The way we plan and live our lives greatly depend on our ability to pay for the things we use and will be using. At the top part of most people's list is mortgage. Changes in mortgage rate directly impact us and our day to day lifestyle.
Below is a chart created using Freddie Mac's U.S. Economic & Housing Marketing Outlook. As you can see, interest rates are projected to increase steadily over the course of the next year.
Depending on the amount of the loan that you secure, a half of a percent (.5%) increase in interest rate can increase your monthly mortgage payment significantly.
According to CoreLogic's latest Home Price Index, national home prices have appreciated 6.2% from this time last year and are predicted to be 5.1% higher next year.
If both the predictions of home price and interest rate increases become a reality, families would wind up paying considerably more for their next homes.
Even a small increase in interest rate can impact your family's wealth, so don't wait until next year! Meet with a local real estate professional to evaluate your ability to purchase your dream home now.
One of the main reasons why real estate have been at the top of the list of great investments is its structurally sound appreciation model. The premise is, as time goes, the population grows but the land mass of a region remains the same. Thus, circling back to the ever dependable law of supply and demand. The rate on increase of a home's value varies greatly per location and it's economic state.
CoreLogic broke down appreciation even further into four price ranges, giving us a more detailed view than if we had simply looked at the year-over-year increases in national median home price.
The chart below shows the four price ranges from the report, as well as each one's year-over-year growth from July 2017 to July 2018 (the latest data available).
It is important to pay attention to how prices are changing in your local market. The location of your home is not the only factor which determines how much your home has appreciated over the course of the last year.
Lower-priced homes have appreciated at greater rates than homes at the upper ends of the spectrum due to demand from first-time home buyers and baby boomers looking to downsize.
If you are planning to list your home for sale in today's market, find a local agent who can explain exactly what's going on in your area and your price range.
With the amount of time spent in its current state, it's a little hard to establish the true norm for everyone. Newcomers to the industry who experienced the pre-bubble burst market may perceive what we have now as their norm. Some may have an ideal vision of how the normal market status should be and some may base it on how things were before the bubble burst.
After the bubble burst in June 2007, values depreciated 6.1% annually until February 2012. From March 2012 to today, the market has been recovering with values appreciating 6.2% annually.
These wild swings in values were caused by abnormal ratios between the available supply of inventory and buyer demand in the market. In a normal market, there would be a 6-month supply of housing inventory.
When the market hit its peak in 2007, homeowners and builders were trying to take advantage of a market that was fueled by an "irrational exuberance."
Inventory levels grew to 7+ months. With that many homes available for sale, there weren't enough buyers to satisfy the number of homeowners/builders trying to sell, so prices began to fall.
Then, foreclosures came to market. We eventually hit 11 months inventory which caused prices to crash until early 2012. By that time, inventory levels had fallen to 6.2 months and the market began its recovery.
Over the last five years, inventory levels have remained well below the 6-month supply needed for prices to continue to level off. As a result, home prices have increased over that time at percentages well above the appreciation levels seen in a more normal market.
That was the past. What about the future?
We currently have about 4.5-months inventory. This means prices should continue to appreciate at above-normal levels which most experts believe will happen for the next year. However, two things have just occurred that are pointing to the fact that we may be returning to a more normal market.
1. Listing Supply is Increasing
Both existing and new construction inventory is on the rise. The latest Existing Home Sales Report from the National Association of Realtors revealed that inventory has increased over the last two months after thirty-seven consecutive months of declining inventory. At the same time, building permits are also increasing which means more new construction is about to come to market.
2. Buyer Demand is Softening
Ivy Zelman, who is widely respected as an industry expert, reported in her latest 'Z' Report:
"While we continue to expect a resumption of growth in resale transactions on the back of easing inventory in 2019 and 2020, our real-time view into the market through our Real Estate Broker Survey does suggest that buyers have grown more discerning of late and a level of "pause" has taken hold in many large housing markets.
Indicative of this, our broker contacts rated buyer demand at 69 on a 0-100 scale, still above average but down from 74 last year and representing the largest year-over-year decline in the two-year history of our survey."
With supply increasing and demand waning, we may soon be back to a more normal real estate market. We will no longer be in a buyers' market (like 2007-February 2012} or a sellers' market (like March 2012- Today}.
Prices won't appreciate at the levels we've seen recently, nor will they depreciate. It will be a balanced market where prices remain steady, where buyers will be better able to afford a home, and where sellers will more easily be able to move-up or move-down to a home that better suits their current lifestyles.
Returning to a normal market is a good thing. However, after the zaniness of the last eleven years, it might feel strange. If you are going 85 miles per hour on a road with a 60 MPH speed limit and you see a police car ahead, you're going to slow down quickly. But, after going 85 MPH, 60 MPH will feel like you're crawling. It is the normal speed limit, yet, it will feel strange.
That's what is about to happen in real estate. The housing market is not falling apart. We are just returning to a more normal market which, in the long run, will be much healthier for you whether you are a buyer or a seller.
If you're debating on moving to your dream home, you might be in luck. In some areas in the U.S. home equities rise which could give way to spending less for the long-awaited dream home for the lucky 25% of homeowners with a mortgage.
Home equity is defined as the difference between the home's fair market value and the outstanding balance of all liens (loans) on the property. While homeowners pay down their mortgages, the amount of equity they have in their homes climbs each time the value of their homes go up!
According to the latest Equity Report from ATTOM Data Solutions, "13.9 million U.S. properties in Q2 2018 were equity rich -- where the combined estimated balance of loans secured by the property was 50 percent or less of the property's estimated market value -- representing 24.9% of all U.S. properties with a mortgage."
This means that nearly a quarter of Americans who have a mortgage would be able to sell their homes and have a significant down payment toward their next home. Many who sell could also use their new-found equity to pay off high-interest credit cards or help children with tuition costs.
The map below shows the percentage of properties with a mortgage in each state that were equity rich in Q2 2018.
If you are a homeowner looking to take advantage of your home equity by moving up to your dream home, contact an agent in your area to discuss your options!
Any process can prove tricky to someone new. Let alone, the complicated procedure of selling homes, to agents helping out the ordeal could be less difficult. Good thing we have this tips to make your life easier.
Memorize the Market
When a market turns and sudden transition occurs, study your potential market response with the sudden changes. As a listing agent and local market expert, mastery of the signs of a shift and having the means to communicate the new reality to your sellers is a must. Our job is to help our potential sellers understand the turns. We should sent out extensive communiques to our existing sellers and also tweaked our listing presentation to encompass the new reality.
Understand the Motivation
Seller motivation is primary. The genuine willingness to do whatever is necessary to sell is very essential. On the other hand, if they are not highly motivated and is after for "testing the market", refer them your competitor across town. Once the listing expires, circle back around.
Know the Numbers
Statistics in average days on the market, sold price, price-per-square-foot, and percentage of current active properties with recent price reduction are vital in helping sellers understand the current market and effectively position their home to sell. In addition to these numbers, using Clarus Market Metrics is highly recommended for these charts and graphs help sellers see the current metrics at a glance.
Effective home selling is all about three P's - preparation, pricing and promotion. These 3 P's are interconnected and must complete the process of listing. Different pricing techniques are essential in different approach:
1) maximum price for an increasing market
2) for downward market - seller's better understanding that prepared homes are the ones that sell while the rest remain active is implied.
Nail the Pricing
Pricing is the most important among the three P's. Such as in a declining market, buyers preferred the best prepared property at the lowest possible price. Effective pricing strategies are very essential as Wisdom states, "price ahead of the market" - if a market has turned downward, educate your sellers to price their listings below the last sales.
Promote the Home
Promotion is the key. Effective promotion includes anything that will keep prospective buyers engaged with the listing on their phone. Thoughtful preparation, use of social media thru targeted ads on Facebook/Instagram/Twitter and innovated technologies such as virtual reality (VR), drone footage, 3D tours and video, professional pictures and beautiful staging. Persuaded through follow up email campaigns and other means to cover all the promotional bases.
Respond to the Leads Quickly
Ensure to have a systematic response systems in place to capture leads and let your sellers know that their property must be available for showing when a prospective buyer wants to come through. All inquiries and concerns should be addressed accordingly by the respective person in charge who is well equipped with knowledge and skills. For further enhancement, a comprehensive disclosure system and report package is available and is user friendly.
Know your Options
Innovation is progress. Trying new measures or practices to excel and help the sellers when the market was down could possible boost them to gain more including credits toward closing costs, bonuses to buyer agents, interest rate buy-downs, termite report clearance and the like.
Master the Scripts
Continuous coaching, training and scripts practices will definitely improve and develop the professional skills and mastery of the agents in their field of work.
Take Listings You Can Sell
Compete effectively in our market by knowing not just the market numbers but yours as well. Significant and efficient advertising budget must be applied for each listing. Mastery of the fundamentals with effective cash flow and client management are substantial and very useful to succeed when the market turns or declines.
Within the property market, there is much written about when the best time to buy and sell is. Just like trading other investments you can try to play the market to your advantage and this certainly applies with investment buyers, but when it comes to selling a home, it is often more about the right time for you rather than trying to judge the wider market.
Lawrence Yun, Chief Economist at the National Association of Realtors, recently commented:
"Contract signings inched backward once again last month, as declines in the South and West weighed down on overall activity."
Yun goes on to say:
"The reason sales are falling off last year's pace is that multiple years of inadequate supply in markets with strong job growth have finally driven up home prices to a point where an increasing number of prospective buyers are unable to afford it."
In this type of market, a seller may hold a major negotiating advantage when it comes to price and other aspects of the real estate transaction, including the inspection, appraisal and financing contingencies.
As a potential seller, you are in the driver's seat right now. It might be time to hit the gas.
There are no complex forces at work here, just a normal case on Supply and Demand imbalance. Figures shown below are from the best and most reliable source explaining the future of the market. Let's find out more.
The Foot Traffic Report
by the National Association of Realtors
Methodology: Every month SentriLock, LLC provides NAR Research with data on the number of properties shown by a REALTOR. Lockboxes made by SentriLock, LLC are used in roughly a third of home showings across the nation. Foot traffic has a strong correlation with future contracts and home sales, so it can be viewed as a peek ahead at sales trends two to three months into the future.
Latest Report: "Foot Traffic climbed 3.2 points to 55.8 mid-summer in July. Additionally, the diffusion index is higher than last year by 13.5 points. Despite a healthy economy and labor market, supply and new construction remains unable to keep up with buyer demand."
Synopsis: Buyer demand remains strong.
The Showing Index
Methodology: The ShowingTime Showing Index tracks the average number of buyer showings on active residential properties on a monthly basis, a highly reliable leading indicator of current and future demand trends.
Latest Report: "Showing activity throughout the country increased by 0.3 percent year over year in July, the third consecutive month that the U.S. ShowingTime Showing Index recorded buyer interest deceleration compared to the previous year. The June 2018 figures revealed a 0.0 percent change in showing traffic from 2017, while May showed a 1.2 percent year-over-year increase. The 12-month average year-over-year increase was 4.6 percent."
Synopsis: Buyer demand is softening
Realtors Confidence Index
by the National Association of Realtors
Methodology: The REALTORS Confidence Index is a key indicator of housing market strength based on a monthly survey sent to over 50,000 real estate practitioners. Practitioners are asked about their expectations for home sales, prices and market conditions.
Latest Report: "REALTORS reported slower home buying activity in July 2018...The REALTORS Buyer Traffic Index registered at 62, down from the same month one year ago (69). This is the fifth straight month (since March 2018) that Realtors reported a decline in buyer activity compared to conditions one year ago."
Synopsis: Buyer demand is softening
The Real Estate Broker Survey
in the 'Z' Report by Zelman and Associates (subscription needed)
Methodology: Proprietary survey results of real estate executives.
Latest Report: "While we continue to expect a resumption of growth in resale transactions on the back of easing inventory in 2019 and 2020, our real-time view into the market through our Real Estate Broker Survey does suggest that buyers have grown more discerning of late and a level of "pause" has taken hold in many large housing markets. Indicative of this, our broker contacts rated buyer demand at 69 on a 0-100 scale, still above average but down from 74 last year and representing the largest year-over-year decline in the two-year history of our survey."
Synopsis: Buyer demand is softening
Again, three of the four most reliable measures of buyer activity are reporting that demand is softening. We had a strong buyers' market directly after the housing crash which was immediately followed by a strong sellers' market over the last six years.
If demand continues to soften and supply begins to grow (as is projected to happen), we will return to a more neutral market which will favor neither buyers nor sellers. This "more normal" market will be better for real estate in the long term.
If you're ready to sell your home but just waiting for the right time, then you're in luck my friend. There's a saying that goes, "strike while the iron is hot" and right now, the iron is ablaze. You should put your property up in the market while it's filled with able, willing and eager buyers.
Between 1987 and 1999, which is often referred to as the 'Pre-Bubble Period,' home prices grew at an average of 3.6% according to the Home Price Expectation Survey.
The chart below shows the forecasted year-over-year prices for 2018 (predictions made in 2017). According to their predictions, the average appreciation over the course of 2018 should be 4.8%, which is still greater than the 'normal' appreciation of 3.6%.
If we layer in the actual price appreciation that has occurred this year, we can see that over the course of 2018, home prices have appreciated by an average of 6.9% and have outpaced projections all year!
What does this mean?
The tale of today's real estate market is one of low inventory, high demand, and rising prices. The forces at work can be simply explained with the theory of supply and demand. That being said, if a large supply of inventory were to come to the market, prices may start to appreciate closer to the forecasted rate which would STILL be greater than the historic norm!
If you are a homeowner whose house no longer meets your needs, now may be a great time to list your home and capitalize on the equity you have gained over the last year to make a significant down payment on your next home!
If you're debating on buying a new home for your family in the future, the best time to buy is now. Here are four good reasons why you should buy a home this fall.
1. Prices Will Continue to Rise
CoreLogic's latest Home Price Insights report reveals that home prices have appreciated by 6.2% over the last 12 months. The same report predicts that prices will continue to increase at a rate of 5.1% over the next year.
Home values will continue to appreciate for years. Waiting no longer makes sense.
2. Mortgage Interest Rates Are Projected to Increase
Freddie Mac's Primary Mortgage Market Survey shows that interest rates for a 30-year mortgage have already increased by half of a percentage point, to around 4.5% in 2018. Most experts predict that rates will rise over the next 12 months. The Mortgage Bankers Association, Fannie Mae, Freddie Mac and the National Association of Realtors are in unison, projecting that rates will increase by half a percentage point to around 5.1% by this time next year.
An increase in rates will impact your monthly mortgage payment. A year from now, your housing expense will increase if a mortgage is necessary to buy your next home.
3. Either Way, You Are Paying a Mortgage
There are some renters who have not yet purchased homes because they are uncomfortable taking on the obligation of a mortgage. Everyone should realize that unless you are living with your parents rent-free, you are paying a mortgage - either yours or your landlord's.
As an owner, your mortgage payment is a form of 'forced savings' that allows you to build equity in your home which you can then tap into later in life. As a renter, you guarantee your landlord is the person building that equity.
Are you ready to put your housing cost to work for you?
4. It's Time to Move on with Your Life
The 'cost' of a home is determined by two major components: the price of the home and the current mortgage rate. It appears that both are on the rise.
But what if they weren't? Would you wait?
Look at the actual reason you are buying and decide if it is worth waiting. Whether you want to have a great place for your children to grow up, you want your family to be safer, or you just want to have control over renovations, maybe now is the time to buy.
Research shows that a great number of prospective home buyers came from a family who owned a home as compared to those who grew up in a family who rents. This is great news as most millennials are raised by baby boomers which we all know to be a generation of homeowners.
According to an analysis of millennial homeowners, the homeownership rate of those whose parents rent their homes is 14.4%, while the rate amongst millennials whose parents are homeowners is 31.7%!
"A young adult's odds of homeownership are highly correlated with their parent's homeownership.
Without controlling for such factors as age, income, education, marital status, and race or ethnicity, there is a 17 percentage-point gap between the homeownership rate for young adults whose parents are renters and young adults whose parents are homeowners."
The study also revealed that as a parent's net worth increases, so does the likelihood that their child will own a home. These two findings are not surprising as we know from the Survey of Consumer Finances that a homeowner's net worth is 44x greater than that of a renter.
Below is a breakdown of the relationship between a parent's wealth and a millennia's likelihood to own a home.
Even though millennials took longer than many of the generations before them to start home searches of their own, the data shows that they will not be waiting much longer!
Timing is everything, selling homes included. In case your thinking of selling your home in the future. This fall is the best time for you, here are five great reasons why you should sell this season.
1. Demand Is StrongThe latest Buyer Traffic Report from the National Association of Realtors (NAR) shows that buyer demand remains very strong throughout the vast majority of the country. These buyers are ready, willing and able to purchase...and are in the market right now! In fact, more often than not, multiple buyers end up competing with each other to buy the same homes.
Take advantage of the buyer activity currently in the market.
2. There Is Less Competition Now Housing inventory is still under the 6-month supply needed for a normal housing market. This means that, in the majority of the country, there are not enough homes for sale to satisfy the number of buyers in the market. This is good news for homeowners who have gained equity as their home values have increased. However, additional inventory could be coming to the market soon!
Historically, a homeowner stayed in his or her home for an average of six years, but that number has hovered between nine and ten years since 2011. Many homeowners have a pent-up desire to move as they were unable to sell over the last few years because of a negative equity situation. As home values continue to appreciate, more and more homeowners will be given the freedom to move.
The choices buyers have will continue to increase. Don't wait until this other inventory comes to market before you decide to sell.
3. The Process Will Be QuickerToday's competitive environment has forced buyers to do all that they can to stand out from the crowd, including getting pre-approved for their mortgage financing. This makes the entire selling process much faster and much simpler as buyers know exactly what they can afford before home shopping. According to Ellie Mae's latest Origination Insights Report, the average time it took to close a loan was 44 days.
4. There Will Never Be a Better Time to Move UpIf your next move will be into a premium or luxury home, now is the time to move up! The abundance of inventory available in these higher price ranges has created a buyer's market for anybody looking to purchase these homes. This means that if you are planning on selling a starter or trade-up home, your home will sell quickly AND you'll be able to find a premium home to call your own!
According to CoreLogic, prices are projected to appreciate by 5.1% over the next year. If you are moving to a higher-priced home, it will wind up costing you more in raw dollars (both in down payment and mortgage payment) if you wait.
5. It's Time to Move on With Your Life Look at the reason you decided to sell in the first place and determine whether it is worth waiting. Is money more important than being with family? Is money more important than your health? Is money more important than having the freedom to go on with your life the way you feel you should?
Only you know the answers to the questions above. You have the power to take control of the situation by putting your home on the market. Perhaps the time has come for you and your family to move on and start living the life you desire.
Let me tell you a story.
There is a man who lives in a town where all residents had a job, a house, and a car or two in their driveway. Every day he went to work and came home and sometimes he would go out on the weekends for a drink. He seemed happy, yet he always complained about little things. Deep down his soul, he knows he's not happy. He regrets the fact that he did not go after the one thing in life that he ever wanted. He sold out for the security of a 9-5 job and the little luxuries that came with it. Therefore, to compensate, he made up stories to tell himself so he could feel better and continued to waste his time with fake reality.
Here is what I think.
Never sell your life short and look down on other people's success and pass it off as luck. Create the life you wanted. A life you could be proud of. I'm guessing that if you find yourself reading this you also want to create a life for yourself. Well, let me tell you that it is possible to create a life following your passion. It is possible for you to break outside the role society has thrown you into, to have more than a mediocre lifestyle. All it takes is a choice.
You owe it to yourself to have better things, a better paycheck, better life. Hussle, be unrealistic, go after your dreams, and create the life you want, but absolutely never settle with mediocrity!
I built a company that gives me the opportunity to earn big and at the same time freedom to concentrate on my passion. NYREEX will never stop pushing people to work their very best and achieve their full potential.
If you're one of the many someones I mentioned above and want to kick off a change to better your life, then I recommend you start as an agent with New York Real Estate Experts. Go to our website www.realestatecareerexpert.com to learn about the many things NYREEX and eXp Realty has in store for you.
I am sharing this post from Inmanville Facebook Group. It's the "10-year Anniversary of the Global Economic Meltdown." Here is the summary of everyone's advice.
1. Ignore the noise
Kendyl Young No matter what the market is doing, there are people who need my help. Focus on them, ignore the rest. In order to sell homes, you have to talk to people. When the market is difficult you have to talk to more people, more skilfully. Show up.
2. Cash is king
Jean Moussavian Keane Save your money.
Katie Francis Minkus That winter is coming and those in commission sales should be saving their cash, instead of buying a new car.
3. Wary of the experts
David Fleming Ignore the advice and opinions of anyone who doesn't work on behalf of your clients -- lenders, title closers and clients' families -- these non-fiduciary "financial advisors." Their interests are supposed to be aligned with our client's. Wrong.
4. Don't drink the Kool Aid
Michael Daly When something is too good to be true, it usually is.
5. Seize opportunity
Jennifer Johnsen Cameron Live below your means and diversify your investments. Then wait for opportunity because if you have cash when things bottom out, there is much of it.
6. Reduce debt
Randy Sumbles Live debt free
7. Grab market share
Chavi M. Hohm The main reason we catapulted to the top 10 in our company is because of the recession. Resilience, take advantage of the market in front of you and invest heavily in marketing when others are retreating.
8. Pay attention to warning signs
Nicole Caballero Economic knowledge and tracking market indicators is key to staying successful in real estate sales and investing.
9. It is about value you create
Paul Kaplan Work your brand to show your value proposition and staying power regardless of market conditions.
10. There's a pony in there
Tony Vitale There's a silver lining to everything, if you look close enough.