2023 National Real Estate Market

2023 National Real Estate Market 9 min read “"The best time to buy a house is always five years ago." - Ray Brown   There’s an old adage in real estate: location, location, location. But ever since the Federal Reserve began its series of inflation-fighting interest rate hikes last year, a new mantra has emerged: mortgage rates, mortgage rates, mortgage rates. Higher rates had the immediate impact of dampening homebuyer affordability and demand. But this year, we’re seeing further repercussions. While analysts expected listing inventory to swell as sales declined, instead, homeowners have been pushing off plans to sell because they feel beholden to their existing, lower mortgage rates. So what impact is this reduced demand and low supply environment having on home values? And what can we expect from the real estate market in the coming months and years? Here are several key indicators that help to paint a picture of the current market and where it’s likely headed.   Would you rather watch the video instead of reading, click here to watch my video on this topic!   HOME SALES ARE EXPECTED TO PICK UP BY EARLY NEXT YEAR The weather isn’t the only thing that heats up in the spring and summer. Nationally, it tends to be the busiest time in real estate. But this year, the peak season got off to a slow start, with sales declines in both March and April.1,2 Existing home sales in April were down 3.4% from the previous month—and 23.2% from a year earlier.2 What’s causing this market slowdown? Industry experts attribute it to several factors, including near-record home prices, high mortgage rates, and low inventory. According to National Association of Realtors (NAR) Chief Economist Lawrence Yun, “Home sales are trying to recover and are highly sensitive to changes in mortgage rates. Yet, at the same time, multiple offers on starter homes are quite common, implying more supply is needed to fully satisfy demand. It's a unique housing market.”1 However, some industry experts believe the market is poised for a comeback. Forecasters at the Mortgage Bankers Association (MBA) predict that home sales will continue to fall through Q3 before rising in Q4 and throughout next year.3  Analysts at Fannie Mae expect the recovery to take a bit longer, picking up in early 2024. Meanwhile, home builder confidence is already up, as purchases of new single-family homes surged in March and April to a 13-month high.5 Builder incentives are helping to boost sales: According to the National Association of Home Builders, in May, 54% reported using them to win over budget-conscious buyers.6 What does it mean for you? A slower pace of sales has given buyers some breathing room. If you hated the frenzy of the pandemic-era real estate market, now might be a better time for you to shop for a home. We can help you evaluate your options and make an informed purchase. If you plan to sell your home, prepare yourself for less foot traffic and a longer sales timeline than you may have found a year ago. It will also be crucial to enlist the help of a skilled agent who knows how to draw in buyers. Reach out for a copy of our multi-step Property Marketing Plan.   PROPERTY VALUES REMAIN RELATIVELY STABLE   Some good news for buyers: While home builder sales climbed in April, the median new-house price fell to $420,800, an 8.2% decrease from a year ago.5 Meanwhile, the median existing-home price dropped to $388,800, down 1.7% year-over-year. Notably, existing-home prices rose in parts of the country but fell in the South and West.2  “Roughly half of the country is experiencing price gains,” explains Yun. “Multiple-offer situations have returned in the spring buying season following the calmer winter market. Distressed and forced property sales are virtually nonexistent.”2 The average national home price remains about 40% higher than it was in early 2020, according to the S&P CoreLogic Case-Shiller index.7 A tight housing supply has helped to buoy prices amidst a slowdown in sales. “While it varies from region to region, home prices at the national level may fall 1% or 1.5% by the end of the year, so not much,” Doug Duncan, senior vice president and chief economist at Fannie Mae, told Yahoo Finance in April.8 Record levels of home equity will help to stabilize the sector and prevent a wave of foreclosures, even as prices moderate, according to Mark Zandi, chief economist at Moody’s Analytics.9 “But for those who have owned a home for more than a year or two, their home will remain a rock-solid investment. And once affordability is restored, the next generation of households can become homeowners. Getting there is critical to the financial well-being of those households, their communities, and the broader economy,” writes Zandi in The Washington Post.9 What does it mean for you?  Prices have softened in certain market segments—and motivated sellers are out there and willing to make deals. We can help you find your next home and negotiate a great price. If you’re a homeowner, the surge in home values has slowed, but you’re likely still sitting on a nice pile of equity. Reach out for a free assessment to find out how much your home is currently worth.   LISTING INVENTORY IS LOW, BUT NEW CONSTRUCTION IS ON THE RISE Unsold existing home inventory rose 7.2% from March to April, according to NAR. At the current level of demand, this equates to 2.9 months of supply, which is still well below the 5 to 6 months of inventory required for a “balanced” market.2 Inventory remains tight despite the market slowdown because many would-be sellers are reluctant to give up their lower mortgage rates. “Affordability is not only an issue for first-time homebuyers, but also for many repeat buyers who still need to take on a mortgage,” explains Danielle Hale, chief economist for Realtor.com.10 In a recent survey by the home listing site, 82% of respondents who are planning to both buy and sell a home said they feel “locked in” by their low rate.11 In some areas, new home construction is helping to fill the supply gap. “Currently, one-third of housing inventory is new construction, compared to historical norms of a little more than 10%,” according to National Association of Home Builders Chief Economist Robert Dietz.12 And more new homes are in the pipeline, after a builder slowdown last year. Single-family housing starts rose 1.6% from March to April (seasonally adjusted) and new construction permits hit a seven-month high.13 What does it mean for you? Inventory remains tight, but less competition means more choice and negotiating power for buyers. If you’ve had trouble finding a home in the past, it may be time to take another look. We can help you explore both new and existing homes in our area. Sellers are enjoying reduced competition right now, as well. However, the longer you wait to list, the more competition you’re likely to face. And if you feel locked in by your current, lower mortgage rate, consider this: If you roll your equity gains into a down payment on your next home, you could possibly lower your monthly payment. Reach out to discuss your options.   MORTGAGE RATES MAY FINALLY COME DOWN According to Freddie Mac, the average 30-year fixed-rate mortgage hit a peak of 7.08% in the fourth quarter of 2022, and since then it’s primarily floated between 6 and 7%.14 However, there are signs that rates could trend lower later this year. “Calmer inflation means lower mortgage rates, eventually,” Yun predicted in a recent statement. “Mortgage rates slipping down to under 6% looks very likely toward the year’s end.”15 Other leading economists agree. In its May forecast, Fannie Mae speculates that 30-year fixed mortgage rates will continue to decline, averaging 6.0% in Q4 2023 and 5.4% by Q4 2024.4 Meanwhile, the MBA predicts rates will fall even faster, averaging 5.6% by Q4 2023 and 4.8% by Q4 2024.3 On May 3, the Federal Reserve raised its benchmark borrowing rate by another quarter point—its 10th consecutive increase since March 2022. However, in its corresponding statement, the Fed omitted language from its previous release about “additional policy firming,” leaving some analysts to speculate that the rate hikes may be over.16  Although mortgage rates aren’t directly tied to the federal funds rate, a decision by the Fed to pause rate increases could have a positive effect. In the meantime, buyers should shop around multiple lenders to find the best rate—and buckle up for what could be an exciting ride. What does it mean for you? Mortgage rates may finally trend down, which would be great news for buyers. But, a decrease in rates could correspond with an increase in competition and prices. If you start searching now, you’ll be prepared to make an offer when the time is right. We can help you negotiate a great deal and potential seller incentives. If you’re planning to sell, this is good news for you, too. But, there are several factors to consider when determining the right time to list your home. Reach out for a consultation so we can help you chart the best course.   I'M HERE TO GUIDE YOU! While national real estate forecasts can provide a “big picture” outlook, real estate is local. And as local market experts, we can guide you through the ins and outs of our market and the issues most likely to impact sales and drive home values in your particular neighborhood.  If you’re considering buying or selling a home, contact us now to schedule a free consultation. We’ll work with you to develop an action plan to meet your real estate goals. The above references an opinion and is for informational purposes only.  It is not intended to be financial, legal, or tax advice. Consult the appropriate professionals for advice regarding your individual needs. Sources: National Association of Realtors -https://www.nar.realtor/newsroom/existing-home-sales-slid-2-4-in-march National Association of Realtors -https://www.nar.realtor/newsroom/existing-home-sales-faded-3-4-in-april Mortgage Bankers Association -https://www.mba.org/docs/default-source/research-and-forecasts/forecasts/2023/mortgage-finance-forecast-may-2023.pdf?sfvrsn=4bf1d1a7_1 Fannie Mae -https://www.fanniemae.com/media/47006/display U.S. Census Bureau - https://www.census.gov/construction/nrs/current/index.html National Association of Home Builders -https://www.nahb.org/news-and-economics/press-releases/2023/05/lack-of-existing-inventory--boosts-builder-confidence-to-key-marker New York Times -https://www.nytimes.com/2023/04/29/business/spring-housing-market.html? Yahoo Finance -https://finance.yahoo.com/news/mortgage-rates-increase-after-weeks-of-declines-160015631.html The Washington Post -https://www.washingtonpost.com/business/2023/04/22/housing-prices-put-some-out-of-the-market/ CNBC -https://www.cnbc.com/2023/04/20/home-sales-fell-in-march-amid-volatility-in-mortgage-rates.html Realtor.com - https://www.realtor.com/research/2023-q1-sellers-survey-btts/ National Association of Home Builders - https://www.nahb.org/news-and-economics/press-releases/2023/04/lack-of-existing-inventory-continues-to-support-builder-sentiment United State Census Bureau -https://www.census.gov/construction/nrc/pdf/newresconst.pdf Freddie Mac -https://www.freddiemac.com/pmms National Association of Realtors - https://www.nar.realtor/blogs/economists-outlook/instant-reaction-inflation-april-12-2023 CNBC - https://www.cnbc.com/2023/05/03/fed-rate-decision-may-2023-.html

The Homeowners Guide; Building Permits 101

The Homeowners Guide; Building Permits 101 11 min read   Soo, what exactly is a building permit, why do we need them, and where did they come from? Let’s dive into the history, purpose, and process of the building permit! Even if you’re not a homeowner yet, a building permit is something that is or will be a very important part of many homeowners dreams. It is a great bit of knowledge to have in your back pocket when it comes time to doing any work in or around your home. How Did Building Codes Begin? Although some will argue that building codes and permits are a relatively new age system, they’re just not. We have seen evidence that ancient civilizations had implemented some systems to avoid human error and horrific failure in buildings. The oldest evidence of this comes from Hammurabi, founder of the Babylonian Empire about 2000 BC. Here in the United States, our building codes were initially put into place addressing fire safety and specified materials for roofing in 1625. Just a few years later Boston made chimneys made of wood and thatch roof coverings illegal due to the obvious safety risks. While creating building plans for the District of Columbia, George Washington suggested creating height and area limitations for wood frame buildings in 1770. So on and so forth more codes were added until we reached the current building codes that we have today. 1 What Does the Permit Have to do with Codes? As a country, we have national building codes, then we move into state codes that may be a bit more restrictive, and then down to local town/city codes which may be even a bit more restrictive (then we can even move down to neighborhood, HOA, and a few more codes as well, but you can read about those here). With so many residential homes in each area, the local officials needed a way to make sure that all of the work going on is safe for its citizens. This is where building permits come into place. A building permit is an official document that gives you permission to build on land or make changes to a building dictionary.cambridge.org Now I know, I know, there are many people that believe you shouldn’t have to pull a permit if you own your home, it’s yours, shouldn’t you be able to do what you want? Of course, to a point. Example 1: Imagine if you finally owned that beautiful 4 bedroom 3 bath dream home of yours, you LOVE the home, but before you move in, you just want to change up the flooring. You bring in someone that you’ve never met, didn’t get a referral to, and said they could get the job done… and for cheap too. This person comes in with a crew to do the work, you wait 2 weeks for the floors to be ripped up, new ones put in, and a final finish that completes the look of your dream kitchen. You finally can move into your dream home! Congratulations! While moving in you notice some squeaky annoying boards, or a soft spot in your brand new floor. Well what could have happened? One scenario could be, your “contractor” gave you a cheap price because their not from the area, so they didn’t pull a permit to save a few hundred bucks, got into your home, ripped up the old floor and found some issues. There could have been an area of rotted subfloor and joists. This contractor didn’t pull a permit, so they knew no one was going to check on their work ,they didn’t want the job to be more work, so they didn’t fix the uncovered issue and just tossed new flooring on top. Now you have a beautiful home with a beautiful new floor, that you have to rip up. How Does the Permit Help me With This? With a situation like this, the permit can help give a home owner peace of mind for starters. When a building permit application is submitted, you must provide the information of the contractor, a copy of their license, and a copy of their insurance. So when you have a building permit on your side, you can feel better about knowing that your contractor is a licensed and insured party, and that they take their work and your safety as a customer seriously. Example 2: Now imagine you have fixed all of your flooring issues, your dream home is the perfect dream, and fast forward 6 years. You are in need of an additional room, weather you are having a baby, a family member is moving in, or you decided you just need some more space! Thinking back about your flooring issue a few years ago, you don’t want to hire someone you don’t know again. So distant cousin Joe has a friend who does AMAZING work. Your cousin pledges that he trusts this contractor so you hire him to add 1 bedroom and 1 bathroom to your home. Everything goes smoothly with this contractor, you have an incredible new addition to your home, the work went surprisingly quickly, and you’ve made a new friend in the process. Fast forward again! It’s been another 5 years and there has been a big decision to leave your dream home and move to another town. You list your home for sale by owner, and things are going great. you’ve accepted an offer, and the appraisal is scheduled! Appraisal day, the appraisal is a step in the home sale process where a third party unbiased appraiser comes to your home, and checks that the home is with the amount of money the offer is. (To learn more about the appraisal process and what its purpose is, click here!) The appraiser will know that in public records your home is still considered to be a 4 bedroom 3 bath home, not a 5 bedroom 4 bath home, so they look into this discrepancy. And what do they find? That cousin Joe’s buddy didn’t pull any permits for your addition. The town decides to take action against you for not following the legal route and pulling a permit for your addition. The town/city can do 1 of 2 things here: They may make you pay a fine for avoiding the permit which would have originally only been a few hundred dollars, is now thousands. Due to the inspector not being able to…well…inspect that all of the work was done properly, they could make you revert the home back to its original standing before the “illegal” work was done. Which is going to cost not just thousands more in the work itself to demolish the addition and get the home back to its previous version. But also, more time and possibly a lost sale. How Does the Permit Help me With This? When applying for a permit, the scope of work is described so the town is aware of what type of work is being done. When it comes to adding bedrooms and bathrooms, depending on the septic system you already have, the town may tell you that you need a larger septic system with your addition. If you have a system rated for only 4 bedrooms, then adding another bedroom (more people) and bathroom pushes you over the limit. There is a possibility that you could over work/fill your septic system. So the permit in this case, allows the town to make sure your septic system is adequate for the amount of…flow it will be receiving. This can be traced back to making sure you, your family, and your neighbors are safe. A disrupted septic system is hazardous to the people, plants, and wildlife around it. Another reason the permit would help you in a situation like this, is routine inspections. Once a permit is pulled, and the town is aware of the type of work you are doing and the location it is happening, a building inspector will be scheduled to check on the work periodically. This, once again, goes right back to your safety. While all areas will vary, most jobs will be inspected at different stages: Fodunation inspection Framing inspection Electrical inspection Plumbing inspection Roofing inspection etc. So, if you’re adding a new bathroom to your home, the town wants to make sure the plumbing was done properly and to code. This is to insure that you won’t have any un-needed plumbing issues such as; wrong sized pipes, loose pipes, uninsulated were needed, etc. When adding new walls, they want to make sure the electrical is done properly and to code, looking to make sure there are no issues; incorrect wire type, crossed wires, open and live wires, too small of a breaker box to support the power, etc. Example 3: Okay, so you have fixed what you needed to fix. You’ve sold your home, and you’re buying a new one a few towns over! Everything abut it is perfect, even more so than the last home! Except it needs a new roof. Don’t worry, this is a quick one So here we are again, you call in someone to fix the roof. They don’t pull a permit and one of their workers falls off the roof! The employee that fell off the roof is now suing you, the homeowner, and the head contractor. How Does the Permit Help me With This? Well, had you had a permit pulled. Once again, the contractors information, license, and insurance policy would be on file. The employee who fell would be going through workman’s comp to settle his injury suite. No one gets sued in the process. *All situations differ, always follow legal practices to cover liabilities. Bottom Line of the Building Permit… Yes it is an extra step. Yeah it is an extra trip to the town/city hall. Of course it is an extra fee. And yes your property will be inspected durring the process, but bottom line is…just pull a permit. It is an incredible peace of mind to know that whoever is doing the work is licensed and insured, and whether the licensed and insured or yourself is doing the work, you know an inspector will be around to make sure everything is safe for you after work has been completed. Okay so I’m on Board. How Does it Work? The process of getting a building permit will vary depending on a variety of variables: Town/City officials and your local Building Department regulations Type of work being preformed Type of property where work is being done The individual property etc Generally speaking though, You as the homeowner can either fill out a permit application yourself, or have the contractor do this for you. Some areas have the permit available online, some will be in person only. After filling out all appropriate information on the application, you or your contractor will need to submit the application for review. This may also be provided online or in person. Along with submitting the application, you will need to make a payment to the town. This price will vary depending on many items. The type of job, type of property, and what calculation your local building department will use to get the number. Most of the time a check is preferred. After leaving the town with your permit and payment, you or your contractor will be contacted in a few days after verifying information and approving the job. You will head back to the Town/City Hall and pick up your building permit! Permits will contain information such as the property address, Town/City seal, and scope of work being done. While work begins and progresses, a building inspector will pop in on scheduled or unscheduled times to verify that the work being done is correct, up to code, and safe for all parties involved. If the inspector finds something that is not up to code, they will most likely make you halt the job and fix the problem. If they find something (such as old work done without a permit) they may make you stop all work indefinitely until all items are done properly. Your Home is One of Your Largest Investments So treat it as such! Pull your permits, protect your home, self, family, friends, and anyone that walks through the door of your beloved home. Please visit your local Town or City Hall or contact your local building department for information specific to your area! Recourses For Orando Residents: Building Department Not in Orlando? To find local information please Google “Town/City name building department” Or reach out to us with any questions you have! We’er happy to help and happy to answer! Sources Provided By: https://www.creia.org/the-development-of-our-building-codes

New Build or Existing Home: Which One Is Right for You?

New Build or Existing Home: Which One Is Right for You? 9 min read   Homebuyers today are facing a huge dilemma. There simply aren’t enough homes for sale.1 Nationwide, there were 1.27 million active listings in September, down 13% from the previous year. According to the National Association of Realtors, that’s about 2.4 months of inventory, which is far less than the six months that is generally needed to strike a healthy balance between supply and demand.2  Given the limited number of available properties, if you’re a buyer in today’s market, you may need to expand your search to include both new construction and resale homes. But it can feel a little like comparing apples to oranges. Let’s take a closer look at some of the factors you should take into account when choosing between a new build or an existing home.  Timeframe: How quickly do you want (or need) to move into your next home? Your timeframe can be a determining factor when it comes to choosing between a new build or resale. New Build If you opt for new construction, you may be surprised by how long you have to wait to get the keys to your new digs. Currently, many home builders are dealing with unique challenges brought on by the COVID-19 pandemic, including rising costs, labor and material shortages, and shipping delays. While historically it took around five to six months to build a home, many builders are now reporting construction timelines closer to a year or more.3 These issues have led some builders to cancel contracts or raise the price on unsuspecting homebuyers long after agreements were signed. Unfortunately, this scenario can throw a major wrench in your moving plans and significantly delay your timeline. To minimize these types of surprises, it’s crucial to have a real estate agent represent you in a new home purchase. We can help negotiate better contract terms and advise you about the potential risks involved. Existing Home If you’re in a hurry to move into your next residence, then you may want to stick to shopping for an existing home.  You can typically move into a resale home as soon as you’ve closed the deal. The average time it takes to close a home purchase is around 51 days, but it can vary based on loan type and market activity.4 If you need to move even sooner, it’s sometimes possible to close faster, especially if you’re a cash buyer. In fact, many sellers prefer a quick closing, so it can give you an advantage in a competitive market.    Location: From commute, to construction, to amenities, there’s a lot to consider when choosing your next neighborhood. New Build With a brand-new home, you’re more likely to move into a neighborhood that’s located on the edge of town and is still undergoing development.5 This could mean a longer commute and ongoing construction for some time.  However, new developments can also offer a lot of amenities that appeal to modern homebuyers. Water features, hike-and-bike trails, tot lots, and dog parks are just a few of the enhancements we’re seeing pop up in master-planned communities across the country. And some feature new schools and their own urban-like centers with restaurants, retail, and office space.6  Existing Home An existing home is more likely to be located close to town in a neighborhood with mature trees, established schools, and a deeply-rooted community. As a result, you may find the neighborhood’s trajectory to be more predictable than an up-and-coming area.  But the amenities may be lacking and the infrastructure dated when compared to newer communities. And while some homebuyers love the charm and eclectic feel of an older neighborhood, others prefer the sleek and cohesive look of a newer development.   Maintenance: Are you a DIY enthusiast, or do you prefer a low-maintenance lifestyle? Set realistic expectations about how much time, effort, and money you want to devote to maintaining your next home. New Build When you build a home, everything is brand new. Therefore, in the first few years at least, you can expect less required maintenance and repairs. A 2019 survey found that millennials’ homebuying regrets often came down to maintenance issues, rather than other concerns.7 So if you would rather spend your weekends exploring your new neighborhood than fixing a leaky faucet, you may be happier buying a turnkey build.  That doesn’t mean, though, that a new home will be entirely maintenance-free. In fact, depending on the builder, you could find yourself repairing more than you expected. Some home builders have reputations for shoddy construction and subpar materials, so it’s important to choose one with a solid reputation. We can help you identify the quality builders in our area. Existing Home No matter how good a deal you got when you purchased it, you could come to regret buying an older home if it costs you heavily in unexpected maintenance and repairs. According to HomeAdvisor’s yearly True Cost report, home renovations have grown more expensive in recent years. For example, installing a new HVAC system could cost you $5,371 on average. And you can expect to pay nearly double that amount ($9,375) for a new roof.8  Fortunately, there are ways to prepare for these large expenditures. We always recommend that our buyers hire a certified home inspector, whether they buy a new or existing home. Once we have the inspector’s report, we can negotiate with the seller on your behalf for reasonable repairs or concessions.   Environmental Impact: On a quest for greener living? If so, there are several factors to consider when deciding on your next home. New Build There’s a growing demand for energy-efficient housing, and many builders are rising to the challenge. Nearly 1 in 4 homes built in 2020 received a HERS (Home Energy Rating System) Index Rating by the Residential Energy Services Network. A HERS rating provides an index score that compares the newly-built home to those that were standard in 2006. The more energy-efficient the home is, the lower the score it receives.11 The average home rated in 2020 was 42% more efficient than those built in 2006 and 72% more efficient than a typical home built in the 1970s.11 So if energy efficiency is a top priority, a new home with a low HERS rating may be a good choice. You can also look for one that’s ENERGY STAR Certified, which means it meets a series of strict efficiency guidelines set by the Environmental Protection Agency. In 2020, only 7.9% of homes built in the U.S. received this designation.12  Existing Home Of course, a basic tenet of sustainable living is: reduce, reuse, recycle. And since a resale home already exists, it automatically comes with a lower carbon footprint. Research has also shown that remodeling or retrofitting an older home is often greener than building one from scratch.13  With some energy-conservation effort and strategic upgrades, environmentally-conscious consumers can feel good about buying an existing home, as well.   Design: Open floor plan? Kitchen island? High ceilings? Must-have design features could drive your decision to build or buy resale. New Build With a new home, you can bet that everything will look shiny and perfect when you move in. Builders tend to put a lot of emphasis on visual details and follow the latest design trends. For example, newly-built homes are likely to feature an open floor plan, central kitchen island, and 9+ foot ceilings, which are must-haves for many modern buyers. They are also unlikely to feature carpet on the main level or laminate countertops, both of which have lost mass appeal.14  However, some buyers complain of the cookie-cutter feel of new homes since they are often built with a similar aesthetic. That doesn’t mean, though, that you can’t incorporate your own style. We can help you negotiate custom features and upgrades to personalize the space and make it feel like your own. Existing Home In some of the most coveted neighborhoods, an older home with classic styling and character can be highly sought after. But unless the previous homeowners have invested in tasteful updates, an existing home is also more likely to look dated.  While some buyers prefer the traditional look and character of an older home, others crave something more modern. If that’s the case, we can help you find a resale home that leaves enough room in your budget to renovate it to your liking. Whichever Path You Choose,   We Can Help! When it comes to choosing between a new build or an existing home, there’s no one-size-fits-all answer. There are numerous factors to consider, and you may have to make some compromises along the way. But the homebuying process doesn’t have to feel overwhelming. We’re here to help. And in many cases, our homebuyer guidance and expertise are available at no cost to you! That’s because the home seller or home builder may compensate us with a commission at closing. Some new-construction homebuyers make the mistake of visiting a builder’s sales office or even purchasing a home without their own real estate representative. But keep in mind, the builder’s agent or “sales consultant” has their best interests in mind—not yours.  We are knowledgeable about both the new construction and resale home options in our area, and we can help you make an informed decision, negotiate a fair price, and avoid mistakes that can cost you time and money. So give us a call today to schedule a free, no-obligation consultation—and let’s start searching for your next home!       Sources: Reuters –https://www.reuters.com/world/us/us-existing-home-sales-fall-august-inventory-declines-2021-09-22/ National Association of Realtors –https://www.nar.realtor/newsroom/existing-home-sales-ascend-7-0-in-september KFVS 12 –https://www.kfvs12.com/2021/09/22/covid-19-pandemic-affects-delivery-rate-building-materials/ Rocket Mortgage –https://www.rocketmortgage.com/learn/time-to-close-on-a-house Real Assets Adviser –https://irei.com/publications/article/master-planned-communities-changing-u-s-housing-trends-favor-investors-can-benefit/  Builder Online –https://www.builderonline.com/land/development/5-master-plan-trends-home-buyers-gravitate-toward-today_o Bankrate –https://www.bankrate.com/real-estate/homebuyer-regret-survey-may-2021/ Home Advisor –https://www.homeadvisor.com/r/true-cost-report/  Roofing Calculator –https://roofingcalculator.com/news/how-long-do-roofs-last  Plumbing and Mechanical Engineer –https://www.pmengineer.com/articles/94873 National Association of Home Builders –https://nahbnow.com/2021/10/nearly-1-in-4-new-homes-in-2020-was-hers-rated/ EnergyStar –https://www.energystar.gov/newhomes/energy_star_certified_new_homes_market_share Advanced Materials Research – https://www.researchgate.net/publication/271358381_Comparative_Study_of_New_Construction_and_Renovation_Project_Based_on_Carbon_Emission  National Association of Home Builders –https://nahbnow.com/2020/04/most-likely-and-unlikely-features-in-a-new-single-family-home/

A Return to "Normal"? The State of Real Estate in 2022

A Return to "Normal"? The State of Real Estate in 2022 8 min read   Last year was one for the real estate history books. The pandemic helped usher in a buying frenzy that caused home prices to soar nationwide by a record 19.9% between August 2020 and August 2021.1 However, there were signs in the fourth quarter that the red-hot housing market was beginning to simmer down. In the month of October, only 60.3% of sales involved a bidding war—down from a high of 74.5% in April.2 While this trend could be attributed to seasonality, it could also be a signal that the real estate run-up may have passed its peak. So what’s ahead for the U.S. housing market in 2022? Here’s where industry experts predict the market is headed in the coming year.   MORTGAGE RATES WILL CREEP UP Most economists expect to see mortgage rates gradually rise this year after hitting record lows in late 2020 and early 2021.3  Freddie Mac forecasts the 30-year fixed-rate mortgage will average 3.5% in 2022, up from around 3% in 2021.4 The Mortgage Bankers Association predicts that rates will tick up to 4% by the end of the year. “Mortgage lenders and borrowers should expect rising mortgage rates over the next year, as stronger economic growth pushes Treasury yields higher,” said Mike Fratantoni, chief economist for the Mortgage Bankers Association at their 2001 Annual Convention & Expo in October.5 However, it’s important to keep in mind that even a 4% mortgage rate is low when compared to historical standards. According to industry trade blogThe Mortgage Reports, “Between 1971 and December 2020, 30-year mortgage rates averaged 7.89%.”6   What does it mean for you? Low mortgage rates can reduce your monthly payment and make homeownership more affordable. Fortunately, there’s still time to lock in a historically-low rate. Whether you’re hoping to purchase a new home or refinance an existing mortgage, act soon before rates go up any further. We’d be happy to connect you with a trusted lending professional in our network.   THE MARKET WILL BECOME MORE BALANCED In 2021, we experienced one of the most competitive real estate markets ever. Fears about the virus and a shift to remote work triggered a huge uptick in demand. At the same time, many existing homeowners delayed their plans to sell, and supply and labor shortages hindered new construction.  This led to an extreme market imbalance that benefitted sellers and frustrated buyers. According to George Ratiu, director of economic research at Realtor. com, “Prices and sellers reached for the moon [last] year. It looks like we are now about to move back to earth.”7 Data from Realtor. com released in November showed that listing price reductions had more than doubled since February 2021. And the average days on market (an indicator of how long it takes a home to sell) has been slowly creeping up since June.7 What’s causing this change in market dynamics? The real estate market typically slows down in the fall and winter. But economists also suspect a fundamental shift in supply and demand. At the National Association of Realtors’ annual conference last November, the group’s chief economist, Lawrence Yun, told attendees that he expects increased supply to come from an uptick in new construction—which is already underway—and an end to the mortgage forbearance program. “With more housing inventory to hit the market, the intense multiple offers will start to ease,” he said.8 Demand is also predicted to wane slightly in the coming year. Rising mortgage rates and record-high prices have made homeownership unaffordable for a growing number of Americans. And in a recent Reuters poll, nearly 80% of property analysts said they expect housing affordability to worsen over the next several years.9   What does it mean for you? If you struggled to buy a home last year, there may be some relief on the horizon. Increased supply and softening demand could make it easier to finally secure the home of your dreams. If you’re a seller, it’s still a great time to cash out your big equity gains! And with more inventory on the market, you’ll have an easier time finding your next home. Reach out for a free consultation so we can discuss your specific needs and goals.   HOME PRICES LIKELY TO KEEP CLIMBING, BUT AT A SLOWER PACE Nationally, home prices rose an estimated 16.8% in 2021.8 But the average rate of appreciation is expected to slow down in 2022. Danielle Hale, chief economist at Realtor. com, told Yahoo! News, “Home asking prices have decelerated in the second half of 2021, with median listing price growth slipping from a peak of 17.2% in April to just 8.6% in October.”10 But experts disagree about how much more property values can continue to climb this year. Goldman Sachs predicts that home prices will rise by 13.5%, while Fannie Mae and Freddie Mac are forecasting a 7.9% and 7% rate of appreciation, respectively.2 However, not all analysts are as bullish. The National Association of Realtors predicts a 2.8% rate of appreciation for existing homes and 4.4% for new homes, while the Mortgage Bankers Association expects the average home price to decrease by 2.5% by the end of the year.10,2 According to Hale, “With prices near all-time highs and mortgage rates expected to rise, we expect this slowdown in prices to continue.”10   What does it mean for you? If you’re a buyer who has been waiting on the sidelines for home prices to drop, you may be out of luck. Even if home prices dip slightly (and most economists expect them to rise) any savings are likely to be offset by higher mortgage rates. The good news is that decreased competition means more choice and less likelihood of a bidding war. We can help you get the most for your money in today’s market.   RENTS WILL CONTINUE TO RISE Along with home, gasoline, and used vehicle prices, rent prices rose dramatically last year. According to CoreLogic, in September, rents for single-family homes were up 10.2% nationally year over year.11 And economists at Realtor.com expect them to climb another 7.1% in 2022.12 “Homes are expensive now…but for most people, the comparison that is most important is how that cost of homeownership is going to compare to the cost of renting,” Zillow Senior Economist Jeff Tucker told CNBC in November.13 Tucker also pointed out that rent is less predictable than a mortgage—and more likely to go up along with inflation.13 Real assets, like real estate, are often used as a hedge against inflation. That’s because property values typically rise with inflation.14 And when a homeowner takes out a mortgage, they lock in a set housing payment for the next 30 years.  In contrast, renters are at the mercy of the market—and they don’t gain any of the benefits of homeownership, like tax deductions, equity, or appreciation. George Ratiu of Realtor. com told CNBC that he advises buyers to consider their budget and time frame. If they plan to stay in the home for at least three to five years, he believes it often makes sense to buy.13 Fortunately, it’s shaping up to be a better year for buyers. “I think 2022 has the promise of providing less competition, a lot more homes to choose from, and, as a result, a lot more approachable prices,” Ratiu said.13   What does it mean for you? Both property and rent prices are expected to continue rising. But when you purchase a home with a fixed-rate mortgage, you can rest assured knowing that your monthly mortgage payment will never go up. Whether you’re a first-time homebuyer or a real estate investor, we can help you make the most of today’s real estate market.    WE’RE HERE TO GUIDE YOU While national real estate numbers and predictions can provide a “big picture” outlook for the year, real estate is local. And as local market experts, we can guide you through the ins and outs of our market and the local issues that are likely to drive home values in your particular neighborhood.  If you’re considering buying or selling a home in 2022, contact us now to schedule a free consultation9 click the "selling" or "buying" link to schedule!. We’ll work with you to develop an action plan to meet your real estate goals this year!   Sources: Fortune –https://fortune.com/2021/11/04/us-home-prices-real-estate-forecast-2022-outlook/ Fortune –https://fortune.com/2021/11/29/housing-market-real-estate-predictions-2022-forecast/ Freddie Mac –http://www.freddiemac.com/pmms/pmms30.html Freddie Mac – https://freddiemac.gcs-web.com/news-releases/news-release-details/freddie-mac-strong-housing-market-will-continue-even-rates-and Mortgage Bankers Association –https://www.mba.org/2021-press-releases/october/mba-annual-forecast-purchase-originations-to-increase-9-percent-to-record-173-trillion-in-2022 The Mortgage Reports –https://themortgagereports.com/61853/30-year-mortgage-rates-chart Realtor.com –https://www.realtor.com/news/trends/has-housing-market-peaked/ National Association of Realtors –https://www.nar.realtor/newsroom/nars-yun-says-housing-market-doing-well-may-normalize-in-2022