![3 Questions You May Be Asking About Selling Your House Today [INFOGRAPHIC] | Simplifying The Market](https://files.simplifyingthemarket.com/wp-content/uploads/2022/10/20151720/3-questions-you-may-be-asking-about-selling-your-house-today-share-KCM-549x300.png)
![3 Questions You May Be Asking About Selling Your House Today [INFOGRAPHIC] | Simplifying The Market](https://files.simplifyingthemarket.com/wp-content/uploads/2022/10/20151723/3-questions-you-may-be-asking-about-selling-your-house-today-MEM.png)
If you’re planning to buy a home this year, one of the first steps on your journey is getting pre-approved. Especially in today’s market when mortgage rates are higher than they were just a few months ago, getting a mortgage pre-approval can be a game changer. Here’s why.
To better understand why pre-approval is key, it’s important to know what pre-approval is. The Mortgage Reports explains it like this:
“When you’re ready to take the leap into homeownership, your first step is mortgage preapproval. . . . A mortgage preapproval is when a lender determines you’re qualified for a home loan. Your preapproval letter shows the maximum loan amount you’re approved for (your home buying budget), as well as the specific interest rate and loan term you can expect.”
As part of the pre-approval process, a lender will look at your finances to determine what they’d be willing to loan you. From there, your lender will give you a pre-approval letter to help you understand your true price range and how much money you can borrow. That can make it easier when you set out to search for homes because you’ll know your overall numbers. And with mortgage rates rising and impacting affordability, a solid understanding of your numbers is even more important.
Another added benefit is that pre-approval lets the seller know you’re qualified to buy their house. A recent article from realtor.com notes:
“. . . getting pre-approved can actually improve your chances of falling into the sellers’ good graces, and you’ll want to get it done as early as you possibly can in the home-buying process.”
Even though bidding wars are easing this year as the market shifts, preapproval is still an important part of making a strong offer. It can help a seller feel more confident because it shows you’re serious about their home and that you’re a qualified buyer.
Getting pre-approved for a mortgage is critical. It helps you better understand what you can borrow and shows sellers you’re serious about purchasing their home. Connect with a local real estate professional and a trusted lender so you have the tools you need to succeed as a homebuyer in today’s market.
Content previously posted on Keeping Current Matters
With all the headlines and talk in the media about the shift in the housing market, you might be thinking this is a housing bubble. It’s only natural for those thoughts to creep in that make you think it could be a repeat of what took place in 2008. But the good news is, there’s concrete data to show why this is nothing like the last time.
For historical context, there were too many homes for sale during the housing crisis (many of which were short sales and foreclosures), and that caused prices to fall dramatically. Supply has increased since the start of this year, but there’s still a shortage of inventory available overall, primarily due to almost 15 years of underbuilding homes.
The graph below uses data from the National Association of Realtors (NAR) to show how the months’ supply of homes available now compares to the crash. Today, unsold inventory sits at just a 3.2-months’ supply at the current sales pace, which is significantly lower than the last time. There just isn’t enough inventory on the market for home prices to come crashing down like they did last time, even though some overheated markets may experience slight declines.
During the lead-up to the housing crisis, it was much easier to get a home loan than it is today. Running up to 2006, banks were creating artificial demand by lowering lending standards and making it easy for just about anyone to qualify for a home loan or refinance their current home.
Back then, lending institutions took on much greater risk in both the person and the mortgage products offered. That led to mass defaults, foreclosures, and falling prices. Today, things are different, and purchasers face much higher standards from mortgage companies.
The graph below uses Mortgage Credit Availability Index (MCAI) data from the Mortgage Bankers Association (MBA) to help tell this story. In that index, the higher the number, the easier it is to get a mortgage. The lower the number, the harder it is. In the latest report, the index fell by 5.4%, indicating standards are tightening.
This graph also shows just how different things are today compared to the spike in credit availability leading up to the crash. Tighter lending standards over the past 14 years have helped prevent a scenario that would lead to a wave of foreclosures like the last time.
Another difference is the number of homeowners that were facing foreclosure after the housing bubble burst. Foreclosure activity has been lower since the crash, largely because buyers today are more qualified and less likely to default on their loans. The graph below uses data from ATTOM Data Solutions to help paint the picture of how different things are this time:
Not to mention, homeowners today have options they just didn’t have in the housing crisis when so many people owed more on their mortgages than their homes were worth. Today, many homeowners are equity rich. That equity comes, in large part, from the way home prices have appreciated over time. According to CoreLogic:
“The total average equity per borrower has now reached almost $300,000, the highest in the data series.”
Rick Sharga, Executive VP of Market Intelligence at ATTOM Data, explains the impact this has:
“Very few of the properties entering the foreclosure process have reverted to the lender at the end of the foreclosure. . . . We believe that this may be an indication that borrowers are leveraging their equity and selling their homes rather than risking the loss of their equity in a foreclosure auction.”
This goes to show homeowners are in a completely different position this time. For those facing challenges today, many have the option to use their equity to sell their house and avoid the foreclosure process.
If you’re concerned we’re making the same mistakes that led to the housing crash, the graphs above should help alleviate your fears. Concrete data and expert insights clearly show why this is nothing like the last time.
Content previously posted on Keeping Current Matters
Since the 2008 housing bubble burst, the word recession strikes a stronger emotional chord than it ever did before. And while there’s some debate around whether we’re officially in a recession right now, the good news is experts say a recession today would likely be mild and the economy would rebound quickly. As the 2022 CEO Outlook from KPMG says:
“Global CEOs see a ‘mild and short’ recession, yet optimistic about global economy over 3-year horizon . . .
More than 8 out of 10 anticipate a recession over the next 12 months, with more than half expecting it to be mild and short.”
To add to that sentiment, housing is typically one of the first sectors to rebound during a slowdown. As Ali Wolf, Chief Economist at Zonda, explains:
“Housing is traditionally one of the first sectors to slow as the economy shifts but is also one of the first to rebound.”
Part of that rebound is tied to what has historically happened to mortgage rates during recessions. Here’s a look back at rates during previous economic slowdowns to help put your mind at ease.
Historical data helps paint the picture of how a recession could impact the cost of financing a home. Looking at recessions in this country going all the way back to 1980, the graph below shows each time the economy slowed down mortgage rates decreased.
Fortune explains mortgage rates typically fall during an economic slowdown:
“Over the past five recessions, mortgage rates have fallen an average of 1.8 percentage points from the peak seen during the recession to the trough. And in many cases, they continued to fall after the fact as it takes some time to turn things around even when the recession is technically over.”
While history doesn’t always repeat itself, we can learn from and find comfort in the trends of what’s happened in the past. If you’re thinking about buying or selling a home, you can make the best decision by working with a trusted real estate professional. That way you have expert advice on what a recession could mean for the housing market.
History shows you don’t need to fear the word recession when it comes to the housing market. If you have questions about what’s happening today, let’s connect so you have expert advice and insights you can trust.
Content previously posted on Keeping Current Matters![Tips For First-Time Homebuyers [INFOGRAPHIC] | Simplifying The Market](https://files.simplifyingthemarket.com/wp-content/uploads/2022/10/13123202/20221014-KCM-Share-549x300.png)
![Tips For First-Time Homebuyers [INFOGRAPHIC] | Simplifying The Market](https://files.simplifyingthemarket.com/wp-content/uploads/2022/10/13123157/20221014-MEM.png)
With higher mortgage rates, you might be wondering if now’s the best time to buy a home. While the financial aspects are important to consider, there are also powerful non-financial reasons it may make sense to make a move. Here are just a few of the benefits that come with homeownership.
Owning your home gives you a significant sense of accomplishment because it’s a space you can customize to your heart’s desire. That can bring you added happiness.
In fact, a report from the National Association of Realtors (NAR) shows making updates or remodeling your home can help you feel more at ease and comfortable in your living space. NAR measures this with a Joy Score that indicates how much happiness specific home upgrades bring. According to NAR:
“There were numerous interior projects that received a perfect Joy Score of 10: paint entire interior of home, paint one room of home, add a new home office, hardwood flooring refinish, new wood flooring, closet renovation, insulation upgrade, and attic conversion to living area.”
And as a homeowner, unless there are specific homeowner’s association requirements, you typically won’t have to worry about the changes you can and can’t make.
If you rent, you may not have the same freedom. And if you do make changes as a renter, there’s a good chance you’ll need to revert them back at the end of your lease based on your rental agreement. That can add additional costs when you move out.
There’s no denying taking care of your home is a large responsibility, but it’s one you’ll take pride in as a homeowner. Freddie Mac explains:
“As the homeowner, you have the freedom to adopt a pet, paint the walls any color you choose, renovate your kitchen, and more. . . . Of course, along with the freedoms of homeownership come responsibilities, such as making your monthly mortgage payments on time and maintaining your home. But as the property owner, you’ll be caring for your own investment.”
You’re not taking care of a living space that belongs to someone else. The space is yours. As an added benefit, you may get a return on investment for any upgrades or repairs you make.
That sense of ownership and your feelings of responsibility can even extend beyond the walls of your home. Your home also gives you a stake in your community. Because the average homeowner stays in their home for longer than just a few years, that can lead to having a stronger connection to your local area. NAR notes how that can benefit you:
“Living in one place for a longer amount of time creates an obvious sense of community pride, which may lead to more investment in said community.”
If you’re looking to put down roots, homeownership can help fuel a sense of connection to the area and those around you.
If you’re planning to buy a home this year, there are incredible benefits waiting for you at the end of your journey, including the ability to customize your home, the sense of achievement homeownership brings, and a greater connection to your community. Let’s connect to discuss everything homeownership has to offer.
Content previously posted on Keeping Current Matters
While the Federal Reserve is working hard to bring down inflation, the latest data shows the inflation rate is still high, remaining around 8%. This news impacted the stock market and added fuel to the fire for conversations about a recession.
You’re likely feeling the impact in your day-to-day life as you watch the cost of goods and services climb. The pinch it’s creating on your wallet and the looming economic uncertainty may leave you wondering: “should I still buy a home right now?” If that question is top of mind for you, here’s what you need to know.
In an inflationary economy, prices rise across the board. Historically, homeownership is a great hedge against those rising costs because you can lock in what’s likely your largest monthly payment (your mortgage) for the duration of your loan. That helps stabilize some of your monthly expenses. James Royal, Senior Wealth Management Reporter at Bankrate, explains:
“A fixed-rate mortgage allows you to maintain the biggest portion of housing expenses at the same payment. Sure, property taxes will rise and other expenses may creep up, but your monthly housing payment remains the same.”
And with rents being as high as they are, the ability to stabilize your monthly payments and protect yourself from future rent hikes may be even more important. Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), explains what happened to rents in the latest inflation report:
“Inflation refuses to budge. In September, consumer prices rose by 8.2%. Rents rose by 7.2%, the highest pace in 40 years.”
When you rent, your monthly payment is determined by your lease, which typically renews on an annual basis. With inflation high, your landlord may be more likely to increase your payments to offset the impact of inflation. That may be part of the reason why a survey from realtor.com shows 72% of landlords said they plan to raise the rent on one or more of their properties in the next year.
Becoming a homeowner, if you’re ready and able to do so, can provide lasting stability and a reliable shelter in times of economic uncertainty.
The best hedge against inflation is a fixed housing cost. If you’re ready to learn more and start your journey to homeownership, let’s connect.
Content previously posted on Keeping Current Matters
Over the past two years, the substantial imbalance of low housing supply and high buyer demand pushed home sales and buyer competition to new heights. But this year, things are shifting as supply and demand reach an inflection point.
The graph below helps tell the story of just how different things are today.
This year, buyer demand has eased as higher mortgage rates and mounting economic uncertainty moderated the market. This slowdown in demand is clear when you look at the red bar on the graph. It uses the latest data from ShowingTime to illustrate how showings (an indicator of buyer demand) have softened by just over 12% compared to the same time last year.
Now for a look at how housing supply has changed, turn to the green bar. It uses data from realtor.com to show active listings are up nearly 27% compared to last year. That’s because the moderation of demand allowed housing inventory to increase in 2022.
If you’re thinking of buying a home, you’ll have less competition and more options than you would have had last year. Enjoy having more homes to choose from in your home search and lean on a trusted real estate professional to understand how the increase in supply has also increased your negotiation power. That professional can talk you through the opportunities and challenges buyers face in today’s shifting market. You may be surprised to find they’re different than they were a year ago.
If you’re looking to sell your house, know that inventory is still low overall. That means, if you work with an agent to price your house based on current market value, it will still sell despite the inventory gains and moderating buyer demand this year. That’s because there are still buyers out there who want to move, and your house may be exactly what they’re looking for.
If you’re thinking of buying or selling a home, the best place to turn to for information on today’s supply and demand is a trusted real estate professional. Let’s connect so you know what’s happening in our local market and what that means for you.
Content previously posted on Keeping Current Matters![The Journey To Buy a Home [INFOGRAPHIC] | Simplifying The Market](https://files.simplifyingthemarket.com/wp-content/uploads/2022/10/06110129/20221007-KCM-Share-549x300.png)
![The Journey To Buy a Home [INFOGRAPHIC] | Simplifying The Market](https://files.simplifyingthemarket.com/wp-content/uploads/2022/10/06110130/20221007-MEM.png)
As you set out to buy a home, saving for a down payment is likely top of mind. But you may still have questions about the process, including how much to save and where to start.
If that sounds like you, your down payment could be more in reach than you originally thought. Here’s why.
If you believe you have to put 20% down on a home, you may have based your goal on a common misconception. Freddie Mac explains:
“. . . nearly a third of prospective homebuyers think they need a down payment of 20% or more to buy a home. This myth remains one of the largest perceived barriers to achieving homeownership.”
Unless it’s specified by your loan type or lender, it’s typically not required to put 20% down. According to the latest Profile of Home Buyers and Sellers from the National Association of Realtors (NAR), the median down payment hasn’t been over 20% since 2005. There are even loan types, like FHA loans, with down payments as low as 3.5%, as well as options like VA loans and USDA loans with no down payment requirements for qualified applicants.
This is good news for you because it means you could be closer to your homebuying dream than you realize. For more information, turn to a trusted lender.
A professional will be able to show you other options that could help you get closer to your down payment goal. According to latest Homeownership Program Index from downpaymentresource.com, there are over 2,000 homebuyer assistance programs in the U.S., and the majority are intended to help with down payments.
A recent article explains why programs like these are helpful:
“These resources can immediately build your home buying power and help you take action sooner than you thought possible.”
And if you’re wondering if you have to be a first-time buyer to qualify for these programs, that’s not always the case. According to an article from downpaymentresource.com:
“It is a common misconception that homebuyer assistance is only available to first-time homebuyers, however, 38% of homebuyer assistance programs in Q1 2022 did not have a first-time homebuyer requirement.”
There are also location and profession-based programs you could qualify for as well.
Saving for your down payment is an important first step on your homebuying journey. Let’s connect today and make sure you have a trusted lender to help explore your options.
Content previously posted on Keeping Current Matters
If you’re looking to buy a home, you probably want to secure the lowest interest rate possible for your home loan. Over the last couple of years, that was easier to do as the housing market saw record-low mortgage rates, but this year rates have risen dramatically.
If you’re looking for ways to combat today’s higher rates and lock in the lowest one you can, here are a few factors to focus on. Since approval opportunities can vary, connect with a trusted lender for customized advice.
Credit scores can play a big role in your mortgage rate. Freddie Mac explains:
“When you build and maintain strong credit, mortgage lenders have greater confidence when qualifying you for a mortgage because they see that you’ve paid back your loans as agreed and used your credit wisely. Strong credit also means your lender is more apt to approve you for a mortgage that has more favorable terms and a lower interest rate.”
That’s why it’s important to maintain a good credit score. If you want to focus on improving your score, your trusted advisor can give you expert advice to help.
There are many types of loans, each offering different terms for qualified buyers. The Consumer Financial Protection Bureau (CFPB) says:
“There are several broad categories of mortgage loans, such as conventional, FHA, USDA, and VA loans. Lenders decide which products to offer, and loan types have different eligibility requirements. Rates can be significantly different depending on what loan type you choose.”
When working with your real estate advisor, make sure you find out what’s available in your area and which types of loans you may qualify for.
Another factor to consider is the term of your loan. Just like with location and loan types, you have options. Freddie Mac says:
“When choosing the right home loan for you, it’s important to consider the loan term, which is the length of time it will take you to repay your loan before you fully own your home. Your loan term will affect your interest rate, monthly payment, and the total amount of interest you will pay over the life of the loan.”
Depending on your situation, the length of your loan can also change your mortgage rate.
If you’re a current homeowner looking to sell and make a move, you can use the home equity you’ve built over time toward the down payment on your next home. The CFPB explains:
“In general, a larger down payment means a lower interest rate, because lenders see a lower level of risk when you have more stake in the property. So if you can comfortably put 20 percent or more down, do it—you’ll usually get a lower interest rate.”
To learn more, connect with a lender to find out the difference a higher down payment can make for your new mortgage.
These are just few factors that can help determine your mortgage rate if you’re buying a home. The best thing you can do is have a team of professionals on your side. Connect with a local real estate professional and a trusted lender so you have the expert advice you need in each step of the process.
Content previously posted on Keeping Current Matters
The housing market is rapidly changing from the peak frenzy it saw over the past two years. That means you probably have questions about what your best move is if you’re thinking of buying or selling this fall.
To help you make a confident decision, lean on the professionals for insights. Here are a few things experts are saying about the fall housing market.
A recent article from realtor.com:
“This fall, a more moderate pace of home selling, more listings to choose from, and softening price growth will provide some breathing room for buyers searching for a home during what is typically the best time to buy a home.”
Michael Lane, VP and General Manager, ShowingTime:
“Buyers will continue to see less competition for homes and have more time to tour homes they like and consider their options.”
Selma Hepp, Interim Lead of the Office of the Chief Economist, CoreLogic:
“. . . record equity continues to provide fuel for housing demand, particularly if households are relocating to more affordable areas.”
Danielle Hale, Chief Economist, realtor.com:
“For homeowners deciding whether to make a move this year, remember that listing prices – while lower than a few months ago – remain higher than in prior years, so you’re still likely to find opportunities to cash-in on record-high levels of equity, particularly if you’ve owned your home for a longer period of time.”
Mortgage rates, home prices, and the supply of homes for sale are top of mind for buyers and sellers today. And if you want the latest information for our area, let’s connect today.
Content previously posted on Keeping Current Matters
Mortgage rates have increased significantly in recent weeks. And that may mean you have questions about what this means for you if you’re planning to buy a home. Here’s some information that can help you make an informed decision when you set your homebuying plans.
As mortgage rates rise, they impact your purchasing power by raising the cost of buying a home and limiting how much you can comfortably afford. Here’s how it works.
Let’s assume you want to buy a $400,000 home (the median-priced home according to the National Association of Realtors is $389,500). If you’re trying to shop at that price point and keep your monthly payment about $2,500-2,600 or below, here’s how your purchasing power can change as mortgage rates climb (see chart below). The red shows payments above that threshold and the green indicates a payment within your target range.
As the chart shows, as rates go up, the amount you can afford to borrow decreases and that may mean you have to look at homes at a different price point. That’s why it’s important to work with a real estate advisor to understand how mortgage rates impact your monthly mortgage payment at various home loan amounts.
The rise in mortgage rates and the resulting decrease in purchasing power may leave you wondering if you should wait for rates to go down before making your purchase. Realtor.com says this about where rates could go from here:
“Many homebuyers likely winced . . . upon hearing that the Federal Reserve yet again boosted its short-term interest rates by three-quarters of a percentage point—a move that’s pushing mortgage rates through the roof. And the already high rates are just going to get higher.”
So, if you’re waiting for mortgage rates to drop, you may be waiting for a while as the Federal Reserve works to get inflation under control.
And if you’re considering renting as your alternative while you wait it out, remember that’s going to get more expensive with time too. As Nadia Evangelou, Senior Economist and Director of Forecasting at the National Association of Realtors (NAR), says:
“There is no doubt that these higher rates hurt housing affordability. Nevertheless, apart from borrowing costs, rents additionally rose at their highest pace in nearly four decades.”
Basically, it is true that it costs more to buy a home today than it did last year, but the same is true for renting. This means, either way, you’re going to be paying more. The difference is, with homeownership, you’re also gaining equity over time which will help grow your net worth. The question now becomes: what makes more sense for you?
Each person’s situation is unique. To make the best decision for you, let’s connect to explore your options.
Content previously posted on Keeping Current Matters
Today’s cooling housing market, the rise in mortgage rates, and mounting economic concerns have some people questioning: should I still buy a home this year? While it’s true this year has unique challenges for homebuyers, it’s important to factor the long-term benefits of homeownership into your decision.
Consider this: if you know people who bought a home 5, 10, or even 30 years ago, you’re probably going to have a hard time finding someone who regrets their decision. Why is that? The reason is tied to how you gain equity and wealth as home values grow with time.
The National Association of Realtors (NAR) explains:
“Home equity gains are built up through price appreciation and by paying off the mortgage through principal payments.”
Here’s a look at how just the home price appreciation piece can really add up over the years.
Even though home price appreciation has moderated this year, home values have still increased significantly in recent years. The map below uses data from the Federal Housing Finance Agency (FHFA) to show just how noteworthy those gains have been over the last five years.
If you look at the percent change in home prices, you can see home prices grew on average by almost 64% nationwide over that period.
That means a home’s value can increase substantially in a short time. And if you expand that time frame even more, the benefit of homeownership and the drastic gains you stand to make become even clearer (see map below):
The second map shows, nationwide, home prices appreciated by an average of over 290% over roughly a thirty-year span.
While home price growth varies by state and local area, the nationwide average tells you the typical homeowner who bought a house thirty years ago saw their home almost triple in value over that time. This is why homeowners who bought their homes years ago are still happy with their decision.
Even if home price appreciation eases as the market cools this year, experts say home prices are still expected to appreciate nationally in 2023. That means, in most markets, your home should grow in value over the next year even if the pace is slower than it was during the peak market frenzy when prices skyrocketed.
The alternative to buying a home is renting, and rental prices have been climbing for decades. So why rent and fight annual lease hikes for no long-term financial benefit? Instead, consider buying a home. It’s an investment in your future that could set you up for long-term gains.
Don’t let the shifting market delay your dreams. Data shows home values typically appreciate over time, and that gives your net worth a nice boost. If you’re ready to start your journey to homeownership, let’s connect today.
Content previously posted on Keeping Current Matters