Monthly Blog post
Stay up to date with market trends, home improvement ideas, buying and selling advice, and everything else that falls under the real estate umbrella.
As the Federal Reserve, once again, increased the overnight lending rate in September and mortgage rates near 7%, you can start to smell the brake pads in the housing market. I don’t see this as a long-term trend as inventory never fully caught up in our valley. However, I do see this softening in the market as an opportunity for buyers over the next 6-12 months.
The graph below represents the number of closed sales month to month over the last year for all single-family homes, townhomes, and condos in the Gallatin Valley. As you can see, this week’s closings are less than half of the same week last year (-56%).
While statistics are just a point in time, owning real estate remains a great strategy to make a home or become part of your investment portfolio. If you have any questions about market trends or whether now is the right time to buy or sell, please reach out to me — you know where to find me.
All the best,
Credit Scores in a Nutshell
Throughout each year, I take continuing education courses to keep my knowledge fresh within my field. Last month I completed a course on credit scores and learned a few new techniques for keeping our credit as high as possible. Credit scores are a large part of obtaining a mortgage, so I am going to catch you up on things I learned that may be useful when looking at your own credit.
How is credit generated?
First of all, it’s important to know that you don’t have just one credit score. There are various credit rating companies that collect data from different lenders and creditors leading to differing outcomes for the same person’s score. Depending on what your score is being pulled for is where this number may waver. For example, if you’re buying a new car with a loan this lender will look at a credit score that places more emphasis on your payment history. The most prevalent factors with their typical weight that go into a credit score are the number of accounts you have (10%), the types of accounts (10%), used vs available credit (30%), how long you have a credit history (15%), and your payment history (35%).
The graphic below shows how a typical FICO (Fair Isaac Corporation) score is calculated from the factors listed above. The majority of lenders and creditors use FICO as a consistent rating scale for credit scoring.
What’s an average Credit Score?
When looking at Americans’ credit scores, I was surprised to find that 50% were in the Excellent range of credit. Good work everyone! Take a peek at the graphic below to see how the other 50% is split up between Good (680-719), Average (620-679), Poor (580-619), and Bad (<580).
How do I improve/keep my Credit Score?
Besides paying off your revolving credit cards each month (or at least making the minimum payment on time), here are three very simple rules to boost your credit:
- 1. Don’t own more than 3-5 revolving credit cards.
- 2. Don’t open and close credit cards quickly just to take advantage of a purchase discount.
- 3. Don’t charge or keep a balance of more than 30% of your credit limit (e.g. $10,000 limit = <$3,000).
Feel free to reach out with any questions or to discuss the next steps in real estate ownership.
As summer enters into full swing, the season for 1031 Tax-Deferred Exchanges is also upon us. I’ve learned from experience that when more than a few of my clients call about exchanging out of their current real estate holdings, that must mean there are more inquiring minds out there! More than half of the investment properties held by my clients are original investments. These owners may not have experience with this IRS rule and what it means for them.
The basic definition of a 1031 tax-deferred exchange is exchanging one investment property for another investment property through a “like-kind” exchange. However, it does not restrict a seller from selling a rental home in Bozeman and buying a 4-Plex in Kansas. Or selling producing agricultural land and buying an apartment building. The purpose is a tax-deferment on property held as an investment. Please keep in mind the word “deferment”.
I recently received one of the best Q&A articles from a national exchange company (also known as an “accommodator”) called IPX1031. This article
Top Misconceptions About 1031 Exchanges for 2022 sums up most of the questions I receive on an annual basis. It’s also super simple to follow. As always, please seek competent tax advice before making any decisions about performing an 1031 exchange.
To your health and ongoing life adventures…
All the best,
Previous monthly newsletters separated by categories
- July 2022: The Reality of Mortgage Rates and How to Succeed
- June 2022: Why Are There So Few Homes on the Market?
- April 2022: How much is my home worth?
- March 2022: Spring Into Action!
- February 2022: Rising Mortgage Rates
- January 2022: A Warm Welcome to 2022
- December 2021: Wrapping up the Year
- November 2021: Your Real Estate Update
- October 2021: Bozeman Housing Update and More!
- September 2021: What Data is the Correct Data?
- August 2021: Dog Days of Summer
- July 2021: Happy ~Montana~ Summer
- June 2021: Your Market Update… Round 2!