More Listings Are Coming onto the Market

 

Some Highlights

• Worried you won’t be able to find your next home after you sell? You should know data from realtor.com shows more listings are coming onto the market each month this year.
• Having additional options can make the search for your next home easier. But inventory is still low overall, which means your house should still stand out when you sell.
• If your biggest question is where you’ll go if you sell, take this as encouraging news. Connect with a local real estate professional to start the process today.

What Are the Best Options for Today's First-Time Homebuyers?

If you’re looking to buy your first home, you’re likely balancing several factors. Because both mortgage rates and home prices have risen this year, it costs more to buy a home than it did even just a few months ago. But that doesn’t mean you have to put your plans on hold.

If you partner with a trusted real estate advisor and hone your strategy, you can navigate today’s market and find the home you’re looking for. Here are two tips to help you get started.

Work with a Professional To Prioritize Your Wish List

If you’re having trouble finding a home in your budget that checks all the boxes, it may be worth taking another look at your lists of what you want and what you really need. According to the latest First-Time Homebuyer Metro Affordability Report from NerdWallet, your wish list can have as much impact on your search as your finances:

“Your budget isn’t all that you need to be concerned about; your wish list and desired location may carry just as much weight.”

It’s all about prioritization. If you’re serious about purchasing your first home soon, be flexible in what you’re looking for to open up your pool of options. Partner with a local real estate professional to better understand what’s available in today’s market and reprioritize your wish list. Remember, making a concession now doesn’t mean you’ll never have everything on your list. After you’ve moved in, you can always add certain features to make the home your own.

Increase Your Search Radius To Consider More Locations

Some areas may have more homes within your target price range than others, but it may require you to be flexible on your location. For example, if you’re a remote worker, you may be able to expand your search radius. As Fannie Mae explains:

“. . . continued remote work flexibility is likely giving many the ability to live farther away in more affordable areas.”

The decision to search in places with a lower cost of living could help you find a home that fits your budget and checks the most boxes off your wish list.

Bottom Line

If you’re serious about purchasing your first home this year, revisiting your wish list and desired location can help. Work with a trusted real estate advisor to explore all the options in your local market – and beyond – so you can achieve your homeownership dreams.

Is the Housing Market Correcting?

 

If you’re following the news, all of the headlines about conditions in the current housing market may leave you with more questions than answers. Is the boom over? Is the market crashing or correcting? Here’s what you need to know.

The housing market is moderating compared to the last two years, but what everyone needs to remember is that the past two years were record-breaking in nearly every way. Record-low mortgage rates and millennials reaching peak homebuying years led to an influx of buyer demand. At the same time, there weren’t enough homes available to purchase thanks to many years of underbuilding and sellers who held off on listing their homes due to the health crisis.

This combination led to record-high demand and record-low supply, and that wasn’t going to be sustainable for the long term. The latest data shows early signs of a shift back to the market pace seen in the years leading up to the pandemic – not a crash nor a correction. As realtor.com says:

“The housing market is at a turning point. . . . We’re starting to see signs of a new direction, . . .”

Home Showings Then and Now

The ShowingTime Showing Index tracks the traffic of home showings according to agents and brokers. It’s a good indication of buyer demand. Here’s a look at that data going back to 2019 (see graph below):

The 2019 numbers give a good baseline of pre-pandemic demand (shown in gray). As the graph indicates, home showings skyrocketed during the pandemic (shown in blue). And while current buyer demand has begun to moderate slightly based on the latest data (shown in green), showings are still above 2019 levels.

And since 2019 was such a strong year for the housing market, this helps show that the market isn’t crashing – it’s just at a turning point that’s moving back toward more pre-pandemic levels.

Existing Home Sales Then and Now

Headlines are also talking about how existing home sales are declining, but perspective matters. Here’s a look at existing home sales going all the way back to 2019 using data from the National Association of Realtors (NAR) (see graph below):

Again, a similar story emerges. The pandemic numbers (shown in blue) beat the more typical year of 2019 home sales (shown in gray). And according to the latest projections for 2022 (shown in green), the market is on pace to close this year with more home sales than 2019 as well.

It’s important to compare today not to the abnormal pandemic years, but to the most recent normal year to show the current housing market is still strong. First American sums it up like this:

“. . . today’s housing market looks a lot like the 2019 housing market, which was the strongest housing market in a decade at the time.”

Bottom Line

If recent headlines are generating any concerns, look at a more typical year for perspective. The current market is not a crash or correction. It’s just a turning point toward more typical, pre-pandemic levels. Reach out to a trusted real estate professional if you have any questions about our local market and what it means for you when you buy or sell this year.

Home Price Deceleration Doesn't Mean Home Price Depreciation

 

Experts in the real estate industry use a number of terms when they talk about what’s happening with home prices. And some of those words sound a bit similar but mean very different things. To help clarify what’s happening with home prices and where experts say they’re going, here’s a look at a few terms you may hear:

• Appreciation is when home prices increase.
• Depreciation is when home prices decrease.
• Deceleration is when home prices continue to appreciate, but at a slower pace.

Where Home Prices Have Been in Recent Years

For starters, you’ve probably heard home prices have skyrocketed over the past two years, but homes were actually appreciating long before that. You might be surprised to learn that home prices have climbed for 122 consecutive months (see graph below):

As the graph shows, houses have gained value consistently over the past 10 consecutive years. But since 2020, the increase has been more dramatic as home price growth accelerated.

So why did home prices climb so much? It’s because there were more buyers than there were homes for sale. That imbalance put upward pressure on home prices because demand was high and supply was low.

Where Experts Say Home Prices Are Going

While this is helpful context, if you’re a buyer or seller in today’s market, you probably want to know what’s going to happen with home prices moving forward. Will they continue that same growth path or will home prices fall?

Experts are forecasting ongoing appreciation, just at a decelerated pace. In other words, prices will keep climbing, just not as fast as they have been. The graph below shows home price forecasts from seven industry leaders. None are calling for prices to fall (see graph below):

Mark Fleming, Chief Economist at First American, identifies a key reason why home prices won’t depreciate or drop:

“In today’s housing market, demand for homes continues to outpace supply, which is keeping the pressure on house prices, so don’t expect house prices to decline.”

And although housing supply is starting to tick up, it’s not enough to make home prices decline because there’s still a gap between the number of homes available for sale and the volume of buyers looking to make a purchase.

Terry Loebs, Founder of the research firm Pulsenomics, notes that most real estate experts and economists anticipate home prices will continue rising. As he puts it:

“With home values at record-high levels and a vast majority of experts projecting additional price increases this year and beyond, home prices and expectations remain buoyant.”

Bottom Line

Experts forecast price deceleration, not depreciation. That means home prices will continue to rise, just at a slower pace. Connect with a trusted real estate professional to get a full picture of what’s happening with home prices in your local market and to discuss your buying and selling goals.

What Does the Rest of the Year Hold for the Housing Market?

 If you’re thinking of buying or selling a house, you’re at an exciting decision point. And anytime you make a big decision like that, one thing you should always consider is timing. So, what does the rest of the year hold for the housing market? Here’s what experts have to say.

The Number of Homes Available for Sale Is Likely To Grow

There are early signs housing inventory is starting to grow and experts say that should continue in the months ahead. According to Danielle Hale, Chief Economist at realtor.com:

“The gap between this year’s homes for sale and last year’s is one-fifth the size that it was at the beginning of the year. The catch up is likely to continue, . . . This growth will mean more options for shoppers than they’ve had in a while, even though inventory continues to lag pre-pandemic normal.”

• As a buyer, having more options is welcome news. Just remember, housing supply is still low, so be ready to act fast and put in your best offer up front.
• As a seller, your house may soon face more competition when other sellers list their homes. But the good news is, if you’re also buying your next home, having more options to choose from should make that move-up process easier.

Mortgage Rates Will Likely Continue To Respond to Inflationary Pressures

Experts also agree inflation should continue to drive up mortgage rates, albeit more moderately. Odeta Kushi, Deputy Chief Economist at First American, says:

“… ongoing inflationary pressure remains likely to push mortgage rates even higher in the months to come.”  

• As a buyer, work with trusted real estate professionals, including your lender, so you can learn how rising mortgage rate environments impact your purchasing power. It may make sense to buy now before it costs more to do so, if you’re ready.
• As a seller, rising mortgage rates are motivating some homeowners to make a move up sooner rather than later. If you’re planning to buy your next home, talk to a trusted real estate advisor to decide how to time your move.

Home Prices Are Projected To Continue To Climb

Home prices are forecast to keep appreciating because there are still fewer homes for sale than there are buyers in the market. That said, experts agree the pace of that appreciation should moderate – but home prices won’t fall. Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), explains:

“Prices throughout the country have surged for the better part of two years, including in the first quarter of 2022. . . Given the extremely low inventory, we’re unlikely to see price declines, but appreciation should slow in the coming months.” 

• As a buyer, continued home price appreciation means it’ll cost you more to buy the longer you wait. But it also gives you peace of mind that, once you do buy a home, it will likely grow in value. That makes it historically a good investment and a strong hedge against inflation.
• As a seller, price appreciation is great news for the value of your home. Again, lean on a professional to strike the right balance of the best conditions possible for both selling your house and buying your next one.

Bottom Line

Whether you’re a homebuyer or seller, you need to know what’s happening in the housing market, so you can make the most informed decision possible. Connect with a real estate advisor to discuss your goals and what lies ahead, so you can pick your best time to make a move.

How Homeownership Impacts You

 

June is National Homeownership Month, and it’s the perfect time to reflect on how impactful owning a home can truly be. When you purchase a house, it becomes more than just a space you occupy. It’s your stake in the community, an investment, and a place you can put your stamp on.

If you’re thinking about buying a home this year, here are some of the benefits you’ll experience when you do.

The Emotional Benefits of Homeownership

Because it’s a place that’s uniquely yours, owning a home can give you a sense of pride and happiness in several ways.

Your Home Can Reflect Your Tastes and Personality

Investopedia puts it like this:

“One often-cited benefit of homeownership is the knowledge that you own your little corner of the world.”

That knowledge can lead to a powerful, emotional connection to the place where you live. But so can the realization that your home will grow with you. Because it’s yours, you have the freedom to make updates to it as your needs and tastes change. As Logan Mohtashami, Lead Analyst for HousingWire, says:

“The psychology is that this is yours and you’re going to make it as good as possible because you’re in for a long time, . . . “

And that can create a greater sense of ownership, pride, and connection with your home and your community.

It Can Enhance Your Neighborhood and Civic Engagement

Homeownership can lead you to get even more involved with your local area. After all, you’re putting your roots down in a location and will want to do what you can to help improve it, much like your home. In a recent report, the National Association of Realtors (NAR) says:

“Living in one place for a longer amount of time creates and [sic] obvious sense of community pride, which may lead to more investment in said community.”

The Financial Benefits of Homeownership

When you choose to become a homeowner, you’re making a financial decision as well. That’s because your home is also an investment.

It Can Help You Feel Financially Stable

Homeownership is truly one of the best ways to improve your long-term financial position. Not only will you have a predictable monthly housing expense that can benefit your budget in the short term, but you’ll also gain equity as your home appreciates in value and you make your monthly mortgage payment. As Freddie Mac says:

“Building equity through your monthly principal payments and appreciation is a critical part of homeownership that can help you create financial stability.”

It Can Grow Your Wealth

Because of your growing equity, you can build your net worth as a homeowner. And when you compare the difference in net worth between a renter and a homeowner, it’s clear that owning a home truly offers a great way to build your long-term financial position.

According to the latest data from NAR, the median household net worth of a homeowner is roughly $300,000, while the median net worth of renters is only about $8,000. That means a homeowner’s net worth is nearly 40 times that of a renter.

Bottom Line

Homeownership is truly a way to find greater satisfaction and happiness and to build financial freedom. If National Homeownership Month has you dreaming about purchasing a home, contact a local real estate professional to begin the process today.