- Interest rates will be lower than they have been since before 1980 at 3.8% and are projected to remain steady throughout 2020!
- According to CoreLogic, home prices will appreciate at a rate of 5.4% over the course of the year.
- Experts predict that the number of homes sold next year will be equal to or outpace 2019.
Source: Keeping Current Matters, 12-20-19
It’s exciting to put a house on the market and to think about making new memories in new spaces, but we can have deep sentimental attachments to the homes we’re leaving behind, too. Growing emotions can help or hinder a sale, depending on how we manage them.
When it comes to the bottom line, homeowners need to know what it takes to avoid costly mistakes. Being mindful of these things and prepared for the process can help you avoid some of the most common mishaps when selling your house.
1. Overpricing Your Home
When inventory is low, like it is in the current market, it’s common to think buyers will pay whatever we ask for when we price our homes. Believe it or not, that’s far from the truth. Don’t forget that the buyer’s bank will send an appraisal to determine the fair value for your home. The bank will not lend more than what the house is worth, so be mindful that you might need to renegotiate the price after the appraisal. A real estate professional will help you to set the true value of your home.
2. Letting Your Emotions Interfere with the Sale
Today, most homeowners have been living in their houses for an average of 10 years (as shown in the graph below):This is several years longer than what used to be the norm, since many homeowners have been recouping from negative equity situations over the past 10 years. The side effect, however, is when you live for so long in one place, you may get even more emotionally attached to your space. If it’s the first home you bought after you got married or the house where your children grew up, it very likely means something extra special to you. Every room has memories and it’s hard to detach from the sentimental value.
For some homeowners, that makes it even harder to negotiate, separating the emotional value of the home from the fair market price. That’s why you need a real estate professional to help you with the negotiations in the process.
3. Not Staging Your Home
We’re generally quite proud of our décor and how we’ve customized our houses to make them our own personalized homes, but not all buyers will feel the same way about your design. That’s why it’s so important to make sure you stage your home with the buyer in mind. Buyers want to envision themselves in the space, so it truly feels like their own. They need to see themselves in the space with their furniture and keepsakes – not your pictures and decorations. Stage and declutter your home so they can visualize their own dreams as they walk through your house. A real estate professional can help you with tips to get your home ready to stage and sell.
Today’s seller’s market might be your best chance to make a move. If you’re considering selling your house, sit down with a local real estate professional to help you navigate through the process while avoiding common seller mistakes.
Source: Keeping Current Matters, 12-17-19
The reality of what we’re seeing this month is that homes are selling fast. In today’s strong seller’s market, bidding wars are common and expected with starter or entry-level homes.
In most areas of the country, first-time buyers have been met with fierce competition throughout their homebuying experience. Some have been out-bid multiple times before finally going into contract on a home to call their own.
Right now, inventory is the big challenge. Here’s what we know today:
According to the latest Existing Home Sales Report from the National Association of Realtors (NAR), there is currently a 3.9-month supply of homes for sale, which can drive this kind of hefty buyer competition. Remember, anything less than 6 months of inventory is a seller’s market.
Even though the month’s supply of inventory is not increasing, ironically, the number of homes for sale is. This means homes are coming up for sale, but they’re being sold quickly. The graph below shows the year-over-year change in inventory over the last 12 months.As depicted above, the percentage of available inventory has fallen for four consecutive months when compared to the previous year.
So, what does this mean? If you’re a buyer, be sure to get pre-approved for a mortgage and be ready to make a competitive offer, so you can move quickly. Chances are, homes high on your wish list are likely going to go fast.
If you’re thinking of buying a home, make sure you’re taking the right steps at the beginning of the process, so you’re a top contender if you ultimately find yourself in a bidding war. Reach out to a local real estate professional to determine what you need to do to make your move toward homeownership.
Source: Keeping Current Matters, 12-16-19
- With interest rates around 3.66%, now is a great time to look back at where they’ve been over the past few decades. Comparatively, they’re pretty low!
- According to Freddie Mac, rates are projected to increase to 3.9% by this time next year.
- The impact your interest rate has on your monthly mortgage payment is significant. An increase of just $20 dollars in your monthly payment can add up to $240 per year and $7,200 over the life of your loan.
- Maybe it’s time to lock in now, while rates are still historically low.
Source: Keeping Current Matters, 11-22-19
Many sellers believe spring is the best time to put their homes on the market because buyer demand traditionally increases at that time of year. What they don’t realize is if every homeowner believes the same thing, then that’s when they’ll have the most competition.
So, what’s the #1 reason to list your house in the winter? Less competition.
Housing supply traditionally shrinks at this time of year, so the choices buyers have will be limited. The chart below was created using the months supply of listings from the National Association of Realtors.As you can see, the ‘sweet spot’ to list your house for the most exposure naturally occurs in the late fall and winter months (November – January).
Temperatures aren’t the only thing that heats up in the spring – so do listings!In 2018, listings increased from December to May. Don’t wait for these listings and the competition that comes with them to come to the market before you decide to list your house.
Added Bonus: Serious Buyers Are Out in the Winter
At this time of year, purchasers who are serious about buying a home will be in the marketplace. You and your family will not be bothered and inconvenienced by mere ‘lookers.’ The lookers are at the mall or online doing their holiday shopping.
If you’ve been debating whether or not to sell your house and are curious about market conditions in your area, talk with a local real estate professional who can help you decide the best time to list your house.
Source: Keeping Current Matters, 11-4-19
No one knows for sure when the next recession will occur. What is known, however, is that the upcoming economic slowdown will not be caused by a housing market crash, as was the case in 2008. There are those who disagree and are comparing today’s real estate market to the market in 2005-2006, which preceded the crash. In many ways, however, the market is very different now. Here are three suppositions being put forward by some, and why they don’t hold up.
A critical warning sign last time was the surging gap between the growth in home prices and household income. Today, home values have also outpaced wage gains. As in 2006, a lack of affordability will kill the market.
The “gap” between wages and home price growth has existed since 2012. If that is a sign of a recession, why didn’t we have one sometime in the last seven years? Also, a buyer’s purchasing power is MUCH GREATER today than it was thirteen years ago. The equation to determine affordability has three elements: home prices, wages, AND MORTGAGE INTEREST RATES. Today, the mortgage rate is about 3.5% versus 6.41% in 2006.
In 2018, as in 2005, housing-price growth began slowing, with significant price drops occurring in some major markets. Look at Manhattan where home prices are in a “near free-fall.”
The only major market showing true depreciation is Seattle, and it looks like home values in that city are about to reverse and start appreciating again. CoreLogic is projecting home price appreciation to reaccelerate across the country over the next twelve months.
Regarding Manhattan, home prices are dropping because the city’s new “mansion tax” is sapping demand. Additionally, the new federal tax code that went into effect last year continues to impact the market, capping deductions for state and local taxes, known as SALT, at $10,000. That had the effect of making it more expensive to own homes in states like New York.
Prices will crash because that is what happened during the last recession.
It is true that home values sank by almost 20% during the 2008 recession. However, it is also true that in the four previous recessions, home values depreciated only once (by less than 2%). In the other three, residential real estate values increased by 3.5%, 6.1%, and 6.6%.
Price is determined by supply and demand. In 2008, there was an overabundance of housing inventory (a 9-month supply). Today, housing inventory is less than half of that (a 4-month supply).
We need to realize that today’s real estate market is nothing like the 2008 market. Therefore, when a recession occurs, it won’t resemble the last one.
Source: Keeping Current Matters, 10-17-19
Everyone felt it at the start of the year—conditions leveling, the market yin and yanging. About half of Power Brokers sensed it, too—that the current cycle’s ending, and a different dynamic’s emerging.
Now, with two months left in 2019, the consensus is similar…but certain factors remain unclear.
“The housing market is in the midst of a normalization period, one that is characterized by slowing price growth, moderate sales and new supply that is slow to market,” according to Ralph McLaughlin, deputy chief economist and executive of Research and Insights at CoreLogic, a data provider.
As the cycle turns, the correction is naturally progressing, Eli Beracha, PhD, director of Florida International University’s Hollo School of Real Estate, says.
“We are toward the end of the cycle—but I do not see a collapse coming, or even a strong correction,” Beracha explains.
Beracha, along with Bill Hardin and Ken Johnson, of FIU and Florida Atlantic University, respectively, developed the Beracha, Hardin and Johnson Buy vs. Rent Index, which assesses whether it’s better to buy or rent.
“Our BH&J scores are starting to soften, and that historically happens as prices start to turn over,” Johnson, a real estate economist, says. “I do not foresee a crash like we had—we have a lot of good economic news that’s helping the housing market buffer itself against a significant contraction in prices.”
That’s the good news.
Appreciation’s been easing for some time, according to the Case-Shiller/CoreLogic Indices. In the latest update, annual appreciation edged just over 3 percent, down by half, roughly, year-over-year.
There are, however, indicators of a resurgence, explains Matthew Speakman, economist at Zillow. The portal publishes the Zillow Home Value Index, based on Zestimates.
“Annual home value appreciation continues to fall, but recent trends suggest that a reacceleration is likely in the coming months,” says Speakman, who adds that the change in course is expected “only marginally,” and to “remain near [the] current 4 percent annual growth pace.”
For 2020, the annual appreciation estimates vary, but generally lie in the 2-5 percent range. In one scenario, the Urban Land Institute makes moderate projections: 2.5 percent in 2020 and 3 percent in 2021. Of existing for-sale homes—or preowned stock—the median price is $278,200, up 4.7 percent, according to National Association of REALTORS® numbers. For newly-built properties, it’s steeper, at $328,400, according to Census data.
“Price appreciation for the next 12 months is more in the 3-5 percent range,” Lawrence Yun, chief economist at NAR, says. “I don’t see any risk of a price decline.”
“I expect prices to go flat—1-2 percent, even 3 percent, is going to become the norm,” Johnson says.
Earlier this month, CoreLogic’s Home Price Index—different from the Case-Shiller report—found overvalued prices in 37 percent of the largest markets in the nation.
“Right now, we’re expecting home price growth to recover somewhat from the 16-month cooling period it just went through and to settle out around 4-5 percent year-over-year by next fall,” McLaughlin says.
What about the price-pusher—supply? According to Census figures from September, construction fell month-over-month more than 9 percent, but still came out 1.6 percent ahead of the previous year. The ULI is predicting 850,000 single-family starts this year, 810,000 single-family starts in 2020 and 800,000 single-family starts in 2021, compared to 875,800 last year. Across all housing types, NAR is expecting 2 percent more starts in 2019 and 10.6 percent more starts in 2020.
“Builders are steadily building more, but even a 50 percent increase from current construction activity, the market will be able to absorb,” Yun says. “We need a strong ramp-up in construction, but, more likely, it will be more of a steady increase. There will still be a housing shortage at the mid-price [tier] and lower.”
That’s not to say builder confidence is lacking, or there aren’t affordable homes being built. In fact, the National Association of Home Builders confidence reading surged this week.
“Home builders appear to be increasingly focused on entry-level homes, as the median square footage of new single-family construction fell 4.3 percent in the second quarter,” Doug Duncan, chief economist at Fannie Mae, pointed out in a separate update.
Then there’s interest rates, which are currently at lows, and aren’t expected to move much in 2020. In a forecast from the ULI, the 10-year Treasury rate—correlated to fixed mortgage rates—rises in 2020 and 2021, but only slightly.
“There’s just no evidence that there’s going to be upward pressure on rates any time soon,” Johnson says. “As long as we have a positive slope to the yield curve, as long as we have a stable economy, I don’t see many interest rate increases.”
Beracha confirms rates “may go half a percent in either direction, but I don’t see them [rising substantially] in the next year,” adding “the [Federal Reserve] decreased interest rates twice in the last couple of months—I don’t think we’re going to see much more of that.”
“Barring a significant, positive development in the U.S.-China trade discussions, Brexit, or other significant current geopolitical dilemma, I imagine that mortgage rates will remain near their current, multi-year lows” in the near term, says Speakman.
Buoyed by low rates, 2020 home sales should tick up, according to Yun. As of last month, NAR forecasted 0.6 percent more home sales in 2019 and 3.4 percent more sales in 2020.
“There will be a small, incremental increase in home sales, and the reasoning for that is the magical power of low mortgage rates,” Yun says. “I do believe that we will continue to have favorable mortgage rates for the next 12 months.”
On the economic front, the fundamentals remain solid, but there’s looming unknowns. According to the latest pulse-check by Zillow, economists forecasted a recession in the third quarter of 2020, and believe it’ll curb demand in the housing market.
“The labor market remains in good shape but has recently shown signs of slowing,” says Speakman. “Should job creation slow markedly and/or consumers become bearish on the state of the economy, it’s likely that home-buying would slow.”
In related research, realtor.com® found that if a recession struck, homebuyers may postpone purchasing.
As for a 2008-like meltdown?
“A weaker U.S. economy and/or a rise in rates could easily trigger a bumpy housing market,” Johnson says. “However, there’s no evidence that a slump to the magnitude of last decade’s housing crash is imminent, even under the worst-case scenario.”
“In other cycles, we saw an excess of construction and supply,” Beracha says. “Our cycle is nine years in the making—longer than the average seven—and during those nine years, we did not produce excess supply. Interest rates are low, and we have a strong job market and very low unemployment.”
Still, according to Yun, it’s critical for home-building to pick up.
“One comforting factor that can neutralize an economic downturn is if home-building activity occurs,” Yun says. “When home-building increases, generally, we don’t have an economic recession.”
The Last Word
However 2020 shakes out, 63 percent of buyers feel optimistic, according to NAR’s latest quarterly survey. What’s more, 52 percent believe the economy’s on firm footing.
So, will 2020 be a buyer’s market, or a seller’s market?
“I would consider 2020 to be a balanced market,” Beracha says. “Prices remain quite high and inventory is still a bit tight, so buyers can take advantage of lower interest rates and sellers can take advantage of the fact that inventory is still low.”
“We anticipate 2020 to continue to shift away from a seller’s market, especially if GDP slows and inventory ticks up,” McLaughlin says.
“At affordable prices, it will still be a seller’s market, and appreciation will be stronger at the lower price points,” Yun says. “The upper-end price projection—as people digest the deductibility of mortgage interest and state and local taxes, including property taxes—is less optimistic. On the lower end, demand will remain solid, given that we have low rates and job creation is continuing.”
“People buy homes because they’re both an investment good and a consumption good,” Johnson says. “Right now, if you find the property and bargain aggressively, and you get a good price, you should move there—and stay for a long period of time.”
Source: Suzanne De Vita, RISMedia
The best time to sell anything is when demand for that item is high and the supply of that item is limited. The latest Existing-Home Sales Report released by the National Association of Realtors (NAR), reveals that demand for housing continues to be strong, but the supply is struggling to keep pace. With this trend likely continuing throughout 2020, now is a great time to sell your house.
THE EXISTING-HOME SALES REPORT
The most important data revealed in this report was not actually sales. In reality, it was the inventory of homes for sale (supply). The report explained:
- Total housing inventory at the end of August decreased 2.6% to 1.86 million homes available for sale.
- Unsold inventory is lower than the 4.3-month figure recorded in August 2018.
- This represents a 1-month supply at the current sales pace.
According to Lawrence Yun, Chief Economist at NAR,
“Sales are up, but inventory numbers remain low and are thereby pushing up
In real estate, there is a simple guideline that often applies here. Essentially, when there is less than a 6-month supply of inventory available, we are in a seller’s market and we will see greater appreciation. Between a 6 to 7-month supply is a neutral market, where prices will increase at the rate of inflation. More than a 7-month supply means we are in a buyer’s market and can expect depreciation in home values (see below):As we mentioned before, there is currently a 4.1-month supply of homes on the market, and houses are going under contract fast. The Existing Home Sales Report also shows that 49% of properties were on the market for less than a month when they were sold. In August, properties sold nationally were typically on the market for 31 days. As Yun notes, this should continue,
“As expected, buyers are finding it hard to resist the current rates…The desire to take advantage of these promising conditions is leading more buyers to the market.”
Takeaway: Inventory of homes for sale is still well below the 6-month supply needed for a normal market, and supply will fail to catch up with demand if a sizable supply does not enter the market.
If you are going to sell, now may be the time to take advantage of the ready, willing, and able buyers who are out there searching for your house to become their dream home.
Source: Keeping Current Matters, 10-14-19
With the fall season upon us, change is in the air. For many families, children are growing up and moving out of the house, maybe leaving for college or taking a jump into the working world. Parents are finding themselves as empty nesters for the first time. The question inevitably arises: is it finally time to downsize?
If you’re pondering that thought, you may also be wondering if you should fix-up your house before you sell it, or go straight to the market as-is, allowing a potential buyer to do the updates and remodeling. If you’re one of the many homeowners this camp, here are a few tips to help you decide which way to go.
1. Analyze Your Market
A real estate professional can help you to understand your market and the potential level of buyer interest and demand for your home. Are you in a seller’s market or a buyer’s market? This can change based on the price range of your home, too. A professional can also give you some insight on what you can change or remodel, and how to declutter your house to make it attractive to buyers in your area.
2. Get an Inspector
Right now, the average length of time a family stays in a home is between 9-10 years. That’s a little longer than the historical average, so if you’ve been living in your home for a while, it might be time to make some significant improvements. Think: electrical system, HVAC units, roof, siding, etc. An inspector can give you a better idea of the condition of your home, if it is up to current code standards, and recommendations on how to have your house ready before you put it on the market.
3. Decide If You Need to Remodel
You may also be thinking about driving buyer appeal with something like a kitchen or a bathroom remodel. If so, first dig into the market value of your home, and compare it to the actual cost of the remodel. A local real estate professional can help you determine your home’s market value, and you’ll want to get a few quotes from contractors on the potential remodel pricing as well. Once you have those two factors narrowed down, you can to decide if a remodel will give you a return on your investment when you sell. Oftentimes, it is actually more advantageous to price your house to sell, list it competitively, and then let the buyer pick the colors they want for their bathroom tiles and the type of countertop they prefer. The 2019 Cost vs. Value Report in Remodeling Magazine compares the average cost for remodeling projects with the value those projects typically retain at resale.
Nationwide, inventory is low, meaning there is less than the 6-month housing supply needed for a normal market. This drives buyer demand, creating a perfect time to sell. If you’re considering selling your house, sit down with a local real estate professional. Partner with someone who can help you confidently determine what will be the best choice for you and your family.
Source: Keeping Current Matters, 9-24-19
In a 15-month trend, annual appreciation decelerated to 3.1 percent in June, falling from 3.3 percent in May, according to the national S&P CoreLogic/Case-Shiller Indices, released today.
The declining gains indicate a return to sustainability, explains Philip Murphy, managing director and global head of Index Governance at S&P Dow Jones Indices.
“Home price gains continue to trend down, but may be leveling off to a sustainable level,” Murphy says. “The U.S. National Home Price NSA Index year-over-year price change in June 2019 of 3.1 percent is exactly half of what it was in June 2018.”
A determining factor, however, is the potential recession, which could disrupt the longer-term trend—but, experts have mixed views.
“Home price gains in most cities remain positive in low single digits,” Murphy says. “Therefore, it is likely that current rates of change will generally be sustained barring an economic downturn.”
According to Ralph McLaughlin, CoreLogic deputy chief economist and executive of Research and Insights, there is the potential for prices to reignite, especially if low mortgage rates remain the trend. The average 30-year fixed rate slid to 3.55 percent, down from 4.51 percent this time in 2018, Freddie Mac recently reported.
“While falling mortgage rates have thus far only led to an increase in refinancing, rather than purchase activity, there will undoubtedly be a large boon to the marginal homebuyer,” McLaughlin says. “Thus, we should expect the lengthy slowdown in home price growth to flatten or even tick upwards by the end of the year, assuming the U.S. economy avoids any present-day threats of a recession.”
According to Lawrence Yun, chief economist at the National Association of REALTORS®, there is a high likelihood for prices to strengthen. In July, the existing-home median price was $280,800, an increase of 4.3 percent year-over-year.
“Though showing mild deceleration in price growth, it is worth noting that this index is a bit of a lagging indicator, with the latest data reflecting what happened in April, May and June,” says Yun. “The figure is likely to show reacceleration in home price gains in the upcoming months, as the market has been shifting towards higher demand due to lower mortgage rates and reduced supply as home builders constructed fewer homes this year compared to the last year.”
In the country’s 20 major markets, home prices rose 2.1 percent year-over-year, according to the S&P National Index. The biggest gains in June were in Phoenix, where home prices surged 5.8 percent, and in Las Vegas, at 5.5 percent.
The complete data for the 20 markets measured by S&P:
Las Vegas, Nev.
Los Angeles, Calif.
New York, N.Y.
San Diego, Calif.
San Francisco, Calif.
Source: Suzanne De Vita, RIS Media