Below is a chart depicting the projections of each entity for 2019, as well as for 2020.As we can see, Freddie Mac, Fannie Mae, and the Mortgage Bankers Association all believe homes sales will increase steadily over the next year. If you’re a homeowner who has considered selling your house recently, now may be the best time to put it on the market.
So, you’ve decided to sell your house. You’ve hired a real estate professional to help you with the entire process and you’ve been asked what level of access you want to provide to potential buyers.
There are four elements to a quality listing. At the top of the list is Access, followed by Condition, Financing, and Price. There are many levels of access you can provide to your agent to be able to show your home.
Here are five levels of access you can provide to a buyer, each with a brief description:
- Lockbox on the Door – This allows buyers the ability to see the home as soon as they are aware of the listing, or at their convenience.
- Providing a Key to the Home – Although the buyer’s agent may need to stop by an office to pick up the key, there is little delay in being able to show the home.
- Open Access with a Phone Call – The seller allows showing with just a phone call’s notice.
- By Appointment Only – Example: 48-hour notice. Many buyers who are relocating for a new career or promotion start working in that area prior to purchasing their home. They often like to take advantage of free time during business hours (such as their lunch break) to view potential homes. Because of this, they may not be able to plan their availability far in advance or may be unable to wait 48 hours to see the house.
- Limited Access – Example: the home is only available for a couple of hours a day. This is the most difficult way to be able to show your house to potential buyers.
In a competitive marketplace, access can make or break your ability to get the price you are looking for, or even sell your house at all.
Every three years, the Federal Reserve conducts its Survey of Consumer Finances. Data is collected across all economic and social groups. The latest survey data covers 2013-2016.
The study revealed that the median net worth of a homeowner is $231,400 – a 15% increase since 2013. At the same time, the median net worth of renters decreased by 5% ($5,200 today compared to $5,500 in 2013).
These numbers reveal that the net worth of a homeowner is over 44 times greater than that of a renter.
Owning a home is a great way to build family wealth.
As we’ve said before, simply put, homeownership is a form of ‘forced savings.’ Every time you pay your mortgage, you are contributing to your net worth by increasing the equity in your home.
That is why Gallup reported Americans picked real estate as the best long-term investment for the sixth year in a row. According to this year’s results, 35% of Americans chose real estate. Stocks followed at 27%, then savings accounts and gold.
If you want to find out how you can use your monthly housing cost to increase your family’s wealth, let’s get together to help you through the process.
It seems you can’t find a headline with the term “housing affordability” without the word “crisis” attached to it. That’s because some only consider the fact that residential real estate prices have continued to appreciate. However, we must realize it’s not just the price of a home that matters, but the price relative to a purchaser’s buying power.
Homes, in most cases, are purchased with a mortgage. The current mortgage rate is a major component of the affordability equation. Mortgage rates have fallen by over a full percentage point since December 2018. Another major piece of the affordability equation is a buyer’s income. The median family income has risen by 3.5% over the last year.
Let’s look at three different reports issued recently that reveal how homes are very affordable in comparison to historic numbers, and how they have become even more affordable over the past several months.
1. National Association of Realtors’ (NAR) Housing Affordability Index:
Here is a graph showing the index going all the way back to 1990. The higher the column, the more affordable homes are:We can see that homes are less affordable today (the green bar) than they were during the housing crash (the red bars). This was when distressed properties like foreclosures and short sales saturated the market and sold for massive discounts. However, homes are more affordable today than at any time from 1990 to 2008.
NAR’s report on the index also shows that the percentage of a family’s income needed for a mortgage payment (16.5%) is dramatically lower than last year and is well below the historic norm of 21.2%.
2. Black Knight’s Mortgage Monitor:
This report reveals that as a result of falling interest rates and slowing home price appreciation, affordability is the best it has been in 18 months. Black Knight Data & Analytics President Ben Graboske explains:
“For much of the past year and a half, affordability pressures have put a damper on home price appreciation. Indeed, the rate of annual home price growth has declined for 15 consecutive months. More recently, declining 30-year fixed interest rates have helped to ease some of those pressures, improving the affordability outlook considerably…And despite the average home price rising by more than $12K since November, today’s lower fixed interest rates have worked out to a $108 lower monthly payment…Lower rates have also increased the buying power for prospective homebuyers looking to purchase the average-priced home by the equivalent of 15%.”
3. First American’s Real House Price Index:
While affordability has increased recently, Mark Fleming, First American’s Chief Economist explains:
“If the 30-year, fixed-rate mortgage declines just a fraction more, consumer house-buying power would reach its highest level in almost 20 years.”
Fleming goes on to say that the gains in affordability are about mortgage rates and the increase in family incomes:
“Average nominal household incomes are nearly 57 percent higher today than in January 2000. Record income levels combined with mortgage rates near historic lows mean consumer house-buying power is more than 150 percent greater today than it was in January 2000.”
If you’ve put off the purchase of a first home or a move-up home because of affordability concerns, you should take another look at your ability to purchase in today’s market. You may be pleasantly surprised!
We’ve experienced economic growth for almost a decade, which is the longest recovery in the nation’s history. Experts know a recession can’t be too far off, but when will this economic slowdown actually occur?
Pulsenomics just released a special report revealing that nearly 6 out of 10 of the 90 economists, investment strategists, and market analysts surveyed believe the next recession will occur by the end of next year. Here’s the breakdown:
- 9% believe a recession will occur this year
- 50% believe it will occur in 2020
- 35% believe it will occur in 2021
- 6% believe it will occur after 2021
When asked what would trigger the next recession, the three most common responses by those surveyed were:
- Trade Policy
- Stock Market Correction
- Geopolitical Crisis
How might the recession impact real estate?
Challenges in the housing and mortgage markets were major triggers of the last recession. However, a housing slowdown ranked #9 on the list of potential triggers for the next recession, behind such possibilities as fiscal policy and political gridlock.
As far as the impact the recession may have on home values, the experts surveyed indicated home prices would continue to appreciate over the next few years. They called for a 4.1% appreciation rate this year, 2.8% in 2020, and 2.5% in 2021.
On the same day, in the same survey, the same experts who forecasted a recession happening within the next 18 months also claimed housing will not be the trigger, and home values will still continue to appreciate.
Whether you are a first-time buyer or looking to move up to the home of your dreams, now is a great time to purchase a home. Here are three major reasons to buy today.
Many people focus solely on price when talking about home affordability. Since home prices have appreciated throughout the past year, they assume homes are less affordable. However, affordability is determined by three components:
- Mortgage Interest Rate
Prices are up, but so are wages – and interest rates have recently dropped dramatically (see #2 below). As a result, the National Association of Realtors’ (NAR) latest Affordability Index report revealed that homes are MORE affordable throughout the country today than they were a year ago.
“All four regions saw an increase in affordability from a year ago. The South had the biggest gain in affordability of 6.9%, followed by the West with a gain of 6.0%. The Midwest had an increase of 5.8%, followed by the Northeast with the smallest gain of 1.8%.”
2. Mortgage Interest Rates
Mortgage rates have dropped almost a full point after heading toward 5% last fall and early winter. Currently, they are below 4%.
Additionally, Fannie Mae recently predicted the average rate for a 30-year fixed mortgage will be 3.7% in the second half of 2019. That compares to a 4.4% average rate in the first quarter and 4% in the second quarter.
With mortgage rates remaining near historic lows, Fannie Mae and others have increased their forecasts for housing appreciation for the rest of the year. If home price gains are about to re-accelerate, buying now rather than later makes financial sense.
3. Increase Family Wealth
Homeownership has always been recognized as a sensational way to build long-term family wealth. A new report by ATTOM Data Solutions reveals:
“U.S. homeowners who sold in the second quarter of 2019 realized an average home price gain since purchase of $67,500, up from an average gain of $57,706 in Q1 2019 and up from an average gain of $60,100 in Q2 2018. The average home seller gain of $67,500 in Q2 2019 represented an average 33.9 percent return as a percentage of original purchase price.”
The longer you delay purchasing a home, the longer you are waiting to put the power of home equity to work for you.
With affordability increasing, mortgage rates decreasing, and home values about to re-accelerate, it may be time to make a move. Let’s get together to determine if buying now makes sense for your family.
As a homeowner, it’s always tempting to dream about the next big project you’re going to tackle. The possibilities are endless. Should I renovate? Should I refinance? Should I stay? Should I move? The list goes on and on.
In today’s housing market, it’s actually a great time to shift your thoughts toward selling your house and moving up into the home of your dreams. Here’s why:
Inventory is on the rise, but there’s still an overall shortage of houses for sale (less than a 6-month supply found in a more normal market), so homes are going under contract quickly. In fact, the National Association of Realtors (NAR) Realtors® Confidence Index Survey reports that right now homes are only staying on the market for an average of 27 days. That’s less than one month, an even more accelerated pace from the 36-day trend we saw last spring.The same report also indicates there are more interested buyers than active sellers today, which is one of the big factors driving home prices higher.This power combination provides an ideal environment for sellers aiming to close a quick sale and earn a big return as we wrap up the summer season.
There’s still time to make a move. Let’s get together to determine if selling now is the right decision for your family.
If you’re currently renting and have dreams of owning your own home, it may be a good time to think about your next move. With rent costs rising annually and many helpful down payment assistance programs available, homeownership may be closer than you realize.
According to the 2018 Bank of America Homebuyer Insights Report, 74% of renters plan on buying within the next 5 years, and 38% are planning to buy within the next 2 years.
When those same renters were asked why they disliked renting, 52% said rising rental costs were their top reason. The results of the survey can be seen here:It’s no wonder rising rental costs came in as the top answer. The median asking rent price has risen steadily over the last 30 years, as you can see below.There is a long-standing rule that a household should not spend more than 28% of its income on housing expenses. With nearly half of renters (48%) surveyed already spending more than that, and with their rents likely to rise again, it’s never a bad idea to reconsider your family’s plan and ask yourself if renting is your best angle going forward. When asked why they haven’t purchased a home yet, not having enough saved for a down payment (44%) came in as the top response. The report went on to reveal that nearly half of all respondents believe that “a 20% down payment is required to buy a home.”
The reality is, the need to produce a 20% down payment is one of the biggest misconceptions of homeownership, especially for first-time buyers. That means a large number of renters may be able to buy now, and they don’t even know it.
If you’re one of the many renters who are tired of rising rents but may be confused about what is required to buy in today’s market, let’s get together to determine your path to homeownership.