We would like to think of life insurance agents as trusted advisers whose only aim is to get us the right coverage.
But the nature of life insurance -– and the job of life insurance agents -– makes them something close to our natural enemy.
Life Insurance Agent Secrets
One easy way to prevent being taken advantage of is to find an independent agent. “Independent agents save you time and money,” said Chris Huntley, co-founder of JRCInsuranceGroup.com.
“Rather than completing applications and medical exams with 15 of the best life insurance companies to see which one will approve you at the best rating, make one call to a qualified independent agent, who can place you with the most appropriate carrier based on your unique personal and medical history.”
In a lot of ways, what hurts us as consumers of life insurance actually benefits life insurance agents. Here are nine examples of what I’m talking about in a quick Life Insurance 101 article!
1. Their Income Is 100% Commission
Any time you’re buying from a person compensated 100 percent by commission, your radar needs to be up and in perfect working order. Being on commission doesn’t make a person evil. But it may change his or her perspective, as well as the type and degree of products that you will be introduced to.
If the agent is entirely on commission, he or she will then have a vested personal interest in selling you products that will result in you paying the highest premium possible and hence yielding the highest commission. It is also why when you fill out the form for an online life insurance quote engine you will frequently get calls from multiple agents within minutes of hitting submit. Each one is trying to reach you first so that they can get the sale.
2. You May Very Well Be Over-Insured
Whenever an agent evaluates how much life insurance you need to have, he will almost inevitably start with numbers that are larger than anything you’d ever imagine that you would need.
For example, it’s not unlikely that the agent will suggest that you need to have life insurance equal to 30 times your annual income. If you are earning $100,000 per year, he may suggest — without flinching — that you will be adequately insured by a $3 million dollar insurance policy.
After all, you will need to provide income for your family for the next 20 years, college educations for your children, the payoff of your mortgage and a comfortable retirement for your spouse.
He knows that it is unlikely that you will take a life insurance policy that large, but it’s an excellent starting point — for him. After all, if he suggests $3 million but walks out of your house with an application for a $1 million policy, he wins. That’s because he knew going in the door that you probably only wanted a policy for a couple hundred thousand dollars.
And you’d probably be right. After all, if you have other investments and your spouse is also well-employed, you will only need a fraction of the life insurance coverage that the agent will suggest.
Most often, life insurance is only needed to settle final arrangements, medical bills, outstanding debts and maybe a few years of living expenses. Providing for your loved ones to live in luxury for the rest of their lives is an expensive you can’t afford, nor need.
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3. Whole Life Isn’t a Good Investment — Or Even Good Insurance
Life insurance agents like to sell whole life insurance as the best of both worlds–- an investment program with life insurance coverage. In truth, it doesn’t do either particularly well. The insurance benefit will be limited because the premiums are high. And since so much of the premium goes to pay for investment fees and the life insurance coverage, there is relatively little left over for investment within the plan.
4. The Cash Value of Whole Life Won’t Benefit You for Years
Life insurance agents like to hawk the virtues of the cash value build-up in a whole life insurance policy. This is another myth. As a rule, it will take at least five years before you will have a cash value that is equivalent to the amount of money you paid in premiums into the policy. And maybe not even then.
5. “Buy Term and Invest the Difference” Really Is a Better Strategy
There is probably no slogan confronted by life insurance agents that is more irritating to them than this one. And that’s because the slogan is true.
Since term insurance is so much less expensive than whole life, you can buy a lot more of it -– in fact a more reasonable amount for your needs. And the investment performance of mutual funds -– particularly index funds –- dramatically outperforms that of any insurance related investment vehicle.
Even if the combination of term life insurance and investment in a mutual fund is no less expensive than a whole life insurance premium, the money you will accumulate in the mutual fund — and the speed at which you will do it — make it a far superior investment to a whole life insurance policy. And you’ll have a whole lot more life insurance coverage along the way.
6. We Don’t Know About the Value of Long-term Care Insurance
From a consumer standpoint, there are two fundamental problems with long-term care insurance coverage:
It’s very expensive.
It’s not certain that you will ever need it.
Since people are living longer than ever, making a provision for long-term care has become a hot topic. Insurance agents know this, and they’re exploiting the fear.
Emotions aside, most people don’t need long-term care. And even if they do, it’s often for a short period just before death. If there are other assets available, particularly retirement assets or a home with substantial equity, long-term care insurance with my be unnecessary.
And if it isn’t ever needed, you will have spent tens of thousands of dollars over many decades funding an insurance policy that was never necessary. This is an important consideration when there are so many other priorities in your household budget.
Long-term care insurance is relatively new coverage, and it’s not at all certain that it will survive the test of time. Some insurance companies have withdrawn long-term care insurance coverage due to the inability to predict future medical costs or the longevity of their clients.
7. Your Kids Don’t Really Need Life Insurance
Life insurance agents love to sell whole or universal life insurance policies to parents of young children, stressing the advantages of the investment provisions of the policies. Those provisions, they argue, will help parents to provide funds for their children’s college educations. But nowhere is the advice of “by term and invest the difference” more relevant.
You should have only enough insurance coverage on your children to pay for final expenses and uncovered medical costs. In most cases, a $50,000 term life insurance policy will get that job done with money to spare. There is no need to replace lost wages with a ridiculously large policy.
And as we’ve already discussed, insurance related investment vehicles are underperforming investments. You’ll be far better off investing money in a mutual fund for your children.
8. There Is No FDIC Equivalent Back-Stopping Insurance Companies
This is a very relevant question – but seldom asked — since life insurance agents like to position themselves as investment advisers. The investments that they sell are almost always exclusively insurance products. However, there is no equivalent to the Federal Deposit Insurance Corp. that will back up the life insurance company in the event of investment failure.
There are arrangements within each state for companies to collectively backup a failed insurance company, but there is no apparatus in place to deal with a systemic failure such as the financial meltdown that hit the banks and financial companies a few years ago.
While this has obvious implications for the life insurance coverage that you pay for and expect to have, it becomes much more significant when you have a lot of money sitting in insurer-sponsored investments.
More Tips for Dealing With Life Insurance Agents
If you apply for life insurance, keep these four tips in mind from Jeff Root, a life insurance agent and founder of Rootfin.com. And again, they’re not tips your agent will be likely to recommend.
If you’re not satisfied, ask for reconsideration. Life insurance underwriters will always offer the best possible rate class as permitted by their underwriting guidelines; however, if you’re not happy with the life insurance company’s offer, your agent can submit a “reconsideration request” and ask the underwriter for a better offer. Most agents don’t even mention this as an alternative because of the extra work involved in drafting a letter convincing the underwriter why they should qualify for a better health classification.
Ask for tentative offers. Consumers can get “tentative offers” from life insurance companies before applying for life insurance. Independent life insurance agents send your risk anonymously to various underwriting desks. Underwriters typically reply within 48 hours with a health classification in what we call a “tentative offer”. You can attach this tentative offer to the life insurance application, and the company you apply with must give you this rate unless you withheld any information from them. This is a must for people with health issues applying for life insurance.
Shopping won’t necessarily get you a better rate. Going from website to website won’t result in finding better rates. However, each company looks at your health differently. It’s your agent’s job to fit your unique health situation into the underwriting guidelines of each company and then see who provides the best rates.
Most applicants won’t get the preferred best rate. Less than 5 percent of people who apply for life insurance can qualify for “preferred best.” Yet it’s the No. 1 health classification quoted on websites.
Start 2022 off strong with the strategies shared by last month’s Real Estate Rockstars. Guests covered content creation, team building, work-life balance, and more. Plus, we offer real estate predictions for 2022, including one that suggests agents should load up on leads right away!
Listen to today’s show and learn:
A trick for creating high-quality real estate videos with ease [2:30]
Real estate topics to cover on social media [4:14]
A saying that helped guide Jacob’s success [5:47]
A law that could make it even harder to evict tenants in New York [7:46]
Our final thoughts and advice for investors [9:09]
What it really takes to build a business [12:49]
Advice on building a real estate team [14:32]
A way to earn $100,000 your first year in real estate [16:33]
What you need to succeed in real estate [17:43]
When to find a financial advisor [19:11]
Kevin’s real estate predictions [20:26]
Why you need to be an authority [21:35]
The great thing about authority marketing [22:27]
How Trish does more deals working less [26:34]
Why building a database makes it so much easier to win business [29:59]
Megan’s most successful direct-mail campaign [34:09]
What Megan learned about hiring team members [36:55]
What all kids should experience [38:41]
How to thrive through the next year [40:22]
The business-owner mindset [41:10]
Why finding a deal is only half of the battle [42:08]
Why real estate is the same everywhere [43:40]
Why you need to load up on leads in early 2022 [45:37]
Every day is closing day [47:28]
Related Links and Resources:
Thank You Rockstars! It might go without saying, but I’m going to say it anyway: We really value listeners like you. We’re constantly working to improve the show, so why not leave us a review? If you love the content and can’t stand the thought of missing the nuggets our Rockstar guests share every week, please subscribe; it’ll get you instant access to our latest episodes and is the best way to support your favorite real estate podcast. Have questions? Suggestions? Want to say hi? Shoot me a message via Twitter, Instagram, Facebook, or Email. -Aaron Amuchastegui
In December 2021, when the 30-year fixed mortgage rate still averaged 3.1%, a borrower could get $700,000 mortgage that required monthly payments of principal and interest of just $2,989.
Fast-forward to Wednesday, and a $700,000 mortgage taken out at the current average mortgage rate of 6.90% would equal a $4,610 per month payment, which is $583,000 more over 30 years than that mortgage issued at a 3.1% rate. When adding on insurance and taxes, that monthly payment could easily top $6,000. Not to mention, that calculation doesn’t account for the fact that U.S. home prices in June 2022 were 12% above December 2021 levels and 39% above June 2020 levels.
Mortgage planners like John Downs, a senior vice president at Vellum Mortgage, have the hard job of breaking this new reality to would-be homebuyers. However, unlike last year, Downs says most 2023 buyers aren’t surprised. The sticker shock, the loan officer says, is wearing off.
Just before speaking with Fortune, Downs wrapped up a call with a middle-class couple in the Washington D.C. area, who told him they were expecting a mortgage payment of around $7,000.
“The call I just had was a typical area household. One person makes $150,000, the other makes $120,000. So $270,000 total and they said a payment goal of $7,000. I’m still not used to hearing people say that out loud,” Downs says.
Even before these borrowers speak to Downs—who operates in the greater Baltimore and Washington D.C. markets—they’ve already concluded that these high mortgage payments will be “short-lived,” and they’ll simply refinance to a lower payment once mortgage rates, presumably, come down.
To better understand how homebuyers are reacting to deteriorated housing affordability (and scare inventory levels), Fortune interviewed Downs.
This conversation has been edited and condensed for clarity.
Fortune: Over the past year, mortgage rates have spiked from 3% to over 6%. How are buyers in your market reacting to those increased borrowing costs?
John Downs: I must say, the reaction today is quite different from last year. It’s almost as if we have lived through the “7 stages of grief.” We appear to have entered the “acceptance and hope” phase.
With all the reports pointing to home prices stabilizing, one might think that buyers are comfortable with these rates and corresponding mortgage payments. The reality is quite different. Many would-be homebuyers have been pushed out of the market due to affordability challenges through loan qualifications or personal budget restraints. Move-up buyers also find themselves in the same predicament.
As a result, my market (Baltimore-DC Metro Region) has 73% fewer available homes for sale than pre-pandemic, 57% fewer weekly contracts, and an 8% increase in properties being relisted. (Information per Altos Research) As a result, prices have remained relatively stable due to the balance of buyers outweighing sellers.
I’m seeing buyers today taking the payments in stride for various reasons. Their incomes have risen dramatically, upwards of 25-30% since 2020, and the income tax savings through the mortgage interest deduction is now a meaningful budget item to consider. Many also say, “I can always refinance when rates come down in the future,” which leads to a sense that this high payment will be short-lived.
When I say buyers are comfortable with these payments, I know there are also two to three times more buyers who run payments using online calculators who opt out of having conversations in the first place! To prove this, our pre-approval credit pulls (a measure of top-of-funnel buyer activity) are running about 50% lower than pre-pandemic.
Among the borrowers you’re working with, how high are monthly payments getting? And how do they react when you give them the number?
For the better part of the last decade, most of my clients would enter a pre-approval conversation with a mortgage payment limit of no more than $3,000 for a condo and $4,500 for single-family homes. It was rare to see numbers higher than that, even for my higher-income wage earners. Today, those numbers are $4,000 to $6,500 respectively.
To my earlier comment, active buyers today seem to expect it. It’s as if they are comfortable with this new normal. Surprisingly, the debt-to-income ratios of today (in my market) are very similar to where they were five years ago. Income is ultimately the great equalizer. Yes, the payments are dramatically higher today, but the buyers’ residual income (post-tax income minus debt) is still in a healthy range due to local wages.
Remember, we are still talking about a much smaller pool of buyers in the market today so this conversation is skewed towards those with more fortunate lifestyles.
Tell us a little bit more about what you saw in the second half of 2022 in your local housing market, and how that compares to the first half of 2023?
There are dramatic differences between those two periods. In the second half of 2022, there was nothing but fear. The stock market was under stress, inflation was running wild, and housing began to stall. Across the country, inventory began to rise, days-on-market pushed dramatically higher, and price decreases were rampant. The safest bet then was to do nothing, and that’s just what buyers did. The mindset was, “I will wait until prices fall and rates push lower before I buy.”
The start of 2023 sparked a reversal in many asset classes. The stock market found a footing and pushed higher, mortgage rates rebalanced, property sellers adjusted their prices, and employers began pushing out significant wage increases. As a result, housing stabilized, and in some areas, aggressive contracts with multiple offers, price escalations, and contingency waivers became the norm.
The strength in housing was not as universal as it was in 2021. There were very hot and cold segments, depending on location and price point. The affordable sector (<$750,000 in my market) and higher-end (>$1.25 million) seemed to perform very well with heightened competition. The mid-range segment is where we noticed some struggles. One common theme is that buyers at every price point seem much more sensitive to the property’s condition. When the housing payments are this elevated, it doesn’t take much for the buyers to walk away!
What do you make of the so-called “lock-in effect”— the idea that existing market churn will be constrained as folks refuse to give up those 2-handle and 3-handle mortgage rates?
I believe the “lock-in effect” is very real. My opinion is based on countless conversations I’ve had in the past 6-9 months with homeowners who want to move but can’t. Some cannot afford to buy their current home at today’s value and rate structure. Others just cannot stomach the significant jump in payment to justify the increase in home size or the preferred location.
I believe the reason we are seeing struggles in the mid-range home is that the traditional move-up buyer is stuck. In my market, that would be the person who sells the $700,000 home to purchase at $1 million. They currently have a PITI housing payment of $2,750; the new payment would be $6,000 rolling their equity as a down payment. That jump is too much for most, especially those with a median income. That payment would have been $4,500 a couple of years ago, which was much more manageable.
Based on what you’re seeing now, do you have any predictions on what the second half of 2023 might look like? And any thoughts on the spring of 2024?
Despite high rates, the desire to buy a home is still high for many. Given the lag effects of Fed tightening (raising interest rates) coupled with an overall improvement in inflation, one can assume mortgage rates have topped out and will continue to improve from here. Think of playing with a yo-yo on a down escalator, up-and-down movement but generally pushing lower. As rates improve, affordability and confidence will shift, bringing out more buyers and sellers.
I believe this will be supportive for home values and give buyers more choice as inventory increases. Keep in mind, most sellers become buyers, so the net impact on inventory will be negligible. Knowing that some sellers will keep their current home as a rental, one could argue that inventory will worsen. At least buyers will have more house options each week, a stark difference from today.
When discussing strength in housing, thinking through local dynamics is crucial. The DC Metro area has a diverse, stable job market which I do not see reversing if an economic slowdown occurs. We didn’t have a tremendous push towards short-term rentals as many other areas and the “work-from-home” (WFH) environment had most people stay within commuting distance to the cities.
One thing I expect is an unwinding of WFH in 2024. In fact, I’m already experiencing that. Many clients are being called back to the office, either through employer demands or fear they will be exposed to corporate downsizing efforts. As a result, I expect underperforming assets (D.C. condos and single-family homes in transitional areas of the city) to catch a bid while single-family homes in the commuting neighborhoods plateau from their record-setting appreciation over the past few years.
Housing market affordability (or better put the lack thereof) is at levels unseen since the peak of the housing bubble. Do you have any advice on how would-be buyers can ease that burden?
This may be the most complex question because everyone is at a different place in life. For the better part of the last 20 years, my consultation calls were 20 to 30 minutes long, and we could formulate a great plan. Today, that pushes over an hour and usually requires a detailed follow-up call. If I had to sum up all my conversations, I would say it comes down to forecasting life and patience.
Forecasting is a process where you map out life over the next two to three years—discussing job stability, income projections, saving and investment patterns, debts rolling off (or being added), kids, schools, tuition, etc. From there, talking about local market dynamics such as housing supply, population growth, and interest rate cycles and projections. This helps formulate a solid budget to use for a home purchase.
Patience can mean several things. For some, it means renting for a period of time to save more money or ride out periods of uncertainty. For others, it could be looking for the right sale price mix and seller concessions for rate buy-downs, closing costs, etc. Sometimes it means being patient with your desired location. Maybe you just can’t have that specific house in that specific area for a few years and settling for the next best location is good enough for now. Housing used to be a stepping stone for many but the low-rate environment of the past few years allowed everyone to get what they wanted right away. We seem to have lost the art of having patience in life.
The decline of Fort Morgan didn’t happen suddenly. There wasn’t a giant factory that closed or a natural disaster that devastated the small, farming town on the plains in the northeastern corridor of Colorado.
Instead, Fort Morgan’s story is a familiar one playing out across rural America: children moving away to find better jobs in the cities and big-box stores and online shopping leading to empty storefronts on Main Street. But this isn’t how the story ends for Fort Morgan, about an hour and 15 minutes northeast of Denver.
HGTV is turning its star power on Fort Morgan with the Season 2 premiere of “Home Town Takeover.” The show will feature its biggest name stars, including Ben and Erin Napier of “Home Town” and Dave and Jenny Marrs of “Fixer to Fabulous,” as they take on revitalization projects around town. The six-episode series is to premiere on Sunday.
The popular network has a strong track record of transforming struggling, down-on-their-luck, small towns and cities into popular tourist and real estate destinations. Several of these communities have credited the shows built around them for their turnarounds. Can HGTV and its talent re-create the magic in Fort Morgan—and perhaps inspire other struggling towns to invest in their own revitalizations?
“At the end of the day, millions of people are going to see this show,” Jenny Marrs tells Realtor.com®. “They’re going to be inspired either to go and visit Fort Morgan, which would be amazing and help the town as far as tourism, but also just be inspired to maybe do the same thing in their own town.”
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Watch: Exclusive: Is HGTV’s ‘Renovation 911’ the Most Dramatic Home Improvement Show Yet?
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Over the four months of filming for the show, the teams completed 18 projects. They included fixing up homes of local heroes, businesses such as the town’s bowling alley, and community spaces such as the downtown business district and a local park.
“Our town could use a jump-start,” says local artist Ann Iungerich. “The last 10 to 15 years, it’s gone through a slump. We could use a boost to get us back on track.”
Helping out on the projects were guest stars Jonathan Knight, star of HGTV’s “Farmhouse Fixer” and former vocalist for New Kids on the Block; rapper Lil Jon, who also has a show, “Lil Jon Wants To Do What?”; and Ty Pennington of “Rock the Block,” among others.
“These towns each have a special story,” says Jenny Marrs. She was most impressed by the people she met in Fort Morgan and how they rallied together to improve their community. “People stop, they say hello, they wave at you when you drive by, they know your name at the grocery stores. These sort of simple things can be really powerful.
“Families have lived in these small towns for generations. This is their family legacy and history,” she continues. “They shouldn’t have to move if we can help make the town viable again.”
The HGTV effect on real estate markets
The Texas city of Waco is perhaps the best example of the power of HGTV and its charismatic stars.
“Fixer Upper” premiered in 2013 and launched Chip and Joanna Gaines into the stratosphere. The couple built an empire off of that show, with a furniture line at Target, eight bestselling books between them, and even their own network, called Magnolia. But their greatest accomplishment might have been transforming the public image of Waco.
Before the popularity brought by the Gaineses, the city had been best known for a deadly standoff in 1993 between federal agents and a religious cult run by David Koresh. Now, tourists flock to the city to shop at the Gaineses’ stores and eat at their restaurant, Magnolia Table.
Average home prices in McLennan County, which includes Waco, surged almost 52.1% from 2015 to 2019, according to data previously provided by local real estate broker Camille Johnson. (“Fixer Upper” ran from 2013 to 2018 on HGTV. It was rebooted as “Fixer Upper: Welcome Home” on the Magnolia network in 2021.)
Before “Home Town” began filming in Laurel, MS, Mayor Johnny Magee flew out to Waco. He wanted to see the impact that “Fixer Upper” had on the struggling city.
“What we saw were tourists everywhere, and people were claiming that the same could happen in Laurel. We were doubtful,” says Magee. He didn’t realize how popular the show starring the Napiers would be when it premiered in January 2016.
Today, Laurel is booming. Its hotels and restaurants are full, home sales have risen as more people have moved here, and the town’s tax base has increased.
Home list prices surged in Laurel, shooting up 84.1% from July 2016 through July 2022, according to Realtor.com data. That’s compared with a 71.9% increase nationally and 60.8% in Mississippi over the same period.
“I am a native Laurelite who is amazed about what has happened since Ben and Erin Napier have begun the ‘Home Town’ show in Laurel. When the show began, downtown was like a ghost town,” says Magee. “What we have experienced has blown the minds of everyone who knew Laurel pre-‘Home Town.’”
Bentonville, AR, where “Fixer to Fabulous” is filmed, is a bit of an exception as it’s a city of more than 55,000 residents. It’s also the birthplace and headquarters of Walmart.
However, the Marrses have seen tourism tick up as a result of their show. There are now golf cart tours of the homes that have appeared on “Fixer to Fabulous.”
“It’s a powerful thing,” Dave Marrs says of the HGTV effect on Bentonville.
But there are a few downsides.
Home prices can rise as a result of being in the spotlight, say the Marrses. The number of properties for rent and sale is likely to drop even further as out-of-towners move in. That’s likely to make it harder for locals to find places. And those who grew up in the community might find themselves competing with deep-pocketed investors and retirees.
When home prices increase, property taxes can also rise. That was a substantial problem that homeowners in Waco experienced.
Fort Morgan’s already benefiting from ‘Home Town Takeover’
Since the news broke in July that the new season of “Home Town Takeover” would be filmed in Fort Morgan, commercial properties downtown have been selling quicker, says Brian Urdiales, a Fort Morgan councilman and Compass real estate broker.
“It isn’t typical to see three commercial properties on Main Street go onto the market and then close in a short time,” he says. “It would be great to see all the foot traffic and people on Main Street like when I grew up.”
Tourists have also begun to trickle in, says artist Iungerich, 61, a lifelong resident of the town. She submitted the town’s original application to be on the show when it launched just before the COVID-19 pandemic hit in early 2020. And she created an art installation that will be featured on the show: a 5-foot-tall bowling ball, a 9.5-foot-tall pin, and a crown, all placed in front of the local bowling alley.
The recent trickle of tourists is certainly something new for Fort Morgan, founded after an eponymously named military post opened in the mid-19th century along the South Platte River.
Today, the fort no longer remains and Fort Morgan is primarily a farming and ranching community of about 11,500 residents. There is a large Cargill beef processing plant, a mozzarella cheese processing facility, and a historic sugar factory.
The old railroad depot is boarded up, but folks can still catch an Amtrak train to Denver or into Nebraska. There are some restaurants, and the movie theater has recently been remodeled.
Fort Morgan has “the blue-collar jobs. They have the farming. They just didn’t have the draw to keep people there,” Dave Marrs tells Realtor.com. “So a lot of our focus was ‘Hey, you’re working here, stay here. Spend time here, spend money here so the town can develop even more.’”
Despite the town’s struggles, Fort Morgan’s real estate market has remained appealing to buyers priced out of more expensive parts of the state. During the pandemic, many Denver-area buyers came to Fort Morgan seeking more affordable properties, more space, and a more rural lifestyle. Homes sold briskly in a single weekend, often for over the asking price.
The real estate market has since come back down as higher mortgage interest rates are forcing many would-be buyers to the sidelines. Home list prices are mostly back to pre-pandemic levels, at a median of $330,550 in March, according to Realtor.com data.
Homes in Fort Morgan are still attracting buyers, especially as prices are about half of Denver’s median price tag of $663,000 and roughly $100,000 less than the national median of $424,500 in March.
“Our market’s always been pretty strong,” says Urdiales. He’s still seeing bidding wars, investors making all-cash offers, and first-time buyers jumping into the fray. “People are still buying.”
And the international exposure the town is about to receive is expected to be positive for the real estate market, especially as many viewers are working remotely and can live just about anywhere.
“It brings this aura of glamour to the small-town lifestyle,” says Jeff Engelstad, a real estate professor at the University of Denver. “You get on a million people’s radar, and you’re going to land a few of them.”
Home prices surge in Wetumpka after ‘Home Town Takeover’
Perhaps the best blueprint of what’s in store for Fort Morgan might be what happened in Wetumpka, AL. The small town was featured in the first season of “Home Town Takeover,” which premiered in May 2021.
As HGTV broadcast this small town into living rooms all over the world, the real estate market caught fire. Prices rose and homes flew off the market. Homes for rent or sale were scarce.
Home list prices in Wetumpka grew 42.3% from January 2021 through January 2023, according to Realtor.com data.
While some of that is due to the hot housing market during the pandemic, Wetumpka saw much larger run-ups in prices than the state or rest of the country. Over the same period, prices rose 26% in Alabama and 23.9% nationally.
The market has since slowed along with the rest of the nation, but some homes are still receiving multiple offers, says Wetumpka real estate broker Beverly Wright, of Re/Max Cornerstone Realty.
“It’s pretty crazy,” says Shellie Whitfield, executive director of the Wetumpka Area Chamber of Commerce. “We’re still building housing, and once the shovel’s in the ground, they’re sold.”
When she moved to Wetumpka in summer 2017, about 40% of the stores downtown were boarded up. Now, only two storefronts are empty and busloads of tourists visit the town’s new bookstore, ice cream parlor, pet store, and even a high-end olive oil and vinegar store.
“They sped us up about 15 years. It’s been really great,” says Whitfield. “They just catapulted us just far beyond anything anyone could have imagined.”
Whitfield is confident the show will have a similar effect on Fort Morgan.
“They definitely will see some impact because there is such a strong following for the show,” says Whitfield.
The Marrses want viewers to be inspired to take action to turn their own towns around.
“I hope that people watch this show and say we can do that,” Jenny Marrs says. “It’s a spark that gets the fire started.”
With home prices down, foreclosures up, there’s an influx of great homes on the market with less competition vying for them. The next year or so may present some prime buying opportunities for those willing to do some homework, and who meet the prerequisites of home ownership. Although it may seem counter-intuitive, one of the most important things to ask yourself when you start looking for a house is: “How easy will it be to sell this thing?”
Sound personal-finance decisions usually involve thinking one step ahead. You should not be content just to get into a house that you emotionally fall in love with; rather, you should be looking to buy a house that you can get out of quickly, easily, and at a profit should life happen to throw you a curveball that will force you to move.
What characteristics lead to a house being highly “marketable”? Granted, there’s not an exact set of criteria that will be ideal for all people in all situations and markets, but the more factors you have working in your favor the better. We’re not talking about buying a house for the purpose of flipping it. We’re simply talking about buying a house that you can live in, put some sweat equity into over time, and then sell for a profit.
Unexpected Moves Can Happen to Anyone
When I purchased my first home 3-1/2 years ago, I was thinking I would be in it until I was able to pay off my mortgage. I loved the location, the house, and the neighbors. My wife and I both had solid jobs. It was also a house that we could grow into: 3 bed, 1.5 bath, 1,500 finished square feet, full basement, and a nice yard — all in an area with a low cost-of-living and high quality-of-life.
Fast-forward 2-1/2 years: a fantastic job opportunity presented itself. We decided it would be best for us to sell and move two hours away. Thanks to some smart thinking before we bought the house and some elbow grease, we were not only able to sell the house in just three months, but make a 10% gain on it in a horrible market. Additionally, we were able to do this via “for sale by owner”.
As you shop for a home, keep in mind these characteristics that not only make it appealing to live in now, but will make it have greater equity in the future (thus making it easier to sell).
The Right Size
You need to not only look for a house that fits for you, but also that fits for the majority of the population. Here’s what the majority of households are looking for or are able to adapt to:
Look for a minimum of three bedrooms and a maximum of four. Two bedroom homes mostly cater to single people or couples that do not or will not have children (and aren’t concerned with selling their house). At the same time, homes with five bedrooms or more cater to those who have a healthy number of children, or plan on having them in the near future. That makes three- and four-bedroom homes the perfect size for the majority of the population, with three bedrooms being ideal. If you haven’t noticed, large suburban homes that are energy drainers are quickly going out of style.
In terms of number of bathrooms, 1-1/2 or 2 will make the home more desirable than just one. If you’re looking at a house that could cheaply add another half or full bath, you might have a good find.
Square footage is important, but not quite as much as the number of bedrooms. Typically, you’ll want more than 1,000 (with room to expand) and less than 2,000 for a home to be comfortable and efficient for the majority of the home-buying population.
Curb Appeal That is Ripe For Improvement
When it comes to selling a house, the biggest challenge is getting people in it. The key is to find an attractive home from an architectural perspective that needs aesthetic upgrades. Consider yourself lucky to find a home with an ugly paint color and really poor landscaping. These are two things that you can spruce up on the cheap with a little sweat equity.
If you’re willing to get up on the roof, a home with a poor roof may present an opportunity to get a credit during the bidding process (with a recommendation from an inspector) that is worth the price of a professional doing the job. You can then turn around and buy the materials and do it yourself, while pocketing the remainder of the money to apply towards your loan or other projects. Our current home has an older roof with a few warped pieces of wood sheathing. We were able to get a $6,500 credit for a project that is costing just $2,000 to do on our own.
On the extreme end of things, our current house had an ugly asphalt driveway that was falling apart. What was attractive about this is that the driveway is only about 25 feet in length so tearing it out and replacing it only cost us $1,700. Now, it looks great!
Here are some other cheap ways to improve a home’s curb appeal before you sell it:
Paint the shutters
Power wash everything
Refinish the porch
Add landscaping that looks great year-round
Water the grass until it’s the greenest on the block
Add a nice new mailbox and address numbers
Good Structure
When it comes to buying a home, you want to avoid major structural issues that will cost you big money to fix or will diminish your leverage when it’s time to sell if you haven’t fixed them. Here are a few of the biggest culprits:
Do not buy a house that has issues with the foundation. If you see large cracks in the foundation outside or on the basement walls, or the walls look like they are caving in some spots, kindly leave the house and look elsewhere.
Termite or carpenter ant damage is common in some locales, and it may be hard to find an older home that hasn’t had a little damage at one point or another. The key here is to find a home that does not have major structural damage and has no signs of current issues. Some home inspectors will actually insure for a year or more that there are no current signs of infestation, and if they appear, they will cover the costs to terminate.
Have you ever walked through a house that makes you feel claustrophobic or just didn’t feel right? Odds are that other people feel that way in the same homes. Don’t buy them. This may be remedied by knocking down a wall or two in some homes, but that can be an expensive project and you may be risking structural damage.
Avoid buying a house that has signs of mold or water damage. They can be very expensive to fix and usually are signs of larger foundational or roof issues. Here again, a good home inspector will be able to test or look for both.
Beware problems with the electrical and plumbing systems. These are a home’s lifeblood, and replacements are costly.
If you buy a home with an ancient furnace, you may want to have it checked out beforehand. Any home with steam radiant heating may cost you a pretty penny to heat or replace.
Easy-to-Improve Internal Aesthetics
As with structure, making major changes to the interior of a home can be costly, but there are some cheap projects that can really change the perceived value and quality of a home. One summer’s worth of weekends spent on the following projects can not only improve the marketability of your home, but make it much more enjoyable for you to live in. Look for a house that will allow you to do most of the following, as one with all of them done already will probably be selling for a premium:
Add nice, modern-looking light fixtures
Add fresh earth-tone paint
Replace beat-up light switch covers
Re-finish hardwood floors
Replace linoleum with tile
Add a backsplash in the kitchen
Here are some of the features most people want, but won’t be cost effective for you to add:
Central air conditioning
Nice kitchen cabinets (or cabinets that will be nice when refinished)
Fireplace
Garage
Energy-efficient windows
An Under-Priced Location
It seems that more people are looking to purchase in nice urban areas that are close to work versus suburban McMansions. Not only do these homes save commuting time and money, but they almost always have a lot more character and are much more structurally sound. In my most recent home-purchasing experience, I looked at a few houses built after 1999. All had large foundational cracks and cheap materials throughout.
Another bonus to purchasing a home in a more densely populated area is foot and car traffic. My first home was located just off the corner of a highly trafficked street. Because of this, I could put up a ‘for sale’ sign pointing towards my house. I ran through 20+ flyers a day and ended up selling the house to someone who drove by it. You don’t get this kind of exposure in the ‘burbs.
Highly desirable locales are going to cost you a premium, but you may be able to sell a home quicker. What I have searched for in my first two home purchases are areas that are relatively cheap compared to highly desired areas, yet have most or all of the same features. Others will realize the same thing when searching for a home.
Good School District
Even if you never plan on having children, it is important to look within areas that have a reputation for having good schools. Do it for the kids. If not yours, for the kids of the people buying your house from you.
The more desirable characteristics you’re able to find or add to through inexpensive sweat equity will improve your chances of not only selling your home, but selling it quickly and for a premium.
What characteristics and specifications would make a house more appealing to you?
While some people think of Walt Disney World as a place designed for kids, that’s not entirely the case. In fact, some parts of Disney World aren’t kid-friendly at all. The elegant, AAA Five Diamond Award-winning restaurant Victoria & Albert’s doesn’t allow kids under 10, and Jellyrolls — a dueling piano bar — is for vacationers 21 and up.
A trip to Disney World for couples or adult friends can be fun and worth taking. But even without kids to add onto trip costs, a Disney trip for two is not cheap.
The average cost of Disney World for two adults can easily top $4,000 for a seven-night trip, and that’s for frugal travelers. Couples who want to splurge on the fanciest rooms and restaurants, perhaps those traveling for a honeymoon or proposal — or those who simply want to travel in style — should budget at least $10,000 for seven nights.
A NerdWallet analysis sought to find out how much a trip to Disney World for two costs, accounting for line items across these four categories:
Park tickets (and add-ons, like Genie+).
On-property hotel room rates.
Food at park restaurants.
Add-on activities, like spa treatments and tours.
Because Disney offers options for a range of budgets, NerdWallet categorized the average cost of a Disney vacation for two into three price tiers: Value, Moderate and Deluxe (which is the same classification that Disney World uses for its hotels).
A frugal couple might be fine booking a Value hotel with minimal frills and only dine-at-counter service restaurants or carts. But other adults might purchase extras to improve the experience, like line-skipping privileges or larger rooms — all variations accounted for in the average price estimates listed below. Read more about NerdWallet’s methodology at the end of this article.
Here’s how much you should anticipate spending per day, per person (with hotel prices based on double occupancy), based on travel style:
One-day, one-park theme park ticket
One-night hotel room (Saturday night)
Individual meal
The average total Disney World cost for 2 adults
Here are NerdWallet’s estimates of a Disney vacation for two, broken down by travel style and length of trip:
Each Disney budget listed above assumes daily theme park tickets, three meals per day and overnight stays at a Disney-owned hotel with both travelers sharing one room.
Disney World ticket prices
Disney World ticket prices vary by park and date.
One-day Magic Kingdom Park tickets average $160, making it typically the most expensive of the four Walt Disney World theme parks. Magic Kingdom may be the most iconic and features romantic spots like Cinderella Castle (which might be ideal for a Disney proposal), but it’s also viewed as the most family-friendly park, which means more strollers to dodge.
Meanwhile, Epcot tends to be the cheapest Disney theme park — which is a plus given it’s often considered the best Disney World park for adults anyway. About half of the park is devoted to World Showcase, which consists of 11 mini subsections themed to a different country, including Norway, China and Morocco. Each serves up food and beverages (including alcohol), and some have rides, too.
Disney World price per person
One-day, one-park ticket advertised price range
$109 to $189.
Average one-day, one-park ticket price
Genie+ (add-on option for Moderate and Deluxe trips)
Starting at $15.
Disney World ticket prices drop the longer you stay. For example, five-day, one-park-per-day tickets average $643 (that’s $129 per day).
Optional Disney ticket upgrades include Lightning Lanes, which are priority queues for certain attractions, and Park Hopper tickets, which allow multiple park visits per day. Upgrades aside, here’s how much you should expect to spend on Disney tickets for two adults, based on number of theme park days:
Disney World hotels
The myriad of Disney-owned hotels offer options across price points. They range from Disney’s All-Star properties — which start at $128 per night, according to Disney trip planning website Touring Plans, and are considered Value properties — to Disney’s Grand Floridian Resort & Spa, which starts at $780 and is one of the most expensive Deluxe hotels.
Specific room rates vary based on check-in date and specific property, but here are average prices broken down by type and trip length, according to NerdWallet’s analysis:
Three nights
Seven nights
Even Disney’s cheapest hotel rooms are more expensive than what you might find elsewhere in the Orlando area. The average daily room rate across Orlando is just $186.49, according to Visit Orlando’s 2022 Travel Industry Indicators. That’s about 35% less than the $286 average price for the cheapest Disney resort.
Disney World food
NerdWallet researched average meal prices to find an estimate for the Disney World cost of food. Value meals consisted of an entree and drink, while meals placed in the Moderate or Deluxe tier (all served at table service restaurants with waitstaff) also included either an appetizer or dessert.
Here were average Disney World meal prices per person, based on restaurant tier:
Other activities and expenses
NerdWallet’s calculations did not factor in miscellaneous items and souvenirs, which you might want to account for when estimating your own trip to Disney World.
But NerdWallet’s seven-day trip estimations did consider other entertainment and activities, which are add-ons that Disney refers to as its “Enchanting Extras Collection.” They include scuba diving, golf lessons and dessert cruises aligned to sail during the fireworks. (NerdWallet did not add the costs of these extras for shorter trips, given that most people would be devoting their time to the theme parks).
Someone seeking a behind-the–scenes tour on a budget might book the $35, one-hour Behind the Seeds tour that takes you into Epcot’s fish farm and greenhouses. Longer and more expensive tours include the Animal Kingdom’s $199 Wild Africa Trek tour, which involves three hours of hiking, off-roading in a safari vehicle and traversing a rope bridge.
For couples taking seven night trips, here’s how much extra NerdWallet estimates you should budget for Disney World extras (for two people):
Value: $284.
Moderate: $443.
Deluxe: $911.
While not everyone will opt for these activities, many adult travelers might incorporate Disney Enchanting Extras in their budget for Disney World.
How couples can visit Disney World on a budget
Couples should expect to spend a minimum of $700 if staying on Disney property for one night and visiting the parks for one day.
For three-night stays (and two theme park days), costs inflate to a minimum of $1,800. And for seven-night stays with five theme park days, expect the trip to cost at least $4,000 if you’re low-frills. However, you might spend more than $10,000 across seven nights if you vacation like you’re keeping up with the Joneses. And that’s all before accounting for the cost to actually get there.
Here are some strategies for couples planning a trip to Disney World on a budget:
Book Disney Good Neighbor Hotels, which are hotels owned by other large hotel chains. Cash rates are typically cheaper than those at Disney’s own hotels, and they can sometimes be booked for free (assuming you have hotel points earned through frequent stays or credit card rewards).
Commit to Disney’s free mass transit. While families might require a rental car to use their own car seat, adults can get away with relying solely on Disney’s extensive transportation network of boats, monorails, buses and gondolas, which are free to use.
Don’t be afraid to order the kids’ meals. Particularly if dining at a counter-service restaurant, no one will know if you’re ordering a kids menu item to be consumed by an adult.
Methodology
To better understand what an average trip to Disney World for two adults costs, NerdWallet gathered more than 200 ticket prices, 550 Disney-owned hotel room rates and 100 additional activities and restaurant prices between April 2023 and April 2024. NerdWallet aggregated those figures to build sample trip budgets based on travel style and trip length and ultimately to determine how much a Disney trip for two costs.
NerdWallet’s trip costs start once you’re on property, thus don’t account for parking, airfare or driving costs. Here’s what’s included in each price tier:
Travel style
A budget-minded traveler seeking affordable options, few frills and little to no add-ons.
Someone price conscious but who occasionally splurges.
Someone who will pay top dollar to access the high end of what Disney offers.
Tickets (Disney World)
One-park-per-day tickets.
One-park-per-day tickets with Genie+.
One-park-per-day tickets with Genie+.
Hotels (Disney World)
Overnight at Disney’s Value hotels.
Overnight at Disney’s Moderate hotels.
Overnight at Disney’s Deluxe hotels.
Daily meals (Disney World)
Three meals (one entree and one beverage) at Value counter service restaurants or food carts.
Two Value meals plus one Moderate meal (one entree, one dessert or side and one beverage) at a casual, table service restaurant with waitstaff.
One Value meal, one Moderate meal plus one Deluxe meal at an upscale, table service restaurant with waitstaff.
Extra activities (Disney World)
Value add-ons, like cheap seats at Disney World’s Cirque du Soleil show or a lower-budget spa treatment (like an express pedicure).
Moderate add-ons, like central seats at Disney World’s Cirque du Soleil show or a grand pedicure at the spa.
Deluxe add-ons, like front-row seats at Disney World’s Cirque du Soleil show or a full-body massage at the spa.
Stateroom type (Disney Cruise Line)
Standard Inside.
Deluxe Oceanview.
Deluxe Oceanview with Verandah.
Daily meals (Disney Cruise Line)
No extra meals added.
One additional meal at Palo.
One additional meal and wine pairing at Palo.
Extra activities (Disney Cruise Line)
No extra activities added.
Moderate add-ons, like a spa day pass or snorkeling excursion.
Deluxe add-ons, like a spa day pass with massage or scuba excursion.
Because Walt Disney World ticket prices vary by park, one-day ticket prices were based on Magic Kingdom admission. Two-day ticket prices were based on Magic Kingdom and Epcot. In addition, NerdWallet’s analysis did not account for Park Hopper tickets, which allow access to multiple theme parks per day.
And of course, these budgets for the average cost for a trip to Disney should be used to estimate — rather than determine — your own Disney trip costs. Couples who pack their own snacks might spend less on Disney food. Meanwhile, those using their Disney trip as a shopping spree should account for souvenir costs, alongside other potential extras like PhotoPass.
(Top photo courtesy of Walt Disney World)
How to maximize your rewards
You want a travel credit card that prioritizes what’s important to you. Here are our picks for the best travel credit cards of 2023, including those best for:
This is a guest post from John Forman from The Essentials of Trading. Forman is the author of a book by the same name. He has been a trader of the stock and other markets for over 20 years, and is a professional stock market analyst for Thomson Reuters.
The wealth building potential of the stock market is enormous. I think we all realize that. The long-running debate, though, is whether one is better off investing in individual stocks (or funds that do just that), or whether it’s best to just put your money in an index fund. Most funds fail to beat the market, so it would seem index funds are the better choice.
While it is certainly true that index investing has some advantages, and some mutual funds do perform better than the indices, no index or fund will ever offer the upside potential of investing in individual stocks. It’s a matter of math.
Indices and funds include many stocks which move in all different directions. One of those stocks could double in price for the year, but because most others in the collection will do much less well, the index’s or fund’s performance will be much lower than that one stock’s gain. An investor who held that stock by itself, though, would have done quite well.
Of course you need to be able to find the stocks that will beat the indices and funds.
How Do I Find Good Stocks? The requirements for success in the stock market are much like the requirements for success in any other undertaking. Proper preparation is one of them — potentially the biggest — and a major part of preparation is having a firm objective in mind. As an investor, that normally means either seeking capital appreciation or pursuing income, or some combination. For the purposes of the discussion here, I will focus on the capital appreciation.
Another part of the equation is timeframe. I’m not talking about how long you have to retirement. There’s plenty of literature in financial planning circles about how you should structure your investments from that perspective. What I’m referring to here is how long you will expect to hold any given stock position in your portfolio.
Are you a patient long-term buy-and-hold investor who will have no problem sitting through the inevitable ups and downs of the market? Or are you someone who wants more action, doesn’t have the patience to hold stocks for years at a time, and/or cannot stomach the idea that at points your positions could go well against you for long periods of time?
You may not always be one or the other. It is, however, important to know which mode you are in when you are looking to pick good stocks. A lot of stock market players get themselves in trouble because they go into a position thinking they are one type of player only to change their minds once prices start moving.
Fundamental Analysis If you are in the first category, then your focus in trying to find good investment stocks is to look at the big picture. You are Warren Buffett. You look at the company and its management team. You look at its business and, in many cases, the broader economy. What you are trying to identify is a company which will steadily increase in value over time.
How do you do that? By thinking about what it takes for a company to grow and profit in a sustained fashion.
What do companies like that have? They have strong management teams who know what they are doing, who have a long term view and who aren’t worried about the quarter-to-quarter results or stock price fluctuations. They are in growing business sectors (or niches) where the competition isn’t so intense that no one can really make any money.
This sort of approach to looking at companies is generally referred to as fundamental analysis. Fundamentals are the underlying elements that determine the long-term growth and profitability of a company.
The idea is that you are giving your money to some really capable people and having them put it to good use in their business. Then you let them do their thing in the way they best see fit. So long as they continue to do good things and keep the business on track for positive growth in value, you stay invested. Maybe somewhere down the line you will cash out your investment. Maybe you’ll leave it to your kids or donate it to charity. Whatever the case may be, you would expect the value of your stake in the company to have grown nicely in value by that time.
Security Analysis by Benjamin Graham and David L. Dodd is the classic text for stock market fundamental analysis. You can also find a brief overview at StockCharts.com.
Technical Analysis Now, if you are in the second category where you’re not just going to buy a stock and lock it away, you need to think more specifically about your holding period. By this I don’t mean to imply that you will hold a stock for an exact period of time and that’s it. I just mean you should have an idea of how long you would expect to be in the position. That could still be years, or it could be months or weeks.
The advantage of the long-term investor is that they need not worry about the fluctuations in the price of the stock. They are investing on the basis of the long-term growth of the company with the assumption that the stock price will generally follow along at about the same pace.
Less long-term players (often referred to as traders) have to be cognizant of the intermediate and shorter-term price action. Generally speaking, the shorter your expected holding time horizon, the more you will have to focus on the price action. This is because the fundamentals mentioned above are usually slow moving elements which play out over the longer timeframes. They don’t change quickly, so they can’t really influence short-term price movements much.
What I mean by that is stock prices can move in the short-term on a great many factors. It could be news, economic data, changes in interest rates, the general market environment, and lots of other things. Just because a company is making money hand over fist doesn’t mean the stock price will be rising. If the company continues to do that, the stock will probably move higher eventually, but in the meantime other factors could cause it to go sideways or to even fall. This is something that baffles a lot of new investors.
Focusing mostly on price moves you into the realm of technical analysis. This approach seeks to identify patterns of price movement in the market for the purposes of determining likely future direction. This is also referred to as market timing, which basically means seeking to define good points at which to buy and sell. A lot of stock investors use fundamental analysis to find good companies, then use technical analysis to try to pick the best time to buy the stock.
Technical Analysis of the Financial Markets is widely considered the ultimate source on the subject. StockCharts.com offers an introduction to technical analysis.
Value Investing To this point you’ll notice that I haven’t used the term value investing yet. Many people would refer to Warren Buffett as a value investor, and as such would put value investing in the long-term investing category.
Value investing need not be a “buy it and bury it” type of approach, however. In fact, I’d guess that most people consider it the process of identifying stocks trading out of line with the value of the company in question. They use any number of metrics to determine what a company’s stock should be worth. If the stock isn’t close to that value, they will either buy it or sell it in expectation that it will eventually get back in line. In most cases, once that happens, the stock position will be exited.
This probably all sounds very familiar. You’ve no doubt heard of Wall Street analysts putting out price targets and ratings and such. They generally use fundamental analysis to come up with what they think is the value of the company right now (adjusting it for new information, of course). Then they look at current price to see how it matches up with what their valuation calculations tell them.
If you’d like to learn more about value investing, consider Benjamin Graham’s classic, The Intelligent Investor. The Motley Fool has an interview with Bruce Greenwald about the three steps of value investing.
It Takes Work Regardless which type of stock market player you are, there are no approaches which don’t require effort on your part to pick the good stocks. Even if you have someone giving you recommendations, you should still be doing your own due diligence to see if they really fit in with what you are trying to do in the market.
Also keep in mind that no matter what timeframe investing/trading you do, you should always take the longer-term view. It’s extremely unlikely that any one stock position is going to make you rich in a short period of time. If you try to score it big on any one trade you’re probably going to end up losing a lot of money. Wealth accumulation in the markets is best sought by steady growth, putting the power of compounding to work in your favor.
In August 2020, Taylor Lopez and her husband Joseph bought their home for $180,000 in the fast-growing city of Anna.
They bought the three-bedroom house built in 1966 with a loan carrying a 3.8% mortgage rate. “From an investment standpoint, it felt like a good choice,” said Lopez, 36, a real estate manager for restaurant chain Wingstop.
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Dallas-Fort Worth home sales, prices only take slight hit from higher mortgage rates
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After more than two years in the home, they’ve been thinking about selling. Joseph works in Lewisville and Taylor works in Addison, so they would like to find a place offering a shorter commute.
D-FW Real Estate News
Get the latest news from Steve Brown and the business staff.
But, like many other would-be upsizers in Dallas-Fort Worth, the couple feels locked into their current home.
Although they could get a good return on a sale, they would have to shop in a dramatically more expensive housing market than when they first purchased and sacrifice their current loan for a new one at a much higher rate.
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After a wave of low-rate homebuying and refinancing from 2020 to 2022, more than half of outstanding Texas mortgages have rates of less than 4%, according to Federal Housing Finance Agency data.
Since last fall, the average rate for a 30-year, fixed-rate mortgage has been hovering between 6% and 7%.
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“There are people that want to sell, but that is what is keeping them there at their house,” said Misty Michael, a real estate agent in the Sachse and Plano area.
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The Lopez family said any home they would want to buy, in school districts they want to be in and that wouldn’t require a lot of work, would start in the $400,000 range.
“It doesn’t make sense when you weigh out all the pros and cons, so we’re continuing to drive about an hour each way to work,” Lopez said. “We could always purchase a home at a higher interest rate, then refinance it if the interest rates go down, but that’s an if and when situation.
“When you’re playing with that much money, it doesn’t seem like a risk I’m willing to take right now.”
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Changing math
Since the start of 2020, the median price of a single-family home in Dallas-Fort Worth has risen more than 50%, according to North Texas Real Estate Information Systems and the Texas Real Estate Research Center at Texas A&M University.
On top of that, the Federal Reserve has aggressively increased its federal funds rate for more than a year, indirectly driving up mortgage rates. Freddie Mac recorded an average 30-year mortgage rate of 6.96% on July 13.
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The result: The monthly principal and interest payment for a median-priced Dallas-Fort Worth home at the average rate with a 20% down payment, before insurance or property taxes, was about $980 in January 2020. In June, it was more than $2,100.
For buyers who purchased a $300,000 home at the record low of 2.65% in January 2021, just buying a house at the same price again at today’s average rate would add almost $900 to their monthly payments before taxes and insurance.
Purchasing a bigger or nicer home would add significantly more to that already-elevated payment, so people with job promotions or babies on the way looking to upgrade to bigger homes may not find a good enough deal to justify it financially.
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“It now is significantly more expensive to make these marginal changes that you might have been planning,” said Texas A&M economist Adam Perdue. He and his wife are expecting a baby soon and have considered getting a bigger home, but they too have a low rate on their home in Brazos County and don’t want to take on higher monthly payments.
While prices are declining slightly year to year, Texas A&M economists don’t expect them to return to where they were at the beginning of 2020. Rates are also expected to decline, but not back down to the record lows. Mortgage Bankers Association forecasts rates in the 5% range by 2024.
Still buying and selling
As mortgage rates rose and sellers held back, new single-family home listings in Dallas-Fort Worth dropped 22% between June 2022 to June 2023, limiting options for people looking to buy.
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Buyers with an immediate need to move are still purchasing homes, and people continue to move to Texas from other parts of the country. Local home sales recorded in June were down only slightly from a year before.
“We have a ton of buyers that are wanting to buy a home,” Michael said, adding that buyers may choose to refinance later. “You have people getting married, having babies, kids going to college.”
More casual buyers without an immediate need to move may no longer be shopping, said Drew Kayes, who heads up homebuying company Opendoor’s operations in Dallas-Fort Worth and Houston.
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“A lot of those folks right now are not in the market because they’re locked into a sub-4% rate, and that’s more of a luxury move than a necessity move,” Kayes said.
Jason Dickson, co-owner of North Texas-based Nuwave Lending, said while it may be hard for homeowners to leave their current home, it may be worth it for them to tap into equity they’ve built up during the pandemic to pay off credit card debt or auto loans.
“They’ll gladly sign up for the higher interest rate in the new house if they have the benefit of taking that equity and improving their overall financial position,” he said.
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A silver lining
Nipun Gadhok, 31, doesn’t want to lose his 3% rate but hopes to purchase a new home for him and his girlfriend next year.
Gadhok, a development manager for the Nehemiah Co., a local firm behind residential communities throughout Dallas-Fort Worth, purchased his five-bedroom home in Fort Worth’s Augusta Meadows neighborhood in 2021.
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He’s looking to buy a home along the outskirts of the metro area, potentially in one of his company’s developments on the east end of Mesquite. Knowing he has a rate he may never get again, he’s not planning to sell his Fort Worth house.
He intends to keep it as a rental property and is already renting out rooms to four other tenants. With mortgage rates causing many people to rent, that’s turning out to be a good side hustle.
“People are choosing to rent, they are not as much inclined to buy,” Gadhok said. “The rates really helped me out in the way that I’m not having problems with finding tenants.”
Read more stories about the D-FW housing market
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Nothing can bring a smile to your face quite like fond memories. Whether it’s time you and your best friend stayed up all night having a movie marathon or when you got drenched in the rain on the way home from school with your siblings, these nostalgic moments are worth cherishing forever. But what if those memories weren’t even yours? While reminiscing about our own experiences is always enjoyable, hearing about someone else’s good times can be just as uplifting—especially since they provide novel perspectives and insights into how others view happiness.
1. Staying in Love
One user posted, “Went to visit my mother-in-law at her memory care facility. A very posh older woman came and sat with us while we chatted and began to play with my hair. (It’s long and was down.)
“She admired both of us for a few moments and then told me that we had reminded her of her and her husband long ago. She said they traveled the world together, were madly in love, and never got bored. She smiled at me, touched my hair again, and said, ‘I used to glow like sunshine from all the happiness he brought me. You look so young! You glow, too!’ She looked at my husband and said, “You make her feel like the most important woman in the world. Don’t ever dim her glow!” And then she patted me on the lap and left.
“We’ve been together for over 25 years. It never gets old hearing how in love we both still look. And it also feels good to know it reminded her of a love that carried her through most of her life.”
2. The Toy Train
Another Redditor shared, “We went to the beach today with my son; he had just bought a toy train 30 minutes prior. We were on the pier, and my son dropped his toy, which ended up falling into the ocean. We considered it gone as we were at least 200 feet from shore and began walking for another 15 mins down the pier. On our way back to the exit, the train was floating in the water. I kid you not.
“We followed it for 30 mins as it headed toward shore. About 100 feet away from the shore, it ended up going under the pier, and we didn’t see it and considered it gone then. Another 30 mins pass, and we joke around, saying let’s go underneath the pier and wait to see if we see it. We get there, and nothing. We waited about 15 mins scoping out, and we were about to leave when I saw the damn train riding a wave close to shore.
“We waited about 5 minutes, and it came close enough, and my boyfriend ended up being able to get it. I had not smiled and laughed so hard in such a long time when we got the train back, and my kiddo was very happy to get it back.”
3. Children Belly-Laughing
“My kids were watching the paw patrol movie this morning. There’s a scene where the pups are dancing on the bus. They both let out massive belly laughs. That made me smile,” a user shared.
Another user replied, “Buddy, you made me smile! Wow, that was wholesome.”
4. Meaningful Conversation
One Redditor posted, “I was hanging out on a call with my partner, and we were just doing our own things, exchanging conversation at odd times. He was setting up a crappy, forgotten game from his favorite franchise onto his computer and was streaming it. It was cursed but hilarious, and we were both having a blast.
“He started talking about a really random but profound fact about something in the franchise but got hesitant and just called himself a nerd and stopped. I knew first hand this was a sign someone had told him to stop talking about his interests before. So I told him, ‘That’s okay. We’re all passionate about things.’ And I could tell from his responses after that he was smiling, which made me smile.”
5. Small Puppy
“Sweet baby dog putting her cold, wet pink nose on my leg while she was passing by. It was very intentional, lol,” one Redditor stated.
6. Winning a Baseball Game
One user cheerfully shared, “Watching my kid win his baseball game!”
7. Favorite Pets
One user, a Redditor, added, “My hamster, Possum, is growing up. Still obviously a baby but fast-growing out and has a fluffy coat, and they’re so cute, so I was smiling and baby talking to them last night.”
8. When Your Baby is Happy
“Seeing my 5-month-old son giggle and smile when I hold him,” shared one user.
9. Meeting up With Friends
One user commented, “Meeting up with an old mate whom I hadn’t been in contact with since late last year.”
10. Holiday Vacation
A user also posted, “Just came home from holiday (traveled to Norway visiting Oslo and a bunch of Fjords, absolutely stunning, can recommend!) and just the feeling of having made those new memories and being comfortable at home again was a nice feeling.”
Do you have memories to share? Please share it in our comments!
Source: Reddit.
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Amazon Prime Day 2023 is a stellar opportunity to elevate your space. If you’re constantly saving home decor Reels on Instagram and consistently updating your home decor boards on Pinterest, it’s finally time to join in on the fun!
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