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- Powerful Job Market Fuels Homebuyer Demand
The spring housing market has been surprisingly active this year. Even with affordability challenges and a limited number of homes for sale, buyer demand is strong, and getting stronger. One way we know there are interested buyers right now is because showing traffic is up. Data from the latest ShowingTime Showing Index, which is a measure of buyers actively touring homes, makes it clear more people are out looking at homes than there were prior to the pandemic (see graph below): And though there’s less traffic than the buyer frenzy of the past couple of years, we’re not far off that pace. There are a lot of interested buyers checking out available homes right now. But why are buyers so active at a time when mortgage rates are higher than they were just last year? The Job Market Is Growing at a Stronger-Than-Expected Pace With inflation still high, the Federal Reserve (the Fed) repeatedly hiking the Federal Funds Rate, and a lot of chatter in the media about a recession, it might surprise you just how strong today’s job market is. What might be even more surprising is the fact that it appears to be getting stronger (see graph below): Each month, the Bureau of Labor Statistics (BLS) reports how many new jobs were added to the U.S. job market. The graph above shows 88,000 more jobs were created in April than in March. In fact, the April numbers beat expert projections. That’s a solid indicator the job market is growing. Unemployment Is at a Near All-Time Low Ever since the Fed began fighting inflation, many people expected the low unemployment rate we’ve seen over the past couple of years to rise – but that hasn’t happened. In fact, what has happened is the unemployment rate has dropped to 3.4% – a 50-year low (see graph below): With so many people steadily employed and financially stable right now, they’re still able to seriously consider buying a home. What This Means for You our house this year, a market with active buyers is music to your ears. That’s because there’ll be increased interest in your home when you put it on the market, especially at a time when the number of homes for sale is so low. To get started, your best resource is an experienced real estate agent. They can help you price your house appropriately, navigate the offers you’ll receive, negotiate effectively, and minimize your stress and hassle. Bottom Line There are plenty of buyers out there right now trying to find a home that fits their needs. That’s because the job market is strong, and many people have the stable income needed to seriously consider homeownership. To put your house on the market and get in on the action, let’s connect.
- Why Buying a Vacation Home Beats Renting One This Summer
For many of us, visiting the same vacation spot every year is a summer tradition that’s fun, relaxing, and restful. If that sounds like you, now’s the time to think about your plans and determine if buying a vacation home this year makes more sense than renting one again. According to Forbes: “. . . if the idea of vacationing at the same place every year makes you feel instantaneously relaxed, buying a vacation home might be a wise move.” To help you decide if making a move like this is right for you, let’s explore why you may want to consider purchasing a vacation home today. Benefits of Owning Your Vacation Home You don’t have to worry about finding a place to stay. It can be a challenge to find a rental where you want, when you want. Some summer vacation destinations are more popular than others, meaning your favorite place may be booked up in advance. Bankrate explains why owning your vacation home means you don’t have to worry about that sort of inconvenience: “. . . a second home can offer a place to have quality time with your family and ensures that you always have a vacation destination.” It’s an investment. Home values typically appreciate over the long haul. That holds true for your vacation home as well, especially if it’s in an area with growing market demand. This can help grow your net worth with time. Vacation homes may provide tax benefits. If you own a vacation home, you may be eligible for tax deductions based on where it is. However, before buying, you’ll want to consult with a tax professional to discuss first as taxes can vary by location. It could potentially turn into a retirement location. If you love the location of your vacation home, you could potentially sell your primary residence and retire there in the future. How a Pro Can Help You Find Your Perfect Match As you’re preparing for summer vacation, remember, you could potentially visit your second home instead of another rental unit or hotel. If that sounds appealing to you, a local real estate agent is your best resource. They have the knowledge and resources to help you understand the area and what vacation homes are available in your budget. Plus, these agents can explain the perks of how owning a second home can benefit you. Bottom Line If any of these reasons for owning a vacation home resonate with you, let’s connect. You still have time to enjoy spending the summer in your vacation home.
- Why Buyers Need an Expert Agent by Their Side
The process of buying a home can feel a bit intimidating, even under normal circumstances. But today's market is still anything but normal. There continues to be a very limited number of homes for sale, and that’s creating bidding wars and driving home prices back up as buyers compete over the available homes. Navigating all of this can be daunting if you’re trying to do it alone. That’s why having a skilled expert to guide you through the homebuying process is essential, especially today. Bankrate shares this perspective: "Advice and guidance from a professional real estate agent can be invaluable, particularly amid a hot or unpredictable housing market." Here are just a few of the ways a real estate expert makes a big difference: Experience – Real estate professionals know the ins and outs of what’s happening today, how it impacts buyers, and how to navigate any hurdles that may pop up. Education – Knowledge is power when it comes to buying a home. Your advisor will simply and effectively explain market conditions and translate what they mean for you so you can feel confident in your decision. Negotiations – Your real estate advisor advocates for your best interests. Having an expert on your side provides assistance with the purchase agreement. An agent can also help you negotiate potential seller concessions if the inspection reveals issues with the home. Contracts – Real estate advisors guide you through the disclosures and contracts necessary in today’s heavily regulated environment. Pricing – Making an offer and negotiating with a seller can be one of the most difficult and stressful parts of the homebuying process. A skilled agent will help you understand what similar homes are selling for so you have the full picture of what you may want to offer. All of these reasons combined may be why 86% of recent buyers used an agent according to the latest Home Buyers and Sellers Generational Trends Report from the National Association of Realtors (NAR). NAR also has this to say about why an agent is so essential today: “A great real estate agent will guide you through the home search with an unbiased eye, helping you meet your buying objectives while staying within your budget. Agents are also a great source when you have questions about local amenities, utilities, zoning rules, contractors, and more.” What’s the Key To Choosing the Right Expert? It starts with trust. You’ll want to know you can trust the advice they’re giving you, so you need to make sure you’re connected with a true professional. No one can provide perfect advice because it’s impossible to know exactly what’s going to happen at every turn – especially in today’s market. But a true professional can give you the best possible advice based on the information and situation at hand. They’ll help advocate for you throughout the process and coach you on the essential knowledge you need to make confident decisions. That’s exactly what you want and deserve. Bottom Line It’s critical to have an expert on your side who is skilled in navigating today’s housing market. If you’re planning to buy a home this year, let’s connect so you have a real estate advisor on your side to give you the best advice and guide you along the way.
- The Impact of Changing Mortgage Rates [INFOGRAPHIC]
Some Highlights If you’re looking to buy a home, you should know even a small change in mortgage rates has an impact on your purchasing power. These charts show how rates generally affect your monthly payment. The best way to navigate changing mortgage rates and make an informed buying decision is to rely on the expertise of a local real estate professional and mortgage lender.
- What You Need To Know About Home Price News
The National Association of Realtors (NAR) will release its latest Existing Home Sales Report tomorrow. The information it contains on home prices may cause some confusion and could even generate some troubling headlines. This all stems from the fact that NAR will report the median sales price, while other home price indices report repeat sales prices. The vast majority of the repeat sales indices show prices are starting to appreciate again. But the median price reported on Thursday may tell a different story. Here’s why using the median home price as a gauge of what’s happening with home values isn’t ideal right now. According to the Center for Real Estate Studies at Wichita State University: “The median sale price measures the ‘middle’ price of homes that sold, meaning that half of the homes sold for a higher price and half sold for less. While this is a good measure of the typical sale price, it is not very useful for measuring home price appreciation because it is affected by the ‘composition’ of homes that have sold. For example, if more lower-priced homes have sold recently, the median sale price would decline (because the “middle” home is now a lower-priced home), even if the value of each individual home is rising.” People buy homes based on their monthly mortgage payment, not the price of the house. When mortgage rates go up, they have to buy a less expensive home to keep the monthly expense affordable. More ‘less-expensive’ houses are selling right now, and that’s causing the median price to decline. But that doesn’t mean any single house lost value. Even NAR, an organization that reports on median prices, acknowledges there are limitations to what this type of data can show you. NAR explains: “Changes in the composition of sales can distort median price data.” For clarification, here’s a simple explanation of median value: You have three coins in your pocket. Line them up in ascending value (lowest to highest). If you have one nickel and two dimes, the median value of the coins (the middle one) in your pocket is ten cents. If you have two nickels and one dime, the median value of the coins in your pocket is now five cents. In both cases, a nickel is still worth five cents and a dime is still worth ten cents. The value of each coin didn’t change. The same thing applies to today’s real estate market. Bottom Line Actual home values are going up in most markets. The median value reported tomorrow might tell a different story. For a more in-depth understanding of home price movements, let’s connect.
- The Worst Home Price Declines Are Behind Us
If you’re following the news today, you may feel a bit unsure about what’s happening with home prices and fear whether or not the worst is yet to come. That’s because today’s headlines are painting an unnecessarily negative picture. Contrary to those headlines, home prices aren’t in a freefall. The latest data tells a very different and much more positive story. Local home price trends still vary by market, but here’s what the national data tells us. If we take a year-over-year view, home prices stayed positive – they just appreciated more slowly than they did at the peak of the pandemic. To get a more detailed picture of some of the trends in the market, we need to look at monthly data. The monthly graphs below use recent reports from three sources to show that the worst home price declines are already behind us, and prices are on their way back up nationally. The story this more detailed monthly view tells us is that the last year has been a tale of two halves in the housing market. In the first half of 2022, home prices were climbing, and they peaked in June. Then, in July, home prices started to decline (shown in red in the graphs above). And by roughly August or September, the trend began to stabilize. As we look at the most recent data for the early part of 2023, these graphs also show a recent rebound in momentum with prices ticking back up. Monthly changes in home prices are gaining steam as we move into the busier spring season. While one to two months doesn’t make a trend, the fact that all three reports show prices have stabilized is an encouraging sign for the housing market. The month-over-month data conveys a clear, but early, consensus that a national shift is taking place today. In essence, home prices are starting to tick back up. Andy Walden, Vice President of Enterprise Research at Black Knight, says this about home price trends: “Just five months ago, prices were declining on a seasonally adjusted month-over-month basis in 92% of all major U.S. markets. Fast forward to March, and the situation has done a literal 180, with prices now rising in 92% of markets from February.” Selma Hepp, Chief Economist at CoreLogic, explains the limited supply of homes available for sale is contributing to this positive turn: “ . . . prices in many large metros appeared to have turned the corner, with the U.S. recording a second month of consecutive monthly gains. . . . The monthly rebound in home prices underscores the lack of inventory in this housing cycle.” Here’s What This Means for You Sellers: If you’ve been holding off on selling because you’re worried about what was happening with home prices and how it would impact the value of your home, it may be time to jump back in and partner with an agent to list your house. You don’t have to put your needs on hold any longer because the latest data shows a turn in your favor. Buyers: If you’ve been waiting to buy because you didn’t want to purchase something that would decrease in value, you now have the peace of mind things are looking up. Buying now lets you make your move before home prices climb more and gives you the chance to own an asset that typically grows in value over time. Bottom Line If you put off your plans to move because you were worried about home prices falling, data shows the worst is already behind us and prices are actually rising nationally. Let’s connect so you have an expert on the local market to explain what we’re seeing with home prices in our area.
- Are Home Price Declines Behind Us?
Some Highlights While home prices vary by local area, they’ve already hit their low point nationally, and now they’re starting to rise again. Last July, prices started to decline, but around February, they began climbing back up. If you put your plans to move on hold waiting to see what would happen with home prices, let’s connect to discuss if now’s the right time to jump back in.
- Homeowners Have Incredible Equity To Leverage Right Now
Even though home prices have moderated over the last year, many homeowners still have an incredible amount of equity. But what is equity? In the simplest terms, equity is the difference between the market value of your home and the amount you owe on your mortgage. The National Association of Realtors (NAR) explains how your equity grows over time: “Housing wealth (home equity or net worth) gains are built up through price appreciation and by paying off the mortgage.” How Your Equity Can Help You Achieve Your Goals The equity you build up over the years can be used to your advantage when you sell your current house and buy your next home. If you no longer have the space you need, it might be time to move into a larger home. Or it’s possible you have too much space and need something smaller. No matter the situation, your equity can be a powerful tool you can use to help you make a move in today’s market. That’s because it may be some (if not all) of what you need for your down payment on your next home. And how much equity you have may surprise you. A recent survey from Realtor.com finds many homeowners today estimate they’ve built up a significant amount of equity: The latest data from CoreLogic helps solidify why homeowners are feeling so good about the equity they’ve likely gained over time. As Selma Hepp, Chief Economist for CoreLogic, says: “While equity gains contracted in late 2022 due to home price declines in some regions, U.S. homeowners on average still have about $270,000 in equity, nearly $90,000 more than they had at the onset of the pandemic.” How a Skilled Real Estate Agent Can Help If you’re looking to leverage your equity to boost your buying power in today’s market, having a trusted agent by your side makes a difference. A real estate professional can help you better understand the value of your home, so you’ll get a clearer picture of how much equity you likely have. As a recent article from Bankrate says: “Hiring a skilled real estate agent can give you a realistic estimate of home prices in your area and how to price your current home. Using that figure, you can calculate how much equity you have and what your net proceeds will look like, so you can apply that money toward the down payment and closing costs of your new home.” Having a solid understanding of your equity is key when it comes to making decisions about buying or selling your home. A skilled agent can help you navigate the often-complicated process of selling your house and ensure the transaction goes smoothly. Bottom Line Today, many homeowners are sitting on a substantial amount of equity, and you may be one of them. Let’s connect so we can estimate how much equity you have and plan how you can use it toward the purchase of your next home.
- The Best Time To Sell Your House Is When Others Aren’t Selling
If you’re thinking about selling your house, you should know the number of homes for sale right now is low. That’s because, this season, there are fewer sellers listing their houses for sale than the norm. Looking back at every April since 2017, the only year when fewer sellers listed their homes was in April 2020, when the pandemic hit and stalled the housing market (shown in red in the graph below). In more typical years, roughly 500,000 sellers add their homes to the market in April. This year, we saw fewer than 400,000 sellers entering the market in April (see graph below): While there are a number of factors contributing to this trend, one thing keeping inventory low right now is that some homeowners are reluctant to move when the mortgage rate they have on their current house is lower than the one they could get today on their next house. It’s called rate lock. As a recent survey from Realtor.com explains, 56% of people who are planning to sell in the next 12 months say they’re waiting for rates to come down. While this wait-and-see approach is right for some sellers, it also creates an opening for more eager sellers to jump in now. If your current house truly doesn’t fit your needs anymore and you’re ready to move, don’t miss this chance to stand out. When fewer sellers are putting their homes up for sale, buyers will have fewer options, so you set yourself up to get the most eyes possible on your house. That’s why your house could see multiple offers as buyers compete over the limited supply of homes for sale – especially if you price it right. As Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), says: “Inventory levels are still at historic lows . . . Consequently, multiple offers are returning on a good number of properties." Bottom Line If you’re ready to sell now, beat the competition before it comes onto the market. If you do, your house should stand out and could get multiple offers. Let's connect to get you market ready.
- The Impact of Inflation on Mortgage Rates
If you’re reading headlines about inflation or mortgage rates, you may see something about the recent decision from the Federal Reserve (the Fed). But what does it mean for you, the housing market, and your plans to buy a home? Here’s what you need to know. Inflation and the Housing Market While the Fed’s working hard to lower inflation, the latest data shows that, while the number has improved some, the inflation rate is still higher than the target (2%). That played a role in the Fed's decision to raise the Federal Funds Rate last week. As Bankrate explains: “Keeping its inflation-fighting streak alive, the Federal Reserve has raised interest rates for the 10th time in 10 meetings . . . The hikes aimed to cool an economy that was on fire after rebounding from the coronavirus recession of 2020.” While the Fed’s actions don’t directly dictate what happens with mortgage rates, their decisions do have an impact and contributed to the intentional cooldown in the housing market last year. How This Impacts You During times of high inflation, your everyday expenses go up. That means you’ve likely felt the pinch at the gas pump and in the grocery store. By raising the Federal Funds Rate, the Fed is actively trying to lower inflation. If the Fed is successful, it could also ultimately lead to lower mortgage rates and better homebuying affordability for you. That’s because when inflation is high, mortgage rates tend to be high. But, as inflation cools, experts say mortgage rates will likely fall. Where Experts Think Mortgage Rates and Inflation Will Go from Here Moving forward, both inflation and mortgage rates will continue to impact the housing market. And as Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), says: “Mortgage rates are likely to descend lower later in the year as the consumer price inflation calms down . . .” Mike Fratantoni, Chief Economist at the Mortgage Bankers Association (MBA), explains: “We continue to expect that mortgage rates will drift down over the course of the year as the economy slows . . .” While there’s no way to say with certainty where mortgage rates will go from here, the experts think mortgage rates will trend down this year if inflation comes down too. To stay informed on the latest insights, connect with a trusted real estate advisor. They keep their pulse on what’s happening today and help you understand what the experts are projecting and how it could impact your homeownership plans. Bottom Line Don’t let headlines about the latest decision from the Fed confuse you. Where mortgage rates go from here depends on what happens with inflation. If inflation cools, mortgage rates should tick down as a result. Let’s connect so you have expert insights on housing market changes and what they mean for you.
- Why Today’s Housing Market Is Not About To Crash
There’s been some concern lately that the housing market is headed for a crash. And given some of the affordability challenges in the housing market, along with a lot of recession talk in the media, it’s easy enough to understand why that worry has come up. But the data clearly shows today’s market is very different than it was before the housing crash in 2008. Rest assured, this isn’t a repeat of what happened back then. Here’s why. It’s Harder To Get a Loan Now It was much easier to get a home loan during the lead-up to the 2008 housing crisis than it is today. Back then, banks had different lending standards, making it easy for just about anyone to qualify for a home loan or refinance an existing one. As a result, lending institutions took on much greater risk in both the person and the mortgage products offered. That led to mass defaults, foreclosures, and falling prices. Things are different today as purchasers face increasingly higher standards from mortgage companies. The graph below uses data from the Mortgage Bankers Association (MBA) to show this difference. The lower the number, the harder it is to get a mortgage. The higher the number, the easier it is. Unemployment Recovered Faster This Time While the pandemic caused unemployment to spike over the last couple of years, the jobless rate has already recovered back to pre-pandemic levels (see the blue line in the graph below). Things were different during the Great Recession as a large number of people stayed unemployed for a much longer period of time (see the red in the graph below): Here’s how the quick job recovery this time helps the housing market. Because so many people are employed today, there’s less risk of homeowners facing hardship and defaulting on their loans. This helps put today’s housing market on stronger footing and reduces the risk of more foreclosures coming onto the market. There Are Far Fewer Homes for Sale Today There were also too many homes for sale during the housing crisis (many of which were short sales and foreclosures), and that caused prices to fall dramatically. Today, there’s a shortage of inventory available overall, primarily due to years of underbuilding homes. The graph below uses data from the National Association of Realtors (NAR) and the Federal Reserve to show how the months’ supply of homes available now compares to the crash. Today, unsold inventory sits at just a 2.6-months’ supply. There just isn’t enough inventory on the market for home prices to come crashing down like they did in 2008. Equity Levels Are Near Record Highs That low inventory of homes for sale helped keep upward pressure on home prices over the course of the pandemic. As a result, homeowners today have near-record amounts of equity (see graph below): And, that equity puts them in a much stronger position compared to the Great Recession. Molly Boesel, Principal Economist at CoreLogic, explains: “Most homeowners are well positioned to weather a shallow recession. More than a decade of home price increases has given homeowners record amounts of equity, which protects them from foreclosure should they fall behind on their mortgage payments.” Bottom Line The graphs above should ease any fears you may have that today’s housing market is headed for a crash. The most current data clearly shows that today’s market is nothing like it was last time.
- It May Be Time To Consider a Newly Built Home
If you’re looking to buy a house, you may find today’s limited supply of homes available for sale challenging. When housing inventory is as low as it is right now, it can feel like a bit of an uphill battle to find the perfect home for you because there just isn’t that much to choose from. If you need to open up your pool of options, it may be time to consider a newly built home. According to the latest data from the U.S. Census, there’s positive news when it comes to new home construction. When you look at the first three months of this year, you’ll find: More new homes were completed and are ready to sell. This gives you more move-in-ready options for your search. Builders broke ground and started construction on more single-family homes. This means there are more homes intended for one household in the beginning stages of construction, allowing you the opportunity to customize one to your liking. The number of permits for building new single-family homes ticked up. This shows builders are ramping up to start on even more home construction soon. And, while this is all good news for broadening your options for your home search, there are other perks that come with considering a newly built home. Customization When you buy a new home under construction, you can tailor it to your unique needs and taste. Bankrate says: “Building means customizing. . . . instead of wishing your home had a certain kind of flooring, a sunroom or some other special amenity, you’ll be able to tailor the property to your exact needs.” Brand New Everything Another perk of a new home is that nothing in the house is used. It’s all brand new and uniquely yours from day one. Minimal Repairs And, because everything is new, you’ll likely find there are fewer maintenance and repair needs upfront. As Realtor.com explains: “. . . if something does go wrong with your new home, not only are there likely some manufacturer warranties in place, but many builders also include additional home warranties . . .” Energy Efficiency Lastly, building a home gives you the opportunity to incorporate more energy-efficient options that can help lower your costs over time – which can feel especially important when inflation’s raising many of the costs around you. Bottom Line If you’re having trouble finding your dream home in today’s market, it may be time to consider newly built homes as an option. Let’s connect so you have an expert on your side to help you explore what’s available in our local area.