BuyerEconomySeller December 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.

BuyerSeller December 19, 2023

Expert Quotes on the 2024 Housing Market Forecast

If you’re thinking about buying or selling a home soon, you probably want to know what you can expect from the housing market in 2024. In 2023, higher mortgage rates, confusion over home price headlines, and a lack of homes for sale created some challenges for buyers and sellers looking to make a move. But what’s on the horizon for the new year?

The good news is, many experts are optimistic we’ve turned a corner and are headed in a positive direction.

Mortgage Rates Expected To Ease

Recently, mortgage rates have started to come back down. This has offered hope to buyers dealing with affordability challenges. Mark Fleming, Chief Economist at First Americanexplains how they may continue to drop:

Mortgage rates have already retreated from recent peaks near 8 percent and may fall further . . .

Jessica Lautz, Deputy Chief Economist at the National Association of Realtors (NAR), says:

“For home buyers who are taking on a mortgage to purchase a home and have been wary of the autumn rise in mortgage rates, the market is turning more favorable, and there should be optimism entering 2024 for a better market.”

The Supply of Homes for Sale May Grow

As rates ease, activity in the housing market should pick up because more buyers and sellers who had been holding off will jump back into action. If more sellers list, the supply of homes for sale will grow – a trend we’ve already started to see this year. Lisa Sturtevant, Chief Economist at Bright MLSsays:

Supply will loosen up in 2024. Even homeowners who have been characterized as being ‘locked in’ to low rates will increasingly find that changing family and financial circumstances will lead to more moves and more new listings over the course of the year, particularly as rates move closer to 6.5%.”

Home Price Growth Should Moderate

And mortgage rates pulling back isn’t the only positive sign for affordabilityHome price growth is expected to moderate too, as inventory improves but is still low overall. As the Home Price Expectation Survey (HPES) from Fannie Mae, a survey of over 100 economists, investment strategists, and housing market analysts, says:

“On average, the panel anticipates home price growth to clock in at 5.9% in 2023, to be followed by slower growth in 2024 and 2025 of 2.4 percent and 2.7 percent, respectively.” 

To wrap it up, experts project 2024 will be a better year for the housing market. So, if you’re thinking about making a move next year, know that early signs show we’re turning a corner. As Mike Simonsen, President and Founder of Altos Researchputs it:

“We’re going into 2024 with slight home-price gains, somewhat easing inventory constraints, slightly increasing transaction volume . . . All in all, things are looking up for the U.S. housing market in 2024.”

Bottom Line

Experts are optimistic about what 2024 holds for the housing market. If you’re looking to buy or sell a home in the new year, the best way to ensure you’re up to date on the latest forecasts is to partner with a trusted real estate agent. Let’s connect.

Buyer December 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 an experienced 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.

Seller December 5, 2023

When You Sell Your House, Where Do You Plan To Go?

If you’re thinking about selling your house, you may have heard the supply of homes for sale is still low, and that means your house should stand out to buyers who are craving more options. But you may also be wondering, once you sell, how does the current supply impact your own move? And, will you be able to find a home you want to buy with inventory this low?

One thing that can help you find your next home is exploring all your options, including both homes that have been lived in before as well as newly built ones. Let’s look at the benefits of each one.

The Pros of Newly Built Homes

First, let’s look at the advantages of purchasing a newly constructed home. With a brand-new home, you’ll be able to:

  1. Create your perfect home. If you build a home from the ground up, you’ll have the option to select the custom features you want, including appliances, finishes, landscaping, layout, and more.
  2. Cash-in on energy efficiency. When building a home, you can choose energy-efficient options to help lower your utility costs and reduce your carbon footprint.
  3. Minimize the need for repairs. Many builders offer a warranty, so you’ll have peace of mind on unlikely repairs. Plus, you won’t have as many little projects to tackle.
  4. Have brand new everything. Another perk of a new home is that nothing in the house is used. It’s all brand new and uniquely yours from day one.

The Pros of Existing Homes

Now, let’s compare that to the perks that come with buying an existing home. With a pre-existing home, you can:

  1. Explore a wider variety of home styles and floorplans. With decades of homes to choose from, you’ll have a broader range of floorplans and designs available.
  2. Join an established neighborhood. Existing homes give you the option to get to know the neighborhood, community, or traffic patterns before you commit.
  3. Enjoy mature trees and landscaping. Established neighborhoods also have more developed landscaping and trees, which can give you additional privacy and curb appeal.
  4. Appreciate that lived-in charm. The character of older homes is hard to reproduce. If you value timeless craftsmanship or design elements, you may prefer an existing home.

The choice is yours. When you start your search for the perfect home, remember that you can go either route – you just need to decide which features and benefits are most important to you. As an article from The Mortgage Reports says:

“When building, you gain more freedom to tailor the design, materials, and features, but it demands more time and involvement. Conversely, buying an established home offers immediate occupancy . . . yet may require compromises. Your choice should align with your budget, timeline, customization preferences, and the local real estate landscape.”

Either way, working with a local real estate agent throughout the process is mission-critical to your success. They’ll help you explore all of your options based on what matters most to you in your next home. Together, you can find the home that’s right for you.

Bottom Line

If you have questions about the options in our area, let’s discuss what’s available and what’s right for you. That way you’ll be ready to make your next move with confidence.

Housing MarketSeller November 16, 2023

People Are Still Moving, Even with Today’s Affordability Challenges

If you’re thinking about buying or selling a home, you might have heard that it’s tough right now because mortgage rates are higher than they’ve been over the past few years, and home prices are rising. That much is true. Take a look at the graph below. It breaks down how the current affordability situation stacks up to recent years.

The National Association of Realtors (NAR) explains how to read the values on the graph:

“To interpret the indices, a value of 100 means that a family with the median income has exactly enough income to qualify for a mortgage on a median-priced home.”

The black dotted line represents that 100 value on the index. Essentially, the higher the bar, the more affordable homes are. As you can see, the orange bar for today shows higher mortgage rates and home prices have created a clear challenge. But, while affordability is definitely tighter right now, that doesn’t mean the housing market is at a standstill.

According to NAR, based on the pace of sales right now, just under 4 million homes will sell this year. With some simple math, let’s break down what that really means for you:

  • 3.96 million homes divided by 365 days in a year = 10,849 houses sell each day
  • 10,849 divided by 24 hours in a day = 452 houses sell per hour
  • 452 divided by 60 minutes in an hour = about 8 houses sell each minute

So, on average, over 10,000 homes sell each day in this country. Whether you’re a buyer or a seller, this goes to show there are still ways to make your move possible, even at a time when affordability is tight.

An Agent Can Help You Make Your Move a Reality

You may be wondering how other homebuyers and sellers are making this happen now. One of the biggest game-changers in today’s market is working with a trusted local real estate agent. Great agents are helping other people just like you navigate today’s market and the current affordability situation, and their insight is invaluable right now.

True professionals will be able to offer advice tailored to your specific wants, needs, budget, and more. Not to mention, they’ll also be able to draw on their experience of what’s working for other buyers and sellers right now. This could mean broadening your search, if needed, to include other housing types like condos, townhouses, or neighborhoods a bit further out to help offset some of the affordability challenges today.

Bottom Line

You might think there aren’t many people buying or selling homes right now since affordability is tighter than it’s been in quite some time, but that’s not the case. It’s true that buying a home has become more expensive over the past couple of years, but people are still moving.

 

If you’re hoping to buy or sell a home today, know that other people are still making their goals a reality – and that’s happening in large part because of the help and advice of skilled local real estate agents. Want to talk to a trusted professional about your own move? Let’s connect.

BuyerHousing MarketSeller November 15, 2023

The Latest 2024 Housing Market Forecast

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.

Housing MarketSeller October 18, 2023

What Are the Real Reasons You Want To Move Right Now?

If you’re considering selling your house right now, it’s likely because something in your life has changed. And while things like mortgage rates play a big role in your decision, you don’t want that to overshadow why you thought about making a move in the first place.

It’s true mortgage rates are higher right now, and that has an impact on affordability. As a result, some homeowners are deciding they’ll wait to sell because they don’t want to move and have a higher mortgage rate on their next home.

But your lifestyle and your changing needs matter, too. As a recent article from Realtor.com says:

No matter what interest rates and home prices do next, sometimes homeowners just have to move—due to a new job, new baby, divorce, death, or some other major life change.”

Here are a few of the most common reasons people choose to sell today. You may find any one of these resonates with you and may be reason enough to move, even today.

Relocation

Some of the things that can motivate a move to a new area include changing jobs, a desire to be closer to friends and loved ones, wanting to live in your ideal location, or just looking for a change in scenery.

For example, if you just landed your dream job in another state, you may be thinking about selling your current home and moving for work.

Upgrading

Many homeowners decide to sell to move into a larger home. This is especially common when there’s a need for more room to entertain, a home office or gym, or additional bedrooms to accommodate a growing number of loved ones.

For example, if you’re living in a condo and your household is growing, it may be time to find a home that better fits those needs.

Downsizing

Homeowners may also decide to sell because someone’s moved out of the home recently and there’s now more space than needed. It could also be that they’ve recently retired or are ready for a change.

For example, you’ve just kicked off your retirement and you want to move somewhere warmer with less house to maintain. A different home may be better suited for your new lifestyle.

Change in Relationship Status

Divorce, separation, or marriage are other common reasons individuals sell.

For example, if you’ve recently separated, it may be difficult to still live under one roof. Selling and getting a place of your own may be a better option.

Health Concerns

If a homeowner faces mobility challenges or health issues that require specific living arrangements or modifications, they might sell their house to find one that works better for them.

For example, you may be looking to sell your house and use the proceeds to help pay for a unit in an assisted-living facility.

With higher mortgage rates and rising prices, there are some affordability challenges right now – but your needs and your lifestyle matter too. As a recent article from Bankrate says:

“Deciding whether it’s the right time to sell your home is a very personal choice. There are numerous important questions to consider, both financial and lifestyle-based, before putting your home on the market. . . . Your future plans and goals should be a significant part of the equation . . .

Bottom Line

If you want to sell your house and find a new one that better fits your needs, let’s connect. That way, you’ll have someone to guide you through the process and help you find a home that works for you.

BuyerEconomySeller October 16, 2023

Are Higher Mortgage Rates Here To Stay?

Mortgage rates have been back on the rise recently and that’s getting a lot of attention from the press. If you’ve been following the headlines, you may have even seen rates recently reached their highest level in over two decades (see graph below):

That can feel like a little bit of a gut punch if you’re thinking about making a move. If you’re wondering whether or not you should delay your plans, here’s what you really need to know.

How Higher Mortgage Rates Impact You 

There’s no denying mortgage rates are higher right now than they were in recent years. And, when rates are up, that affects overall home affordability. It works like this. The higher the rate, the more expensive it is to borrow money when you buy a home. That’s because, as rates trend up, your monthly mortgage payment for your future home loan also increases.

Urban Institute explains how this is impacting buyers and sellers right now:

When mortgage rates go up, monthly housing payments on new purchases also increase. For potential buyers, increased monthly payments can reduce the share of available affordable homes . . . Additionally, higher interest rates mean fewer homes on the market, as existing homeowners have an incentive to hold on to their home to keep their low interest rate.”

Basically, some people are deciding to put their plans on hold because of where mortgage rates are right now. But what you want to know is: is that a good strategy?

Where Will Mortgage Rates Go from Here?

If you’re eager for mortgage rates to drop, you’re not alone. A lot of people are waiting for that to happen. But here’s the thing. No one knows when it will. Even the experts can’t say with certainty what’s going to happen next.

Forecasts project rates will fall in the months ahead, but what the latest data says is that rates have been climbing lately. This disconnect shows just how tricky mortgage rates are to project.

The best advice for your move is this: don’t try to control what you can’t control. This includes trying to time the market or guess what the future holds for mortgage rates. As CBS News states:

“If you’re in the market for a new home, experts typically recommend focusing your search on the right home purchase — not the interest rate environment.”

Instead, work on building a team of skilled professionals, including a trusted lender and real estate agent, who can explain what’s happening in the market and what it means for you. If you need to move because you’re changing jobs, want to be closer to family, or are in the middle of another big life change, the right team can help you achieve your goal, even now.

Bottom Line

The best advice for your move is: don’t try to control what you can’t control – especially mortgage rates. Even the experts can’t say for certain where they’ll go from here. Instead, focus on building a team of trusted professionals who can keep you informed. When you’re ready to get the process started, let’s connect.

Housing MarketSeller August 31, 2023

How Inflation Affects the Housing Market

Have you ever wondered how inflation impacts the housing market? Believe it or not, they’re connected. Whenever there are changes to one, both are affected. Here’s a high-level overview of the connection between the two.

The Relationship Between Housing Inflation and Overall Inflation

Shelter inflation is the measure of price growth specific to housing. It comes from a survey of renters and homeowners that’s done by the Bureau of Labor Statistics (BLS). The survey asks renters how much they’re paying in rent, and homeowners how much they’d rent their homes for, if they weren’t living in them.

Much like overall inflation measures the cost of everyday items, shelter inflation measures the cost of housing. And for four consecutive months, based on that survey, shelter inflation has been coming down (see graph below):

Why does this matter? Well, shelter inflation makes up about one-third of overall inflation, as measured by the Consumer Price Index (CPI). So, when shelter inflation moves, it leads to noticeable moves in overall inflation. That means the recent dip in shelter inflation might be a sign that overall inflation could fall in the months ahead.

That moderation would be a welcome sight for the Federal Reserve (the Fed). They’ve been working to get inflation under control since early 2022. While they’ve made some headway (it peaked at 8.9% in the middle of last year), they’re still trying to get to their 2% goal (the latest report is 3.3%).

Inflation and the Federal Funds Rate 

What’s the Fed been doing to lower inflation? They’ve been increasing the Federal Funds Rate. That interest rate influences how much it costs banks to borrow money from each other. When inflation climbed, the Fed responded by raising the Federal Funds Rate to keep the economy from overheating.

The graph below shows the relationship between the two. Each time inflation (shown in the blue line) starts to climb, the Fed raises the Federal Funds Rate (shown in the orange line) to try to get it back to their target of 2% (see below):

The circled portion of the graph shows the most recent spike in inflation, the Fed’s actions to raise the Federal Funds Rate to fight that, and the moderation of inflation that happened in response to that hike. As inflation gets closer to the Fed’s current 2% goal, they may not need to raise the Federal Funds Rate much further.

A Brighter Future for Mortgage Rates?

So, what does all of this mean for you? While the actions coming out of the Fed don’t determine mortgage rates, they do have an impact. As Mortgage Professional America (MPA) explains:

“. . . mortgage rates and inflation are connected, however indirectly. When inflation rises, mortgage rates rise to keep up with the value of the US dollar. When inflation drops, mortgage rates follow suit.

While no one can predict the future for mortgage rates, it’s encouraging to see the signs of moderating inflation in the economy.

Bottom Line

Whether you’re looking to buy, sell, or just stay informed about the housing market, let’s connect.

BuyerSeller August 30, 2023

Buyer Traffic Is Still Stronger than the Norm

Are you putting off selling your house because you’re worried no one’s buying because of where mortgage rates are? If so, know this: the latest data shows plenty of buyers are still out there, and they’re purchasing homes today. Here’s the data to prove it.

The ShowingTime Showing Index is a measure of buyers touring homes. The graph below uses the latest numbers available and compares them to the same month in the last normal years to show just how active today’s buyers still are:

As you can see, when June 2023 numbers are stacked alongside what’s typical for the housing market at this time of year, it’s clear buyers are still active. And, they’re actually a lot more active than the norm.

If you’re wondering how this could possibly be true, it’s because buyers are getting used to higher mortgage rates and accepting them as the new reality. As Danielle Hale, Chief Economist, Realtor.comexplains:

“Interest rate hikes continue to further cut into buyers’ purchasing power, although they appear to have adapted to the higher mortgage rate environment . . .”

It’s simple. Buyers will always need to buy, and those who can afford to move at today’s rates are going to do so.

The Key Takeaway for You

While it’s true things have slowed down from the frenzy of the last couple of years, it doesn’t mean today’s market is at a standstill. The reality is: buyer traffic is still strong today. Even with today’s mortgage rates, plenty of buyers are still making their moves. So why delay your own move when there’s clearly a market for your house?

Bottom Line

Don’t put off your plans because you’re worried no one will buy your home. The opposite is true, and more buyers are more active than the norm. Let’s connect to get your house ready to sell, so it makes the best first impression possible on those eager buyers.