Earlier this month, realtor.com announced the release of their initial Housing Recovery Index, a weekly guide showing how the pandemic has impacted the residential real estate market. The index leverages a weighted average of four key components of the housing industry, tracking each of the following:

1. Housing Demand – Growth in online search activity
2. Home Price – Growth in asking prices
3. Housing Supply – Growth of new listings
4. Pace of Sales – Difference in time-on-market

The index then compares the current status “to the last week of January 2020 market trend, as a baseline for pre-COVID market growth. The overall index is set to 100 in this baseline period. The higher a market’s index value, the higher its recovery and vice versa.”

The graph below charts the index by showing how the real estate market started out strong in early 2020, and then dropped dramatically at the beginning of March when the pandemic paused the economy. It also shows the strength of the recovery since the beginning of May.It’s clear to see that the housing market is showing promising signs of recovery from the deep economic cuts we experienced earlier this spring. As noted by Dean Mon, Chairman of the National Association of Home Builders (NAHB):

“As the nation reopens, housing is well-positioned to lead the economy forward.”

The data today indicates the housing market is already on the way up.

Bottom Line

Staying connected to the housing market’s performance over the coming months will be essential, as we continue to evaluate exactly how the housing market is doing in this uncharted time ahead.

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Tomorrow morning the Bureau of Labor Statistics will release the latest Employment Situation Summary, which will include the most current unemployment rate. It will be a horrific number. Many analysts believe unemployment could be greater than 20%. These numbers represent families across the nation that are not sure when (or if) they will return to work. The emotional impact on these households is devastating.

There are, however, some small rays of light shining through on this issue. Here are three:

1. The actual number of unemployed is less than many are reporting

The number of people unemployed is sometimes over-exaggerated. It seems that every newscaster talks about the 40+ million people “currently” unemployed. It is true that, over the last ten weeks, over 40.7 million people have applied for unemployment. It is also true, however, that many of those people have already returned to work or gotten a new job. The actual number of people currently unemployed is 21.1 million. This is still a horrible number, but about half of what is often being reported.

2. Of those still unemployed, most are temporary layoffs

Last month’s unemployment report showed that 90% of those unemployed believe their status is temporary. Friday’s report will probably show a decline in that percentage as the original number was somewhat optimistic. However, a recent survey by the Federal Reserve Bank showed that employers believe over 75% of job losses are temporary layoffs and furloughs. This means 3 out of 4 people should be returning to work as the economy continues to recover.

3. Those on unemployment are receiving assistance

According to a recent study from the Becker Friedman Institute for Economics at the University of Chicago, 68% of those who are eligible for unemployment insurance receive benefits that exceed lost earnings, with 20% receiving benefits at least twice as large as their lost earnings.

Bottom Line

Tomorrow’s report will be difficult to digest. However, as the nation continues to reopen, many of those families who are impacted will be able to return to work.

The travel industry is one of the major sectors that’s been hit extremely hard by the COVID-19 pandemic. Today, it’s hard to know how long it will take for summer travelers to be back in action and for the industry to fully recover. Homeowners who rent their secondary properties on their own or through programs like Airbnb, which has over 660,000 listings in the U.S. alone, have been impacted in this challenging time. Some of these homeowners are considering selling their vacation homes, and understandably so.

A recent CNN article indicated:

“With global travel screeching to a halt during the pandemic, a number of Airbnb hosts are planning to sell their properties…These desperate moves come as hosts face the possibility of losing thousands of dollars a month in canceled bookings while bills, maintenance costs, and mortgage payments pile up.”

If you’re one of the property owners in this position, you too may be feeling the pain of decreased travel, especially as we prepare for the typical busy summer vacation season. A recent survey notes that 48% of Americans have already canceled summer travel plans due to the current health crisis. In addition, 36% indicated they don’t have vacation plans, and only 16% said they did not cancel their summer travel.

The same survey also asked, “How long will you wait before traveling again?” Not surprisingly, only 29% of respondents are planning to travel within the next 6 months. That means 71% are putting their plans on hold for at least 6 months, or are still unsure about future travel. That can continue to add to the significant income loss that many property renters felt this spring.If you’re considering selling your rental property, know that there are two key factors indicating that selling your vacation home now may be your best move as a homeowner.

1. Inventory Shortage

The inventory of overall homes for sale is well below the demand from potential buyers, so many eyes may be searching for a home like yours. According to the National Association of Realtors (NAR), total housing inventory, meaning homes available to purchase, is down 19.7% from one year ago (see graph below):Inventory across the country continues to be a challenge, with only a 4.1-month supply of listings available at the current sales pace. For a balanced market, where there are enough homes available for interested buyers to purchase, that number would need to bump up to a 6-month supply. This means we don’t have enough inventory for the number of buyers looking for homes, so selling in this scenario is ideal. Buyers are looking now, and some vacation homes make a great primary residence or second home for those eager to escape from more populated urban areas.

2. Home Prices

The lack of inventory is also keeping homes from depreciating in value. Today, prices are holding strong and experts forecast home price appreciation to continue throughout this year. Selling your home while prices are holding steady is a sound business move. You’ll likely have equity you’ve earned working for you as well. If your home has been vacant for the past few months, the forced savings you have built in your equity may help balance out possible rental income loss due to the slowdown in the travel industry.

Bottom Line

We don’t know exactly when heightened summer travel will return or what it will look like when it does. If you’re considering selling your vacation home, let’s connect today to determine your options in the current market.

More than ever, our homes have become an integral part of our lives. Today they are much more than the houses we live in. They’re evolving into our workplaces, schools for our children, and safe havens that provide shelter, stability, and protection for our families through the evolving health crisis. Today, 65.3% of Americans are able to call their homes their own, a rate that has risen to its highest point in 8 years.

June is National Homeownership Month, and it’s a great time to reflect on the benefits of owning your own home. Below are some highlights and quotes recently shared by the National Association of Realtors (NAR). From non-financial to financial, and even including how owning a home benefits your local economy, these items may give you reason to think homeownership stretches well beyond a sound dollars and cents investment alone.

Non-Financial Benefits

Owning a home brings families a sense of happiness, satisfaction, and pride.

• Pride of Ownership: It feels good to have a place that’s truly your own, especially since you can customize it to your liking. “The personal satisfaction and sense of accomplishment achieved through homeownership can enhance psychological health, happiness and well-being for homeowners and those around them.”
• Property Maintenance and Improvement: Your home is your stake in the community, and a way to give back by driving value into your neighborhood.
• Civic Participation: Homeownership creates stability, a sense of community, and increases civic engagement. It’s a way to add to the strength of your local area.

Financial Benefits

Buying a home is also an investment in your family’s financial future.

• Net Worth: Homeownership builds your family’s net worth. “The median family net worth for all homeowners ($231,400) increased by nearly 15% since 2013, while net worth ($5,000) actually declined by approximately 9% since 2013 for renter families.”
• Financial Security: Equity, appreciation, and predictable monthly housing expenses are huge financial benefits of homeownership. Homeownership is truly the best way to improve your long-term net worth.

Economic Benefits

Homeownership is even a local economic driver.

• Housing-Related Spending: An economic force throughout our nation, housing-related expenses accounted for more than one-sixth of the country’s economic activity over the past three decades.
• GDP Growth: Homeownership also helps drive GDP growth as the country aims to make an economic rebound. “Every 10% increase in total housing market wealth would translate to approximately $147 billion in additional consumer spending, or 0.8% of GDP, as well as billions of dollars in new federal tax revenue.”
• Entrepreneurship: Homeownership is even a form of forced savings that provides entrepreneurial opportunities as well. “Owning a home enables new entrepreneurs to obtain access to credit to start or expand a business and generate new jobs by using their home as collateral for small business loans.”

Bottom Line

The benefits of homeownership are vast and go well beyond the surface level. Homeownership is truly a way to build financial freedom, find greater satisfaction and happiness, and make a substantial impact on your local economy. If owning a home is part of your dream, let’s connect today so you can begin the homebuying process.

With stay-at-home orders starting to gradually lift throughout parts of the country, data indicates homebuyers are jumping back into the market. After many families put their plans on hold due to the COVID-19 pandemic, what we once called the busy spring real estate season is shifting into the summer. In 2020, summer is the new spring for real estate.

Joel Kan, Economist at The Mortgage Bankers Association (MBA) notes:

“Applications for home purchases continue to recover from April’s sizable drop and have now increased for five consecutive weeks…Government purchase applications, which include FHA, VA, and USDA loans, are now 5 percent higher than a year ago, which is an encouraging turnaround after the weakness seen over the past two months.”

Additionally, according to Google Trends, which scores search terms online, searches for real estate increased from 68 points the week of March 15^th to 92 points last week. As we can see, more potential homebuyers are looking for homes virtually.

What’s the Opportunity for Buyers?

Another reason buyers are coming back to the market, even with forced unemployment and stay-at-home orders, is historically low mortgage rates. Sam Khater, Chief Economist at Freddie Mac indicates:

“For the fourth consecutive week, the 30-year fixed-rate mortgage has been below 3.30 percent, giving potential buyers a good reason to continue shopping even amid the pandemic…As states reopen, we’re seeing purchase demand improve remarkably fast, now essentially flat relative to a year ago.”

With mortgage rates at such low levels and states gradually beginning to reopen, there’s more incentive than ever to buy a home this summer.

What’s the Opportunity for Sellers?

Finding a home to buy, however, is still a challenge, as this spring sellers removed many listings from the market. Though more people are now putting their houses up for sale this month as compared to last month, current inventory is still well below last year’s level.

According to last week’s Weekly Economic and Housing Market Update from realtor.com:

“Weekly Housing Inventory showed continued tightening. New Listings declined 28% compared with a year ago, as sellers grappled with uncertainty and hesitated bringing homes to market. Total Listings dropped 20% YoY, a faster rate than in prior weeks, leaving very few homes available for sale. As Time on Market was 15 days slower YoY, asking prices moved up 1.5% YoY.”

If you’re thinking of selling your house this summer, now may be your best opportunity. With so few homes on the market for buyers to purchase, this season may be the time for your house to stand out from the crowd. Trusted real estate professionals can help you list safely and effectively, keeping your family’s needs top of mind. Buyers are looking, and your house may be at the top of their list.

Bottom Line

If you’re thinking of selling, many buyers may be eager to find a home just like yours. Let’s connect today to make sure you can get your house in on the action this summer.

One of the biggest questions we all seem to be asking these days is: When are we going to start to see an economic recovery? As the country begins to slowly reopen, moving forward in strategic phases, business activity will help bring our nation back to life. Many economists indicate a recovery should begin to happen in the second half of this year. Here’s a look at what some of the experts have to say. Jerome Powell, Federal Reserve Chairman

“I think there’s a good chance that there’ll be positive growth in the third quarter. And I think it’s a reasonable expectation that there’ll be growth in the second half of the year… So, in the long run, I would say the U.S. economy will recover. We’ll get back to the place we were in February; we’ll get to an even better place than that. I’m highly confident of that. And it won’t take that long to get there.”

Nonpartisan Analysis for the U.S Congress

“The economy is expected to begin recovering during the second half of 2020 as concerns about the pandemic diminish and as state and local governments ease stay-at-home orders, bans on public gatherings, and other measures. The labor market is projected to materially improve after the third quarter; hiring will rebound and job losses will drop significantly as the degree of social distancing diminishes.”

Neel Kashkari, President, Minneapolis Federal Reserve Bank

“I think we need to prepare for a more gradual recovery while we hope for that quicker rebound.”

We’re certainly not out of the woods yet, but clearly many experts anticipate we’ll see a recovery starting this year. It may be a bumpy ride for the next few months, but most agree that a turnaround will begin sooner rather than later. During the planned shutdown, as the economic slowdown pressed pause on the nation, many potential buyers and sellers put their real estate plans on hold. That time coincided with the traditionally busy spring real estate season. As we look ahead at this economic recovery and we begin to emerge back into our communities over the coming weeks and months, perhaps it’s time to think about putting your real estate plans back into play.

Bottom Line

The experts note a turnaround is on the horizon, starting as early as later this year. If you paused your 2020 real estate plans, let’s connect today to determine how you can re-engage in the process as the country reopens and the economy begins a much-anticipated rebound.

While many people across the U.S. have traditionally enjoyed the perks of an urban lifestyle, some who live in more populated city limits today are beginning to rethink their current neighborhoods. Being in close proximity to everything from the grocery store to local entertainment is definitely a perk, especially if you can also walk to some of these hot spots and have a short commute to work. The trade-off, however, is that highly populated cities can lack access to open space, a yard, and other desirable features. These are the kinds of things you may miss when spending a lot of time at home. When it comes to social distancing, as we’ve experienced recently, the newest trend seems to be around re-evaluating a once-desired city lifestyle and trading it for suburban or rural living. George Ratiu, Senior Economist at realtor.com notes:

“With the re-opening of the economy scheduled to be cautious, the impact on consumer preferences will likely shift buying behavior…consumers are already looking for larger homes, bigger yards, access to the outdoors and more separation from neighbors. As we move into the recovery stage, these preferences will play an important role in the type of homes consumers will want to buy. They will also play a role in the coming discussions on zoning and urban planning. While higher density has been a hallmark of urban development over the past decade, the pandemic may lead to a re-thinking of space allocation.”

The Harris Poll recently surveyed 2,000 Americans, and 39% of the respondents who live in urban areas indicated the COVID-19 crisis has caused them to consider moving to a less populated area.Today, moving outside the city limits is also more feasible than ever, especially as Americans have quickly become more accustomed to – and more accepting of – remote work. According to the Pew Research Center, access to the Internet has increased significantly in rural and suburban areas, making working from home more accessible. The number of people working from home has also spiked considerably, even before the pandemic came into play this year.

Bottom Line

If you have a home in the suburbs or a rural area, you may see an increasing number of buyers looking for a property like yours. If you’re thinking of buying and don’t mind a commute to work for the well-being of your family, you may want to consider looking at homes for sale outside the city. Let’s connect today to discuss the options available in our area.

Last Friday, the Bureau of Labor Statistics (BLS) released its latest jobs report. It revealed that the economic shutdown made necessary by COVID-19 caused the unemployment rate to jump to 14.7%. Many anticipate that next month the percentage could be even higher. These numbers represent the extreme hardship so many families are experiencing right now. That pain should not be understated. However, the long-term toll the pandemic will cause should not be overstated either. There have been numerous headlines claiming the current disruption in the economy is akin to the Great Depression, and many of those articles are calling for total Armageddon. Some experts are stepping up to refute those claims. In a Wall Street Journal (WSJ) article this past weekend, Josh Zumbrun, a national economics correspondent for the Journal explained:

“News stories often describe the coronavirus-induced global economic downturn as the worst since the Great Depression…the comparison does more to terrify than clarify.”

Zumbrun goes on to explain:

“From 1929 to 1933, the economy shrank for 43 consecutive months, according to contemporaneous estimates. Unemployment climbed to nearly 25% before slowly beginning its descent, but it remained above 10% for an entire decade…This time, many economists believe a rebound could begin this year or early next year.”

Here is a graph comparing current unemployment numbers (actual and projected) to those during the Great Depression:Clearly, the two unemployment situations do not compare.

What makes this time so different?

This was not a structural collapse of the economy, but instead a planned shutdown to help mitigate the virus. Once the virus is contained, the economy will immediately begin to recover. This is nothing like what happened in the 1930s. In the same WSJ article mentioned above, former Federal Reserve Chairman Ben Bernanke, who has done extensive research on the depression in the 1930s, explained:

“The breakdown of the financial system was a major reason for both the Great Depression and the 2007-09 recession.” He went on to say that today – “the banks are stronger and much better capitalized.”

What about the families and small businesses that are suffering right now?

The nation’s collective heart goes out to all. The BLS report, however, showed that ninety percent of the job losses are temporary. In addition, many are getting help surviving this pause in their employment status. During the Great Depression, there were no government-sponsored unemployment insurance or large government subsidies as there are this time. Today, many families are receiving unemployment benefits and an additional $600 a week. The stimulus package is helping many companies weather the storm. Is there still pain? Of course. The assistance, however, is providing much relief until most can go back to work.

Bottom Line

We should look at the current situation for what it is – a predetermined pause placed on the economy. The country will recover once the pandemic ends. Comparisons to any other downturn make little sense. Bernanke put it best:

“I don’t find comparing the current downturn with the Great Depression to be very helpful. The expected duration is much less, and the causes are very different.”

Through all the volatility in the economy right now, some have put their search for a home on hold, yet others have not. According to ShowingTime, the real estate industry’s leading showing management technology provider, buyers have started to reappear over the last several weeks. In the latest report, they revealed:

“The March ShowingTime Showing Index® recorded the first nationwide drop in showing traffic in eight months as communities responded to COVID-19. Early April data show signs of an upswing, however.”

Why would people be setting appointments to look at prospective homes when the process of purchasing a home has become more difficult with shelter-in-place orders throughout the country? Here are three reasons for this uptick in activity: 1. Some people need to move. Whether because of a death in the family, a new birth, divorce, financial hardship, or a job transfer, some families need to make a move as quickly as possible. 2. Real estate agents across the country have become very innovative, utilizing technology that allows purchasers to virtually:

• View homes
• Meet with mortgage professionals
• Consult with their agent throughout the process

All of this can happen within the required safety protocols, so real estate professionals are continuing to help families make important moves. 3. Buyers understand that mortgage rates are a key component when determining their monthly mortgage payments. Mortgage interest rates are very close to all-time lows and afford today’s purchaser the opportunity to save tens of thousands of dollars over the lifetime of the loan. Looking closely at the third reason, we can see that there’s a big difference between purchasing a house last December and purchasing one now (see chart below):

Bottom Line

Many families have decided not to postpone their plans to purchase a home, even in these difficult times. If you need to make a move, let’s connect today so you have a trusted advisor to safely and professionally guide you through the process.

A big challenge facing the housing industry is determining what impact the current pandemic may have on home values. Some buyers are hoping for major price reductions because the health crisis is straining the economy.

The price of any item, however, is determined by supply and demand, which is how many items are available in relation to how many consumers want to buy that item.

In residential real estate, the measurement used to decipher that ratio is called months supply of inventory. A normal market would have 6-7 months of inventory. Anything over seven months would be considered a buyers’ market, with downward pressure on prices. Anything under six months would indicate a sellers’ market, which would put upward pressure on prices.

Going into March of this year, the supply stood at three months – a strong seller’s market. While buyer demand has decreased rather dramatically during the pandemic, the number of homes on the market has also decreased. The recently released Existing Home Sales Report from the National Association of Realtors (NAR) revealed we currently have 3.4 months of inventory. This means homes should maintain their value during the pandemic.

This information is consistent with the research completed by John Burns Real Estate Consulting, which recently reported:

“Historical analysis showed us that pandemics are usually V-shaped (sharp recessions that recover quickly enough to provide little damage to home prices).”

What are the experts saying?

Here’s a look at what some experts recently reported on the matter:

Ivy Zelman, President, Zelman & Associates

“Supported by our analysis of home price dynamics through cycles and other periods of economic and housing disruption, we expect home price appreciation to decelerate from current levels in 2020, though easily remain in positive territory year over year given the beneficial factors of record-low inventories & a historically-low interest rate environment.”

Freddie Mac

“The fiscal stimulus provided by the CARES Act will mute the impact that the economic shock has on house prices. Additionally, forbearance and foreclosure mitigation programs will limit the fire sale contagion effect on house prices. We forecast house prices to fall 0.5 percentage points over the next four quarters. Two forces prevent a collapse in house prices. First, as we indicated in our earlier research report, U.S. housing markets face a large supply deficit. Second, population growth and pent up household formations provide a tailwind to housing demand. Price growth accelerates back towards a long-run trend of between 2 and 3% per year.”

Mark Fleming, Chief Economist, First American

“The housing supply remains at historically low levels, so house price growth is likely to slow, but it’s unlikely to go negative.”

Bottom Line

Even though the economy has been placed on pause, it appears home prices will remain steady throughout the pandemic.

Many American businesses have been put on hold as the country deals with the worst pandemic in over one hundred years. As the states are deciding on the best strategy to slowly and safely reopen, the big question is: how long will it take the economy to fully recover?

Let’s look at the possibilities. Here are the three types of recoveries that follow most economic slowdowns (the definitions are from the financial glossary at Market Business News):

• V-shaped recovery: an economic period in which the economy experiences a sharp decline. However, it is also a brief period of decline. There is a clear bottom (called a trough by economists) which does not last long. Then there is a strong recovery.
• U-shaped recovery: when the decline is more gradual, i.e., less severe. The recovery that follows starts off moderately and then picks up speed. The recovery could last 12-24 months.
• L-shaped recovery: a steep economic decline followed by a long period with no growth. When an economy is in an L-shaped recovery, getting back to where it was before the decline will take years.

What type of recovery will we see this time?

No one can answer this question with one hundred percent certainty. However, most top financial services firms are calling for a V-shaped recovery. Goldman Sachs, Morgan Stanley, Wells Fargo Securities, and JP Morgan have all recently come out with projections that call for GDP to take a deep dive in the first half of the year but have a strong comeback in the second half.

Is there any research on recovery following a pandemic?

There have been two extensive studies done that look at how an economy has recovered from a pandemic in the past. Here are the conclusions they reached:

1. John Burns Consulting:

“Historical analysis showed us that pandemics are usually V-shaped (sharp recessions that recover quickly enough to provide little damage to home prices), and some very cutting-edge search engine analysis by our Information Management team showed the current slowdown is playing out similarly thus far.”

2. Harvard Business Review:

“It’s worth looking back at history to place the potential impact path of Covid-19 empirically. In fact, V-shapes monopolize the empirical landscape of prior shocks, including epidemics such as SARS, the 1968 H3N2 (“Hong Kong”) flu, 1958 H2N2 (“Asian”) flu, and 1918 Spanish flu.”

The research says we should experience a V-shaped recovery.

Does everyone agree it will be a ‘V’?

No. Some are concerned that, even when businesses are fully operational, the American public may be reluctant to jump right back in.

As Market Business News explains:

“In a typical V-shaped recovery, there is a huge shift in economic activity after the downturn and the trough. Growing consumer demand and spending drive the massive shift in economic activity.”

If consumer demand and spending do not come back as quickly as most expect it will, we may be heading for a U-shaped recovery.

In a message last Thursday, Chris Hyzy, Chief Investment Officer for Merrill and Bank of America Private Bank, agrees with other analysts who are expecting a resurgence in the economy later this year:

“We’re forecasting real economic growth of 30% for the U.S. in the 4th quarter of this year and 6.1% in 2021.”

His projection, however, calls for a U-shaped recovery based on concerns that consumers may not rush back in:

“After the steep plunge and bottoming out, a ‘U-shaped’ recovery should begin as consumer confidence slowly returns.”

Bottom Line

The research indicates the recovery will be V-shaped, and most analysts agree. However, no one knows for sure how quickly Americans will get back to “normal” life. We will have to wait and see as the situation unfolds.

There are two crises in this country right now: a health crisis that has forced everyone into their homes and a financial crisis caused by our inability to move around as we normally would. Over 20 million people in the U.S. became instantly unemployed when it was determined that the only way to defeat this horrific virus was to shut down businesses across the nation. One second a person was gainfully employed, a switch was turned, and then the room went dark on their livelihood.

The financial pain so many families are facing right now is deep.

How deep will the pain cut?

Major institutions are forecasting unemployment rates last seen during the Great Depression. Here are a few projections:

• Goldman Sachs – 15%
• Merrill Lynch – 10.6%
• JP Morgan – 8.5%
• Wells Fargo – 7.3%

How long will the pain last?

As horrific as those numbers are, there is some good news. The pain will be deep, but it won’t last as long as it did after previous crises. Taking the direst projection from Goldman Sachs, we can see that 15% unemployment quickly drops to 6-8% as we head into next year, continues to drop, and then returns to about 4% in 2023.

When we compare that to the length of time it took to get back to work during both the Great Recession (9 years long) and the Great Depression (12 years long), we can see how the current timetable is much more favorable.

Bottom Line

It’s devastating to think about how the financial heartache families are going through right now is adding to the uncertainty surrounding their health as well. Hopefully, we will soon have the virus contained and then we will, slowly and safely, return to work.

Some Highlights:

• A recent realtor.com survey revealed that buyers are still considering moving forward with the homebuying process, even if they can’t see the home in-person.
• While they still prefer to physically see a home, virtual home tours and accurate listing information top the list of tech specs buyers find most helpful in today’s process.
• Let’s connect today to determine how technology can help power your home search.

The uncertainty the world faces today due to the COVID-19 pandemic is causing so many things to change. The way we interact, the way we do business, even the way we buy and sell real estate is changing. This is a moment in time that’s even sparking some buyers to search for a better deal on a home. Sellers, however, aren’t offering a discount these days; they’re holding steady on price.

According to the most recent NAR Flash Survey (a survey of real estate agents from across the country), agents were asked the following two questions:

1. “Have any of your sellers recently reduced their price to attract buyers?”

Their answer: 72% said their sellers have not lowered prices to attract buyers during this health crisis. 

2. “Are home buyers expecting lower prices now?”

Their answer: 63% of agents said their buyers were looking for a price reduction of at least 5%.

What We Do Know  

In today’s market, with everything changing and ongoing questions around when the economy will bounce back, it’s interesting to note that some buyers see this time as an opportunity to win big in the housing market. On the other hand, sellers are much more confident that they will not need to reduce their prices in order to sell their homes. Clearly, there are two different perspectives at play.

Bottom Line

If you’re a buyer in today’s market, you might not see many sellers lowering their prices. If you’re a seller and don’t want to lower your price, you’re not alone. If you have questions on how to price your home, let’s connect today to discuss your real estate needs and next steps.

Every day that passes, people have a need to buy and sell homes. That doesn’t stop during the current pandemic. If you’ve had a major life change recently, whether with your job or your family situation, you may be in a position where you need to sell your home – and fast. While you probably feel like timing with the current pandemic isn’t on your side, making a move is still possible. Rest assured, with technology at your side and fewer sellers on the market in most areas, you can list your house and make it happen safely and effectively, especially when following the current COVID-19 guidelines set forth by the National Association of Realtors (NAR) and the Centers for Disease Control and Prevention (CDC).

You may have a new baby, a new employment situation, a parent who moved in with you, you just built a home that’s finally ready to move into, or some other major part of your life that has changed in recent weeks. Buyers have those needs too, so rest assured that someone is likely looking for a home just like yours.

According to the NAR Flash Survey: Economic Pulse taken April 5 – 6, real estate agents indicate, not surprisingly, that there’s a noticeable decline in current homebuyer interest. That said, 10% of agents said in the same survey that they saw no change or even an increase in buyer activity. So, while buyer interest is low compared to normal spring markets, there are still buyers in the market. Don’t forget, you only need one buyer – the right one for your home.

Here’s the other thing – people are spending a lot of time on the Internet right now, given the stay-at-home orders implemented across the country. Buyers are actively looking at homes for sale online. Some of them are reaching out to real estate professionals for virtual tours and getting ready to make offers too. Homes are being sold in many markets.

There Is Less Competition Right Now

The same survey indicates that 56% of NAR members said sellers are removing their homes from the market right now. This can definitely work in your favor. If other sellers are removing their listings, your home has a better chance of rising to the top of a buyer’s search list and being seen. Keep in mind, listings will pick up again soon, as 57% of the respondents note that sellers are only planning to delay the process by a couple of months. If you need to sell right now, don’t wait for the competition to get back into the market again.

This year, delayed listings from the typically busy spring season will push into the summer months, so more competition will be coming to the market as the pandemic passes. Getting ahead of that wave now might be your biggest opportunity.

Your Trusted Real Estate Advisor Can Help

Real estate agents are working hard every single day under untraditional circumstances, utilizing technology to help both buyers and sellers who need to continue with their plans. We’re using virtual tours to show homes currently on the market, staying connected with the buyers and sellers through video chats, and leveraging resources to complete transactions electronically. We’re making sure the families we support remain safe and can keep their real estate needs on track, especially as life is changing so rapidly.

Bottom Line

Homes are still being bought and sold in the midst of this pandemic. If you need to sell your house and would like to know the current status in our local market, let’s work together to create a safe and effective plan that works for you and your family.

With over 90% of Americans now under a shelter-in-place order, many experts are warning that the American economy is heading toward a recession, if it’s not in one already. What does that mean to the residential real estate market?

What is a recession?

According to the National Bureau of Economic Research:

“A recession is a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales.”

COVID-19 hit the pause button on the American economy in the middle of March. Goldman Sachs, JP Morgan, and Morgan Stanley are all calling for a deep dive in the economy in the second quarter of this year. Though we may not yet be in a recession by the technical definition of the word today, most believe history will show we were in one from April to June.

Does that mean we’re headed for another housing crash?

Many fear a recession will mean a repeat of the housing crash that occurred during the Great Recession of 2006-2008. The past, however, shows us that most recessions do not adversely impact home values. Doug Brien, CEO of Mynd Property Management, explains:

“With the exception of two recessions, the Great Recession from 2007-2009, & the Gulf War recession from 1990-1991, no other recessions have impacted the U.S. housing market, according to Freddie Mac Home Price Index data collected from 1975 to 2018.”

CoreLogic, in a second study of the last five recessions, found the same. Here’s a graph of their findings:

What are the experts saying this time?

This is what three economic leaders are saying about the housing connection to this recession:

Robert Dietz, Chief Economist with NAHB

“The housing sector enters this recession underbuilt rather than overbuilt…That means as the economy rebounds – which it will at some stage – housing is set to help lead the way out.”

Ali Wolf, Chief Economist with Meyers Research

“Last time housing led the recession…This time it’s poised to bring us out. This is the Great Recession for leisure, hospitality, trade and transportation in that this recession will feel as bad as the Great Recession did to housing.”

John Burns, founder of John Burns Consulting, also revealed that his firm’s research concluded that recessions caused by a pandemic usually do not significantly impact home values:

“Historical analysis showed us that pandemics are usually V-shaped (sharp recessions that recover quickly enough to provide little damage to home prices).”

Bottom Line

If we’re not in a recession yet, we’re about to be in one. This time, however, housing will be the sector that leads the economic recovery.

Today’s everyday reality is pretty different than it looked just a few weeks ago. We’re learning how to do a lot of things in new ways, from how we work remotely to how we engage with our friends and neighbors. Almost everything right now is shifting to a virtual format. One of the big changes we’re adapting to is the revisions to the common real estate transaction, which all vary by state and locality. Technology, however, is making it possible for many of us to continue on the quest for homeownership, an essential need for all.

Here’s a look at some of the elements of the process that are changing (at least in the near-term), due to stay-at-home orders and social distancing, and what you may need to know about each one if you’re thinking of buying or selling a home sooner rather than later.

1. Virtual Consultations – Instead of heading into an office, you can meet with real estate and lending professionals through video chat. Whether it’s your first initial needs analysis as a buyer or your listing appointment as a seller, you can still get the process started remotely and create a plan together. Your trusted advisor is still on your side.

2. Home Searches & Virtual Showings – According to theNational Association of Realtors (NAR), the Internet is one of the three most popular information sources buyers use when searching for homes. Your real estate agent can send you listing information and help you request a virtual showing when you’re ready to start looking. This means you can virtually walk through the homes on your wish list while keeping your family safe. As a seller, you can still have virtual open houses and virtual tours too, so as not to miss those buyers looking to find a home right now.

3. Document Signing – Although this is another area that varies by state, today more portions of the transaction are being done digitally. In many areas, your agent or loan officer can set up an account where you can upload all of the required documents and sign electronically right from your computer.

4. Sending Money – Whether you need to pay for an appraisal or submit closing costs, there are options available. Depending on the transaction and local regulations, you may be able to pay by credit card, and most banks will also allow you to wire funds from your account. Sometimes you can send a check by mail, and in some states, a mobile escrow agent will pick up a check from your home.

5. Closing Process – Again, depending on your area, a mobile notary may be able to bring the required documents to your home before the closing. If your state requires an attorney to be present, check with your legal counsel to see what options are available. Also, depending on the title company, some are allowing drive-thru closings, which is similar to doing a transaction at a bank window.

Although these virtual processes are starting to become more widely accepted, it does not mean that this is the way things are going to get done from now on. Under the current circumstances, however, technology is making it possible to continue much of the real estate transaction today.

Bottom Line

If you need to move today, technology can help make it happen; there are options available. Let’s touch base today to discuss your situation and our local regulations, so you don’t have to put your real estate plans on hold.

For years, we’ve all heard about the most desirable home features buyers are looking for, from upgraded kitchens to remodeled bathrooms, master suites, and more. The latest on the hotlist, however, might surprise you: home offices.

In a recent article by George Ratiu, Senior Economist with realtor.com, he notes how listings with an office are selling quickly:

“As more companies have been embracing remote work, buyers are driving demand for houses with home offices higher. Homes featuring the term ‘office’ are selling 9 days faster than the overall housing inventory.”

Today, more and more people are working remotely, and that’s not just because the current pandemic is prompting businesses to operate virtually. According to the same piece and the most recent data available, the number of employees working at home was fairly steady from 1997 – 2004 but has been climbing ever since (see graph below):Clearly, the work-from-home population is growing, and technology is making it possible. Just last month, according to an article on Think Google, searches for telecommuting hit an all-time high, and that’s certainly no surprise given our current situation.

People all over the U.S. are looking for answers on how to be most effective at home, and it’s making the ideal workspace more and more desirable. In fact, best practices from seasoned work-from-home professionals, like Chris Anderson, Senior Account Executive at HousingWire, tout that having a dedicated space is a must for productivity.

With today’s increasing demand for home offices, it’s a great feature to highlight within your listing if you’re selling a house that may meet this growing need. From bright natural light with large windows to built-in bookshelves or a quiet and secluded atmosphere, whatever makes your office space shine is worth mentioning to buyers when you’re ready to list your house.

Ratiu concludes:

“For housing, the continued increase in the share of remote workers implies that demand for homes with offices or dedicated work spaces will continue to increase. The current coronavirus pandemic offers a dramatic indication of the fact that companies and employees will have to develop plans and clearer policies for remote work beyond the current crisis.”

Bottom Line

Remote work may become more widely accepted as this current crisis teaches businesses throughout the country what it takes to function virtually. So, what seems like a business challenge today may be more of the norm tomorrow. With that in mind, if you have a home office, your house may be more desirable to buyers than you think.

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Ten million Americans lost their jobs over the last two weeks. The next announced unemployment rate on May 8^th is expected to be in the double digits. Because the health crisis brought the economy to a screeching halt, many are feeling a personal financial crisis. James Bullard, President of the Federal Reserve Bank of St. Louis, explained that the government is trying to find ways to assist those who have lost their jobs and the companies which were forced to close (think: your neighborhood restaurant). In a recent interview he said:

“This is a planned, organized partial shutdown of the U.S. economy in the second quarter. The overall goal is to keep everyone, households and businesses, whole.”

That’s promising, but we’re still uncertain as to when the recently unemployed will be able to return to work.

Another concern: how badly will the U.S. economy be damaged if people can’t buy homes?

A new concern is whether the high number of unemployed Americans will cause the residential real estate market to crash, putting a greater strain on the economy and leading to even more job losses. The housing industry is a major piece of the overall economy in this country.

Chris Herbert, Managing Director of the Joint Center for Housing Studies of Harvard University, in a post titled Responding to the Covid-19 Pandemic, addressed the toll this crisis will have on our nation, explaining:

“Housing is a foundational element of every person’s well-being. And with nearly a fifth of US gross domestic product rooted in housing-related expenditures, it is also critical to the well-being of our broader economy.”

How has the unemployment rate affected home sales in the past?

It’s logical to think there would be a direct correlation between the unemployment rate and home sales: as the unemployment rate went up, home sales would go down, and when the unemployment rate went down, home sales would go up.

However, research reviewing the last thirty years doesn’t show that direct relationship, as noted in the graph below. The blue and grey bars represent home sales, while the yellow line is the unemployment rate. Take a look at numbers 1 through 4:

1. The unemployment rate was rising between 1992-1993, yet home sales increased.
2. The unemployment rate was rising between 2001-2003, and home sales increased.
3. The unemployment rate was rising between 2007-2010, and home sales significantly decreased.
4. The unemployment rate was falling continuously between 2015-2019, and home sales remained relatively flat.

The impact of the unemployment rate on home sales doesn’t seem to be as strong as we may have thought.

Isn’t this time different?

Yes. There is no doubt the country hasn’t seen job losses this quickly in almost one hundred years. How bad could it get? Goldman Sachs projects the unemployment rate to be 15% in the third quarter of 2020, flattening to single digits by the fourth quarter of this year, and then just over 6% percent by the fourth quarter of 2021. Not ideal for the housing industry, but manageable.

How does this compare to the other financial crises?

Some believe this is going to be reminiscent of The Great Depression. From the standpoint of unemployment rates alone (the only thing this article addresses), it does not compare. Here are the unemployment rates during the Great Depression, the Great Recession, and the projected rates moving forward:

Bottom Line

We’ve given you the facts as we know them. The housing market will have challenges this year. However, with the help being given to those who have lost their jobs and the fact that we’re looking at a quick recovery for the economy after we address the health problem, the housing industry should be fine in the long term. Stay safe.

Some Highlights

• Expert insights are painting a bright future for housing when the economy bounces back – and it will.
• We may be facing challenging economic times today, but the housing market is poised to help the economy recover, not drag it down.
• Let’s connect to make sure you’re informed and ready when it’s time to make your move.

As our lives, our businesses, and the world we live in change day by day, we’re all left wondering how long this will last. How long will we feel the effects of the coronavirus? How deep will the impact go? The human toll may forever change families, but the economic impact will rebound with a cycle of downturn followed by economic expansion like we’ve seen play out in the U.S. economy many times over.

Here’s a look at what leading experts and current research indicate about the economic impact we’ll likely see as a result of the coronavirus. It starts with a forecast of U.S. Gross Domestic Product (GDP).

According to Investopedia:

“Gross Domestic Product (GDP) is the total monetary or market value of all the finished goods and services produced within a country’s borders in a specific time period. As a broad measure of overall domestic production, it functions as a comprehensive scorecard of the country’s economic health.”

When looking at GDP (the measure of our country’s economic health), a survey of three leading financial institutions shows a projected sharp decline followed by a steep rebound in the second half of this year:A recent study from John Burns Consulting also notes that past pandemics have also created V-Shaped Economic Recoveries like the ones noted above, and they had minimal impact on housing prices. This certainly gives hope and optimism for what is to come as the crisis passes.

With this historical analysis in mind, many business owners are also optimistic for a bright economic return. A recent PricewaterhouseCoopers survey shows this confidence, noting 66% of surveyed business owners feel their companies will return to normal business rhythms within a month of the pandemic passing, and 90% feel they should be back to normal operation 1 to 3 months after:From expert financial institutions to business leaders across the country, we can clearly see that the anticipation of a quick return to normal once the current crisis subsides is not too far away. In essence, this won’t last forever, and we will get back to growth-mode. We’ve got this.

Bottom Line

Lives and businesses are being impacted by the coronavirus, but experts do see a light at the end of the tunnel. As the economy slows down due to the health crisis, we can take guidance and advice from experts that this too will pass.

The last few weeks and months have caused a major health crisis throughout the world, leading to a pause in the U.S. economy as businesses and consumers work to slow the spread of the coronavirus. The rapid spread of the virus has been compared to prior pandemics and outbreaks not seen in many years. It also has consumers remembering the economic slowdown of 2008 that was caused by a housing crash. This economic slowdown, however, is very different from 2008.

One thing the experts are saying is that while we’ll see a swift decline in economic activity in the second quarter, we’ll begin a sharp rebound in the second half of this year. According to John Burns Consulting:

“Historical analysis showed us that pandemics are usually V-shaped (sharp recessions that recover quickly enough to provide little damage to home prices), and some very cutting-edge search engine analysis by our Information Management team showed the current slowdown is playing out similarly thus far.” 

Given this situation, if you’re thinking about buying a home this year, the best thing you can do right now is use this time to get pre-approved for a mortgage, which you can do from the comfort of your home. Pre-approval will help you better understand how much you can afford so that you can confidently do the following two things when you’re ready to buy:

1. Gain a Competitive Advantage

Today’s low inventory, like we’ve seen recently and will continue to see, means homebuyers need every advantage they can get to make a strong offer and close the deal. Being pre-approved shows the sellers you’re serious about buying a home, which is always a plus in your corner.

2. Accelerate the Homebuying Process

Pre-approval can also speed-up the homebuying process so you can move faster when you’re ready to make an offer. Being ready to put your best foot forward when the time comes may be the leg-up you need to cross the finish line first and land the home of your dreams.

Bottom Line

Pre-approval is the best thing you can do right now to be in a stronger position to buy a home when you’re ready. Let’s connect today to get the process started.

We’re in a changing real estate market, and life, in general, is changing too – from how we grocery shop and meal prep to the ways we can interact with our friends and neighbors. Even practices for engaging with agents, lenders, and all of the players involved in a real estate transaction are changing to a virtual format. What isn’t changing, however, is one key thing that can drive the local economy: buying a home.

We’re all being impacted in different ways by the effects of the coronavirus. If you’re in a position to buy a home today, know that you’re a major economic force in your neighborhood. And while we all wait patiently for the current pandemic to pass, there are a lot of things you can do in the meantime to keep your home search on track.

Every year the National Association of Realtors (NAR) shares a report that notes the full economic impact of home sales. This report summarizes:

“The total economic impact of real estate related industries on the state economy, as well as the expenditures that result from a single home sale, including aspects like home construction costs, real estate brokerage, mortgage lending and title insurance.”

Here’s the breakdown of how the average home sale boosts the economy:When you buy a home, you’re making an impact. You’re fulfilling your need for shelter and a place to live, and you’re also generating jobs and income for the appraiser, the loan officer, the title company, the real estate agent, and many more contributors to the process. For every person or business that you work with throughout the transaction, there’s also likely a team behind the scenes making it all happen, so the effort multiplies substantially. As noted above in the circle on the right, the impact is almost double when you purchase new construction, given the extra labor it requires to build the home.

The report also breaks down the average economic impact by state:As a buyer, you have an essential need for a home – and you can make an essential impact with homeownership, too. That need for shelter, comfort, and a safe place to live will always be alive and well. And whenever you’re able to act on that need, whether now or later, you’ll truly be creating gains for you, your family, local business professionals, and the overall economy.

Bottom Line

Whenever you purchase a home, you’re an economic driver. Even if you’re not ready or able to make a move now, there are things you can do to keep your own process moving forward so you’re set when the time is right for you. Let’s connect to keep your home search – and your local contributions – on track.

The angst caused by the coronavirus has most people on edge regarding both their health and financial situations. It’s at times like these when we want exact information about anything we’re doing – even the correct protocol for grocery shopping. That information brings knowledge, and this gives us a sense of relief and comfort.

If you’re thinking about buying or selling a home today, the same need for information is very real. But, because it’s such a big step in our lives, that desire for clear information is even greater in the homebuying or selling process. Given the current level of overall anxiety, we want that advice to be truly perfect. The challenge is, no one can give you “perfect” advice. Experts can, however, give you the best advice possible.

Let’s say you need an attorney, so you seek out an expert in the type of law required for your case. When you go to her office, she won’t immediately tell you how the case is going to end or how the judge or jury will rule. If she could, that would be perfect advice. What a good attorney can do, however, is discuss with you the most effective strategies you can take. She may recommend one or two approaches she believes will be best for your case.

She’ll then leave you to make the decision on which option you want to pursue. Once you decide, she can help you put a plan together based on the facts at hand. She’ll help you achieve the best possible resolution and make whatever modifications in the strategy are necessary to guarantee that outcome. That’s an example of the best advice possible.

The role of a real estate professional is just like the role of the lawyer. An agent can’t give you perfect advice because it’s impossible to know exactly what’s going to happen throughout the transaction – especially in this market.

An agent can, however, give you the best advice possible based on the information and situation at hand, guiding you through the process to help you make the necessary adjustments and best decisions along the way. An agent will get you the best offer available. That’s exactly what you want and deserve.

Bottom Line

If you’re thinking of buying or selling, contact a local real estate professional to make sure you get the best advice possible.

There’s a lot of anxiety right now regarding the coronavirus pandemic. The health situation must be addressed quickly, and many are concerned about the impact on the economy as well.

Amidst all this anxiety, anyone with a megaphone – from the mainstream media to a lone blogger – has realized that bad news sells. Unfortunately, we will continue to see a rash of horrifying headlines over the next few months. Let’s make sure we aren’t paralyzed by a headline before we get the full story.

When it comes to the health issue, you should look to the Centers for Disease Control and Prevention (CDC) or the World Health Organization (WHO) for the most reliable information.

Finding reliable resources with information on the economic impact of the virus is more difficult. For this reason, it’s important to shed some light on the situation. There are already alarmist headlines starting to appear. Here are two such examples surfacing this week.

1. Goldman Sachs Forecasts the Largest Drop in GDP in Almost 100 Years

It sounds like Armageddon. Though the headline is true, it doesn’t reflect the full essence of the Goldman Sachs forecast. The projection is actually that we’ll have a tough first half of the year, but the economy will bounce back nicely in the second half; GDP will be up 12% in the third quarter and up another 10% in the fourth.

This aligns with research from John Burns Consulting involving pandemics, the economy, and home values. They concluded:

“Historical analysis showed us that pandemics are usually V-shaped (sharp recessions that recover quickly enough to provide little damage to home prices), and some very cutting-edge search engine analysis by our Information Management team showed the current slowdown is playing out similarly thus far.”

The economy will suffer for the next few months, but then it will recover. That’s certainly not Armageddon.

2. Fed President Predicts 30% Unemployment!

That statement was made by James Bullard, President of the Federal Reserve Bank of St. Louis. What Bullard actually said was it “could” reach 30%. But let’s look at what else he said in the same Bloomberg News interview:

“This is a planned, organized partial shutdown of the U.S. economy in the second quarter,” Bullard said. “The overall goal is to keep everyone, households and businesses, whole” with government support.

According to Bloomberg, he also went on to say:

“I would see the third quarter as a transitional quarter” with the fourth quarter and first quarter next year as “quite robust” as Americans make up for lost spending. “Those quarters might be boom quarters,” he said.

Again, Bullard agrees we will have a tough first half and rebound quickly.

Bottom Line

There’s a lot of misinformation out there. If you want the best advice on what’s happening in the current housing market, let’s talk today.

With interest rates hitting all-time lows over the past few weeks, many homeowners are opting to refinance. To decide if refinancing your home is the best option for you and your family, start by asking yourself these questions:

Why do you want to refinance?

There are many reasons to refinance, but here are three of the most common ones:

1. Lower Your Interest Rate and Payment: This is the most popular reason. Is your current interest rate higher than what’s available today? If so, it might be worth seeing if you can take advantage of the current lower rates.

2. Shorten the Term of Your Loan: If you have a 30-year loan, it may be advantageous to change it to a 15 or 20-year loan to pay off your mortgage sooner rather than later.

3. Cash-Out Refinance: You might have enough equity to cash out and invest in something else, like your children’s education, a business venture, an investment property, or simply to increase your cash reserve.

Once you know why you might want to refinance, ask yourself the next question:

How much is it going to cost?

There are fees and closing costs involved in refinancing, and The Lenders Network explains:

“As an example, let’s say your mortgage has a balance of $200,000. If you were to refinance that loan into a new loan, total closing costs would run between 2%-4% of the loan amount. You can expect to pay between $4,000 to $8,000 to refinance this loan.”

They also explain that there are options for no-cost refinance loans, but be on the lookout:

“A no-cost refinance loan is when the lender pays the closing costs for the borrower. However, you should be aware that the lender makes up this money from other aspects of the mortgage. Usually charging a slightly higher interest rate so they can make the money back.”

Keep in mind that, given the current market conditions and how favorable they are for refinancing, it can take a little longer to execute the process today. This is because many other homeowners are going this route as well. As Todd Teta, Chief Officer at ATTOM Data Solutions notes about recent mortgage activity:  

“Refinancing largely drove the trend, with more than twice as many homeowners trading in higher-interest mortgages for cheaper ones than in the same period of 2018.”

Clearly, refinancing has been on the rise lately. If you’re comfortable with the up-front cost and a potential waiting period due to the high volume of requests, then ask yourself one more question:

Is it worth it? 

To answer this one, do the math. Will it help you save money? How much longer do you need to own your home to break even? Will your current home meet your needs down the road? If you plan to stay for a few years, then maybe refinancing is your best move.

If, however, your current home doesn’t fulfill your needs for the next few years, you might want to consider using your equity for a down payment on a new home instead. You’ll still get a lower interest rate than the one you have on your current house, and with the equity you’ve already built, you can finally purchase the home you’ve been waiting for.

Bottom Line

Today, more than ever, it’s important to start working with a trusted real estate advisor. Whether you connect by phone or video chat, a real estate professional can help you understand how to safely navigate the housing market so that you can prioritize the health of your family without having to bring your plans to a standstill. Whether you’re looking to refinance, buy, or sell, a trusted advisor knows the best protocol as well as the optimal resources and lenders to help you through the process in this fast-paced world that’s changing every day.

More and more economists are predicting a recession is imminent as the result of the pullback in the economy caused by COVID-19. According to the National Bureau of Economic Research:

“A recession is a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales.”

Bill McBride, the founder of Calculated Risk, believes we are already in a recession:

“With the sudden economic stop, and with many states shutting down by closing down schools, bars and restaurants…my view is the US economy is now in a recession (started in March 2020), and GDP will decline sharply in Q2. The length of the recession will depend on the course of the pandemic.”

How deep will it go?

No one knows for sure. It depends on how long it takes to beat this virus. Goldman Sachs anticipates we will see a difficult first half of the year, but the economy will recover in the second half (see below):Goldman also projects we’ll have “further strong gains in early 2021.”

This aligns with the projection from Wells Fargo Investment Institute:

“Once the virus infection rate peaks, we expect a recovery to gain momentum into the final quarter of the year and especially into 2021.”

Again, no one knows for sure how long the pandemic will last. The hope is that it will resolve sometime over the next several months. Most agree that when it does, the economy will regain its strength quickly.

*QUARTER 1 DATA FROM GOLDMAN SACHS WAS UPDATED FROM 0% TO -0.2% ON 3/17/20 AFTER THE INITIAL RELEASE.

Bottom Line

This virus is not only impacting the physical health of Americans, but also the financial health of the nation. The sooner we beat it, the sooner our lives will return to normal.

With all of the havoc being caused by COVID-19, many are concerned we may see a new wave of foreclosures. Restaurants, airlines, hotels, and many other industries are furloughing workers or dramatically cutting their hours. Without a job, many homeowners are wondering how they’ll be able to afford their mortgage payments.In spite of this, there are actually many reasons we won’t see a surge in the number of foreclosures like we did during the housing crash over ten years ago. Here are just a few of those reasons:

The Government Learned its Lesson the Last Time

During the previous housing crash, the government was slow to recognize the challenges homeowners were having and waited too long to grant relief. Today, action is being taken swiftly. Just this week:

• The Federal Housing Administration indicated it is enacting an “immediate foreclosure and eviction moratorium for single family homeowners with FHA-insured mortgages” for the next 60 days.
• The Federal Housing Finance Agency announced it is directing Fannie Mae and Freddie Mac to suspend foreclosures and evictions for “at least 60 days.”

Homeowners Learned their Lesson the Last Time

When the housing market was going strong in the early 2000s, homeowners gained a tremendous amount of equity in their homes. Many began to tap into that equity. Some started to use their homes as ATM machines to purchase luxury items like cars, jet-skis, and lavish vacations. When prices dipped, many found themselves in a negative equity situation (where the mortgage was greater than the value of their homes). Some just walked away, leaving the banks with no other option but to foreclose on their properties.

Today, the home equity situation in America is vastly different. From 2005-2007, homeowners cashed out $824 billion worth of home equity by refinancing. In the last three years, they cashed out only $232 billion, less than one-third of that amount. That has led to:

• 37% of homes in America having no mortgage at all
• Of the remaining 63%, more than 1 in 4 having over 50% equity

Even if prices dip (and most experts are not predicting that they will), most homeowners will still have vast amounts of value in their homes and will not walk away from that money.

There Will Be Help Available to Individuals and Small Businesses

The government is aware of the financial pain this virus has caused and will continue to cause. Yesterday, the Associated Press reported:

“In a memorandum, Treasury proposed two $250 billion cash infusions to individuals: A first set of checks issued starting April 6, with a second wave in mid-May. The amounts would depend on income and family size.”

The plan also recommends $300 billion for small businesses.

Bottom Line

These are not going to be easy times. However, the lessons learned from the last crisis have Americans better prepared to weather the financial storm. For those who can’t, help is on the way.

In times of uncertainty, one of the best things we can do to ease our fears is to educate ourselves with research, facts, and data. Digging into past experiences by reviewing historical trends and understanding the peaks and valleys of what’s come before us is one of the many ways we can confidently evaluate any situation. With concerns of a global recession on everyone’s minds today, it’s important to take an objective look at what has transpired over the years and how the housing market has successfully weathered these storms.

1. The Market Today Is Vastly Different from 2008

We all remember 2008. This is not 2008. Today’s market conditions are far from the time when housing was a key factor that triggered a recession. From easy-to-access mortgages to skyrocketing home price appreciation, a surplus of inventory, excessive equity-tapping, and more – we’re not where we were 12 years ago. None of those factors are in play today. Rest assured, housing is not a catalyst that could spiral us back to that time or place.

According to Danielle Hale, Chief Economist at Realtor.com, if there is a recession:

“It will be different than the Great Recession. Things unraveled pretty quickly, and then the recovery was pretty slow. I would expect this to be milder. There’s no dysfunction in the banking system, we don’t have many households who are overleveraged with their mortgage payments and are potentially in trouble.”

In addition, the Goldman Sachs GDP Forecast released this week indicates that although there is no growth anticipated immediately, gains are forecasted heading into the second half of this year and getting even stronger in early 2021.Both of these expert sources indicate this is a momentary event in time, not a collapse of the financial industry. It is a drop that will rebound quickly, a stark difference to the crash of 2008 that failed to get back to a sense of normal for almost four years. Although it poses plenty of near-term financial challenges, a potential recession this year is not a repeat of the long-term housing market crash we remember all too well.

2. A Recession Does Not Equal a Housing Crisis

Next, take a look at the past five recessions in U.S. history. Home values actually appreciated in three of them. It is true that they sank by almost 20% during the last recession, but as we’ve identified above, 2008 presented different circumstances. In the four previous recessions, home values depreciated only once (by less than 2%). In the other three, residential real estate values increased by 3.5%, 6.1%, and 6.6% (see below):

3. We Can Be Confident About What We Know

Concerns about the global impact COVID-19 will have on the economy are real. And they’re scary, as the health and wellness of our friends, families, and loved ones are high on everyone’s emotional radar.

According to Bloomberg,

“Several economists made clear that the extent of the economic wreckage will depend on factors such as how long the virus lasts, whether governments will loosen fiscal policy enough and can markets avoid freezing up.”

That said, we can be confident that, while we don’t know the exact impact the virus will have on the housing market, we do know that housing isn’t the driver.

The reasons we move – marriage, children, job changes, retirement, etc. – are steadfast parts of life. As noted in a recent piece in the New York Times, “Everyone needs someplace to live.” That won’t change.

Bottom Line

Concerns about a recession are real, but housing isn’t the driver. If you have questions about what it means for your family’s homebuying or selling plans, let’s connect to discuss your needs.

Highlights:

• Buying a home can be intimidating if you’re not familiar with the terms used throughout the process.
• To point you in the right direction, here’s a list of some of the most common language you’ll hear along the way.
• The best way to ensure your homebuying process is a positive one is to find a real estate professional who will guide you through every aspect of the transaction with ‘the heart of a teacher.’

The residential real estate market has come roaring out of the gates in 2020. Compared to this time last year, the number of buyers looking for a home is up 20%, and the number of home sales is up almost 10%. The increase in purchasing activity has caused home price appreciation to begin reaccelerating. Many analysts have boosted their projections for price appreciation this year.

Whenever home prices begin to increase, there’s an immediate concern about how that will impact the ability Americans have to purchase a home. That thinking is understandable. We must, however, realize that price is not the only element to the affordability equation. Mark Fleming, Chief Economist at First American, recently explained:

“When demand increases for a scarce (limited or low supply) good, prices will rise faster. The difference between houses and other goods is that we buy them with a mortgage. So, it’s not the actual price that matters, but the price relative to purchasing power.”

While home prices have risen recently, mortgage interest rates have fallen rather dramatically. At the beginning of last year, the 30-year fixed-rate mortgage stood at 4.46%. Today, that number stands over a full percentage point lower.

How does a lower mortgage rate impact your monthly mortgage payment?

Michael Hyman, a research data specialist for the National Association of Realtors (NAR), explained in a recent report that, even though home values have increased over the last year, the monthly cost of owning a home has decreased:

“With lower mortgage rates compared to one year ago, the payment as a percentage of income fell to 15.5%…from 17.1% a year ago.”

When purchasing a home, the price is not as important as its cost. Today, the monthly expense (cost) of purchasing the same house you could have purchased last year would be less. Or, you could purchase a more expensive home for the same monthly expense.

Fleming, looking at all aspects of the affordability equation (prices, wages, and mortgage rates), calculated the actual numbers in a recent blog post:

“Low mortgage rates and income growth triggered a 13.5% increase in house-buying power compared with a year ago.”

Since wages have increased and mortgage rates have dropped to historically low levels, this is a great time to buy your first home or move up to the home of your dreams. As Tendayi Kapfidze, Chief Economist at LendingTree, recently advised:

“If you are in a point in your life where you’re considering buying a home today, it’s a better time to buy than 10 years ago. If you can get a mortgage, you’re getting much lower interest rates, and it enables you to afford more.”

Bottom Line

Whether you’ve considered becoming a homeowner for the first time or have decided to sell your home and buy one that better suits your current lifestyle, now is a great time to get together and discuss your options.

After over a year of moderating home prices, it appears home value appreciation is about to reaccelerate. Skylar Olsen, Director of Economic Research at Zillow, explained in a recent article:

 “A year ago, a combination of a government shutdown, stock market slump and mortgage rate spike caused a long-anticipated inventory rise. That supposed boom turned out to be a short-lived mirage as buyers came back into the market and more than erased the inventory gains. As a natural reaction, the recent slowdown in home values looks like it’s set to reverse back.”

CoreLogic, in their January 2020 Market Pulse Report, agrees with Olsen, projecting home value appreciation in all fifty states this year. Here’s the breakdown:

• 21 states appreciating 5% or more
• 26 states appreciating between 3-5%
• Only 3 states appreciating less than 3%

The Misconception

Many believe when real estate values are increasing, owning a home becomes less affordable. That misconception is not necessarily true.

In most cases, homes are purchased with a mortgage. The current mortgage rate is a major component of the affordability equation. Mortgage rates have fallen by almost a full percentage point since this time last year.

Another major piece of the equation is a buyer’s income. The median family income has risen by 5% over the last year, contributing to the affordability factor.

Black Knight, in their latest Mortgage Monitor, addressed this exact issue:

 “Despite the average home price increasing by nearly $13,000 from just over a year ago, the monthly mortgage payment required to buy that same home has actually dropped by 10% over that same span due to falling interest rates…

Put another way, prospective homebuyers can now purchase a $48K more expensive home than a year ago while still paying the same in principal and interest, a 16% increase in buying power.”

Bottom Line

If you’re thinking about purchasing a home, realize that homes are still affordable even though prices are increasing. As the Black Knight report concluded:

“Even with home price growth accelerating, today’s low-interest-rate environment has made home affordability the best it’s been since early 2018.”

There’s comfort in being around people who share common interests, goals, and challenges. That comfort in a community doesn’t wane with age – it actually deepens. Whether it’s proudly talking about grandchildren or lamenting the fact that our eyes aren’t as good as they used to be, it helps to be around people who not only understand what we’re saying but actually feel the same joys and concerns as well.

That’s why many boomers are deciding to move into an active adult community. In the latest 55 places National Housing Survey, they were described by one out of three seniors as an “outgoing, social community of likeminded people.”

Bill Ness, Chief Executive Officer and Founder of 55places.com, explains:

“Baby boomers are now reaching the age when moving to an active adult community is the ideal opportunity for them…Many boomers now want to downsize, experience a maintenance-free lifestyle, and pursue more social opportunities. It’s exciting that there are so many choices for baby boomers.”

There’s still a desire, however, among many seniors to “age-in-place.” According to the Senior Resource Guide, aging-in-place means:

“…that you will be remaining in your own home for the later years of your life; not moving into a smaller home, assisted living, or a retirement community etcetera.”

The challenge is, many seniors live in suburban or rural areas, and that often necessitates driving significant distances to see friends or attend other social engagements. A recent report from the Joint Center for Housing Studies of Harvard University (JCHS) titled Housing America’s Older Adults addressed this exact concern:

“The growing concentration of older households in outlying communities presents major challenges for residents and service providers alike. Single-family homes make up most of the housing stock in low-density areas, and residents typically need to be able to drive to do errands, see doctors, and socialize.”

The Kiplinger report also chimed in on this subject:

“While most seniors say they want to age in place, a much smaller percentage of them actually manage to accomplish it, studies show. Transportation is often a problem; when you can no longer drive, you can’t get to medical appointments or to other outings.”

Driving may not be a challenge right now, but think about what it may be like to drive 10, 20, or 30 years down the road.

There are also health challenges brought on by a possible lack of socialization when living at home versus a community of seniors. Sarah J. Stevenson is an author who writes about seniors. In a recent blog post for A Place for Mom, she explains:

“Social contacts tend to decrease as we age for reasons such as retirement, the death of friends and family, or lack of mobility.”

Thankfully, research from the same article suggests if you’re spending time with others in a community, thus reducing the impact of loneliness and isolation, there’s less of a risk of developing high blood pressure, obesity, heart disease, a weakened immune system, depression, anxiety, cognitive decline, Alzheimer’s disease, and early death.

Though the familiarity of our current home may bring a feeling of warmth, comfort, and convenience, it’s important to understand that staying there may mean missing out on crucial socialization opportunities. Living with adult children, joining a retirement community, or moving to an assisted living facility can help us continue to be with people we enjoy every day.

Bottom Line

“Aging-in-place” definitely has its advantages, but it could mean getting “stuck-in-place” too. There are many health benefits derived from socialization with a community of people that shares common interests. It’s important to take the need for human interaction into consideration when making a decision about where to spend the later years in life.

In the spring, many excited buyers get ready to enter the housing market. Others continue dreaming about the homes they’d like to buy. The truth is, many potential buyers continue to dream longer than they need to, simply because they’re confused about the homebuying process. Thankfully, working with a trusted real estate professional can help ease those concerns and make the process to homeownership much easier to understand.

A recent survey conducted by Ipson and Freddie Mac reveals the confidence level of Gen Z and Millennial buyers regarding the homebuying process. The graph below shows the breakdown of the top results, clearly indicating there’s a significant portion of younger buyers who are not yet confident with some of the steps in the homebuying process.Between the homebuying process and the mortgage process, there are 230 possible steps in the transaction. With trusted professionals on your side, you certainly don’t have to know them all to have a successful experience.

There are many reasons why these steps can change as you move through each one. Depending on your personal circumstances, the term or your mortgage, and the type of loan you use, the path you take may need to vary. That’s why guidance and support from the experts is key.

In addition to the process itself, respondents in the survey definitely expressed concerns about understanding the types of loans available. Here are just a few of the basic loans to consider. Be sure to speak with your lender about the specifics of what will work best for you:

• FHA: Loans guaranteed by the Federal Housing Administration for first-time buyers. They generally enable qualified borrowers to enter the housing market with a lower down payment.
• Conventional: Loans that usually require a larger down payment. Repeat buyers usually use these types of loans since they have an established credit history as well as more money from the sale of their previous home (called equity) for a bigger down payment.
• VA: Loans available for Veterans of the U.S. Armed Forces and their spouses. They are guaranteed by the Department of Veteran Affairs.
• USDA: Loans for those living in rural and suburban areas. A qualified lender can issue a USDA home loan, and they are guaranteed by the United States Department of Agriculture (USDA).

Interest rates also popped up as a common area of confusion among Gen Z and Millennial respondents in the survey. With today’s rates hovering at near historic lows, it’s a fantastic time for buyers to get more house for their money in the current market. Why? When mortgage rates are this low and wages are increasing as they are today, overall affordability increases, enabling home buyers to stretch their mortgage dollars further. It’s just another area where a trusted professional can help simplify the process and give guidance along the way.

Bottom Line

There are many possible steps in a real estate transaction, but they don’t have to be confusing. To understand your best course of action, let’s get together today to ensure you have a trusted advisor who will help you feel confident and informed at every turn.

The success of the U.S. residential real estate market, like any other market, is determined by supply and demand. This means we need to look at how many potential purchasers are in the market versus the number of houses that are available to buy. With early 2020 housing data now rolling in, it’s quite evident there are two big stories impacting this year’s residential real estate market:

1. Buyer demand is already extremely strong
2. Housing supply is at a historically low level

Demand

ShowingTime is a firm that compiles data from property showings scheduled across the country. The latest ShowingTime Showing Index reveals how showings have increased in each of the country’s four regions for five months in a row.

Supply

Move.com also just released information indicating that the number of homes currently for sale has declined rapidly and now sits at the lowest level in almost a decade. They explained,

“National housing inventory declined 13.6 percent in January, the steepest year-over-year decrease in more than 4 years, pushing the supply of for sale homes in the U.S. to its lowest level since realtor.com began tracking the data in 2012.”

In response to these numbers, Danielle Hale, Chief Economist at realtor.com, said,

“Homebuyers took advantage of low mortgage rates and stable listing prices to drive sales higher at the end of 2019, further depleting the already limited inventory of homes for sale. With fewer homes coming up for sale, we’ve hit another new low of for sale-listings in January.”

The decrease in inventory impacted every price range, too. Here’s a graph showing the data released by move.com:

Bottom Line

Since there’s a historic shortage of homes for sale, putting your home on the market today could drive an excellent price and give you additional negotiating leverage when selling your house. Let’s get together to determine if listing your house now is your best move.

It’s hard to listen to today’s news without hearing about the uncertainty surrounding global markets, the spread of the coronavirus, and tensions in the Middle East, just to name a few. These concerns have caused some to question their investment plans going forward. As an example, in Vanguard’s Global Outlook for 2020, the fund explains,

“Slowing global growth and elevated uncertainty create a fragile backdrop for markets in 2020 and beyond.”

Is there a silver lining to this cloud of doubt?

Some worry this could cause concern for the U.S. housing market. The uncertainty, however, may actually mean good news for real estate.

Mark Fleming, Chief Economist at First American, discussed the situation in a recent report,

“Global events and uncertainty…impact the U.S. economy, and more specifically, the U.S. housing market…U.S. bonds, backed by the full faith and credit of the U.S. government, are widely considered the safest investments in the world. When global investors sense increased uncertainty, there is a ‘flight to safety’ in U.S. Treasury bonds, which causes their price to go up, and their yield to go down.”

Last week, in a HousingWire article, Kathleen Howley reaffirmed Fleming’s point,

“The death toll from the coronavirus already has passed Severe Acute Respiratory Syndrome, or SARS, that bruised the world’s economy in 2003…That’s making investors around the world anxious, and when they get anxious, they tend to sell off stocks and seek the safe haven of U.S. bonds. An increase in competition for bonds means investors, including the people who buy mortgage-backed bonds, have to take lower yields. That translates into lower mortgage rates.”

The yield from treasury bonds is the rate investors receive when they purchase the bond. Historically, when the treasury rate moves up or down, the 30-year mortgage rate follows. Here’s a powerful graph showing the relationship between the two over the last 48 years:How might concerns about global challenges impact the housing market in 2020? Fleming explains,

“Even a small change in the 10-year Treasury due to increased uncertainty, let’s say a slight drop to 1.6 percent, would imply a 30-year, fixed mortgage rate as low as 3.3 percent. Assuming no change in household income, that would mean a house-buying power gain of $21,000, a five percent increase.”

Bottom Line

For a multitude of reasons, 2020 could be a challenging year. It seems, however, real estate will do just fine. As Fleming concluded in his report:

“Amid uncertainty, the house-buying power of U.S. consumers can benefit significantly.”

Regardless of the lack of inventory on the market, the U.S. homeownership rate has climbed to a 6-year high. The United States Census Bureau reported that it increased to 65.1% in the fourth quarter of 2019, representing the highest level in the past six years. See the graph below:This increase does not come as a surprise. According to realtor.com,

“The largest cohort of the millennial generation turns 30-years-old in 2020 and they are hitting the housing market in full force. At the end of the fourth quarter of 2019, millennials made up the largest generational segment of homebuyers, growing their share of home purchase mortgages to 48 percent.”

With so many Millennials entering a homebuying phase of life and getting into the market, the Millennial Report also explains,

“Homeownership is an even bigger goal for younger generations. Of those with savings, 41 percent of Gen Z and 40 percent of younger millennials are saving to buy a home.”

Today’s low interest rates are providing a break to new homeowners too, regardless of generation, making homeownership more desirable and achievable at the same time. Freddie Mac explains,

“The combination of very low mortgage rates, a strong economy and more positive financial market sentiment all point to home purchase demand continuing to rise over the next few months.”

The increase in homeownership rate was also represented by race and ethnicity of the householders. HousingWire explains,

“The homeownership rate for black Americans in 2019’s fourth quarter rose to 44%, a seven-year high, increasing from the record low it reached in 2019’s second quarter. The rate for Hispanic Americans was 48.1%, a two-year high, the Census data showed…The rate for white Americans was 73.7%, an eight-year high.”

See the graph below:

Bottom Line

If you’re considering buying a home this year, let’s get together to set a plan that will help you get one step closer to achieving your dream.

Even though there’s a big buyer demand for homes in today’s low inventory market, it doesn’t mean you should price your home as high as the sky when you’re ready to sell. Here’s why making sure you price it right is key to driving the best price for the sale.

If you’ve ever watched the show “The Price Is Right,” you know the only way to win the game is to be the one to correctly guess the price of the item up for bid without going over. That means your guess must be just slightly under the retail price.

When it comes to pricing your home, setting it at or slightly below market value will increase the visibility of your listing and drive more buyers your way. This strategy actually increases the number of buyers who will see your home in their search process. Why? When potential buyers look at your listing and see a great price for a fantastic home, they’re probably going to want to take a closer look. This means more buyers are going to be excited about your house and more apt to make an offer.

When this happens, you’re more likely to set up a scenario with multiple offers, potential bidding wars, and the ability to drive a higher final sale price. At the end of the day, even when inventory is tight, pricing it right – or pricing it to sell immediately – makes a big difference.

Here’s the other thing: homeowners who make the mistake of overpricing their homes will eventually have to lower the prices anyway after they sit on the market for an extended period of time. This leaves buyers wondering if the price drops were caused by something wrong with these homes when in reality, nothing was wrong, the initial prices were just too high.

Bottom Line

If you’re thinking about selling your home this year, let’s get together so you have a professional on your side to help you properly price your home and maximize demand from the start.

Rents in the United States have been skyrocketing since 2012. This has caused many renters to face a tremendous burden when juggling their housing expenses and the desire to save for a down payment at the same time. The recent stabilization of rental prices provides a great opportunity for renters to save more of their current income to put toward the purchase of a home.

Just last week the Joint Center of Housing Studies of Harvard University released the America’s Rental Housing 2020 Report. The results explain the financial challenges renters are experiencing today,

“Despite slowing demand and the continued strength of new construction, rental markets in the U.S. remain extremely tight. Vacancy rates are at decades-long lows, pushing up rents far faster than incomes. Both the number and share of cost-burdened renters are again on the rise, especially among middle-income households.”

According to the most recent Zillow Rent Index, which measures the estimated market-rate rent for all homes and apartments, the typical U.S. rent now stands at $1,600 per month. Here is a graph of how the index’s median rent values have climbed over the last eight years:

Is Good News Coming?

There seems, however, to be some good news on the horizon. Four of the major rent indices are all reporting that rents are finally beginning to stabilize in all rental categories:

1. The Zillow Rent Index, linked above, only rose 2.6% over the last year.

2. RENTCafé’s research team also analyzes rent data across the 260 largest cities in the United States. The data on average rents comes directly from competitively rented, large-scale, multi-family properties (50+ units in size). Their 2019 Year-End Rent Report shows only a 3% increase in rents from last year, the slowest annual rise over the past 17 months.

3. The CoreLogic Single Family Rent Index reports on single-family only rental listing data in the Multiple Listing Service. Their latest index shows how overall year-over-year rent price increases have slowed since February 2016, when they peaked at 4.2%. They have stabilized around 3% since early 2019.

4. The Apartment List National Rent Report uses median rent statistics for recent movers taken from the Census Bureau American Community Survey. The 2020 report reveals that the year-over-year growth rate of 1.6% matches the rate at this time last year; it is just ahead of the 1.5% rate from January 2016. They also explain how “the past five years also saw stretches of notably faster rent growth. Year-over-year rent growth stood at 2.6% in January 2018, and in January 2016 it was 3.3%, more than double the current rate.”

It seems tenants are getting a breather from the rapid rent increases that have plagued them for almost a decade.

Bottom Line

Rental expenses are beginning to moderate, and at the same time, average wages are increasing. That power combination may allow renters who dream of buying a home of their own an opportunity to save more money to put toward a down payment. That’s sensational news!

When the number of buyers in the housing market outnumbers the number of homes for sale, it’s called a “seller’s market.” The advantage tips toward the seller as low inventory heats up the competition among those searching for a place to call their own. This can create multiple offer scenarios and bidding wars, making it tough for buyers to land their dream homes – unless they stand out from the crowd. Here are three reasons why pre-approval should be your first step in the homebuying process.

1. Gain a Competitive Advantage

Low inventory, like we have today, means homebuyers need every advantage they can get to make a strong impression and close the deal. One of the best ways to get one step ahead of other buyers is to get pre-approved for a mortgage before you make an offer. For one, it shows the sellers you’re serious about buying a home, which is always a plus in your corner.

2. Accelerate the Homebuying Process

Pre-approval can also speed up the homebuying process, so you can move faster when you’re ready to make an offer. In a competitive arena like we have today, being ready to put your best foot forward when the time comes may be the leg-up you need to cross the finish line first and land the home of your dreams.

3. Know What You Can Borrow and Afford

Here’s the other thing: if you’re pre-approved, you also have a better sense of your budget, what you can afford, and ultimately how much you’re eligible to borrow for your mortgage. This way, you’re less apt to fall in love with a home that may be out of your reach.

Freddie Mac sets out the advantages of pre-approval in the My Home section of their website:

“It’s highly recommended that you work with your lender to get pre-approved before you begin house hunting. Pre-approval will tell you how much home you can afford and can help you move faster, and with greater confidence, in competitive markets.”

Local real estate professionals also have relationships with lenders who can help you through this process, so partnering with a trusted advisor will be key for that introduction. Once you select a lender, you’ll need to fill out their loan application and provide them with important information regarding “your credit, debt, work history, down payment and residential history.”

Freddie Mac also describes the ‘4 Cs’ that help determine the amount you’ll be qualified to borrow:

1. Capacity: Your current and future ability to make your payments
2. Capital or Cash Reserves: The money, savings, and investments you have that can be sold quickly for cash
3. Collateral: The home, or type of home, that you would like to purchase
4. Credit: Your history of paying bills and other debts on time

While there are still many additional steps you’ll need to take in the homebuying process, it’s clear why pre-approval is always the best place to begin. It’s your chance to gain the competitive edge you may need if you’re serious about owning a home.

Bottom Line

Getting started with pre-approval is a great way to begin the homebuying journey. Let’s get together today to make sure you’re on the fastest path to homeownership.

If you’re following what’s happening in the current housing market, you’ve seen how the lack of newly constructed homes is a major reason there’s a shortage of housing inventory available to today’s buyers. Another reason is that the inventory of existing homes for sale is shrinking. According to the most recent Existing Home Sales Report from the National Association of Realtors (NAR), sales are up 10.8% from the same time last year. That exceeds expectations and is great news.

The troubling news from the report is that the sold inventory is not being replaced. As NAR explained,

“Total housing inventory at the end of December totaled 1.40 million units, down 14.6% from November and 8.5% from one year ago. Unsold inventory sits at a 3.0-month supply at the current sales pace, down from the 3.7-month figure recorded in both November and December 2018. Unsold inventory totals have dropped for seven consecutive months from year-ago levels, taking a toll on home sales.”

The situation was also addressed in a recent Zillow article stating,

“The number of for-sale homes in the U.S. is at its lowest point in at least seven years, and the shortage appears poised to get worse before it gets better.”

Bill McBride of Calculated Risk further noted,

“Inventory always decreases sharply in December as people take their homes off the market for the holidays. However, based on the data I’ve collected, this was the lowest level for inventory in at least three decades (the previous low was 1.43 million in December 1993).”

Why is inventory falling so dramatically? I thought the housing market had softened.

A year ago, that was the case – but the market shifted again. Skylar Olsen, Director of Economic Research at Zillow, explains,

“A year ago, a combination of a government shutdown, stock market slump and mortgage rate spike caused a long-anticipated inventory rise. That supposed boom turned out to be a short-lived mirage as buyers came back into the market and more than erased the inventory gains. As a natural reaction, the recent slowdown in home values looks like it’s set to reverse back to accelerating growth right as we head into home shopping season with demand outpacing supply.”

What does this mean if you’re a homeowner thinking of selling?

Now is a great time to consider putting your home on the market. The competition (number of houses on the market) has not been this low in decades. It’s best not to wait for the inventory (both existing homes and new construction) to increase in the spring, as it always does.

Bottom Line

The supply of homes for sale is at a historic low. Buyer demand is surprisingly strong. Now would be a great time to sell.

If one of the questions you’re asking yourself today is, “Should I sell my house this year?” the current Housing Opportunities and Market Experience (HOME) Survey from the National Association of Realtors® (NAR) should boost your confidence as it relates to the current selling sentiment in the housing market. Even with all the information overload in the media circling around talk of a possible recession, the upcoming 2020 election, and more, Americans feel good about selling a house now. That’s some news to get excited about!

As the graph below shows, as of Q4 2019, 75% of people surveyed indicate they believe now is a good time to sell a home:

In the case of those with a yearly salary of $100,000 or more, the results jumped even higher, coming in at an 82% positive sentiment.

When the study divided the outcomes by region, the results still consistently showed Americans feeling good about selling:

• Northeast: 71% positive
• Midwest: 76% positive
• South: 72% positive
• West: 81% positive

In addition to looking at income and region, the report also divided the results by generation, as shown in the graph below:

As you can see, many believe that, despite everything going on in the world, it is still a good time to sell a home.

According to NAR, the unsold inventory available today “sits at a 3.0-month supply at the current sales pace,” which is down from a 3.7-month supply in November. The current inventory is half of what we need for a normal or neutral housing market, which should have a 6.0-month supply of unsold inventory. This is good news for sellers, as Lawrence Yun, Chief Economist at NAR, says:

“Home sellers are positioned well, but prospective buyers aren’t as fortunate. Low inventory remains a problem, with first-time buyers affected the most.”

Bottom Line

If you’re ready to list your home, you can feel good about the current sentiment in the market. Let’s get together today to determine the best next step when it comes to selling your house this year.

In the latest Housing Trends Report, the National Association of Home Builders (NAHB) measured the share of adults planning to buy a home over the next 12 months. The report indicates the percentage of all buyers that will be first-time buyers looking to purchase a home grew from 58% in Q4 2018 to 63% in Q4 2019.

The results revealed,

“Millennials are the most likely generation to be making plans to purchase a home within a year (19%), followed by Gen Z (13%) and Gen X (12%)…Prospective buyers in the youngest two generations are primarily first-time buyers:  88% of Gen Z buyers and 78% of Millennial buyers are reaching out to homeownership for the first time in their lives.”

With a high demand from first-time homebuyers and a shortage of inventory in the current market, selling your existing home this year might be your best move. Why? Because when homebuyers begin their search, they’re not all looking for new construction. Many are eager to find a little charm and character in a place to call home – possibly yours.

In fact, according to the same study, there is a significant demand for existing homes:

“In terms of the type of home these prospective home buyers are interested in, 40% are looking to buy an existing home and 19% a newly-built home. The remaining 41% would buy either a new or existing home.”

With showing activity up among buyers and more new construction coming to market, as a homeowner, you have the opportunity to sell your existing house now and move up into a new one, or downsize into a home that better fits your current and ever-changing needs.

Bottom Line

Not all buyers are looking for a newly built house. If you’re ready to take advantage of low mortgage rates and a high demand for your existing home, let’s get together to determine how we will market the charming details of your current house to potential buyers.

In 1963, Martin Luther King, Jr. led and inspired a powerful movement with his famous “I Have a Dream” speech. Through his passion and determination, he sparked interest, ambition, and courage in his audience. Today, reflecting on his message encourages many of us to think about our own dreams, goals, beliefs, and aspirations. For many Americans, one of those common goals is owning a home: a piece of land, a roof over our heads, and a place where our families can grow and flourish.

If you’re dreaming of buying a home this year, the best way to start the process is to connect with a Real Estate professional to understand what goes into buying a home. Once you have that covered, then you can answer the questions below to make the best decision for you and your family.

1. How Can I Better Understand the Process, and How Much Can I Afford?

The process of buying a home is not one to enter into lightly. You need to decide on key things like how long you plan on living in an area, school districts you prefer, what kind of commute works for you, and how much you can afford to spend.

Keep in mind, before you start the process to purchase a home, you’ll also need to apply for a mortgage. Lenders will evaluate several factors connected to your financial track record, one of which is your credit history. They’ll want to see how well you’ve been able to minimize past debts, so make sure you’ve been paying your student loans, credit cards, and car loans on time. Most agents have loan officers they trust that they can refer you to.

According to ConsumerReports.org,

“Financial planners recommend limiting the amount you spend on housing to 25 percent of your monthly budget.”

2. How Much Do I Need for a Down Payment?

In addition to knowing how much you can afford on a monthly mortgage payment, understanding how much you’ll need for a down payment is another critical step. Thankfully, there are many different options and resources in the market to potentially reduce the amount you may think you need to put down up front.

If you’re concerned about saving for a down payment, start small and be consistent. A little bit each month goes a long way. Jumpstart your savings by automatically adding a portion of your monthly paycheck into a separate savings account or house fund. AmericaSaves.org says,

“Over time, these automatic deposits add up. For example, $50 a month accumulates to $600 a year and $3,000 after five years, plus interest that has compounded.”

Before you know it, you’ll have enough for a down payment if you’re disciplined and thoughtful about your process.

3. Saving Takes Time: Practice Living on a Budget

As tempting as it is to settle in each morning with a fancy cup of coffee from your favorite local shop, putting that daily spend toward your down payment will help accelerate your path to homeownership. It’s the little things that count, so start trying to live on a slightly tighter budget if you aren’t doing so already. A budget will allow you to save more for your down payment and help you pay down other debts to improve your credit score. A survey of Millennial spending shows,

“70 percent of would-be first-time homebuyers will cut spending on spa days, shopping and going to the movies in exchange for purchasing a home within the next year.”

While you don’t need to cut all of the fun out of your current lifestyle, making smarter choices and limiting your spending in areas where you can slim down will make a big difference.

Bottom Line

If homeownership is on your dream list this year, take a good look at what you can prioritize to help you get there. Let’s get together today to discuss the best steps you can take to start the process.

Some Highlights:

• If you’re thinking of buying a home, plan ahead and stay on the right track, starting with pre-approval.
• Being proactive about the homebuying process will help set you up for success in each step.
• Make sure to work with a trusted real estate professional along the way, to help guide you through the homebuying steps specific to your area.

The real estate market is expected to do very well this year as mortgage rates remain at historic lows. One challenge to the housing industry is the lack of homes available for sale. Last week, move.com released a report showing that 2020 is beginning with the lowest available housing inventory in two years. The report explains:

“Last month saw the largest year-over-year decline of housing inventory in almost three years with a dramatic 12 percent decline, pushing the number of homes for sale in the U.S. to the lowest level since January 2018.”

The report also revealed that the decline in inventory stretches across all price points, as shown in the following graph:

George Ratiu, Senior Economist at realtor.com, explains how this drop in available homes for sale comes at a time when more buyers are expected to enter the market:

“The market is struggling with a large housing undersupply just as 4.8 million millennials are reaching 30-years of age in 2020, a prime age for many to purchase their first home. The significant inventory drop…is a harbinger of the continuing imbalance expected to plague this year’s markets, as the number of homes for sale are poised to reach historically low levels.”

The question is: What does this mean to you?

If You’re a Buyer…

Be patient during your home search. It may take time to find a home you love. Once you do, however, be ready to move forward quickly. Get pre-approved for a mortgage, be ready to make a competitive offer from the start, and understand that a shortage in inventory could lead to the resurgence of bidding wars. Calculate just how far you’re willing to go to secure a home, if you truly love it.

If You’re a Seller…

Realize that, in some ways, you’re in the driver’s seat. When there is a shortage of an item at the same time there is a strong demand for that item, the seller of that item is in a good position to negotiate. Whether it is price, moving date, possible repairs, or anything else, you’ll be able to demand more from a potential purchaser at a time like this – especially if you have multiple interested buyers. Don’t be unreasonable, but understand you probably have the upper hand.

Bottom Line

The housing market will remain strong throughout 2020. Understand what that means to you, whether you’re buying, selling, or doing both.

By the end of last year, many homeowners found themselves with more equity than they realized, and at the same time their wages were increasing. When those two factors unite, it can spark homeowners to think about making a move to a larger or more expensive home in the luxury space. That said, now is a perfect opportunity to take a look at the forecast for the 2020 luxury market.

Three Things to Think About in the 2020 Luxury Housing Market

1. Prices

The U.S. economy is strong today, with buying opportunities throughout the luxury end of the market. Thomas Veraguth, Strategist at UBS Global Wealth Management, says in Barrons.com,

“There’s a good link between luxury real estate prices and [economic] growth.”

Available inventory is a key element that can impact home prices. At the upper range, the inventory is greater in comparison to the entry-level market, making moving up to a luxury home a growing reality for many buyers right now.

2. Activity in the Market

With more buying opportunities at the higher end, we should start to see an increase in activity. The same article states,

“Affluent homebuyers will start to come out of the woodwork as they find rising luxury rents less appealing and sellers get even more negotiable on price.”

Buyers looking in the luxury market are taking the opportunity to negotiate on price in a segment where there are more choices, too. According to the Luxury Market Report, homes sold for an average of 96.94% of the list price in December.

Buyers are also getting more for their money with greater purchasing power due to the current low interest rates.

3. Buyers Are Coming Back

Keep in mind, buyers are often sellers too, especially those looking to move up. Homeowners with an entry-level home can take advantage of the inventory shortage at the lower end of the market, thus driving higher sales prices for their current homes. Combined with growing equity in the homes they’re listing, it’s a great time for those who are ready to make a luxury move.

The extra equity and greater purchasing power are bringing many buyers back to the market. The same article mentioned that,

“We’ve already seen buyers who’ve been on the sidelines for two years tread back into the market.”

Bottom Line

If you’re considering entering the luxury market, 2020 is shaping up to be a great year for those who are ready to make that move. Let’s get together to set your real estate plan for the year.

According to an Urban Institute study, homeowners who purchase a house before age 35 are better prepared for retirement at age 60.

The good news is, our younger generations are strong believers in homeownership.

According to a Freddie Mac survey,

“The dream of homeownership is alive and well within “Generation Z,” the demographic cohort following Millennials.

Our survey…finds that Gen Z views homeownership as an important goal. They estimate that they will attain this goal by the time they turn 30 years old, three years younger than the current median homebuying age (33).”

If these aspiring homeowners purchase at an early age, the Urban Institute study shows the impact it can have.

Based on this data, those who purchased their first homes when they were younger than 25 had an average of $10,000 left on their mortgage at age 60. The 50% of buyers who purchased in their mid-20s and early-30s had close to $50,000 left, but traditionally purchased more expensive homes.

Although the vast majority of Gen Zers want to own a home and are somewhat confident in their future, “In terms of financial awareness, 65% of Gen Z respondents report that they are not confident in their knowledge of the mortgage process.”

Bottom Line

As the numbers show, you’re not alone. If you want to buy this year but you’re not sure where to start the process, let’s get together to help you understand the best steps to take from here.

If you’re following what’s happening in the housing market right now, you know that many people believe the winter months aren’t a good time to sell a home. As realtor.com Senior Economist George Ratiu recently noted,

“Sellers tend to be more reluctant to list during the colder time of year when the market typically makes a seasonal slowdown.”

However, a recent report by ShowingTime reveals how this year is different. Buyer activity is way up compared to the same time last year. The report explains,

“The nation’s 12.6% growth in home showings compared to 2018 was the most significant jump in buyer traffic during the current four-month streak of year-over-year increases. The West Region saw the greatest growth in activity, with a 23.1% jump – the region’s greatest in the history of the Showing Index.”

The increase has spread across all four regions of the country, as the graph below shows:

Bottom Line

Waiting for the “spring buyers’ market” may be a mistake this year. It seems the purchasers are already out and looking to buy.

Some Highlights:

• On January 10^th of each year, “National Cut Your Energy Costs Day” encourages consumers to reduce their overall energy costs by improving home efficiency.
• According to Freddie Mac, a typical U.S. family spends $2,200 per year on energy bills. By making energy efficient upgrades, you could reduce your energy bills by up to 30%.
• To assess the energy efficiency of your home and see how it measures up, take a moment to check out Home Energy Yardstick to calculate your estimated opportunity. Don’t forget to have your energy bills nearby!

When closing out another year, it’s normal to wonder what’s ahead for the housing market. Though there will be future inventory issues, we expect interest rates to stay low and appreciation to continue.

Here’s what three experts are saying we’ll likely see in 2020:

Danielle Hale, Chief Economist at realtor.com

“I think the biggest surprise from the forecast is how long the market is staying in this low inventory environment, especially as Millennials are in a major home-buying phase…sellers will contend with flattening price growth and slowing activity with existing home sales down 1.8%. Nationwide you can look to flat home prices with an increase of less than 1%.”

Mike Fratantoni, Chief Economist at Mortgage Banker Association (MBA)

“Interest rates will, on average, remain lower…These lower rates will in turn support both purchase and refinance origination volume in 2020.”

Skylar Olsen, Director of Economic Research at Zillow

“If current trends hold, then slower means healthier and smaller means more affordable. Yes, we expect a slower market than we’ve become accustomed to the last few years…consumers will continue to absorb available inventory and the market will remain competitive in much of the country.”

As we can see, we’re still going to have a healthy market. It is forecasted to be a more moderate (or normal) market than the last few years, but strong enough for Americans to continue to believe in homeownership and to capitalize on the opportunities that come with low interest rates.

Bottom Line

If you’re wondering what’s happening in our local market, let’s get together today.

Rising home prices coupled with the current inventory in today’s market may cause some homeowners to consider selling their homes on their own (known in the industry as a For Sale By Owner). However, a FSBO might be hard to execute well for the vast majority of sellers.

Here are the top 5 reasons not to FSBO:

1. Online Strategy for Prospective Purchasers

Studies have shown that 93% of buyers search online for a home. That’s a pretty staggering number! Most real estate agents have an Internet strategy to promote the sale of your home. Do you?

2. Results Come from the Internet

According to NAR, here’s where buyers found the homes they actually purchased:

• 55% on the Internet
• 28% from a Real Estate Agent
• 10% Other
• 6% from a Yard Sign
• 1% from Newspapers

The days of selling your house by putting up a sign in your yard or placing an ad in the paper are long gone. Having a strong Internet strategy is crucial.

3. There Are Too Many People to Negotiate With

Here’s a list of some of the people with whom you must be prepared to negotiate if you decide to FSBO:

• The buyer, who wants the best deal possible
• The buyer’s agent, who solely represents the best interest of the buyer
• The buyer’s attorney (in some parts of the country)
• The home inspection companies, which work for the buyer and will almost always find some problems with the house
• The appraiser, if there is a question of value

4. FSBOing Has Become Increasingly Difficult

The paperwork involved in buying or selling a home has increased dramatically as industry disclosures and regulations have become mandatory. This is one of the reasons the percentage of people FSBOing has dropped from 19% to 8% over the last 20+ years.

5. You Net More Money When Using an Agent

Many homeowners believe they’ll save the real estate commission by selling on their own, but the seller and buyer can’t both save the commission.

A report by Zillow revealed that FSBOs are inclined to do so because they believe it will save money (46 percent cite this among their top three reasons), but they don’t actually save anything, and eventually end up listing with an agent.

The same report revealed that,

“While 36% of sellers that (at first) attempted to sell their homes on their own, only 11 percent of sellers—in other words, less than a third…actually sold without an agent.”

It appears working with a real estate professional is the best answer.

Bottom Line

Before you decide to take on the challenges of selling your house on your own, let’s get together to discuss your needs.

Looking ahead, 2020 is projected to be a strong year for homeownership. According to the Freddie Mac Forecast,

“We expect rates to remain low, falling to a yearly average of 3.8% in 2020.”

If you’re currently renting, 2020 may be a great time to think about making a jump into homeownership while mortgage rates are low.

As noted in the National Rent Report,

“the national rent index increased by 1.4 percent year-over-year.”

With average rents on the rise, this year-over-year increase may not sound like much, but it can add up – fast. The math on how much extra it will cost you over time surely doesn’t lie.

Here’s an example: On a $1,500 rental payment, an increase of 1.4% adds an additional $21 dollars per month to your payment. When multiplied by the twelve months in a year, it’s a $252 overall annual increase. The price continues to multiply when you rent year after year, as rental prices rise.

History shows how average rental prices have been increasing each year, and there doesn’t seem to be much end in sight. Here’s a look at how rents have grown since 2012 alone:

Why not lock down your monthly housing expense, and at the same time build additional net worth for you and your family? If you’re thinking about buying a home, consider the financial benefits of what homeownership can do for you, especially while the market conditions are strong and current mortgage rates are low.

Bottom Line

With average rents continuing to rise, now may be a great time to stabilize your monthly payment by becoming a homeowner and locking into a low mortgage rate. Let’s get together to discuss how taking advantage of the current market conditions might work for you.

It’s exciting to put a house on the market and to think about making new memories in new spaces, but we can have deep sentimental attachments to the homes we’re leaving behind, too. Growing emotions can help or hinder a sale, depending on how we manage them.

When it comes to the bottom line, homeowners need to know what it takes to avoid costly mistakes. Being mindful of these things and prepared for the process can help you avoid some of the most common mishaps when selling your house.

1. Overpricing Your Home

When inventory is low, like it is in the current market, it’s common to think buyers will pay whatever we ask for when we price our homes. Believe it or not, that’s far from the truth. Don’t forget that the buyer’s bank will send an appraisal to determine the fair value for your home. The bank will not lend more than what the house is worth, so be mindful that you might need to renegotiate the price after the appraisal. A real estate professional will help you to set the true value of your home.

2. Letting Your Emotions Interfere with the Sale

Today, most homeowners have been living in their houses for an average of 10 years (as shown in the graph below):

This is several years longer than what used to be the norm, since many homeowners have been recouping from negative equity situations over the past 10 years. The side effect, however, is when you live for so long in one place, you may get even more emotionally attached to your space. If it’s the first home you bought after you got married or the house where your children grew up, it very likely means something extra special to you. Every room has memories and it’s hard to detach from the sentimental value.

For some homeowners, that makes it even harder to negotiate, separating the emotional value of the home from the fair market price. That’s why you need a real estate professional to help you with the negotiations in the process.

3. Not Staging Your Home

We’re generally quite proud of our décor and how we’ve customized our houses to make them our own personalized homes, but not all buyers will feel the same way about your design. That’s why it’s so important to make sure you stage your home with the buyer in mind. Buyers want to envision themselves in the space, so it truly feels like their own. They need to see themselves in the space with their furniture and keepsakes – not your pictures and decorations. Stage and declutter your home so they can visualize their own dreams as they walk through your house. A real estate professional can help you with tips to get your home ready to stage and sell.

Bottom Line

Today’s seller’s market might be your best chance to make a move. If you’re considering selling your house, let’s get together to help you navigate through the process while avoiding common seller mistakes.

The reality of what we’re seeing this month is that homes are selling fast. In today’s strong seller’s market, bidding wars are common and expected with starter or entry-level homes.

In most areas of the country, first-time buyers have been met with fierce competition throughout their homebuying experience. Some have been out-bid multiple times before finally going into contract on a home to call their own.

Right now, inventory is the big challenge. Here’s what we know today:

According to the latest Existing Home Sales Report from the National Association of Realtors (NAR), there is currently a 3.9-month supply of homes for sale, which can drive this kind of hefty buyer competition. Remember, anything less than 6 months of inventory is a seller’s market.

Even though the month’s supply of inventory is not increasing, ironically, the number of homes for sale is. This means homes are coming up for sale, but they’re being sold quickly. The graph below shows the year-over-year change in inventory over the last 12 months.

As depicted above, the percentage of available inventory has fallen for four consecutive months when compared to the previous year.

So, what does this mean? If you’re a buyer, be sure to get pre-approved for a mortgage and be ready to make a competitive offer, so you can move quickly. Chances are, homes high on your wish list are likely going to go fast.

Bottom Line

If you’re thinking of buying a home, make sure you’re taking the right steps at the beginning of the process, so you’re a top contender if you ultimately find yourself in a bidding war. Let’s get together to discuss what you need to do to make your move toward homeownership.

Over the past year, mortgage rates have fallen more than a full percentage point. This is a great driver for homeownership, as today’s low rates provide consumers with some significant benefits. Here’s a look at three of them:

1. Refinance: If you already own a home, you may want to decide if you’re going to refinance. It’s one way to lock in a lower monthly payment and save substantially over time, but it also means paying upfront closing costs too. You have to answer the question: Should I refinance my home?
2. Move-up or Downsize: Another option is to consider moving into a new home, putting the equity you’ve likely gained in your current house toward a down payment on a new one that better meets your needs – something that’s truly a perfect fit for your family.
3. Become a First-Time Homebuyer: There are many financial and non-financial benefits to owning a home, and the most important thing is to first decide when the time is right for you. You have to determine that on your own, but know that now is a great time to buy if you’re considering it. Just take a look at the cost of renting vs. buying

Why 2019 Was a Great Year for Homeownership

Last year at this time, mortgage rates were 4.63% (substantially higher than they are today). If you’re one who waited for a better time to make a move, market conditions have improved significantly. Today’s low mortgage rates combined with increasing wages are making homes much more affordable than they were just one year ago, so it’s a great time to get more for your money and consider a new home.

The chart below shows how much you would save based on today’s rates, compared to what you would have paid if you purchased a house exactly one year ago, depending on how much you finance.

Bottom Line

If you’ve been waiting since last year to make your move into homeownership, or to find a house that better meets your needs, today’s low mortgage rates may be just what you need to get the process going. Let’s get together to discuss how you can benefit from the current rates.

It may seem hard to imagine that the home you’re in today – whether it’s your starter home or just one you’ve fallen in love with along the way – might not be your forever home.

The good news is, it’s okay to admit if your house no longer fits your needs.

According to the latest Home Price Insights from CoreLogic, prices have appreciated 3.5% year-over-year. At the same time, the National Association of Realtors (NAR) reports inventory has dropped 4.3% from one year ago.

These two statistics are directly related to one another. As inventory has decreased and demand has increased, prices have been driven up.

This is great news if you own a home and are thinking about selling. The equity in your house has likely risen as prices have increased. Even better is the fact that there’s a large pool of buyers out there searching for the American dream, and your home may be high on their wish list.

Bottom Line

If you think you’ve outgrown your home, let’s get together to discuss local market conditions and determine if now is the best time for you to sell.

Click the images below to download your free copy!

Did you know that each year in the United States, we celebrate “National Roof Over Your Head Day” on December 3^rd?

As noted on the National Calendar, it was “created as a day to be thankful for what you have, starting with the roof over your head. There are many things that we have that we take for granted and do not stop to appreciate how fortunate we are for having them.”

From bungalows to cottages, and farmhouses to treehouses, today we show our appreciation and gratitude for the places we call home. Owning the roof that shelters us is something many renters still aspire to, knowing there are so many financial and non-financial benefits to homeownership.

According to the 2019 State of the Nation’s Housing from the Joint Center for Housing Studies of Harvard University,

“Cost-burdened renters now outnumber cost-burdened homeowners by more than 3.0 million. In addition, renters make up 10.8 million of the 18.2 million severely burdened households that pay more than half their incomes for housing.”

Homeownership drives many benefits, including providing families with a place to feel secure. It also helps promote confidence that they are investing proactively in themselves and their communities. That is why there are 77.7 million owner-occupied housing units in the United States.

Many, however, fear it is too expensive to own a home. In reality, however, it’s actually more expensive to rent. Here’s the breakdown as a percentage of income necessary for both – affording median rent and owning a home:

Bottom Line

Today we pause to appreciate the places we call home, and all of the other reasons we have to be truly thankful. For those who don’t own yet and would like to, it’s a wonderful time to start identifying the steps to take toward homeownership. Let’s connect today to begin creating your plan.

There are great advantages to owning a home, yet many people continue to rent. The financial benefits are just some of the reasons why homeownership has been a part of the long-standing American dream.

Realtor.com reported that:

“Buying remains the more attractive option in the long term – that remains the American dream, and it’s true in many markets where renting has become really the shortsighted option…as people get more savings in their pockets, buying becomes the better option.”

Why is owning a home financially better than renting?

Here are the top 5 financial benefits of homeownership:

1. Homeownership is a form of forced savings.
2. Homeownership provides tax savings.
3. Homeownership allows you to lock in your monthly housing cost.
4. Buying a home is less expensive than renting.
5. No other investment lets you live inside of it.

Studies have also shown that a homeowner’s net worth is 44x greater than that of a renter.

A family that purchased a median-priced home at the start of 2019 would build more than
$37,750 in family wealth over the next five years with projected price appreciation alone.

Some argue that renting eliminates the cost of taxes and home repairs, but every potential renter must realize that all the expenses the landlord incurs are already baked into the rent payment – along with a profit margin!

Bottom Line

Owning a home has many social and financial benefits that cannot be achieved by renting. Let’s connect to determine if buying a home is your best move.

The economy is currently experiencing the longest recovery in our nation’s history. The stock market has hit record highs, while unemployment rates are at record lows. Home price appreciation is beginning to reaccelerate. This begs the question: How long can this economic recovery last?

The Wall Street Journal (WSJ) Survey of Economists recently called for an economic slowdown (recession) in the near future. The most recent survey, however, now shows the economists are pushing that timetable back. When asked when they expect a recession to start, 42.5% of the economists in the previous survey projected between now and the end of 2020. The most recent survey showed that percentage drop to 34.2%. Here are the most current results:

Like the economists surveyed by the WSJ, most experts are still predicting a recession will likely occur sometime in the next few years. However, many are pushing back the date for the economic slowdown.

Bottom Line

Real estate is impacted by the economy (and the consumer’s belief in the strength of the economy). The fact that most economic experts are calling for the recovery to continue through 2020 means the housing market will also remain strong for the foreseeable future.

Success is something often worth repeating, and Brent Sutherland, a Certified Financial Planner and Real Estate Investor, has certainly made his way in a momentum-driving direction. Here are 3 tips he shares from a recent piece in Business Insider on the benefits of owning real estate:

1. Real estate diversifies your income

“While it is certainly important to be properly diversified with your investments, it is even more important to be diversified with your income. This is because the largest financial risk for most of you is the loss of your primary source of income, which is typically in the form of a day job.”

The article highlights how having multiple sources of income, such as those derived from real estate investments, can eventually lead to relying less and less on a day job. Sound dreamy? It can be. When done well, real estate investments may eventually open up your time and the financial freedom to explore other things, like travel and other aspirations you may have for the future, particularly in the golden years of retirement.

2. Real estate produces near-immediate results

“You can achieve and feel the results almost immediately. Property improvements are visible and tangible. You can cash, spend, and invest rent payments. Today! Not 30 years in the future.”

Currently, home prices are appreciating in all price ranges, and just last week CoreLogic announced their 12-month home value projection at 5.6%, an increase from 4.5% noted earlier this summer. With that in mind, real estate today is definitely driving immediate results!

3. Passive income can help you become financially independent sooner

“If you need $40,000 a year to live, you could alternatively invest in assets that generate an 8% cash-on-cash return. This is a very reasonable assumption. And it means you would only need to save a total of $500,000 (instead of $1 million). Yet, your investments would still meet your annual household living needs.

While returns, taxes, and inflation can, of course, affect your timeline, cash-flowing real-estate is a clear asset.”

Homeownership is a form of ‘forced savings.’ Every time you pay your mortgage, you’re contributing to your net worth by increasing the equity in your home, bringing you one step closer to true financial independence.

Bottom Line

If you want to increase your savings and overall net worth, real estate is a great way to go. To learn how you can make it happen, let’s get together to discuss the process.

When you’re ready to buy, you’ll need to determine if you prefer the charm of an existing home or the look and feel of a newer build. With limited existing home inventory available today, especially in the starter and middle-level markets, many buyers are considering a new home that’s recently been constructed, or they’re building the home of their dreams.

According to Robert Dietz, Chief Economist at the National Association of Home Builders (NAHB),

“The second half of 2019 has seen steady gains in single-family construction, and this is mirrored by the gradual uptick in builder sentiment over the past few months.”

This is great news for homebuyers because it means there is additional inventory coming to the market, giving buyers more choices. The most recent data from NAHB shows,

“The inventory of new homes for sale was 321,000 in September, representing a 5.5 months’ supply. The median sales price was $299,400. The median price of a new home sale a year earlier was $328,300.”

Another added bonus is that builders are very aware of buyer demand in this segment, so they’re now building in a price range where there are more interested buyers ($299,400 instead of $328,300). With a reduced sales price and low-interest rates, today’s buyers have strong purchasing power.

Bottom Line

If you’re thinking of buying a home, you may want to consider a new build to meet your family’s needs. Let’s get together to discuss the process and review what’s available in our area.

Every Hour in the U.S. Housing Market: 

• 614 Homes Are Sold
• 95 Homes Regain Positive Equity
• Median Home Values Go Up $1.38

A considerable number of potential buyers shy away from the real estate market because they’re uncertain about the buying process – particularly when it comes to qualifying for a mortgage.

For many, the mortgage process can be scary, but it doesn’t have to be! 

In order to qualify in today’s market, you’ll need a down payment (the average down payment on all loans last year was 5%, with many buyers putting down 3% or less), a stable income, and a good credit history.

Once you’re ready to apply, here are 5 easy steps Freddie Mac suggests to follow:

1. Find out your current credit history and credit score– Even if you don’t have perfect credit, you may already qualify for a loan. The average FICO Score® for all closed loans in September was 737, according to Ellie Mae.
   
2. Start gathering all of your documentation– This includes income verification (such as W-2 forms or tax returns), credit history, and assets (such as bank statements to verify your savings).
3. Contact a professional– Your real estate agent will be able to recommend a loan officer who can help you develop a spending plan, as well as help you determine how much home you can afford.
4. Consult with your lender– He or she will review your income, expenses, and financial goals in order to determine the type and amount of mortgage you qualify for.
5. Talk to your lender about pre-approval– A pre-approval letter provides an estimate of what you might be able to borrow (provided your financial status doesn’t change) and demonstrates to home sellers that you’re serious about buying.

Bottom Line

Do your research, reach out to professionals, stick to your budget, and be sure you’re ready to take on the financial responsibilities of becoming a homeowner.

The gap between the increase in personal income and residential real estate prices has been used to defend the concept that we are experiencing an affordability crisis in housing today.

It is true that home prices and wages are two key elements in any affordability equation. There is, however, an extremely important third component to that equation: mortgage interest rates.

Mortgage interest rates have fallen by more than a full percentage point from this time last year. Today’s rate is 3.75%; it was 4.86% at this time last year. This has dramatically increased a purchaser’s ability to afford a home.

Here are three reports validating that purchasing a home is in fact more affordable today than it was a year ago:

CoreLogic’s Typical Mortgage Payment

“Falling mortgage rates and slower home-price growth mean that many buyers this year are committing to lower mortgage payments than they would have faced for the same home last year. After rising at a double-digit annual pace in 2018, the principal-and-interest payment on the nation’s median-priced home – what we call the “typical mortgage payment”– fell year-over-year again.”  

The National Association of Realtors’ Affordability Index

“At the national level, housing affordability is up from last month and up from a year ago…All four regions saw an increase in affordability from a year ago…Payment as a percentage of income was down from a year ago.”

First American’s Real House Price Index (RHPI)

“In 2019, the dynamic duo of lower mortgage rates and rising incomes overcame the negative impact of rising house price appreciation on affordability. Indeed, affordability reached its highest point since January 2018. Focusing on nominal house price changes alone as an indication of changing affordability, or even the relationship between nominal house price growth and income growth, overlooks what matters more to potential buyers – surging house-buying power driven by the dynamic duo of mortgage rates and income growth. And, we all know from experience, you buy what you can afford to pay per month.”

Bottom Line

Though the price of homes may still be rising, the cost of purchasing a home is actually falling. If you’re thinking of buying your first home or moving up to your dream home, let’s connect so you can better understand the difference between the two.

Much has been written about how residential real estate values have increased since the housing market started its recovery in 2012. However, little has been shared about what has taken place with residential rental prices. Let’s shed a little light on this subject.

In the most recent Apartment Rent Report, RentCafe explains how rents have continued to increase over the last twelve months because of a large demand and a limited supply.

 “Continued interest in rental apartments and slowing construction keeps the national average rent on a strong upward trend.”

Zillow, in its latest Rent Index, agreed that rents are continuing on an “upward trend” across most of the country, and that the trend is accelerating:

“The median U.S. rent grew 2% year-over-year, to $1,595 per month. National rent growth is faster than a year ago, and while 46 of the 50 largest markets are showing deceleration in annual home value growth, annual rent growth is accelerating in 41 of the largest 50 markets.”

The Zillow report went on to detail rent increases since the beginning of the housing market recovery in 2012. Here is a graph showing the increases:

Bottom Line

It is true that home prices have risen over the past seven years, increasing the cost of owning a home. However, the cost of renting a home has also increased over that same time period.

Did you know that 1 in 6 Americans currently live in a multigenerational household?

According to Generations United, the number of multigenerational households rose from 42.4 million in 2000 to 64 million in 2016. The 2018 Profile of Home Buyers and Sellers from the National Association of Realtors shows that 12% of all buyers have a multigenerational household.

Why Are Many Americans Choosing to Live in a Multigenerational Household?

The benefits to multigenerational living are significant. According to Toll Brothers,

“In recent years, there’s been a steady rise in the number of multigenerational homes in America. Homeowners and their families are discovering new ways to get the most out of home with choices that fit the many facets of their lives.”

The piece continues to explain the top 5 benefits of multigenerational living. Here is the list, and a small excerpt from their article:

1. Shared Expenses

“…Maintaining two households is undeniably costlier and more rigorous than sharing the responsibilities of one. By bringing family members and resources together under one roof, families can collectively address their expenses and allocate finances accordingly.”

2. Shared Responsibilities

“Distributing chores and age-appropriate responsibilities amongst family members is a tremendous way of ensuring that everyone does their part. For younger, more able-bodied members, physical work such as mowing the lawn or moving furniture is a nice trade-off so that the older generation can focus on less physically demanding tasks.”

3. Strengthened Family Bond

“While most families come together on special occasions, multigenerational families have the luxury of seeing each other every day. By living under one roof, these families develop a high level of attachment and closeness.”

4. Ensured Family Safety

“With multiple generations under one roof, a home is rarely ever left unoccupied for long, and living with other family members increases the chances that someone is present to assist elderly family members should they have an accident.”

5. Privacy

“One of the primary trepidations families face when shifting their lifestyle is the fear of losing privacy. With so many heads under one roof, it can feel like there’s no place to turn for solitude. Yet, these floor plans are designed to ensure that every family member can have quiet time… [and] allow for complete separation between the generations within the household.”

Bottom Line

The trend of multigenerational living is growing, and the benefits to families who choose this option are significant. If you’re considering a multigenerational home, let’s get together to discuss the options available in our area.

In today’s market, low inventory dominates the conversation in many areas of the country. It can often be frustrating to be a first-time homebuyer if you aren’t prepared. Here are five tips from realtor.com’s article, “How to Find Your Dream Home—Without Losing Your Mind.”

1. Get Pre-Approved for a Mortgage Before You Start Your Search

One way to show you’re serious about buying your dream home is to get pre-qualified or pre-approved for a mortgage. Even if you’re in a market that is not as competitive, understanding your budget will give you the confidence of knowing whether or not your dream home is within your reach. This will help you avoid the disappointment of falling in love with a home well outside your price range.

2. Know the Difference Between Your ‘Must-Haves’ and ‘Would-Like-To-Haves’

Do you really need that farmhouse sink in the kitchen to be happy with your home choice? Would a two-car garage be a convenience or a necessity? Before you start your search, list all the features of a home you would like. Qualify them as ‘must-haves’, ‘should-haves’, or ‘absolute-wish list’ items. This will help you stay focused on what’s most important.

3. Research and Choose a Neighborhood Where You Want to Live

Every neighborhood has unique charm. Before you commit to a home based solely on the house itself, take a test-drive of the area. Make sure it meets your needs for “amenities, commute, school district, etc. and then spend a weekend exploring before you commit.”

4. Pick a House Style You Love and Stick to It

Evaluate your family’s needs and settle on a style of home that will best serve those needs. Just because you’ve narrowed your search to a zip code doesn’t mean you need to tour every listing in that vicinity. An example from the article says, “if you have several younger kids and don’t want your bedroom on a different level, steer clear of Cape Cod–style homes, which typically feature two or more bedrooms on the upper level and the master on the main.”

5. Document Your Home Visits

Once you start touring homes, the features of each individual home will start to blur together. The article suggests keeping your camera handy and making notes on the listing sheet to document what you love and don’t love about each property you visit.

Bottom Line

In a high-paced, competitive environment, any advantage you can give yourself will help you on your path to buying your dream home.

If you’re searching for a home online, you’re not alone; lots of people are doing it. The question is, are you using all of your available resources, and are you using them wisely? Here’s why the Internet is a great place to start the home-buying process, and the truth on why it should never be your only go-to resource when it comes to making such an important decision.

According to the National Association of Realtors (NAR), the three most popular information sources home buyers use in the home search are:

• Online website (93%)
• Real estate agent (86%)
• Mobile/tablet website or app (73%)

Clearly, you’re not alone if you’re starting your search online; 93% of home buyers are right there with you. The even better news: 86% of buyers are also getting their information from a real estate agent at the same time.

Here are 3 top reasons why using a real estate professional in addition to a digital search is key:

1. There’s More to Real Estate Than Finding a Home Online. It’s a lonely and complicated trek around the web if you don’t have a real estate professional to also help you through the 230 possible steps you’ll face as you navigate through a real estate transaction. That’s a pretty staggering number! Determining your price, submitting an offer, and successful negotiation are just a few of these key steps in the sequence. You’ll definitely want someone who has been there before to help you through it.

2. You Need a Skilled Negotiator. In today’s market, hiring a talented negotiator could save you thousands, maybe even tens of thousands of dollars. From the original offer to the appraisal and the inspection, many of the intricate steps can get complicated and confusing. You need someone who can keep the deal together until it closes.

3. It Is Crucial to Make a Competitive and Compelling Offer. There is so much information out there in the news and on the Internet about home sales, prices, and mortgage rates. How do you know what’s specifically going on in your area? How do you know what to offer on your dream home without paying too much or offending the seller with a lowball offer?

Dave Ramsey, the financial guru, advises:

“When getting help with money, whether it’s insurance, real estate or investments, you should always look for someone with the heart of a teacher, not the heart of a salesman.”

Hiring a real estate professional who has his or her finger on the pulse of the market will make your buying experience an informed and educated one. You need someone who is going to tell you the truth, not just what they think you want to hear.

Bottom Line

If you’re ready to start your search online, let’s get together. You’ll want someone who is educated and informed at your side who can answer your questions and guide you through a process that can be complex and confusing if you go at it with the Internet alone.

Some Highlights:

• The National Association of REALTORS® surveyed their members for the release of their Confidence Index.
• 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.
• Homes across the country are selling quickly, in an average of just 31 days.
• 49% of homes sold in less than a month.

No one knows for sure when the next recession will occur. What is known, however, is that the upcoming economic slowdown will not be caused by a housing market crash, as was the case in 2008. There are those who disagree and are comparing today’s real estate market to the market in 2005-2006, which preceded the crash. In many ways, however, the market is very different now. Here are three suppositions being put forward by some, and why they don’t hold up.

SUPPOSITION #1

A critical warning sign last time was the surging gap between the growth in home prices and household income. Today, home values have also outpaced wage gains. As in 2006, a lack of affordability will kill the market.

Counterpoint

The “gap” between wages and home price growth has existed since 2012. If that is a sign of a recession, why didn’t we have one sometime in the last seven years? Also, a buyer’s purchasing power is MUCH GREATER today than it was thirteen years ago. The equation to determine affordability has three elements:  home prices, wages, AND MORTGAGE INTEREST RATES. Today, the mortgage rate is about 3.5% versus 6.41% in 2006.

SUPPOSITION #2

In 2018, as in 2005, housing-price growth began slowing, with significant price drops occurring in some major markets. Look at Manhattan where home prices are in a “near free-fall.”

Counterpoint

The only major market showing true depreciation is Seattle, and it looks like home values in that city are about to reverse and start appreciating again. CoreLogic is projecting home price appreciation to reaccelerate across the country over the next twelve months.

Regarding Manhattan, home prices are dropping because the city’s new “mansion tax” is sapping demand. Additionally, the new federal tax code that went into effect last year continues to impact the market, capping deductions for state and local taxes, known as SALT, at $10,000. That had the effect of making it more expensive to own homes in states like New York.

SUPPOSITION #3

Prices will crash because that is what happened during the last recession.

Counterpoint

It is true that home values sank by almost 20% during the 2008 recession. However, it is also true that in the four previous recessions, home values depreciated only once (by less than 2%). In the other three, residential real estate values increased by 3.5%, 6.1%, and 6.6%.

Price is determined by supply and demand. In 2008, there was an overabundance of housing inventory (a 9-month supply). Today, housing inventory is less than half of that (a 4-month supply).

Bottom Line

We need to realize that today’s real estate market is nothing like the 2008 market. Therefore, when a recession occurs, it won’t resemble the last one.

Some Highlights:

• Many buyers are purchasing homes with down payments as little as 3%.
• You may already qualify for a loan, even if you don’t have perfect credit.
• Your local professionals are here to help you determine how much you can afford, so take advantage of the opportunity to learn more.

In a normal housing market, whether you’re buying or selling a home, you need an experienced guide to help you navigate the process. You need someone you can turn to who will tell you how to price your home correctly right from the start. You need someone who can help you determine what to offer on your dream home without paying too much or offending the seller with a low-ball offer.

We are, however, in anything but a “normal market” right now. The media is full of stories about an impending recession, a trade war with China, and constant political upheaval. Each of these potential situations could dramatically impact the real estate market. To successfully navigate the landscape today, you need more than an experienced guide. You need a ‘Real Estate Sherpa.’

A Sherpa is a “member of a Himalayan people living on the borders of Nepal and Tibet, renowned for their skill in mountaineering.” Sherpas are skilled in leading their parties through the extreme altitudes of the peaks and passes in the region – some of the most treacherous trails in the world. They take pride in their hardiness, expertise, and experience at very high altitudes.

They are much more than just guides.

This is much more than a normal real estate market.

The average guide just won’t do. You need a ‘Sherpa.’ You need an expert who understands what is happening in the market and why it is happening. You need someone who can simply and effectively explain it to you and your family. You need an expert who will guarantee you make the right decision, even in these challenging times.

Dave Ramsey, the financial guru, advises:

“When getting help with money, whether it’s insurance, real estate or investments, you should always look for someone with the heart of a teacher, not the heart of a salesman.” 

Bottom Line

Hiring an agent who has a finger on the pulse of the market will make your buying or selling experience an educated one.

While a recent announcement from CNBC shares that the average national FICO® score has reached an all-time high of 706, the good news for potential buyers is that you don’t need a score that high to qualify for a mortgage. Let’s unpack the credit score myth so you can to become a homeowner sooner than you may think.

With today’s low interest rates, many believe now is a great time to buy – and rightfully so! Fannie Mae recently noted that 58% of Americans surveyed say it is a good time to buy. Similarly, the Q3 2019 HOME Survey by the National Association of Realtors said 63% of people believe now is a good time to buy a home. Unfortunately, fear and misinformation often hold qualified and motivated buyers back from taking the leap into homeownership.

According to the same CNBC article,

“For the first time, the average national credit score has reached 706, according to FICO®, the developer of one of the most commonly used scores by lenders.”

This is great news, as it means Americans are improving their credit scores and building toward a stronger financial future, especially after the market tumbled during the previous decade. With today’s strong economy and increasing wages, many Americans have had the opportunity to improve their credit over the past few years, driving this national average up.

Since Americans with stronger credit are now entering the housing market, we are seeing an increase in the FICO® Score Distribution of Closed Loans (see graph below):

But hang on – don’t forget that this does not mean you need a FICO® score over 700 to qualify for a mortgage. Here’s what Experian, the global leader in consumer and business credit reporting, says:

FHA Loan: “FHA loans are ideal for those who have less-than-perfect credit and may not be able to qualify for a conventional mortgage loan. The size of your required down payment for an FHA loan depends on the state of your credit score: If your credit score is between 500 and 579, you must put 10% down. If your credit score is 580 or above, you can put as little as 3.5% down (but you can put down more if you want to).”

Conventional Loan: “It’s possible to get approved for a conforming conventional loan with a credit score as low as 620, although some lenders may look for a score of 660 or better.”

USDA Loan: “While the USDA doesn’t have a set credit score requirement, most lenders offering USDA-guaranteed mortgages require a score of at least 640.”

VA Loan: “As with income levels, lenders set their own minimum credit requirements for VA loan borrowers. Lenders are likely to check credit scores as part of their screening process, and most will set a minimum score, or cutoff, that loan applicants must exceed to be considered.”

Bottom Line

As you can see, plenty of loans are granted to buyers with a FICO® score that is lower than the national average. If you’d like to understand the next steps to take when determining your credit score, let’s get together so you can learn more.

As a homeowner, it’s important to keep your home running efficiently, not only to save money, but also to help the environment thrive. October 2^nd is Energy Efficiency Day, a perfect time to think about making some key upgrades that will improve the efficiency of your home. If you’re looking to sell your house and increase the pool of potential buyers in your market, the upgrades below are truly a must.

According with Wallet Hub,

“In the U.S., energy costs eat between 5 and 22 percent of families’ total after-tax income.”

What should you spend on utilities?

Money Management says,

“If you’re working with a budget, and trust me, you should be, your utility costs should be no more than 8-10 percent of your monthly income.”

How can you make your home more efficient?

EnergyEfficiencyDay.Org provides some handy tips that can help you improve the energy efficiency of your home. Here are a few simple ones to consider, and how to make them happen:

1. Make the Switch to LED

LEDs are a great example of how innovation and technology can make your life easier. They last at least 25 times longer and consume up to 90 percent less electricity than incandescent bulbs.

Tip: By switching five of your home’s most frequently used bulbs with ENERGY STAR® certified LEDs, it’s possible to save $75 on energy costs annually.

2. Seal Those Leaks

On average, heating and cooling account for almost half of a home’s energy consumption. In fact, all the little leaks can be equivalent to leaving open a 3-foot-by-3-foot window.

Tip: Take simple steps like caulking windows, sealing leaks around chimneys and recessed lighting, and sliding draft guards under your doors to save up to 20% on heating costs.

3. Heat and Cool Efficiently

Don’t waste money heating or cooling an empty home. Install a programmable thermostat and in colder weather schedule your home’s heat to lower when you are away or asleep and increase when you are returning home or waking-up. In warm weather, schedule the thermostat to raise the temperature when you are away or asleep, and lower it at other times.

Tip: Follow the U.S. Department of Energy recommended temperatures and be energy-efficient all year. 

4. Maintain Your HVAC System

Make sure to clean or change your furnace filters regularly. A dirty furnace filter will slow down air flow, making the system work harder to keep you warm (or cool) and costing you more money.

Tip: Consider getting a winter tune-up. Just as a tune-up for your car can improve your gas mileage, a semi-annual or yearly tune-up of your heating and cooling system can be vital to improve efficiency, saving you money and making your home more comfortable. 

Bottom Line

By making a few key upgrades to your home, you’ll save on your utility bills and improve the energy efficiency of your home. When you’re ready to sell your house, these key features will make it even more attractive to potential buyers. Let’s get together to discuss what buyers are looking for when it comes to energy efficiency options in our area.

Every year, ‘Black Friday’ is a highly anticipated event for eager shoppers. Some people prepare for weeks, crafting and refining a strategic shopping agenda, determining exactly when to arrive at each store, and capturing a wish list of discounted must-have items to purchase. But what about buying a home? Is there a ‘Black Friday’ for the home-buying process? Believe it or not, there is.

According to a new study from realtor.com, the week of September 22 is the best time of year to buy a home, making it ‘Black Friday’ for home buyers.

After evaluating housing data in 53 metros from 2016 to 2018, realtor.com determined that the first week of fall is when buyers “tend to find less competition, more inventory, and the biggest reductions on list price.”

The report explains,

“During the first week of fall, buyers tend to face 26% less competition from other buyers, and they are likely to see 6.1% more homes available on the market compared to other weeks of the year…nearly 6% of homes on the market will also see price reductions, averaging 2.4% less than their peak.”

What’s so different about the first week of fall?

George Ratiu, Senior Economist with realtor.com says,

“As summer winds down and kids return to school, many families hit pause on their home search and wait until the next season to start again…as seasonal inventory builds up and restores itself to more buyer-friendly levels, fall buyers will be in a better position to take advantage of today’s low mortgage rates and increased purchasing power.”

Learn more about how prices, listings, and buyer competition stack up during the first week of fall in your metro area.

Bottom Line

If you want to take advantage of the ‘Black Friday’ of home buying, let’s get together to discuss the benefits of making your next move this fall.

With the fall season upon us, change is in the air. For many families, children are growing up and moving out of the house, maybe leaving for college or taking a jump into the working world. Parents are finding themselves as empty nesters for the first time. The question inevitably arises: is it finally time to downsize?

If you’re pondering that thought, you may also be wondering if you should fix-up your house before you sell it, or go straight to the market as-is, allowing a potential buyer to do the updates and remodeling. If you’re one of the many homeowners this camp, here are a few tips to help you decide which way to go.

1. Analyze Your Market

A real estate professional can help you to understand your market and the potential level of buyer interest and demand for your home. Are you in a seller’s market or a buyer’s market? This can change based on the price range of your home, too. A professional can also give you some insight on what you can change or remodel, and how to declutter your house to make it attractive to buyers in your area.

2. Get an Inspector

Right now, the average length of time a family stays in a home is between 9-10 years. That’s a little longer than the historical average, so if you’ve been living in your home for a while, it might be time to make some significant improvements. Think: electrical system, HVAC units, roof, siding, etc. An inspector can give you a better idea of the condition of your home, if it is up to current code standards, and recommendations on how to have your house ready before you put it on the market.

3. Decide If You Need to Remodel

You may also be thinking about driving buyer appeal with something like a kitchen or a bathroom remodel. If so, first dig into the market value of your home, and compare it to the actual cost of the remodel. A local real estate professional can help you determine your home’s market value, and you’ll want to get a few quotes from contractors on the potential remodel pricing as well. Once you have those two factors narrowed down, you can to decide if a remodel will give you a return on your investment when you sell. Oftentimes, it is actually more advantageous to price your house to sell, list it competitively, and then let the buyer pick the colors they want for their bathroom tiles and the type of countertop they prefer. The 2019 Cost vs. Value Report in Remodeling Magazine compares the average cost for remodeling projects with the value those projects typically retain at resale.

Bottom Line

Nationwide, inventory is low, meaning there is less than the 6-month housing supply needed for a normal market. This drives buyer demand, creating a perfect time to sell. If you’re considering selling your house, let’s get together to help you confidently determine what will be the best choice for you and your family.

In today’s real estate market, more houses are coming to market every day. Eager buyers are searching for their dream homes, so setting the right price for your house is one of the most important things you can do.

According to CoreLogic’s latest Home Price Index, home values have risen at over 6% a year over the past two years, but have started to slow to 3.6% over the last 12 months. By this time next year, CoreLogic predicts home values will be 5.4% higher.

With prices slowing from their previous pace, homeowners must realize that pricing their homes a little over market value to leave room for negotiation will actually dramatically decrease the number of buyers who will see their listing (see the chart below).

Instead of the seller trying to ‘win’ the negotiation with one buyer, they should price their house so demand for the home is maximized. By doing so, the seller will not be negotiating with a buyer over the price, but will instead have multiple buyers competing with each other over the house.

The secret is making sure your house is Priced To Sell Immediately (PTSI). That way, your home will be seen by the most potential buyers. It will sell at a great price before more competition comes to the market.

Bottom Line

If you’re debating listing your house for sale, let’s get together to discuss how to price your home appropriately and maximize your exposure.

Some Highlights:

• Buyers are active in the market and often competing with one another for available listings.
• Housing inventory is still under the 6-month supply found in a normal housing market.
• Homes are still selling relatively quickly, averaging 31 days on the market.

Congratulations! You’ve found a home to buy and have applied for a mortgage! You’re undoubtedly excited about the opportunity to decorate your new home, but before you make any large purchases, move your money around, or make any big-time life changes, consult your loan officer – someone who will be able to tell you how your decisions will impact your home loan.

Below is a list of Things You Shouldn’t Do After Applying for a Mortgage. Some may seem obvious, but some may not.

1. Don’t Change Jobs or the Way You Are Paid at Your Job. Your loan officer must be able to track the source and amount of your annual income. If possible, you’ll want to avoid changing from salary to commission or becoming self-employed during this time as well.

2. Don’t Deposit Cash into Your Bank Accounts. Lenders need to source your money, and cash is not really traceable. Before you deposit any amount of cash into your accounts, discuss the proper way to document your transactions with your loan officer.

3. Don’t Make Any Large Purchases Like a New Car or Furniture for Your New Home. New debt comes with it, including new monthly obligations. New obligations create new qualifications. People with new debt have higher debt to income ratios…higher ratios make for riskier loans…and sometimes qualified borrowers no longer qualify.

4. Don’t Co-Sign Other Loans for Anyone. When you co-sign, you are obligated. As we mentioned, with that obligation comes higher ratios as well. Even if you swear you will not be the one making the payments, your lender will have to count the payments against you.

5. Don’t Change Bank Accounts. Remember, lenders need to source and track assets. That task is significantly easier when there is consistency among your accounts. Before you even transfer any money, talk to your loan officer.

6. Don’t Apply for New Credit. It doesn’t matter whether it’s a new credit card or a new car. When you have your credit report run by organizations in multiple financial channels (mortgage, credit card, auto, etc.), your FICO® score will be affected. Lower credit scores can determine your interest rate and maybe even your eligibility for approval.

7. Don’t Close Any Credit Accounts. Many clients erroneously believe that having less available credit makes them less risky and more likely to be approved. Wrong. A major component of your score is your length and depth of credit history (as opposed to just your payment history) and your total usage of credit as a percentage of available credit. Closing accounts has a negative impact on both of those determinants in your score.

Bottom Line

Any blip in income, assets, or credit should be reviewed and executed in a way that ensures your home loan can still be approved. The best advice is to fully disclose and discuss your plans with your loan officer before you do anything financial in nature. They are there to guide you through the process.

Some Highlights:

• Keeping an eye on the current status of the housing market is one of the best ways to make powerful and confident decisions when buying or selling a home.
• Mortgage rates remaining near historic lows and houses selling in an average of only 29 days are just two key elements driving the strength of today’s market.
• With the national data shown here, make sure to also determine what’s happening in your local market so you are fully informed when you’re ready to make your next move.

In a recent article by Realtor Magazine, Mark Fleming, Chief Economist of First American Financial Corporation, notes,

“The largest group of millennials by birth year will turn 30 in 2020, which puts them entering their prime homebuying years”.

The article continues to describe how millennials have more buying-power than the generations that preceded them, making their interest in embracing homeownership stronger than ever,

“Millennials—the most educated generation—have the highest incomes across their generational cohorts, even when salaries are adjusted for inflation.”

This combination of power and desire has the potential to drive positive growth in the homeownership rate heading into the near future. According to Fleming,

‘“The gap between the potential and actual homeownership in 2018 narrowed slightly as the growth in homeownership modestly exceeded the increase in potential demand,” he says, citing First American’s Homeownership Progress Index.

“We expect the homeownership rate to further close the gap with potential in the years ahead as millennials continue to make important decisions, such as attaining an education and, later in life, getting married and having children.”’

That said, the shortage of sellable inventory in the entry and mid-range levels that’s attractive to potential millennial buyers may be a contributing factor as to why many millennials haven’t yet purchased a home. According to another recent report citing Frank Martell, President and CEO of CoreLogic,

“Lower rates are certainly making it more affordable to buy homes and millennial buyers are entering the market with increasing force. These positive demand drivers, which are occurring against a backdrop of persistent shortages in housing stock, are the major drivers for higher home prices, which will likely continue to rise for the foreseeable future.”

With millennials aging-up into mortgage-ready and home-buying territory, along with their strong buying interest and buying power, this generation is poised and ready to have positive impact on homeownership rates across the country. Many of them just need to find a home they’re excited to buy in this competitive end of the market.

Bottom Line

If you’re thinking of selling, let’s connect and determine if now is a great time for you to list your house and move-up. More millennials are getting ready to jump into the market and join the ranks of homeownership, so demand for homes in the starter and mid-level range will continue to be strong.

So, you’ve decided to sell your house. You’ve hired a real estate professional to help you with the entire process and you’ve been asked what level of access you want to provide to potential buyers.

There are four elements to a quality listing. At the top of the list is Access, followed by Condition, Financing, and Price. There are many levels of access you can provide to your agent to be able to show your home.

Here are five levels of access you can provide to a buyer, each with a brief description:

• Lockbox on the Door – This allows buyers the ability to see the home as soon as they are aware of the listing, or at their convenience.
• Providing a Key to the Home – Although the buyer’s agent may need to stop by an office to pick up the key, there is little delay in being able to show the home.
• Open Access with a Phone Call – The seller allows showing with just a phone call’s notice.
• By Appointment Only – Example: 48-hour notice. Many buyers who are relocating for a new career or promotion start working in that area prior to purchasing their home. They often like to take advantage of free time during business hours (such as their lunch break) to view potential homes. Because of this, they may not be able to plan their availability far in advance or may be unable to wait 48 hours to see the house.
• Limited Access – Example: the home is only available for a couple of hours a day. This is the most difficult way to be able to show your house to potential buyers.

In a competitive marketplace, access can make or break your ability to get the price you are looking for, or even sell your house at all.

When buying a home, taxes are one of the expenses that can make a significant difference in your monthly payment. Do you know how much you might pay for property taxes in your state or local area?

When applying for a mortgage, you’ll see one of two acronyms in your paperwork – P&I or PITI – depending on how you’re including your taxes in your mortgage payment.

P&I stands for Principal and Interest, and both are parts of your monthly mortgage payment that go toward paying off the loan you borrow. PITI stands for Principal, Interest, Taxes, and Insurance, and they’re all important factors to calculate when you want to determine exactly what the cost of your new home will be.

TaxRates.org defines property taxes as,

“A municipal tax levied by counties, cities, or special tax districts on most types of real estate – including homes, businesses, and parcels of land. The amount of property tax owed depends on the appraised fair market value of the property, as determined by the property tax assessor.”

This organization also provides a map showing annual property taxes by state (including the District of Columbia), from lowest to highest, as a percentage of median home value.

The top 5 states with the highest median property taxes are New Jersey, New Hampshire, Texas, Nebraska, and Wisconsin. The states with the lowest median property taxes are Louisiana, Hawaii, Alabama, and Delaware, followed by the District of Columbia.

Bottom Line

Depending on where you live, property taxes can have a big impact on your monthly payment. To make sure your estimated taxes will fall within your desired budget, let’s get together today to determine how the neighborhood or area you choose can make a difference in your overall costs when buying a home.

Click the images below to download your free copy!

Below are 5 compelling reasons listing your home for sale this fall makes sense.

1. Demand Is Strong

The latest Buyer Traffic Report from the National Association of Realtors (NAR) shows that buyer demand remains strong throughout the vast majority of the country. These buyers are ready, willing, and able to purchase…and are in the market right now. More often than not, in many areas of the country, multiple buyers are competing with each other to buy the same home.

Take advantage of the buyer activity currently in the market.

2. There Is Less Competition Now

Housing inventory is still under the 6-month supply that is needed for a normal market. This means that in the majority of the country, there are not enough homes for sale to satisfy the number of buyers.

Historically, a homeowner would stay an average of six years in his or her home. Since 2011, that number has hovered between nine and ten years. There is a pent-up desire for many homeowners to move as they were unable to sell over the last few years due to a negative equity situation. As home values continue to appreciate, more and more homeowners will be given the freedom to move.

Many homeowners were reluctant to list their homes over the last couple years, for fear that they would not find a home to move to. That is all changing now as more homes come to market at the higher end. The choices buyers have will continue to increase. Don’t wait until additional inventory comes to market before you decide to sell.

3. The Process Will Be Quicker

Today’s competitive environment has forced buyers to do all they can to stand out from the crowd, including getting pre-approved for their mortgage financing. This makes the entire selling process much faster and simpler, as buyers know exactly what they can afford before shopping for a home. According to Ellie Mae’s latest Origination Insights Report, the time needed to close a loan is 43 days.

4. There Will Never Be a Better Time to Move Up

If your next move will be into a premium or luxury home, now is the time to move up. There is currently ample inventory for sale at higher price ranges. This means if you’re planning on selling a starter or trade-up home and moving into your dream home, you’ll be able to do that in the luxury or premium market.

According to CoreLogic, prices are projected to appreciate by 5.2% over the next year. If you’re moving to a higher-priced home, it will wind up costing you more in raw dollars (both in down payment and mortgage) if you wait.

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 having the freedom to go on with your life the way you think you should?

Only you know the answers to these questions. 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.

Some Highlights:

• There is plenty of talk in the media about a pending economic slowdown.
• The good news is, home values actually increased in 3 of the last 5 U.S. recessions, and decreased by less than 2% in the 4^th.
• Many experts predict a potential recession is on the horizon. However, housing will not be the trigger, and home values will still continue to appreciate. It will not be a repeat of the crash in the 2008 housing market.

According to the Pew Research Center, around 37% of U.S students will be going back to school soon and the rest have already started the new academic year. With school-aged children in your home, buying or selling a house can take on a whole different approach when it comes to finding the right size, location, school district, and more.

Recently, the 2019 Moving with Kids Report from the National Association of Realtors®(NAR) studied “the different purchasing habits as well as seller preferences during the home buying and selling process.” This is what they found:

When Purchasing a Home

The major difference between the home buyers who have children and those who do not is the importance of the neighborhood. In fact, 53% said the quality of the school district is an important factor when purchasing a home, and 50% select neighborhoods by the convenience to the schools.

Buyers with children also purchase larger, detached single-family homes with 4 bedrooms and 2 full bathrooms at approximately 2,110 square feet.

Furthermore, 26% noted how childcare expenses delayed the home-buying process and forced additional compromises: 31% in the size of the home, 24% in the price, and 18% in the distance from work.

When Selling a Home

Of those polled, 23% of buyers with children sold their home “very urgently,” and 46% indicated “somewhat urgently, within a reasonable time frame.” Selling with urgency can pressure sellers to accept offers that are not in their favor. Lawrence Yun, Chief Economist at NAR explains,

“When buying or selling a home, exercising patience is beneficial, but in some cases – such as facing an upcoming school year or the outgrowing of a home – sellers find themselves rushed and forced to accept a less than ideal offer.”

For sellers with children, 21% want a real estate professional to help them sell the home within a specific time frame, 20% at a competitive price, and 19% to market their home to potential buyers.

Bottom Line

Buying or selling a home can be driven by different priorities when you are also raising a family. If you’re a seller with children and looking to relocate, let’s get together to navigate the process in the most reasonable time frame for you and your family.

Mortgage rates have fallen by over a full percentage point since Q4 of 2018, settling at near-historic lows. This is big news for buyers looking to get more for their money in the current housing market.

According to Freddie Mac’s Primary Mortgage Market Survey,

“the 30-year fixed-rate mortgage (FRM) rate averaged 3.60 percent, the lowest it has been since November 2016.”

Sam Khater, Chief Economist at Freddie Mac, notes how this is great news for homebuyers. He states,

“…consumer sentiment remains buoyed by a strong labor market and low rates that will continue to drive home sales into the fall.”

As a potential buyer, the best thing you can do is work with a trusted advisor who can help you keep a close eye on how the market is changing. Relying on current expert advice is more important than ever when it comes to making a confident and informed decision for you and your family.

Bottom Line

Even a small increase (or decrease) in interest rates can impact your monthly housing cost. If buying a home is on your short list of goals to achieve, let’s get together to determine your best move.

Some Highlights:

• The pumpkin spice latte is launching soon, so you may be tempted to spend your extra cash on a daily caffeine fix, but that small expense can add up to a big number – fast!
• Saving for a down payment takes a little discipline, so limiting your extra purchases (like a latte a day from your favorite coffee shop) will help you get there faster.
• Depending on where you live, putting away just a small amount each day will get you to the average down payment you may need for homeownership faster than you think.

When someone is thinking about buying or selling a home, they want to be well-informed. They want to make the right decision for themselves and their family. They scour the internet for any information they can find about the housing market.

Today, there is an abundance of information available. It is often conflicting news. It can easily lead to confusion and concern, perhaps even causing a potential buyer or seller to cancel their plans to move altogether. Instead, the best things to do are sit down and take a deep breath.

In a recent article, Jeff Davidson, a recognized speaker on the subject of productivity, explained:

“The pace at which new information arrives will accelerate every day…Too often, the reflex to take action only exacerbates your time-pressure problems. Do not bite off more than you can chew, and acknowledge that often, the wisest response to too much competition for your time and attention is to simply slow down to assess the best way to proceed.”

To that point, here is an easy five-step process to follow if all of this information seems overwhelming:

1. Calm Down – Don’t let the confusion lead to concern or panic.
2. Slow Down – As Davidson suggests, just “slow down to assess.”
3. Think – Remember the reasons you wanted to move in the first place. Are they still important?
4. Plan – Determine whether or not the new information should change anything. If you need further clarification on some points, reach out to a real estate professional in your area for a better understanding.
5. Act – After thorough consideration, feel good about your decision, whether you decide to move or not.

Bottom Line

Don’t let the plethora of seemingly conflicting information on the housing market stop you from moving forward with your life. Let’s get together to ensure you get the valuable counsel you need so you can make the right decision for you and your family.

It seems you can’t find a headline with the term “housing affordability” without the word “crisis” attached to it. That’s because some only consider the fact that residential real estate prices have continued to appreciate. However, we must realize it’s not just the price of a home that matters, but the price relative to a purchaser’s buying power.

Homes, in most cases, are purchased with a mortgage. The current mortgage rate is a major component of the affordability equation. Mortgage rates have fallen by over a full percentage point since December 2018. Another major piece of the affordability equation is a buyer’s income. The median family income has risen by 3.5% over the last year.

Let’s look at three different reports issued recently that reveal how homes are very affordable in comparison to historic numbers, and how they have become even more affordable over the past several months.

1. National Association of Realtors’ (NAR) Housing Affordability Index:

Here is a graph showing the index going all the way back to 1990. The higher the column, the more affordable homes are:

We can see that homes are less affordable today (the green bar) than they were during the housing crash (the red bars). This was when distressed properties like foreclosures and short sales saturated the market and sold for massive discounts. However, homes are more affordable today than at any time from 1990 to 2008.

NAR’s report on the index also shows that the percentage of a family’s income needed for a mortgage payment (16.5%) is dramatically lower than last year and is well below the historic norm of 21.2%.

2. Black Knight’s Mortgage Monitor:

This report reveals that as a result of falling interest rates and slowing home price appreciation, affordability is the best it has been in 18 months. Black Knight Data & Analytics President Ben Graboske explains:

“For much of the past year and a half, affordability pressures have put a damper on home price appreciation. Indeed, the rate of annual home price growth has declined for 15 consecutive months. More recently, declining 30-year fixed interest rates have helped to ease some of those pressures, improving the affordability outlook considerably…And despite the average home price rising by more than $12K since November, today’s lower fixed interest rates have worked out to a $108 lower monthly payment…Lower rates have also increased the buying power for prospective homebuyers looking to purchase the average-priced home by the equivalent of 15%.”

3. First American’s Real House Price Index:

While affordability has increased recently, Mark Fleming, First American’s Chief Economist explains:

“If the 30-year, fixed-rate mortgage declines just a fraction more, consumer house-buying power would reach its highest level in almost 20 years.”

Fleming goes on to say that the gains in affordability are about mortgage rates and the increase in family incomes:

“Average nominal household incomes are nearly 57 percent higher today than in January 2000. Record income levels combined with mortgage rates near historic lows mean consumer house-buying power is more than 150 percent greater today than it was in January 2000.”

Bottom Line

If you’ve put off the purchase of a first home or a move-up home because of affordability concerns, you should take another look at your ability to purchase in today’s market. You may be pleasantly surprised!

Over the last couple of years, we’ve heard quite a bit about rising home prices. Today, expert projections still forecast continued growth, just at a slower pace. One of the often-overlooked benefits of rising home prices is the positive impact they have on home equity. Let’s break down three ways this is a win for homeowners.

1. Move-Up Opportunity

With the rise in prices, homeowners naturally experience an increase in home equity. According to the Homeowner Equity Insights from CoreLogic,

“In the first quarter of 2019, the average homeowner gained approximately $6,400 in equity during the past year.”

This increase in profit means if homeowners decide to sell, they’ll be able to put their equity to work for them as they make plans to move up into their next home.

2. Gain in Seller’s Profit

ATTOM Data Solutions recently released their Q2 2019 Home Sales Report, indicating the seller’s profit jumped at one of the fastest rates since 2015. They said:

“A look at the national numbers showed that U.S. homeowners who sold in the second quarter of 2019 realized an average home price gain since the original purchase of $67,500…the average home seller gain of $67,500 in Q2 2019 represented an average 33.9 percent return as a percentage of the original purchase price.”

Looking at the amount paid when they bought their homes, and then the amount they received after selling, we can see that some homeowners were able to walk away with a significant gain.

3. Out of a Negative Equity Situation

Negative equity occurs when there is a decline in home value, an increase in mortgage debt, or both. Many families experienced these challenges over the last decade. According to the same report from CoreLogic,

“U.S. homeowners with mortgages (roughly 63% of all properties) have seen their equity increase by a total of nearly $485.7 billion since the first quarter 2018, an increase of 5.6%, year over year.

In the first quarter of 2019, the total number of mortgaged residential properties with negative equity decreased…to 2.2 million homes, or 4.1% of all mortgaged properties.”

The good news is, many families have moved beyond a negative equity situation, and no longer owe more on their mortgage than the value of their home.

Bottom Line

If you’re a current homeowner, you may have more equity than you realize. Your equity can open the door to future opportunities, such as moving up to your dream home. Let’s get together to discuss your options and start to put your equity to work for you.

Have you ever been flipping through the channels, only to find yourself glued to the couch in an HGTV binge session? We’ve all been there, watching entire seasons of shows like “Property Brothers,” “Fixer Upper,” and “Love It or List It,” all in one sitting.

When you’re in the middle of your real estate-themed TV show marathon, you might start to think everything you see on the screen must be how it works in real life. However, you may need a reality check.

Reality TV Show Myths vs. Real Life:

Myth #1: Buyers look at 3 homes and decide to purchase one of them.
Truth: There may be buyers who fall in love and buy the first home they see, but according to the National Association of Realtors, the average homebuyer tours 10 homes as a part of their search.  

Myth #2: The houses the buyers are touring are still for sale.
Truth: Everything is staged for TV. Many of the homes 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 they are only one piece of the overall marketing of your home. Keep in mind, many homes are sold during regular showing appointments as well. 

Myth #5: Homeowners decide to sell their homes 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 homes and move on with their lives and goals.

Bottom Line

Having an experienced professional on your side while navigating the real estate market is the best way to guarantee you can make the home of your dreams a true reality.

Fannie Mae just released the July edition of their Home Purchase Sentiment Index (HPSI). The HPSI takes information regarding consumers’ confidence in the real estate market from Fannie Mae’s National Housing Survey and condenses it into a single number. Therefore, the HPSI reflects consumers’ current views and forward-looking expectations of housing market conditions.

Great News! The index reached its highest level since Fannie Mae began their survey. Breaking it down, the report revealed:

• The share of Americans who say it is a good time to buy a home increased from the same time last year.
• The share of those who say it is a good time to sell a home increased from the same time last year.
• The share of Americans who say they are not concerned about losing their job over the next 12 months increased dramatically (16 percentage points) from the same time last year.
• The share of Americans who say mortgage rates will go down over the next 12 months increased dramatically (24 percentage points) from the same time last year.

The day after the index was released, Freddie Mac also announced the 30-year fixed-rate mortgage rate fell to its lowest level in three years.

Doug Duncan, Senior Vice President and Chief Economist at Fannie Mae explained the uptick in the index:

“Consumer job confidence and favorable mortgage rate expectations lifted the HPSI to a new survey high in July, despite ongoing housing supply and affordability challenges. Consumers appear to have shaken off a winter slump in sentiment amid strong income gains. Therefore, sentiment is positioned to take advantage of any supply that comes to market, particularly in the affordable category.”

Bottom Line

Consumers are feeling good about the real estate market. Since Americans are not worried about their jobs, see mortgage rates near an all-time low, and believe it is a good time to buy, the housing market will remain strong for the rest of the year.

Some Highlights:

• Owning your own home vs. renting may lead to some great options, such as locking in your monthly payments and having the freedom to customize your living space.
• Whether you rent or own, you have to cover someone’s mortgage costs. You may as well be doing so to build your own wealth, rather than that of your landlord.
• Renting and owning both have up-front fees when you sign your lease or close, respectively. Think about putting that money to work for you!

Whether you’ve owned a home before, or you’re ready to jump into homeownership for the first time, there are always a lot of questions swirling around about what is truly required for a down payment, and how to best source down payment assistance. Let’s tackle these two today.

1. How much do you really need for a down payment?

There is a long-standing misconception about down payment requirements. A survey from Fannie Mae shows only 17% of consumers know the minimum options are actually between 1 – 5% of the purchase price and 40% don’t know how much they need at all.

There are many mortgage loans available that require as little as 3% down for first-time buyers, and some ask for only 3.5% down from repeat buyers. There are even loans available for Veterans that provide 0% down payment options too.

We’ve mentioned recently that you don’t need to come up with a 20% down payment to buy, and we’ve also shared how quickly you can save for a 3% or 10% down payment, depending on where you live. If you’re planning to put down just 3%, the research shows it may be possible in most states to have enough saved for a down payment in less than a year. That puts homeownership in a much closer reach for many potential buyers, maybe even you!

2. How can I get help with my down payment?

Regardless of the loans available, many buyers still need assistance with a down payment. The great news is, there are a lot of ways to tap into down payment assistance options. Here are just a couple of them:

Assistance from Family Members

The National Association of Realtors (NAR) said, “a third of recent first-time buyers received down payment assistance from family members.” They also mentioned, “the average net worth of those aged 75 and over stands at $264,800…They just might offer the boost the next generation needs to become homeowners.”

That means one of the ways to find help with a down payment is to accept a gift from a family member. If this is an option for you, make sure you talk to your loan officer before you accept the money, to ensure you document the process the way it is required by your loan. This way, it will be received properly and you can still potentially qualify.

Down Payment Assistance Programs

The reality is, not everyone has a loved one or a family member who can provide help with a down payment. There are, however, more than 2,500 down payment assistance programs available (by local areas like city, county, or neighborhood), and some of them are even specifically for first-time buyers.

The gap, as mentioned in the same survey, is “only 23% of consumers are familiar with low down payment programs.”

That’s why it is so important to get familiar with these options by doing your homework before you plan to buy a home. Determine what is available in the area where you ultimately want to live, so you have all the details you need to take advantage of the down payment assistance option that is best for your family.

Bottom Line

If buying a home is one of your long-term goals, you may be able to get there sooner than you think by tapping into one of the many down payment assistance programs available.

There’s no doubt that today’s housing market is changing, and everything we see right now indicates it is time to sell. Here’s a look at why selling now is likely to drive the greatest return on your largest investment.

Home values have been appreciating for several years now, growing at a strong, steady, and impressive pace. In fact, the average annual appreciation rate since 2012 has nearly doubled the average rate from the more normal market of the 1990s (think: pre-bubble).Appreciation, however, is projected to shift back toward normal, meaning home prices will likely keep climbing over the next few years, but they are not projected to continue to increase at such a high rate.

Here’s What That Means for Homeowners:

As noted in the latest Home Price Expectation Survey (HPES) powered by Pulsenomics, experts forecast an average annual appreciation rate closer to 3.2% over the next five years, which is more in line with a historically normal market (3.6%). The good news is, there’s still time to take advantage of the current strength of home prices by selling your house now.Looking at the projections as they stand today, 2019 is slated to drive the strongest appreciation as compared to the upcoming few years. With average home prices still on the rise, the pace at which they are predicted to continue increasing will likely soften by 2020.

Bottom Line

If you’re thinking about selling your house, now is a great time to make your move. Don’t get stuck waiting until projected home price appreciation rates potentially re-accelerate again in 2023. You’ll likely earn the greatest return on your investment by selling now before the prices start to normalize next year.

On his personal website, self-made millionaire David Bach makes a striking statement:

 “Not prioritizing homeownership is the single biggest mistake millennials are making.” 

He further stated, “Buying a home is an escalator to wealth.”

Bach explains:

“Young adults in particular aren’t hopping on this escalator, and it’s a costly mistake…If millennials don’t buy a home, their chances of actually having any wealth in this country are little to none.”

He then elaborates on the game of homeownership:

“Start by crunching the numbers…actually do the math…This way, you’re really clear on your goals and you won’t just say to yourself, ‘I’ll never afford this!’

A good rule of thumb is to make sure your total monthly housing payment doesn’t consume more than 30 percent of your take-home pay.”

Bach concludes by saying,

“Oftentimes, buying your first home means you’re not buying your dream home…You’re just getting into the market.”

Bottom Line

Whenever a well-respected millionaire gives investment advice, listeners usually clamor to hear it. This millionaire shares some simple and straightforward insights: “The fact is, you aren’t really in the game of building wealth until you own some real estate.”

Who is David Bach?

Bach is a self-made millionaire who has written nine consecutive New York Times bestsellers. His book, “The Automatic Millionaire,” spent 31 weeks on the New York Times bestseller list. He is one of the only business authors in history to have four books simultaneously on the New York Times, Wall Street Journal, BusinessWeek, and USA Today bestseller lists.

He has been a contributor to NBC’s Today Show, appearing more than 100 times, as well as a regular on ABC, CBS, Fox, CNBC, CNN, Yahoo, The View, and PBS. He has also been profiled in many major publications, including the New York Times, BusinessWeek, USA Today, People, Reader’s Digest, Time, Financial Times, Washington Post, Wall Street Journal, Working Woman, Glamour, Family Circle, Redbook, Huffington Post, Business Insider, Investors’ Business Daily, and Forbes.

As a homeowner, it’s always tempting to dream about the next big project you’re going to tackle. The possibilities are endless. Should I renovate? Should I refinance? Should I stay? Should I move? The list goes on and on.

In today’s housing market, it’s actually a great time to shift your thoughts toward selling your house and moving up into the home of your dreams. Here’s why:

Inventory is on the rise, but there’s still an overall shortage of houses for sale (less than a 6-month supply found in a more normal market), so homes are going under contract quickly. In fact, the National Association of Realtors (NAR) Realtors® Confidence Index Survey reports that right now homes are only staying on the market for an average of 27 days. That’s less than one month, an even more accelerated pace from the 36-day trend we saw last spring.The same report also indicates there are more interested buyers than active sellers today, which is one of the big factors driving home prices higher.This power combination provides an ideal environment for sellers aiming to close a quick sale and earn a big return as we wrap up the summer season.

Bottom Line

There’s still time to make a move before the school year starts and the fall weather sets in. Maybe it’s time to make a change. Let’s get together to determine if selling now is the right decision for your family.

Shifting trends and industry-leading research are pointing toward some valuable projections about the status of the housing market for the rest of the year.

If you’re thinking of buying or selling, or if you just want to know what experts are saying is on the horizon, here are the top three things to put on your radar as we head into the coming months:

1. Home prices are appreciating at a more normal rate: Home prices have been appreciating for about ten years now. Experts at the Home Price Expectation Survey, Mortgage Bankers Association, Freddie Mac, and Fannie Mae are forecasting continued growth throughout the next year, although it should be leveling-off to normal appreciation (3.6%), as we move into 2020.
2. Interest rates are low: Over the past 30 years, the average mortgage rate in the United States has been 8.27%, and rates even peaked as high as 18% in the 1980s. Today, at 3.81%, the rate is considerably lower than the historical 30-year average. Although experts predict it may climb into the low 4% range in the near future, that’s still remarkably lower than our running average, suggesting a great time to get more for your money over the life of your loan.
3. An impending recession does not mean there will be a housing crash: Although expert research studies such as those found in the Duke Survey of American CFOs and the National Association of Business Economics, are pointing toward a recession beginning within the next 18 months, a potential recession isn’t expected to be driven by the housing industry. That means we likely won’t experience a devastating housing crash like the country felt in 2008. Expert financial analyst Morgan Housel tweeted:

“An interesting thing is the widespread assumption that the next recession will be as bad as 2008. Natural to think that way, but, statistically, highly unlikely. Could be over before you realized it began.”

In fact, during 3 of the 5 last U.S. recessions, housing prices actually appreciated:

Bottom Line

With prices appreciating and low interest rates available, it’s a perfect time to buy or sell a home. Let’s get together to discuss how you can take the next step in the exciting journey of homeownership.

We’re halfway through the year, and with a decline in interest rates as well as home price and wage appreciation, many are wondering what the experts predict for the second half of 2019.

Here’s what some have to say:

Danielle Hale, Chief Economist at realtor.com

“Lower mortgage rates, higher wages and more homes for sale have helped counteract rising home prices, and ultimately, made it so that buyers are able to afford more than last year.”

“Our outlook implies 4% growth for the remaining months of the year, predicated on…more supply than last year, the decline in mortgage rates, moderating home price appreciation and improving affordability.”

Lawrence Yun, Chief Economist at NAR

“Rates of 4% and, in some cases even lower, create extremely attractive conditions for consumers. Buyers, for good reason, are anxious to purchase and lock in at these rates.”

Doug Duncan, Chief Economist for Fannie Mae

“Moderating home price appreciation and attractive mortgage rates continue to support affordability, particularly as home builders are now paying more attention to the entry-level portion of the housing market.”

Kaycee Miller in a Realtor Magazine article

“At the moment, some observers suggest the housing market is indeed headed for a slowdown. But no need to panic — experts say the financial and economic factors that were in play during the big crash a decade ago don’t exist today.”

Bottom Line

The housing market will be stronger for the rest of 2019. If you’d like to know more about your specific market, let’s get together to chat about what’s happening in our area.

Over the last few years, many sellers have been hesitant to put their houses on the market because they feared not being able to find another home to buy.

We’ve reported on inventory shortages in the past, and it’s been a constant concern for potential buyers throughout recent years. New research shows the inventory concern is starting to decrease among potential buyers.

According to First American, the two leading obstacles to homeownership that buyers feel today are Affordability and Limited Inventory. This means the feeling that homes are less affordable has risen, while the fear of limited inventory has decreased, delivering a wealth of good news for sellers.

At the same time, over the past 12 months, we’ve seen a steady month-over-month increase in the number of homes coming to market for purchase. In the past, the lack of listings and available inventory slowed down the real estate market. This recent increase in current inventory has many buyers and sellers now thinking it is time to make their move – and rightfully so! For the last two months, we’ve seen over 4 months of inventory become available for sale, a promising number that’s been slowly increasing this year and creating more buying opportunities.

To further support the idea of an improving real estate market, Sam Khater, the Chief Economist at Freddie Mac says,

“…In the near-term, we expect the housing market to continue to improve from both a sales and price perspective.” 

Many experts, like Sam, believe the second half of 2019 will drive a stronger market than we saw at the beginning of the year. This is great news for homeowners who have put off getting their houses on the market and are now ready to make a move.

Bottom Line

What a difference we’ve seen over the course of this year! If you’re thinking of selling, now is the time as inventory is on the rise.

Over 10% of all residential homes are purchased by investors, and that number continues to rise. Who are these investors?

Many have speculated that the large institutional conglomerates such as Blackstone, American Homes 4 Rent, and Colony Starwood dominate investor purchases. However, a special report on investor home buying by CoreLogic, Don’t Call it a Comeback: Housing Investors Have Been Here for Years, shows this is not the case.

Ralph McLaughlin, CoreLogic’s Deputy Chief Economist and author of the report, explained his findings at the recent National Association of Real Estate Editors conference in Austin:

“Investor buying activity in the U.S. is at record highs. And our records go back confidently, about 20 years…

What’s going on and why? Well, it turns out, it’s not the big institutional guys that are leading the increase in home buying. It’s actually the smaller guys. It’s those that have bought between one and ten properties over this 20-year period, they’re the ones that are really leading the increase in investor home buying.”

Here is the breakdown of the percentage of purchasers by type of investor over the last six years according to the report:

As the graph shows, the percentage of “Mom & Pop” investors is currently dominating the number of homes purchased by investors, as the percentage of homes purchased by both professional and institutional investors is falling.

Bottom Line

Most houses purchased by an investor are bought by small investors looking to diversify their financial portfolio by adding a real estate component. If you are investing in real estate as either a landlord or someone who fixes-up and flips the house, let’s chat about the ways you can build or liquidate your current portfolio of properties.

Owning a home has great financial benefits.

In a recent research paper, Homeownership and the American Dream, Laurie S. Goodman and Christopher Mayer of the Urban Land Institute explained:

“Homeownership appears to help borrowers accumulate housing and nonhousing wealth in a variety of ways, with tax advantages, greater financial flexibility due to secured borrowing, built-in ‘default’ savings with mortgage amortization and nominally fixed payments, and the potential to lower home maintenance costs through sweat equity.”

Let’s breakdown 5 major financial benefits of homeownership:

1. Housing is typically the one leveraged investment available

Homeownership allows households to amplify any appreciation on the value of their homes by a leverage factor. A 20% down payment results in a leverage factor of five, meaning every percentage point rise in the value of your home is a 5% return on your equity. If you put down 10%, your leverage factor is 10.

Example: Let’s assume you purchased a $300,000 home and put down $60,000 (20%). If the house appreciates by $30,000, that is only a 10% increase in value but a 50% increase in equity.

2. You’re paying for housing whether you own or rent

Some argue that renting eliminates the cost of property taxes and home repairs. Every potential renter must realize that all the expenses the landlord incurs (property taxes, repairs, insurance, etc.) are baked into the rent payment already – along with a profit margin!!

3. Owning is usually a form of “forced savings”

Studies have shown that homeowners have a net worth that is 44X greater than that of a renter. As a matter of fact, it was recently estimated that a family buying an average priced home this past January could build more than $42,000 in family wealth over the next five years.

4. Owning is a hedge against inflation

House values and rents tend to go up at or higher than the rate of inflation. When you own, your home’s value will protect you from that inflation.

5. There are still substantial tax benefits to owning

We know that the new tax reform bill puts limits on some deductions on certain homes. However, in the research paper referenced above, the authors explain:

“…the mortgage interest deduction is not the main source of these gains; even if it were removed, homeowners would continue to benefit from a lack of taxation of imputed rent and capital gains.”

Bottom Line

From a financial standpoint, owning a home has always been and will always be better than renting.

Homes priced at the top 25% of the price range for a particular area of the country are considered “premium homes.” In today’s real estate market, there are deals to be had at the higher end! This is great news for homeowners wanting to upgrade from their current house.

Much of the demand for housing over the past couple of years has come from first-time buyers looking for their starter home. Many of the more expensive homes listed for sale have not seen as much interest.

According to ILHM’s Luxury Report, this mismatch in demand and inventory of luxury and premium homes has created a Buyer’s Market. For the purpose of the report, a luxury home was defined as one that costs $1 million or more.

“A Buyer’s Market indicates that buyers have greater control over the price point. This market type is demonstrated by a substantial number of homes on the market and few sales, suggesting demand for residential properties is slow for that market and/or price point.”

The authors of the report were quick to point out that current conditions at the higher end of the market are no cause for concern.

“While luxury homes may take longer to sell than in previous years, the slower pace, increased inventory levels and larger differences between list and sold prices, represent a normalization of the market, not a downturn.”

Luxury can mean different things to different people. To one person, luxury is a secluded home with plenty of property and privacy. To another, it could be a penthouse at the center of a bustling city. Knowing what characteristics mean luxury to you will help your agent find you the home of your dreams.

Bottom Line

If you are debating upgrading your current house to a premium or luxury home, now is the time!

Some Highlights:

• Real estate has outranked stocks/mutual funds, gold, savings accounts/CDs, and bonds as the best long-term investment among Americans for the last 6 years.
• Stock owners are more positive about real estate than stocks as an investment.
• Of the 4 listed, real estate is the only investment you can also live in!

Rising home prices coupled with a lack of inventory in today’s market may cause some homeowners to consider selling their home on their own (known in the industry as a For Sale By Owner). However, a FSBO might not be a good idea for the vast majority of sellers.

The top 5 reasons are listed below:

1. Online Strategy for Prospective Purchasers

Recent studies have shown that 95% of buyers search online for a home. In comparison, only 13% use print newspaper ads. Most real estate agents have an Internet strategy to promote the sale of your home. Do you?

2. Results Come from the Internet

Where did buyers find the home they actually purchased?

• 50% on the Internet
• 7% from a yard sign
• 28% from a Real Estate Agent
• 1% from newspapers

The days of selling your house by putting up a sign and listing it in the paper are long gone. Having a strong Internet strategy is crucial.

3. There Are Too Many People to Negotiate With

Here is a list of some of the people with whom you must be prepared to negotiate if you decide to For Sale By Owner:

• The buyer who wants the best deal possible
• The buyer’s agent, who solely represents the best interest of the buyer
• The buyer’s attorney (in some parts of the country)
• The home inspection companies, which work for the buyer and will almost always find some problems with the house
• The appraiser, if there is a question of value

4. FSBOing Has Become Increasingly Difficult

The paperwork involved in the process has increased dramatically as industry disclosures and regulations have become mandatory. This is one of the reasons that the percentage of people FSBOing has dropped from 19% to 7% over the last 20+ years.

5. You Net More Money When Using an Agent

Many homeowners believe that they will save the real estate commission by selling on their own. Realize that the main reason buyers look at FSBOs is because they also believe they can save the real estate agent’s commission. The seller and buyer can’t both save the commission.

A study by Collateral Analytics revealed that FSBOs don’t actually save anything by forgoing the help of an agent. In some cases, they may actually cost themselves more. One of the main reasons for the price difference at the time of sale is:

“Properties listed with a broker that is a member of the local MLS will be listed online with all other participating broker websites, marketing the home to a much larger buyer population. And those MLS properties generally offer compensation to agents who represent buyers, incentivizing them to show and sell the property and again potentially enlarging the buyer pool.”

The more buyers that view a home, the greater the chance of a bidding war for the property. The study found the difference in price between comparable homes of size and location is currently at an average of 6%.

Listing on your own leaves you to manage the entire transaction yourself. Why do that when you can hire an agent without additional cost?

Bottom Line

Before you decide to take on the challenge of selling your house on your own, let’s get together to discuss your needs.

Some Highlights:

• If you are thinking of buying a home, you may not know where to start.
• Here is a simple list of 10 steps that you will go through to purchase a home.
• Make sure to ask your agent for details about each step and what else may be required in your area!

The housing crisis of the last decade was partially caused by unhealthy levels of mortgage debt. Homeowners were using their homes as ATMs by refinancing and swapping their equity for cash.

When prices started to fall, many homeowners found themselves in a negative equity situation (where their mortgage was higher than the value of their home). As a result, they walked away. This caused prices to fall even further.

Headlines are again talking about record levels of mortgage debt, making the comparison to the challenges that preceded the housing crash. However, cumulative debt is not an important data point. If we look at the debt as a percentage of disposable personal income, we are at an all-time low.

Here’s a visual representation of mortgage debt as a percent of income:

Furthermore, according to a new report from ATTOM Data Solutions, more than 1-in-4 homes with a mortgage have at least 50% equity. The report explains:

“[O]ver 14.5 million U.S. properties were equity rich — where the combined estimated amount of loans secured by the property was 50 percent or less of the property’s estimated market value — up by more than 834,000 from a year ago to a new high as far back as data is available, Q4 2013.”

Bottom Line

Unlike 2008, homeowners have a comfortable level of mortgage debt and are sitting on massive amounts of home equity. They will not be walking away from their homes if the housing market begins to soften.

When deciding to buy a home, people are presented with many different options. The type of home you buy depends on your needs, budget, and in many cases, the desired maintenance level. For many millennials, their choice has been buying a condominium!

According to CoreLogic,

“Last year about 43% of all condo home-purchase mortgage applications were submitted by FTHBs… Similarly, the data show condos were more popular with young homebuyers and empty nesters. For instance, 21% of all condo home-purchase mortgage applications were submitted by buyers aged 18 to 30, compared with just 17% of all single-family home-purchase mortgage applications by the same group in 2018.”

With home prices increasing year-over-year, it makes sense millennials are buying condos instead of a single-family house. As a result, the demand for this type of home has been increasing.

As this graph explains,

“The younger millennials are the largest cohort and are likely to drive much of the condo demand in the coming years”.

Bottom Line

If you are a millennial considering buying a home, understand that there are many options available. You may find yourself in a condominium as your first home. If you would like to determine which type of home best fits your needs, let’s get together to evaluate your options!

So you made an offer and it was accepted. Now, your next task is to have the home inspected prior to closing. Agents oftentimes make your offer contingent on a clean home inspection.

This contingency allows you to renegotiate the price you paid for the home, ask the sellers to cover repairs, or in some cases, to walk away. Your agent can advise you on the best course of action once the report is filed.

How to Choose an Inspector

Your agent will most likely have a short list of inspectors that they have worked with in the past that they can recommend to you. HGTV recommends that you consider the following five areas when choosing the right home inspector for you:

1. Qualifications – find out what’s included in your inspection and if the age or location of your home may warrant specific certifications or specialties.

2. Sample Reports – ask for a sample inspection report so you can review how thoroughly they will be inspecting your dream home. In most cases, the more detailed the report, the better.

3. References – do your homework – ask for phone numbers and names of past clients who you can call to ask about their experiences.

4. Memberships – Not all inspectors belong to a national or state association of home inspectors, and membership in one of these groups should not be the only way to evaluate your choice. Membership in one of these organizations often means that continued training and education are provided.

5. Errors & Omission Insurance – Find out what the liability of the inspector or inspection company is once the inspection is over. The inspector is only human, after all, and it is possible that they might have missed something they should have seen.

Ask your inspector if it’s okay for you to tag along during the inspection. That way they can point out anything that should be addressed or fixed.

Don’t be surprised to see your inspector climbing on the roof or crawling around in the attic and on the floors. The job of the inspector is to protect your investment and find any issues with the home, including but not limited to: the roof, plumbing, electrical components, appliances, heating & air conditioning systems, ventilation, windows, the fireplace and chimney, the foundation, and so much more!

Bottom Line

They say, ‘ignorance is bliss,’ but not when investing your hard-earned money into a home of your own. Work with a professional who you can trust to give you the most information possible about your new home so that you can make the most educated decision about your purchase.

In today’s fast-paced world where answers are a Google search away, there are some who may wonder what the benefits of hiring a real estate professional to help them in their home search are. The truth is, the addition of more information causes more confusion.

Shows like Property Brothers, Fixer Upper, and dozens more on HGTV have given many a false sense of what it’s like to buy and sell a home.

Now more than ever, you need an expert on your side who is going to guide you toward your dreams and not let anything get in the way of achieving them. Buying and/or selling a home is definitely not something you want to DIY (Do It Yourself)!

Here are just some of the reasons you need a real estate professional in your corner:

There’s more to real estate than finding a house you like online!

There are over 230 possible steps that need to take place during every successful real estate transaction. Don’t you want someone who has been there before, someone who knows what these actions are, to ensure you achieve your dream?

You Need a Skilled Negotiator

In today’s market, hiring a talented negotiator could save you thousands, perhaps tens of thousands of dollars. Each step of the way – from the original offer, to the possible renegotiation of that offer after a home inspection, to the possible cancellation of the deal based on a troubled appraisal – you need someone who can keep the deal together until it closes.

What is the home you’re buying or selling worth in today’s market?

There is so much information on the news and on the Internet about home sales, prices, and mortgage rates; how do you know what’s going on specifically in your area? Who do you turn to in order to competitively and correctly price your home at the beginning of the selling process? How do you know what to offer on your dream home without paying too much, or offending the seller with a lowball offer?

Dave Ramsey, the financial guru, advises:

“When getting help with money, whether it’s insurance, real estate or investments, you should always look for someone with the heart of a teacher, not the heart of a salesman.”

Hiring an agent who has his or her finger on the pulse of the market will make your buying or selling experience an educated one. You need someone who is going to tell you the truth, not just what they think you want to hear.

Bottom Line

Today’s real estate market is highly competitive. Having a professional who’s been there before to guide you through the process is a simple step that will give you a huge advantage!

Here are 5 compelling reasons listing your home for sale this summer makes sense.

1. Demand Is Strong

The latest Buyer Traffic Index  from the National Association of Realtors (NAR) shows that buyer demand remains strong throughout the vast majority of the country. These buyers are ready, willing, and able to purchase… and are in the market right now! More often than not, multiple buyers are competing with each other for the same home.

Take advantage of the buyer activity currently in the market.

2. There Is Less Competition Now

Housing inventory is still under the 6-month supply needed for a normal housing market. This means that, in most of the country, there are not enough homes for sale to satisfy the number of buyers.

Historically, the average number of years a homeowner stayed in his or her home was six, but that number has hovered between nine and ten years since 2011. Many homeowners have a pent-up desire to move, as they were unable to sell over the last few years due to a negative equity situation. As home values continue to appreciate, more and more homeowners are granted the freedom to move.

Many homeowners were reluctant to list their home over the last couple of years for fear that they would not find a home to move in to. That is all changing now as more homes come to market at the higher end. The choices buyers have will continue to increase. Don’t wait until additional inventory comes to market before you to decide to sell.

3. The Process Will Be Quicker

Today’s competitive environment has forced buyers to do all they can to stand out from the crowd, including getting pre-approved for their mortgage financing. Buyers know exactly what they can afford before home shopping. This makes the entire selling process much faster and simpler. According to Ellie Mae’s latest Origination Insights Report, the time to close a loan has dropped to 43 days. (Last numbers available.)

4. There Will Never Be a Better Time to Move Up

If your next move will be into a premium or luxury home, now is the time to move up! The inventory of homes for sale at these higher price ranges has created a buyer’s market. This means that if you are planning on selling a starter or trade-up home, it will sell quickly, AND you’ll be able to find a premium home to call your own!

According to CoreLogic, prices are projected to appreciate by 4.8% over the next year. 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.

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 having the freedom to go on with your life the way you think you should?

Only you know the answers to these questions. 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 start living the life you desire.

That is what is truly important.

When buying a home today, why is there so much paperwork mandated by the lenders for a mortgage loan application? It seems like they need to know everything about you. Furthermore, it requires three separate sources to validate each and every entry on the application form. Many buyers are being told by friends and family that the process was a hundred times easier when they bought their home ten to twenty years ago.

There are two very good reasons that the loan process is much more onerous on today’s buyer than perhaps any other time in history.

1. The government has set new guidelines that now demand that the bank proves beyond any doubt that you are indeed capable of paying the mortgage.

During the run-up to the housing crisis, many people ‘qualified’ for mortgages that they could never pay back. This led to millions of families losing their home. The government wants to make sure this can’t happen again.

2. The banks don’t want to be in the real estate business.

Over the last several years, banks were forced to take on the responsibility of liquidating millions of foreclosures and negotiating an additional million plus short sales. Just like the government, they don’t want more foreclosures. For that reason, they have to double (maybe even triple) check everything on the application.

However, there is some good news in this situation.

The housing crash that mandated that banks be extremely strict on paperwork requirements also allowed you to get a low mortgage interest rate.

The friends and family who bought homes ten or twenty years ago experienced a simpler mortgage application process, but also paid a higher interest rate (the average 30-year fixed rate mortgage was 8.12% in the 1990s and 6.29% in the 2000s).

If you went to the bank and offered to pay 7% instead of around 4%, they would probably bend over backward to make the process much easier.

Bottom Line

Instead of concentrating on the additional paperwork required, let’s be thankful that we are able to buy a home at historically low rates.