On the Fence of Whether or Not To Move This Spring? Consider This.
If you’re thinking of selling your house, it may be because you’ve heard prices are rising, listings are going fast, and sellers are getting multiple offers on their homes. But why are conditions so good for sellers today? And what can you expect when you move? To help answer both of those questions, let’s turn to the data. Today, there are far more buyers looking for homes than sellers listing their houses. Here are the maps of the latest buyer and seller traffic from the National Association of Realtors (NAR) to help paint the picture of what this looks like: Notice how much darker the blues are on the left. This shows buyer traffic is strong today. In contrast, the much lighter blues on the right indicate weak or very weak seller traffic. In a nutshell, the demand for homes is significantly greater than what’s available to purchase. What That Means for You You have an incredible advantage when you sell your house under these conditions. Since buyer demand is so high at a time when seller traffic is so low, there’s a good chance buyers will be competing for your house. According to NAR, in February, the average home sold got 4.8 offers. When buyers have to compete with one another like this, they’ll do everything they can to make their offer stand out. This could play to your favor and mean you’ll see things like waived contingencies, offers over asking price, earnest money deposits, and more. Selling when demand is high and supply is low sets you up for a big win. If you’re also looking to buy a house, you may be tempted to focus more on just the seller traffic map and wonder if it means you’ll have trouble finding your next home. But remember this: perspective is key. As Danielle Hale, Chief Economist at realtor.com, says: “The limited number of homes for sale is a lesson in perspective. This same stat that frustrates would-be homebuyers also means that today’s home sellers enjoy more limited competition than last year’s home sellers.” If you look at the big picture, the opportunity you have as a seller today is unprecedented. Last year was a hot sellers’ market. This year, inventory is even lower, and that means an even bigger opportunity for you. Even though finding your next home in a market with low inventory can be challenging, is that concern worth passing on some of the best conditions sellers have ever seen? As added peace of mind, remember real estate professionals have been juggling this imbalance of supply and demand for nearly two years, and they know how to help both buyers and sellers find success when they move. A skilled agent can help you capitalize on the great opportunity you have as a seller today and guide you through the buying process until you find the perfect place to call your next home. Bottom Line If you’re ready to move, you have an incredible opportunity in front of you today. Trust the experts. Let’s connect so you have expertise on your side that can help you win when you sell and when you buy.
The Future of Home Price Appreciation and What It Means for You
Many consumers are wondering what will happen with home values over the next few years. Some are concerned that the recent run-up in home prices will lead to a situation similar to the housing crash 15 years ago. However, experts say the market is totally different today. For example, Odeta Kushi, Deputy Chief Economist at First American, tweeted just last week on this issue: “. . . We do need price appreciation to slow today (it’s not sustainable over the long run) but high price growth today is supported by fundamentals- short supply, lower rates & demographic demand. And we are in a much different & safer space: better credit quality, low DTI [Debt-To-Income] & tons of equity. Hence, a crash in prices is very unlikely.” Price appreciation will slow from the double-digit levels the market has seen over the last two years. However, experts believe home values will not depreciate (where a home would lose value). To this point, Pulsenomics just released the latest Home Price Expectation Survey – a survey of a national panel of over 100 economists, real estate experts, and investment and market strategists. It forecasts home prices will continue appreciating over the next five years. Below are the expected year-over-year rates of home price appreciation based on the average of all 100+ projections: 2022: 9%2023: 4.74%2024: 3.67%2025: 3.41%2026: 3.57% Those responding to the survey believe home price appreciation will still be relatively high this year (though half of what it was last year), and then return to more normal levels over the next four years. What Does This Mean for You as a Buyer? With a limited supply of homes available for sale and both prices and mortgage rates increasing, it can be a challenging market to navigate as a buyer. But buying a home sooner rather than later does have its benefits. If you wait to buy, you’ll pay more in the future. However, if you buy now, you’ll actually be in the position to make future price increases work for you. Once you buy, those rising home prices will help you build your home’s value, and by extension, your own household wealth through home equity. As an example, let’s assume you purchased a $360,000 home in January of this year (the median price according to the National Association of Realtors rounded up to the nearest $10K). If you factor in the forecast for appreciation from the Home Price Expectation Survey, you could accumulate over $96,000 in household wealth over the next five years (see graph below): Bottom Line If you’re trying to decide whether to buy now or wait, the key is knowing what’s expected to happen with home prices. Experts say prices will continue to climb in the years ahead, just at a slower pace. So, if you’re ready to buy, doing so now may be your best bet for your wallet. It’ll also give you the chance to use the future home price appreciation to build your own net worth through rising equity. If you want to get started, let’s connect today.
What You Can Expect from the Spring Housing Market
As the spring housing market kicks off, you likely want to know what you can expect this season when it comes to buying or selling a house. While there are multiple factors causing some uncertainty, including the conflict overseas, rising inflation, and the first rate increase from the Federal Reserve in over three years — the housing market seems to be relatively immune. Here’s a look at what experts say you can expect this spring. 1. Mortgage Rates Will Climb Freddie Mac reports the 30-year fixed mortgage rate has increased by more than a full point in the past six months. And despite some mild fluctuation in recent weeks, experts believe rates will continue to edge up over the next 90 days. As Freddie Mac says: “The Federal Reserve raising short-term rates and signaling further increases means mortgage rates should continue to rise over the course of the year.” If you’re a first-time buyer or a seller thinking of moving to a home that better fits your needs, realize that waiting will likely mean you’ll pay a higher mortgage rate on your purchase. And that higher rate drives up your monthly payment and can really add up over the life of your loan. 2. Housing Inventory Will Increase There may be some relief coming for buyers searching for a home to purchase. Realtor.com recently reported that the number of newly listed homes has grown for each of the last two months. Also, the National Association of Realtors (NAR) just announced the months’ supply of inventory increased for the first time in eight months. The inventory of existing homes usually grows every spring, and it seems, based on recent activity, the next 90 days could bring more listings to the market. If you’re a buyer who has been frustrated with the limited supply of homes available for sale, it looks like you could find some relief this spring. However, be prepared to act quickly if you find the right home. If you’re a seller, listing now instead of waiting for this additional competition to hit the market makes sense. Your leverage in any negotiation during the sale will be impacted as additional homes come to market. 3. Home Prices Will Rise Prices are always determined by supply and demand. Though the number of homes entering the market is increasing, buyer demand remains very strong. As realtor.com explains in their most recent Housing Report: “During the final two weeks of the month, more new sellers entered the market than during the same time last year. . . . However, with 5.8 million new homes missing from the market and millions of millennials at first-time buying ages, housing supply faces a long road to catching up with demand.” What does that mean for you? With the demand for housing still outpacing supply, home prices will continue to appreciate. Many experts believe the level of appreciation will decelerate from the high double-digit levels we’ve seen over the last two years. That means prices will continue to climb, just at a more moderate pace. Most experts are predicting home prices will not depreciate. Won’t Increasing Mortgage Rates Cause Home Prices To Fall? While some people may believe a 1% increase in mortgage rates will impact demand so dramatically that home prices will have to fall, experts say otherwise. Doug Duncan, Senior Vice President and Chief Economist at Fannie Mae, says: “What I will caution against is making the inference that interest rates have a direct impact on house prices. That is not true.” Freddie Mac studied the impact that mortgage rates increasing by at least 1% has had on home prices in the past. Here are the results of that study: As the chart shows, mortgage rates jumped by at least 1% six times in the last thirty years. In each case, home values increased. So again, if you’re a first-time buyer or a repeat buyer, waiting to buy likely means you’ll pay more for a home later in the year (as compared to its current value). Bottom Line There are three things that seem certain going into the spring housing market: Mortgage rates will continue to riseThe selection of homes available for sale will modestly improveHome prices will continue to appreciate, just at a slightly slower pace If you’re thinking of buying, act now before mortgage rates and home prices increase further. If you’re thinking of selling, your best bet may be to sell soon so you can beat the increase in competition that’s about to come to market.
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