Looking at the maps above, it is not hard to see why prices are appreciating in many areas of the country. Until the supply of homes for sale starts to meet the buyer demand, prices will continue to increase. If you are debating listing your home for sale, let’s get together to help you capitalize on the demand in the market now!
- Realtor.com recently shared “5 Habits to Start Now If You Hope to Buy a Home in 2017.”
- Setting up an automatic savings plan that saves a small amount of every check is one of the best ways to save without thinking a lot about it.
- Living within a budget now will help you save money for down payments and pay down other debts that might be holding you back.
January 9, 2017 Market Update:
QUOTE OF THE WEEK... "Write it on your heart that every day is the best day in the year." --Ralph Waldo Emerson, American essayist, lecturer and poet
INFO THAT HITS US WHERE WE LIVE ... This year we should have 357 best days ahead of us, if most of the housing market forecasts come true. One online real estate firm expects a fast sales pace, thanks to millennials surging into the market, helping to push existing home sales up by 2.8% in 2017. The National Association of Realtors (NAR) currently estimates existing home sales will rise by 2.0%, their lower estimate based on increasing home prices. Yet a financial services company, whose house price index looks at inflation, wage growth and other factors, says prices are still more affordable now than during the housing boom.
Speaking of home prices, a real estate tech and data firm reported prices in November up 7.1% versus a year ago. The property economist for a research consultancy put this to continued low inventories and the rise in housing demand after the election. Of course, the situation varies by market. That data firm forecasts the year will show a 5% increase in prices overall. But some areas may hit double-digit gains, while others decline. Last week, Case-Shiller reported home prices were finally above their all-time highs. Now a listing site notes that the value of housing stock nationally hit an all-time high in 2016, though some markets are still below their peak prices.
BUSINESS TIP OF THE WEEK... The beginning of the year is a great time to re-commit yourself to your business. It takes a 100% commitment to give you the drive you need to keep meeting the challenges and enjoying the ride.
The latest Existing Home Sales Report from the National Association of Realtors (NAR) revealed a direct correlation between a lack of inventory and rising prices.
We are all familiar with the concept of supply and demand. As the demand for an item increases the supply of that same item goes down, driving prices up.
Year-over-year inventory levels have dropped each of the last 18 months, as inventory now stands at a 4.0-month supply, well below the 6.0-month supply needed for a ‘normal’ market.
The median price of homes sold in November (the latest data available) was $234,900, up 6.8% from last year and marking the 57th consecutive month with year-over-year gains.
NAR’s Chief Economist, Lawrence Yun had this to say:
"Existing housing supply at the beginning of the year was inadequate and is now even worse heading into 2017. Rental units are also seeing this shortage. As a result, both home prices and rents continue to far outstrip incomes in much of the country."
But there is good news about rising prices. More and more homeowners are recovering from a negative equity situation and learning that they are able to sell their homes and either move up to their dream home or downsize to a property that will better suit their needs. Look for these homes to come to market soon.
Buyer demand continues to outpace the supply of homes for sale. Listing your home in the winter attracts serious buyers who are looking to close the transaction quickly.
QUOTE OF THE WEEK... "And now we welcome the new year. Full of things that have never been." --Rainer Maria Rilke, German poet
INFO THAT HITS US WHERE WE LIVE ... In the housing market we hope this year will be chock full of new transactions. But some question whether this will happen. The National Association of Realtors (NAR) Pending Home Sales index dipped in November, 2.5% below its October reading. This measure of contracts signed on existing homes points to actual sales a few months out. The NAR said higher borrowing costs "somewhat cloud" the housing market outlook for 2017. Yet their chief economist noted that the effect of higher rates will be "partly neutralized" by stronger growth in wages and this year's expected two million net new job additions.
Meanwhile, the Case-Shiller National Home Price Index (HPI) came in with an annual gain of 5.6% in October. This finally put prices past the all-time highs set more than ten years ago--long recovery, hey? However, since the National HPI bottomed out in February 2012, it climbed to a peak yearly rate just shy of 11% before falling to its present 5% range of annual gains. Case-Shiller's managing director noted "the current high consumer confidence numbers and low unemployment rate...do not suggest an immediate reversal in home price trends." But some observers point out that more buyers and sellers might get off the fence given the new market conditions.
BUSINESS TIP OF THE WEEK... Take every opportunity to build trust with clients and prospects. Make phone calls and deliver information when you say you will and show up for meetings on time. Trust is the basis of business success.
There are some who are calling for a decrease in home prices should mortgage interest rates begin to rise rapidly. Intuitively, this makes sense as the cost of a home is determined by the price of the home, plus the cost of financing that home. If mortgage interest rates increase, fewer people will be able to buy, and logic says prices will fall if demand decreases.
However, history shows us that this has not been the case the last four times mortgage interest rates dramatically increased.
Here is a graph showing what actually happened:
Last week, in an article titled “Higher Rates Don’t Mean Lower House Prices After All,” the Wall Street Journal revealed that a recent study by John Burns Real Estate Consulting Inc. found that:
“[P]rices weren’t especially sensitive to rising rates, particularly in the presence of other positive economic factors, such as strong job growth, rising wages and improving consumer confidence.”
Last week’s jobs report was strong and the Conference Board just reported that the Consumer Confidence Index was back to pre-recession levels.
We will have to wait and see what happens as we move forward, but a decrease in home prices should rates go up is anything but guaranteed.
- The National Association of Realtors (NAR) recently released their latest Existing Home Sales Report.
- First-time homebuyers made up 33% of all sales in October.
- Homes are selling quickly with 43% of homes on the market for less than a month.
- A limited supply continues to drive up prices for the 56th consecutive month.
Today the FHFA announced the new conforming loan limits for loans purchased by Fannie Mae and Freddie Mac on or after January 1, 2017. The base limit will increase to $424,100 and the high balance ceiling will increase to $636,150. The base limit in Hawaii will be $636,150.
1) The National Association of REALTORS® surveyed their members for the release of their Confidence Index.
2) The REALTORS® Confidence Index is a key indicator of housing market strength based on a monthly survey sent to over 50,000 real estate practitioners. Practitioners are asked about their expectations for home sales, prices and market conditions.
3) Homes sold in 60 days or less in 42 out of 50 states, and Washington D.C.
4) Homes sold in 30 days or less in 17 states.
People across the country are beginning to think about what their life will look like next year. It happens every fall; we ponder whether we should relocate to a different part of the country to find better year-round weather, or perhaps move across the state for better job opportunities. Homeowners in this situation must consider whether they should sell their house now or wait.
If you are one of these potential sellers, here are five important reasons to sell now instead of in the dead of winter.
1. Demand Is Strong
The latest Realtors’ Confidence Index from the National Association of Realtors (NAR) shows that buyer demand remains very strong throughout the vast majority of the country. These buyers are ready, willing and able to purchase… and are in the market right now!
Take advantage of the buyer activity currently in the market.
2. There Is Less Competition Now
According to NAR’s latest Existing Home Sales Report, the supply of homes for sale is still under the 6-month supply that is needed for a normal housing market (which is 4.5-months).
This means, in most areas, there are not enough homes for sale to satisfy the number of buyers in that market. This is good news for home prices. However, additional inventory is about to come to market.
There is a pent-up desire for many homeowners to move, as they were unable to sell over the last few years because of a negative equity situation. Homeowners are now seeing a return to positive equity as real estate values have increased over the last two years. Many of these homes will be coming to the market soon.
Also, as builders regain confidence in the market, new construction of single-family homes is projected to continue to increase, reaching historic levels in 2017. Last month’s new home sales numbers show that many buyers who have not been able to find their dream homes within the existing inventory have turned to new construction to fulfill their needs.
The choices buyers have will continue to increase. Don’t wait until all this other inventory of homes comes to market before you sell.
3. The Process Will Be Quicker
Fannie Mae announced that they anticipate an acceleration in home sales that will surpass 2007's pace. As the market heats up, banks will be inundated with loan inquiries causing closing timelines to lengthen. Selling now will make the process quicker & simpler.
4. There Will Never Be a Better Time to Move Up
If you are moving up to a larger, more expensive home, consider doing it now. Prices are projected to appreciate by 5.2% over the next year, according to CoreLogic. If you are moving to a higher-priced home, it will wind up costing you more in raw dollars (both in down payment and mortgage payment) if you wait.
According to Freddie Mac’s latest report, you can also lock-in your 30-year housing expense with an interest rate around 3.57% right now. Interest rates are projected to increase moderately over the next 12 months. Even a small increase in rate will have a big impact on your housing cost.
5. It’s Time to Move On with Your Life
Look at the reason you decided to sell in the first place and determine whether it is worth waiting. Is money more important than being with family? Is money more important than your health? Is money more important than having the freedom to go on with your life the way you think you should?
Only you know the answers to the questions above. You have the power to take control of the situation by putting your home on the market. Perhaps the time has come for you and your family to move on and start living the life you desire.
That is what is truly important.
The price of any item is determined by the supply of that item, as well as the market demand. The National Association of REALTORS (NAR) surveys “over 50,000 real estate practitioners about their expectations for home sales, prices and market conditions” for their monthly REALTORS Confidence Index.
Their latest edition sheds some light on the relationship between Seller Traffic (supply) and Buyer Traffic (demand).
The map below was created after asking the question: “How would your rate buyer traffic in your area?”
The darker the blue, the stronger the demand for homes in that area. Only four states came in with a weak or moderate demand level.
The Index also asked: “How would your rate seller traffic in your area?”
As you can see from the map below, the majority of the country has weak Seller Traffic, meaning there are far fewer homes on the market than what is needed to satisfy the buyers who are out looking for their dream homes.
Looking at the maps above, it is not hard to see why prices are appreciating in many areas of the country. Until the supply of homes for sale starts to meet the buyer demand, prices will continue to increase. If you are debating listing your home for sale, let’s get together and discuss the demand in our area.
- Only 2.9% of homes are in serious delinquency, down 17.1% from July 2015.
- This is the 57th consecutive month with a year-over-year decline.
- The national foreclosure rate has returned to August 2007 levels, at only 0.9%.
Myth #1: “I Need a 20% Down Payment”
Myth #2: “I need a 780 FICO Score or Higher to Buy”
Whether buying your first home or moving up to your dream home, knowing your options will definitely make the mortgage process easier. Your dream home may already be within your reach.
There are some people that have not purchased a home because they are uncomfortable taking on the obligation of a mortgage. Everyone should realize that, unless you are living with your parents rent free, you are paying a mortgage - either yours or your landlord’s.
As The Joint Center for Housing Studies at Harvard University explains:
“Households must consume housing whether they own or rent. Not even accounting for more favorable tax treatment of owning, homeowners pay debt service to pay down their own principal while households that rent pay down the principal of a landlord plus a rate of return.
That’s yet another reason owning often does—as Americans intuit—end up making more financial sense than renting.”
Christina Boyle, a Senior Vice President, Head of Single-Family Sales & Relationship Management at Freddie Mac, explains another benefit of securing a mortgage vs. paying rent:
“With a 30-year fixed rate mortgage, you’ll have the certainty & stability of knowing what your mortgage payment will be for the next 30 years – unlike rents which will continue to rise over the next three decades.”
As an owner, your mortgage payment is a form of ‘forced savings’ which allows you to have equity in your home that you can tap into later in life. As a renter, you guarantee the landlord is the person with that equity.
Interest rates are still at historic lows, making it one of the best times to secure a mortgage and make a move into your dream home. Freddie Mac’s latest report shows that rates across the country were 3.43% last week.
Whether you are looking for a primary residence for the first time or are considering a vacation home on the shore, now may be the time to buy.
Have you ever been flipping through the channels, only to find yourself glued to the couch in an HGTV ‘show hole’*? We’ve all been there… watching entire seasons of “Love it or List it,” “Fixer Upper,” “House Hunters,” “Flip or Flop,” “Property Brothers,” and so many more, just in one sitting.
When you’re in the middle of your real estate themed show marathon, you might start to think that everything you see on TV must be how it works in real life, but you may need a reality check.
Reality TV Show Myths vs. Real Life:
Myth #1: Buyers look at 3 homes and make a decision to purchase one of them.
Truth: There may be buyers who fall in love and buy the first home they see, but more often than not the process of buying a home means touring more than three homes.
Myth #2: The houses the buyers are touring are still for sale.
Truth: The reality is being staged for TV. Many of the homes being shown are already sold and are off the market.
Myth #3: The buyers haven’t made a purchase decision yet.
Truth: Since there is no way to show the entire buying process in a 30-minute show, TV producers often choose buyers who are further along in the process and have already chosen a home to buy.
Myth #4: If you list your home for sale, it will ALWAYS sell at the Open House.
Truth: Of course this would be great! Open Houses are important to guarantee the most exposure to buyers in your area, but are only a PIECE of the overall marketing of your home. Just realize that many homes are sold during regular showing appointments as well.
Myth #5: Homeowners make a decision about selling their home after a 5-minute conversation.
Truth: Similar to the buyers portrayed on the shows, many of the sellers have already spent hours deliberating the decision to list their home and move on with their life/goals.
Having an experienced professional on your side while navigating the real estate market is the best way to guarantee that you can make the home of your dreams a reality!
*Show Hole - A side effect of binge-watching. Symptoms include a sense of emptiness and depression brought on by realizing you just wasted a good portion of your life watching several seasons of a TV show or an entire movie franchise all at once when you could have managed your time better.