot of advice. Though your friends and family will have your best interest at heart, they may not be fully aware of your needs and what is currently happening in real estate.

Let’s look at whether or not now is actually a good time for you to buy a home.

There are 3 questions you should ask before purchasing in today’s market:

1. Why am I buying a home in the first place?

This truly is the most important question to answer. Forget the finances for a minute. Why did you even begin to consider purchasing a home? For most, the reason has nothing to do with finances.

A study by the Joint Center for Housing Studies at Harvard University reveals that the four major reasons people buy a home have nothing to do with money:

  • A good place to raise children and for them to get a good education
  • A place where you and your family feel safe
  • More space for you and your family
  • Control of that space

What non-financial benefits will you and your family derive from owning a home? The answer to that question should be the biggest reason you decide to purchase or not.

2. Where are home values headed?

When looking at future housing values, Home Price Expectation Survey provides a fair assessment. Every quarter, Pulsenomics surveys a nationwide panel of over 100 economists, real estate experts and investment & market strategists about where prices are headed over the next five years. They then average the projections of all 100+ experts into a single number.

Here is what the experts projected in the latest survey:

  • Home values will appreciate by 4.1% in 2015.
  • The cumulative appreciation will be 18.1% by 2019.
  • Even the experts making up the most bearish quartile of the survey still are projecting a cumulative appreciation of over 10.5% by 2019.

So what does that really mean for you and your family?

The chart below was made using the Home Price Expectation Survey’s predictions:

Family-Wealth-KCM (1)


If the experts are right and you were to purchase a home by January 2016 for $250,000, that home would appreciate by over $34,000 over the next four years! As we have reported before, homeownership is one of the best ways to build your family’s wealth.

3. Where are mortgage interest rates headed?

A buyer must be concerned about more than just prices. The ‘long term cost’ of a home can be dramatically impacted by an increase in mortgage rates.

The Mortgage Bankers Association (MBA), the National Association of Realtors and Freddie Mac have all projected that mortgage interest rates will increase by approximately one full percentage over the next twelve months as you can see in the chart below:



Bottom Line

Only you and your family will know for certain if now is the right time to purchase a home. Answering these questions can assist in making that decision.

If you are ready to move forward with your house hunt in the Hilton Head and Bluffton SC area, give Jo Anne or Tony Rizza a call at 843-301-5825. Great Hilton Head / Bluffton properties are available & waiting for you!

5 Financial Reasons To Buy A Home


We have reported many times that the American Dream of homeownership is alive and well. The personal reasons to own differ for each buyer, with many basic similarities.

Eric Belsky, the Managing Director of the Joint Center of Housing Studies at Harvard University expanded on the top 5 financial benefits of homeownership in his paper –The Dream Lives On: the Future of Homeownership in America.

Here are the five reasons, each followed by an excerpt from the study: 

1.) Housing is typically the one leveraged investment available.

“Few households are interested in borrowing money to buy stocks and bonds and few lenders are willing to lend them the money. As a result, homeownership allows households to amplify any appreciation on the value of their homes by a leverage factor. Even a hefty 20 percent down payment results in a leverage factor of five so that every percentage point rise in the value of the home is a 5 percent return on their equity. With many buyers putting 10 percent or less down, their leverage factor is 10 or more.”

2.) You’re paying for housing whether you own or rent.

“Homeowners pay debt service to pay down their own principal while households that rent pay down the principal of a landlord.”

3.) Owning is usually a form of “forced savings”.

“Since many people have trouble saving and have to make a housing payment one way or the other, owning a home can overcome people’s tendency to defer savings to another day.”

4.) There are substantial tax benefits to owning.

“Homeowners are able to deduct mortgage interest and property taxes from income…On top of all this, capital gains up to $250,000 are excluded from income for single filers and up to $500,000 for married couples if they sell their homes for a gain.”

5.) Owning is a hedge against inflation.

“Housing costs and rents have tended over most time periods to go up at or higher than the rate of inflation, making owning an attractive proposition.”

Bottom Line

We realize that homeownership makes sense for many Americans for an assortment of social and family reasons. It also makes sense financially. If you are considering a purchase this year, contact Jo Anne or Tony Rizza at 843-301-5825 to view the great real estate properties available in the Hilton Head Island/Bluffton area!

Hilton Head Real Estate Partners
Partnering with you every step of the way.

Where Are Mortgage Rates Headed? This Fall? Next Year?


The interest rate you pay on your home mortgage has a direct impact on your monthly payment. The higher the rate the greater the payment will be. That is why it is important to look at where rates are headed when deciding to buy now or wait until next year.

Below is a chart created using Freddie Mac’s July 2015 U.S. Economic & Housing Marketing Outlook. As you can see interest rates are projected to increase steadily over the course of the next 12 months.



How Will This Impact Your Mortgage Payment?

Depending on the amount of the loan that you secure, a half of a percent (.5%) increase in interest rate can increase your monthly mortgage payment significantly.

Dr. Frank Nothaft, the SVP & Chief Economist for CoreLogic, had this to say in their latest MarketPulse:

“If you are thinking of buying a home and have the financial means to do so, this could be a good time to take a look at the neighborhoods you are interested in. We expect home prices in our national index to be up about 4.3% in the next 12 months, and mortgage rates are also likely to increase over the next year.”

If both the predictions of home price and interest rate increases become reality, families would wind up paying considerably more for their next home.

Bottom Line

Even a small increase in interest rate can impact your family’s wealth.

Contact Jo Anne or Tony Rizza at 843-301-5825 to evaluate your ability to purchase your dream home. Great properties are available in the current Hilton Head Island/Bluffton real estate market, so be sure to call today!

Hilton Head Real Estate Partners
Partnering with you every step of the way.

Selling Your Home? Price It Right From the Start!



In today’s market, where demand is outpacing supply in many regions of the country, pricing a house is one of the biggest challenges real estate professionals face. Sellers often want to price their home higher than recommended, and many agents go along with the idea to keep their clients happy. However, the best agents realize that telling the homeowner the truth is more important than getting the seller to like them.

There is no “later.”

Sellers sometimes think, “If the home doesn’t sell for this price, I can always lower it later.” However, research proves that homes that experience a listing price reduction sit on the market longer, ultimately selling for less than similar homes.

John Knight, recipient of the University Distinguished Faculty Award from the Eberhardt School of Business at the University of the Pacific, actually did research on the cost (in both time and money) to a seller who priced high at the beginning and then lowered the their price. In his article, Listing Price, Time on Market and Ultimate Selling Price published in Real Estate Economics revealed:

“Homes that underwent a price revision sold for less, and the greater the revision, the lower the selling price. Also, the longer the home remains on the market, the lower its ultimate selling price.”

Additionally, the “I’ll lower the price later” approach can paint a negative image in buyers’ minds. Each time a price reduction occurs, buyers can naturally think, “Something must be wrong with that house.” Then when a buyer does make an offer, they low-ball the price because they see the seller as “highly motivated.” Pricing it right from the start eliminates these challenges.

Don’t build “negotiation room” into the price.

Many sellers say that they want to price their home high in order to have “negotiation room.” But, what this actually does is lower the number of potential buyers that see the house. And we know that limiting demand like this will negatively impact the sales price of the house.

Not sure about this? Think of it this way: when a buyer is looking for a home online (as they are doing more and more often), they put in their desired price range. If your seller is looking to sell their house for $400,000, but lists it at $425,000 to build in “negotiation room,” any potential buyers that search in the $350k-$400k range won’t even know your listing is available, let alone come see it!

One great way to see this is with the chart below. The higher you price your home over its market value, the less potential buyers will actually see your home when searching.



A better strategy would be to price it properly from the beginning and bring in multiple offers. This forces these buyers to compete against each other for the “right” to purchase your house.

Look at it this way: if you only receive one offer, you are set up in an adversarial position against the prospective buyer. If, however, you have multiple offers, you have two or more buyers fighting to please you. Which will result in a better selling situation?

The Price is Right

Great pricing comes down to truly understanding the real estate dynamics in your neighborhood. Look for an agent that will take the time to simply and effectively explain what is happening in the housing market and how it applies to your home.

Bottom Line:

You need an agent that will tell you what you need to know rather than what you want to hear. This will put you in the best possible position.

As your real estate partner we will walk through every step of the home buying and selling process. Give Jo Anne or Tony Rizza a call at 843-301-5825 for more information on the current Hilton Head Island/Bluffton real estate market.

Hilton Head Real Estate Partners
Partnering with you every step of the way.

This Is NOT Your Parents’ 3% Down Payment Plan


In their latest Housing Market Insight & Outlook report, Freddie Mac revealed that recent low down payment initiatives have raised concerns that we may be returning to the same lax mortgage qualifications that caused the housing crisis from which we are just now recovering.

The report went on to explain that today’s underwriting guidelines are nothing like those that existed just prior to the housing meltdown.

“Pre-crisis underwriting allowed layered risk, that is, the combination of multiple features that amplified credit risk. Low down payments often were combined with variable-payment loan structures, property-based underwriting, and questionable appraisals. These risk factors, along with the ‘irrational exuberance’ of some borrowers, led to large losses during the crisis.”

What is layered risk?

In the pre-crisis environment, many mortgage loans incorporated several additional features besides low down payments that multiplied the total risk of the loans such as: variable payment options, underwriting based on the property not the borrower, questionable appraisal processes. Borrower expectations were also overly optimistic at that time.

Freddie Mac highlights the difference between then and now by using a table in the report:



By removing the “layered risk”, we can be confident that low down payment programs will not impact the market the way mortgage underwriting impacted the market a decade ago. And the report explains:

“Previous research has found that reduced down payments can increase the relative probability of homeownership among some groups by over 25 percent.”

Bottom Line

We believe the report’s conclusion says it all:

“As long as the underwriting process bars the return of the layered risks prevalent in the pre-crisis era, lower down payments are not a cause for concern.”

Contact Jo Anne or Tony Rizza at 843-301-5825 for more information on the current Hilton Head Island/Bluffton real estate market.

Hilton Head Real Estate Partners
Partnering with you every step of the way.

The True Cost of Waiting…



First-time homebuyers are flocking to the housing market in greater numbers than any time in the last few years. Renters who are ready and willing to buy are now realizing that they are also able to as well. Many first-time buyers are Millennials (born between 1981 – 1997).

If you are one of the many in this generation who sees your friends and family diving head first into the real estate market, and wonder if now is the time for you to do the same, keep reading!

The Cost of Waiting to Buy is defined as the additional funds it would take to buy a home if prices and interest rates were to increase over a period of time.

Let’s look at an example of what the experts are predicting for the upcoming year, and what that really would mean for you. Let’s say you’re 30 and your dream house costs $250,000 today. Right now mortgage interest rates are at or about 4%.

Your monthly mortgage payment (principal & interest only) would be $1,193.54.

But you’re busy, you like your apartment, and moving is such a hassle. You decide to wait until next year to buy. CoreLogic predicts that home prices will appreciate by 5.1% in the next 12 months; this means that same house you loved now costs, $262,750.

Freddie Mac predicts that over this same period of time, interest rates will be a full point higher at 5.0%. Your new payment per month is now $1,410.50.

The difference in payment is $216.96 PER MONTH!

That’s basically like taking $8 and tossing it out the window EVERY DAY!

Or you could look at it this way:

  • That’s your morning coffee everyday on the way to work (average $2) with $10 left for lunch!
  • There goes Friday Sushi Night! ($50 x 4)
  • Stressed Out? How about a few deep tissue massages with tip!
  • Need a new car? You could get a brand new car for $217 a month.

Let’s look at that number annually! Over the course of your new mortgage at 5.0%, your annual additional cost would be $2,603.52!

Had your eye on a vacation in the Caribbean? How about a 2-week trip through Europe? Or maybe your new house could really use a deck for entertaining. We could come up with 100’s of ways to spend $2,603, and we’re sure you could too!

Over the course of your 30 year loan, now at age 61, hopefully you are ready to retire soon, you would have spent an additional $78,105.60, all because when you were 30 you thought moving in 2015 was such a hassle or loved your apartment too much to leave yet.

Or maybe there wasn’t an agent out there to educate you on the true cost of waiting a year. Maybe they thought you wouldn’t be ready. But if they showed you that you could save $78,000 you’d at least listen to what they had to say.

Bottom Line

They say hindsight is 20/20 and we’d like to think that 30 years from now when you are 60, looking back, you would say now was the time to buy!
Give Jo Anne or Tony Rizza a call today at 843-301-5825 for more information on the current Hilton Head/Bluffton housing market.

Hilton Head Real Estate Partners
Partnering with you every step of the way.