Evansville and Newburgh Real Estate BlogRecently posted or modified blog postshttps://www.carsonlowryrealestate.com/blog/Copyright CarsonLowryRealEstate.com2021-03-19T08:20:54-07:00tag:carsonlowryrealestate.com,2012-09-20:12521What Is the Strongest Tailwind to Today’s Recovering Economy?<img src="https://assets.site-static.com/userfiles/1890/image/20210317-KCM-Share.png" width="750" height="410" />
Last year started off with a bang. Unemployment was under <a href="https://www.bls.gov/charts/employment-situation/civilian-unemployment-rate.htm">4%</a>, forecasters were giddy with their projections for the economy, and the residential housing market had the strongest January and February activity in over a decade.
Then came the announcement on March 11, 2020, from the World Health Organization declaring COVID-19 a worldwide <a href="https://www.ajmc.com/view/a-timeline-of-covid19-developments-in-2020">pandemic</a>. Two days later, the White House declared it a national emergency. Businesses and schools were forced to close, shelter-in-place mandates were enacted, and the economy came to a screeching halt. As a result, unemployment in this country skyrocketed to <a href="https://www.bls.gov/opub/ted/2020/unemployment-rate-rises-to-record-high-14-point-7-percent-in-april-2020.htm?view_full">14.9%</a>.
A year later, the economy is recovering, and the U.S. has regained more than half of the <a href="https://www.bls.gov/opub/ted/2021/number-of-involuntary-part-time-workers-in-february-2021-down-from-record-highs.htm">jobs</a> that were originally lost. However, some businesses are still closed, and many schools are still struggling to reopen. Despite the past and current challenges, there is one industry that’s proven to be a tailwind helping to counter all of these headwinds to our economy. That industry is housing. Remarkably, the residential real estate market (including existing homes and new construction) has flourished over the last twelve months. <a href="https://www.cnbc.com/2021/01/22/existing-home-sales-in-2020-were-highest-since-in-over-a-decade.html">Sales</a> are up, <a href="https://www.keepingcurrentmatters.com/2021/03/02/home-prices-what-happened-in-2020-what-will-happen-this-year/">prices</a> are appreciating, and more new homes are being <a href="https://www.census.gov/construction/nrs/pdf/newressales.pdf">built</a>. The housing market has been a pillar of strength in an otherwise slowly recovering economy.
How does the real estate market help the economy?
At the beginning of the pandemic, the National Association of Realtors (NAR) released a <a href="https://www.nar.realtor/blogs/economists-outlook/every-home-sale-adds-more-than-88000-to-the-economy-how-do-home-sales-affect-the-economy-in-your">report</a> that explained:
“Real estate has been, and remains, the foundation of wealth building for the middle class and a critical link in the flow of goods, services, and income for millions of Americans. Accounting for nearly 18% of the GDP, real estate is clearly a major driver of the U.S. economy.”
The report calculated the total economic impact of real estate-related industries on the economy as well as the expenditures that resulted from a single home sale. At a national level, their research revealed that a single newly constructed home had an economic impact of $88,416.
Here’s how it breaks down:
<a href="https://files.keepingcurrentmatters.com/wp-content/uploads/2021/03/16105312/20210317-NM-Eng-1.jpg" class="lightbox-added aligncenter"><img loading="lazy" class="aligncenter wp-image-2077246 lazy-loaded" src="https://files.keepingcurrentmatters.com/wp-content/uploads/2021/03/16105312/20210317-NM-Eng-1.jpg" data-lazy-type="image" data-src="https://files.keepingcurrentmatters.com/wp-content/uploads/2021/03/16105312/20210317-NM-Eng-1.jpg" alt="What Is the Strongest Tailwind to Today’s Recovering Economy? | Keeping Current Matters" width="550" height="413" srcset="https://files.keepingcurrentmatters.com/wp-content/uploads/2021/03/16105312/20210317-NM-Eng-1.jpg 1000w, https://files.keepingcurrentmatters.com/wp-content/uploads/2021/03/16105312/20210317-NM-Eng-1-300x225.jpg 300w, https://files.keepingcurrentmatters.com/wp-content/uploads/2021/03/16105312/20210317-NM-Eng-1-768x576.jpg 768w" data-srcset="" sizes="(max-width: 550px) 100vw, 550px" /></a>
The map below shows the impact by <a href="https://www.nar.realtor/reports/state-by-state-economic-impact-of-real-estate-activity">state</a>:<a href="https://files.keepingcurrentmatters.com/wp-content/uploads/2021/03/16105337/20210317-NM-Eng-2.png" class="lightbox-added aligncenter"><img loading="lazy" class="aligncenter wp-image-2077244 lazy-loaded" src="https://files.keepingcurrentmatters.com/wp-content/uploads/2021/03/16105337/20210317-NM-Eng-2.png" data-lazy-type="image" data-src="https://files.keepingcurrentmatters.com/wp-content/uploads/2021/03/16105337/20210317-NM-Eng-2.png" alt="What Is the Strongest Tailwind to Today’s Recovering Economy? | Keeping Current Matters" width="550" height="413" srcset="https://files.keepingcurrentmatters.com/wp-content/uploads/2021/03/16105337/20210317-NM-Eng-2.png 1000w, https://files.keepingcurrentmatters.com/wp-content/uploads/2021/03/16105337/20210317-NM-Eng-2-300x225.png 300w, https://files.keepingcurrentmatters.com/wp-content/uploads/2021/03/16105337/20210317-NM-Eng-2-768x576.png 768w" data-srcset="" sizes="(max-width: 550px) 100vw, 550px" /></a>
The impact of an existing home sale is approximately $40,000.
Real estate has done more for our economic wellbeing than virtually any other industry over the last year. It’s been a beacon of light during a very challenging time in our nation’s history.
Bottom Line
Whether you’re buying a newly constructed home or one that already exists, you’re making a positive economic impact in your local community – and it’s a step toward your homeownership goals as well.2021-03-19T08:15:00-07:002021-03-19T08:20:54-07:00Carson Lowrytag:carsonlowryrealestate.com,2012-09-20:12517To Renovate or Not To Renovate Before You Sell<img src="https://assets.site-static.com/userfiles/1890/image/20210318-KCM-Share.png" width="750" height="410" />
When thinking about selling, homeowners often feel they need to get their house ready with some remodeling to make it more appealing to buyers. However, with so many <a href="https://www.keepingcurrentmatters.com/2021/01/14/why-right-now-may-be-the-time-to-sell-your-house/">buyers</a> competing for available homes right now, renovations may not be as vital as they would be in a more normal market. Here are two things to keep in mind if you’re thinking of selling this season.
1. There aren’t enough homes for sale right now.
A normal market has a 6-month supply of houses for sale, but today’s housing inventory sits far below that benchmark. According to the National Association of Realtors (NAR), there’s only a <a href="https://www.nar.realtor/newsroom/existing-home-sales-tick-up-0-6-in-january">1.9-month</a> supply of homes available today. As a result, buyer competition is high and homes are only on the market for about <a href="https://cdn.nar.realtor/sites/default/files/documents/2021-01-realtors-confidence-index-02-19-2021.pdf">21 days</a>, during which time many receive multiple offers from hopeful buyers.
In a competitive market that’s moving so quickly, it makes sense to sell your house when buyers are scooping homes up as fast as they’re being listed. Spending costly time and money on renovations before you sell might just mean you’ll miss your key window of opportunity. While certain repairs on your house may be important, your best move right now is to work with a real estate advisor to determine which improvements are truly necessary, and which ones are not likely to be deal-breakers for buyers.
Today, many buyers are more willing to take on home improvement projects themselves in order to get the home they’re after, even if it means putting in a little extra work. <a href="https://www.homeadvisor.com/r/wp-content/uploads/2020/12/DP6355-StateOfHomeSpending-2020-R4.pdf">Home Advisor</a> explains:
“When it comes to the number of home improvement projects completed, Gen Z homeowners are leading the pack, completing an average of 3.5 projects. Millennials closely follow Gen Z, taking on an average of 3.3 projects, followed by Gen X at 2.8 projects. Boomers completed an average of 2 projects, and the Silent Generation completed the fewest projects, on average, at 1.8 per household. Compared to 2019, millennials are spending 60% more on home improvement and doing on average 30% more projects.”
In this market, it may be wise to let future homeowners remodel the bathroom or the kitchen to make design decisions that are best for their specific taste and lifestyle. As a seller, your dollars and time might be better spent working on small cosmetic updates, like refreshing some paint and power washing the exterior. Instead of over-investing in your home with upgrades that the buyers may change anyway, work with a real estate professional to determine the key <a href="https://www.keepingcurrentmatters.com/2021/03/05/how-to-prepare-your-house-for-a-winning-sale-this-spring-infographic/">projects</a> that will maximize your listing, without overdoing it.
2. Focus on getting a good return on your investment.
When planning any bigger projects to tackle, you and your real estate agent will want to discuss the potential return on your investment and if those projects are worth the cost. Some homes do need a kitchen or bathroom renovation, roof repairs, or other major work, but definitely not all of them. You might be surprised by how well your house could fair in today’s sellers’ market. <a href="https://www.remodeling.hw.net/cost-vs-value/2020/key-trends-in-the-2020-cost-vs-value-report">Hanley Wood</a> states:
“The 2020 Cost vs. Value report shows a predictable increase in costs for all 22 remodeling projects but a consistent dip in the perceived value of those projects at the time of home sale, as estimated by real-estate professionals in more than 100 metro areas across the U.S. This results in a slight downturn on the return on investment for nearly all projects relative to the trends we saw in last year’s report.”
Ideally, homeowners getting ready to move should try to avoid over-investing in big renovations if they won’t make that money back when they sell their house. According to the 2020 State of Home Spending report from <a href="https://www.homeadvisor.com/r/wp-content/uploads/2020/12/DP6355-StateOfHomeSpending-2020-R4.pdf">Home Advisor</a>:
“The average household spending on home services rose to $13,138, an increase over last year’s survey results, where homeowners who did projects spent $9,081 on average in 2019.”
Before you renovate, contact a local real estate professional to see if it’s the best course of action. You may find out that putting your house on the market as-is will help you sell quickly, and it may result in the best return on your investment. Every home is different, but a conversation with your agent is mission-critical to make sure you make the right moves when selling this season.
Bottom Line
We’re in a strong sellers’ market, and that means you have the <a href="https://www.keepingcurrentmatters.com/2021/02/24/how-much-leverage-do-todays-house-sellers-have/">leverage</a> to sell your house on your terms. Talk with us today to determine if renovating is really the best way to spend your time and money before you sell.2021-03-18T08:05:00-07:002021-03-18T08:07:01-07:00Carson Lowrytag:carsonlowryrealestate.com,2012-09-20:12515What Is the #1 Financial Benefit of Homeownership?<img src="https://assets.site-static.com/userfiles/1890/image/20210316-KCM-Share.png" width="750" height="410" />
There are many financial and non-financial benefits of homeownership, and the greatest financial one is wealth creation. Homeownership has always been the first rung on the ladder that leads to forming household wealth. As Freddie Mac <a href="https://myhome.freddiemac.com/owning/equity-and-appreciation.html">explains</a>:
“Homeownership has cemented its role as part of the American Dream, providing families with a place that is their own and an avenue for building wealth over time. This ‘wealth’ is built, in large part, through the creation of equity…Building equity through your monthly principal payments and appreciation is a critical part of homeownership that can help you create financial stability.”
Odeta Kushi, Deputy Chief Economist at First American, also <a href="https://blog.firstam.com/economics/homeownership-remains-strongly-linked-to-wealth-building">notes</a>:
“The wealth-building power of homeownership shows that home is not only where your heart is, but also where your wealth is…For the majority of households that transition into homeownership, the most recent data reinforces that housing is one of the biggest positive drivers of wealth creation.”
Last week, CoreLogic released their latest <a href="https://www.corelogic.com/insights-download/homeowner-equity-report.aspx">Homeowner Equity Insights Report</a>, which reveals the surge in wealth created over the last twelve months through increased home equity. The report makes five key points:
Roughly 38% of all homes are mortgage-free
The average equity gain of mortgaged homes in the last year was $26,300
The current average equity of mortgaged homes is greater than $200,000
There was a 16.9% increase in total homeowner equity
Total homeowner equity reached over $1.5 trillion
Here’s a map that shows the equity gains by state:<a href="https://files.keepingcurrentmatters.com/wp-content/uploads/2021/03/15121450/20210316-NM-Eng-1.jpg" class="lightbox-added aligncenter"><img loading="lazy" class="aligncenter wp-image-2077225 lazy-loaded" src="https://files.keepingcurrentmatters.com/wp-content/uploads/2021/03/15121450/20210316-NM-Eng-1.jpg" data-lazy-type="image" data-src="https://files.keepingcurrentmatters.com/wp-content/uploads/2021/03/15121450/20210316-NM-Eng-1.jpg" alt="What Is the #1 Financial Benefit of Homeownership? | Keeping Current Matters" width="550" height="413" srcset="https://files.keepingcurrentmatters.com/wp-content/uploads/2021/03/15121450/20210316-NM-Eng-1.jpg 1000w, https://files.keepingcurrentmatters.com/wp-content/uploads/2021/03/15121450/20210316-NM-Eng-1-300x225.jpg 300w, https://files.keepingcurrentmatters.com/wp-content/uploads/2021/03/15121450/20210316-NM-Eng-1-768x576.jpg 768w" data-srcset="" sizes="(max-width: 550px) 100vw, 550px" /></a>
Increasing equity is giving homeowners the power to better manage the challenges of the pandemic, especially for those spending more time at home. In the report, Frank Nothaft, Chief Economist for CoreLogic, explains:
“This equity growth has enabled many families to finance home remodeling, such as adding an office or study, further contributing to last year’s record level in home improvement spending.”
The financial advantage homeowners have has not gone unnoticed. In the same report, Frank Martell, President and CEO of CoreLogic, states:
“This growing bank of personal wealth that homeownership affords was noticed by many but in particular for first-time buyers who want a piece of the cake.”
Increasing wealth benefits more than just homeowners.
Last year, the Rosen Consulting Group released a <a href="https://www.nar.realtor/sites/default/files/documents/white-paper-homeownership-incentivized-by-federal-system-02-06-2020.pdf">report</a> outlining the benefits of homeownership. In that report, they explained what an increase in net worth – which they call the “wealth effect” – means to the economy:
“In economic literature, the wealth effect is a term used to describe the fact that individuals have a tendency to increase their spending habits when their actual or perceived wealth increases. For homeowners, the latent savings achieved by building equity in their home and the growth in home values over time both contribute to increased net worth. Through the wealth effect, this in turn translates to households having a greater ability and willingness to spend money across a wide range of other types of goods and services that spur business activity and provide a positive multiplier effect that creates jobs and income throughout the economy.”
Bottom Line
Homeownership builds wealth through equity, and this creates a positive impact for homeowners and their communities. Get in touch with us if you’re ready to invest in a home of your own.2021-03-17T06:51:00-07:002021-03-17T06:54:05-07:00Carson Lowrytag:carsonlowryrealestate.com,2012-09-20:12512How to Be a Competitive Buyer in Today’s Housing Market [INFOGRAPHIC]<img src="https://assets.site-static.com/userfiles/1890/image/20210312-NM.png" width="1300" height="2516" />
Some Highlights
With so few houses for sale today, it’s important to be prepared when you’re ready to buy a home.
Meeting with your lender early, knowing your must-haves and nice-to-haves, preparing for a bidding war, and keeping your emotions in check are all ways to gain confidence in the homebuying process.
If you’re looking for an expert guide to help you navigate today’s lightning-fast housing market, connect with us today.
2021-03-12T09:14:00-07:002021-03-12T09:17:22-07:00Carson Lowrytag:carsonlowryrealestate.com,2012-09-20:12509Will the Housing Market Bloom This Spring?<img src="https://assets.site-static.com/userfiles/1890/image/20210311-KCM-Share.png" width="750" height="410" />
Spring is almost here, and many are wondering what it will bring for the housing market. Even though the pandemic continues on, it’s certain to be very different from the spring we experienced at this time last year. Here’s what a few industry experts have to say about the housing market and how it will bloom this season.
<a href="https://www.realtor.com/research/weekly-housing-trends-view-data-week-feb-13-2021/">Danielle Hale, Chief Economist, realtor.com</a>:
“Despite early weakness, we expect to see new listings grow in March and April as they traditionally do heading into spring, and last year’s extraordinarily low new listings comparison point will mean year over year gains. One other potential bright spot for would-be homebuyers, new construction, which has risen at a year over year pace of 20% or more for the last few months, will provide additional for-sale inventory relief.”<br />
<a href="https://www.realtor.com/news/trends/vaccines-housing-market/">Ali Wolf, Chief Economist, Zonda</a>:
“Some people will feel comfortable listing their home during the first half of 2021. Others will want to wait until the vaccines are widely distributed. This suggests more inventory will be for sale in late 2021 and into the spring selling season in 2022.”<br />
<a href="https://freddiemac.gcs-web.com/node/22241/pdf">Freddie Mac:</a>
“Since reaching a low point in January, mortgage rates have risen by more than 30 basis points… However, the rise in mortgage rates over the next couple of months is likely to be more muted in comparison to the last few weeks, and we expect a strong spring sales season.”
<a href="https://blog.firstam.com/economics/house-prices-are-hot-but-is-housing-overvalued">Mark Fleming, Chief Economist, First American</a>:
“As the housing market heads into the spring home buying season, the ongoing supply and demand imbalance all but assures more house price growth…Many find it hard to believe, but housing is actually undervalued in most markets and the gap between house-buying power and sale prices indicates there’s room for further house price growth in the months to come.”
Bottom Line
The experts are very optimistic about the housing market right now. If you pressed pause on your real estate plans over the winter, reach out to us to determine how you can re-engage in the homebuying process this spring.2021-03-11T07:23:00-07:002021-03-11T07:24:40-07:00Carson Lowrytag:carsonlowryrealestate.com,2012-09-20:125086 Simple Graphs Proving This Is Nothing Like Last Time<img src="https://assets.site-static.com/userfiles/1890/image/20210310-KCM-Share.png" width="750" height="410" />
Last March, many involved in the residential housing industry feared the market would be crushed under the pressure of a once-in-a-lifetime pandemic. Instead, real estate had one of its best years ever. Home sales and prices were both up substantially over the year before. 2020 was so strong that many now fear the market’s exuberance mirrors that of the last housing boom and, as a result, we’re now headed for another crash.
However, there are many reasons this real estate market is nothing like 2008. Here are six visuals to show the dramatic differences.
1. Mortgage standards are nothing like they were back then.
During the housing bubble, it was difficult not to get a mortgage. Today, it’s tough to qualify. Recently, the Urban Institute released their latest <a href="https://www.urban.org/policy-centers/housing-finance-policy-center/projects/housing-credit-availability-index">Housing Credit Availability Index</a> (HCAI) which “measures the percentage of owner-occupied home purchase loans that are likely to default—that is, go unpaid for more than 90 days past their due date. A lower HCAI indicates that lenders are unwilling to tolerate defaults and are imposing tighter lending standards, making it harder to get a loan. A higher HCAI indicates that lenders are willing to tolerate defaults and are taking more risks, making it easier to get a loan.”
The index shows that lenders were comfortable taking on high levels of risk during the housing boom of 2004-2006. It also reveals that today, the HCAI is under 5 percent, which is the lowest it’s been since the introduction of the index. The report explains:
“Significant space remains to safely expand the credit box. If the current default risk was doubled across all channels, risk would still be well within the pre-crisis standard of 12.5 percent from 2001 to 2003 for the whole mortgage market.”
<a href="https://files.keepingcurrentmatters.com/wp-content/uploads/2021/03/08150656/20210310-NM-Eng-1.png" class="lightbox-added aligncenter"><img loading="lazy" class="aligncenter wp-image-2077102 lazy-loaded" src="https://files.keepingcurrentmatters.com/wp-content/uploads/2021/03/08150656/20210310-NM-Eng-1.png" data-lazy-type="image" data-src="https://files.keepingcurrentmatters.com/wp-content/uploads/2021/03/08150656/20210310-NM-Eng-1.png" alt="6 Simple Graphs Proving This Is Nothing Like Last Time | Keeping Current Matters" width="550" height="413" srcset="https://files.keepingcurrentmatters.com/wp-content/uploads/2021/03/08150656/20210310-NM-Eng-1.png 1000w, https://files.keepingcurrentmatters.com/wp-content/uploads/2021/03/08150656/20210310-NM-Eng-1-300x225.png 300w, https://files.keepingcurrentmatters.com/wp-content/uploads/2021/03/08150656/20210310-NM-Eng-1-768x576.png 768w" data-srcset="" sizes="(max-width: 550px) 100vw, 550px" /></a>
This is nothing like the last time.
2. Prices aren’t soaring out of control.
Below is a graph showing annual home price <a href="https://www.blackknightinc.com/black-knights-december-2019-mortgage-monitor-2/">appreciation</a> over the past four years compared to the four years leading up to the height of the housing bubble. Though price appreciation was quite strong <a href="https://www.corelogic.com/insights-download/home-price-index.aspx">last year</a>, it’s nowhere near the rise in prices that preceded the crash.<a href="https://files.keepingcurrentmatters.com/wp-content/uploads/2021/03/08150710/20210310-NM-Eng-2.png" class="lightbox-added aligncenter"><img loading="lazy" class="aligncenter wp-image-2077101 lazy-loaded" src="https://files.keepingcurrentmatters.com/wp-content/uploads/2021/03/08150710/20210310-NM-Eng-2.png" data-lazy-type="image" data-src="https://files.keepingcurrentmatters.com/wp-content/uploads/2021/03/08150710/20210310-NM-Eng-2.png" alt="6 Simple Graphs Proving This Is Nothing Like Last Time | Keeping Current Matters" width="550" height="413" srcset="https://files.keepingcurrentmatters.com/wp-content/uploads/2021/03/08150710/20210310-NM-Eng-2.png 1000w, https://files.keepingcurrentmatters.com/wp-content/uploads/2021/03/08150710/20210310-NM-Eng-2-300x225.png 300w, https://files.keepingcurrentmatters.com/wp-content/uploads/2021/03/08150710/20210310-NM-Eng-2-768x576.png 768w" data-srcset="" sizes="(max-width: 550px) 100vw, 550px" /></a>
There’s a stark difference between these two periods of time. Normal appreciation is 3.8%. So, while current appreciation is higher than the historic norm, it’s certainly not accelerating out of control as it did in the early 2000s.
This is nothing like the last time.
3. We don’t have a surplus of homes on the market. We have a shortage.
The months’ supply of inventory needed to sustain a normal real estate market is approximately six months. Anything more than that is an overabundance and will causes prices to depreciate. Anything less than that is a shortage and will lead to continued appreciation. As the next graph shows, there were too many homes for sale in 2007, and that caused prices to tumble. Today, there’s a shortage of <a href="https://www.nar.realtor/research-and-statistics/housing-statistics/existing-home-sales">inventory</a>, which is causing an acceleration in home values.<a href="https://files.keepingcurrentmatters.com/wp-content/uploads/2021/03/08150723/20210310-NM-Eng-3.png" class="lightbox-added aligncenter"><img loading="lazy" class="aligncenter wp-image-2077100 lazy-loaded" src="https://files.keepingcurrentmatters.com/wp-content/uploads/2021/03/08150723/20210310-NM-Eng-3.png" data-lazy-type="image" data-src="https://files.keepingcurrentmatters.com/wp-content/uploads/2021/03/08150723/20210310-NM-Eng-3.png" alt="6 Simple Graphs Proving This Is Nothing Like Last Time | Keeping Current Matters" width="550" height="413" srcset="https://files.keepingcurrentmatters.com/wp-content/uploads/2021/03/08150723/20210310-NM-Eng-3.png 1000w, https://files.keepingcurrentmatters.com/wp-content/uploads/2021/03/08150723/20210310-NM-Eng-3-300x225.png 300w, https://files.keepingcurrentmatters.com/wp-content/uploads/2021/03/08150723/20210310-NM-Eng-3-768x576.png 768w" data-srcset="" sizes="(max-width: 550px) 100vw, 550px" /></a>
This is nothing like the last time.
4. New construction isn’t making up the difference in inventory needed.
Some may think new construction is filling the void. However, if we compare today to right before the housing crash, we can see that an overabundance of newly built <a href="http://www.census.gov/construction/nrc/xls/co_cust.xls">homes</a> was a major challenge then, but isn’t now.<a href="https://files.keepingcurrentmatters.com/wp-content/uploads/2021/03/08150737/20210310-NM-Eng-4.png" class="lightbox-added aligncenter"><img loading="lazy" class="aligncenter wp-image-2077099 lazy-loaded" src="https://files.keepingcurrentmatters.com/wp-content/uploads/2021/03/08150737/20210310-NM-Eng-4.png" data-lazy-type="image" data-src="https://files.keepingcurrentmatters.com/wp-content/uploads/2021/03/08150737/20210310-NM-Eng-4.png" alt="6 Simple Graphs Proving This Is Nothing Like Last Time | Keeping Current Matters" width="550" height="413" srcset="https://files.keepingcurrentmatters.com/wp-content/uploads/2021/03/08150737/20210310-NM-Eng-4.png 1000w, https://files.keepingcurrentmatters.com/wp-content/uploads/2021/03/08150737/20210310-NM-Eng-4-300x225.png 300w, https://files.keepingcurrentmatters.com/wp-content/uploads/2021/03/08150737/20210310-NM-Eng-4-768x576.png 768w" data-srcset="" sizes="(max-width: 550px) 100vw, 550px" /></a>
This is nothing like the last time.
5. Houses aren’t becoming too expensive to buy.
The affordability formula has three components: the price of the home, the wages earned by the purchaser, and the mortgage rate available at the time. Fifteen years ago, prices were high, wages were low, and mortgage rates were over 6%. Today, prices are still high. Wages, however, have increased, and the mortgage rate is about 3%. That means the average homeowner pays less of their monthly income toward their mortgage payment than they did back then. Here’s a chart showing that difference:<a href="https://files.keepingcurrentmatters.com/wp-content/uploads/2021/03/08150749/20210310-NM-Eng-5.png" class="lightbox-added aligncenter"><img loading="lazy" class="aligncenter wp-image-2077098 lazy-loaded" src="https://files.keepingcurrentmatters.com/wp-content/uploads/2021/03/08150749/20210310-NM-Eng-5.png" data-lazy-type="image" data-src="https://files.keepingcurrentmatters.com/wp-content/uploads/2021/03/08150749/20210310-NM-Eng-5.png" alt="6 Simple Graphs Proving This Is Nothing Like Last Time | Keeping Current Matters" width="550" height="413" srcset="https://files.keepingcurrentmatters.com/wp-content/uploads/2021/03/08150749/20210310-NM-Eng-5.png 1000w, https://files.keepingcurrentmatters.com/wp-content/uploads/2021/03/08150749/20210310-NM-Eng-5-300x225.png 300w, https://files.keepingcurrentmatters.com/wp-content/uploads/2021/03/08150749/20210310-NM-Eng-5-768x576.png 768w" data-srcset="" sizes="(max-width: 550px) 100vw, 550px" /></a>
As Mark Fleming, Chief Economist for First American, <a href="https://blog.firstam.com/economics/house-prices-are-hot-but-is-housing-overvalued">explains</a>:
“Lower mortgage interest rates and rising incomes correspond with higher house prices as home buyers can afford to borrow and buy more. If housing is appropriately valued, house-buying power should equal or outpace the median sale price of a home. Looking back at the bubble years, house prices exceeded house-buying power in 2006, but today house-buying power is nearly twice as high as the median sale price nationally.”
This is nothing like the last time.
6. People are equity rich, not tapped out.
In the run-up to the housing bubble, homeowners were using their homes as personal ATM machines. Many immediately <a href="http://www.freddiemac.com/research/datasets/refinance-stats/index.page">withdrew</a> their equity once it built up, and they learned their lesson in the process. Prices have risen nicely over the last few years, leading to over 50% of homes in the country having greater than 50% equity – and owners have not been tapping into it like the last time. Here’s a table comparing the equity withdrawal over the last three years compared to 2005, 2006, and 2007. Homeowners have cashed out almost $500 billion dollars less than before:<a href="https://files.keepingcurrentmatters.com/wp-content/uploads/2021/03/08150802/20210310-NM-Eng-6.png" class="lightbox-added aligncenter"><img loading="lazy" class="aligncenter wp-image-2077097 lazy-loaded" src="https://files.keepingcurrentmatters.com/wp-content/uploads/2021/03/08150802/20210310-NM-Eng-6.png" data-lazy-type="image" data-src="https://files.keepingcurrentmatters.com/wp-content/uploads/2021/03/08150802/20210310-NM-Eng-6.png" alt="6 Simple Graphs Proving This Is Nothing Like Last Time | Keeping Current Matters" width="550" height="413" srcset="https://files.keepingcurrentmatters.com/wp-content/uploads/2021/03/08150802/20210310-NM-Eng-6.png 1000w, https://files.keepingcurrentmatters.com/wp-content/uploads/2021/03/08150802/20210310-NM-Eng-6-300x225.png 300w, https://files.keepingcurrentmatters.com/wp-content/uploads/2021/03/08150802/20210310-NM-Eng-6-768x576.png 768w" data-srcset="" sizes="(max-width: 550px) 100vw, 550px" /></a>
During the crash, home values began to fall, and sellers found themselves in a negative equity situation (where the amount of the mortgage they owed was greater than the value of their home). Some decided to walk away from their homes, and that led to a wave of distressed property listings (foreclosures and short sales), which sold at huge discounts, thus lowering the value of other homes in the area. With the average home equity now standing at over <a href="https://www.corelogic.com/insights-download/homeowner-equity-report.aspx">$190,000</a>, this won’t happen today.
This is nothing like the last time.
Bottom Line
If you’re concerned that we’re making the same mistakes that led to the housing crash, take a look at the charts and graphs above to help alleviate your fears.2021-03-10T07:58:00-07:002021-03-10T08:03:45-07:00Carson Lowrytag:carsonlowryrealestate.com,2012-09-20:12506Should You Buy a House in 2021?<img src="https://assets.site-static.com/userfiles/1890/image/Should_You_Buy_a_House_in_2021_.png" width="750" height="410" />
Whether you're buying a house to live in yourself, flip, or retain as an income property, it's a big decision to make. And this year may be particularly challenging on the homebuying front. Here's what you need to know.
Mortgage rates remain low
First, let's talk about mortgage rates. Despite a recent uptick, rates for all fixed-loan products continue to sit near historic lows. As of this writing, the average 30-year loan can be had at 2.839%, while rates are averaging 2.613% for the 20-year loan and 2.296% for the 15-year.
These rates are, in a word, outstanding. And they won't last forever, though chances are, they'll stay relatively low throughout 2021, especially with the economy starting off the year in a continued sluggish state. Even if the average 30-year mortgage hits 3% later on in the year, it will still be an incredibly appealing time to lock in a home loan.
Housing inventory is limited
As of December 2020, housing inventory stood at just 1.07 million units for sale. That's a 23% year-over-year decline. It also represents a mere 1.9-month supply, which is well below the threshold needed for an equalized housing market.
Right now, sellers have a clear upper hand due to limited listings, and buyers are paying the price. In December, the median price of an existing home sold was $309,800. That's a 12.9% climb from a year prior, and also, the highest median price for December on record.
The fact that homes are flying off the market isn't helping buyers, either. In December, it took an average of just 21 to sell a listed property.
Should you buy a home in 2021?
Whether it pays to pay a home this year largely boils down to your financial circumstances and what you intend to do with that property.
If you're buying an <a href="https://www.fool.com/millionacres/real-estate-investing/articles/should-you-enter-a-bidding-war/">income property</a>, there's huge demand for affordable rentals right now, so it could be worth paying a premium to add units to your portfolio. Similarly, house-flipping profits recently reached a <a href="https://www.fool.com/millionacres/real-estate-investing/articles/house-flipping-profits-reach-20-year-high/">20-year high</a>, so now's a good time to get in on that game.
If you're thinking of buying a home to live in, not necessarily as an investment, then you'll need to consider your financial situation. Right now, you'll pay more for a home than normal, so you'll need the cash reserves to support a higher down payment. You may also need to settle for a home that doesn't check off every box on your wish list given the limited number of properties that are available for sale.
Of course, as the year progresses, inventory could open up, and home prices could start to come down. It could also pay to plan to buy once coronavirus vaccines are widely rolled out, at which point it should be easier to attend open houses and see homes in person.
The big question mark on the homebuying front this year will likely be mortgage interest rates, but most industry experts predict that they'll hold relatively steady as the year progresses. If you're a strong borrower -- meaning you have a low <a href="https://www.fool.com/millionacres/real-estate-basics/articles/how-calculate-your-debt-income-ratio/">debt-to-income ratio</a> and a respectable credit score -- you're likely to score an attractive rate, which will help compensate for a higher home purchase price should you be forced to pay one.
The bottom line
Buying a home this year is a mixed bag, whether you're an investor or are looking to put a roof over your head. While you might pay more for a home in 2021, you might also score a lower interest rate on a mortgage than you normally would. Assess your own finances and goals to see if buying is right for you, and if you are going to buy a property to hold onto (not flip), make sure you're an optimal mortgage candidate. The primary upside to buying this year is snagging a discounted home loan rate, so be certain you're actually in a position to get one.2021-03-09T08:09:00-07:002021-03-09T08:11:55-07:00Carson Lowrytag:carsonlowryrealestate.com,2012-09-20:125035 Reasons to Sell Your House This Spring<img src="https://assets.site-static.com/userfiles/1890/image/20210308-KCM-Share.png" width="750" height="410" />
When selling a house, most homeowners hope for a quick and profitable transaction that puts them in a position to make a great move. If you’re waiting for the best time to win as a seller, the market is calling your name this spring. Here are five reasons why this is the perfect time to sell your house if you’re ready.
1. There’s high demand from homebuyers.
Buyer demand is strong right now, and buyers are active in the market. ShowingTime, which tracks the average number of buyer showings on residential properties, recently announced that buyer showings are up 51.5% compared to this time last year. Daniil Cherkasskiy, Chief Analytics Officer at ShowingTime, <a href="https://www.showingtime.com/blog/january-2021-showing-index-results/">notes</a>:
“As anticipated, demand for real estate remains elevated and continues to be affected by low levels of inventory…On average, each home is getting 50 percent or more requests this year compared to January of last year. As we head into the busy season, it’s likely we’ll push into even more extreme territory until the supply starts catching up with demand.”
When your house is positioned to get a ton of attention from competitive buyers, you’re in the best spot possible as the seller.
2. There aren’t enough houses for sale.
Purchaser demand is so high, the market is <a href="https://www.keepingcurrentmatters.com/2021/02/22/where-have-all-the-houses-gone/">running out</a> of available houses for sale. Recently, realtor.com <a href="https://www.realtor.com/research/february-2021-data/">reported</a>:
“Nationally, the inventory of homes for sale in February decreased by 48.6% over the past year, a higher rate of decline compared to the 42.6% drop in January. This amounted to 496,000 fewer homes for sale compared to February of last year.”
The National Association of Realtors (NAR) also <a href="https://www.nar.realtor/research-and-statistics/housing-statistics/existing-home-sales">reveals</a> that, while home sales are skyrocketing, the inventory of existing homes for sale is continuing to drop dramatically. Houses are essentially selling as fast as they’re hitting the market – in fact, NAR <a href="https://www.nar.realtor/research-and-statistics/research-reports/realtors-confidence-index">reports</a> that the average house is on the market for only 21 days.
It’s this imbalance between high buyer demand and a low supply of houses for sale that gives sellers such an advantage. A seller will always negotiate the best deal when demand is high and supply is low. That’s exactly what’s happening in the real estate market today.
3. You have a lot of leverage in today’s market.
Clearly, many more people are interested in buying than selling this spring, creating the ultimate <a href="https://www.keepingcurrentmatters.com/2021/02/26/its-a-sellers-market-infographic/">sellers’ market</a>. When this happens, homeowners in a position to sell have the upper hand in negotiations.
According to NAR, agents are <a href="https://cdn.nar.realtor/sites/default/files/documents/2021-01-realtors-confidence-index-02-19-2021.pdf">reporting</a> an average of 3.7 offers per house and an increase in bidding wars. As a seller, this means the ball is in your court – so much so that you can use your <a href="https://www.keepingcurrentmatters.com/2021/02/24/how-much-leverage-do-todays-house-sellers-have/">leverage</a> to negotiate the best possible contract. Demand is there, and now is the perfect time to sell for the most favorable terms.
4. It’s a great way to use your home equity.
According to the latest <a href="https://www.corelogic.com/insights-download/homeowner-equity-report.aspx">data</a> from CoreLogic, as of the third quarter of 2020, the average homeowner gained $17,000 in equity over the past year, and that number continues to grow as <a href="https://www.keepingcurrentmatters.com/2021/03/02/home-prices-what-happened-in-2020-what-will-happen-this-year/">home values</a> appreciate. <a href="https://www.keepingcurrentmatters.com/2021/02/17/3-ways-home-equity-can-have-a-major-impact-on-your-life/">Equity</a> is a type of forced savings that grows during your time as a homeowner and can be put toward bigger goals like buying your next dream home.
Mark Fleming, Chief Economist at First American, <a href="https://blog.firstam.com/economics/housing-market-potential-reaches-highest-level-since-2007">notes</a>:
“As homeowners gain equity in their homes, they are more likely to consider using that equity to purchase a larger or more attractive home – the wealth effect of rising equity. In today’s housing market, fast rising demand against the limited supply of homes for sale has resulted in continued house price appreciation.”
5. It’s a chance to find a home that meets your needs.
So much has changed over the past year, including what many of us need in a home. Spending extra time where we currently live is enabling many of us to re-evaluate homeownership and what we find most important in a home.
Whether it’s a house that has the features suited to working remotely, space for virtual or hybrid schooling, a home gym or theater, or something else, selling this spring gives you a chance to make a move and <a href="https://www.keepingcurrentmatters.com/2021/02/25/are-there-going-to-be-more-homes-to-buy-this-year/">find</a> the home of your dreams.
Bottom Line
Today’s housing market belongs to the sellers. If you’ve considered making a move but have been waiting for the right market conditions, your wait may be over. Contact us today so you’ll be positioned to win when you sell your house this spring.2021-03-08T07:50:00-07:002021-03-08T07:53:07-07:00Carson Lowrytag:carsonlowryrealestate.com,2012-09-20:12498Is It a Good Time to Sell My House?<img src="https://assets.site-static.com/userfiles/1890/image/20210304-KCM-Share.png" width="750" height="410" />
Last year, many homeowners thought twice about selling their houses due to the onset of the health crisis. This year, however, homeowners are beginning to regain their confidence when it comes to selling <a href="https://www.keepingcurrentmatters.com/2020/11/13/tips-to-sell-your-house-safely-right-now-infographic/">safely</a>. The latest Home Purchase Sentiment Index (<a href="https://www.fanniemae.com/media/38211/display">HPSI</a>) by Fannie Mae shows that 57% of consumers believe now is a good time to sell.
Doug Duncan, Vice President and Chief Economist at Fannie Mae, <a href="https://www.fanniemae.com/research-and-insights/surveys/national-housing-survey">explains</a>:
“Overall, the index’s monthly increase was driven largely by a substantial jump in the share of consumers reporting that it’s a good time to sell a home, with many citing favorable mortgage rates, high home prices, and low housing inventory as their primary rationale.”
Normally, spring is the busiest season in the housing market – the time when many homeowners decide to list their houses. While this is obviously not a normal year since the pandemic is still very much upon us, experts are optimistic that consumer positivity around selling will lead to more homeowners making moves this year. Duncan continues to say:
“We will pay close attention to see if this newfound optimism develops into a trend.”
What does this mean if you’re thinking of selling your house?
The fact that there are so few houses available for sale today is one driver that’s encouraging consumers to think more positively about selling. The National Association of Realtors (NAR) <a href="https://www.nar.realtor/newsroom/existing-home-sales-tick-up-0-6-in-january">states</a>:
“Total housing inventory at the end of January amounted to 1.04 million units, down 1.9% from December and down 25.7% from one year ago (1.40 million).”
With so few homes available to buy, your house will be more likely to rise to the top of an eager purchaser’s wish list in this competitive market. Today’s high buyer <a href="https://www.keepingcurrentmatters.com/2021/02/22/where-have-all-the-houses-gone/">activity</a> is creating upward pressure on home <a href="https://www.keepingcurrentmatters.com/2021/03/02/home-prices-what-happened-in-2020-what-will-happen-this-year/">prices</a> and more multiple-offer scenarios. According to the <a href="https://cdn.nar.realtor/sites/default/files/documents/2021-01-realtors-confidence-index-02-19-2021.pdf">Realtors Confidence Index Survey</a> from NAR, the average home for sale is receiving 3.7 offers today, up from 2.3 offers just one year ago. This makes selling even more enticing.
In this kind of <a href="https://www.keepingcurrentmatters.com/2021/02/26/its-a-sellers-market-infographic/">sellers’ market</a>, you have a huge <a href="https://www.keepingcurrentmatters.com/2021/02/24/how-much-leverage-do-todays-house-sellers-have/">advantage</a> in the process. And here’s another win – you can also use your <a href="https://www.keepingcurrentmatters.com/2021/01/06/the-importance-of-home-equity-in-building-wealth/">equity</a> toward a down payment on a new home when you move.
Wondering where you’ll go if you try to move while it’s so challenging to find a home to buy? Well, in many areas, there are more homes available at the higher end of the <a href="https://www.keepingcurrentmatters.com/2021/02/10/the-luxury-market-is-attracting-buyers-in-2021/">market</a>, so finding a move-up home may be less of an issue if you’re ready to search for your dream home this spring.
Bottom Line
If you pressed pause on selling your house last year, now may be the best time to put your plans back into motion while inventory is so low. Contact us today to get the process started.2021-03-04T07:34:00-07:002021-03-04T07:39:34-07:00Carson Lowrytag:carsonlowryrealestate.com,2012-09-20:12497How Smart Is It to Buy a Home Today?<img src="https://assets.site-static.com/userfiles/1890/image/20210303-KCM-Share.png" width="750" height="410" />
Whether you’re buying your first home or selling your current house, if your needs are changing and you think you need to move, the decision can be complicated. You may have to take personal or professional considerations into account, and only you can judge what impact those factors should have on your desire to move.
However, there’s one category that provides a simple answer. When deciding to buy now or wait until next year, the financial aspect of the purchase is easy to evaluate. You just need to ask yourself two questions:
Do I think home values will be higher a year from now?
Do I think mortgage rates will be higher a year from now?
From a purely financial standpoint, if the answer is ‘yes’ to either question, you should strongly consider buying now. If the answer to both questions is ‘yes,’ you should definitely buy now.
Nobody can guarantee what home values or mortgage rates will be by the end of this year. The experts, however, seem certain the answer to both questions above is a resounding ‘yes.’ Mortgage rates are expected to <a href="https://www.keepingcurrentmatters.com/2021/02/18/will-low-mortgage-rates-continue-through-2021/">rise</a> and home values are expected to <a href="https://www.keepingcurrentmatters.com/2021/03/02/home-prices-what-happened-in-2020-what-will-happen-this-year/">appreciate</a> rather nicely.
What does this mean to you?
Let’s look at how waiting would impact your financial situation. Here are the assumptions made for this example:
The experts are right – mortgage rates will be 3.18% at the end of the year
The experts are right – home values will appreciate by 5.9%
You want to buy a home valued at $350,000 today
You decide on a 10% down payment
<a href="https://files.keepingcurrentmatters.com/wp-content/uploads/2021/03/02132658/20210303-NM-Eng-1.png" class="lightbox-added aligncenter"><img loading="lazy" class="aligncenter wp-image-2077022 lazy-loaded" src="https://files.keepingcurrentmatters.com/wp-content/uploads/2021/03/02132658/20210303-NM-Eng-1.png" data-lazy-type="image" data-src="https://files.keepingcurrentmatters.com/wp-content/uploads/2021/03/02132658/20210303-NM-Eng-1.png" alt="How Smart Is It to Buy a Home Today? | Keeping Current Matters" width="550" height="413" srcset="https://files.keepingcurrentmatters.com/wp-content/uploads/2021/03/02132658/20210303-NM-Eng-1.png 1000w, https://files.keepingcurrentmatters.com/wp-content/uploads/2021/03/02132658/20210303-NM-Eng-1-300x225.png 300w, https://files.keepingcurrentmatters.com/wp-content/uploads/2021/03/02132658/20210303-NM-Eng-1-768x576.png 768w" data-srcset="" sizes="(max-width: 550px) 100vw, 550px" /></a>
Here’s the financial impact of waiting:
You pay an extra $20,650 for the house
You need an additional $2,065 for a down payment
You pay an extra $116/month in your mortgage payment ($1,392 additional per year)
You don’t gain the $20,650 increase in wealth through equity build-up
Bottom Line
There are many things to consider when buying a home. However, from a purely financial aspect, if you find a home that meets your needs, buying now makes much more sense than buying next year.2021-03-03T09:36:00-07:002021-03-03T09:44:45-07:00Carson Lowrytag:carsonlowryrealestate.com,2012-09-20:12494Home Prices: What Happened in 2020? What Will Happen This Year?<img src="https://assets.site-static.com/userfiles/1890/image/20210302-KCM-Share.png" width="750" height="410" />
The real estate market was on fire during the second half of 2020. Buyer demand was way up, and the supply of homes available for sale hit record lows. The price of anything is determined by the supply and demand ratio, so home prices skyrocketed last year. Dr. Lynn Fisher, Deputy Director of the Federal Housing Finance Agency (FHFA) Division of Research and Statistics, <a href="https://www.fhfa.gov/AboutUs/Reports/Pages/US-House-Price-Index-Report-2020-Q4.aspx">explains</a>:
“House prices nationwide recorded the largest annual and quarterly increase in the history of the FHFA Home Price Index. Low mortgage rates, pent up demand from homebuyers, and a limited housing supply propelled every region of the country to experience faster growth in 2020 compared to a year ago despite the pandemic.”
Here are the year-end home price appreciation numbers from the FHFA and two other prominent pricing indexes:
Federal Housing Finance Agency <a href="https://www.fhfa.gov/AboutUs/Reports/Pages/US-House-Price-Index-Report-2020-Q4.aspx">House Price Index Report</a>: 10.8%
CoreLogic <a href="https://www.corelogic.com/insights-download/home-price-index.aspx">Home Price Insights</a>: 9.2%
S&P Case-Shiller <a href="https://www.spglobal.com/spdji/en/documents/indexnews/announcements/20210223-1321360/1321360_cshomeprice-release-0223.pdf">U.S. National Home Price Index</a>: 10.4%
The past year was truly a remarkable time for homeowners as prices appreciated substantially. Lawrence Yun, Senior Economist at the National Association of Realtors (NAR), <a href="https://www.thedenverchannel.com/news/national/soaring-housing-prices-during-pandemic-may-point-to-split-economic-recovery">reveals</a>:
“A typical homeowner in 2020, just by being a homeowner, would have accumulated around $24,000 in housing wealth.”
What will happen with home prices this year?
Many experts believe buyer demand will soften somewhat as mortgage rates are poised to <a href="https://www.keepingcurrentmatters.com/2021/02/23/the-reason-mortgage-rates-are-projected-to-increase-and-what-it-means-for-you/">bump up</a> slightly. Some also believe the inventory challenge will ease as <a href="https://www.keepingcurrentmatters.com/2021/02/25/are-there-going-to-be-more-homes-to-buy-this-year/">more listings</a> come to market this year.
Based on this, most forecasters anticipate we’ll see strong appreciation in 2021 – but not as strong as last year. Here are seven prominent groups and their projections:<a href="https://files.keepingcurrentmatters.com/wp-content/uploads/2021/03/01145808/20210302-NM-Eng-1.png" class="lightbox-added aligncenter"><img loading="lazy" class="aligncenter wp-image-2077016 lazy-loaded" src="https://files.keepingcurrentmatters.com/wp-content/uploads/2021/03/01145808/20210302-NM-Eng-1.png" data-lazy-type="image" data-src="https://files.keepingcurrentmatters.com/wp-content/uploads/2021/03/01145808/20210302-NM-Eng-1.png" alt="Home Prices: What Happened in 2020? What Will Happen This Year? | Keeping Current Matters" width="550" height="310" srcset="https://files.keepingcurrentmatters.com/wp-content/uploads/2021/03/01145808/20210302-NM-Eng-1.png 1000w, https://files.keepingcurrentmatters.com/wp-content/uploads/2021/03/01145808/20210302-NM-Eng-1-300x169.png 300w, https://files.keepingcurrentmatters.com/wp-content/uploads/2021/03/01145808/20210302-NM-Eng-1-768x432.png 768w" data-srcset="" sizes="(max-width: 550px) 100vw, 550px" /></a>
Bottom Line
Home price appreciation will be strong this year, but it won’t reach the historic levels of 2020. If you’d like to find out what your house is currently worth, contact us today!2021-03-02T07:43:00-07:002021-03-02T07:52:39-07:00Carson Lowrytag:carsonlowryrealestate.com,2012-09-20:12491It’s a Sellers’ Market [INFOGRAPHIC]<img src="https://assets.site-static.com/userfiles/1890/image/20210226-NM.png" width="1400" height="2011" />
Some Highlights
Over the past year, homeowners have gained an unprecedented opportunity to sell with great success while buyer demand is soaring.
With homes selling twice as <a href="https://www.nar.realtor/newsroom/existing-home-sales-tick-up-0-6-in-january">fast</a> as they did last year at this time, getting multiple <a href="https://cdn.nar.realtor/sites/default/files/documents/2021-01-realtors-confidence-index-02-19-2021.pdf">offers</a>, and rising in <a href="https://www.nar.realtor/newsroom/existing-home-sales-tick-up-0-6-in-january">price</a>, homeowners are in the driver’s seat.
Reach out to a local real estate professional today if you’re ready to learn about the <a href="https://www.keepingcurrentmatters.com/2021/02/24/how-much-leverage-do-todays-house-sellers-have/">leverage</a> you have as a seller in today’s housing market.
2021-03-01T07:34:00-07:002021-03-01T07:35:58-07:00Carson Lowrytag:carsonlowryrealestate.com,2012-09-20:12485Are There Going to Be More Homes to Buy This Year?<img src="https://assets.site-static.com/userfiles/1890/image/20210225-KCM-Share.png" width="750" height="410" />
If you’re looking for a home to purchase right now and having trouble finding one, you’re not alone. At a time like this when there are so <a href="https://www.keepingcurrentmatters.com/2021/01/29/is-right-now-the-right-time-to-sell-infographic/">few</a> houses for sale, it’s normal to wonder if you’ll actually find one to buy. According to the National Association of Realtors (<a href="https://www.nar.realtor/newsroom/existing-home-sales-rise-0-7-in-december-annual-sales-see-highest-level-since-2006">NAR</a>), across the country, inventory of available homes for sale is at an all-time low – the lowest point recorded since NAR began tracking this metric in 1982. There are, however, more homes expected to hit the market later this year. Let’s break down the three key places they’ll likely come from as 2021 continues on.
1. Homeowners Who Didn’t Sell Last Year
In 2020, many sellers decided to pause their moving plans for a number of different reasons. From health concerns about the pandemic to financial uncertainty, plenty of homeowners decided not to move last year.
Now that vaccines are being distributed and there’s a light at the end of the COVID-19 tunnel, it should bring some peace of mind to many potential sellers. As Danielle Hale, Chief Economist at realtor.com, <a href="https://www.realtor.com/research/weekly-housing-trends-view-data-week-feb-6-2021/">notes</a>:
“Fortunately for would-be homebuyers, we expect sellers to return to the market as we see improvement in the economy and progress against the coronavirus.”
Many of the homeowners who decided not to sell in 2020 will enter the market later this year as they begin to feel more comfortable showing their house in person, understanding their financial situation, and simply having more security in life.
2. More New Homes Will Be Built
Last year was a strong year for home builders, and according to the National Association of Home Builders (<a href="https://www.washingtonpost.com/business/2021/01/11/2021-housing-market-predictions/">NAHB</a>), 2021 is expected to be even better:
“For 2021, NAHB expects ongoing growth for single-family construction. It will be the first year for which total single-family construction will exceed 1 million starts since the Great Recession.”
With more houses being built in many markets around the country, homeowners looking for new houses that meet their <a href="https://www.keepingcurrentmatters.com/2021/01/12/4-reasons-people-are-buying-homes-in-2021/">changing</a> needs will be able to move into their dream homes. When they sell their current houses, this will create opportunities for those looking to find a home that’s already built to do so. It sets a simple chain reaction in motion for hopeful buyers.
3. Those Impacted Financially by the Economic Crisis
Many experts don’t anticipate a large wave of <a href="https://www.keepingcurrentmatters.com/2021/01/13/will-forbearance-plans-lead-to-a-tsunami-of-foreclosures/">foreclosures</a> coming to the market, given the <a href="https://www.keepingcurrentmatters.com/2020/12/14/5-steps-to-follow-when-applying-for-forbearance/">forbearance</a> options afforded to current homeowners throughout the pandemic. Some homeowners who have been impacted economically will, however, need to move this year. There are also homeowners who didn’t take advantage of the forbearance option or were already in a foreclosure situation before the pandemic began. In those cases, homeowners may decide to sell their houses instead of going into the foreclosure process, especially given the <a href="https://www.keepingcurrentmatters.com/2021/02/17/3-ways-home-equity-can-have-a-major-impact-on-your-life/">equity</a> in homes today. Lawrence Yun, Chief Economist at NAR, <a href="https://www.investors.com/news/housing-market-outlook-2021-watch-these-stocks-trends-cities/">explains</a>:
“Given the huge price gains recently, I don’t think many homes will have to go to foreclosure…I think homes will just be sold, and there will be cash left over for the seller, even in a distressed situation. So that’s a bit of a silver lining in that we don’t expect a massive sale of distressed properties.”
As we can see, it looks like we’re going to have an increase in the number of homes for sale in 2021. With fears of the pandemic starting to ease, new homes being built, and more listings coming to the market prior to foreclosure, there’s hope if you’re planning to buy this year. And if you’re thinking of selling and making a move, doing so while demand for your house is high might create an outstanding move-up option for you.
Bottom Line
Housing demand is high and supply is low, so if you’re thinking of moving, it’s a great time to do so. There are likely many buyers who are looking for a home just like yours, and there are options coming for you to find a new house too. Contact us today to see how you can benefit from the opportunities available in your local market.2021-02-25T12:19:00-07:002021-02-25T12:23:06-07:00Carson Lowrytag:carsonlowryrealestate.com,2012-09-20:12484How Much Leverage Do Today’s House Sellers Have?<img src="https://assets.site-static.com/userfiles/1890/image/20210224-KCM-Share.png" width="750" height="410" />
The housing market has been scorching hot over the last twelve months. Buyers and their high demand have far outnumbered sellers and a short supply of houses. According to the latest <a href="https://www.nar.realtor/newsroom/existing-home-sales-tick-up-0-6-in-january">Existing Home Sales Report</a> from the National Association of Realtors (NAR), sales are up 23.7% from the same time last year while the inventory of homes available for sale is down 25.7%. There are 360,000 fewer single-family homes for sale today than there were at this time last year. This increase in demand coupled with such limited supply is leading to more bidding wars throughout the country.
Rose Quint, Assistant Vice President for Survey Research with the National Association of Home Builders (NAHB), recently <a href="https://eyeonhousing.org/2021/02/share-of-home-buyers-getting-outbid-almost-doubles-2/">reported</a>:
“The number one reason long-time searchers haven’t made a home purchase is not because of their inability to find an affordably-priced home, but because they continue to get outbid by other offers.”
A survey in the NAHB report showed that 40% of buyers have been outbid for a home they wanted to purchase. This is more than twice the percentage in 2019, which was 19%.
What does this mean for sellers today?
It means sellers have tremendous leverage when negotiating with buyers.
In negotiations, leverage is the power that one side may have to influence the other side while moving closer to their negotiating position. A party’s leverage is based on its ability to award benefits or eliminate costs on the other side.
In today’s market, a buyer wants three things:
To buy a home
To buy now before prices continue to appreciate
To buy now and take advantage of historically low mortgage rates while they <a href="https://www.keepingcurrentmatters.com/2021/02/23/the-reason-mortgage-rates-are-projected-to-increase-and-what-it-means-for-you/">last</a>
These three buyer needs give the homeowner tremendous leverage when selling their house. Most realize this leverage enables the seller to sell at a good price. However, there may be another need the seller has that can be satisfied by using this leverage.
Here’s an example:
Odeta Kushi, Deputy Chief Economist at First American, recently <a href="https://blog.firstam.com/economics/housing-market-potential-poised-to-grow-in-2021">identified</a> a situation in which many sellers are finding themselves today:
“As mortgage rates are expected to remain near 3%, millennials continue to form households and more existing homeowners tap their equity for the purchase of a better home…Many homeowners may want to upgrade, but do not for fear that they will be unable to find a home to buy.”
She then offers a possible solution:
“While the fear of not being able to find something to buy will not disappear in a limited supply environment, new housing supply can incentivize existing homeowners to move.”
There’s no doubt many sellers would love to build a new home to perfectly fit their <a href="https://www.keepingcurrentmatters.com/2021/01/12/4-reasons-people-are-buying-homes-in-2021/">changing</a> wants and needs. However, most builders require that they sell their house first. If the seller sells their home, where would they live while their new home is being constructed?
Going back to the concept of leverage:
As mentioned, buyers have compelling reasons to purchase a home now, and many homeowners have challenges to address if they want to sell. Perhaps they can make a deal to satisfy each party’s needs. But how?
The seller may decide to sell their home to the buyer at today’s price, which will enable the purchaser to take advantage of current mortgage rates. In return, the buyer might lease the house back to the seller for a pre-determined length of time while the seller’s new home is being built. A true win-win negotiation.
Not every buyer will agree to such a deal – but you only need one.
That’s just one example of how a seller might be able to overcome a challenge because of the leverage they have in today’s market. Maybe you feel a need to make certain repairs before selling. Perhaps you need time to get permits or approvals for certain upgrades you made to the house. Whatever the challenge, you may be able to work it out.
Bottom Line
If you’re considering selling your house now but worry a huge obstacle stands in your way, contact a local real estate professional. Maybe with the leverage you currently have, you can negotiate a deal that will allow you to make the move of your dreams.2021-02-24T07:59:00-07:002021-02-24T08:02:15-07:00Carson Lowrytag:carsonlowryrealestate.com,2012-09-20:12480Forbearances Fall for Third Week in a Row, to 5.22%<img src="https://assets.site-static.com/userfiles/1890/image/6_Foundational_Benefits_of_Homeownership_Today_3.png" width="700" height="700" />
<article id="post-293490">
[Article provided <a href="https://www.housingwire.com/articles/forbearances-fall-for-third-week-in-a-row-to-5-22/">by Housing Wire</a>.]
The total number of <a rel="noreferrer noopener" href="https://www.housingwire.com/articles/forbearance-rate-drops-again-to-5-29/" data-type="URL" data-id="https://www.housingwire.com/articles/forbearance-rate-drops-again-to-5-29/" target="_blank">mortgages in forbearance</a> declined seven basis points to 5.22% in the week ending Feb. 14, according to the latest estimate from the Mortgage Bankers Association.
The trade group said 2.6 million homeowners are currently in <a href="https://www.housingwire.com/forbearance/" data-type="URL" data-id="https://www.housingwire.com/forbearance/" target="_blank" rel="noreferrer noopener">forbearance plans.</a>
“The share of loans in forbearance has declined for three weeks in a row, with portfolio and PLS loans decreasing the most this week. This decline was due to a sharp increase in borrower exits, particularly for IMB servicers,” said Mike Fratantoni, MBA’s senior vice president and chief economist.
Fannie Mae and Freddie Mac‘s forbearance portfolio continued to express the lowest share of loans, decreasing four basis points to 2.97%. Ginnie Mae‘s share, which include loans backed by the Federal Housing Administration, fell 2 basis points to 7.32%, while the share for portfolio loans and private-label securities (PLS) dropped a full 20 basis points from the prior week, at 8.94%.
The percentage of loans in forbearance for nonbank servicers also dropped 15 basis points to 5.54%, while the percentage of loans for depository servicers decreased 2 basis points to 5.28%.
<a href="https://www.housingwire.com/articles/from-forbearance-to-post-forbearance-how-to-make-the-process-effective/">From forbearance to post-forbearance: How to make the process effective</a>
To accommodate the large volume of loans still in forbearance, mortgage servicers must have functional, flexible and effective processes in place. Here are some actionable steps to create that process.
Presented by: FICS
The MBA’s survey found that of the cumulative exits between June 1, 2020, and Feb. 14, 27.9% of borrowers continued to make their monthly payments during the forbearance period while over 15% of exits represented borrowers who did not make all of their monthly payments and exited forbearance without a loss mitigation plan in place.
Overall, the MBA noted that new forbearance requests are also falling – down six basis points to match a survey low.
“The housing market is quite strong, with <a rel="noreferrer noopener" href="https://www.housingwire.com/articles/millennials-are-driving-us-home-sales/" data-type="URL" data-id="https://www.housingwire.com/articles/millennials-are-driving-us-home-sales/" target="_blank">home sales</a>, home <a rel="noreferrer noopener" href="https://www.housingwire.com/articles/homebuilders-preparing-for-big-2021-data-suggests/" data-type="URL" data-id="https://www.housingwire.com/articles/homebuilders-preparing-for-big-2021-data-suggests/" target="_blank">construction</a>, and home price data all testifying to this strength,” Fratantoni said. “Policymakers and the mortgage industry have helped enable this during the pandemic by providing millions of homeowners support in the form of forbearance.”
In the week prior, forbearance was once again extended by the <a rel="noreferrer noopener" href="https://www.housingwire.com/articles/hud-extends-covid-19-forbearance-for-fha-loans/" data-type="URL" data-id="https://www.housingwire.com/articles/hud-extends-covid-19-forbearance-for-fha-loans/" target="_blank">Biden administration</a>, pushing out forbearance and eviction moratoriums an additional three months, through June 30, 2021. This measure only applies to those with a loan backed by the FHA, though <a href="https://www.housingwire.com/articles/fhfa-extends-forbearance-policies-for-up-to-15-months/" data-type="URL" data-id="https://www.housingwire.com/articles/fhfa-extends-forbearance-policies-for-up-to-15-months/" target="_blank" rel="noreferrer noopener">Fannie and Freddie </a>recently extended forbearance requests up to 15 months.
Now, data is showing the affects of long-standing moratoriums. Black Knight’s <a rel="noreferrer noopener" href="https://cdn.blackknightinc.com/wp-content/uploads/2021/01/BKI_MM_Dec2020_Report.pdf" data-type="URL" data-id="https://cdn.blackknightinc.com/wp-content/uploads/2021/01/BKI_MM_Dec2020_Report.pdf" target="_blank">December mortgage monitor report </a>revealed foreclosure starts hit a record low in 2020, falling by 67% from the year prior as moratoriums and forbearance plans protected homeowners.
Based on the rate of improvement to date, Black Knight estimates there could be more than 2.5 million active forbearance plans remaining at the end of March 2021 when the first wave of plans reaches their 12-month expirations.
For four months now, the forbearance portfolio volume has hovered between 5% and 6% — the longest a percentage range has held since the survey’s origins in May.
</article>
2021-02-23T07:59:00-07:002021-02-23T08:18:49-07:00Carson Lowrytag:carsonlowryrealestate.com,2012-09-20:12477Where Have All the Houses Gone?<img src="https://assets.site-static.com/userfiles/1890/image/Where_Have_All_the_Houses_Gone_.png" width="750" height="410" />
In today’s housing market, it seems harder than ever to find a home to buy. Before the health crisis hit us a year ago, there was already a shortage of homes for sale. When many homeowners delayed their plans to sell at the same time that more buyers aimed to take advantage of record-low mortgage rates and purchase a home, housing inventory dropped even further. Experts consider this to be the biggest challenge facing an otherwise hot market while buyers continue to compete for homes. As Danielle Hale, Chief Economist at realtor.com, <a href="https://www.realtor.com/research/weekly-housing-trends-view-data-week-feb-6-2021/">explains</a>:
“With buyers active in the market and seller participation lagging, homes are selling quickly and the total number available for sale at any point in time continues to drop lower. In January as a whole, the number of for sale homes dropped below 600,000.”
Every month, realtor.com releases new <a href="https://www.realtor.com/research/data/">data</a> showing the year-over-year change in inventory of existing homes for sale. As you can see in the map below, nationwide, inventory is 42.6% lower than it was at this time last year:<a href="https://files.keepingcurrentmatters.com/wp-content/uploads/2021/02/18151906/20210222-NM-Eng-1.jpg" class="lightbox-added aligncenter"><img loading="lazy" class="aligncenter wp-image-2076901 lazy-loaded" src="https://files.keepingcurrentmatters.com/wp-content/uploads/2021/02/18151906/20210222-NM-Eng-1.jpg" data-lazy-type="image" data-src="https://files.keepingcurrentmatters.com/wp-content/uploads/2021/02/18151906/20210222-NM-Eng-1.jpg" alt="Where Have All the Houses Gone? | Keeping Current Matters" width="550" height="413" srcset="https://files.keepingcurrentmatters.com/wp-content/uploads/2021/02/18151906/20210222-NM-Eng-1.jpg 1000w, https://files.keepingcurrentmatters.com/wp-content/uploads/2021/02/18151906/20210222-NM-Eng-1-300x225.jpg 300w, https://files.keepingcurrentmatters.com/wp-content/uploads/2021/02/18151906/20210222-NM-Eng-1-768x576.jpg 768w" data-srcset="" sizes="(max-width: 550px) 100vw, 550px" /></a>
Does this mean houses aren’t being put on the market for sale?
Not exactly. While there are fewer existing homes being listed right now, many homes are simply selling faster than they’re being counted as current inventory. The market is that competitive! It’s like when everyone was trying to find toilet paper to buy last spring and it was flying off the shelves faster than it could be stocked in the stores. That’s what’s happening in the housing market: homes are being listed for sale, but not at a rate that can keep up with heavy demand from competitive buyers.
In the same realtor.com report, Hale explains:
“Time on the market was 10 days faster than last year meaning that buyers still have to make decisions quickly in order to be successful. Today’s buyers have many tools to help them do that, including the ability to be notified as soon as homes meeting their search criteria hit the market. By tailoring search and notifications to the homes that are a solid match, buyers can act quickly and compete successfully in this faster-paced housing market.”
The Good News for Homeowners
The health crisis has been a major reason why potential sellers have held off this long, but as vaccines become more widely available, homeowners will start making their moves. Ali Wolf, Chief Economist at Zonda, <a href="https://www.realtor.com/news/trends/vaccines-housing-market/">confirms</a>:
“Some people will feel comfortable listing their home during the first half of 2021. Others will want to wait until the vaccines are widely distributed.”
With more homeowners getting ready to sell later this year, putting your house on the market sooner rather than later is the best way to make sure your listing shines brighter than the rest.
When you’re ready to sell your house, you’ll likely want it to sell as quickly as possible, for the best price, and with little to no hassle. If you’re looking for these selling conditions, you’ll find them in today’s market. When demand is high and inventory is low, <a href="https://www.keepingcurrentmatters.com/2020/12/10/why-it-makes-sense-to-sell-your-house-this-holiday-season/">sellers</a> have the ability to create optimal terms and timelines for the sale, making now an exceptional time to move.
Bottom Line
Today’s housing market is a big win for sellers, but these conditions won’t last forever. If you’re in a position to sell your house now, you may not want to wait for your neighbors to do the same. Contact a local real estate professional for advice on how to sell your house <a href="https://www.keepingcurrentmatters.com/2020/11/13/tips-to-sell-your-house-safely-right-now-infographic/">safely</a> so you’re able to benefit from today’s high demand and low inventory.2021-02-22T07:14:00-07:002021-02-22T07:25:19-07:00Carson Lowrytag:carsonlowryrealestate.com,2012-09-20:124765 Signs You're Ready To Sell Your House
<img src="https://lh6.googleusercontent.com/_IZQbY5IoJqM78w4F-0xbo-wGaf2H84JxlcvrnNBRFz-1yr1Gq5nsSrJKb-p-QlS0KQbGpXXLUjTMO0KI5PvtOQ6s_p84dTxtrr2_3gzQDmu5nhMXyc8fiR-UaYbYzdCCWrnw_cN" width="624" height="416" role="presentation" alt="" data-uw-rm-ima="un" />
If selling your home has been on your mind, or if you're simply interested in <a href="https://www.carsonlowryrealestate.com/sellers/pricing-your-home/">finding the value of your home</a> instantly, you've arrived at the right place.
Here are 5 Signs You Are Ready To Sell Your House
1) You Clicked On This Article
So, this article caught your eye, surely it's a sign. Or, at the very least, it means you are giving some considerable thought to selling your home. This is a good sign, and we're here to help you make the best decision for you.
2) You're Thinking About Your Dream Home
There are some great things about your home, and it has definitely served its purpose, but you know it's not your forever home. With home values continuing to rise in Central Indiana, selling your current home to find your Dream Home
3) You're Waiting Until You Make Some Fixes
Many people believe they still have to fix minor issues in their home. However, painting that wall, fixing that piece of flooring, or changes that light is not necessarily needed in this market.
Yes, you should fix that hole in the wall, but minor fixes no longer need to be a reason to push off selling that home. Consult with a Realtor on what things you should fix, and what things you can get away with leaving as they are.
4) You've Outgrown Your Home
Is your closet creeping into the rest of your bedroom? Are your once spacious areas slowly becoming filled with misplaced items? Basements, extra deep closets, bonus areas; all of these spaces could be just what you and your growing family need.
5) The Area Is No Longer Ideal
Are you driving your kids to school 30 minutes away? Do your friends and family live in the next zip code? It could be time to make convenience a priority. People are more likely to visit their friends, and even go to the gym, if they are within a 5 mile radius. So location and proximity could be even more important than you realize!
<img src="https://lh6.googleusercontent.com/ZY5340b5o8futPkDXHsSdjzjqG992UMpZ5K28HLzqNvLpYhEgnny_4mpZXUM563jq0wRVTvShaynbog9P_pm4uLDRCVadKHhZf8YtXj27oMJzTnZWiIHrTU9eA8N7MtXGi95ZbIj" width="624" height="351" role="presentation" alt="" data-uw-rm-ima="un" />
Free Custom Market Analysis
If you're thinking about selling your home, and would like a <a href="https://www.carsonlowryrealestate.com/sellers/free-market-analysis/">Free Custom Market Analysis</a> to see how your home compares to those around it, and what you can expect from the home selling process.
2021-02-19T07:44:00-07:002021-02-19T07:48:26-07:00Carson Lowrytag:carsonlowryrealestate.com,2012-09-20:12473Will Low Mortgage Rates Continue through 2021?<img src="https://assets.site-static.com/userfiles/1890/image/20210218-KCM-Share.png" width="750" height="410" />
With mortgage interest rates hitting <a href="https://www.keepingcurrentmatters.com/2020/11/19/will-mortgage-rates-remain-low-next-year/">record lows</a> so many times recently, some are wondering if we’ll see low rates continue throughout 2021, or if they’ll start to rise. Recently, Freddie Mac released their quarterly <a href="http://www.freddiemac.com/blog/research_and_analysis/20210125_what_will_2021_bring_for_housing.page">forecast</a>, noting:
“The average 30-year fixed-rate mortgage hit a record low over a dozen times in 2020 and the low interest rate environment is projected to continue through this year. We expect interest rates to average below 3% through the end of 2021. While this is a modest rise from 2020 averages, the recent vote by the Federal Reserve to keep interest rates anchored near zero should keep rates low.”
As shown in the graph below, Freddie Mac is projecting low rates going forward with a modest rise that’s expected to continue through 2022.<img loading="lazy" class="aligncenter wp-image-2076873 lazy-loaded" src="https://files.keepingcurrentmatters.com/wp-content/uploads/2021/02/17132141/20210218-NM-Eng-1.jpg" data-lazy-type="image" data-src="https://files.keepingcurrentmatters.com/wp-content/uploads/2021/02/17132141/20210218-NM-Eng-1.jpg" alt="Will Low Mortgage Rates Continue through 2021? | Keeping Current Matters" width="550" height="310" srcset="https://files.keepingcurrentmatters.com/wp-content/uploads/2021/02/17132141/20210218-NM-Eng-1.jpg 1000w, https://files.keepingcurrentmatters.com/wp-content/uploads/2021/02/17132141/20210218-NM-Eng-1-300x169.jpg 300w, https://files.keepingcurrentmatters.com/wp-content/uploads/2021/02/17132141/20210218-NM-Eng-1-768x432.jpg 768w" data-srcset="" sizes="(max-width: 550px) 100vw, 550px" />Freddie Mac isn’t the only authority forecasting low rates with a slight rise. <a href="https://www.fanniemae.com/media/37951/display">Fannie Mae</a>, The Mortgage Bankers Association (<a href="https://www.mba.org/news-research-and-resources/research-and-economics/forecasts-and-commentary">MBA</a>), and the National Association of Realtors (<a href="https://cdn.nar.realtor/sites/default/files/documents/forecast-Q1-2021-us-economic-outlook-01-30-2021.pdf">NAR</a>) also anticipate low rates with a small increase as 2021 continues on. Here’s the quarterly breakdown of their projections and how they’re expected to play out over the next year:<a href="https://files.keepingcurrentmatters.com/wp-content/uploads/2021/02/17132154/20210218-NM-Eng-2.jpg" class="lightbox-added aligncenter"><img loading="lazy" class="aligncenter wp-image-2076872 lazy-loaded" src="https://files.keepingcurrentmatters.com/wp-content/uploads/2021/02/17132154/20210218-NM-Eng-2.jpg" data-lazy-type="image" data-src="https://files.keepingcurrentmatters.com/wp-content/uploads/2021/02/17132154/20210218-NM-Eng-2.jpg" alt="Will Low Mortgage Rates Continue through 2021? | Keeping Current Matters" width="550" height="310" srcset="https://files.keepingcurrentmatters.com/wp-content/uploads/2021/02/17132154/20210218-NM-Eng-2.jpg 1000w, https://files.keepingcurrentmatters.com/wp-content/uploads/2021/02/17132154/20210218-NM-Eng-2-300x169.jpg 300w, https://files.keepingcurrentmatters.com/wp-content/uploads/2021/02/17132154/20210218-NM-Eng-2-768x432.jpg 768w" data-srcset="" sizes="(max-width: 550px) 100vw, 550px" /></a>It’s important to note that, while a small change in interest rates can have a substantial impact on monthly mortgage payments, these rates are still incredibly low compared to where they were just a couple of years ago.
What does this mean for buyers?
Low mortgage rates are creating an outstanding opportunity for current <a href="https://www.keepingcurrentmatters.com/2021/02/11/47-of-new-buyers-surprised-by-how-affordable-homes-are-today/">homebuyers</a> to get more for their money while staying within their budget. As the economy gets stronger and we recover from the challenges of 2020, it’s natural for rates to potentially rise in response to a healthier economy. Mark Fleming, Chief Economist at First American, <a href="https://blog.firstam.com/economics/why-the-housing-market-can-thrive-if-a-new-rising-rate-era-begins">reminds</a> us:
“Rising interest rates reduce house-buying power and affordability, but are often a sign of a strong economy, which increases home buyer demand. By any historic standard, today’s mortgage rates remain historically low and will continue to boost house-buying power and keep purchase demand robust.”
With low rates fueling activity among hopeful buyers, there are a lot of people who are highly motivated and looking for homes to purchase right now. In this environment, it can be <a href="https://www.keepingcurrentmatters.com/2021/01/28/what-record-low-housing-inventory-means-for-you/">challenging</a> to find a home to buy, so a local real estate agent will be key to your success if you’re thinking of buying too. Working with a trusted real estate professional to navigate the process while rates are in your favor might be the best move you can make.
Bottom Line
If you’re ready to buy a home, it may be wise to make your move before mortgage rates begin to rise. Contact a local real estate professional to discuss how today’s low rates can create more opportunities for you this year.2021-02-18T08:11:00-07:002021-02-18T08:16:29-07:00Carson Lowrytag:carsonlowryrealestate.com,2012-09-20:12472Millennials: Is It Time to Buy a Bigger Home?<img src="https://assets.site-static.com/userfiles/1890/image/20210216-KCM-Share.png" width="750" height="410" />
In today’s housing market, all eyes are on millennials. Not only are millennials the largest generation, but they’re also currently between 25 and 40 years old. These are often considered prime homebuying years when many people begin to form their own households and invest in real estate. If you’re like many millennials who are spending much more time at home these days, you may have a growing need for more space or upgraded features, making moving more desirable than ever.
For those millennials who already own a home, there’s a great opportunity to <a href="https://www.keepingcurrentmatters.com/2021/01/12/4-reasons-people-are-buying-homes-in-2021/">move up</a> in 2021. Danielle Hale, Chief Economist at realtor.com, <a href="https://www.housingwire.com/articles/will-we-have-a-buyers-housing-market-in-2021/">explains</a>:
“Older millennials will be trade-up buyers with many having owned their first homes long enough to see substantial equity gains.”
Even if you bought a home sometime in the last few years, you may have more equity than you realize, and that’s a big factor to consider when you’re thinking about moving. According to the <a href="https://www.corelogic.com/insights-download/homeowner-equity-report.aspx">Homeowner Equity Insights Report</a> from CoreLogic:
“In the third quarter of 2020, the average homeowner gained approximately $17,000 in equity during the past year. This marks the largest average equity gain since the first quarter of 2014.”
Growing equity can be the driver you’re looking for to fund your next move, especially if what you need in a home is changing right now. As equity builds over time, it can be put toward the down payment on your next home.
In addition to equity gains, today’s housing market affordability is powered by record-low <a href="https://www.keepingcurrentmatters.com/2020/12/22/the-difference-a-year-makes-for-homeownership/">mortgage rates</a>, so moving at a time when you can get more for your money may be more <a href="https://www.keepingcurrentmatters.com/2021/02/11/47-of-new-buyers-surprised-by-how-affordable-homes-are-today/">realistic</a> than you think.
Bottom Line
If you’re a millennial thinking about moving this year, you’re not alone. Contact a local real estate professional to shed light on the equity you have in your current home and the opportunities it can create.2021-02-16T13:54:00-07:002021-02-16T14:02:37-07:00Carson Lowrytag:carsonlowryrealestate.com,2012-09-20:12465What Your Buyer's Agent Does For You<img src="https://assets.site-static.com/userfiles/1890/image/150493408_3681855238570825_2436295007624875877_n.jpg" width="1125" height="1316" />
[<a href="https://homebuying.realtor/content/what-your-buyers-agent-does-you?fbclid=IwAR2pH3xI6hcbf6ONFykCiXmjanJDaRM-pKK60vClNMhwFsZJfklAVLYqtow">Article provided by National Association of Realtors.</a>]
Finding and purchasing a home involves more steps than most buyers realize. A buyer’s representative can be an incredibly beneficial resource, helping you navigate the entire process. Here’s a partial list of everything they can do for you.
Help arrange financing.
Assist in locating sources of mortgage loans.
Help you examine how much you can afford but how much you may want to spend.
Assist in comparing different financing options.
Provide information on purchasing incentives that may be available.
Educate and discuss the differences between being prequalified and preapproved for a mortgage.
Assist in finding the right property.
Identify your needs and wants in a property.
Find appropriate available properties.
Set up an automated email alert system that immediately notifies you of properties that fit your requirements.
Sort through inaccurate information about homes in the area.
Provide ready access to all MLS-listed properties.
Network with other agents for properties not yet in the MLS.
Preview properties prior to showing.
Help select for viewing only those homes that fit your needs.
Aid in narrowing your search until you have identified your top choices.
Assist in analyzing the pros and cons of each property.
Disclose all known latent material defects.
Assist you in evaluating properties for suitability, affordability, and resale value.
Educate you on market conditions.
Educate you on whether it is a buyer’s market or a seller’s market.
Show statistics on what percent of list price the sellers are currently receiving.
Show trends, current average days on market, current absorption rate, and/or current months of inventory.
Guide you through making an offer and represent you and your interests in negotiations.
Prepare a CMA so that you make an informed decision when offering a price.
Advise you on what comparable properties are selling for.
Explain common contract contingencies.
Obtain appropriate seller disclosures.
Prioritize your goals.
Help create a negotiating strategy to achieve those goals.
Ensure that you receive and understand all state and federally required disclosure forms.
Handle the completion of the offer to purchase or sales contract.
Educate you on the contents of the sales contract.
Ensure that all appropriate additional forms are completed.
Assist you in getting the best property at the best price with the least amount of inconvenience based on current market conditions.
Prepare you for multiple offer situations and develop negotiation strategies specific to multiple offers.
Get you to closing and serve as your trusted real estate resource.
Recommend inspectors, lenders, attorneys, and other professionals as necessary.
Be an advocate and advisor during the closing process.
Review and discuss home inspection concerns.
Monitor and communicate required contract deadlines to ensure that you meet them.
Assist in coordinating communications between the listing agent, lender, attorneys, title company, appraiser, and other professionals.
Accompany you on the walk-through prior to closing to ensure the property is in the same condition as when you entered into the contract.
Remain a life-long trusted advisor regarding real estate questions, needs, or concerns.
2021-02-15T07:47:00-07:002021-02-15T07:51:08-07:00Carson Lowrytag:carsonlowryrealestate.com,2012-09-20:1246347% of New Buyers Surprised by How Affordable Homes Are Today<img src="https://assets.site-static.com/userfiles/1890/image/20210211-KCM-Share.png" width="750" height="410" />
Headlines matter. Right now, it’s hard to read about real estate without seeing a headline that suggests homes have become unaffordable for most Americans. In reality, there’s hard evidence that shows how owning a home is more affordable than <a href="https://www.attomdata.com/news/market-trends/home-sales-prices/attom-data-solutions-2021-rental-affordability-report/">renting</a> in most parts of the country, as record-low interest rates are keeping monthly mortgage payments about 23% <a href="https://www.corelogic.com/blog/2020/12/affordability-challenges-ahead-large-demographic-tailwind-has-arrived-amid-lowest-inventory-of-homes-for-sale.aspx">lower</a> than the typical payment of 20 years ago. Despite the facts, misleading headlines persist, and they impact how hopeful homebuyers perceive the market.
In a recent <a href="https://news.move.com/2021-02-03-Affordability-Surprises-First-Time-Homebuyers-While-Parental-Assistance-Savings-and-Wishlist-Compromises-Prove-Common-Survey-Finds">survey</a> by realtor.com, home shoppers indicated they were surprised by what they could actually afford when buying their first home. In fact, 47% discovered their budget was larger than they expected. George Ratiu, Senior Economist at realtor.com, explains:
“For first-time buyers, especially, the drop in the 30-year mortgage rate…has provided unexpected leverage. Lower rates allowed many buyers to stretch and buy more expensive homes while keeping their monthly budget the same.”
So why do these negative headlines that cast doubt on affordability continue to exist?
Most analysts only look at two of the three elements that make up the affordability equation: price and income. It’s true that incomes haven’t kept up with the price of houses. However, <a href="https://www.keepingcurrentmatters.com/2020/09/22/the-cost-of-a-home-is-far-more-important-than-the-price/">affordability</a> is about the cost of the home, not just the price. For that reason, mortgage rates, the third element of the affordability equation, are important to consider.
For example, here’s the typical mortgage payment for assorted dates going back to 2000, as calculated by <a href="https://www.corelogic.com/blog/2020/12/affordability-challenges-ahead-large-demographic-tailwind-has-arrived-amid-lowest-inventory-of-homes-for-sale.aspx">CoreLogic</a>:<a href="https://files.keepingcurrentmatters.com/wp-content/uploads/2021/02/10130509/20210211-NM-Eng-1.jpg" class="lightbox-added aligncenter"><img loading="lazy" class="aligncenter wp-image-2076789 lazy-loaded" src="https://files.keepingcurrentmatters.com/wp-content/uploads/2021/02/10130509/20210211-NM-Eng-1.jpg" data-lazy-type="image" data-src="https://files.keepingcurrentmatters.com/wp-content/uploads/2021/02/10130509/20210211-NM-Eng-1.jpg" alt="47% of New Buyers Surprised by How Affordable Homes Are Today | Keeping Current Matters" width="550" height="413" srcset="https://files.keepingcurrentmatters.com/wp-content/uploads/2021/02/10130509/20210211-NM-Eng-1.jpg 1000w, https://files.keepingcurrentmatters.com/wp-content/uploads/2021/02/10130509/20210211-NM-Eng-1-300x225.jpg 300w, https://files.keepingcurrentmatters.com/wp-content/uploads/2021/02/10130509/20210211-NM-Eng-1-768x576.jpg 768w" data-srcset="" sizes="(max-width: 550px) 100vw, 550px" /></a>Outside of the housing crash (when short sales and foreclosures drove prices down), it’s more affordable to buy a home today when you consider all three elements of the affordability equation: price, income, and mortgage rate.
Bottom Line
Whether you’re a first-time buyer or a move-up buyer, don’t let the headlines scare you away from your dream of homeownership. Instead, connect with mortgage and real estate professionals to determine what you can afford and what’s available at that price. Like almost half of the buyers in the survey, you may be pleasantly surprised.2021-02-11T07:42:00-07:002021-02-11T07:43:52-07:00Carson Lowrytag:carsonlowryrealestate.com,2012-09-20:124573 Reasons We’re Definitely Not in a Housing Bubble<img src="https://assets.site-static.com/userfiles/1890/image/20210209-KCM-Share.png" width="750" height="410" />
Home values appreciated by about ten percent in 2020, and they’re forecast to appreciate by about five percent this year. This has some voicing concern that we may be in another housing bubble like the one we experienced a little over a decade ago. Here are three reasons why this market is totally different.
1. This time, housing supply is extremely limited
The price of any market item is determined by supply and demand. If supply is high and demand is low, prices normally decrease. If supply is low and demand is high, prices naturally increase.
In real estate, supply and demand are measured in “months’ supply of inventory,” which is based on the number of current homes for sale compared to the number of buyers in the market. The normal months’ supply of inventory for the market is about 6 months. Anything above that defines a buyers’ market, indicating prices will soften. Anything below that defines a <a href="https://www.keepingcurrentmatters.com/2020/12/10/why-it-makes-sense-to-sell-your-house-this-holiday-season/">sellers’ market</a> in which prices normally appreciate.
Between 2006 and 2008, the months’ supply of inventory increased from just over 5 months to 11 months. The months’ supply was over 7 months in twenty-seven of those thirty-six months, yet home values continued to rise.
Months’ inventory has been under 5 months for the last 3 years, under 4 for thirteen of the last fourteen months, under 3 for the last six months, and currently stands at <a href="https://www.keepingcurrentmatters.com/2021/01/28/what-record-low-housing-inventory-means-for-you/">1.9 months</a> – a historic low.
Remember, if supply is low and demand is high, prices naturally increase.
2. This time, housing demand is real
During the housing boom in the mid-2000s, there was what Robert Schiller, a fellow at the Yale School of Management’s International Center for Finance, called “irrational exuberance.” The <a href="https://www.investopedia.com/terms/i/irrationalexuberance.asp#:~:text=Irrational%20exuberance%20is%20unfounded%20market,bubble%20in%20the%20stock%20market.">definition</a> of the term is, “unfounded market optimism that lacks a real foundation of fundamental valuation, but instead rests on psychological factors.” Without considering historic market trends, people got caught up in the frenzy and bought houses based on an unrealistic belief that housing values would continue to escalate.
The mortgage industry fed into this craziness by making mortgage money available to just about anyone, as shown in the <a href="https://www.mba.org/news-research-and-resources/research-and-economics/single-family-research/mortgage-credit-availability-index">Mortgage Credit Availability Index</a> (MCAI) published by the Mortgage Bankers Association. The higher the index, the easier it is to get a mortgage; the lower the index, the more difficult it is to obtain one. Prior to the housing boom, the index stood just below 400. In 2006, the index hit an all-time high of over 868. Again, just about anyone could get a mortgage. Today, the index stands at 122.5, which is well below even the pre-boom level.
In the current real estate market, demand is real, not fabricated. Millennials, the largest generation in the country, have come of age to marry and have children, which are two major drivers for homeownership. The health crisis is also challenging every household to redefine the meaning of “home” and to re-evaluate whether their current home meets that new definition. This desire to own, coupled with historically low mortgage rates, makes purchasing a home today a strong, sound financial decision. Therefore, today’s demand is very real.
Remember, if supply is low and demand is high, prices naturally increase.
3. This time, households have plenty of equity
Again, during the housing boom, it wasn’t just purchasers who got caught up in the frenzy. Existing homeowners started using their homes like ATM machines. There was a wave of cash-out refinances, which enabled homeowners to leverage the equity in their homes. From 2005 through 2007, Americans pulled out <a href="http://www.freddiemac.com/research/datasets/refinance-stats/index.page">$824 billion dollars</a> in equity. That left many homeowners with little or no equity in their homes at a critical time. As prices began to drop, some homeowners found themselves in a negative equity situation where the mortgage was higher than the value of their home. Many defaulted on their payments, which led to an avalanche of foreclosures.
Today, the banks and the American people have shown they learned a valuable lesson from the housing crisis a little over a decade ago. Cash-out refinance volume over the last three years was less than a third of what it was compared to the 3 years leading up to the crash.
This conservative approach has created levels of equity never seen before. According to Census Bureau <a href="https://constructioncoverage.com/research/where-residents-have-paid-off-homes">data</a>, over 38% of owner-occupied housing units are owned ‘free and clear’ (without any mortgage). Also, ATTOM Data Solutions just released their fourth quarter <a href="https://www.attomdata.com/news/market-trends/home-sales-prices/attom-data-solutions-q4-2020-u-s-home-equity-underwater-report/">2020 U.S. Home Equity Report</a>, which revealed:
“17.8 million residential properties in the United States were considered equity-rich, meaning that the combined estimated amount of loans secured by those properties was 50 percent or less of their estimated market value…The count of equity-rich properties in the fourth quarter of 2020 represented 30.2 percent, or about one in three, of the 59 million mortgaged homes in the United States.”
If we combine the 38% of homes that are owned free and clear with the 18.7% of all homes that have at least 50% equity (30.2% of the remaining 62% with a mortgage), we realize that 56.7% of all homes in this country have a minimum of 50% equity. That’s significantly better than the equity situation in 2008.
Bottom Line
This time, housing supply is at a historic low. Demand is real and rightly motivated. Even if there were to be a drop in prices, homeowners have enough equity to be able to weather a dip in home values. This is nothing like 2008. In fact, it’s the exact opposite.2021-02-09T08:37:00-07:002021-02-09T08:41:04-07:00Carson Lowrytag:carsonlowryrealestate.com,2012-09-20:124566 Foundational Benefits of Homeownership Today<img src="https://assets.site-static.com/userfiles/1890/image/20210208-KCM-Share.png" width="750" height="410" />
Over the past year, our homes have become an integral part of our lives more than ever. They’re much more than the houses we live in. They’re our workplaces, virtual schools, and safe havens that provide shelter, stability, and protection through the evolving health crisis. Today, <a href="https://www.census.gov/housing/hvs/files/currenthvspress.pdf">65.8%</a> of Americans are fortunate enough to call their homes their own.
As we continue to think about the future, our goals for the year, and what we want to achieve well beyond 2021, it’s a great time to look at the benefits of owning a home. Below are some <a href="https://www.nar.realtor/sites/default/files/documents/white-paper-homeownership-incentivized-by-federal-system-02-06-2020.pdf">highlights</a> and quotes on the benefits of homeownership shared by the National Association of Realtors (NAR). From feel-good motivations to economic and social impacts on the local community, these items may give you reason to believe homeownership stretches well beyond your financial investment.
Non-Financial Benefits
Owning a home brings a sense of happiness, satisfaction, and pride.
Pride of Ownership: It feels good to have a place that’s truly your own, especially since you can customize it to your liking. “The personal satisfaction and sense of accomplishment achieved through homeownership can enhance psychological health, happiness and well-being for homeowners and those around them.”
Civic Participation: Homeownership creates stability, a sense of community, and increases civic engagement. It’s a way to add to the strength of your local area and drive value into your neighborhood.
Financial Benefits
Buying a home is also an investment in your financial future.
Net Worth: Homeownership builds your <a href="https://www.keepingcurrentmatters.com/2020/10/07/a-homeowners-net-worth-is-40x-greater-than-a-renters/">net worth</a>. Today, the median household net worth of all homeowners is $254,900, while the median net worth of renters is only $6,270.
Financial Security: Equity, appreciation, and more predictable monthly housing expenses are huge financial benefits of owning a home. Homeownership is truly the best way to improve your long-term financial position.
Economic Benefits
Homeownership is even a local economic driver.
Housing-Related Spending: An economic force throughout our nation, housing-related expenses accounted for more than one-sixth of the country’s economic activity over the past three decades.
Entrepreneurship: Homeownership is also a form of forced savings that can provide entrepreneurial opportunities. “Owning a home enables new entrepreneurs to obtain access to credit to start or expand a business and generate new jobs by using their home as collateral for small business loans.”
Bottom Line
The benefits of homeownership go well beyond the basics. Homeownership is truly a way to build financial freedom, find greater satisfaction and happiness, and make a substantial impact in your community. If owning a home is part of your dream this year, contact us to begin the homebuying process today.2021-02-08T13:03:00-07:002021-02-08T13:05:50-07:00Carson Lowrytag:carsonlowryrealestate.com,2012-09-20:12455Thinking about Building a New Home? Your Agent Is Critical [INFOGRAPHIC]<img src="https://assets.site-static.com/userfiles/1890/image/20210205-NM.png" width="1300" height="2364" />
Some Highlights
A real estate professional is an expert who can advocate on your behalf throughout the process when building a home.
Agents help you understand key steps, like choosing upgrades and managing negotiations, while staying within your budget from start to finish.
If building is the right choice for you, work with a trusted real estate professional who can help you successfully navigate the path to your dream home.
2021-02-05T07:42:00-07:002021-02-05T07:51:28-07:00Carson Lowrytag:carsonlowryrealestate.com,2012-09-20:12453Why Owning a Home Is a Powerful Financial Decision<img src="https://assets.site-static.com/userfiles/1890/image/20210204-KCM-Share.png" width="750" height="410" />
In today’s housing market, there are clear financial benefits to owning a home: increasing <a href="https://www.keepingcurrentmatters.com/2021/01/06/the-importance-of-home-equity-in-building-wealth/">equity</a>, the chance to build your <a href="https://www.keepingcurrentmatters.com/2020/10/07/a-homeowners-net-worth-is-40x-greater-than-a-renters/">net worth</a>, and <a href="https://www.keepingcurrentmatters.com/2021/01/11/what-does-2021-have-in-store-for-home-values/">appreciating</a> home values, just to name a few. If you’re a renter, it’s never too early to think about how homeownership can propel you toward a stronger future. Here’s a dive into three often-overlooked financial benefits of homeownership and how preparing for them now can steer you in the direction of greater financial security and savings.
1. You Won’t Always Have a Monthly Housing Payment
Personal finance advisor Dave Ramsey <a href="https://www.daveramsey.com/blog/buy-vs-rent-myths-busted">explains</a>:
“Every payment brings you closer to owning the house. When you pay your rent, that money is spent. Gone. Bye. Not returning. But when you pay your mortgage, you work toward full ownership.”
As a homeowner, you can eventually eliminate the monthly payment you make on your house. That’s a huge win and a big factor in how homeownership can drive stability and savings in your life. As soon as you buy a home, your monthly housing costs begin to work for you as forced savings in the form of <a href="https://www.keepingcurrentmatters.com/2020/12/17/homeowner-equity-increases-an-astonishing-1-trillion/">equity</a>. When you build equity and grow your net worth, you can continue to reinvest those savings into your future, maybe even by buying that next dream home. The possibilities are truly endless.
2. Homeownership Is a Tax Break
One thing people who have never owned a home don’t always think about are the tax advantages of homeownership. The same article states:
“You have tax advantages. Many of the costs of owning a home—like property taxes—are tax deductible. And if you’re paying off a mortgage, you’ll get to count your mortgage interest as a deduction when you file your tax return.”
Whether you’re living in your first home or your fifth, it’s a huge financial advantage to have some tax relief tied to the interest you pay each year. It’s one thing you definitely don’t get when you’re renting. Be sure to work with a tax professional to get the best possible benefits on your annual return.
3. Monthly Housing Costs Are Predictable
A third benefit is the fact that monthly costs start to become more predictable with homeownership, something that doesn’t happen if you’re renting. Ramsey also notes:
“Rent rates will go up. Even if you found a killer deal in a hot area, inflation, competition, and rising property values will cause your rent to go up year after year.”
With a mortgage, you can keep your monthly housing costs relatively steady and predictable. Your monthly costs are most likely based on a fixed-rate mortgage, which allows you to budget your finances over a longer period of time. Rental prices have been <a href="http://www.census.gov/housing/hvs/files/currenthvspress.pdf">skyrocketing</a> since 2012, and with today’s <a href="https://www.keepingcurrentmatters.com/2021/01/19/should-i-wait-for-lower-mortgage-interest-rates/">low</a> mortgage rates, it’s a great time to get more for your money when purchasing a home. If you want to lock-in your monthly payment at a low rate and have a solid understanding of what you’re going to spend in your mortgage payment each month, buying a home may be your best bet.
Bottom Line
If you’re ready to start feeling the benefits of stability, savings, and predictability that come with owning a home, reach out to a local real estate professional to determine if buying sooner rather than later is right for you.2021-02-04T07:24:00-07:002021-02-04T07:29:15-07:00Carson Lowrytag:carsonlowryrealestate.com,2012-09-20:124507 Things to Do Now if You Want to Refinance Your Mortgage in 2021<img src="https://assets.site-static.com/userfiles/1890/image/GettyImages-935400890.png" width="1280" height="853" />
<a href="https://money.com/mortgage-refinance-lowest-rates-january-2021/?amp=true&fbclid=IwAR3uKpH_Z__c4v57UoR9aIeKb48XQGwSDt_5IrmUP4sHNAXBAgWqKqD2sp8">Article written by Money.com</a>
Homeowners refinanced in droves this year — and it’s no wonder. With mortgage rates dropping to an all-time low of just 2.71% at one point, the financial incentive — at least for many homeowners — was huge.
On a $200,000 mortgage, for example, refinancing from a 4.25% rate to a 3% one — a rate higher than today’s current average, according to Freddie Mac — homeowners could shave $140 off their monthly payment and a jaw-dropping $88,000 over a 30-year loan term. For those who had loans from 2009 or earlier, when rates <a href="https://money.com/how-low-are-mortgage-rates-right-now-just-look-at-the-sky-high-numbers-from-the-80s-and-90s/">rarely dipped below 5%</a>, the savings could be even bigger.
Fortunately, it seems the low rates are here to stay — so if you weren’t one of the millions who seized the day this year, there’s still time. In fact, most experts predict an average rate of anywhere from 2.9% to 3.4% across the new year.
Are you thinking of pulling the trigger? Here are the steps you’ll need to take if a New Year’s refinance is on your agenda:
1. Run the numbers.
The first step is to make sure that refinancing actually makes sense. For one, a refinance doesn’t come for free. According to Freddie Mac, it costs an average of $5,000 to refinance a mortgage loan or about 2% to 5% of the total loan amount.
To make those costs worth it, you’ll need to reach the break-even point — which is when the refinance saves you more than it costs to execute.
Calculating that break-even point requires a few bits of information: First, an idea of how long you’ll be in the home; second, an estimate of your closing costs; and third, how much you’ll be saving each month by refinancing. You can get a sense of potential savings using an online mortgage calculator or by working with a mortgage broker or loan officer. They can help walk you through the numbers, as well as what interest rate you might be able to expect.
Your break-even point is then calculated by dividing your closing costs by your monthly savings. If you’re closing costs are $4,000 and you’re saving $50 per month, then your break-even point is 80 months (4,000 / 50). So essentially, it would take you 80 months — or more than seven years — to break even on your refinancing costs. If you don’t plan to be in the home that long, then refinancing isn’t financially worth it.
“With any potential refinance, borrowers should make sure they fully understand the potential costs and savings associated with the refinance to assure the economics make sense,” said Mike Tassone, co-founder and COO at mortgage marketplace Own Up. “Unfortunately, there are some lenders that will encourage consumers to refinance, even if it’s not necessarily in their best interest.”
2. Know your goals.
You also need to know your objectives before refinancing your mortgage loan. Though most homeowners are looking to lower their mortgage rates and save on monthly payments when refinancing, there are other goals you can achieve, too.
For one, you could use a refinance to pay off your loan faster. To do this, you’d refinance into a shorter-term loan — for example, from a 30-year mortgage to a 15-year one. Your monthly payment would be higher, but it would also ensure your loan is paid off sooner — and save you on long-term interest, too.
You might also use a refinance to take cash out of your home and pay for <a href="https://money.com/get-a-home-improvement-loan/">home improvements</a>, consolidate debts or handle other costs. In some cases, you may want to change loan types — say, from an <a href="https://money.com/mortgage-refinance-arm/">adjustable-rate mortgage</a> to a fixed-rate one.
“Review different refinancing options,” said Sonu Mittal, head of retail mortgages at Citizens Bank. “​The most common reasons folks will consider refinancing are to reduce their rate, pay off other debt through a cash-out refi or their current loan is maturing and need to refinance into a long-term product.”
Ultimately, your goal will determine what loan type you will need, as well as the qualifications you’ll need to meet.
3. Get your documentation together.
Refinances require a good amount of financial paperwork, just as your initial mortgage loan did. That means you’ll need papers that prove your income, debts and other financial obligations.
“Take inventory and begin gathering the documents you will need during the underwriting of your loan,” Tassone said.
If you’re a salaried worker, that includes the last 30 days of pay stubs, the last two years of W-2s, a two-year employment history, copies of your recent mortgage and property tax statements and a copy of your homeowner’s insurance declarations page.
For those with <a href="https://money.com/get-a-mortgage-when-self-employed/">non-traditional jobs</a>, you may need bank statements, 1099s, recent client invoices and a profit-and-loss statement for your business. Getting these all in order early can help your refinance go more smoothly once you’re ready to apply.
According to Tammy Andrews, vice president and branch manager at Motto Mortgage United, you should also know your home’s estimated value and your current mortgage loan balance before applying for a refinance. The difference between your home’s value and mortgage balance is your home equity, which acts as your down payment in a refinance. The amount of equity you have will influence your overall loan eligibility, your interest rate and the amount of cash you can access when doing a cash-out refinance. It will also determine if you need private mortgage insurance.
4. Keep a close eye on your credit — and maybe try to improve it.
“Your credit score will play a significant role in getting you the best rate possible,” Mittal said.
It will also impact your ability to qualify for a refinance in the first place. To make sure your credit is in a good place, pull your credit report (all three credit reporting bureaus will let you do so for free once a week through April) and look for any blemishes — things like late payments or collections attempts. These will need to be remedied before you apply for a loan.
You should also be careful about your holiday spending. Avoid opening new credit cards (including <a href="https://money.com/how-do-store-credit-cards-work/">store ones</a>), and steer clear of racking up balances on existing cards. Both of these actions can lower your credit score, making it harder to get a loan. They can also increase your debt-to-income ratio — how much of your monthly income your debts take up.
“Borrowers should be mindful of opening new credit accounts, as these will increase the monthly <a href="https://money.com/debt-income-ratio-calculator/">debt-to-income ratio</a> — which is a key qualifying factor,” Tassone said. “If a borrower absolutely needs to open additional credit, they should confirm with their lender — prior to doing so — to determine the impact on their mortgage qualification.”
Finally, you can also try to actively increase your score before applying, too. Paying down your debts, making on-time payments and alerting credit bureaus of any errors on your report can all help here.
5. Avoid or delay applying for mortgage forbearance.
If you’re having a hard time making your mortgage payments during the pandemic, forbearance can give you a break — at least temporarily — until you get on your feet. According to the Mortgage Bankers Association, about 5.48% of American mortgage loans (or 2.7 million homeowners) are currently in forbearance, essentially pausing their monthly payments for up to 360 days.
Though this can certainly help lighten the load during hard financial times, it can also hurt your chances of refinancing.
“Borrowers should not request a hardship forbearance from their current lender before attempting to refinance,” Tassone said.
For one, since refinancing can lower your rate and monthly payment, it could help you avoid forbearance altogether. If you need to file for forbearance later on, it would also reduce the amount of those deferred payments, making it easier to get current down the line.
Additionally, there’s your credit report to think about. Though the move won’t hurt your credit score directly, it will get noted on your credit report as a delinquency, which new lenders will see when evaluating your application. At best, it could give them pause about loaning you money. At worst? It might mean an outright denial, Tassone said.
The same goes for forbearance options on other debts, too — including those on car loans, student loans or other debt you might have in your name. If you’re considering pausing payments on any loan leading up to your refinance, talk to a mortgage pro first about your options. You could also ask your existing lender about a loan modification, which may let you change the rate and terms of your current loan without refinancing.
If you’re already on a forbearance plan, don’t fret. You’ll be eligible to refinance after you’ve made three on-time payments.
6. Shop around for your lender.
You don’t have to use your current lender to refinance — nor should you. Rates and qualifying standards vary wildly from one mortgage lender to the next, so shopping around is critical. According to a study from the Consumer Financial Protection Bureau, rates can differ as much as .50% between lenders — even for the highest-credit borrowers.
“The key to securing the best interest rates is to shop around,” Tassone said. “We regularly encounter consumers who are able to substantially improve their rate simply by receiving multiple quotes.”
It’s true: Recent data from loan marketplace LendingTree shows that refinance borrowers who shopped around last quarter will save as much as $59,255 across their loan term. Freddie Mac data shows that borrowers who get at least two mortgage quotes save around $1,500. Those who get five quotes? The savings jump to $3,000.
It’s more than just a cost-saving measure, though. Shopping around between mortgage lenders (credit unions, big banks and online lenders), as well as mortgage brokers (essentially personal shoppers for mortgage borrowers) can have other benefits, too.
“Each will look at your mortgage application differently and offer you varying levels of service and options,” Andrews said. “Remember, rate isn’t everything. You will want to have a trustworthy, reliable point of contact to answer your questions, help you stick to deadlines and navigate all of the documentation to close the refinance on time.”
When shopping around, it’s important to get all your quotes within a 30-day period or less. Since lenders will require a hard credit check with each application, applying within a short time frame reduces the impact they’ll have on your score.
7. Lock your rate.
If a lender makes you an offer that achieves your goal, then it’s time to lock your rate, which guarantees that quoted interest rate for a period of time — usually 30 to 60 days. This protects you from any rate increases while the lender processes your loan.
According to Tassone, locking your rate is critical once you find a deal you like.
“Interest rates change daily, as do the potential savings from a refinance,” he said. “Once consumers have decided they want to move forward with a rate quote they have received, they should request their lender lock that rate so they’re not subject to future rate fluctuations.”
Shorter lock terms generally come with better interest rates, Andrews said, so ask the lender about your options. Be careful, though. You’ll want to make sure the lender can actually close the loan on that shorter timeline. If they can’t, you may owe a fee to extend the lock or, riskier yet, you might have to take whatever market rate is available when your lock expires. According to mortgage tech firm Ellie Mae, on average it took <a href="https://static.elliemae.com/pdf/origination-insight-reports/EM_OIR_OCTOBER2020.pdf" target="_blank">57 days to close</a> a refinance loan in October — over two weeks longer than a year earlier.
“Given the pandemic and historically low interest rates, borrowers should plan for lenders to take up to 60 days to approve and fund their application,” Tassone said. “Borrowers should ask their lender whether their lender will extend the rate at their cost if they can’t close the loan within this timeframe.”
Get started today
If a refinance is on your radar for early 2021, you’ll want to get the ball rolling today. <a href="https://money.com/current-mortgage-rates/">Mortgage rates</a> are at their lowest point ever right now, and though experts largely expect low rates to continue, there’s no predicting the future.
As Andrews explained, “We’re in an environment where the early bird gets the worm.”2021-02-03T07:42:00-07:002021-02-03T07:46:36-07:00Carson Lowrytag:carsonlowryrealestate.com,2012-09-20:12425Best Staging Makeovers: January 2021 EditionThe Home Staging Resource is kicking off 2021 by launching a brand-new monthly recognition program for designers and stagers whose work stands out from the pack. Check out some of the before and after photos below from January’s “HSR Best of the Best” recipients.
Shades of Green
<img src="https://cdn.nar.realtor/sites/default/files/styles/inline_paragraph_image/public/SSS_Audra_1.png?itok=lTfXwlmU" class="b-lazy hoverZoomLink b-loaded" width="975" height="650" alt="Bed" /><br />
Captivating is the word I would use to describe this “Best of the Best” photo by Sylvie Becourt of EZ Home Staging in Las Vegas. I love the use of color in this space and how she ties it all together, from the poufs to the curtains, art, and carpet, and even the way she lays the little teal pillows on top of the larger pillows. The result? A memorable, soothing space.
A Dramatic Kitchen Redo
<img src="https://cdn.nar.realtor/sites/default/files/styles/inline_paragraph_image/public/SSS_Audra_BEFORE1.png?itok=qbWukpQx" class="b-lazy hoverZoomLink b-loaded" width="975" height="732" alt="Kitchen" />
There are quite a few of these dramatic before-and-after photo winners in our January 2021 “Best of the Best.” Many of these drastic improvements showcase how home stagers are not only about moving furniture and inserting inventory. Home stagers are specifying finishes, working with contractors, and instructing clients on what kind of cosmetic improvements they can make to get the best return on their investment.
<img src="https://cdn.nar.realtor/sites/default/files/styles/inline_paragraph_image/public/SSS_Audra_2.png?itok=uLjoSBwo" class="b-lazy hoverZoomLink b-loaded" width="975" height="732" alt="Kitchen" /><br />
In this kitchen, Angeline Kelly, a home stager with Apple Blossom Staging & Design in Cedar Falls, Iowa, found clever ways to stay within her client’s budget. First, she decided to refurbish existing cabinets, saving the seller a lot of money. Paint went a long way on these classic cabinets, which are unique in an older, historical home. Kelly changed out the items that were most important: the flooring, the appliances, the countertops, and the backsplash. The backsplash becomes the “bling” in the space.
Leveraging Neutrals
<img src="https://cdn.nar.realtor/sites/default/files/styles/inline_paragraph_image/public/SSS_Audra_3.png?itok=swJAugdJ" class="b-lazy hoverZoomLink b-loaded" width="975" height="975" alt="Bedroom" /><br />
Charlotte Harris creates an amazing and tranquil bedroom in this staging job. You just want to sink into the space. And while she uses a trick that stagers and designers use by going very monochromatic with her neutrals, it doesn’t feel sterile and cold. This bedroom uses multiple layers of several textures to bring it all together.
Toning Down the Hues
<img src="https://cdn.nar.realtor/sites/default/files/styles/inline_paragraph_image/public/SSS_Audra_4.png?itok=I8K977rJ" class="b-lazy hoverZoomLink b-loaded" width="975" height="738" alt="Patio" /><br />
Imagine this outdoor space with nothing in it. Do you think you would like the contrasting finishes? The pinkish-gray concrete juxtaposed with the golden yellow rock walls would be all you would have noticed. Kate Patino, a home stager and designer with Dark Horse Interiors in McKinney, Texas, understood this problem all too well. So she overcompensated by styling this outdoor room to the tenth degree. It’s another example of why it’s important to connect with a stager or designer if you’re picking finishes for a remodel—you don’t want different aesthetics fighting each other for attention in one space. Kate earns a “Best of the Best” award for transforming and merchandising this space so that the eye is drawn to the lifestyle and not the finishes themselves.
Going Bold
<img src="https://cdn.nar.realtor/sites/default/files/styles/inline_paragraph_image/public/SSS_Audra_5.png?itok=F9nj-aCK" class="b-lazy hoverZoomLink b-loaded" width="975" height="1219" alt="Wallpaper" /><br />
This vacation rental designed by Denise Crowe earned a spot in January’s “Best of the Best” because of its creativity and “Instagram worthiness.” It’s another example of how stagers don’t just stage homes. Crowe does design and redesign, and she’s doing a lot of vacation rentals or stage-to-rent lately.
Bathroom Overhaul
<img src="https://cdn.nar.realtor/sites/default/files/styles/inline_paragraph_image/public/SSS_Audra_6.png?itok=L5l4qp_j" class="b-lazy hoverZoomLink b-loaded" width="783" height="1044" alt="Bathroom" />
How many of us have bathrooms that look similar to this very common “before” bathroom? Donna Allen, a designer and home stager with Dramatix Decor in Chicago, did a magnificent job on this bathroom transformation by picking the finishes beautifully. Allen went through the Home Staging Resource’s Certified Color Expert program to master how colors in finishes can conflict with one another. Allen knew exactly what she was doing and brightened and updated the space without breaking the client’s budget. Allen earned a “Best of the Best” by taking this bathroom from blah to beautiful.
<img src="https://cdn.nar.realtor/sites/default/files/styles/inline_paragraph_image/public/SSS_Audra_7.png?itok=BLmk0cTc" class="b-lazy hoverZoomLink b-loaded" width="975" height="732" alt="Bathroom" /><br />
Adding in Some Lux
<img src="https://cdn.nar.realtor/sites/default/files/styles/inline_paragraph_image/public/SSS_Audra_8.png?itok=fGKh_u2F" class="b-lazy hoverZoomLink b-loaded" width="760" height="1350" alt="Bedroom" />
What we love about this photo is that while many other home stagers would have stopped at one piece of art, a couple of pillows, or one lamp on a side table, Gina Gailing added more luxurious details. Gailing, a designer and home stager based in Tampa, Fla., really takes pride in her work by fully furnishing the space and creating a space worthy of a “Best of the Best.”
<img src="https://cdn.nar.realtor/sites/default/files/styles/inline_paragraph_image/public/SSS_Audra_9.png?itok=P_pmd6MN" class="b-lazy hoverZoomLink b-loaded" width="975" height="732" alt="Bedroom" /><br />
A Paint Transformation
<img src="https://cdn.nar.realtor/sites/default/files/styles/inline_paragraph_image/public/SSS_Audra_10.png?itok=lM1FPzF0" class="b-lazy hoverZoomLink b-loaded" width="975" height="617" alt="Living Room" />
This is actually one of my personal favorite staging transformations by Heather Odean, a home stager and designer with Karis Home Solutions in Charlotte, N.C. At first glance, this is a very standard home built in the ’90s. There was a lot of pink beige back then. A lot of people are afraid to paint the wood. But a little paint goes a long way in this home!
<img src="https://cdn.nar.realtor/sites/default/files/styles/inline_paragraph_image/public/SSS_Audra_11.png?itok=AJva9ib7" class="b-lazy hoverZoomLink b-loaded" width="975" height="629" alt="Living Room" /><br />
Odean talked the client into removing all their furnishings—and bam! It’s hard to believe this is the same space! The combination of paint and furniture rearrangement to emphasize the focal point makes all the difference. Odean made the fireplace and built-in wall the focal point that it should be, and then she emphasized the focal point by rearranging the furniture so that you’re streamlining your view toward it. The space is nearly unrecognizable from its previous state!
Designing a Vignette
<img src="https://cdn.nar.realtor/sites/default/files/styles/inline_paragraph_image/public/SSS_Audra_12.png?itok=NokM1T1C" class="b-lazy hoverZoomLink b-loaded" width="975" height="732" alt="Couch" /><br />
This photo is our favorite vignette for January’s “Best of the Best.” We liked the arrangement, various textures, mixed elements, and photography. This vignette was done by Jennifer Dobson, a home stager with The Queen of the Castle in Cincinnati.
The Perfect Pendants
<img src="https://cdn.nar.realtor/sites/default/files/styles/inline_paragraph_image/public/SSS_Audra_13.png?itok=yhztCmyj" class="b-lazy hoverZoomLink b-loaded" width="975" height="650" alt="Kitchen" /><br />
There's not much that we don't love about this kitchen designed by Jodi Grant. Look at those pendants over the island. Normally, people might be a little concerned about their large size, but in this case, they fit brilliantly to the sconce lights. They also compliment the entire setup Grant has to the right with the coffee bar.
Attention to Shelves
<img src="https://cdn.nar.realtor/sites/default/files/styles/inline_paragraph_image/public/SSS_Audra_14.png?itok=Mtp9gZig" class="b-lazy hoverZoomLink b-loaded" width="975" height="650" alt="Fireplace" /><br />
We fell in love with Kelly Sharp’s staged living space as a “Best of the Best.” Again, another home stager might have done a lot less on those shelves, and it would not have looked nearly as well. We also loved how the photo captures the spectacular light fixture in the space through the reflection in the mirror.
Clearing the Clutter
<img src="https://cdn.nar.realtor/sites/default/files/styles/inline_paragraph_image/public/SSS_Audra_15.png?itok=xgzZdrBp" class="b-lazy hoverZoomLink b-loaded" width="975" height="818" alt="Before Staging" />
Mary Diaz worked a minor miracle in this living space as a classic example of how home staging benefits every home regardless of size and luxury. She didn’t get fancy here, but this is a “Best of the Best” because it was so dramatic. You can really see the work that was put into this compared to what it looked like before.
<img src="https://cdn.nar.realtor/sites/default/files/styles/inline_paragraph_image/public/SSS_Audra_16.png?itok=AKpkcCug" class="b-lazy hoverZoomLink b-loaded" width="975" height="818" alt="After Staging" /><br />
We really love how Diaz used a large rug to cover that not-so-attractive floor and helped to raise the eyes of buyers to the coordinating artwork and pillows.
Rearranging the Space
<img src="https://cdn.nar.realtor/sites/default/files/styles/inline_paragraph_image/public/SSS_Audra_17.png?itok=4tTCiWzT" class="b-lazy hoverZoomLink b-loaded" width="800" height="620" alt="Living Room" />
<img src="https://cdn.nar.realtor/sites/default/files/styles/inline_paragraph_image/public/SSS_Audra_18.png?itok=vgJap12x" class="b-lazy hoverZoomLink b-loaded" width="785" height="625" alt="Living Room" /><br />
What we love about this staging example by Cindy Tovell, a home stager in Columbus, Ohio, is that it shows the dramatic difference rearranging a room can make. We call this “zero-budget” staging, since the seller is paying very little for dramatic results. A lot of homes with nice-enough furnishings can greatly benefit from staging, such as editing, space planning, and shopping for updated items that then coordinate with the seller’s existing furniture.
Lightening the Mood
<img src="https://cdn.nar.realtor/sites/default/files/styles/inline_paragraph_image/public/SSS_Audra_19.png?itok=1Xis9dju" class="b-lazy hoverZoomLink b-loaded" width="975" height="731" alt="Before" />
This is a before photo of a kitchen by Sherry Rampy that, of course, has to go on the “Best of the Best” list because the changes she made are so dramatic.
<img src="https://cdn.nar.realtor/sites/default/files/styles/inline_paragraph_image/public/SSS_Audra_20.png?itok=2Phdjt9k" class="b-lazy hoverZoomLink b-loaded" width="975" height="732" alt="Kitchen" /><br />
This kitchen is another great example of how stagers can really do it all. A lot of people don’t realize that stagers are not just about staging homes. They really do it all: vacation rentals, remodels, model homes, etc.
For more information on how to properly stage your house to sell, get in touch with us today!2021-02-02T07:26:00-07:002021-02-02T07:35:33-07:00Carson Lowrytag:carsonlowryrealestate.com,2012-09-20:12420Is Right Now the Right Time to Sell? [INFOGRAPHIC]<img src="https://assets.site-static.com/userfiles/1890/image/20210129-NM.png" width="1300" height="1569" />
Some Highlights
If you’re on the fence about selling your house, now is a great time to take advantage of sky-high demand, low supply, and fierce buyer competition.
With buyer <a href="https://www.keepingcurrentmatters.com/2021/01/14/why-right-now-may-be-the-time-to-sell-your-house/">demand</a> rising and historically <a href="https://www.realtor.com/research/weekly-housing-trends-view-data-week-jan-23-2021/">low inventory</a> for sale, if you’re in a position to move, your house may really stand out from the crowd.
Reach out to a local real estate professional today to get your homebuying process underway.
2021-01-29T07:20:00-07:002021-01-29T07:34:19-07:00Carson Lowrytag:carsonlowryrealestate.com,2012-09-20:12419What Record-Low Housing Inventory Means for You<img src="https://assets.site-static.com/userfiles/1890/image/20210128-KCM-Share.png" width="750" height="410" />
The real estate market is expected to do <a href="https://www.keepingcurrentmatters.com/2020/12/16/3-reasons-to-be-optimistic-about-real-estate-in-2021/">very well</a> in 2021, with mortgage rates that are hovering at historic lows and forecasted by <a href="https://www.keepingcurrentmatters.com/2020/12/31/four-expert-views-on-the-2021-housing-market/">experts</a> to remain favorable throughout the year. One challenge to the housing industry, however, is the lack of homes available for sale today. Last week, the National Association of Realtors (NAR) released their <a href="https://www.nar.realtor/newsroom/existing-home-sales-rise-0-7-in-december-annual-sales-see-highest-level-since-2006">Existing Home Sales Report</a>, which shows that the inventory of homes for sale is currently at an all-time low. The report explains:
“Total housing inventory at the end of December totaled 1.07 million units, down 16.4% from November and down 23% from one year ago (1.39 million). Unsold inventory sits at an all-time low 1.9-month supply at the current sales pace, down from 2.3 months in November and down from the 3.0-month figure recorded in December 2019. NAR first began tracking the single-family home supply in 1982.”<br />(See graph below):
<a href="https://files.keepingcurrentmatters.com/wp-content/uploads/2021/01/26151413/20200128-NM-Eng-1.jpg" class="lightbox-added aligncenter"><img loading="lazy" class="aligncenter wp-image-2076653 lazy-loaded" src="https://files.keepingcurrentmatters.com/wp-content/uploads/2021/01/26151413/20200128-NM-Eng-1.jpg" data-lazy-type="image" data-src="https://files.keepingcurrentmatters.com/wp-content/uploads/2021/01/26151413/20200128-NM-Eng-1.jpg" alt="What Record-Low Housing Inventory Means for You | Keeping Current Matters" width="550" height="413" srcset="https://files.keepingcurrentmatters.com/wp-content/uploads/2021/01/26151413/20200128-NM-Eng-1.jpg 1000w, https://files.keepingcurrentmatters.com/wp-content/uploads/2021/01/26151413/20200128-NM-Eng-1-300x225.jpg 300w, https://files.keepingcurrentmatters.com/wp-content/uploads/2021/01/26151413/20200128-NM-Eng-1-768x576.jpg 768w" data-srcset="" sizes="(max-width: 550px) 100vw, 550px" /></a>
What Does This Mean for You?
If You’re a Buyer:
Be patient during your home search. It may take time to find a home you love. Once you do, however, <a href="https://www.keepingcurrentmatters.com/2020/12/11/winning-as-a-buyer-in-a-sellers-market-infographic/">be ready</a> to move forward quickly. Get <a href="https://www.keepingcurrentmatters.com/2020/08/27/why-is-it-so-important-to-be-pre-approved-in-the-homebuying-process/">pre-approved</a> for a mortgage, be prepared to make a competitive offer from the start, and know that a shortage in inventory could mean you’ll enter a <a href="https://www.keepingcurrentmatters.com/2020/10/16/how-to-prepare-for-a-bidding-war-infographic/">bidding war</a>. Calculate just how far you’re willing to go to secure a home and lean on your real estate professional as an expert guide along the way. The good news is, more inventory is likely headed to the market soon, Lawrence Yun, Chief Economist at NAR, notes:
“To their credit, homebuilders and construction companies have increased efforts to build, with housing starts hitting an annual rate of near 1.7 million in December, with more focus on single-family homes…However, it will take vigorous new home construction in 2021 and in 2022 to adequately furnish the market to properly meet the demand.”
If You’re a Seller:
Realize that, in some ways, you’re in the driver’s seat. When there’s a shortage of an item at the same time there’s a strong demand for it, the <a href="https://www.keepingcurrentmatters.com/2020/12/10/why-it-makes-sense-to-sell-your-house-this-holiday-season/">seller</a> is in a good position to negotiate the best possible terms. Whether it’s the price, moving date, possible repairs, or anything else, you’ll be able to request more from a potential purchaser at a time like this – especially if you have multiple interested buyers. Don’t be unreasonable, but understand you probably have the upper hand.
Bottom Line
The housing market will remain strong throughout 2021. Know what that means for you, whether you’re buying, selling, or doing both.2021-01-28T07:39:00-07:002021-01-28T07:42:46-07:00Carson Lowrytag:carsonlowryrealestate.com,2012-09-20:12416What Happens When Homeowners Leave Their Forbearance Plans?<img src="https://assets.site-static.com/userfiles/1890/image/20210127-KCM-Share.png" width="750" height="410" />
According to the latest <a href="https://cdn.blackknightinc.com/wp-content/uploads/2020/12/BKI_MM_Oct2020_Report.pdf">report</a> from Black Knight, Inc., a well-respected provider of data and analytics for mortgage companies, 6.48 million households have entered a forbearance plan as a result of financial concerns brought on by the COVID-19 pandemic. Here’s where these homeowners stand right now:
2,543,000 (39%) are current on their payments and have left the program
625,000 (9%) have paid off their mortgages
434,000 (7%) have negotiated a repayment plan and have left the program
2,254,000 (35%) have extended their original forbearance plan
512,000 (8%) are still in their original forbearance plan
116,000 (2%) have left the program and are still behind on payments
This shows that of the almost 3.72 million homeowners who have left the program, only 116,000 (2%) exited while they were still behind on their payments. There are still 2.77 million borrowers in a forbearance program. No one knows for sure how many of those will become foreclosures. There are, however, three major reasons why most experts believe there will not be a tsunami of foreclosures as we saw during the housing crash over a decade ago:
Almost 30% of borrowers in forbearance are <a href="https://www.corelogic.com/blog/2020/12/one-third-of-forbearance-loans-have-not-made-payment-since-may.aspx">still current</a> on their mortgage payments.
Banks likely don’t want to repeat the <a href="https://hbr.org/2020/07/how-banks-can-avoid-a-repeat-of-the-2008-foreclosure-crisis">mistakes</a> of 2008-2012 when they put large numbers of foreclosures on their books. This time, many will instead negotiate a modification plan with the borrower, which will enable households to maintain ownership of the home.
With the significant <a href="https://www.corelogic.com/insights-download/homeowner-equity-report.aspx">equity</a> homeowners have today, many will be able to sell instead of going into foreclosure.
Will there be foreclosures coming to the market? Yes. There are hundreds of thousands of foreclosures in this country each year. People experience economic hardships, and in some cases, are not able to meet their mortgage obligations.
Here’s the breakdown of new foreclosures over the last three years, prior to the pandemic:
2017: 314,220
2018: 279,040
2019: 277,520
Through the first three quarters of 2020 (the latest data available), there were only 114,780 new foreclosures. If 10% of those currently in forbearance go to foreclosure, 275,000 foreclosures would be added to the market in 2021. That would be an average year as the numbers above show.
What happens if the number is more than 10%?
If we do experience a higher foreclosure rate from those in forbearance, most experts believe the current housing market will easily absorb the excess inventory. We entered 2020 with 1,210,000 single-family homes available for purchase. At the time, that was low and problematic. The market was experiencing high buyer demand, and we needed more houses to meet that demand. We’re now entering 2021 with 320,000 fewer homes for sale, while buyer demand remains extremely strong. This means the housing market has the capacity to soak up a lot of inventory.
Bottom Line
There will be more foreclosures entering the market later this year, especially compared to the record-low numbers in 2020. However, the market will be able to handle the increase as buyer demand remains strong.2021-01-27T07:44:00-07:002021-01-27T07:47:22-07:00Carson Lowrytag:carsonlowryrealestate.com,2012-09-20:12413What’s the Difference between an Appraisal and a Home Inspection?<img src="https://assets.site-static.com/userfiles/1890/image/20210126-KCM-Share.png" width="750" height="410" />
If you’re planning to buy a home, an <a href="https://cdn.nar.realtor/sites/default/files/documents/valuation-appraisal-for-homebuyers-12-2020.pdf">appraisal</a> is an important <a href="https://www.keepingcurrentmatters.com/2020/12/04/the-path-to-homeownership-infographic/">step</a> in the process. It’s a professional evaluation of the market value of the home you’d like to buy. In most cases, an appraisal is ordered by the lender to confirm or verify the value of the home prior to lending a buyer money for the purchase. It’s also a different step in the process from a home inspection, which assesses the condition of the home before you finalize the transaction. Here’s the breakdown of each one and why they’re both important when buying a home.
Home Appraisal
The National Association of Realtors (NAR) <a href="https://www.nar.realtor/appraisal-valuation/residential-appraisal-process-for-home-buyers">explains</a>:
“A home purchase is typically the largest investment someone will make. Protect yourself by getting your investment appraised! An appraiser will observe the property, analyze the data, and report their findings to their client. For the typical home purchase transaction, the lender usually orders the appraisal to assist in the lender’s decision to provide funds for a mortgage.”
When you apply for a mortgage, an unbiased appraisal (which is required by the lender) is the best way to confirm the value of the home based on the sale price. Regardless of what you’re willing to pay for a house, if you’ll be using a mortgage to fund your purchase, the appraisal will help make sure the bank doesn’t loan you more than what the home is worth.
This is especially critical in today’s <a href="https://www.keepingcurrentmatters.com/2020/12/10/why-it-makes-sense-to-sell-your-house-this-holiday-season/">sellers’ market</a> where low <a href="https://www.keepingcurrentmatters.com/2021/01/14/why-right-now-may-be-the-time-to-sell-your-house/">inventory</a> is driving an increase in <a href="https://www.keepingcurrentmatters.com/2020/10/16/how-to-prepare-for-a-bidding-war-infographic/">bidding wars</a>, which can push home <a href="https://www.keepingcurrentmatters.com/2021/01/11/what-does-2021-have-in-store-for-home-values/">prices</a> upward. When sellers are in a strong position like this, they tend to believe they can set whatever price they want for their house under the assumption that competing buyers will be willing to pay more.
However, the lender will only allow the buyer to borrow based on the value of the home. This is what helps keep home prices in check. If there’s ever any confusion or discrepancy between the appraisal and the sale price, your trusted real estate professional will help you navigate any additional negotiations in the buying process.
Home Inspection
Here’s the key difference between an appraisal and an inspection. MSN <a href="https://www.msn.com/en-us/money/realestate/what-is-a-home-appraisal-everything-you-need-to-know/ar-BB17nckC?fbclid=IwAR2hDqkZowDqKWBcb7DxAI_iy37ONH_n3-B1XBOYdN0_resgnZr163iZ9j0">explains</a>:
“In simplest terms, a home appraisal determines the value of a home, while a home inspection determines the condition of a home.”
The home <a href="https://www.keepingcurrentmatters.com/2019/10/01/what-to-expect-from-your-home-inspection-2/">inspection</a> is a way to determine the current state, safety, and condition of the home before you finalize the sale. If anything is questionable in the inspection process – like the age of the roof, the state of the HVAC system, or just about anything else – you as a buyer have the option to discuss and negotiate any potential issues or repairs with the seller before the transaction is final. Your real estate agent is a key expert to help you through this part of the process.
Bottom Line
The appraisal and the inspection are critical steps when buying a home, and you don’t need to manage them by yourself. Reach out to a local real estate professional today so you have the expert guidance you need to navigate through the entire homebuying process.2021-01-26T07:31:00-07:002021-01-26T07:35:12-07:00Carson Lowrytag:carsonlowryrealestate.com,2012-09-20:12411Why Moving May Be Just the Boost You Need<img src="https://assets.site-static.com/userfiles/1890/image/20210125-KCM-Share.png" width="750" height="410" />
As we look back over the past year, we’ve certainly lived through one of the most stressful periods in recent history. After spending so much more time at home throughout the health crisis, some are wondering if they should move to improve their mental health and well-being. This is no surprise since the U.S. Census Bureau reported an increase in the percentage of adults with symptoms of anxiety and depression in a recent <a href="https://www.census.gov/library/stories/2021/01/young-adults-living-alone-report-anxiety-depression-during-pandemic.html?utm_campaign=20210113msacos1ccstors&utm_medium=email&utm_source=govdelivery">Household Pulse Survey</a>.
There’s logic behind the idea that making a move could improve someone’s quality of life. When people change their scenery, they often feel happier. Catherine Hartley, an Assistant Professor at New York University’s Department of Psychology and co-author of a <a href="https://www.nyu.edu/about/news-publications/news/2020/may/new-and-diverse-experiences-linked-to-enhanced-happiness--new-st.html">study</a> on how new experiences impact happiness, mentioned:
“Our results suggest that people feel happier when they have more variety in their daily routines—when they go to novel places and have a wider array of experiences.”
If you’re looking for a new experience, planning a move into a new home may be something you’ve started to consider more carefully. If so, you’re not alone. The <a href="https://www.unitedvanlines.com/newsroom/movers-study-2020">2020 Annual National Movers Study</a> by United Van Lines shows:
“For customers who cited COVID-19 as an influence on their move in 2020, the top reasons associated with COVID-19 were concerns for personal and family health and wellbeing (60%); desires to be closer to family (59%); 57% moved due to changes in employment status or work arrangement (including the ability to work remotely); and 53% desired a lifestyle change or improvement of quality of life.”
So, if you’re thinking of moving this year to help boost your happiness factor, here are a few questions to ask yourself as you make your decision.
How’s the Weather?
Is the weather something that’s important to you? Does it have a tendency to impact your mood? The World Population Review <a href="https://worldpopulationreview.com/state-rankings/states-with-the-best-weather">shares</a>:
“What states have the best weather? When evaluating each state for temperature, rain, and sun, some states stand out. Although climate and weather preferences are personal and subjective, some criteria are considered to make up the best weather, according to Current Results:
Comfortable temperatures from 63°F to 86°F for more than half of the year.
Dry weather with no more than 60 inches of rain per year.
Mostly clear skies with an average of sunshine for at least 60% of the year.”
“Better weather” can mean different things to different people – some prefer the heat, others cooler temperatures, and some want to experience all four seasons. Think about what makes you feel happiest if you’re looking for a new location.
Should I Choose the City, Suburbs, or Country?
With the COVID-19 pandemic, some people are deciding to move to lower-density areas. Robert Dietz, Chief Economist at the National Association of Home Builders (NAHB), <a href="http://eyeonhousing.org/2021/01/top-posts-of-2020-suburban-shift-for-home-building/">mentions</a>:
“The third quarter Home Building Geography Index (HBGI) reveals that a suburban shift for consumer home buying preferences in the wake of the COVID-19 pandemic is accelerating as telecommuting is providing consumers more flexibility to live further out within large metros or even to relocate to more affordable, smaller metro areas.”
Can you work from home? Are you open to a longer commute in the future? If so, a move to the suburbs or even a quieter rural area may be a win for you. Or, if you’ve always dreamed of life in the city, now may be your chance to move into town.
Bottom Line
As we look beyond the trials of the pandemic, many are hoping for a new beginning, and that may mean moving. Contact a local real estate advisor today to talk about your new goals and options in today’s market.2021-01-25T09:41:00-07:002021-01-25T10:01:12-07:00Carson Lowrytag:carsonlowryrealestate.com,2012-09-20:12408Financial Fundamentals for Homebuyers [INFOGRAPHIC]<img src="https://assets.site-static.com/userfiles/1890/image/20210122-NM.png" width="1300" height="2832" />
Some Highlights
When you’re thinking about buying a home, there are a few key steps to take before you even start to look at houses.
From saving for your down payment to getting pre-approved for a mortgage, you’ll want to make sure you keep your financial plan on track from the beginning.
Reach out to a local real estate professional and a trusted lender today to make sure you have the best possible guidance as you begin your homebuying process.
2021-01-22T07:53:00-07:002021-01-22T07:54:22-07:00Carson Lowrytag:carsonlowryrealestate.com,2012-09-20:12405What Experts Are Saying about the 2021 Job Market<img src="https://assets.site-static.com/userfiles/1890/image/20210121-KCM-Share.png" width="750" height="410" />
Earlier this month, the Bureau of Labor Statistics (BLS) released their most recent <a href="https://www.bls.gov/news.release/pdf/empsit.pdf">Jobs Report</a>. The report revealed that the economy lost 140,000 jobs in December. That’s a devastating number and dramatically impacts those households that lost a source of income. However, we need to give it some context. Greg Ip, Chief Economics Commentator at the Wall Street Journal (WSJ), <a href="https://economics.cmail19.com/t/ViewEmail/d/86F72442EA56A4BB2540EF23F30FEDED/5323CD85A2087AFD22947492D9797BBC">explains</a>:
“The economy is probably not slipping back into recession. The drop was induced by new restrictions on activity as the pandemic raged out of control. Leisure and hospitality, which includes restaurants, hotels, and amusement parks, tumbled 498,000.”
In the same report, Michael Pearce, Senior U.S. Economist of Capital Economics, agreed:
“The 140,000 drop in non-farm payrolls was entirely due to a massive plunge in leisure and hospitality employment, as bars and restaurants across the country have been forced to close in response to the surge in coronavirus infections. With employment in most other sectors rising strongly, the economy appears to be carrying more momentum into 2021 than we had thought.”
Once the vaccine is distributed throughout the country and the pandemic is successfully under control, the vast majority of those 480,000 jobs will come back.
Here are two additional comments from other experts, also <a href="https://economics.cmail19.com/t/ViewEmail/d/86F72442EA56A4BB2540EF23F30FEDED/5323CD85A2087AFD22947492D9797BBC">reported</a> by the WSJ that day:
Nick Bunker, Head of Research in North America for Indeed:
“These numbers are distressing, but they are reflective of the time when coronavirus vaccines were not rolled out and federal fiscal policy was still deadlocked. Hopefully, the recent legislation can help build a bridge to a time when vaccines are fully rolled out and the labor market can sustainably heal.”
Michael Feroli, Chief U.S. Economist for JPMorgan Chase:
“The good news in today’s report is that outside the hopefully temporary hit to the food service industry, the rest of the labor market appears to be holding in despite the latest public health challenges.”
What impact will this have on the real estate market in 2021?
Some are concerned that with millions of Americans unemployed, we may see distressed properties (foreclosures and short sales) dominate the housing market once again. Rick Sharga, Executive Vice President at RealtyTrac, along with most other experts, doesn’t believe that will be the <a href="https://www.realtytrac.com/news/why-the-2021-real-estate-recession-will-be-different-from-2008/">case</a>:
“There are reasons to be cautiously optimistic despite massive unemployment levels and uncertainty about government policies under the new Administration. But while anything is possible, it’s highly unlikely that we’ll see another foreclosure tsunami or housing market crash.”
Bottom Line
For the households that lost a wage earner, these are extremely difficult times. Hopefully, the new stimulus package will lessen some of their pain. The health crisis, however, should vastly improve by mid-year with expectations that the jobs market will also progress significantly.2021-01-21T07:25:00-07:002021-01-21T07:27:06-07:00Carson Lowrytag:carsonlowryrealestate.com,2012-09-20:12404Owning a Home Is Still More Affordable Than Renting One<img src="https://assets.site-static.com/userfiles/1890/image/20210120-KCM-Share.png" width="750" height="410" />
If spending more time at home over the past year is making you really think hard about <a href="https://www.keepingcurrentmatters.com/2021/01/12/4-reasons-people-are-buying-homes-in-2021/">buying</a> a home instead of renting one, you’re not alone. You may be wondering, however, if the dollars and cents add up in your favor as home prices continue to <a href="https://www.keepingcurrentmatters.com/2021/01/11/what-does-2021-have-in-store-for-home-values/">rise</a>. According to the experts, in many cases, it’s still more affordable to buy a home than rent one. Here’s why.
ATTOM Data Solutions recently released the <a href="https://www.attomdata.com/news/market-trends/home-sales-prices/attom-data-solutions-2021-rental-affordability-report/">2021 Rental Affordability Report</a>, which states:
“Owning a median-priced three-bedroom home is more affordable than renting a three-bedroom property in 572, or 63 percent of the 915 U.S. counties analyzed for the report.
That has happened even though median home prices have increased more than average rents over the past year in 83 percent of those counties and have risen more than wages in almost two-thirds of the nation.”
How is this possible?
The answer: historically low mortgage interest <a href="https://www.keepingcurrentmatters.com/2021/01/19/should-i-wait-for-lower-mortgage-interest-rates/">rates</a>. Todd Teta, Chief Product Officer with ATTOM Data Solutions, explains:
“Home-prices are rising faster than rents and wages in a majority of the country. Yet, home ownership is still more affordable, as amazingly low mortgage rates that dropped below 3 percent are helping to keep the cost of rising home prices in check.”
In 2020, mortgage rates reached all-time lows <a href="https://www.keepingcurrentmatters.com/2021/01/05/why-not-to-wait-until-spring-to-make-a-move/">16 times</a>, and so far, they’re continuing to hover in low territory this <a href="http://www.freddiemac.com/pmms/pmms_archives.html">year</a>. These low rates are a big factor in driving affordability. Teta also notes:
“It’s startling to see that kind of trend. But it shows how both the cost of renting has been relatively high compared to the cost of ownership and how declining interest rates are having a notable impact on the housing market and home ownership. The coming year is totally uncertain, amid so many questions connected to the Coronavirus pandemic and the broader economy. But right now, owning a home still appears to be a financially-sound choice for those who can afford it.”
Bottom Line
If you’re considering buying a home this year, contact a local real estate professional today to learn more about the options that match your budget while affordability is in your favor.2021-01-20T07:18:00-07:002021-01-20T07:20:26-07:00Carson Lowrytag:carsonlowryrealestate.com,2012-09-20:12402Should I Wait for Lower Mortgage Interest Rates?<img src="https://assets.site-static.com/userfiles/1890/image/20210119-KCM-Share.png" width="750" height="410" />
Historically low mortgage rates are a big motivator for homebuyers right now. In 2020 alone, rates hit new <a href="https://www.keepingcurrentmatters.com/2021/01/05/why-not-to-wait-until-spring-to-make-a-move/">record-lows</a> 16 times, and the trend continued into the early part of this year. Many hopeful homebuyers are now wondering if they should put their plans on hold and wait for the lowest rates imaginable. However, the reality is, acting sooner rather than later may be the actual win if you’re ready to buy a home.
<a href="https://www.bankrate.com/mortgages/mortgage-rate-forecast-for-january-2021/">According</a> to Greg McBride, Chief Financial Analyst for Bankrate:
“As vaccines become more widely available and a return to normal starts to come into view, we’ll see mortgage rates bounce off the record lows.”
While only a slight increase in mortgage rates is projected for 2021, some experts believe they will start to rise. Over the past week, for example, the average mortgage rate ticked up slightly, reaching <a href="http://www.freddiemac.com/pmms/">2.79%</a>. This is still incredibly low compared to the <a href="https://www.keepingcurrentmatters.com/2020/08/14/mortgage-rates-payments-by-decade-infographic/">trends</a> we’ve seen over time. According to Freddie Mac:
“Borrowers are smart to take advantage of these low rates now and will certainly benefit as a result.”
Here’s why.
As mortgage rates rise, the increase impacts the overall <a href="https://www.keepingcurrentmatters.com/2020/09/22/the-cost-of-a-home-is-far-more-important-than-the-price/">cost</a> of purchasing a home. The higher the rate, the higher your monthly mortgage payment, especially as home <a href="https://www.keepingcurrentmatters.com/2021/01/11/what-does-2021-have-in-store-for-home-values/">prices</a> rise too. Sam Khater, Chief Economist at Freddie Mac, <a href="https://freddiemac.gcs-web.com/node/21801/pdf">says</a>:
“The forces behind the drop in rates have been shifting over the last few months and rates are poised to rise modestly this year. The combination of rising mortgage rates and increasing home prices will accelerate the decline in affordability and further squeeze potential homebuyers during the spring home sales season.”
What does this mean for buyers?
Right now, the <a href="https://www.nar.realtor/newsroom/existing-home-sales-decrease-2-5-in-november">inventory</a> of houses for sale is also at a historic low, making it more challenging than normal to find a home to buy in many areas. As more buyers hit the market in the typically busy spring buying season, it may become even harder to find a home in the coming months. With this in mind, Len Keifer, Deputy Chief Economist for Freddie Mac, <a href="https://www.bankrate.com/mortgages/mortgage-rate-forecast-for-january-2021/">recommends</a> taking advantage of both low mortgage rates and the opportunity to buy:
“If you’ve found a home that fits your needs at a price you can afford, it might be better to act now rather than wait for future rate declines that may never come and a future that likely holds very tight inventory.”
Bottom Line
While today’s low mortgage rates provide great opportunities for homebuyers, we may not see them stick around forever. If you’re ready to buy a home, it’s time to chat with a real estate professional so you can take advantage of what today’s market has to offer.2021-01-19T07:38:00-07:002021-01-19T07:40:22-07:00Carson Lowrytag:carsonlowryrealestate.com,2012-09-20:12400How to Make the Dream of Homeownership a Reality This Year<img src="https://assets.site-static.com/userfiles/1890/image/20210118-KCM-Share.png" width="750" height="410" />
In 1963, Martin Luther King, Jr. inspired a powerful movement with his famous “<a href="https://kinginstitute.stanford.edu/king-papers/documents/i-have-dream-address-delivered-march-washington-jobs-and-freedom">I Have a Dream</a>” speech. Through his passion and determination, he sparked interest, ambition, and courage in his audience. Today, reflecting on his message encourages many of us to think about our own dreams, goals, beliefs, and aspirations. For many Americans, one of those common goals is owning a home: a piece of land, a roof over our heads, and a place where we can grow and flourish.
If you’re dreaming of buying a home this year, start by connecting with a local real estate <a href="https://www.keepingcurrentmatters.com/2021/01/08/reasons-to-hire-a-real-estate-professional-infographic/">professional</a> to understand what goes into the process. With a trusted advisor at your side, you can then begin to answer the questions below to set yourself up for homebuying success.
1. How Can I Better Understand the Process, and How Much Can I Afford?
The <a href="https://www.keepingcurrentmatters.com/2020/12/04/the-path-to-homeownership-infographic/">process</a> of buying a home is not one to enter into lightly. You need to decide on key things like how long you plan on living in an area, school districts you prefer, what kind of commute works for you, and how much you can afford to spend.
Keep in mind, before you start the process to purchase a home, you’ll also need to apply for a <a href="https://www.keepingcurrentmatters.com/2020/12/21/the-dos-and-donts-after-applying-for-a-mortgage/">mortgage</a>. Lenders will evaluate several factors connected to your financial track record, one of which is your credit history. They’ll want to see how well you’ve been able to minimize past debts, so make sure you’ve been paying your student loans, credit cards, and car loans on time. If your financial situation has changed recently, be sure to discuss that with your lender as well. Most agents have loan officers they trust and will provide referrals for you.
According to <a href="https://www.consumerreports.org/mortgages/how-much-mortgage-can-you-afford/">ConsumerReports.org</a>:
“Financial planners recommend limiting the amount you spend on housing to 25 percent of your monthly budget.”
2. How Much Do I Need for a Down Payment?
In addition to knowing how much you can afford on a monthly mortgage payment, understanding how much you’ll need for a <a href="https://www.keepingcurrentmatters.com/2020/10/13/do-you-have-enough-money-saved-for-a-down-payment/">down payment</a> is another critical step. Thankfully, there are many different options and <a href="https://www.keepingcurrentmatters.com/2020/10/27/how-down-payment-assistance-opens-the-door-to-homeownership/">resources</a> in the market to potentially reduce the amount you may think you need to put down.
If you’re concerned about saving for a down payment, start small and be consistent. A little bit each month goes a long way. Jumpstart your savings by automatically adding a portion of your monthly paycheck into a separate savings account or house fund. AmericaSaves.org <a href="https://americasaves.org/for-savers/save-automatically">says</a>:
“Over time, these automatic deposits add up. For example, $50 a month accumulates to $600 a year and $3,000 after five years, plus interest that has compounded.”
Before you know it, you’ll have enough for a down payment if you’re disciplined and thoughtful about your process.
3. Saving Takes Time: Practice Living on a Budget
As tempting as it is to pass the extra time you may be spending at home these days with a little retail therapy, putting that extra money toward your down payment will help accelerate your path to homeownership. It’s the little things that count, so start trying to live on a slightly tighter budget if you aren’t doing so already. A budget will allow you to save more for your down payment and help you pay down other debts to improve your credit score.
A <a href="https://news.move.com/2020-10-07-Who-is-Todays-Millennial-Home-Buyer-Realtor-com-R-Unveils-New-Research-on-the-Largest-Generation-in-the-U-S#assets_all">survey</a> of millennial spending shows, “68% reported that shelter in place orders helped them save for their down payment.” Danielle Hale, Chief Economist at realtor.com, also notes:
“If there is any silver lining to the current economic landscape, it’s that mortgage rates are hanging around record lows…Additionally, shelter-in-place orders helped many who were fortunate enough to keep their jobs save for a down payment — one of the largest hurdles of buying a home. The combination of low rates and the opportunity to save is enabling many millennials to move up their home buying timeline.”
While you don’t need to cut all of the extras out of your current lifestyle, making smarter choices and limiting your spending in areas where you can slim down will make a big difference.
Bottom Line
If homeownership is on your dream list this year, take a good look at what you can prioritize to help you get there. To determine the steps you should take to start the process, connect with a local real estate professional today.2021-01-18T07:56:00-07:002021-01-18T07:59:02-07:00Carson Lowrytag:carsonlowryrealestate.com,2012-09-20:12398Things to Avoid after Applying for a Mortgage [INFOGRAPHIC]<img src="https://assets.site-static.com/userfiles/1890/image/20210115-NM.png" width="1300" height="2246" />
Some Highlights
There are a few key things to make sure you <a href="https://www.keepingcurrentmatters.com/2020/12/21/the-dos-and-donts-after-applying-for-a-mortgage/">avoid</a> after applying for a mortgage to help make sure you still qualify for your loan at the closing table.
Along the way, be sure to discuss any changes in income, assets, or credit with your lender, so you don’t unintentionally jeopardize your application.
The best plan is to fully disclose your intentions with your lender before you do anything financial in nature.
2021-01-15T07:28:00-07:002021-01-15T07:30:09-07:00Carson Lowrytag:carsonlowryrealestate.com,2012-09-20:12390Why Right Now May Be the Time to Sell Your House<img src="https://assets.site-static.com/userfiles/1890/image/20210114-KCM-Share.png" width="750" height="410" />
The housing market made an incredible recovery in 2020 and is now positioned for an even stronger year in 2021. Record-low mortgage interest rates are a driving factor in this continued momentum, with average rates hovering at historic all-time <a href="http://www.freddiemac.com/pmms/">lows</a>.
According to the latest <a href="https://cdn.nar.realtor/sites/default/files/documents/2020-11-realtors-confidence-index-12-22-2020.pdf">Realtors Confidence Index Survey</a> from the National Association of Realtors (NAR), buyer demand across the country is incredibly strong. That’s not the case, however, on the supply side. Seller traffic is simply not keeping up. Here’s a breakdown by state:<a href="https://files.keepingcurrentmatters.com/wp-content/uploads/2021/01/13171317/20210114-NM-Eng-1.jpg" class="lightbox-added aligncenter"><img loading="lazy" class="aligncenter wp-image-2076525 lazy-loaded" src="https://files.keepingcurrentmatters.com/wp-content/uploads/2021/01/13171317/20210114-NM-Eng-1.jpg" data-lazy-type="image" data-src="https://files.keepingcurrentmatters.com/wp-content/uploads/2021/01/13171317/20210114-NM-Eng-1.jpg" alt="Why Right Now May Be the Time to Sell Your House | Keeping Current Matters" width="550" height="275" srcset="https://files.keepingcurrentmatters.com/wp-content/uploads/2021/01/13171317/20210114-NM-Eng-1.jpg 1000w, https://files.keepingcurrentmatters.com/wp-content/uploads/2021/01/13171317/20210114-NM-Eng-1-300x150.jpg 300w, https://files.keepingcurrentmatters.com/wp-content/uploads/2021/01/13171317/20210114-NM-Eng-1-768x384.jpg 768w" data-srcset="" sizes="(max-width: 550px) 100vw, 550px" /></a>As the maps show, buyer traffic is high, but seller traffic is low. With so few homes for sale right now, record-low inventory is creating a mismatch between supply and demand.
NAR also just <a href="https://www.nar.realtor/newsroom/existing-home-sales-decrease-2-5-in-november">reported</a> that the actual number of homes currently for sale stands at 1.28 million, down 22% from one year ago (1.64 million). Additionally, inventory is at an all-time low with 2.3 months supply available at the current sales pace. In a normal market, that number would be 6.0 months of <a href="https://www.keepingcurrentmatters.com/2020/12/10/why-it-makes-sense-to-sell-your-house-this-holiday-season/">inventory</a> – significantly higher than it is today.
What does this mean for buyers and sellers?
Buyers need to remain patient in the search process. At the same time, they must be ready to act immediately once they find the right home since <a href="https://www.keepingcurrentmatters.com/2020/10/16/how-to-prepare-for-a-bidding-war-infographic/">bidding wars</a> are more common when so few houses are available for sale.
Sellers may not want to wait until spring to put their houses on the market, though. With such high buyer demand and such a low supply, now is the perfect time to sell a house on optimal terms.
Bottom Line
The real estate market is entering the year like a lion. There’s no indication it will lose that roar, assuming inventory continues to come to market.2021-01-14T09:18:00-07:002021-01-14T09:20:30-07:00Carson Lowrytag:carsonlowryrealestate.com,2012-09-20:123844 Reasons People Are Buying Homes in 2021<img src="https://assets.site-static.com/userfiles/1890/image/20210112-KCM-Share.png" width="750" height="410" />
According to many <a href="https://www.keepingcurrentmatters.com/2020/12/31/four-expert-views-on-the-2021-housing-market/">experts</a>, the real estate market is expected to continue growing in 2021, and it’s largely driven by the lasting impact the pandemic is having on our lifestyles. As many of us spend extra time at home, we’re reevaluating what “home” means and what we may need in one going forward.
Here are 4 reasons people are reconsidering where they live and why they’re expecting to buy a home this year.
1. Record-Low Mortgage Interest Rates
In 2020, the average interest rate for a 30-year fixed mortgage hit a record low 16 times, continuing to fall further below 3%. According to Freddie Mac, the average 30-year fixed interest rate today is <a href="http://www.freddiemac.com/pmms/">2.65%</a>. Many wonder how low these rates will go and how long they’ll last. Len Keifer, Deputy Chief Economist for Freddie Mac, <a href="https://www.bankrate.com/mortgages/mortgage-rate-forecast-for-january-2021/">advises</a>:
“If you’ve found a home that fits your needs at a price you can afford, it might be better to act now rather than wait for future rate declines that may never come and a future that likely holds very tight inventory.”
This sense of urgency is driving many to buy this year.
2. Working from Home
Remote work is a new normal for many businesses, and it’s lasting longer than most expected. Many in the workforce today are discovering they don’t need to live close to the office anymore and they can get more for their money by moving a little further outside of the city limits. David Mele, President at Homes.com, <a href="https://press.homes.com/pandemic-reshapes-homebuying-rental-decisions-homes-com-survey/">says</a>:
“The surge in the work-from-home population has rewritten the playbook for many homebuying and rental decisions, from when and where to relocate, to what people are looking for in their next residence.”
The reality is, for some people, working remotely in their current home is challenging, especially when there may be other options available.
3. More Outdoor Space
Another new priority for homeowners is having more usable outdoor space. Being at home is driving those in some areas to seek less densely populated neighborhoods so they have more room to stretch their legs. In addition, those living in apartments and townhomes are often looking for extra square footage, both inside and out.
According to the State of Home Spending report by <a href="https://www.homeadvisor.com/r/wp-content/uploads/2020/12/DP6355-StateOfHomeSpending-2020-R4.pdf">HomeAdvisor</a>, of the households surveyed, almost half reported spending 27% more on outdoor living over the past year. This is a trend that’s expected to grow in 2021 and beyond.
4. Avoiding Renovations
It’s recently come to light that many homeowners would also rather buy a new home than go through the process of fixing up the one they have. According to the 2020 Profile of Home Buyers and Sellers <a href="https://www.nar.realtor/research-and-statistics/research-reports/highlights-from-the-profile-of-home-buyers-and-sellers">report</a> from the National Association of Realtors (NAR), 44% of homebuyers purchased a new home to “avoid renovations or problems with the plumbing or electricity.”
Depending on what needs to be addressed, today’s high buyer demand may make it possible to skip some <a href="https://www.keepingcurrentmatters.com/2020/10/30/should-i-renovate-my-house-before-i-sell-it-infographic/">renovations</a> before selling. Many of these homeowners have prioritized buying over renovating for convenience and potential cost savings.
Bottom Line
It’s clear that homeownership needs are changing. As a result, Americans are expected to move in record numbers this year. If you’re trying to decide if now is the right time to buy a home, contact a local real estate professional today to discuss your options.2021-01-12T08:13:00-07:002021-01-12T08:15:18-07:00Carson Lowrytag:carsonlowryrealestate.com,2012-09-20:12382What Does 2021 Have in Store for Home Values?<img src="https://assets.site-static.com/userfiles/1890/image/20210107-KCM-Share.png" width="750" height="410" />
According to the latest CoreLogic <a href="https://www.corelogic.com/insights-download/home-price-index.aspx">Home Price Insights Report</a>, nationwide home values increased by 8.2% over the last twelve months. The dramatic rise was brought about as the inventory of homes for sale reached historic lows at the same time buyer demand was buoyed by record-low mortgage rates. As CoreLogic <a href="https://www.corelogic.com/blog/2020/12/us-for-sale-home-supply-tightened-during-pandemic.aspx">explained</a>:
“Home price growth remained consistently elevated throughout 2020. Home sales for the year are expected to register above 2019 levels. Meanwhile, the availability of for-sale homes has dwindled as demand increased and coronavirus (COVID-19) outbreaks continued across the country, which delayed some sellers from putting their homes on the market.
While the pandemic left many in positions of financial insecurity, those who maintained employment and income stability are also incentivized to buy given the record-low mortgage rates available; this is increasing buyer demand while for-sale inventory is in short supply.”
Where will home values go in 2021?
Home price appreciation in 2021 will continue to be determined by this imbalance of supply and demand. If supply remains low and demand is high, prices will continue to increase.
Housing Supply
According to the National Association of Realtors (NAR), the current number of single-family homes for sale is 1,080,000. At the same time last year, that number stood at 1,450,000. We are entering 2021 with approximately 270,000 fewer homes for sale than there were one year ago.
However, there is some speculation that the inventory crush will ease somewhat as we move through the new year for two reasons:
1. As the health crisis eases, more homeowners will be comfortable putting their houses on the market.
2. Some households impacted financially by the pandemic will be forced to sell.
Housing Demand
Low mortgage rates have driven buyer demand over the last twelve months. According to Freddie Mac, rates stood at <a href="http://www.freddiemac.com/pmms/archive.html">3.72%</a> at the beginning of 2020. Today, we’re starting 2021 with rates one full percentage point lower than that. Low rates create a great opportunity for homebuyers, which is one reason <a href="https://www.keepingcurrentmatters.com/2020/12/31/four-expert-views-on-the-2021-housing-market/">why</a> demand is expected to remain high throughout the new year.
Taking into consideration these projections on housing supply and demand, real estate analysts forecast homes will continue to appreciate in 2021, but that appreciation may be at a steadier pace than last year. Here are their forecasts:<a href="https://files.keepingcurrentmatters.com/wp-content/uploads/2021/01/08134230/20210107-NM-Eng-1-1.jpg" class="lightbox-added aligncenter hoverZoomLink"><img loading="lazy" class="aligncenter wp-image-2076483 lazy-loaded" src="https://files.keepingcurrentmatters.com/wp-content/uploads/2021/01/08134230/20210107-NM-Eng-1-1.jpg" data-lazy-type="image" data-src="https://files.keepingcurrentmatters.com/wp-content/uploads/2021/01/08134230/20210107-NM-Eng-1-1.jpg" alt="What Does 2021 Have in Store for Home Values? | Keeping Current Matters" width="550" height="413" srcset="https://files.keepingcurrentmatters.com/wp-content/uploads/2021/01/08134230/20210107-NM-Eng-1-1.jpg 1000w, https://files.keepingcurrentmatters.com/wp-content/uploads/2021/01/08134230/20210107-NM-Eng-1-1-300x225.jpg 300w, https://files.keepingcurrentmatters.com/wp-content/uploads/2021/01/08134230/20210107-NM-Eng-1-1-768x576.jpg 768w" data-srcset="" sizes="(max-width: 550px) 100vw, 550px" /></a>
Bottom Line
There’s still a very limited number of homes for sale for the great number of purchasers looking to buy them. As a result, the concept of “supply and demand” mandates that home values in the country will continue to appreciate.2021-01-11T07:47:00-07:002021-01-11T07:48:25-07:00Carson Lowrytag:carsonlowryrealestate.com,2012-09-20:12380Reasons to Hire a Real Estate Professional [INFOGRAPHIC]<img src="https://assets.site-static.com/userfiles/1890/image/20210108-NM.png" width="1301" height="2149" />
Some Highlights
Choosing the right real estate professional to work with is one of the most important decisions you can make in your homebuying or selling process.
The right agent can explain current market conditions and break down exactly what they mean for you.
If you’re considering buying or selling a home this year, make sure to work with someone who has the experience to answer all of your questions about pricing, contracts, negotiations, and more.
2021-01-08T07:14:00-07:002021-01-08T07:17:10-07:00Carson Lowrytag:carsonlowryrealestate.com,2012-09-20:12379Is This the Year to Sell My House?<img src="https://assets.site-static.com/userfiles/1890/image/20200107-KCM-Share.png" width="750" height="410" />
If one of the questions you’re asking yourself is, “Should I sell my house this year?” consumer sentiment about selling today should boost your confidence in the right direction. Even with the current health crisis that continues to challenge our nation, Americans still feel good about selling a house. Here’s why.
According to the latest <a href="https://www.fanniemae.com/newsroom/fannie-mae-news/home-purchase-sentiment-dips-slightly-may-have-plateaued-now">Home Purchase Sentiment Index</a> from Fannie Mae, 57% of consumer respondents to their survey indicate now is a good time to buy a home, while 59% feel it’s a good time to sell one:
“The percentage of respondents who say it is a good time to sell a home remained the same at 59%, while the percentage who say it’s a bad time to sell decreased from 35% to 33%. As a result, the net share of those who say it is a good time to sell increased 2 percentage points month over month.”
As you can see, many still believe that, despite everything going on in the world, it is still a good time to sell a house.
Why is now a good time to sell?
There simply are not enough homes available to meet today’s <a href="https://www.keepingcurrentmatters.com/2021/01/05/why-not-to-wait-until-spring-to-make-a-move/">buyer demand</a>, and they’re selling just as quickly as they’re coming to the market. According to the National Association of Realtors (NAR), unsold inventory available today sits at a <a href="https://www.nar.realtor/newsroom/existing-home-sales-decrease-2-5-in-november">2.3-month supply</a> at the current sales pace, which is down from a 2.5-month supply from the previous month. This record-low inventory is not even half of what we need for a normal or neutral housing market, which should have a 6.0-month supply of unsold inventory to balance out.
With so few homes available for buyers to choose from, we’re in a true <a href="https://www.keepingcurrentmatters.com/2020/12/10/why-it-makes-sense-to-sell-your-house-this-holiday-season/">sellers’ market</a>. Homeowners ready to make a move right now have the opportunity to negotiate the best possible contracts with buyers who are feeling the pull of intense competition when it comes to finding their dream home. Lawrence Yun, Chief Economist for NAR, <a href="https://www.nar.realtor/newsroom/pending-home-sales-slide-2-6-in-november">notes</a> how quickly homes are selling right now, further confirming the benefits to sellers this season:
“The market is incredibly swift this winter with the listed homes going under contract on average at less than a month due to a backlog of buyers wanting to take advantage of record-low mortgage rates.”
However, this sweet spot for sellers won’t last forever. As more homes are listed this year, this tip toward sellers may start to wane. According to Danielle Hale, Chief Economist at realtor.com, <a href="https://www.realtor.com/news/trends/housing-market-2021-forecast/">more choices</a> for buyers are on the not-too-distant horizon:
“The bright spot for buyers is that more homes are likely to become available in the last six months of 2021. That should give folks more options to choose from and take away some of their urgency. With a larger selection, buyers may not be forced to make a decision in mere hours and will have more time to make up their minds.”
Bottom Line<br />
If you’re ready to make a move, you can feel good about the current sentiment in the market and the advantageous conditions for today’s sellers. Contact a local real estate professional today to determine the best next step when it comes to selling your house this year.2021-01-07T08:53:00-07:002021-01-07T08:55:51-07:00Carson Lowrytag:carsonlowryrealestate.com,2012-09-20:12374Why Not to Wait Until Spring to Make a Move<img src="https://assets.site-static.com/userfiles/1890/image/20210105-KCM-Share.png" width="750" height="410" />
The housing market recovery coming into the new year has been nothing short of remarkable. Many experts agree the turnaround from the nation’s economic pause is playing out extremely well for real estate, and the current market conditions are truly making this winter an ideal time to make a move. Here’s a dive into some of the biggest wins for homebuyers this season.
1. Mortgage Rates Are Historically Low
In 2020, mortgage rates hit all-time lows 16 times. Continued low rates have set buyers up for significant long-term gains. In fact, realtor.com notes:
“Given this means homes could cost potentially tens of thousands less over the lifetime of the loan.”
Essentially, it’s less expensive to borrow money for a home loan today than it has been in <a href="https://www.keepingcurrentmatters.com/2020/12/22/the-difference-a-year-makes-for-homeownership/">years past</a>. Although mortgage rates are expected to remain relatively <a href="https://www.keepingcurrentmatters.com/2020/12/18/2021-housing-forecast-infographic/">low</a> in 2021, even the slightest increase can make a big difference in your payments over the lifetime of a home loan. So, this is a huge opportunity to capitalize on right now before mortgage rates start to rise.
2. Equity Is Growing
According to <a href="https://www.realestateconsulting.com/">John Burns Consulting</a>, 58.7% of homes in the U.S. have at least 60% equity, and 42.1% of all homes in this country are mortgage-free, meaning they’re owned free and clear.
In addition, <a href="https://www.corelogic.com/insights-download/homeowner-equity-report.aspx">CoreLogic</a> notes the average <a href="https://www.keepingcurrentmatters.com/2020/12/17/homeowner-equity-increases-an-astonishing-1-trillion/">equity</a> homeowners gained since last year is $17,000. That’s a tremendous amount of forced savings for homeowners, and an opportunity to use this increasing equity to make a move into a home that fits your changing needs this season.
3. Home Prices Are Appreciating
According to leading experts, home prices are forecasted to continue appreciating. Today, many experts are projecting more <a href="https://www.keepingcurrentmatters.com/2020/12/09/are-home-prices-headed-toward-bubble-territory/">moderate</a> home price growth than last year, but still moving in an upward direction through 2021.
Knowing home values are increasing while mortgage rates are so low should help you feel confident that buying a home before prices rise even higher is a strong long-term investment.
4. There Are Not Enough Homes for Sale
With today’s <a href="https://www.keepingcurrentmatters.com/2020/12/10/why-it-makes-sense-to-sell-your-house-this-holiday-season/">low inventory</a> of homes on the market, which is contributing to this home price appreciation, sellers are in the driver’s seat. The competition is high among <a href="https://www.keepingcurrentmatters.com/2020/12/15/the-holidays-arent-stopping-homebuyers-this-year/">buyers</a>, so homes are selling quickly.
Making a move while so many buyers are looking for homes to purchase may mean your house rises to the top of the buyer pool. Selling your house before more listings come to the market in the traditionally busy spring market might be your best chance to shine.
Bottom Line
If you’re considering making a move, this may be your moment, especially with today’s low mortgage rates and limited inventory. Reach out to a local real estate professional today to get set up for homebuying success in the new year.2021-01-05T07:05:00-07:002021-01-05T07:08:46-07:00Carson Lowrytag:carsonlowryrealestate.com,2012-09-20:123723 Must-Do’s When Selling Your House This Year<img src="https://assets.site-static.com/userfiles/1890/image/20210104-KCM-Share.png" width="750" height="410" />
It’s exciting to put a house on the market and to think about making new memories in new spaces. However, despite the anticipation of what’s to come, we can still have deep sentimental attachments to the home we’re leaving behind. Growing emotions can help or hinder a sale depending on how we manage them.
When it comes to the bottom line, homeowners need to know what it takes to avoid costly mistakes when it’s time to move. Being mindful and prepared for the process can help you stay on the right track when selling your house this year.
1. Price Your Home Right
When <a href="https://www.keepingcurrentmatters.com/2020/12/10/why-it-makes-sense-to-sell-your-house-this-holiday-season/">inventory</a> is low, like it is in the current market, it’s common to think buyers will pay whatever we ask when setting a listing price. Believe it or not, that’s not always true. Don’t forget that the buyer’s bank will send an appraiser to determine the fair value for your house. The bank will not lend more than what the house is worth, so be aware that you might need to renegotiate the <a href="https://www.keepingcurrentmatters.com/2020/12/28/why-its-important-to-price-your-house-right-today/">price</a> after the appraisal. A real estate professional will help you set the true value of your home.
2. Keep Your Emotions in Check
Today, homeowners are living in their houses for a longer period of time. Since 1985, the average tenure, or the time a homeowner has owned their home, has increased from 5 to 10 years (as shown in the graph below):<a href="https://files.keepingcurrentmatters.com/wp-content/uploads/2020/12/17112729/20210104-NM-Eng-1.jpg" class="lightbox-added aligncenter hoverZoomLink"><img loading="lazy" class="aligncenter wp-image-2076264 lazy-loaded" src="https://files.keepingcurrentmatters.com/wp-content/uploads/2020/12/17112729/20210104-NM-Eng-1.jpg" data-lazy-type="image" data-src="https://files.keepingcurrentmatters.com/wp-content/uploads/2020/12/17112729/20210104-NM-Eng-1.jpg" alt="3 Must-Do’s When Selling Your House This Year | Keeping Current Matters" width="550" height="413" srcset="https://files.keepingcurrentmatters.com/wp-content/uploads/2020/12/17112729/20210104-NM-Eng-1.jpg 1000w, https://files.keepingcurrentmatters.com/wp-content/uploads/2020/12/17112729/20210104-NM-Eng-1-300x225.jpg 300w, https://files.keepingcurrentmatters.com/wp-content/uploads/2020/12/17112729/20210104-NM-Eng-1-768x576.jpg 768w" data-srcset="" sizes="(max-width: 550px) 100vw, 550px" /></a>This is several years longer than what used to be the historical norm. The side effect, however, is when you stay in one place for so long, you may get even more emotionally attached to your space. If it’s the first home you bought or the house where your children grew up, it very likely means something extra special to you. Every room has memories, and it’s hard to detach from the sentimental value.
For some homeowners, that makes it even harder to negotiate and separate the emotional value of the house from the fair market price. That’s why you need a real estate professional to help you with the negotiations along the way.
3. Stage Your Home Properly
We’re generally quite proud of our décor and how we’ve customized our houses to make them our own unique homes, but not all buyers will feel the same way about your design. That’s why it’s so important to make sure you stage your house with the buyer in mind.
Buyers want to envision themselves in the space so it truly feels like it could be their own. They need to see themselves inside with their furniture and keepsakes – not your pictures and decorations. Stage and declutter so they can visualize their own dreams as they walk down the hall. A real estate professional can help you with tips to get your home ready to stage and sell.
Bottom Line
Today’s sellers’ market might be your best chance to make a move. If you’re considering selling your house, reach out to a local real estate professional to help you navigate through the process while prioritizing these must-do’s.2021-01-04T08:32:00-07:002021-01-04T08:35:35-07:00Carson Lowrytag:carsonlowryrealestate.com,2012-09-20:12368Why Selling Your House on Your Own in 2021 Is a Mistake<img src="https://assets.site-static.com/userfiles/1890/image/20201230-KCM-Share.png" width="750" height="410" />
There are many benefits to working with a real estate professional when selling your house. During challenging times, like what we face today, it becomes even more important to have an expert you trust to help guide you through the process. If you’re considering selling on your own, known in the industry as a For Sale By Owner (FSBO), it’s critical to consider the following items.
1. Your Safety Is a Priority
Your safety should always come first, and that’s more crucial than ever given the current health situation in our country. When you FSBO, it is incredibly difficult to control entry into your home. A real estate professional will have the proper protocols in place to protect not only your belongings but your health and well-being too. From regulating the number of people in your home at one time to ensuring proper sanitization during and after a showing, and even facilitating virtual tours, real estate professionals are equipped to follow the latest industry <a href="https://www.nar.realtor/coronavirus-a-guide-for-realtors">standards</a> recommended by the National Association of Realtors (NAR) to help protect you and your potential buyers.
2. A Powerful Online Strategy Is a Must to Attract a Buyer
Recent <a href="https://www.nar.realtor/research-and-statistics/research-reports/highlights-from-the-profile-of-home-buyers-and-sellers">studies</a> from NAR have shown that, even before COVID-19, the first step 43% of all buyers took when looking for a home was to search online. Throughout the process, that number jumps to 97%. Today, those numbers have grown exponentially. Most real estate agents have developed a strong Internet and social media strategy to promote the sale of your house.
3. There Are Too Many Negotiations
Here are just a few of the people you’ll need to negotiate with if you decide to FSBO:
The buyer, who wants the best deal possible
The buyer’s agent, who solely represents the best interest of the buyer
The inspection company, which works for the buyer and will almost always find challenges with the house
The appraiser, if there is a question of value
As part of their training, agents are taught how to negotiate every aspect of the real estate transaction and how to mediate the emotions felt by buyers looking to make what is probably the largest purchase of their lives.
4. You Won’t Know if Your Purchaser Is Qualified for a Mortgage
Having a buyer who wants to purchase your house is the first step. Making sure they can afford to buy it is just as important. As a FSBO, it’s almost impossible to be involved in the mortgage process of your buyer. A real estate professional is trained to ask the appropriate questions and, in most cases, will be intimately aware of the progress being made toward a purchaser’s mortgage commitment. You need someone who’s working with lenders every day to guarantee your buyer makes it to the closing table.
5. FSBOing Is Becoming More Difficult from a Legal Standpoint
The documentation involved in the selling process is growing dramatically as more and more disclosures and regulations become mandatory. In an increasingly litigious society, the agent acts as a third-party to help the seller avoid legal jeopardy. This is one of the major reasons why the percentage of people FSBOing has dropped from 19% to <a href="https://www.nar.realtor/research-and-statistics/research-reports/highlights-from-the-profile-of-home-buyers-and-sellers">8%</a> over the last 20+ years.
6. You Net More Money When Using an Agent
Many homeowners think they’ll save the real estate commission by selling on their own. Realize that the main reason buyers look at FSBOs is because they also believe they can save the real estate agent’s commission. The seller and buyer can’t both save on the commission.
A <a href="https://collateralanalytics.com/wp-content/uploads/2017/08/CA-RESEARCH-Saving-Real-Estate-Commissions-at-Any-Price.pdf">study</a> by Collateral Analytics revealed that FSBOs don’t actually save anything by forgoing the help of an agent. In some cases, the seller may even net less money from the sale. The study found the difference in price between a FSBO and an agent-listed home was an average of 6%. One of the main reasons for the price difference is effective exposure:
“Properties listed with a broker that is a member of the local MLS will be listed online with all other participating broker websites, marketing the home to a much larger buyer population. And those MLS properties generally offer compensation to agents who represent buyers, incentivizing them to show and sell the property and again potentially enlarging the buyer pool.”<br />
The more buyers that view a home, the greater the chance a bidding war will take place, potentially driving the price higher, too.
Bottom Line
Listing on your own leaves you to manage the entire transaction by yourself. Why do that when you can hire an agent and still net the same amount of money? Before you decide to take on the challenge of selling your house alone, reach out to a local real estate professional to discuss your options.2020-12-30T12:36:00-07:002021-01-02T11:17:46-07:00Carson Lowrytag:carsonlowryrealestate.com,2012-09-20:12364Why It’s Important to Price Your House Right Today<img src="https://assets.site-static.com/userfiles/1890/image/20201228-KCM-Share.png" width="750" height="410" />
Even in today’s <a href="https://www.keepingcurrentmatters.com/2020/12/10/why-it-makes-sense-to-sell-your-house-this-holiday-season/">sellers’ market</a>, setting the right price for your house is one of the most valuable things you can do. According to the <a href="https://cdn.nar.realtor/sites/default/files/documents/forecast-Q3-2020-us-economic-outlook-0-11-17-2020.pdf">U.S. Economic Outlook</a> by the National Association of Realtors (NAR), existing home prices nationwide are forecasted to increase by 4.5% in 2021. This means experts anticipate home values will continue climbing next year. Danielle Hale, Chief Economist for realtor.com, <a href="https://www.realtor.com/research/2021-national-housing-forecast/">notes</a>:
“We expect price gains to ease somewhat in 2021 and end 5.7% above 2020 levels, decelerating steadily through the spring and summer, and then gradually reaccelerating toward the end of the year.”
How to Price Your House
When it comes to setting the right price for your house, the goal is to increase visibility and drive more buyers your way. Instead of trying to win the negotiation with one buyer, you should price your house so that demand is maximized and more buyers want to take a look.
As a seller in today’s market, you might be thinking about pricing your house on the high end while so many of today’s buyers are <a href="https://www.keepingcurrentmatters.com/2020/11/23/dont-let-buyer-competition-keep-you-from-purchasing-a-home/">searching</a> harder than ever just to find a home to purchase. But here’s the thing – a high price tag does not mean you’re going to cash in big on the sale. It’s actually more likely to deter buyers.
Right now, even when there are so few houses for sale, your house is more likely to sit on the market longer or require a price drop that can send buyers running if it isn’t priced just right from the very beginning.<a href="https://files.keepingcurrentmatters.com/wp-content/uploads/2020/12/15152741/20201228-NM-Eng-1.jpg" class="lightbox-added aligncenter hoverZoomLink"><img loading="lazy" class="aligncenter wp-image-2076208 lazy-loaded" src="https://files.keepingcurrentmatters.com/wp-content/uploads/2020/12/15152741/20201228-NM-Eng-1.jpg" data-lazy-type="image" data-src="https://files.keepingcurrentmatters.com/wp-content/uploads/2020/12/15152741/20201228-NM-Eng-1.jpg" alt="Why It’s Important to Price Your House Right Today | Keeping Current Matters" width="550" height="310" srcset="https://files.keepingcurrentmatters.com/wp-content/uploads/2020/12/15152741/20201228-NM-Eng-1.jpg 1000w, https://files.keepingcurrentmatters.com/wp-content/uploads/2020/12/15152741/20201228-NM-Eng-1-300x169.jpg 300w, https://files.keepingcurrentmatters.com/wp-content/uploads/2020/12/15152741/20201228-NM-Eng-1-768x432.jpg 768w" data-srcset="" sizes="(max-width: 550px) 100vw, 550px" /></a>
It’s important to make sure your house is priced correctly by working with a trusted real estate professional throughout the process. When you price it competitively from the start, you won’t be negotiating with one buyer. Instead, you’ll likely have multiple buyers competing for the house, potentially increasing the final sale price.
The key is to make sure your house is priced to sell immediately. This way, it will be seen by the greatest number of buyers. More than one of them may be interested, and it will be more likely to sell at a competitive price.
Bottom Line
Reach out to a local real estate professional to price your house correctly from the start so you can maximize your exposure and your return.
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2020-12-28T15:18:00-07:002021-01-02T11:18:50-07:00Carson Lowrytag:carsonlowryrealestate.com,2012-09-20:12357The Difference a Year Makes for Homeownership<img width="750" height="410" src="https://files.mykcm.com/2020/12/18155948/20201222-KCM-Share-1.jpg" class="attachment-entry size-entry wp-post-image" alt="The Difference a Year Makes for Homeownership | MyKCM" loading="lazy" srcset="https://files.mykcm.com/2020/12/18155948/20201222-KCM-Share-1.jpg 750w, https://files.mykcm.com/2020/12/18155948/20201222-KCM-Share-1-600x328.jpg 600w, https://files.mykcm.com/2020/12/18155948/20201222-KCM-Share-1-100x55.jpg 100w" sizes="(max-width: 750px) 100vw, 750px" style="font-size: 17px;" />
Over the past year, mortgage rates have <a href="https://www.simplifyingthemarket.com/2020/11/19/will-mortgage-rates-remain-low-next-year/?a=107633-0a4a5d8f417550dbf26d9dbea5bb559f" title="fallen" target="_blank" rel="noopener noreferrer">fallen</a> more than a full percentage point, hitting a new historic low 15 times. This is a great driver for homeownership, as today’s low rates provide consumers with some significant benefits. Here’s a look at three of them.
1. Move-up or Downsize: One option is to consider moving into a new home, putting the <a href="https://www.simplifyingthemarket.com/2020/12/17/homeowner-equity-increases-an-astonishing-1-trillion/?a=107633-0a4a5d8f417550dbf26d9dbea5bb559f" title="equity" target="_blank" rel="noopener noreferrer">equity</a> you’ve likely gained in your current house toward a down payment on a new one that better meets your needs – something that’s truly a perfect fit, especially if your lifestyle has changed this year.
2. Become a First-Time Homebuyer: There are many financial and non-financial benefits to owning a home, and the most important thing is to first decide when the time is right for you. You have to determine that on your own, but know that now is a great time to buy if you’re considering it. Just take a look at the cost of <a href="https://www.simplifyingthemarket.com/2020/08/28/the-cost-of-renting-vs-buying-a-home-infographic-4/?a=107633-0a4a5d8f417550dbf26d9dbea5bb559f" title="renting vs. buying" target="_blank" rel="noopener noreferrer">renting vs. buying</a>.
3. Refinance: If you already own a home, you may decide you’re going to refinance. It’s one way to lock in a lower monthly payment and save more over time. However, it also means paying upfront closing costs, too. If you want to take this route, you have to answer the question: <a href="https://www.simplifyingthemarket.com/2020/03/25/is-now-a-good-time-to-refinance-my-home/?a=107633-0a4a5d8f417550dbf26d9dbea5bb559f" title="Should I refinance my home?" target="_blank" rel="noopener noreferrer">Should I refinance my home?</a>
Why 2020 Was a Great Year for Homeownership
Last year, the average mortgage rate was <a href="http://www.freddiemac.com/pmms/archive.html?year=2019" title="3.93%" target="_blank" rel="noopener noreferrer">3.93%</a> (substantially higher than it is <a href="https://freddiemac.gcs-web.com/node/21696/pdf" title="today" target="_blank" rel="noopener noreferrer">today</a>). If you waited for a better time to make a move, market conditions have improved significantly. Today’s low mortgage rates are a huge <a href="https://www.simplifyingthemarket.com/2020/12/02/with-home-values-surging-is-it-still-affordable-to-buy-right-now/?a=107633-0a4a5d8f417550dbf26d9dbea5bb559f" title="perk" target="_blank" rel="noopener noreferrer">perk</a> for buyers, so it’s a great time to get more for your money and consider a new home.
The chart below shows how much you would save per month based on today’s rates compared to what you would have paid if you purchased a home exactly one year ago, depending on how much you finance:<a href="https://files.simplifyingthemarket.com/2020/12/18123418/20201222-MEM-Eng-1.jpg?a=107633-0a4a5d8f417550dbf26d9dbea5bb559f" target="_blank" rel="noopener noreferrer" class="hoverZoomLink"><img class="aligncenter wp-image-96892" src="https://files.mykcm.com/2020/12/18123418/20201222-MEM-Eng-1.jpg" alt="The Difference a Year Makes for Homeownership | MyKCM" width="600" height="450" /></a>
Bottom Line
If you’ve been waiting since last year to make your move into homeownership or to find a house that better meets your needs, today’s low mortgage rates may be just what you need to get the process going. Let’s connect today to discuss how you may benefit from the current rates.
<img id="hzDownscaled" style="position: absolute; top: -10000px;" />2020-12-22T15:25:00-07:002021-01-02T11:15:38-07:00Carson Lowrytag:carsonlowryrealestate.com,2012-09-20:123542021 Housing Forecast [INFOGRAPHIC]<img src="https://assets.site-static.com/userfiles/1890/image/20201218-MEM.png" width="1301" height="2753" />2020-12-18T13:20:00-07:002021-01-02T11:19:56-07:00Carson Lowrytag:carsonlowryrealestate.com,2012-09-20:123513 Reasons to Be Optimistic about Real Estate in 2021<img width="750" height="410" src="https://files.mykcm.com/2020/12/15104831/20201216-KCM-Share.jpg" class="attachment-entry size-entry wp-post-image" alt="3 Reasons to Be Optimistic about Real Estate in 2021 | MyKCM" loading="lazy" srcset="https://files.mykcm.com/2020/12/15104831/20201216-KCM-Share.jpg 750w, https://files.mykcm.com/2020/12/15104831/20201216-KCM-Share-600x328.jpg 600w, https://files.mykcm.com/2020/12/15104831/20201216-KCM-Share-100x55.jpg 100w" sizes="(max-width: 750px) 100vw, 750px" style="font-size: 17px;" />
This year will be remembered for many reasons, and optimism is one thing that’s been in short supply since the spring. We’re experiencing a global pandemic, social unrest, an economic downturn, and natural disasters, just to name a few. The challenges brought on by the health crisis have also forced many homeowners to reevaluate their space and what they need in a home going into 2021. So, experts are forecasting that next year is one in which we can be optimistic about real estate for three key reasons.
1. The Economy Is Expected to Continue Improving
Tim Duy from the University of Oregon puts it this <a href="https://www.bloomberg.com/opinion/articles/2020-11-11/biden-is-stepping-into-a-dream-economic-scenario?srnd=opinion&sref=BRvilyBN" title="way" target="_blank" rel="noopener noreferrer">way</a>:
“There is nothing fundamentally ‘broken’ in the economy that needs to heal…there was no obvious financial bubble driving excessive activity in any one economic sector when the pandemic hit…With Covid-19 cases surging again, it is understandably hard to look optimistically to the other side of this winter…Don’t let the near-term challenges distract from the economic stage being set for next four years.”
2. Interest Rates Are Projected to Stay Low
In the latest projections from Freddie Mac, interest rates for a 30-year fixed-rate mortgage are expected to remain at or near 3% next year. These low rates will continue to make homes more affordable, driving demand for housing in 2021.<a href="https://files.simplifyingthemarket.com/2020/12/15104833/20201216-MEM-Eng-1.jpg?a=107633-0a4a5d8f417550dbf26d9dbea5bb559f" target="_blank" rel="noopener noreferrer"><img class="aligncenter wp-image-96787" src="https://files.mykcm.com/2020/12/15104833/20201216-MEM-Eng-1.jpg" alt="3 Reasons to Be Optimistic about Real Estate in 2021 | MyKCM" width="600" height="450" /></a>
3. Future Home Sales Are Forecasted to Grow
While the economy improves and interest rates remain low, homes are also expected to continue appreciating as more people buy in the coming year. Danielle Hale, Chief Economist at realtor.com, <a href="https://www.realtor.com/research/2021-national-housing-forecast/" title="says" target="_blank" rel="noopener noreferrer">says</a>:
“We expect home sales in 2021 to come in 7.0% above 2020 levels, following a more normal seasonal trend and building momentum through the spring and sustaining the pace in the second half of the year.”
Bottom Line
Experts forecast that buyers and sellers are going to be active in 2021. If you’ve thought about buying or selling your home this year but have held off, now may be the time to take advantage of this market. Let’s connect to take the first step toward your new home today.
2020-12-17T08:40:00-07:002021-01-02T11:20:11-07:00Carson Lowry