Despite the forecasts of mortgage rate rise, demand for homes has continuously outnumbered its supply. Let's find out why.
According to the National Association of Realtors (NAR), the inventory of homes for sale "has fallen year-over-year for 36 consecutive months," and now stands at a 4.1-month supply. A 6-month supply of inventory is necessary for a balanced market and has not been seen since August of 2012.
NARs Chief Economist Lawrence Yun had this to say,
Is There Any Relief Coming?
According to the CoreLogic's 2018 Consumer Housing Sentiment Study, four times as many renters are considering buying homes in the next 12 months than homeowners who are planning to sell, "which is the crux of the available housing-supply imbalance."
As more and more renters realize the benefits of homeownership, the demand for housing will continue to rise.
Do homeowners realize demand is so high? With home prices rising across the country, homeowners gained over a trillion dollars in equity over the last 12 months, with the average homeowner gaining over $16,000!
The map below shows the breakdown by state:
Many homeowners who have not thought about listing their homes may not even realize how much equity they have gained, or the opportunity available to them in today's market!
If you are one of the many homeowners across the country who hasn't quite found their forever home, now may be a great time to list your house for sale and find your dream home!
It is given that purchasing power is always desired. But with all the current trends in the real estate industry, how true is it that many believe that house-buying power is near historic levels?
We keep hearing that home affordability is approaching crisis levels. While this may be true in a few metros across the country, housing affordability is not a challenge in the clear majority of the country. In their most recent Real House Price Index, First American reported that consumer "house-buying power" is at "near-historic levels."
Their index is based on three components:
Combining these three crucial pieces of the home purchasing process, First American created an index delineating the actual home-buying power that consumers have had dating back to 1991.
Here is a graph comparing First American's consumer house-buying power (blue area) to the actual median home price that year from the National Association of Realtors (yellow line).
Consumer house-buyer power has been greater than the actual price of a home since 1991. And, the spread is larger over the last decade.
Even though home prices are increasing rapidly and are now close to the values last seen a decade ago, the actual affordability of a home is much better now. As Chief Economist Mark Fleming explains in the report:
Some may just be a fad or a short-term trend, others may be permanent changes like technological advancements. Needless to say, here are some of 2018's top real estate influencing phenomenon.
1. Technology Advancements
The advancement of technological innovation in the real estate industry has been changing rapidly and all agents should adapt to this to maximize exposure for their listings. Companies like Redfin, Zillow, Trulia and Homesnap have been changing the way sellers and buyers perceive the market and it is crucial for agents to quickly adapt to this new reality. - Alex Chieng, A & L Real Estate Team
Not to belabor the already highly-trending topic of blockchain changing the world, but this is the reality of our industry. Blockchain-based applications are changing the way buyers, sellers and investors interact with each other and the properties they have interests in. Welcome to an new world of unleashed liquidity, transparency and disintermediation. The real estate world is rapidly changing and we must do so too, or we will fall by the wayside. - Garratt Hasenstab, The Mountain Life Companies
3. Return Of The Co-Ops
For the past several years in Manhattan, we've seen the downtown new development condo market take a big bite out of the co-op resale market. Now that there are so many new (and more expensive) projects, we're seeing buyers actually return uptown to purchase co-ops because the prices are more moderate in comparison. What hasn't changed is that some of the boards remain difficult to pass. - Elizabeth Ann Stribling-Kivlan, stribling.com
4. Home Prices Still Rising
The NYC real estate market indicates that home prices might rise more slowly in the months ahead. During the years 2012-2015, we saw 12%-15% growth. We didn't have any surprises this year. Average home price growth over the last few decades is somewhere between 5% and 10% per year. So, perhaps what we are seeing here is a normalization within the Manhattan real estate market. - Elliot Bogod, Broadway Realty
5. Millennials Buying Homes
I've seen article after article saying millennials do not want to buy a home or cannot afford it, yet homeownership for this age group is on the rise. Fortunately, this age group is still a significant portion of the luxury rental market, and the baby boomers who just sold their houses are an increasing renter base. - Susan Tjarksen, KIG CRE LLC
6. Steady Stream Of New Construction
The top trend I've seen so far has been a steady stream of new construction, which is keeping rent prices mostly in check for 2018. A stable pipeline of new buildings means we'll see the impact of lower rent growth but still above long-term averages when it comes to rent across the U.S. - Nathaniel Kunes, AppFolio Inc.
7. Low Available Inventory
The drought of available inventory has been the most surprising trend, by far. Whether the underlying reasons are demographic, economic, regulatory (i.e., zoning) or a combination thereof, we just aren't seeing as many homes hit the market as we should. Agents have to do a better job in prompting inventory and explaining the current seller's market to homeowners. - Ari Afshar, Compass
8. Visual Marketing Trends Soaring
We are seeing a huge uptick in agents recognizing the value in using professionals for all their visual marketing needs -- virtual staging, drone video and photography, virtual tours, interactive floor plans and more. Hiring the pros to help will continue to be less of a "nice to have" and more of a "must have" for agents, homeowners and home seekers alike. - Brian Balduf, VHT Studios
We have to be aware and prepared, we have to be able to adapt to these trends to stay on top of our game.
Nowadays, people buy insurance for all sorts of things they hold dear. Jewelry, pets, computer equipment and believe it or not, even body parts. It gives one peace of mind and a sense of security to know their possessions are safe. All the more reason why your home should be insured with the best insurance provider you can find. Here a few things you need to know about home insurance and the top providers of 2018.
The first thing you need to know about homeowners insurance is what it covers. One well-known aspect of homeowners insurance is that it covers your dwelling and its contents if there's a fire or other event that causes damage -- or if your stuff is stolen or vandalized. Policies typically cover certain kinds of weather or extreme events like hail, lightning, or damage from wind, but not others. Floods and earthquakes, for example, are often excluded from most base plans. You have to buy additional coverage if you want to protect yourself in case of those events.
When it comes to dwelling and property coverage there are two types. The first is cash value coverage, which only will pay you the amount that your property is currently worth or the depreciated value of the property. The second kind is replacement value coverage, which will give you as much as you need to replace an item at its current market value. Certain types of property or property with values that are over a certain dollar amount can't be insured in some circumstances. For that reason, you might also need a special insurance rider or include these items in a schedule.
But homeowners insurance doesn't just help you repair or replace your things, it also provides liability coverage. This covers you against liability if anyone is injured on your property or if you damage their property. It also often covers you in case someone is injured because of your dog. Usually these liability coverage policies have low coverage amounts and offer just $100,000 in total coverage.
After that, different home insurance companies offer different types of additional coverages in their base policies. Some include things like medical payments coverage in the event someone gets injured on your property. It can offer a certain dollar amount to cover medical bills without having to go to court or reach a settlement. There are also home insurance companies that offer things like "loss of use" coverage, which pays for a hotel and food if you can't return to your home, identity fraud coverage, additional liability coverage, and other types of special riders.
Are you wondering what type of coverage is best for you and what company you should buy it from?
We look at the best homeowners insurance companies to help you decide.
Here are LendEDU's best homeowners insurance companies (click a company to read their full review):
Best Homeowners Insurance Comparison
There are a lot of home insurance providers out there, you have the freedom to pick one that you find can cater to all your needs.
There has been a lot of talk regarding when the next recession could be, we all remember that the housing crisis in 2008 caused the last recession. Is there a likelihood of that repeating itself?
Economists and analysts know that the country has experienced economic growth for almost a decade. They also know that a recession can't be too far off. A recent report by Zillow Research shed light on a survey conducted by Pulsenomics in which they asked economists, investment strategists and market analysts how they felt about the current housing market. That report revealed the possible timing of the next recession:
That timing concurs with a recent survey of economists by the Wall Street Journal:
Here is a graph comparing the opinions of those surveyed by both the Wall Street Journal and Pulsenomics:
Recession DOES NOT Equal Housing Crisis
According to the Merriam-Webster Dictionary, a recession is defined as follows:
A recession means the economy has slowed down markedly. It does not mean we are experiencing another housing crisis. Obviously, the housing crash of 2008 caused the last recession. However, during the previous five recessions home values appreciated.
According to the experts surveyed by Pulsenomics, the top three probable triggers for the next recession are:
Others agree that housing will not be impacted like it was a decade ago.
Mark Fleming, First American's Chief Economist, explained:
A recession is probably less than two years away. A housing crisis is not.
We have a lot of potential homeowners and families having second thoughts about buying today. Current mortgage rates and home prices intimidate buyers and it's completely understandable.
With both home prices and mortgage rates increasing this year, many are concerned about a family's ability to purchase a major part of the American Dream - its own home. However, if we compare housing affordability today to the average affordability prior to the housing boom and bust, we are in much better shape than most believe.
In Black Knight's latest monthly Mortgage Monitor, they revealed that in the vast majority of the country, it is actually more affordable to purchase a home today than it was between 1995 to 2003 when looking at mortgage payments (determined by price and interest rate) as compared to incomes. Home prices are up compared to 1995-2003, but mortgage rates are still much lower now than at that time. Today, they stand at about 4.5%. Here are the average mortgage rates for each of the years mentioned:
Black Knight's research revealed that, when comparing "the share of median income required to buy the median-priced home" today, to the average between 1995 to 2003, it is currently more affordable to purchase a home in 44 of 50 states.
Here is a state map of the percentage change in the price-to-payment ratio. Positive numbers indicate that it is less affordable to buy while negative numbers indicate that it is more affordable.
Whether you are moving up to the home of your dreams or purchasing your first house, it is a great time to buy when looking at historic affordability data.
Baby boomers are leading in the market. They have the highest number of home buyers compare to other generations. See the comparison.
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Demand for houses continuously goes up while its supply dwindles. It's a common knowledge that scarcity equates to price inflation, does this mean it's time to sell?
According to recently released data from the National Association of Realtors (NAR), the median number of days that a home spent on the market hit a new low of 26 days in April, as 57% of homes were on the market for under a month.
NAR's Chief Economist, Lawrence Yun, had this to say,
Strong buyer demand, a good economy, and a low inventory of new and existing homes for sale created the perfect storm to accelerate the time between listing and signing a contract. The chart below shows the median days on the market from April 2017 to April 2018:
We are all aware that change is constant. In today's quick turn around of national market conditions. It is time for you to decide whether or not to list your home for sale. Don't hesitate to seek professional help and learn about the latest updates. Contact your local real estate agent and find out what's the best course of action to take.
Know why the Month of May and June are the Best Months to Sell your Home! #homeselling #homebuying #realestate #marketupdate#westchester #bronx #yonkersny #expertadviser #realtor #broker #agent#realestateagent #homeseller #homebuyer #homesforsale#americandream #dreamhome #mortgage
Monday Meeting! Lets end the month of April with a Bang!
Kicking it up to high gear! We would like to welcome Jose Arroyo to the team!
Youâve made an expert move in becoming a partner of New York Real Estate Experts!
We are growing and if youâve been looking for your career leverage, give us a call at 914-920-2299!
#nyreex #realestate #careergoals #careeropportunity #expertadviser #broker#agent #realtor #westchester #yonkersny #bronx #success #inspiration#10X #homebuying #homeselling #homesforsale
It's no mystery that cost of living varies drastically depending on where you live, so a new study by GOBankingRates set out to find out what minimum salary you would need to make in order to buy a median-priced home in each of the 50 states, and Washington, D.C.
States in the Midwest came out on top as most affordable, requiring the smallest salaries in order to buy a median-priced home. States with large metropolitan areas saw a bump in the average salary needed to buy with California, Washington, D.C., and Hawaii edging out all others with the highest salaries required.
Below is a map with the full results of the study:
GoBankingRates gave this advice to anyone considering a home purchase,
"Before you buy a home, it's important to find out if you can afford the monthly mortgage payment. To do this, some financial experts recommend your housing costs - primarily your mortgage payments - shouldn't consume more than 30 percent of your monthly income."
As we recently reported, research from Zillow shows that historically, Americans had spent 21% of their income on owning a median-priced home. The latest data from the fourth quarter of 2017 shows that the percentage of income needed today is only 15.7%!
If you are considering buying a home, whether itâs your first time or your fifth time, consult a local real estate professional who can help evaluate your ability to do so in todayâs market!
When it comes to buying a home, whether it is your first time or your fifth, it is always important to know all the facts. With the large number of mortgage programs available that allow buyers to purchase homes with down payments below 20%, you can never have too much information about Private Mortgage Insurance (PMI).
What is PMI?
Freddie Mac defines PMI as:
"An insurance policy that protects the lender if you are unable to pay your mortgage. It's a monthly fee, rolled into your mortgage payment, that is required for all conforming, conventional loans that have down payments less than 20%.
Once you've built equity of 20% in your home, you can cancel your PMI and remove that expense from your mortgage payment."
As the borrower, you pay the monthly premiums for the insurance policy, and the lender is the beneficiary. Freddie Mac goes on to explain that:
"The cost of PMI varies based on your loan-to-value ratio - the amount you owe on your mortgage compared to its value - and credit score, but you can expect to pay between $30 and $70 per month for every $100,000 borrowed."
According to the National Association of Realtors, the average down payment for all buyers last year was 10%. For first-time buyers, that number dropped to 5%, while repeat buyers put down 14% (no doubt aided by the sale of their homes). This just goes to show that for a large number of buyers last year, PMI did not stop them from buying their dream homes.
Here's an example of the cost of a mortgage on a $200,000 home with a 5% down payment & PMI, compared to a 20% down payment without PMI:
The larger the down payment you can make, the lower your monthly housing cost will be, but Freddie Mac urges you to remember:
"It's no doubt an added cost, but it's enabling you to buy now and begin building equity versus waiting 5 to 10 years to build enough savings for a 20% down payment."
If you have questions about whether you should buy now or wait until youâve saved a larger down payment, meet with a professional in your area who can explain your marketâs conditions and help you make the best decision for you and your family.
If your house no longer fits your needs and you are planning on buying a luxury home, now is a great time to do so! Recently, the Institute for Luxury Home Marketing released its Luxury Market Report which showed that in today's premium home market, buyers are in control.
The inventory of homes for sale in the luxury market far exceeds the number of people searching to purchase these properties in many areas of the country. This means that homes are often staying on the market longer or can be found at a discount.
Those who have a starter or trade-up home to sell will find buyers competing, and often entering bidding wars, to be able to call their house their new home.
The sale of your starter or trade-up house will help you come up with a larger down payment for your new luxury home. Even a 5% down payment on a million-dollar home is $50,000.
But not all who are buying luxury properties have a home to sell first.
A recent Bloomberg article gave some insight into what many millennials are choosing to do:
"A new generation of affluent homebuyers powered by a surge in inherited wealth is driving the luxury-home market, demanding larger spaces and fancier finishes, according to a report heralding âthe rise of the new aristocracy.'"
The best time to sell anything is when demand is high, and supply is low. If you are currently in a starter or trade-up house that no longer fits your needs and you are looking to step into a luxury home, nowâs the time to list your house for sale and make your dreams come true.
If you are considering selling your current home, to either move up to a larger home or into a home in an area that better suits your current family needs, great news was just revealed.
Last week, Trulia posted a blog, Not Your Fatherâs Housing Market, which examined home affordability over the last 40+ years (1975-2016). Their research revealed that:
"Nationally, homes are just about the most affordable theyâve been in the last 40 yearsâ¦ the median household could afford a home 1.5 times more expensive than the median home price. In 1980, the median household could only afford about 3/4 of the median home price.
Despite relatively stagnant incomes, affordability has grown due to the sharp drop in mortgage rates over the last 30 years - from a high of over 16% in the 1980s to under 4% by 2016.
Of the nation's 100 largest metros, only Miami became unaffordable between 1990 and 2016. Meanwhile, 22 metros have flipped from being unaffordable to becoming affordable in that same time frame."
Here is a graph showing the Affordability Index compared to the 40-year average:
The graph shows that housing affordability is better now than at any other time in the last forty years, except during the housing crash last decade.
(Remember that during the crash you could purchase distressed properties - foreclosures and short sales at 20-50% discounts.)
There is no doubt that with home prices and mortgage rates on the rise, the affordability index will continue to fall. That is why if you are thinking of moving up, you probably shouldn't wait.
If you have held off on moving up to your family's dream home because you were hoping to time the market, that time has come.
As more and more baby boomers enter retirement age, the question of whether or not to sell their homes and move will become a hot topic. In today's housing market climate, with low available inventory in the starter and trade-up home categories, it makes sense to evaluate your home's ability to adapt to your needs in retirement.
According to the National Association of Exclusive Buyers Agents (NAEBA), there are 7 factors that you should consider when choosing your retirement home.
"It may be easy enough to purchase your home today but think long-term about your monthly costs. Account for property taxes, insurance, HOA fees, utilities - all the things that will be due whether or not you have a mortgage on the property."
Would moving to a complex with homeowner association fees actually be cheaper than having to hire all the contractors you would need to maintain your home, lawn, etc.? Would your taxes go down significantly if you relocated? What is your monthly income going to be like in retirement?
"If you have equity in your current home, you may be able to apply it to the purchase of your next home. Maintaining a healthy amount of home equity gives you a source of emergency funds to tap, via a home equity loan or reverse mortgage."
The equity you have in your current home may be enough to purchase your retirement home with little to no mortgage. Homeowners in the US gained an average of over $14,000 in equity last year.
"As we age, our tolerance for cleaning gutters, raking leaves and shoveling snow can go right out the window. A condominium with low-maintenance needs can be a literal lifesaver, if your health or physical abilities decline."
As we mentioned earlier, would a condo with an HOA fee be worth the added peace of mind of not having to do the maintenance work yourself?
"Elderly homeowners can be targets for scams or break-ins. Living in a home with security features, such as a manned gate house, resident-only access and a security system can bring peace of mind."
As scary as that thought may be, any additional security and an extra set of eyes looking out for you always adds to peace of mind.
"Renting won't do if the dog can't come too! The companionship of pets can provide emotional and physical benefits."
Evaluate all of your options when it comes to bringing your 'furever' friend with you to a new home. Will there be necessary additional deposits if you are renting or in a condo? Is the backyard fenced in? How far are you from your favorite veterinarian?
"No one wants to picture themselves in a wheelchair or a walker, but the home layout must be able to accommodate limited mobility."
Sixty is the new 40, right? People are living longer and are more active in retirement, but that doesn't mean that down the road you wonât need your home to be more accessible. Installing handrails and making sure your hallways and doorways are wide enough may be a good reason to look for a home that was built to accommodate these needs.
"Is the new home close to the golf course, or to shopping and dining? Do you have amenities within easy walking distance? This can add to home value!"
How close are you to your children and grandchildren? Would relocating to a new area make visits with family easier or more frequent? Beyond being close to your favorite stores and restaurants, there are a lot of factors to consider.
When it comes to your forever home, evaluating your current house for its ability to adapt with you as you age can be the first step to guaranteeing your comfort in retirement. If after considering all these factors you find yourself curious about your options, contact a local real estate professional who can evaluate your ability to sell your house in todayâs market and get you into your dream retirement home!
Here are four great reasons to consider buying a home today instead of waiting.
Prices Will Continue to Rise
CoreLogic's latest Home Price Index reports that home prices have appreciated by 6.6% over the last 12 months. The same report predicts that prices will continue to increase at a rate of 4.3% over the next year.
The bottom in home prices has come and gone. Home values will continue to appreciate for years. Waiting no longer makes sense.
Mortgage Interest Rates Are Projected to Increase
Freddie Mac's Primary Mortgage Market Survey shows that interest rates for a 30-year mortgage hovered close to 4.0% in 2017. 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 nearly a full percentage point 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.
Either Way, You Are Paying a Mortgage
There are some renters who have not yet purchased a home 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 landlordâs.
As an owner, your mortgage payment is a form of 'forced savings' that allows you to have equity in your home that you can tap into later in life. As a renter, you guarantee your landlord is the person with that equity.
Are you ready to put your housing cost to work for you?
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.
If the right thing for you and your family is to purchase a home this year, buying sooner rather than later could lead to substantial savings.
Last week, the National Association of Realtors (NAR) released their most recent Existing Home Sales Report. According to the report:
"The median existing-home price for all housing types in January was $240,500, up 5.8 percent from January 2017 ($227,300). January's price increase marks the 71st straight month of year-over-year gains."
Seventy-one consecutive months of price increases may have some concerned that current home values may be overinflated.
However, at the same time, Zillow issued a press release which revealed:
"If the housing bubble and bust had not happened, and home values had instead appreciated at a steady pace, the median home value would be higher than its current value."
Here are two graphs that help show why home prices are exactly where they should be.
âThe first graph shows actual median home sales prices from 2000 through 2017.
By itself, this graph could heighten concerns as it shows home values rose in the early 2000s, came tumbling down and are now headed up again. It gives the feel of a rollercoaster ride that is about to take another turn downward.
âHowever, if we also include where prices would naturally be, had there not been a boom & bust, we see a different story.
The blue bars on this graph represent were prices would be if they had increased by the normal annual appreciation rate (3.6%). By adding 3.6% to the actual 2000 price and repeating that for each subsequent year, we can see that prices were overvalued during the boom, undervalued during the bust, and a little bit LOWER than where they should be right now.
Based on historic appreciation levels, we should be very comfortable that current home values are not overinflated.
Mortgage interest rates have already risen by over a quarter of a percentage point in 2018. Many are projecting that rates could increase to 5% by the end of the year.
What impact will rising rates have on house values?
Many quickly jump to the conclusion that an increase in mortgage rates will have a detrimental impact on real estate prices as fewer buyers will be able to qualify for a loan. This seems logical; if there is less demand for housing then prices will drop.
However, in a good economy, rising mortgage rates increase demand as many prospective purchasers immediately jump off the fence to guarantee they get the lower rate.
Let's look at home prices the last four times mortgage rates increased dramatically.
In each case, home prices APPRECIATED and did not depreciate. No one is projecting as dramatic an increase in rates as the examples above. Most are projecting an increase of approximately 1% by the end of the year.
The last time mortgage rates increased by 1% over a twelve-month period was January 2013 (3.41%) to January 2014 (4.43%). What happened to house prices during that span? They appreciated by 9.8%.
Just two weeks ago, Rick Palacios Jr., Director of Research at John Burns Real Estate Consulting explained:
"Mortgage rates have risen 1% or more ten times in the last 43 years, with little impact on home sales and prices when the economy was also strongâ¦Historically, rising confidence, solid job growth, and higher wages have more than offset reduced demand for housing resulting from higher mortgage rates."
When mortgage rates increase, history has shown that prices appreciate (and do not depreciate) during that same time span.
Every homeowner wants to make sure they maximize their financial reward when selling their home. But how do you guarantee that you receive the maximum value for your house?
Here are two keys to ensure that you get the highest price possible.
1. Price it a LITTLE LOW
This may seem counter-intuitive, but let's look at this concept for a moment. Many homeowners think that pricing their homes a little OVER market value will leave them with room for negotiation. In actuality, this just dramatically lessens the demand for your house (see chart below).
2. Use a Real Estate Professional
This, too, may seem counter-intuitive. The seller may think they would make more money if they didn't have to pay a real estate commission. With this being said, studies have shown that homes typically sell for more money when handled by a real estate professional.
A study by Collateral Analytics, reveals that FSBOs don't actually save any money, and in some cases may be costing themselves more, by not listing with an agent.
In the study, they analyzed home sales in a variety of markets in 2016 and the first half of 2017. The data showed that:
"FSBOs tend to sell for lower prices than comparable home sales, and in many cases below the average differential represented by the prevailing commission rate."
The results of the study showed that the differential in selling prices for FSBOs when compared to MLS sales of similar properties is about 5.5%. Sales in 2017 suggest the average price was near 6% lower for FSBO sales of similar properties.
Price your house at or slightly below the current market value and hire a professional. This will guarantee that you maximize the price you get for your house.
According to CoreLogic's latest Home Price Index, prices appreciated by 6.9% year-over-year from December 2016 to December 2017 on a national level. This marks the fifth month in a row with at least a 6.9% increase.
Dr. Frank Nothaft, Chief Economist for CoreLogic, gave insight into the reason behind the large appreciation,
"The number of homes for sale has remained very low. Job growth lowered the unemployment rate to 4.1 percent by yearâs end, the lowest level in 17 years. Rising income and consumer confidence has increased the number of prospective homebuyers. The net result of rising demand and limited for-sale inventory is a continued appreciation in home prices."
This is great news for homeowners who have gained nearly $15,000 in equity (on average) in their homes over the last year! Those homeowners who had been on the fence as to whether or not to sell will be pleasantly surprised to find out that they now have an even larger profit to help cover a down payment on their dream homes.
As we near the traditionally busy spring buyers season, there is still hope for buyers as mortgage rates remain low compared to recent decades. The report also predicted that home price appreciation will slow slightly, rising by 4.3% by this time next year.
If you are looking to enter the housing market, as either a buyer or a seller, meet with a local real estate professional who can explain exactly whatâs going on in your neighborhood and discuss your options!
The interest rate you pay on your home mortgage has a direct impact on your monthly payment. The higher the rate the greater the payment will be. That is why it is important to know where rates are headed when deciding to start your home search.
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 12 months.
How Will This Impact Your Mortgage Payment?
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 7.0% from this time last year and are predicted to be 4.2% higher next year.
If both the predictions of home price and interest rate increases become reality, families would wind up paying considerably more for their next home.
Even a small increase in interest rate can impact your family's wealth. Meet with a local real estate professional to evaluate your ability to purchase your dream home.
Every winter, families across the country decide if this will be the year that they sell their current houses and move into their dream homes.
Mortgage rates hovered around 4% for all of 2017 which forced many buyers off the fence and into the market, resulting in incredibly strong demand RIGHT NOW!
At the same time, however, inventory levels of homes for sale have dropped dramatically as compared to this time last year.
Trulia reported that "in Q4 2017, U.S. home inventory decreased by 10.5%. That is the biggest drop we've seen since Q2 2013."
Here is a chart showing the decrease in inventory levels by category:
The largest drop in inventory was in the starter home category which saw a 19% dip in listings.
âDemand for your home is very strong right now while your competition (other homes for sale) is at a historically low level. If you are thinking of selling in 2018, now may be the perfect time.
In today's housing market, where supply is very low and demand is very high, home values are increasing rapidly. Many experts are projecting that home values could appreciate by another 4% or more over the next twelve months. One major challenge in such a market is the bank appraisal.
When prices are surging, it is difficult for appraisers to find adequate, comparable sales (similar houses in the neighborhood that recently closed) to defend the selling price when performing the appraisal for the bank.
Every month in their Home Price Perception Index (HPPI), Quicken Loans measures the disparity between what a homeowner who is seeking to refinance their home believes their house is worth and what an appraiser's evaluation of that same home is.
In the latest release, the disparity was the narrowest it has been in over two years, as the gap between appraisers and homeowners was only -0.5%. This is important for homeowners to note as even a .5% difference in appraisal can mean thousands of dollars that a buyer or seller would have to come up with at closing (depending on the price of the home)
The chart below illustrates the changes in home price estimates over the last two years.
Bill Banfield, Executive VP of Capital Markets at Quicken Loans urges homeowners to find out how their local markets have been impacted by supply and demand:
"Appraisers and real estate professionals evaluate their local housing markets daily. Homeowners, on the other hand, may only think about their housing market when they see 'for sale' signs hit front yards in the spring or when they think about accessing their equity."
"With several years of growth, owners may have more equity than they realize. Many consumers use the tax season at the beginning of the year to reevaluate their entire financial life. It also provides a good opportunity for them to consider how best to take advantage of their equity while mortgage interest rates and borrowing costs are still near record lows."
Every house on the market must be sold twice; once to a prospective buyer and then to the bank (through the bankâs appraisal). With escalating prices, the second sale might be even more difficult than the first. If you are planning on entering the housing market this year, meet with an experienced professional who can guide you through this and any other obstacles that may arise.