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2020 Real Estate Trends: What You Need to Know

Wow, 2020 has been a challenging year. With so much happening across the country, you might be wondering how the current crisis is impacting real estate trends. Well, surprisingly, median home prices are all the way up to $320,000!1 Will the rest of 2020 bring more of the same results? How will the housing market shake out in the current economic climate?

Whether you’re selling, buying or staying put, here are the 2020 real estate trends you need to know!

Real Estate Trend #1: Home Prices Are Still Rising Slowly

Okay, let’s start with home price trends. In April 2020, home prices grew by a teeny-tiny 0.6% compared to last year—down from the nearly 4% growth rate in March!2 This slower growth trend is likely due to the craziness of the coronavirus and market uncertainty.

But within the third week of May, home prices moved their way back up to a 3% growth rate—almost to pre-COVID levels!3 So there’s a chance that home prices might be regaining some momentum.

Find expert agents to help you buy your home.

National Association of Realtors Chief Economist Lawrence Yun believes home prices will make their way back up to 4% growth overall in 2020.4 So, you’ll likely see home prices continue to creep up, but they probably won’t knock your socks off with rapid growth like we’ve seen in previous years.

National Association of Realtors Chief Economist Lawrence Yun believes home prices will make their way back up to 4% growth overall in 2020.

What Higher Prices Mean for Sellers

A nice profit may be on the horizon! But also keep in mind that a lot of buyers are being priced out of the market at the moment, which could lead to fewer offers for your home. So, what should you do about this? Be aware of your competition.

With less offers to go around, you want your home to really stand out from similar ones in your area. Prepare your home for potential home buyers and work with a real estate agent to help you list your home at the right price.

And be sure to wait for the right offer. Some buyers may try to gut punch you with a low number. If you aren’t in a hurry to move, wait for an offer that gives you the most profit. Remember, the less desperate person always has the upper hand when negotiating!

What Higher Prices Mean for Buyers

If you’re going to buy a home in this expensive market, you absolutely must find out how much house you can really afford. Crunch the numbers yourself with our free mortgage calculator and figure out a monthly payment your budget can handle.

Commit to staying within that budget amount. Don’t rush into a home purchase that doesn’t make financial sense for you no matter how much pressure you feel watching competitors pluck good homes off the market. You could screw up your finances!

If you can’t put down at least 10–20% on a 15-year fixed-rate conventional loan, then you probably can’t afford a house in this market. A down payment that’s less than 10–20% will strangle your budget with massive monthly mortgage payments. But if you want to get prepared to buy and you’re committed to your budget, here are some options to consider:

  • Keep saving. If you stay patient and motivated, you can save for a five-figure down payment by this time next year.
  • Sacrifice some wants. If you can’t afford to buy the house you want, be willing to give up some “nice-to-haves” for your “must-haves.” Find the least expensive home in the best neighborhood you can afford and you can upgrade as your income and savings increase over time.
  • Expand your search. What if the location where you’re planning to buy is what’s busting your budget? You might be surprised at the gem you can find in a less popular neighborhood. Working with a real estate agent who really knows the area is the best way to find a home that fits your budget and lifestyle.

Buying a home can be stressful, but our Home Buyers Guide will streamline the process! It’ll help you think through all the important parts so you can rest easy when your dream home is officially yours.

Real Estate Trend #2: Mortgage Interest Rates Are Super Low

Mortgage interest rates have been trending down—even before the pandemic. In May, the average interest rate for a conventional 15-year fixed-rate mortgage (the cheapest type of mortgage and the only kind we recommend) dropped to 2.69%—the lowest it’s been in over seven years!5

In May, the average interest rate for a conventional 15-year fixed-rate mortgage (the cheapest type of mortgage and the only kind we recommend) dropped to 2.69%—the lowest it’s been in over seven years!

Economist geeks think interest rates will continue to stay low until the economy is close to normal again. But interest rates probably won’t go so low as to hit rock bottom since lenders still have high demand from current homeowners to refinance their mortgages at lower rates.6

If you want to refinance or get a smart mortgage that helps you pay off your home fast, talk to our friends at Churchill Mortgage.

What Lower Rates Mean for Sellers

If interest rates stay low, buyers will be more motivated to buy your home sooner than later. But if interest rates do start to increase later in the year, just plan for your house to be on the market a little longer. A mortgage is a big commitment, and adding higher interest rates to the mix will make many buyers pause.

An experienced real estate agent can help you set the right expectations on how much money to sell your house for and how long you’ll have to wait for the best offer.

What Lower Rates Mean for Buyers

Even though interest rates are super low, be smart and go for a conventional 15-year fixed-rate mortgage (unless you can buy with cash). Avoid getting locked into paying the extra interest and fees that come with rip-off mortgages like FHA, VA, USDA and adjustable-rate ones. That way, you’ll know exactly what your payment will be over the life of the loan and you’ll pay it off faster!

Real Estate Trend #3: Millennial Home Buyers Are the Majority

That’s right, our final trend is about who is buying homes. And once again, millennials took the lead as the largest group (38%) of home buyers last year.7

What is a millennial exactly? Well, the technical answer is anyone born between 1980 and 1998. The easiest way to spot a millennial home buyer? They can’t wait to post a pic of their new home on Instagram!

What Millennial Buyers Mean for Sellers

Here are three important words: Know your buyer. In a nutshell, millennials are internet savvy and do their research before house shopping. Here are some tips:

  • Upgrade your online listing. Virtually all millennials (98%) use the internet for their home search—and 78% of them found the home they purchased on a mobile device last year.8 So, make the best possible impression on the internet by investing in high quality listing photos. You might even need to take video footage to give potential buyers a digital tour of your home.
  • Highlight perks over size. Yes, square footage matters. But millennials are more concerned about their commuting costs and how close their new home is to schools. In fact, most millennial buyers said they were least likely to compromise on school and neighborhood quality when deciding which home to buy.9 So, highlight the benefits of your home’s fabulous location instead of wasting time trying to sell on its size.
     
  • Know popular features. Here are some of the top home features millennials want: laundry room (86%), patio (81%), garage storage (80%) and a walk-in pantry (79%).10 If you’re thinking of making some upgrades to your home, choosing one of those might have millennials showering you with offers when you’re ready to sell.

What Millennial Buyers Mean for Buyers

Okay, if you’re looking for a three-bedroom, single-family home in the suburbs, expect to have a lot of competition. You may have to reprioritize what you want in a dream home. Follow these tips:

  • Know what you want. Decide what you absolutely need in a home. If you’re married and house hunting, you and your spouse need to agree on must-haves. Compare your individual lists and combine them for your real estate agent to use as the foundation of your home search.
  • Write a letter. Sending a personal story to your seller might be just the thing that makes you stand out from similar offers. Nashville couple Abby and John included a personal letter when they made an offer on their home. “We sent the sellers a personal letter with our offer,” Abby said. “The best thing you can do is to include in the letter things you love about their house. If they have a deck or screened-in porch, tell them how you envision using the space. We did that and the sellers accepted our offer—out of multiple offers—within 24 hours.”
  • Hire an experienced pro. Last year, 92% of millennial home buyers used real estate agents to purchase their homes.11 Think they’re onto something? You bet! Save yourself the stress of trying to buy on your own. Get the help of a real estate pro so the home-buying process is smooth for everyone involved.

What if I’m Not Buying or Selling a Home This Year?

You may be thinking, All this is great, but I’m not going anywhere anytime soon. We hear you, and here’s what you should know for now:

1. Equity is unlikely to decrease through 2020.

With most housing markets at low risk for a downturn, the 2020 Housing and Mortgage Market Review estimates home prices will continue to rise for the next couple of years.12 Woo-hoo for sellers! If you sell your house before 2023, you’ll likely still make a nice profit. Continue to monitor how much your home is worth to make sure your equity (what your home is worth minus how much you owe on it) is going up.

2. From what we can see, the real estate market isn’t going to crash.

With the uncertainty around our current economic crisis and price growth slowing down, some folks are wondering about the future of the housing market and if it could collapse again. Well, it’s impossible to know for sure, but economists suggest a housing crash is unlikely.

After all, the super low mortgage rates are motivating buyers to enter the market, which increases demand. But there’s still a record-low supply of home listings. This is keeping home buying somewhat competitive and allowing home price growth to stay steady.13

3. Regardless of your neighborhood, buyers are interested.

Since home prices have experienced rapid growth over the past few years, some buyers may be less choosy. In fact, determined ones might be willing to consider neighborhoods that don’t have easy access to highways or aren’t in close proximity to a big city. If you think you live in an unpopular neighborhood or believe your home isn’t what buyers are looking for, think again. Now may be your perfect time to consider selling.

Take Control of the Trends With a Top-Notch Real Estate Agent

Whether you’re selling or buying, you can take advantage of the current trends by partnering with a professional real estate agent. Through our Endorsed Local Providers (ELP) program, our team will match you with agents we recommend in your area. Our real estate ELPs are top-performing professionals in your market who’ve earned our seal of trust by actually caring about your financial goals.

Find your real estate agent today!

Posted on https://www.daveramsey.com/blog

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Market News

Where Is the Housing Market Headed for the Rest of 2020? [INFOGRAPHIC]

Some Highlights:

  • The housing market is forecasted to finish the year with growing strength.
  • Historically low mortgage rates are creating great potential for homebuyers, and home sales are on the rise.
  • If you’re thinking of buying or selling a home this year, let’s connect to maximize your opportunity today.

Posted by Keeping Current Matters

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Market News

Three of the Latest Reports Show Housing Market Is Strong

The residential real estate market is remaining resilient as the country still struggles to beat the COVID-19 pandemic. Three separate reports recently revealed how the housing market is still showing growth. Here’s a look at each one.

1. Ivy Zelman’s Real Estate Broker Survey

The survey explains that purchaser demand remains strong:

“This month’s overall homebuyer demand rating…was easily the strongest sequential gain in our survey history…Strength continues to be led by the entry-level…While high-end demand is less robust in an absolute sense, there has also been relative improvement, with contacts attributing incremental improvement to the stock market’s rebound, record low mortgage rates and luxury customers trading out of high-priced cities.”

2. The National Association of Home Builders Housing Market Index

The index reveals that builder confidence has returned to levels last seen prior to the pandemic:

“In a strong signal that the housing market is ready to lead a post-COVID economic recovery, builder confidence in the market for newly-built single-family homes jumped 14 points to 72 in July, according to the latest National Association of Home Builders/Wells Fargo Housing Market Index (HMI). The HMI now stands at the solid pre-pandemic reading in March before the outbreak affected much of the nation.”

3. The realtor.com Housing Market Recovery Index

This index leverages a weighted average of four key components of the housing industry, tracking each of the following:

  1. Housing Demand – Growth in online search activity
  2. Home Price – Growth in asking prices
  3. Housing Supply – Growth of new listings
  4. Pace of Sales – Difference in time-on-market

It then compares the current status “to the last week of January 2020 market trend, as a baseline for pre-COVID market growth. The overall index is set to 100 in this baseline period. The higher a market’s index value, the higher its recovery and vice versa.”

The latest results came in at 101, with realtor.com explaining:

“The U.S. Housing Market has recovered from the immediate disruption caused by the COVID pandemic and returned to January 2020 growth levels.”

Bottom Line

Real estate brokers, home builders, and industry data all agree that the housing market has surged back to pre-COVID levels, showing growth, strength, and incredible resilience.

Posted by Keeping Current Matters

Ready to buy or sell your next home? Contact us today to get started!

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Market News

A Remarkable Recovery for the Housing Market

For months now the vast majority of Americans have been asking the same question: When will the economy turn around? Many experts have been saying the housing market will lead the way to a recovery, and today we’re seeing signs of that coming to light. With record-low mortgage rates driving high demand from potential buyers, homes are being purchased at an accelerating pace, and it’s keeping the housing market and the economy moving.

Here’s a look at what a few of the experts have to say about today’s astonishing recovery. In more than one instance, it’s being noted as truly remarkable.

Ali Wolf, Chief Economist, Meyers Research

“The housing recovery has been nothing short of remarkable…The expectation was that housing would be crushed. It was—for about two months—and then it came roaring back.”

Fannie Mae

“Recent home purchase measures have continued to show remarkable strength, leading us to revise upward our home sales forecast, particularly over the third quarter. Similarly, we bumped up our expectations for home price growth and purchase mortgage originations.”

Javier Vivas, Director of Economic Research for realtor.com

“All-time low mortgage rates and easing job losses have boosted buyer confidence back to pre-pandemic levels.”

James Knightley, Chief International Economist, ING

“At face value this is remarkable given the scale of joblessness in the economy and the ongoing uncertainty relating to the path of Covid-19…The outlook for housing transactions, construction activity and employment in the sector is looking much better than what looked possible just a couple of months ago.”

Bottom Line

The strength of the housing market is a bright spark in the economy and leading the way to what is truly being called a remarkable recovery throughout this country. If you’re thinking of buying or selling a home, maybe this is your year to make a move after all.

Posted by Keeping Current Matters

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Market News

What Are Experts Saying about Home Prices?

Last week, a very well-respected real estate analytics firm surprised many with their home price projection for the next twelve months. CoreLogic, in their latest Home Price Index said:

“The economic downturn that started in March 2020 is predicted to cause a 6.6% drop in the HPI by May 2021, which would be the first decrease in annual home prices in over 9 years.”

The forecast was surprising as it was strikingly different than any other projection by major analysts. Six of the other eight forecasts call for appreciation, and the two who project depreciation indicate it will be one percent or less.

Here is a graph showing all of the projections:

There’s a simple formula to determine the future price of any item: calculate the supply of that item in ratio to the demand for that item. In housing right now, demand far exceeds supply. Last week mortgage applications to buy a home were 33% higher than they were at the same time last year. The available inventory of homes for sale is 31% lower than it was last year. Normally, these numbers should call for homes to continue to appreciate.

Bottom Line

Because of the uncertainty with the pandemic, any economic prediction is extremely difficult. However, looking at the limited supply of homes for sale and the tremendous demand for housing, it is difficult to disagree with the majority of analysts who are calling for price appreciation.

Posted on Keeping Current Matters

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Market News

What Are the Experts Saying About Future Home Prices?

A worldwide pandemic and an economic recession have had a tremendous effect on the nation. The uncertainty brought about by both has made predicting consumer behavior nearly impossible. For that reason, forecasting home prices has become extremely difficult.

Normally, there’s a simple formula to determine the future price of any item: calculate the supply of that item in ratio to the demand for that item. In housing right now, demand far exceeds supply. Mortgage applications to buy a home just rose to the highest level in 11 years while inventory of homes for sale is at (or near) an all-time low. That would usually indicate strong appreciation for home values as we move throughout the year.

Some experts, however, are not convinced the current rush of purchasers is sustainable. Ralph McLaughlin, Chief Economist at Haus, explained in their June 2020 Hausing Market Forecast why there is concern:

“The upswing that we’ll see this summer is a result of pent-up demand from homebuyers and supply-in-progress from homebuilders that has simply been pushed off a few months. However, after this pent-up demand goes away, the true economic scarring due to the pandemic will begin to affect the housing market as the tide of pent-up demand goes out.”

The virus and other challenges currently impacting the industry have created a wide range of thoughts regarding the future of home prices. Here’s a list of analysts and their projections, from the lowest depreciation to the highest appreciation:

We can garner two important points from this list:

  1. There is no real consensus among the experts.
  2. No one projects prices to crash like they did in 2008.

Bottom Line

Whether you’re thinking of buying a home or selling your house, know that home prices will not change dramatically this year, even with all of the uncertainty we’ve faced in 2020.

Posted on Keeping Current Matters

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Market News

Economists Forecast Recovery to Begin in the Second Half of 2020

With the U.S. economy on everyone’s minds right now, questions about the country’s financial outlook continue to come up daily. The one that seems to keep rising to the top is: when will the economy begin to recoverWhile no one knows exactly how a rebound will play out, expert economists around the country are becoming more aligned on when the recovery will begin.

According to the latest Wall Street Journal Economic Forecasting Survey, which polls more than 60 economists on a monthly basis, 85.3% believe a recovery will begin in the second half of 2020 (see graph below):

There seems to be a growing consensus among these experts that the second half of this year will be the start of a turnaround in this country.

Chris Hyzy, Chief Investment Officer for Merrill notes:

“We fully expect the economy could begin to pick up in late June and July with a strong recovery in the fourth quarter.” 

In addition, five of the major financial institutions are also forecasting positive GDP in the second half of the year. Today, four of the five expect a recovery to begin in the third quarter of 2020, and all five agree a recovery should start by the fourth quarter (see graph below):

Bottom Line

The vast majority of economists, analysts, and financial institutions are in unison, indicating an economic recovery should begin in the second half of 2020. Agreement among these leading experts is stronger than ever.

Posted on Keeping Current Matters

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Market News Uncategorized

Housing Market Positioned to Bring Back the Economy

Couple dream in their new home

All eyes are on the American economy. As it goes, so does the world economy. With states beginning to reopen, the question becomes: which sectors of the economy will drive its recovery? There seems to be a growing consensus that the housing market is positioned to be that driving force, the tailwind that is necessary. Some may question that assertion as they look back on the last recession in 2008 when housing was the anchor to the economy – holding it back from sailing forward. But even then, the overall economy did not begin to recover until the real estate market started to regain its strength. This time, the housing market was in great shape when the virus hit. As Mark Fleming, Chief Economist of First Americanrecently explained:

“Many still bear scars from the Great Recession and may expect the housing market to follow a similar trajectory in response to the coronavirus outbreak. But, there are distinct differences that indicate the housing market may follow a much different path. While housing led the recession in 2008-2009, this time it may be poised to bring us out of it.”

Fleming is not the only economist who believes this. Last week, Dr. Frank Nothaft, Chief Economist for CoreLogic, (@DrFrankNothaft) tweeted:

“For the first 6 decades after WWII, the housing sector led the rest of the economy out of each recession. Expect it to do so this time as well.”

And, Robert Dietz, Chief Economist for the National Association of Home Builders, in an economic update last week explained:

“As the economy begins a recovery later in 2020, we expect housing to play a leading role. Housing enters this recession underbuilt, not overbuilt…Based on demographics and current vacancy rates, the U.S. may have a housing deficit of up to one million units.”

Bottom Line

Every time a home is sold it has a tremendous financial impact on local economies. As the real estate market continues its recovery, it will act as a strong tailwind to the overall national economy.

Posted by The KCM Crew

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Market News Uncategorized

What Your Real Estate Agent Wants You To Know About the Housing Market Right Now

IP Galanternik D.U./Getty Images

Spring is typically a busy time for buying and selling homes, but the coronavirus pandemic has pushed homeowners and shoppers into new, uncharted territory. Shelter-in-place orders and concerns about contagion have forced many real estate agents to cancel open houses, while unemployment is at a historically high level.

But even in the midst of a deadly pandemic that is devastating the economy, many Americans still want or even need to buy a home in the near future.

“I definitely have clients that are still interested in viewing homes but have been honest that they won’t put pen to paper and write an offer until they know the health crisis has passed and they can assess the impact on real estate and the economy,” says Noah Grassi, a Realtor® for Compass in San Diego.

So, what does the current state of the housing market mean for buyers? With so much uncertainty these days, buying—or planning to buy—a home during a pandemic requires extra careful consideration. That’s why we reached out to real estate agents to get their honest takes on what’s really happening in the housing market in the time of COVID-19, how buyers can prepare, and what we can likely expect when the pandemic subsides.

There may be some reductions in home prices

The federal government has provided relief through cash payments, and lenders are also offering mortgage forbearance options. But with unemployment numbers rising, more people could be forced to sell their homes or enter foreclosure, potentially leading to reductions in home prices.

“Due to millions of job losses per week, and the long-term impact of COVID, I expect housing prices to shift into a downward trend,” says Justin Brennan with Brennan Real Estate Group, Pacific Sotheby’s International Realty. “To what extent they go down will be determined by how many job losses become permanent versus temporary.”

If the price cuts materialize, that would be good news for buyers in locations where affordability was already stretched thin.

More homes will come onto the market

A bigger inventory of homes on the market may soon be on the horizon for buyers.

“There’s an inventory of sellers on the sidelines, and it is growing every day,” says Grassi. “These are owners that still reside in their property and don’t want strangers—agents and potential buyers—walking through their home at the moment due to the health crisis. Once it is clear the risk is minimal, I think we are going to see a big increase in the number of homes for sale.”

There’s a chance that buyers are also waiting in the wings for the coronavirus pandemic to end and the economy to get back on its feet. But the likely big inventory of homes for sale could put buyers in a good position.

Interest rates are likely to stay low

Over the past few months, mortgage interest rates have been lower than we’ve ever seen. And experts expect that trend to continue.

“The general consensus of the experts is that mortgage interest rates will remain attractive for many months to come,” says Grassi. “If buyers are hoping to try to find a deal on their mortgage during this health crisis, they should be writing offers now.”

If low mortgage rates and being stuck indoors have convinced you it’s time to find a new home, this may be a time to consider buying.

Keep in touch with your mortgage lender

Serious buyers should always have their mortgage lender on speed dial, but in these unprecedented times, this advice is more relevant than ever.

“Make sure you are constantly speaking with your lender on updates in the lending market,” says Brennan. “If you fall in love with a home, focus on the long term and getting a great interest rate and payment versus trying to time the market.”

Posted by Anayat Durrani on realtor.com

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Market News

The Cost of Waiting: Interest Rates Edition [INFOGRAPHIC]

Some Highlights:

  • Interest rates are projected to increase steadily heading into 2019.
  • The higher your interest rate, the more money you end up paying for your home and the higher your monthly payment will be.
  • Rates are still low right now – don’t wait until they hit 5% to start searching for your dream home!

 

Posted by The KCM Crew