A Window of Opportunity for Homebuyers

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A Window of Opportunity for Homebuyers.

Mortgage rates are much higher today than they were at the beginning of the year, and that’s had a clear impact on the housing market. As a result, the market is seeing a shift back toward the range of pre-pandemic levels for buyer demand and home sales.

But the transition back toward pre-pandemic levels isn’t a bad thing. In fact, the years leading up to the pandemic were some of the best the housing market has seen. That’s why, as the market undergoes this shift, it’s important to compare today not to the abnormal pandemic years, but to the most recent normal years to show how the current housing market is still strong.

Higher Mortgage Rates Are Moderating the Housing Market 

The ShowingTime Showing Index tracks the traffic of home showings according to agents and brokers. It’s also a good indication of buyer demand over time. Here’s a look at their data going back to 2017 (see graph below):

A Window of Opportunity for Homebuyers | Simplifying The Market

Here’s a breakdown of the story this data tells:

  • The 2017 through early 2020 numbers (shown in gray) give a good baseline of pre-pandemic demand. The steady up and down trends seen in each of these years show typical seasonality in the market.
  • The blue on the graph represents the pandemic years. The height of those blue bars indicates home showings skyrocketed during the pandemic.
  • The most recent data (shown in green), indicates buyer demand is moderating back toward more pre-pandemic levels.

This shows that buyer demand is coming down from levels seen over the past two years, and the frenzy in real estate is easing because of higher mortgage rates. For you, that means buying your next home should be less challenging than it would’ve been during the pandemic because there is more inventory available.

Higher Mortgage Rates Slow the Once Frenzied Pace of Home Sales

As mortgage rates started to rise this year, other shifts began to occur too. One additional example is the slowing pace of home sales. Using data from the National Association of Realtors (NAR), here’s a look at existing home sales going all the way back to 2017. Much like the previous graph, a similar trend emerges (see graph below):

A Window of Opportunity for Homebuyers | Simplifying The Market

Again, the data paints a picture of the shift:

  • The pre-pandemic years (shown in gray) establish a baseline of the number of existing home sales in more typical years.
  • The pandemic years (shown in blue) exceeded the level of sales seen in previous years. That’s largely because low mortgage rates during that time spurred buyer demand and home sales to new heights.
  • This year (shown in green), the market is feeling the impact of higher mortgage rates and that’s moderating buyer demand (and by extension home sales). That’s why the expectation for home sales this year is closer to what the market saw in 2018-2019.

Why Is All of This Good News for You?

Both of those factors have opened up a window of opportunity for homeowners looking to move and for buyers looking to purchase a home. As demand moderates and the pace of home sales slows, housing inventory is able to grow – and that gives you more options for your home search.

So don’t let the headlines about the market cooling or moderating scare you. The housing market is still strong; it’s just easing off from the unsustainable frenzy it saw during the height of the pandemic – and that’s a good thing. It opens up new opportunities for you to find a home that meets your needs.

Bottom Line

The housing market is undergoing a shift because of higher mortgage rates, but the market is still strong. If you’ve been looking to buy a home over the last couple of years and it felt impossible to do, now may be your opportunity. Buying a home right now isn’t easy, but there is more opportunity for those who are looking.

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Great News About Housing Inventory [INFOGRAPHIC]

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Great News About Housing Inventory [INFOGRAPHIC].

Some Highlights

  • Experts say the number of homes for sale is growing this year, and that can have a big impact on your move.
  • If you’re planning to buy, additional options in today’s market may be just what you’ve been waiting for. More inventory means added opportunities to find the home of your dreams.
  • Let’s connect so you have the latest information on available homes in our area.
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Think Home Prices Are Going To Fall? Think Again

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Think Home Prices Are Going To Fall? Think Again.

Over the last two years, the rate of home prices appreciated at a dramatic pace. While that led to incredible equity gains for homeowners, it’s also caused some buyers to wonder if home prices will fall. It’s important to know the housing market isn’t a bubble about to burst, and home price growth is supported by strong market fundamentals.

To understand why price declines are unlikely, it’s important to explore what caused home prices to rise so much recently, and where experts say home prices are headed. Here’s what you need to know.

Home Prices Rose Significantly in Recent Years

The graph below uses the latest data from CoreLogic to illustrate the rise in home prices over the past year and a half. The gray bars represent the dramatic increase in the rate of home price appreciation in 2021. The blue bars show home prices are still rising in 2022, but not as quickly:

Think Home Prices Are Going To Fall? Think Again | Simplifying The Market

You might be asking: why did home prices climb so much last year? It’s because there were more buyers than there were homes for sale. That imbalance put upward pressure on home prices because demand was extremely high, and supply was record low.

Where Experts Say Prices Will Go from Here

While housing inventory is increasing and buyer demand is softening today, there’s still a shortage of homes available for sale. That’s why the market is seeing ongoing price appreciation. Mark Fleming, Chief Economist at First American, explains it like this:

“. . .we’re still well below normal levels of inventory and that’s why even with the pullback in demand, we still see house prices appreciating. While there is more inventory, it’s still not enough.”

As a result, experts are projecting a more moderate rate of home price appreciation this year, which means home prices will continue rising, but at a slower pace. That doesn’t mean prices are going to fall. As Selma Hepp, Deputy Chief Economist at CoreLogic, says:

“The current home price growth rate is unsustainable, and higher mortgage rates coupled with more inventory will lead to slower home price growth but unlikely declines in home prices.”

In other words, even with higher mortgage rates, moderating buyer demand, and more homes for sale, experts say home price appreciation will slow, but prices won’t decline.

If you’re planning to buy a home, that means you shouldn’t wait for home prices to drop to make your purchase. Instead, buying today means you can get ahead of future price increases, and benefit from the rise in prices in the form of home equity.

Bottom Line

Home prices skyrocketed in recent years because there was more demand than supply. As the market shifts, experts aren’t forecasting a drop in prices, just a slowdown in the rate of price growth. To understand what’s happening with home prices in our area, let’s connect today.

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Why Pre-Approval Is a Game Changer for Homebuyers

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Why Pre-Approval Is a Game Changer for Homebuyers.

If you’re planning to buy a home this year, you might have heard that pre-approval is a necessary step to take before starting out on your journey. But why is that? And is it still important in today’s shifting market?

The truth is, getting a pre-approval letter from your lender is critical, and when it comes to your home search, it can be a game changer in so many ways.

To better understand why, it’s important to know what pre-approval is. Freddie Mac defines the process like this:

“A pre-approval is an indication from your lender that they are willing to lend you a certain amount of money to buy your future home. The lender you work with will provide you with a pre-approval letter, which is an official document that states the maximum amount they are willing to lend you, . . .”

Put simply, pre-approval from a lender helps you understand your true price range and how much money you can borrow for your loan. That can make it easier when you set out to search for homes. And since you’ll know what you’re approved for, it’ll also help once it’s time to submit an offer on the home of your dreams.

Another added benefit is that pre-approval lets the seller know you’re qualified to buy their house. Paul Centopani, Editor for the Mortgage Reports, explains:

“. . . most sellers won’t even consider an offer unless the buyer is pre-approved at the right price point. Sellers and their agents want to know you’re ready and able to finance your offer amount. So you’ll want to have your preapproval teed up as soon as you’re serious about bidding on a home you like.”

Every advantage you can gain as a buyer is crucial in a market that’s constantly changing. You’re going to need guidance to navigate these waters, so it’s important to have a team of professionals, such as a real estate advisor and trusted lender, on your side. They’ll help make sure you’re ready to put your best foot forward.

Bottom Line

Getting pre-approved for a mortgage helps you better understand what you can borrow and shows sellers you’re serious about purchasing their home. Let’s connect so you have the tools you need to succeed as a homebuyer in today’s shifting market.

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Wondering Where You’ll Move if You Sell Your House Today?

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Wondering Where You’ll Move if You Sell Your House Today?.

If you put a pause on your home search because you weren’t sure where you’d go once you sold your house, it might be a good time to get back into the market. That’s because today’s market is undergoing a shift, and the supply of homes for sale is increasing as a result. That means you may have a better chance of finding a home that will meet your current needs. Here are some options to consider.

Buying an Existing Home Can Give You That Lived-in Charm

According to the National Association of Realtors (NAR), the supply of existing homes (a home that’s been previously owned) has steadily increased since the beginning of the year. The graph below indicates inventory levels are rising, and that’s largely due to more homes coming onto the market and the pace of sales slowing:

Wondering Where You’ll Move if You Sell Your House Today? | Simplifying The Market

As the graph shows, if you’re looking for a home with lived-in charm, supply is rising, and that’s great news for you.

Danielle Hale, Chief Economist for realtor.com, gives insight into why more homeowners are listing their homes and adding to the growing supply of existing homes today:

“Home sellers in many markets across the country continue to benefit from rising home prices and fast-selling homes. That’s prompted a growing number of homeowners to sell homes this year compared to last, giving home shoppers much needed options. We’ve seen more homes come up for sale this year compared to last year . . .”

There are several benefits to buying an existing home. Many buyers want to purchase a home with history, and the character of older houses is hard to reproduce. Existing homes can often be part of an established neighborhood featuring mature landscaping that can give you additional privacy and boost your curb appeal.

Plus, timing can be a consideration as well. With an existing home, you can move in based on the timeline you agree to with the sellers, rather than building a new home and waiting for construction to finish. This is something to keep in mind, especially if you need to move sooner rather than later.

Just remember, while more sellers are listing their homes, supply is still low overall. That means you’ll have more options to choose from as you search for your next home, but you’ll still need to be prepared for a fast-moving market.

Purchasing a Newly Built or Under Construction Home Means Brand New Everything

Census data shows there’s an increasing number of new homes available for sale. It includes homes that are under construction, soon to be completed, and fully built. As the graph below highlights, the supply of new homes for sale has also grown this year:

Wondering Where You’ll Move if You Sell Your House Today? | Simplifying The MarketWhen building a new home, you can create your perfect living space and customize it to your lifestyle. That could mean everything from requesting energy efficient options to specific design features. Plus, you’ll have the benefit of all new appliances, windows, roofing, and more. These can all help lower your energy costs, which can add up to significant savings over time.

The lower maintenance that comes with a newer home is another great advantage. When you have a new home, you likely won’t have as many little repairs to tackle, like leaky faucets, shutters to paint, and other odd jobs around the house. And with new construction, you’ll also have warranty options that may cover portions of your investment for the first few years.

Keep in mind, purchasing a new home could mean waiting a considerable amount of time before you can move. Robert Dietz, Chief Economist and Senior Vice President for Economics and Housing Policy at the National Association of Home Builders (NAHB), explains:

“New single-family home inventory remained elevated at a 7.7 months’ supply. . . . However, only 8.3% of new home inventory is completed and ready to occupy. The remaining have not started construction (25.9%) or are currently under construction.”

That’s an important factor when making your decision and one you should discuss with a trusted real estate advisor. They’ll help you think through all the pros and cons of both new and existing homes to help you arrive at your best decision.

Bottom Line

With the supply of homes for sale rising, you have options for your next home no matter what your preferences are. If you have questions or want help deciding what’s best for you, let’s connect and start the conversation today.

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Should I Buy a Home Right Now?

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Should I Buy a Home Right Now?.

If you’ve been thinking about buying a home, you likely have one question on the top of your mind: should I buy right now, or should I wait? While no one can answer that question for you, here’s some information that could help you make your decision.

The Future of Home Price Appreciation

Each quarter, Pulsenomics surveys a national panel of over 100 economists, real estate experts, and investment and market strategists to compile projections for the future of home price appreciation. The output is the Home Price Expectation Survey. In the latest release, it forecasts home prices will continue appreciating over the next five years (see graph below):

Should I Buy a Home Right Now? | Simplifying The Market

As the graph shows, the rate of appreciation will moderate over the next few years as the market shifts away from the unsustainable pace it saw during the pandemic. After this year, experts project home price appreciation will continue, but at levels that are more typical for the market. As Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), says: 

“People should not anticipate another double-digit price appreciation. Those days are over. . . . We may return to more normal price appreciation of 4%, 5% a year.”

For you, that ongoing appreciation should give you peace of mind your investment in homeownership is worthwhile because you’re buying an asset that’s projected to grow in value in the years ahead.

What Does That Mean for You?

To give you an idea of how this could impact your net worth, here’s how a typical home could grow in value over the next few years using the expert price appreciation projections from the Pulsenomics survey mentioned above (see graph below):

Should I Buy a Home Right Now? | Simplifying The Market

As the graph conveys, even at a more typical pace of appreciation, you still stand to make significant equity gains as your home grows in value. That’s what’s at stake if you delay your plans.

Bottom Line

If you’re ready to become a homeowner, know that buying today can set you up for long-term success as your asset’s value (and your own net worth) is projected to grow with the ongoing home price appreciation. Let’s connect to begin your homebuying process today.

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The Drop in Mortgage Rates Brings Good News for Homebuyers

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The Drop in Mortgage Rates Brings Good News for Homebuyers.

Over the past few weeks, the average 30-year fixed mortgage rate from Freddie Mac fell by half a percent. The drop happened over concerns about a potential recession. And since mortgage rates have risen dramatically this year, homebuyers across the country should see this decline as welcome news.

Freddie Mac reports that the average 30-year rate was down to 5.30% from 5.81% two weeks prior (see graph below):

The Drop in Mortgage Rates Brings Good News for Homebuyers | Simplifying The Market

But why is this recent dip such good news for homebuyers? As Nadia Evangelou, Senior Economist and Director of Forecasting at the National Association of Realtors (NAR), explains:

“According to Freddie Mac, the 30-year fixed mortgage rate dropped sharply by 40 basis points to 5.3 percent. . . . As a result, home buying is about 5 percent more affordable than a week ago. This translates to about $100 less every month on a mortgage payment.”

That’s because when rates go up (as they have for the majority of this year), they impact how much you’ll pay in your monthly mortgage payment, which directly affects how much you can comfortably afford. The inverse is also true. A decrease in mortgage rates means an increase in your purchasing power.

The chart below shows how a half-point, or even a quarter-point, change in mortgage rates can impact your monthly payment:

The Drop in Mortgage Rates Brings Good News for Homebuyers | Simplifying The Market

Bottom Line

If your home doesn’t meet your needs, this may be the opportunity you’ve been waiting for. Let’s connect to see how you can benefit from the current drop in mortgage rates.

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Why Growing Home Equity Is Great News if You Plan To Move [INFOGRAPHIC]

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Why Growing Home Equity Is Great News if You Plan To Move [INFOGRAPHIC].

Why Growing Home Equity Is Great News if You Plan To Move [INFOGRAPHIC] | Simplifying The Market

Some Highlights

  • According to the latest data from CoreLogic, the average homeowner gained $64,000 in home equity over the past 12 months.
  • That much equity can be a game-changer when you move. When you sell, it could be some (if not all) of what you need for a down payment on your next home.
  • To find out how much equity you have in your home and how you can use it, let’s connect today.
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How Your Equity Can Grow over Time

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How Your Equity Can Grow over Time.

It’s true that record levels of home price appreciation have spurred significant equity gains for homeowners over the past few years. As Diana Olick, Real Estate Correspondent at CNBC, says:

“The stunning jump in home values over the course of the Covid-19 pandemic has given U.S. homeowners record amounts of housing wealth.”

That’s great for your home’s value over the last couple of years, but what if you’ve lived in your home for longer than that? You may be wondering how much equity you truly have.

The National Association of Realtors (NAR) has done a study to calculate the typical equity gains over longer spans of time. The data they compiled could be enough to motivate you to move. Just remember, to find out how much equity you have in your specific home, you’ll want to get a professional equity assessment from a trusted real estate advisor.

How Your Equity Grows

Let’s start by establishing how you build equity in your home. While price appreciation is clearly a factor that can help boost your equity, you also build equity over time as you pay down your home loan. NAR explains:

“Home equity gains are built up through price appreciation and by paying off the mortgage through principal payments.”

Average Equity Growth over Time

The study from NAR breaks down the typical equity gain over time (see graph below). It calculates the equity a homeowner potentially gained if they purchased the median-priced home 5, 10, or 30 years ago and still own it today.

How Your Equity Can Grow over Time | Simplifying The Market

These six-figure numbers are impressive and certainly enough to help you fuel a move into your next home, but they’re not a promised amount. Remember, your own equity gain will be different. It depends on how long you’ve been in the house, your home’s condition, any upgrades you’ve made, your area, and much more.

If you want to find out how much equity you have, partner with a trusted real estate professional for an equity assessment on your home. They can provide an expert opinion on what your house is worth today and how the equity you’ve gained over time can help you when you purchase your next home. It may be some (if not all) of what you need for your next down payment.

Bottom Line

If you’re thinking about selling your house and making a move, home equity can be a real game-changer, especially if you’ve been in your current home for a while. If you’re ready to find out how much equity you have, let’s connect.

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Real Estate Consistently Voted Best Investment [INFOGRAPHIC]

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Real Estate Consistently Voted Best Investment [INFOGRAPHIC].

Real Estate Consistently Voted Best Investment [INFOGRAPHIC] | Simplifying The Market

Some Highlights

  • Based on a recent Gallup poll, real estate has been rated the best long-term investment for nine years in a row.
  • Owning real estate is more than just a place to call home. It’s also an investment in your future. That’s because it’s typically a stable and secure asset that can grow in value over time.
  • If you’re ready to buy a home and invest in your future, let’s connect.
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