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Does Your Home Have What Buyers Are Looking For?
There’s a great opportunity for today’s homeowners to sell their houses and make a move, yet due to the impact of the ongoing health crisis, some sellers are taking their time coming back to the market. According to Javier Vivas, Director of Economic Research at realtor.com:
“Sellers continue returning to the market at a cautious pace and further improvement could be constrained by lingering coronavirus concerns, economic uncertainty, and civil unrest.”
For homeowners who need a little nudge of motivation to get back in the game, it’s good to know that buyers are ready to purchase this season. After spending several months at home and re-evaluating what they truly want and need in their space, buyers are ready and they’re in the market now. Lawrence Yun, Chief Economist at the National Association of Realtors (NAR) explains:
“A number of potential buyers noted stalled plans due to the pandemic and that has led to more urgency and a pent-up demand to buy…After being home for months on end – in a home they already wanted to leave – buyers are reminded how much their current home may lack certain desired features or amenities.”
The latest Market Recovery Survey from NAR shares some of the features and amenities buyers are looking for, especially since the health crisis has shifted many buyer priorities. The most common home features cited as increasingly important are home offices and space to accommodate family members new to the residence (See graph below):
The survey results also show that among buyers who indicate they would now like to live in a different area due to COVID-19, 47% have an interest in purchasing in the suburbs, 39% cite rural areas, and 25% indicate a desire to be in small towns.
As we can see, buyers are eager to find a new home, but there’s a big challenge in the market: a lack of homes available to purchase. Danielle Hale, Chief Economist at realtor.com explains:
“The realtor.com June Housing Trends Report showed that buyers still outnumber sellers which is causing the gap in time on market to shrink, prices to grow at a faster pace than pre-COVID, and the number of homes available for sale to decrease by more than last month. These trends play out similarly in the most recent week’s data with the change in time on market being most notable. In the most recent week homes sat on the market just 7 days longer than last year whereas the rest of June saw homes sit 2 weeks or more longer than last year.”
In essence, home sales are picking up speed and buyers are purchasing them at a faster rate than they’re coming to the market. Hale continues to say:
“The housing market has plenty of buyers who would benefit from a few more sellers. If the virus can be contained and home prices continue to grow, this may help bring sellers back to the housing market.”
Bottom Line
If you’re considering selling and your current house has some of the features today’s buyers are looking for, let’s connect. You’ll likely be able to sell at the best price, in the least amount of time, and will be able to take advantage of the low-interest rates available right now when buying your new home.
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.
Not All Agents Are Created Equal
In today’s fast-paced world where answers are just a Google search away, there are some who may question the benefits of hiring a real estate professional when selling a house. The reality is, the addition of more information can lead to more confusion. A real estate agent can be your essential guide, but truth be told, not all agents are created equal. Finding the right agent for you and your family should be your top priority when you’re ready to sell your house.
The right agent is the person who can truly walk you through the whole process, look out for your best interest, and seamlessly lead you through all the steps along the way. In today’s complex market, the way we execute real estate transactions is changing constantly, especially as more elements can be done virtually. Making sure you have the best advice on your side is more important than ever.
So, how do you choose the perfect agent?
It starts with trust. You must trust the advice this person is going to give you, and you’ll want to begin by making sure you’re connected to a true professional. An agent can’t give you perfect advice because it’s impossible to know exactly what’s going to happen at every turn – especially in this unique market. A true professional agent can, however, give you the best advice possible based on the information and situation at hand, helping you make the necessary adjustments and best decisions along the way. The right agent – the professional – will get you the best offer available. That’s exactly what you want and deserve.
What do you need to trust your agent to do?
1. Navigate the Process
There are over 230 possible steps that take place during a successful real estate transaction. Don’t you want someone who has been there before, someone who knows what these actions are, to ensure you have a positive selling experience?
2. Negotiate on Your Behalf
Today, hiring a trusted and talented negotiator could save you thousands, perhaps tens of thousands of dollars. Each step – from the buyer submitting an original offer, to the possible renegotiation of that offer after a home inspection, to the potential cancelation of the deal based on a troubled appraisal – you need someone who can keep the deal together until it closes.
3. Price Your House Competitively
There’s so much information in the news and on the Internet about home sales, prices, and mortgage rates. How do you know what’s going on in our local area? Who do you turn to in order to competitively and correctly price your home at the beginning of the selling process?
Dave Ramsey, known as the financial guru, advises:
“When getting help with money, whether it’s insurance, real estate or investments, you should always look for someone with the heart of a teacher, not the heart of a salesman.”
Hiring a trusted professional who has a finger on the pulse of the market and is eager to help you learn will make your experience an informed and educated one. You need someone who’s going to tell you the truth, not just what they think you want to hear.
Bottom Line
Today’s real estate market is highly competitive. Having a trusted professional who’s been there before to guide you through the process is a simple step that will give you a huge advantage when you’re ready to sell your house. Let’s make it happen together.
Is the Health Crisis Driving Buyers Out of Urban Areas?
The pandemic has caused consumers to re-examine the components that make up the “perfect home.” Many families are no longer comfortable with the locations and layouts of their existing homes. The allure of city life (more congested) seems to be giving way to either suburban or rural life (less congested). The fascination with an open floor plan seems to be fading as people are finding a need for more privacy while working from home.
Recently, news.com released a report that revealed how buyers’ views of listings are leaning heavily to more suburban and rural properties. Here are the year-over-year percentage increases in views per property type:
- Urban – 7%
- Suburban – 13%
- Rural – 16%
In the report, Javier Vivas, Director of Economic Research for realtor.com, gives these numbers some context:
“This migration to the suburbs is not a new trend, but it has become more pronounced. After several months of shelter-in-place orders, the desire to have more space and the potential for more people to work remotely are likely two of the factors contributing to the popularity of the burbs.”
Realtor Magazine also just reported that the desire to move is strongest in our city markets:
“Nearly 30% of respondents living in a high-density urban area say that the pandemic is prompting them to want to move by the end of the year…This is more than double the rate of those living in rural parts of the country, where residents are much more likely to stay put rather than to relocate.”
New Construction Also Seeing a Surge in Views
Since the pandemic has altered how consumers think about floor plans, builders are anticipating how future homes will change. In a recent press release by Zillow, it was explained that:
- Builders believe as people spend more time at home during the pandemic, buyers are realizing which features of their homes are working and not working.
- Homebuilders predict open-concept floor plans will be a thing of the past, as people now value more walls, doors, and overall privacy.
- New construction, which offers the chance to personalize home features, saw its listing page views grow by 73% over last May.
The Virus is Even Impacting the Luxury Second-Home Market
It appears that COVID-19 is impacting the luxury market too. In an article released last week titled, Luxury Buyers Return to Market in Force, Danielle Hale, Chief Economist for realtor.com reported:
“Stay at home orders and social distancing have put a new value on the extra space. We’re seeing this in the luxury market as well, which could mean there is renewed interest from high-end buyers to find a second-home that is within driving distance from their primary residence.
Much like the suburbs are gaining favor with home shoppers, second home markets are seeing increased interest from luxury buyers…Views of luxury properties accelerated 56% in The Hamptons, 28% in Palm Springs and 24% in Greenwich compared to January trends.”
Bottom Line
It appears that a percentage of people are preparing to leave many American cities. Some of these moves will be permanent, while others will be temporary (such as a getaway to a second home). In either case, many consumers are on the move. Real estate professionals are ready and willing to help in any way they can.
A Historic Rebound for the Housing Market
Pending Home Sales increased by 44.3% in May, registering the highest month-over-month gain in the index since the National Association of Realtors (NAR) started tracking this metric in January 2001. So, what exactly are pending home sales, and why is this rebound so important?
According to NAR, the Pending Home Sales Index (PHS) is:
“A leading indicator of housing activity, measures housing contract activity, and is based on signed real estate contracts for existing single-family homes, condos, and co-ops. Because a home goes under contract a month or two before it is sold, the Pending Home Sales Index generally leads Existing-Home Sales by a month or two.”
In real estate, pending home sales is a key indicator in determining the strength of the housing market. As mentioned before, it measures how many existing homes went into contract in a specific month. When a buyer goes through the steps to purchase a home, the final one is the closing. On average, that happens about two months after the contract is signed, depending on how fast or slow the process takes in each state.
Why is this rebound important?
With the COVID-19 pandemic and a shutdown of the economy, we saw a steep two-month decline in the number of houses that went into contract. In May, however, that number increased dramatically (See graph below):
This jump means buyers are back in the market and purchasing homes right now. Lawrence Yun, Chief Economist at NAR mentioned:
“This has been a spectacular recovery for contract signings and goes to show the resiliency of American consumers and their evergreen desire for homeownership…This bounce back also speaks to how the housing sector could lead the way for a broader economic recovery.”
But in order to continue with this trend, we need more houses for sale on the market. Yun continues to say:
“More listings are continuously appearing as the economy reopens, helping with inventory choices…Still, more home construction is needed to counter the persistent underproduction of homes over the past decade.”
As we move through the year, we’ll see an increase in the number of houses being built. This will help combat a small portion of the inventory deficit. The lack of overall inventory, however, is still a challenge, and it is creating an opportunity for homeowners who are ready to sell. As the graph below shows, during the last 12 months, the supply of homes for sale has been decreasing year-over-year and is not keeping up with the demand from homebuyers.
Bottom Line
If you decided not to sell this spring due to the health crisis, maybe it’s time to jump back into the market while buyers are actively looking for homes. Let’s connect today to determine your best move forward.
Are New Homes Going to Be Available to Buy This Year?
In today’s economy, everyone seems to be searching for signs that a recovery is coming soon. Many experts agree that it may actually already be in motion or will be starting by the 3rd quarter of this year. With the housing market positioned to lead the way out of this recession, builder confidence might be a bright spark that gets the recovery fire started. The construction of new homes coming right around the corner is a huge part of that effort, and it may drive your opportunity to make a move this year.
According to the National Association of Home Builders (NAHB):
“New home sales jumped in May, as housing demand was supported by low interest rates, a renewed household focus on housing, and rising demand in lower-density markets. Census and HUD estimated new home sales in May at a 676,000 seasonally adjusted annual pace, a 17% gain over April.”
In addition, builder confidence is also rising, opening up opportunities for newly constructed homes in the market. The NAHB also notes:
“In a sign that housing stands poised to lead a post-pandemic economic recovery, builder confidence in the market for newly-built single-family homes jumped 21 points to 58 in June, according to the latest National Association of Home Builders/Wells Fargo Housing Market Index (HMI). Any reading above 50 indicates a positive market.”
As noted above, this upward trend is supported by builders reporting an increase in demand for single-family homes in suburban neighborhoods with lower-density populations, a result of the COVID-19 health crisis.
Moreover, the most recent Monthly New Residential Construction Report from the U.S. Census indicates that authorized building permits for new residential construction increased by 14.4% month-over-month from April to May, and housing starts were also up 4.3% over the same time period. (See graph below):
Although housing permits and starts are both considerably lower than they were at this time last year, indicating the new construction market is still working on building its way back up, the trends are moving in the right direction when it comes to having an impact on the U.S. economy. They’re also poised to create the much-needed new homes for Americans to purchase in a time when inventory is so scarce.
Dean Mon, Chairman of the NAHB notes:
“As the nation reopens, housing is well-positioned to lead the economy forward…Inventory is tight, mortgage applications are increasing, interest rates are low and confidence is rising. And buyer traffic more than doubled in one month even as builders report growing online and phone inquiries stemming from the outbreak.”
The gap between homes to buy and the high demand from purchasers may be narrowed by new construction, and the data shows that these homes are on their way into the housing market.
So, if you’ve debated whether or not to sell your house this year because you’re not sure where to move, a newly-built home – designed to your specific liking – may be your answer.
Bottom Line
With new residential construction right around the corner, you can feel confident about selling your house and having a place to move into. Maybe it’s time to finally design the home you’ve always wanted. Let’s connect today to discuss selling your house while demand from eager buyers is high.
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 the inventory of homes for sale is at (or near) an all-time low. That would usually indicate a 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 a 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:
- CoreLogic: Year-Over-Year decline of -1.5%
- Haus: Year-Over-Year decline of -1%
- Zillow: Year-Over-Year change is forecasted to bottom out at -0.7%.
- Home Price Expectation Survey: Decline of -0.3% in 2020
- Fannie Mae: Increase of 0.4% in 2020
- Freddie Mac: Increase of 2.3% in 2020
- Zelman & Associates: Increase of 3.0% in 2020
- National Association of Realtors: Increase of 3.8% in 2020
- Mortgage Bankers Association: Increase of 4.0% in 2020
We can garner two important points from this list:
- There is no real consensus among the experts.
- 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.
Homebuyers Are in the Mood to Buy Today
According to the latest FreddieMac Quarterly Forecast, mortgage interest rates have fallen to historically low levels this spring and they’re projected to remain low. This means there’s a huge incentive for buyers who are ready to purchase. And homeowners looking for eager buyers can take advantage of this opportune time to sell as well.
There’s a very positive outlook on interest rates going forward, as the projections from the FreddieMac report indicate continued lows into 2021:
“Going forward, we forecast the 30-year fixed-rate mortgage to remain low, falling to a yearly average of 3.4% in 2020 and 3.2% in 2021.”
With mortgage rates hovering at such compelling places, ongoing buyer interest is bound to keep driving the housing market forward. Rates also reached another record low last week, so homebuyers are in what FreddieMac is identifying as the buying mood:
“While the rebound in the economy is uneven, one segment that is exhibiting strength is the housing market. Purchase demand activity is up over twenty percent from a year ago, the highest since January 2009. Mortgage rates have hit another record low due to declining inflationary pressures, putting many homebuyers in the buying mood. However, it will be difficult to sustain the momentum in demand as unsold inventory was at near record lows coming into the pandemic and it has only dropped since then.”
There’s no doubt that even though buyers are ready to purchase, it’s hard for many of them to find a home to buy today. Mortgage rates aren’t the only thing hovering near all-time lows; homes available for sale are too. With housing inventory as scarce as it is today – a nearly 20% year-over-year decline in available homes to purchase – keeping buyers in the purchasing mood may be tough if they can’t find a home to buy (See graph below):
What does this mean for buyers?
Competition is hot with so few homes available for purchase and low mortgage rates are helping to drive affordability as well. Getting pre-approved now will help you gain a competitive advantage and accelerate the homebuying process, so you’re ready to go when you find that perfect home you’d like to buy. Working quickly and efficiently with a trusted real estate professional will help put you in a position to act fast when you’re ready to make your move.
What does this mean for sellers?
If you’re thinking of selling your house, know that the motivation for buyers to purchase right now is as high as ever with rates where they are today. Selling now before other sellers come to market in your neighborhood this summer might put your house high on the list for many buyers. Homebuyers are clearly in the mood to buy, and with today’s safety guidelines and precautions in place to show your house, confidence is also on your side.
Bottom Line
Whether you’re looking to buy or sell, there’s great motivation to be in the housing market, especially with mortgage rates hovering at this historic all-time low. Let’s connect today to make sure you’re ready to make your move.
Want to Make a Move? Homeowner Equity is Growing Year-Over-Year
One of the bright spots of the 2020 real estate market is the growth in equity homeowners are experiencing across the country. According to the recently released Homeowner Equity Insights Report from CoreLogic, in nearly every state there was a year-over-year first-quarter equity increase, averaging out to a 6.5% overall gain.
The report notes:
“CoreLogic analysis shows U.S. homeowners with mortgages (roughly 63% of all properties) have seen their equity increase by a total of nearly $590 billion since the first quarter of 2019, an increase of 6.5%, year over year.” (See map below):
This means that “In the first quarter of 2020, the average homeowner gained approximately $9,600 in equity during the past year.”
That’s a huge win for homeowners, especially for those looking to sell their houses and make a move this summer. Having equity to re-invest in your next home is a major force that can make moving a reality, especially while buyers are expressing such a high demand for homes to purchase.
Frank Martell, President and CEO of CoreLogic addresses the potential long-term outlook and how homeowners will likely fare much more positively through the current recession than many did during the last one:
“Many homeowners will experience a recession during their lifetime, and it is reasonable to compare the current recession to those in the past. But the comparison is not apples to apples — every recession is different. Primary drivers of the Great Recession were an overbuilt housing stock, risky mortgages and the collapse of home prices, creating a massive increase in negative equity that proved difficult to recover from. Today’s housing environment has low vacancy and delinquency rates and a large home equity cushion.”
Bottom Line
Now is a great time to consider leveraging your equity and making a move, especially while buyer interest is high. Let’s connect to explore your equity position and make your next move a reality.
Is a Recession Here? Yes. Does that Mean a Housing Crash? No.
On Monday, the National Bureau of Economic Research (NBER) announced that the U.S. economy is officially in a recession. This did not come as a surprise to many, as the Bureau defines a recession this way:
“A recession is a significant decline in economic activity spread across the economy, normally visible in production, employment, and other indicators. A recession begins when the economy reaches a peak of economic activity and ends when the economy reaches its trough. Between trough and peak, the economy is in an expansion.”
Everyone realizes that the pandemic shut down the country earlier this year, causing a “significant decline in economic activity.”
Though not surprising, headlines announcing the country is in a recession will cause consumers to remember the devastating impact the last recession had on the housing market just over a decade ago.
The real estate market, however, is in a totally different position than it was then. As Mark Fleming, Chief Economist at First American, 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.”
Four major differences in today’s real estate market are:
- Families have large sums of equity in their homes
- We have a shortage of housing inventory, not an overabundance
- Irresponsible lending no longer exists
- Home price appreciation is not out of control
We must also realize that a recession does not mean a housing crash will follow. In three of the four previous recessions prior to 2008, home values increased. In the other one, home prices depreciated by only 1.9%.
Bottom Line
Yes, we are now officially in a recession. However, unlike 2008, this time the housing industry is in much better shape to weather the storm.
