Latest Real Estate News

Feb. 7, 2024

Why Pre-Approval Is Even More Important This Year

On the road to becoming a homeowner? If so, you may have heard the term pre-approval get tossed around. Let’s break down what it is and why it’s important if you’re looking to buy a home in 2024.

What Pre-Approval Is

As part of the homebuying process, your lender will look at your finances to figure out what they’re willing to loan you. According to Investopedia, this includes things like your W-2, tax returns, credit score, bank statements, and more.

From there, they’ll give you a pre-approval letter to help you understand how much money you can borrow. Freddie Mac explains it 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. . . . Keep in
mind that the loan amount in the pre-approval letter is the lender’s maximum
offer. Ultimately, you should only borrow an amount you are comfortable repaying.”

Now, that last piece is especially important. While home affordability is getting better, it’s still tight. So, getting a good idea of what you can borrow can help you really wrap your head around the financial side of things. It doesn’t mean you should borrow the full amount. It just tells you what you can borrow from that lender.

This sets you up to make an informed decision about your numbers. That way you’re able to tailor your home search to what you’re actually comfortable with budget-wise and can act fast when you find a home you love.

Why Pre-Approval Is So Important in 2024

If you want to buy a home this year, there’s another reason you’re going to want to be sure you’re working with a trusted lender to make this a priority. 

While more homes are being listed for sale, the overall number of available homes is still below the norm. At the same time, the recent downward trend in mortgage rates compared to last year is bringing more buyers back into the market. That imbalance of more demand than supply creates a bit of a tug-of-war for you. 

It means you’ll likely find you have more competition from other buyers as more and more people who were sitting on the sidelines when mortgage rates were higher decide to jump back in. But pre-approval can help with that too. 

Pre-approval shows sellers you mean business because you’ve already undergone a credit and financial check. As Greg McBride, Chief Financial Analyst at Bankrate, says:

“Preapproval carries more weight because it means lenders have actually
done more than a cursory review of your credit and your finances, but have
instead reviewed your pay stubs, tax returns and bank statements. A
preapproval means you’ve cleared the hurdles necessary to be approved
for a mortgage up to a certain dollar amount.

Sellers love that because that makes it more likely the sale will move forward without unexpected delays or issues. And if you may be competing with another buyer to land your dream home, why wouldn’t you do this to help stack the deck in your favor?

Bottom Line

If you’re looking to buy a home in 2024, know that getting pre-approved is going to be a key piece of the puzzle. With lower mortgage rates bringing more buyers back into the market, this can help you make a strong offer that stands out from the crowd.

Posted in Real Estate Market
Feb. 5, 2024

Why Having Your Own Agent Matters When Buying a New Construction Home

Finding the right home is one of the biggest challenges for potential buyers today. Right now, the supply of homes for sale is still low. But there is a bright spot. Newly built homes make up a larger percent of the total homes available for sale than normal. That’s why, if you’re craving more options, it makes sense to see if a newly built home is right for you. 

But it’s important to remember the process of working with a builder is different than buying from a homeowner. And, while builders typically have sales agents on-site, having your own agent helps make sure you have proper representation throughout your homebuying journey. As Realtor.com says: 

“Keep in mind that the on-site agent you meet at a new-construction office
works for the builder. So, as the homebuyer, it’s a smart idea to bring in
your own agent, as well, to help you negotiate and
stay protected in the transaction.”

Here’s how having your own agent is key when you build or buy a new construction home.

Agents Know the Local Area and Market

It’s important to consider how the neighborhood and surrounding area may evolve before making your home purchase. Your agent is well-versed in the upcoming communities and developments that could influence your decision. One way a real estate agent can help is by reviewing the builder's site plan. For example, you’ll want to know if there are any plans to construct a highway or add a drainage ditch behind your prospective backyard.

Knowledge of Construction Quality and Builder Reputation

An agent also has expertise in the construction quality and reputation of different builders. They can give you insights into each one's track record, customer satisfaction, and construction practices. Armed with this information, you can choose a builder known for consistently delivering top-notch homes.

Assistance with Customization and Upgrades

The most obvious benefit of opting for new home construction is the opportunity to customize your home. Your agent will guide you through that process and share advice on the upgrades that are most likely to add long-term value to your home. Their expertise helps make sure you focus your budget on areas that will give you the greatest return on your investment later.

Understanding Builder Negotiations and Contracts

When it comes to working with builders, having a skilled negotiator on your side can make all the difference. Builder contracts can be complex. Your agent can help you navigate these contracts to make sure you fully understand the terms and conditions. Plus, agents are skilled negotiators who can advocate for you, potentially securing better deals, upgrades, or incentives throughout the process. As Realtor.com says:

“A good buyer’s agent will be able to review any contracts
before you sign on 
the dotted line, ensuring you aren’t unwittingly agreeing
to terms
that only benefit the builder.” 

Bottom Line

If you are interested in buying or building a new construction home, having a trusted agent by your side can make a big difference. If you'd like to start that conversation, let’s connect.

Posted in Real Estate Market
Feb. 2, 2024

Foreclosure Activity Is Still Lower than the Norm

Have you seen headlines talking about the increase in foreclosures in today’s housing market? If so, they may leave you feeling a bit uneasy about what’s ahead. But remember, these clickbait titles don’t always give you the full story.

The truth is, if you compare the current numbers with what usually happens in the market, you’ll see there’s no need to worry.

Putting the Headlines into Perspective

The increase the media is calling attention to is misleading. That’s because they’re only comparing the most recent numbers to a time where foreclosures were at historic lows. And that’s making it sound like a bigger deal than it is.

In 2020 and 2021, the moratorium and forbearance program helped millions of homeowners stay in their homes, allowing them to get back on their feet during a very challenging period.

When the moratorium came to an end, there was an expected rise in foreclosures. But just because foreclosures are up doesn’t mean the housing market is in trouble.

Historical Data Shows There Isn’t a Wave of Foreclosures

Instead of comparing today’s numbers with the last few abnormal years, it’s better to compare to long-term trends – specifically to the housing crash – since that’s what people worry may happen again.

Take a look at the graph below. It uses foreclosure data from ATTOM, a property data provider, to show foreclosure activity has been consistently lower (shown in orange) since the crash in 2008 (shown in red):

So, while foreclosure filings are up in the latest report, it’s clear this is nothing like it was back then.

In fact, we’re not even back at the levels we’d see in more normal years, like 2019. As Rick Sharga, Founder and CEO of the CJ Patrick Company, explains:

“Foreclosure activity is still only at about 60% of pre-pandemic levels. . .”

That’s largely because buyers today are more qualified and less likely to default on their loans. Delinquency rates are still low and most homeowners have enough equity to keep them from going into foreclosure. As Molly Boesel, Principal Economist at CoreLogic, says:

“U.S. mortgage delinquency rates remained healthy in October, with the overall delinquency rate unchanged from a year earlier and the serious delinquency rate remaining at a historic low… borrowers in later stages of delinquencies are finding alternatives to defaulting on their home loans.”

The reality is, while increasing, the data shows a foreclosure crisis is not where the market is today, or where it’s headed.

Bottom Line

Even though the housing market is experiencing an expected rise in foreclosures, it’s nowhere near the crisis levels seen when the housing bubble burst. If you have questions about what you’re hearing or reading about the housing market, let’s connect.

Posted in Real Estate Market
Jan. 16, 2024

Why You May Want To Seriously Consider a Newly Built Home

Are you putting off your plans to sell because you’re worried you won’t be able to find a home you like when you move? If so, it may be time to consider a newly built home and the benefits that come with one. Here’s why.

Near-Record Percentage of New Home Inventory

Newly built homes are becoming an increasingly significant part of today’s housing inventory. According to the most recent report from the National Association of Home Builders (NAHB):

“Newly built homes available for sale accounted for 31% of total homes
available for sale in November, compared to an approximate 12% historical average.”

That means the percentage of the total homes available to buy that are newly built is well over two times higher than the norm. And even more new homes are on the way.

Recent data from the Census shows there’s been an uptick in both housing starts (where builders break ground on more new homes) and housing completions (homes where construction just wrapped).

And while some people may worry builders are building too many homes, that isn’t a concern – if anything, the recent increase is really good news. As Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), explains:

“Even more home building will be needed with the housing shortage persisting
in most markets . . .
Another 30% rise in home construction can easily
be absorbed in the marketplace . . .”

How This Helps You 

Since the supply of existing homes for sale is still low right now, the increase of new-home construction can be a game changer because it gives you more options for your search.

Picture yourself in a home that’s new from the ground up: new appliances, fresh paint, fewer maintenance needs because everything is new, and so much more. Doesn’t that sound nice?

And it may be more within reach than you ever imagined. In addition, some builders are offering things like mortgage rate buy-downs for homebuyers right now. This can help offset today’s affordability challenges while also getting you into your dream home. In a recent article, Patrick Duffy, Senior Real Estate Economist at U.S. News, explains:

“Builders have been using mortgage interest rate buydowns for many years as
a sales incentive whenever interest rates are relatively high, . . .
Today more builders are offering rate buydowns for the entirety of the loan,
allowing buyers to finance more home for the same payment amount.”

Just remember, the process of buying from a builder is different from buying from a home seller, so it’s important to partner with a trusted real estate agent who knows the local market. They’ll be your go-to resource for coordinating with the builder, reviewing contracts, and more.

Bottom Line

If you’re trying to sell so you can make a move but you’re having a hard time finding a home you like, let’s connect. That way you have a local expert to help you explore all of your options, including the newly built homes in our area.

Posted in Real Estate Market
Jan. 9, 2024

What Lower Mortgage Rates Mean for Your Purchasing Power

If you want to buy a home, it's important to know how mortgage rates impact what you can afford and how much you’ll pay each month. Fortunately, rates for 30-year fixed mortgages have come down significantly since the end of October and are currently under 7%, according to Freddie Mac (see graph below):

This recent trend is great news for buyers. As a recent article from Bankrate says:

“The rate cool-off somewhat eases the housing affordability squeeze.”

And according to Edward Seiler, AVP of Housing Economics and Executive Director of the Research Institute for Housing America at the Mortgage Bankers Association (MBA):

“MBA expects that affordability conditions will continue to improve
as mortgage rates decline . . .”

Here’s a bit more context on how this could help with your plans to buy a home.

How Mortgage Rates Affect Your Search for a Home

Understanding the connection between mortgage rates and your monthly home payment is crucial for your plans to become a homeowner. The chart below illustrates how your ability to afford a home changes when mortgage rates shift. Imagine your budget allows for a monthly payment between $2,400 and $2,500. The green part in the chart shows payments in that range or lower (see chart below):

As you can see, even small changes in rates can affect your budget and the loan amount you can afford.

Get Help from Reliable Experts To Understand Your Budget and Plan Ahead

When you're looking to buy a home, it's important to get guidance from a local real estate agent and a trusted lender. They can help you explore different mortgage options, understand what makes mortgage rates go up or down, and how those changes impact you.

By looking at the numbers and the latest data together, then adjusting your strategy based on today's rates, you'll be better prepared and ready to buy a home.

Bottom Line

If you’re looking to buy a home, you should know the recent downward trend in mortgage rates is good news for your move. Let’s connect and plan your next steps.

Posted in Real Estate Market
Dec. 29, 2023

Retiring Soon?Why Moving Might Be the Perfect Next Step

If you’re thinking about retirement or have already retired this year, it’s a good time to consider if your current house is still a good fit for the next chapter in your life. 

Fortunately, you may be in a better position to make a move than you realize. Here are a few things to think about as you decide whether or not to sell and make a move.

How Long You’ve Been in Your Home

From 1985 to 2008, the average length of time homeowners typically stayed in their homes was only six years. But according to the National Association of Realtors (NAR), that number is rising today, meaning many homeowners are living in their houses even longer (see graph below):

When you live in a home for a significant period of time, it’s natural for you to experience a number of changes in your life while you’re in that house. As those life changes and milestones happen, your needs may change. And if your current home no longer meets them, you may have better options waiting for you.

How Much Equity You’ve Gained

Additionally, if you’ve been in your house for more than a few years, you’ve likely built-up significant equity that can fuel your next move. That’s because the longer you’ve been in your house, the more likely it’s grown in value due to home price appreciation. Data from the Federal Housing Finance Agency (FHFA) illustrates that point (see graph below):

While home price growth varies by state and local area, the national average shows the typical homeowner who’s been in their house for five years saw it increase in value by nearly 60%. And the average homeowner who’s owned their home since 1991 saw it more than triple in value over that time.

Consider Your Retirement Goals

Whether you're looking to downsize, relocate to a dream destination, or simply be closer to loved ones, your home equity can be a key to realizing your homeownership goals. NAR shares that for recent home sellers, the primary reason to move was to be closer to loved ones.

Whatever your home goals are, a trusted real estate agent can work with you to find the best option. They’ll help you sell your current house and guide you through buying the home that’s right for your lifestyle today. 

Bottom Line

Retirement can bring about major changes in your life, including what you need from your home. Let’s connect to explore the available homes in our area.

Posted in Real Estate Market
Dec. 20, 2023

Why Mortgage Rates Could Continue to Decline

When you read about the housing market, you’ll probably come across some information about inflation or recent decisions made by the Federal Reserve (the Fed). But how do those two things impact you and your homebuying plans? Here's what you need to know.

The Federal Funds Rate Hikes Have Stalled

One of the Fed’s primary goals is to lower inflation. In order to do that, they started raising the Federal Funds Rate to slow down the economy. Even though this doesn’t directly dictate what happens with mortgage rates, it does have an impact.

Recently inflation has started to cool, a signal those increases worked and are bringing inflation back down. As a result, the Fed’s hikes have gotten smaller and less frequent. In fact, there haven’t been any increases since July (see graph below):

And not only has the Fed decided not to raise the Federal Funds Rate the last three times the committee met, they’ve signaled there may actually be rate cuts coming in 2024. According to the New York Times (NYT):

“Federal Reserve officials left interest rates unchanged in their final policy
decision of 2023 and forecast that they will cut borrowing costs three
times in the coming year, a sign that the central bank is shifting toward the
next phase in its fight against rapid inflation.”

This indicates the Fed thinks the economy and inflation are improving. Why does that matter to you and your plans to buy a home? It could end up leading to lower mortgage rates and improved affordability.

Mortgage Rates Are Coming Down

Mortgage rates are influenced by a wide variety of factors, and inflation and the Fed’s actions (or as has been the case recently, inaction) play a big role. Now that the Fed has paused the increases, it looks more likely mortgage rates will continue their downward trend (see graph below):

Although mortgage rates may remain volatile, their recent trend combined with expert forecasts indicate they could continue to go down in 2024. That would improve affordability for buyers and make it easier for sellers to move since they won’t feel as locked-in to their current, low mortgage rate.

Bottom Line

The Fed’s decisions have an indirect impact on mortgage rates. By not raising the Federal Funds Rate, mortgage rates are likely to continue declining. Let’s connect so you have expert advice about changes in the housing market and how they affect you.

 

Posted in Real Estate Market
Dec. 7, 2023

Why You Should Use a Real Estate Agent When You Buy a Home

If you’ve recently decided you’re ready to become a homeowner, chances are you’re trying to figure out what to do first. It can feel a bit overwhelming to know where to start, but the good news is you don’t have to navigate all of that alone.

When it comes to buying a home, there are a lot of moving pieces. And that’s especially true in today’s housing market. The number of homes for sale is still low, and home prices and mortgage rates are still high. That combination can be tricky if you don’t have reliable expertise and a trusted advisor on your side. That’s why the best place to start is connecting with a local real estate agent.

Agents Are the #1 Most Useful Source in the Buying Process

The latest annual report from the National Association of Realtors (NAR) finds recent homebuyers agree the #1 most useful source of information they had in the home buying process was a real estate agent. Let’s break down why.

How an Agent Helps When You Buy a Home

When you think about a real estate agent, you may think of someone taking you on home showings and putting together the paperwork, but a great agent does so much more than that. It’s not just being the facilitator for your purchase, it’s being your guide through every step.

The visual below shows some examples from that same NAR release of the many ways an agent adds value. It includes the percentage of homebuyers in that report who highlighted each of these benefits:

Here’s a bit more context on how the survey results noted an agent continually helps buyers in these situations:

  • Helped Buyer’s Understand the Process: Do you know the difference between an inspection and an appraisal, what each report tells you, and why they’re both important? Or that there are things you shouldn’t do after applying for a mortgage, like buying appliances or furniture? An agent knows all of these best practices and will share them with you along the way, so you don’t miss any key steps by the time you get to the closing table.

  • Pointed Out Unnoticed Features or Faults with the Home: An agent also has a lot of experience evaluating homes. They’ve truly seen it all. They’ll be able to pinpoint some things you may not have noticed about the home that could help inform your decision or at least what repairs you ask for.

  • Provided a Better List of Service Providers: In a real estate transaction, there are a lot of people involved. An agent has experience working with various professionals in your area, like home inspectors, and can help connect you with the pros you need for a successful experience.

  • Negotiated Better Contract Terms and Price: Did something pop up in the home inspection or with the appraisal? An agent will help you re-negotiate as needed to get the best terms and price possible for you, so you feel confident with your big purchase.

  • Improved Buyer’s Knowledge of the Search Area: Moving to a new town and you’re not familiar with the area, or you’re staying nearby, but don’t know which neighborhoods are most affordable? Either way, an agent knows the local area like the back of their hand and can help you find the perfect location for your needs.

  • Expanded Buyer’s Search Area: And if you’re not finding anything you’re interested in within your initial search radius, an agent will know other neighborhoods nearby you should consider based on what you like, what amenities you want, and more.

Bottom Line

If you’re looking to buy a home, don’t forget about the many ways an agent is essential to that process. Any hurdle that pops up, a negotiation that needs to take place, and more, your agent will know how to handle it while they make sure to minimize your stress along the way. Let’s connect to tackle this together.

 

Posted in Real Estate Market
Nov. 29, 2023

Why the Economy Won't Tank the Housing Market

If you’re worried about a coming recession, you’re not alone. Over the past couple of years, there’s been a lot of recession talk. And many people worry, if we do have one, it would cause the unemployment rate to skyrocket. Some even fear that a spike in unemployment would lead to a rash of foreclosures similar to what happened 15 years ago.

However, the latest Economic Forecasting Survey from the Wall Street Journal (WSJ) reveals that, for the first time in over a year, less than half (48%) of economists believe a recession will actually occur within the next year:

“Economists are turning optimistic on the U.S. economy . . . economists
lowered the probability of a recession within the next year, from 54% on
average in July to a more optimistic 48%. That is the first time they have put
the probability below 50% since the middle of last year.”

If over half of the experts no longer expect a recession within the next year, you might naturally think those same experts also don’t expect the unemployment rate to jump way up – and you’d be right. The graph below uses data from that same WSJ survey to show exactly what the economists project for the unemployment rate over the next three years (see graph below):

If those expert projections are correct, more people will lose their jobs in the upcoming year. And job losses of any kind are devastating for those people and their loved ones.

However, the question here is: will there be enough job losses to cause a wave of foreclosures that will crash the housing market? Based on historical context from Macrotrends and the Bureau of Labor Statistics (BLS), the answer is no. That’s because the unemployment rate is currently near all-time lows (see graph below):

As the orange bar in the graph shows, the average unemployment rate dating back to 1948 is 5.7%. The red bar shows, the last time the housing market crashed, in the immediate aftermath of the 2008 financial crisis, the average unemployment rate was up to 8.3%. Both of those bars are much higher than the unemployment rate today (shown in the blue bar).

Moving forward, projections show the unemployment rate is likely to stay beneath the 75-year average. And that means we won’t see a wave of foreclosures that would severely impact the housing market.

Bottom Line

Most economists no longer expect a recession to occur in the next 12 months. That’s why they also don’t expect a dramatic rise in the unemployment rate that would lead to a rash of foreclosures and another housing market crash.

Posted in Real Estate Market
Nov. 15, 2023

The Latest 2024 Housing Market Forcast

The new year is right around the corner, and you might be wondering if 2024 will be the right time to buy or sell a home. If you want to make the most informed decision possible, it’s important to know what the experts have to say about what's ahead for the housing market. Spoiler alert: the projections may be better than you think. Here’s why.


Experts Forecast Ongoing Home Price Appreciation

Take a look at the latest home price forecasts from Fannie Mae, the Mortgage Bankers Association (MBA), and the National Association of Realtors (NAR):

As you can see in the orange bars on the left, on average, experts forecast prices will end this year up about 2.8% overall, and increase by another 1.5% by the end of 2024. That’s big news, considering so many people thought prices would crash this year. The truth is, prices didn’t come tumbling way down in 2023, and that’s because there just weren’t enough homes for sale compared to the number of people who wanted or needed to buy them, and that inventory crunch is still very real. This is the general rule of supply and demand, and it continues to put upward pressure on prices as we move into the new year.

Looking forward, experts project home prices will continue to rise next year, but not quite as much as they did this year. Even though the expected rise in 2024 isn't as big as in 2023, it's important to understand home price appreciation is cumulative. In simpler terms, this means if the experts are right, according to the national average, after your home's value goes up by 2.8% this year, it should go up by another 1.5% next year. That ongoing price growth is a big part of why owning a home can be a smart decision in the long run.


Projections Show Sales Should Increase Slightly Next Year

While 2023 hasn’t seen a lot of home sales relative to more normal years in the housing market, experts are forecasting a bit more activity next year. Here’s what those same three organizations project for the rest of this year, and in 2024 (see graph below):

While expectations are for just a slight uptick in total sales, improved activity next year is a good thing for the housing market, and for buyers and sellers like you. As people continue to move, that opens up options for hopeful buyers who are looking for a home.

So, what do these forecasts show? The housing market is expected to be more active in 2024. That may be in part because there will always be people who need to move. People will get new jobs, have children, get married or divorced – these and other major life changes lead people to move regardless of housing market conditions. That will remain true next year, and for years to come. And if mortgage rates come down, we’ll see even more activity in the housing market.


Bottom Line

If you’re thinking about buying or selling, it’s important to know what the experts are forecasting for the future of the housing market. When you’re in the know about what’s ahead, you can make the most informed decision possible. Let's chat about the latest forecasts together, and craft a plan for your next move.

Posted in Real Estate Market