National Real Estate Market Update for 2023
National Real Estate Market Update for 2023
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.
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.
WE’RE 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:
1. National Association of Realtors -
https://www.nar.realtor/newsroom/existing-home-sales-slid-2-4-in-march
2. National Association of Realtors -
https://www.nar.realtor/newsroom/existing-home-sales-faded-3-4-in-april
3. Mortgage Bankers Association -
https://www.mba.org/docs/default-source/research-and-forecasts/forecasts/2023/mortgage-finance-forecast-may-2023.pdf?sfvrsn=4bf1d1a7_1
4. Fannie Mae -
https://www.fanniemae.com/media/47006/display
5. U.S. Census Bureau -
https://www.census.gov/construction/nrs/current/index.html
6. 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
7. New York Times -
https://www.nytimes.com/2023/04/29/business/spring-housing-market.html?
8. Yahoo Finance -
https://finance.yahoo.com/news/mortgage-rates-increase-after-weeks-of-declines-160015631.html
9. The Washington Post -
https://www.washingtonpost.com/business/2023/04/22/housing-prices-put-some-out-of-the-market/
10. CNBC -
https://www.cnbc.com/2023/04/20/home-sales-fell-in-march-amid-volatility-in-mortgage-rates.html
11. Realtor.com -
https://www.realtor.com/research/2023-q1-sellers-survey-btts/
12. 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
13. United State Census Bureau -
https://www.census.gov/construction/nrc/pdf/newresconst.pdf
14. Freddie Mac -
https://www.freddiemac.com/pmms
15. National Association of Realtors -
https://www.nar.realtor/blogs/economists-outlook/instant-reaction-inflation-april-12-2023
16. CNBC -
https://www.cnbc.com/2023/05/03/fed-rate-decision-may-2023-.html
Serious About Selling? 5 Steps to Make Your Home the Best on the Block
If you’re looking to sell your home fast and for the most money possible, you’ll need a strategy to set it apart from all the other listings competing for buyers in your area. That’s why we’ve outlined our proven, five-step plan for serious sellers.
We all want to be good neighbors. But when it comes to selling your home, it’s not just about “keeping up with the Joneses.”It’s about outshining them at every opportunity!
If you’re looking to sell your home fast and for the most money possible, you’ll need a strategy to set it apart from all the other listings competing for buyers in your area. That’s why we’ve outlined our proven, five-step plan for serious sellers.
Use these five tactics to help your listing get noticed, win over buyers, and net a higher sales price than your neighbors!
STEP 1: Stage Your Home to Show Its Full Potential
The average seller will do the minimum to prepare their home for market: clean and declutter, fix anything that’s broken, mow the lawn. And while those tasks are essential, today’s buyers want more than just a clean house and tidy yard. When they dream of buying a new home, they envision a designer house with modern finishes. Help them see your property’s full potential by staging it.
Home staging is one of the hottest trends in real estate—because it works! According to the Real Estate Staging Association, homes that are professionally staged spend 73% less time on the market.1
So what exactly is staging? In a broad sense, staging is the act of preparing your home for market. The goal is to highlight your home’s strengths, minimize any deficiencies, and help buyers envision themselves living in the space. When staging a home, you might rearrange the furniture to make a room feel larger or remove heavy curtains to make it appear brighter.
Some sellers choose to hire a professional home stager, who has specialized training and experience, to maximize the appeal of their home to the largest number of potential buyers. Others may opt to do it themselves, using guidance from their agent.
We can help you determine the appropriate budget and effort required to push your home ahead of the competition in your neighborhood. The good news is, an investment in staging pays off. A 2018 survey found that 85% of staged homes sold for 6-25% more than their unstaged neighbors homes.2
STEP 2: Draw Buyers in with High-Quality Listing Photos
You only have one chance to make a first impression with potential buyers. And many buyers will view photos of a listing before they decide whether or not to visit it in person. In fact, 87% of buyers find photos “very useful” in their home search.3 Poor-quality or amateur-looking listing photos could keep buyers from ever stepping through your door.
Since good photography plays such an important role in getting your property noticed, we only work with the top local professionals to photograph our listings. But we don’t just rely on their photography skills when it comes to showcasing your home.
We go the extra mile to ensure your listing photos showcase the true essence of your home. We’re always on site during the photo shoot to help the photographer capture the best angles and lighting, and to let them know about unique or compelling selling features that they should photograph. The extra effort pays off in the end. In fact, listings with high-quality photography sell 32% faster than the competition … and often for more money!4
STEP 3: Price It Properly From the Start
Even in a strong real estate market, there are homes that will sit unsold for months on end. This can be the “kiss of death” in real estate, as buyers tend to imagine that there must be something wrong with the property, even if it’s not the case.
But why are those houses still on the market in the first place? It’s because they are often priced too high.
Every buyer has a budget. And most will be viewing listings within a particular price range. If your property is overpriced, it can’t properly compete with the other houses they’re viewing that are priced correctly. Which means it’ll sit on the market until you’re eventually forced to drop the price.
Alternatively, if you price your home aggressively, it can be among the nicest homes that buyers have seen within their budget. This can lead to emotionally-attached buyers, who are often willing to pay a premium or settle for fewer seller concessions. And in certain markets, it can lead to a multiple-offer situation, or bidding war. The end result? More money in your pocket.
We can help you determine the ideal listing price for your home in the current market. Pricing it properly in the beginning is the best way to ensure a fast and profitable sale.
STEP 4: Put on a Good Show at Each Showing
Once buyers are interested enough to schedule a visit, it’s crucial that you put on a good show at each showing.
The first step is to make your home readily available—and often on short notice—for buyers to see it. A missed showing is a missed opportunity to sell your home. If you set too many restrictions on when it’s available to view, busy buyers will simply skip over your listing and move on to the next one.
Part of making your home available means keeping it relatively show-ready as long as it’s on the market. Most of us don’t live picture-perfect lives, and our homes reflect the day-to-day reality of our busy (and sometimes messy) families. But a little extra effort spent keeping your home clean, fresh-smelling, and ready for buyers will help it sell faster … which means you can get back to your regular routine as quickly as possible!
STEP 5: Use a Proven Promotion Plan
Most agents are still marketing their listings like they did 20 years ago … put a sign in the yard, put the listing in the MLS, and pray that it sells. Yet, we know that 93% of buyers search for real estate listings online.3
That’s why we invest in the latest training and technology—to ensure your listing appears in the places where buyers are most likely to look. Our dual-level promotion strategy includes both pre-launch activities designed to seed the marketplace and post-listing activities to ensure your home stays top-of-mind with potential buyers.
By utilizing online and social marketing platforms to connect with consumers and offline channels to connect with local real estate agents, your property gets maximum exposure to prospective buyers.
LET’S GET MOVING
Are you thinking about listing your home? Get a head start on your competition! Contact us for a copy of our Home Seller’s Guide, which offers a complete guide to the home selling process. Or call us to schedule a free no-commitment consultation. We’d love to put together a custom plan to maximize the sales potential of your property!
Sources:
Real Estate Staging Association - https://www.realestatestagingassociation.com/content.aspx?page_id=22&club_id=304550&module_id=164548
Home Staging Resources -
https://www.homestagingresources.com/2018-home-staging-statistics/National Association of Realtors -
https://www.nar.realtor/sites/default/files/documents/2018-real-estate-in-a-digital-world-12-12-2018.pdfRIS Media -
https://rismedia.com/2018/12/12/shocking-stats-importance-photography-real-estate/
What is a Homeowner’s Association?
HOAs are often part of life for condo, townhouse and some single family homeowners. They’re not all good and they’re not all bad. Their purpose in this modern world is to maintain a sort of uniformity and authority that can not only help neighbors deal with disputes, but help the neighborhood as a whole keep a nice, shiny reputation.
For everyone out there looking at homes right now, there are three little letters that could make or break your purchase decision. They are “H,” “O” and “A.” Three of the most frightening letters of the alphabet, imposed over the largest purchase you’ll ever make — it’s a recipe for high anxiety.
But not every Homeowners Association is the nightmare that many home buyers imagine. As long as you do your homework and know exactly what you’re getting into, your HOA may be the best decision you ever made.
Homeowners Associations, Maintenance and Uniformity
HOAs are often part of life for condo, townhouse and some single family homeowners. They’re not all good and they’re not all bad. Their purpose in this modern world is to maintain a sort of uniformity and authority that can not only help neighbors deal with disputes, but help the neighborhood as a whole keep a nice, shiny reputation.
When it comes to attached homes, like condos and townhouses, the HOAs also maintain the exteriors of buildings, including roofing, and common areas, like lawns. Single family HOAs often provide amenities like pools and common buildings that can be used for parties. The more the HOA does, the more the fees will be. And sometimes there will be fees even if they don’t do much.
Homeowners Associations Versus Neighborhood Associations
Another point to clarify is that there is a difference between a neighborhood association and a homeowners association. Neighborhood associations are voluntary, generally have very low fees for membership and do not run with the land. That means that you can buy a house where the former owner was part of the neighborhood association, but decline to be a member yourself.
On the other hand, if you buy a home that’s part of a homeowners association, the covenants, conditions and restrictions (CC&Rs) run with the land itself. So, you buy the land (usually with a house on it) and at closing sign that you agree to the HOA’s rules. You can only change those by being an active part of the association itself and going through the process it takes to allow RV parking in the front yard or whatever it is that you really want to do.
Is an HOA For You?
It’s really hard to know if you’re going to get along in an HOA-controlled neighborhood without taking a long hard look at those CC&Rs. They vary widely, just like the people who live in different neighborhoods. Even if you find a home that you absolutely love, don’t sign a thing until you’ve seen the CC&Rs and gone over them with your real estate agent. You will be living under those rules for a while, make sure you can accept that.
While it would be fun to have a pool you don’t have to clean, sometimes you have to be realistic and say, “These rules just aren’t for me or my lifestyle.”
But, sometimes those rules are really practical and make a lot of sense. For example, some might state that your grass has to be kept under six inches high. Great rule, this practice reduces animal and insect problems by removing cover.
Others might say you can’t have a clothesline or a fence, which might be a total deal-breaker for you. There is often an appeal process, but if that clothesline is a big enough issue, don’t risk it. There are plenty of houses in the sea.
Don’t Forget, HOA Fees Are Included in Your DTI
Last, but not least, remember that HOA fees will be included in your debt to income calculation. So, if you are just barely able to afford that lovely home, the monthly fees may make your lender give you the red light. This is an important item to check when you’re investigating the other terms of the HOA.
You can expect them to run anywhere from a few hundred to over a thousand dollars a month. Definitely something you want to be sure about before committing. Would you rather have that much more in home, or in amenities?
Already in Love With the Idea of a Home In an HOA?
If you and your real estate agent have taken the time to investigate the HOA and the CC&Rs and you’re still good to go, write that contract! Make that home yours and know that the rules will help to maintain home standards, even if they can be a bit draconian at times.
Once you move in, don’t forget your friends at HomeKeepr! Your real estate agent can recommend lawn pros to keep the grass trimmed, siding experts to ensure that the front of your home is always looking its best and other home pros like fence installers for that fence Fido requires.
National Real Estate Market Update for 2023
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.
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.
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.
WE’RE 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:
1. National Association of Realtors -
https://www.nar.realtor/newsroom/existing-home-sales-slid-2-4-in-march
2. National Association of Realtors -
https://www.nar.realtor/newsroom/existing-home-sales-faded-3-4-in-april
3. Mortgage Bankers Association -
https://www.mba.org/docs/default-source/research-and-forecasts/forecasts/2023/mortgage-finance-forecast-may-2023.pdf?sfvrsn=4bf1d1a7_1
4. Fannie Mae -
https://www.fanniemae.com/media/47006/display
5. U.S. Census Bureau -
https://www.census.gov/construction/nrs/current/index.html
6. 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
7. New York Times -
https://www.nytimes.com/2023/04/29/business/spring-housing-market.html?
8. Yahoo Finance -
https://finance.yahoo.com/news/mortgage-rates-increase-after-weeks-of-declines-160015631.html
9. The Washington Post -
https://www.washingtonpost.com/business/2023/04/22/housing-prices-put-some-out-of-the-market/
10. CNBC -
https://www.cnbc.com/2023/04/20/home-sales-fell-in-march-amid-volatility-in-mortgage-rates.html
11. Realtor.com -
https://www.realtor.com/research/2023-q1-sellers-survey-btts/
12. 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
13. United State Census Bureau -
https://www.census.gov/construction/nrc/pdf/newresconst.pdf
14. Freddie Mac -
https://www.freddiemac.com/pmms
15. National Association of Realtors -
https://www.nar.realtor/blogs/economists-outlook/instant-reaction-inflation-april-12-2023
16. CNBC -
https://www.cnbc.com/2023/05/03/fed-rate-decision-may-2023-.html
Top 8 Home Design and Remodeling Trends for 2023
If you’re a current homeowner, or in the market to buy, you’re probably curious about the latest trends in home design. Sellers who make strategic updates before listing a property can generate increased interest from buyers and, in some cases, a premium selling price. And buyers should consider which features of a home will need updating immediately (or in the near future) so they can factor renovation costs into their overall budget.
If you’re a current homeowner, or in the market to buy, you’re probably curious about the latest trends in home design.
Sellers who make strategic updates before listing a property can generate increased interest from buyers and, in some cases, a premium selling price. And buyers should consider which features of a home will need updating immediately (or in the near future) so they can factor renovation costs into their overall budget.
Even if you have no immediate plans to buy or sell, we advise our clients to be thoughtful about the colors, materials, and finishes they select when planning a remodel. Making over-personalized or unpopular design choices could hurt a home’s value when it does come time to sell. And selecting out-of-style or overly-trendy elements could cause your renovation to feel dated quickly.
To help, we’ve rounded up eight of the hottest home design trends for 2019. Keep in mind, not all trends will work well in every house. If you plan to buy, list, or renovate a property, consult a professional who can help you realize your vision and maximize the impact of your investment.
WARMER PAINT COLORS
White and grey aren’t going anywhere, but expect to see warmer tones and more earthy neutrals popping up in 2019. Cold whites are being replaced by warmer, softer whites. And warmer tones of grey have become a popular alternative to the cooler grays we were seeing earlier in the decade. Dove grey—with a lilac undertone—is a particular favorite with designers this year.
Sherwin Williams chose Cavern Clay, a warm terracotta, as its 2019 color of the year, while Behr selected Blueprint, a mid-tone blue. Benjamin Moore’s selection is Metropolitan, a sophisticated grey.
If you’re preparing to sell your home, consider a light, neutral paint color. Neutral colors provide a blank canvas upon which a buyer can envision placing their belongings, and lighter colors make a room appear larger and brighter.
MIXED METALS
Don’t feel limited to using one metallic finish throughout your home—or even throughout a single room. Designers are mixing metals in 2019, and their favorites include copper, brass, pewter, gunmetal, and matte black.
Experts suggest picking one metal hue to dominate your color palette and a contrasting tone to complement it. If your room has a warm color palette, choose a warm-hued primary metal, such as brass or copper. For cool palettes, choose a cool-toned metal, like pewter or stainless steel. You can also experiment with mixing finishes, such as polished and hammered copper.
From faucets to cabinet pulls to accent pieces, swapping out your old or dated fixtures is an easy—and relatively inexpensive—way to modernize your decor. Mixing metals adds depth and gives your room a more curated look.
OUTDOOR ELEMENTS
Bringing outdoor elements into the home can help warm up a sterile space. And natural materials can soften a modern design esthetic.
Homeowners are increasingly looking for ways to incorporate these materials throughout their home. Especially popular right now: stone, copper, concrete, and wood. From concrete showers to agate stone tiles, designers are finding unexpected ways to bring the outside in.
One notable exception: granite countertops. Engineered quartz—a combination of ground quartz and resin—overtook natural granite stone as the most popular countertop material in 2018. This durable, low-maintenance, highly-customizable product has won over homeowners and designers alike.
ALTERNATIVE APPLIANCES
Stainless steel has been the industry standard for years, but the market is trending toward variety and fresh alternatives. Homeowners have more options available than ever to personalize their kitchens with vibrant colors, black stainless, or modern white appliances. Another favorite? Integrated appliances that blend seamlessly into cabinetry. Built-in column refrigerators, which allow you to customize the design and size of your freezer and refrigerator, are becoming a “must-have” in high-end homes.
Advancements in technology have also brought a new wave of appliances to the market. Induction cooktops are replacing commercial gas ranges as a gourmet favorite. And french door ovens and steam ovens are also gaining in popularity—especially ones with smart features you can control from an app on your smartphone.
COLORFUL KITCHENS
White will always be a classic choice, but color is finally coming back to kitchens. More homeowners are choosing cabinets in alternative neutrals like black, cream, and grey, along with colorful options like green and blue. Also popular? Wood cabinets in stains like warm chestnut and fruitwood.
Two-tone kitchen cabinets remain a homeowner favorite, as well. To incorporate this trend, try pairing darker lower cabinets with lighter upper cabinets or a colorful kitchen island with neutral-colored perimeter cabinets.
OPEN SHELVING
Swapping upper kitchen cabinets for open shelves continues to be a popular choice in 2019. It’s a cost-effective update that can make a kitchen feel larger and brighter. However, it’s not a practical option for everyone. Before you commit, test it out by removing your cabinet doors for a few weeks. See how it feels to have your glasses and dishware on display.
Not ready to give up all your upper cabinet storage space? Replace just one or two upper cabinets with open shelves for a lower-commitment but still-updated look.
STATEMENT TILE
The ubiquitous white subway tile is finally fading in popularity. In 2019, homeowners are gravitating toward more colorful choices, creative textures and finishes, and alternative shapes. Especially hot right now: hexagons, arabesques, diamonds, and Moroccan fish scales.
Natural stone remains a favorite, including marble, quartzite and river rock. But advancements in porcelain tile that mimics stone, and even concrete, has made it an attractive, affordable, and low-maintenance alternative.
SHOWCASE CEILINGS
Once an afterthought, ceilings are taking center stage. While 2018 was all about statement walls, statement ceilings are shaping up to be the darling of 2019. Designers are using bold paint colors, wallpaper, intricate moldings, fabric, and other materials to transform a ceiling into something truly special.
Want to incorporate this trend without going too bold? Choose a classic design, like coffered or wooden beams. Or stick with wood paneling or tin tiles for a more timeless look. Even something as simple as painting a ceiling the same color as the walls can make your space feel more modern.
DESIGNED TO SELL
Are you contemplating a remodel? Want to find out how upgrades could impact the value of your home? Give us a call for a free consultation!
Buyer preferences can vary greatly by neighborhood and price range. We can share the insights we’ve gathered from working with buyers in this market … and offer tips on how to maximize the return on your remodeling investment. And if you’re in the market to sell, we can run a Comparative Market Analysis on your home to find out how it compares to others in the area.
Want to learn more about how to stage your home to sell? Contact us at 480-818-5105 to request a free copy of our report: 10 Staging Secrets From the Pros for a Quick Sale at Top Dollar!
Sources:
Decor Mag –
https://www.decoraid.com/blog/home-design-trends-2019Gates Interior Design –
https://gatesinteriordesign.com/hottest-new-kitchen-and-bath-trends-for-2019/House Beautiful –
https://www.housebeautiful.com/home-remodeling/interior-designers/a24844028/home-trends-for-2019/Houzz –
https://www.houzz.com/ideabooks/114552119/list/32-home-design-trends-that-will-rule-in-2019Invaluable –
https://www.invaluable.com/blog/mixing-metals/Sebring –
https://sebringdesignbuild.com/top-trends-in-kitchen-design/
What Should I Look for in a Smart Security Camera?
Once upon a time having a security system or even just some video cameras meant that you either lived in a dodgy neighborhood or you had something really awesome to steal. Today, home security devices are common, inexpensive and can be used for all sorts of things.
Once upon a time having a security system or even just some video cameras meant that you either lived in a dodgy neighborhood or you had something really awesome to steal. Today, home security devices are common, inexpensive and can be used for all sorts of things, from watching your dog run around like a maniac while you’re at work to checking in to make sure the kids made it safely home from school.
Thanks to the magic of WiFi, you can even keep an eye on vacation homes or empty rentals if you’re willing to invest a little bit extra to keep the internet going or to upgrade to camera that can connect to your cellular account. Basically, if there’s something you want to see on the regular, a modern smart security camera can handle the job!
What Kind of Smart Cameras Are Available?
There are several major players in the smart security camera space, from easily recognized names like Nest and Ring to lesser known companies like Vimtag. The brands of the cameras don’t matter as much as you might think, but their features sure do. Let’s break it down.
Type of Security Camera
First and foremost, there are several types of cameras lumped in under the security camera header. Those are:
Webcams. These are cameras that you can check in with, but won’t necessarily alert you to movements or unusual sounds. They literally just give you a live feed of whatever you’re pointing them at.
Video Doorbells. Offering a decent view of the porch area, a video doorbell is a great solution if you receive a lot of packages or simply don’t want to get up to answer the door only to be surprised by solicitors. You can interact with people who ring the bell and when placed properly, the camera can alert and record quite a bit of activity within its field of vision.
Indoor Security. True security cameras have a great deal of customization so users can set them up to their exact needs. Some are able to be moved back and forth or up and down based on user input, even remotely. This can give you a better idea of what’s going on in the room.
Outdoor Security. Outdoor security cameras are much like the indoor ones, except that they have more durable housing and may be powered using things like solar panels to keep the maintenance to a minimum. Attach it, point it and forget it until it wakes you up at 2 am because someone is walking their dog down the street in front of your house.
How to Become a Homeowner on a First-Time Buyer’s Budget
It's not easy being a first-time homebuyer right now. At the end of last year, housing affordability hit an all-time low. Additionally, mortgage rates have risen significantly since 2021, while inventory remains tight for many property categories, but especially for starter homes
It's not easy being a first-time homebuyer right now. At the end of last year, housing affordability hit an all-time low.1 Additionally, mortgage rates have risen significantly since 2021, while inventory remains tight for many property categories, but especially for starter homes. Even lower-priced condos are harder to snag these days, as investors and downsizers muscle out first-timers by offering stronger, often cash-heavy bids.2
In fact, according to the National Association of Realtors, only 26% of last year's homebuyers were first-timers—the lowest share on record and down from 34% a year prior. This underscores just how steep a hill new buyers are facing.3 As a result, many first-time homebuyers are finding that they need to get creative or risk renting for longer than they planned.
If you, too, are struggling to afford homeownership, here are some workarounds to consider as you plot your first home purchase.
1. Try House Hacking
“House hacking” is a real estate investment strategy in which participants use their homes to generate income in order to offset their expenditures.
For example, renting out a basement apartment or accessory dwelling unit (ADU)—such as a detached garage that's been outfitted with a bathroom and small kitchen—counts as house hacking. So does splitting housing costs with a roommate or converting a part of your home into an Airbnb.
House hacking isn’t new. But, it’s grown in popularity as a new crop of digital platforms has entered the market and made it easier than ever for homeowners to generate income from their property.
In some cases, house hacking may make it possible for you to qualify for and afford your first home. A lender, for example, may approve you for a larger mortgage if you purchase a home with immediate income potential, such as a legal duplex or a property with a secondary suite that has a kitchen and full bathroom.4
In addition, house hacking could help you pay your mortgage once you move in. Here are just a few of the ways you could use your home to earn some extra cash:
● Offer paid parking in your driveway on a site like Spacer or SpotHero.
● Rent out your swimming pool for a few hours on Swimply.
● Make your home available for photoshoots or events on Giggster or Peerspace.
● Turn your backyard into a pay-by-the-hour dog park on Sniffspot.
● List your garage space on an app like Neighbor Storage.
But before you make plans to house hack, make sure you fully understand an area's laws and HOA rules. We can help you find a home with income potential in a neighborhood with less restrictive zoning and regulations.
2. Team Up With Friends or Family
If you aren't wild about the idea of welcoming strangers to your home, you may want to consider co-purchasing with a friend or family member instead. This unconventional housing arrangement is also growing more popular as friends and family members cope with higher living costs by pooling resources.
According to the National Association of Realtors' 2022 Profile of Home Buyers and Sellers, the share of first-time homebuyers living with people other than children or a romantic partner is currently at an all-time high.3 Meanwhile, research from Pew found that multigenerational living has accelerated especially quickly, with a quarter of U.S. adults aged 25 to 34 now living in a multigenerational home.5
Arrangements can be customized to fit your circumstances. For example, you could purchase a home and then rent a portion of it to a loved one. Or you might consider co-buying a home with friends or family members so that you can step onto the property ladder and start building equity together.
Co-ownership could work out especially well for you long-term if it helps you to buy a home that's bigger, has more investment potential, or is located in a high-demand area and so appreciates at a faster rate. Plus, you'll get to see your loved ones more often and enjoy the coziness of shared living with people you like having around.
On the other hand, sharing a big financial responsibility, like a mortgage, with friends or family could get messy—especially if you don't create a clear-cut co-ownership agreement beforehand that outlines your mutual expectations. So plan carefully before you proceed.
In addition, you may need to rethink the type of home you pursue. For example, a smaller home might be cheaper, but do you really want that much togetherness all the time? We can help you set priorities and search for a suitable property.
3. Tap Your Network for Help With Funding
Another established method for affording a first home is to lean on family or friends for financial help. Getting assistance with the down payment or other borrowing costs can go a long way toward making your homeownership dreams come true.
As long as you don't mind asking for help, a free-and-clear gift that's intended for your down payment is an ideal arrangement, since it will allow you to borrow less overall. Or, if that’s too big an ask, your loved ones could pitch in toward closing or moving costs.
Alternatively, your loved ones could help by co-signing your loan. For example, if their credit score is a lot higher than yours, it could enable you to secure a lower interest rate so that your monthly payment is more affordable.
According to a recent YouGov poll, more than a third of homeowners (and a whopping 79% of those under 30) received financial help from their parents when buying their first home.6 So you wouldn't be the only one leaning on family to help afford a home at today's prices.
Just be sure your parents or other generous loved ones are aware they're giving a gift, not a loan, and are willing to put that in writing. A lender will want proof that this money isn't adding to your debt burden and may require documentation from your benefactors.
Another way to tap your network for help is to crowdfund part of your down payment or ask for monetary gifts instead of tangible ones. For example, if you're getting married soon, you could skip the wedding gift registry and ask guests to contribute funds to your hoped-for home purchase instead.
4. Look for Special Programs and Assistance
You could also cut some of your upfront mortgage costs by applying for special grants and funding opportunities.
For example, consider using a grant to help you fund your down payment. There are a number of public and private grants and down payment assistance programs that are expressly intended to help first-time buyers.
Just like a gift, you don't have to pay a grant back. But, depending on your personal situation, you may find some grants difficult to qualify for—especially if you make a relatively high income.
Many grants are reserved for lower-income buyers only.7
Check out grant programs, such as the HomePath Ready Buyer Program, National Homebuyers Fund, the Good Neighbor Next Door Program, and specialized grants from banks. Also look to state and local sources for potential grants and down payment assistance programs, including forgivable and deferred payment loans, Individual Development Accounts, and DPA Second Mortgages.7
Similarly, if you have enough income to support a house payment but can't spare much cash for your down payment, you may qualify for a government-sponsored loan, such as an FHA loan that allows you to put down as little as 3.5% to 10%.8
We can connect you with a lender or mortgage broker who can educate you about your options and help shepherd you through the process. Some financial assistance programs require you to work with specific lenders, while others require you to apply directly and fill out a separate application.
In addition, you may look to even less conventional options, such as seller financing. But be aware these kinds of arrangements are rare and hard to find. Depending on the market, you will likely get more help from a seller if you ask them to pay closing costs or contribute to your mortgage rate buydown. In many cases, we can help you negotiate seller concessions that make your home purchase more affordable.
5. Expand Your Home Search
If you’re having trouble finding a home within your budget, consider broadening your search criteria. You may be surprised by the kinds of deals that are available when you're willing to compromise.
For example, if you're struggling to find an affordable home in your target neighborhood, expand your search area and consider homes that are further out of town or that are located in up-and-coming areas with lower starting prices. We would be happy to introduce you to some great but lesser-known neighborhoods that we consider hidden gems.
You could also save money on your home purchase simply by dropping or revising some of your must-haves and settling for OK-to-haves instead.
For example, do you really need two bathrooms and a large backyard? Or could you settle for a single bathroom with space to add a second one in the future? And would a small garden, cozy balcony, or rooftop terrace still give you the outdoor time you crave? These types of compromises can sometimes shave tens of thousands off your purchase price.
Similarly, if you don't mind rolling up your sleeves or working with a contractor on minor jobs, you can look for homes that need a little TLC. Just because a house looks dated doesn't mean it's destined to stay that way or that it will take a ton of money to spruce up. In fact, a home with good bones but cosmetic flaws could be a perfect match: With less competition, you'll have a better chance of purchasing the home at an affordable price. You can then take your time to save more and fix it up to your taste.
Keep in mind, starter homes are rarely forever homes, but merely a first step onto the property ladder. By gaining a foothold in the real estate market now, you can set yourself up to afford a more expensive property in the future.
According to the National Association of Realtors, in 2021, the net worth of a typical homeowner was $300,000, while that of a renter was only $8,000.9 We can help you find an affordable first home so you can start building equity to reach your long-term financial and real estate goals.
YOU CAN DO IT—AND WE CAN HELP
Buying a first home is challenging, but it's not impossible—especially when you have a savvy real estate professional in your corner. We will work with you to devise a plan to overcome your financial constraints. Then, we’ll help you find a home that not only excites you but also fits your budget and lifestyle. Give us a call to get started with a free exploratory consultation.
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:
1. Housing Wire -
https://www.housingwire.com/articles/housing-affordability-ends-2022-at-record-low/
2. Realtor.com - https://www.realtor.com/news/trends/death-of-the-starter-home-where-have-all-the-small-houses-gone/
3. National Association of Realtors - https://www.nar.realtor/research-and-statistics/research-reports/highlights-from-the-profile-of-home-buyers-and-sellers
4. ValuePenguin -
https://www.valuepenguin.com/mortgages/claiming-rental-income-for-mortgage
7. Bankrate -
https://www.bankrate.com/mortgages/first-time-homebuyer-grants/#types
8. Investopedia -
https://www.investopedia.com/terms/f/fhaloan.asp
9. National Association of Realtors - https://www.nar.realtor/sites/default/files/documents/2022-snapshot-of-race-and-home-buying-in-the-us-04-26-2022.pdf
Top 10 Myths That Trip Up First-Time Home Buyers
Buying a home is a big decision, but it doesn’t have to be a scary one. If you arm yourself with knowledge and a qualified team of support professionals, you’ll be well equipped to make the right choices for your family and financial future.
If you’re thinking about buying a home, you’ve probably received your share of advice from family and friends. Add to that the constant stream of TV shows, news segments, and social media posts that over-simplify the home buying process for easy entertainment.
With so much information to sift through, it can be tough to distinguish fact from fiction. That’s why we’re revealing the truth behind some of the most common home buyer myths and misconceptions.
Buying a home is a big decision, but it doesn’t have to be a scary one. If you arm yourself with knowledge and a qualified team of support professionals, you’ll be well equipped to make the right choices for your family and financial future.
DON’T FALL FOR THESE COMMON HOME BUYER MYTHS
Myth #1: You need a 20% down payment.
Plenty of buyers are purchasing homes with down payments that are much less than 20% of the total cost of the property. Today, you can buy a home with as little as 3-5% down.
There are multiple programs out there that allow you to have a lower down payment, and a lender or mortgage broker can talk you through which option is the best for you. Since you’re putting less money down, you’re a riskier borrower to your lender than people who put down a full 20%. Because of this, you will most likely need to pay mortgage insurance as part of your monthly payment.
Myth #2: Real estate agents are expensive.
Your agent is with you every step of the way throughout your home buying journey, and he or she spends countless hours working on your behalf. It sounds like having an agent is expensive, right? Well, not for you. Buyers usually don’t pay a real estate agent’s commission. Your agent’s fee is paid for at closing by the seller of the home you’re buying.1 The seller knows to factor this cost into the property’s total purchase price.
Myth #3: Don’t call a real estate agent until you're ready to buy.
The earlier you bring in an agent to help with the purchasing process, the better. Even if you’re in the very early stages of casually browsing Zillow, a real estate professional can be a huge help.
They can create a search for you in the Multiple Listing Service (MLS), so you get notifications for every house that meets your criteria as soon as it hits the market. The MLS is typically more up-to-date than popular home search sites like Zillow and Trulia. Setting up a search a few months before you’re considering buying gives you a good idea of what’s out there in your town that’s in your budget. Reviewing the MLS and speaking with an agent as soon as possible can help you set realistic expectations for when you actually start the house hunting process.
Myth #4: Fixer-uppers are more budget friendly.
We’ve all watched the shows on HGTV that encourage people to go after fixer-uppers because they’re more affordable and allow buyers to eventually renovate the home to include everything on their wishlist. But, this isn’t always the case.
Sometimes, homes that need a lot of work also require a lot of money. Big renovations, like add-ons, a total kitchen remodel, or installing a pool, take a lot longer than it looks on TV. If you’re really interested in a fixer-upper, ask your agent to show you a mix of newer homes and older homes. If you fall in love with an older home that needs a lot of work, get some quotes from contractors before you buy so you know the real cost of the renovations and see if you can work them into your budget.
Myth #5: Your only upfront cost is your down payment.
Your down payment is big, but it isn’t the only money you’ll spend during the home buying process. At closing, you’ll pay your down payment, but you’ll also bring closing costs to the table. Closing costs are typically anywhere from 2-4% of the total purchase price of the home.2 This amount includes the cost for items like homeowners insurance, title fees, and more.
You’ll also need to pay for an inspection before closing, which usually costs a few hundred dollars. This price will be higher or lower based on the size of your new property. Your lender will also require an appraisal. An appraiser will come in and inspect the home to determine how much it’s worth. Depending on your lender, you may have to pay this when the appraisal is conducted or it might be rolled into your closing costs.
Myth #6: You need a high credit score to buy a house.
You don’t need perfect credit to buy the perfect home. There are loans out there that buyers with lower credit scores can qualify for. These are good options for people who have had credit issues in the past, but some of them come with additional fees you will need to pay. Speak to a few local lenders or mortgage brokers to talk through which options might be best for you.
Myth #7: You can't qualify for a mortgage if you're still paying off student loans.
While some buyers may feel more comfortable paying off their existing debts before taking the leap into homeownership, it’s not a requirement. When you’re applying for a mortgage, the lender takes a close look at your debt-to-income ratio.3 If you want to calculate this on your own, add up all of your monthly debt payments and divide those by your monthly income. When you’re lender does this, they’re trying to make sure that you will be able to afford your monthly mortgage payments along with your other existing payments. If your income is high enough to allow you to make all of these payments each month, having a student loan will most likely not stop you from getting a mortgage.
Myth #8: You should base your budget on what your lender approves.
How much house you qualify for and how much you can afford are two totally different numbers. When you prequalify for a mortgage, your lender will look at your income, debt, assets, credit score, and financial history to determine how much money you might qualify for.4 For some people, this number might be much higher than you thought because lenders tend to approve for the highest amount they think you can afford. But that doesn’t mean that’s how much you should borrow.
Instead, figure out how much house you can actually afford. An online mortgage calculator can be a good first step in determining this number. We recommend thinking about what you want your monthly payment to be as a starting point. And remember to include your principal, interest, taxes, and, insurance. You should also think about ownership expenses that aren’t part of your monthly payment, like HOA dues and maintenance.
Myth #9: It's all about location.
You’ve heard the phrase. Location, location, location is basically the real estate industry’s motto, but we’ll let you in on a little known secret: It’s not always true. Yes, location is great to consider when it comes to school districts and commute times, but you also need to think about how the home will function for you and/or your family’s lifestyle. If a family of five is choosing between a one bedroom condo in the bustling city center and a 4-bedroom home out in the suburbs, the latter is probably the best, most functional choice for them. Also, by buying in a less sought after neighborhood, your property taxes will most likely be much lower!
Obviously, you might still want to choose an area with great resale potential, and this is something that your agent can speak to you about. They’re an expert in your city and are constantly monitoring buying and selling trends.
Myth #10: If you look hard enough, you'll find a home that checks every box on your wishlist.
You’ve seen that famous house hunting show. And while we have our suspicions about how real it is, the one thing they get right is that almost every buyer needs to compromise on something. Yes, the perfect house that meets every item on your wishlist is probably out there, but it’s also probably double or triple your budget.
A long wishlist can be a great starting point for figuring out what you want and don’t want, but we recommend narrowing that wishlist down to the top five things that are important to you in order of priority. We also recommend noting on your wishlist what your absolute deal breakers are, like “must have a yard for our dog,” and noting what you can live without, like “heated bathroom floors.”
This is a great list to discuss when you first start talking to an agent. A good real estate agent will be able to look at your list and find properties that might work for you. By coming to that first meeting with realistic expectations and knowledge about home buying rather than a bunch of myths heard here and there, you’ll be able to start the process off on the right foot and be in your new house in no time.
WE’RE HERE TO HELP
Whether you’re a first-time buyer or a seasoned homeowner, there’s no reason to go through the home buying process without an advocate on your side. We’re here to answer your questions and do the hard work for you, so you can spend your time dreaming about your new home. Call us today to schedule a free, no-obligation consultation.
Now that we’ve cleared up these common homebuyer myths, find out if you know the steps you should take to prepare financially before you apply for a mortgage. Contact us to request a complimentary copy of our “Home Buyer’s Guide to Getting Mortgage Ready.”
Sources:
Realtor.com -
https://www.realtor.com/advice/finance/realtor-fees-closing-costs/
The Balance -
https://www.thebalance.com/buyer-s-closing-costs-1798422StudentLoanHero -
https://studentloanhero.com/featured/student-loans-buying-house/
Zillow -
https://www.zillow.com/mortgage-learning/pre-qualification-vs-pre-approval/
Important Steps to Consider for Purchasing a Home
Where you buy not only affects the home’s current and future value, but it also affects your lifestyle.
Where you buy not only affects the home’s current and future value, but it also affects your lifestyle. Your agent will be able to conduct a more targeted home search if you outline your preferences in neighborhoods and nearby amenities. Here’s a checklist of items you should consider and communicate to your chosen real estate agent.
Urban, suburban or rural
Commute time
School districts
Desirable neighborhoods
Proximity to the airport
Proximity to restaurants and retail
Access to major highways and thoroughfares
Access to public transportation
Health care facilities
Parks and recreation
Length of time you plan to live in the home (Your agent should be knowledgeable about growth trends and projections that could affect your investment.)
Buying a home in Scottsdale is a big step for most people so approaching the process with some basic knowledge and the right resources is important. An experienced and knowledgeable buyer’s agent will be your best resource to guide you through the local Scottsdale Real Estate market and assist you with finding the best home at the best price. The guide below is an important tool in the home buying process. The Select Realty Group is happy to provide this guide as a resource for all of our buyers.
One of the first and most important decisions in purchasing a home is deciding where you want to buy. The Phoenix Metro market has a vast offering of housing. Finding the right neighborhood is a must. We offer daily tours of Scottsdale neighborhoods to help buyers find the right neighborhood. Contact us today for more information and to schedule your tour 480-818-5105!
Deciding How Much Home You Can Afford
Your lender decides what you can borrow, but you decide what you can afford.
Your lender decides what you can borrow, but you decide what you can afford.
Lenders are careful, however they make qualification decisions based on averages and formulas. They won’t understand the nuances of your lifestyle and spending patterns quite as well as you do. So, leave a little room for the unexpected – for all the new opportunities your home will give you to spend money, from furnishings, to landscaping, to repairs.
Historically, banks use a ratio called 28/36 to decide how much borrowers could borrow. An approved housing payment couldn’t be more than 28 percent of the buyer’s gross monthly income, and his or her total debt load, including car payments, student loans, and credit card payments, couldn’t be more than 36 percent. As home prices have risen, some lenders have responded by stretching these ratios to as high as 50 percent. No matter how expensive your market though, we urge you to think carefully before stretching your budget quite so much.
Deciding how much you can afford should involve some careful attention to how your financial profile will change in the upcoming years. In the long run, your own peace of mind and security will matter most.
Creating Your Home Wishlist
Before the home search begins, your real estate agent will want to know as much as possible about the features and amenities you desire
Before the home search begins, your real estate agent will want to know as much as possible about the features and amenities you desire. To help your agent better serve you, analyze what you want and what you need in a home’s features and amenities.
Features:
Age: Do you prefer historic properties, or newer ones?
Style: Do you have a special preference for ranches, bungalows, or another style of construction?
Bedrooms: How many?
Bathrooms: How many? Are they updated?
Living and Dining Areas: A traditional, formal layout, or a more open, contemporary plan?
Stories: How many?
Square feet: How much space?
Ceilings: How high?
Kitchen: How big? Recently updated? Open to other living areas?
Storage: Big closets, a shed, an extra-large garage?
Parking: A garage or carport? Room for how many cars?
Extras: Attic or basement?
Amenities:
Office
Play/exercise room
Security system
Sprinkler system
Workshop/Studio
In-law suite
Fireplace
Pool
Hot tub
Sidewalk
Wooded lot
Patio, deck, or porch
Laundry room
8 Steps To Selling Your Home
Step-by-step guide: from deciding to sell through closing the deal.
1. Define your needs.
Write down all the reasons for selling your home. Ask yourself, “Why do I want to sell and what do I expect to accomplish with the sale?” For example, a growing family may prompt your need for a larger home, or a job opportunity in another city may necessitate a move. For your goals, write down if you’d like to sell your house within a certain time frame or make a particular profit margin. Work with your real estate agent to map out the best path to achieve your objectives and set a realistic time frame for the sale.
2. Name your price.
Your next objective should be to determine the best possible selling price for your house. Setting a fair asking price from the outset will generate the most activity from other real estate agents and buyers. You will need to take into account the condition of your home, what comparable homes in your neighborhood are selling for, and state of the overall market in your area. It’s often difficult to remain unbiased when putting a price on your home, so your real estate agent’s expertise is invaluable at this step. Your agent will know what comparable homes are selling for in your neighborhood and the average time those homes are sitting on the market. If you want a truly objective opinion about the price of your home, you could have an appraisal done. This typically costs a few hundred dollars. Remember: You’re always better off setting a fair market value price than setting your price too high. Studies show that homes priced higher than 3 percent of their market value take longer to sell. If your home sits on the market for too long, potential buyers may think there is something wrong with the property. Often, when this happens, the seller has to drop the price below market value to compete with newer, reasonably priced listings.
3. Prepare your home.
Most of us don’t keep our homes in “showroom” condition. We tend to overlook piles of boxes in the garage, broken porch lights, and doors or windows that stick. It’s time to break out of that owner’s mindset and get your house in tip-top shape. The condition of your home will affect how quickly it sells and the price the buyer is willing to offer. First impressions are the most important. Your real estate agent can help you take a fresh look at your home and suggest ways to stage it and make it more appealing to buyers.
A home with too much “personality” is harder to sell. Removing family photos, mementos and personalized will help buyers visualize the home as theirs.
Make minor repairs and replacements. Small defects, such as a leaky faucet, a torn screen or a worn doormat, can ruin the buyer’s first impression.
Clutter is a big no-no when showing your home to potential buyers. Make sure you have removed all knick-knacks from your shelves and cleared all your bathroom and kitchen counters to make every area seem as spacious as possible.
4. Get the word out.
Now that you’re ready to sell, your real estate agent will set up a marketing strategy specifically for your home. There are many ways to get the word out, including: * The Internet * Yard signs * Open houses * Media advertising * Agent-to-agent referrals * Direct mail marketing campaigns In addition to listing your home on the MLS, your agent will use a combination of these tactics to bring the most qualified buyers to your home. Your agent should structure the marketing plan so that the first three to six weeks are the busiest.
5. Receive an offer.
When you receive a written offer from a potential buyer, your real estate agent will first find out whether or not the individual is pre-qualified or pre-approved to buy your home. If so, then you and your agent will review the proposed contract, taking care to understand what is required of both parties to execute the transaction. The contract, though not limited to this list, should include the following:
Legal description of the property
Offer price
Down payment
Financing arrangements
List of fees and who will pay them
Deposit amount
Inspection rights and possible repair allowances
Method of conveying the title and who will handle the closing
Appliances and furnishings that will stay with the home
Settlement date
Contingencies
At this point, you have three options: accept the contract as is, accept it with changes (a counteroffer), or reject it. Remember: Once both parties have signed a written offer, the document becomes legally binding. If you have any questions or concerns, be certain to address them with your real estate agent right away.
6. Negotiate to sell.
Most offers to purchase your home will require some negotiating to come to a win-win agreement. Your real estate agent is well versed on the intricacies of the contracts used in your area and will protect your best interest throughout the bargaining. Your agent also knows what each contract clause means, what you will net from the sale and what areas are easiest to negotiate. Some negotiable items:
Price
Financing
Closing costs
Repairs
Appliances and fixtures
Landscaping
Painting
Move-in date
Once both parties have agreed on the terms of the sale, your agent will prepare a contract.
7. Prepare to close.
Once you accept an offer to sell your house, you will need to make a list of all the things you and your buyer must do before closing. The property may need to be formally appraised, surveyed, inspected or repaired. Your real estate agent can spearhead the effort and serve as your advocate when dealing with the buyer’s agent and service providers. Depending on the written contract, you may pay for all, some or none of these items. If each procedure returns acceptable results as defined by the contract, then the sale may continue. If there are problems with the home, the terms set forth in the contract will dictate your next step. You or the buyer may decide to walk away, open a new round of negotiations or proceed to closing. Important reminder: A few days before the closing, you will want to contact the entity that is closing the transaction and make sure the necessary documents will be ready to sign on the appropriate date. Also, begin to make arrangements for your upcoming move if you have not done so.
8. Close the deal.
“Closing” refers to the meeting where ownership of the property is legally transferred to the buyer. Your agent will be present during the closing to guide you through the process and make sure everything goes as planned. By being present during the closing, he or she can mediate any last-minute issues that may arise. In some states, an attorney is required and you may wish to have one present. After the closing, you should make a “to do” list for turning the property over to the new owners. Here is a checklist to get you started.
Cancel electricity, gas, lawn care, cable and other routine services.
If the new owner is retaining any of the services, change the name on the account.
Gather owner’s manuals and warranties for all conveying appliances.x
Increasing Your Home’s Appeal
Remember the 60-second rule: That’s all the time you have to create a winning first impression. Here are some simple to significant ways to maximize your home’s appeal.
Remember the 60-second rule: That’s all the time you have to create a winning first impression. Here are some simple to significant ways to maximize your home’s appeal.
Exterior
Keep the grass cut, landscape neat and remove all yard clutter.
Weed and apply fresh mulch to flower beds.
Apply fresh paint to wooden fences.
Tighten and clean all door handles.
Clean windows inside and out.
Power wash home’s exterior.
Ensure all gutters and downspouts are firmly attached and functioning.
Paint the front door.
Buy a new welcome mat.
Place potted flowers near the front door.
Interior
Evaluate the furniture in each room and remove anything that interrupts “the flow” or makes the room appear smaller.
Consider renting a storage unit to move items off-site.
Clean and organize cabinets, closets and bookshelves.
Clean all light fixtures and ceiling fans.
Shampoo carpets.
Remove excessive wall hangings and knick-knacks.
Repair all plumbing leaks, including faucets and drain traps.
Make minor repairs (torn screens, sticking doors, cracked caulking).
Clean or paint walls and ceilings.
Replace worn cabinet and door knobs.
Fix or replace discolored grout.
Replace broken tiles.
Replace worn counter-tops.
Special details for showings
Turn on all the lights.
Open all drapes and shutters in the daytime.
Close all toilet lids in each bathroom.
Keep pets secured outdoors.
Buy new towels for bathrooms.
Buy new bedding for bedrooms.
Replace old lamps or lampshades.
Play quiet background music.
Light the fireplace or clean out the ashes and light a candelabrum.
Infuse home with a comforting scent, such as apple spice or vanilla.
Set the dining room table for a fancy dinner party.
Vacate the property while it is being shown.
Understanding The Buyer
As the seller, you can control three factors that will affect the sale of your home: the home’s condition, asking price, and marketing strategy.
As the seller, you can control three factors that will affect the sale of your home:
The home’s condition
Asking price
Marketing strategy
However, it’s important to note that there are numerous other factors that influence a buyer, and you need to understand these consumer trends when you enter the seller's market. The more your home matches these qualifications, the more competitive it will be in the marketplace. Your real estate agent can advise you on how to best position and market your home to overcome any perceived downsides.
Location
Unfortunately, the most influential factor in determining your home’s appeal to buyers is something you can’t control: its location. According to the National Association of REALTORS(r), neighborhood quality is the No. 1 reason buyers choose certain homes. The second most influential factor is commute times to work and school.
Size
While some buyers want to simplify their lives and downsize to a smaller home, home sizes in general have continued to increase over the decades, nearly doubling in size since the 1950's. Smaller homes typically appeal to first-time home buyers and “empty nesters,” or couples whose children have grown up and moved out.
Amenities
Preferences in floor plans and amenities go in and out of fashion, and your real estate agent can inform you of the “hot ticket” items that are selling homes in your market. If your home lacks certain features, you can renovate to increase its appeal, but be forewarned: That’s not always the right move. Using market conditions and activity in your neighborhood as a gauge, your agent can help you determine whether the investment is likely to help or hinder your profit margin and time on the market.