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If you are one of the many homeowners who is debating taking your home off the market for the next few weeks, don’t! You will miss the great opportunity you have right now!
The latest Existing Home Sales Report from The National Association of Realtors (NAR), revealed that the inventory of homes for sale has dropped to a 4.3-month supply.
Historically, a 6-month supply is necessary for a ‘normal’ market, explained below:
There are more buyers that are ready, willing, and able to buy now than there have been in years! The supply of homes for sale is not keeping up with the demand of these buyers.
Home prices are appreciating in this seller’s market. Making your home available over the next few weeks will give you the most exposure to buyers who will be competing against each other to buy it.
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The price of any item (including residential real estate) is determined by ‘supply and demand’. If many people are looking to buy an item and the supply of that item is limited, the price of that item increases.
According to the National Association of Realtors (NAR), the supply of homes for sale dramatically increases every spring. As an example, here is what happened to housing inventory at the beginning of 2016:
Putting your home on the market now instead of waiting for increased competition in the spring might make a lot of sense.
Buyers in the market during the winter months are truly motivated purchasers. They want to buy now. With limited inventory currently available in most markets, sellers are in a great position to negotiate.
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Over the next five years, home prices are expected to appreciate 3.24% per year on average and to grow by 21.4% cumulatively, according to Pulsenomics’ most recent Home Price Expectation Survey.
So, what does this mean for homeowners and their equity position?
As an example, let’s assume a young couple purchases and closes on a $250,000 home in January. If we look at only the projected increase in the price of that home, how much equity will they earn over the next 5 years?
Since the experts predict that home prices will increase by 4.0% this year alone, the young homeowners will have gained over $10,000 in equity in just one year.
Over a five-year period, their equity will increase by over $43,000! This figure does not even take into account their monthly principal mortgage payments. In many cases, home equity is one of the largest portions of a family’s overall net worth.
Not only is homeownership something to be proud of, but it also offers you and your family the ability to build equity you can borrow against in the future. If you are ready and willing to buy, let’s get together to find out if you are able to, today!
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Today, many real estate conversations center on housing prices and where they may be headed. That is why we like the Home Price Expectation Survey.
Every quarter, Pulsenomics surveys a nationwide panel of over one hundred economists, real estate experts, and investment & market strategists about where they believe prices are headed over the next five years. They then average the projections of all 100+ experts into a single number.
Home values will appreciate by 4.0% over the course of 2017, 3.2% in 2018 and 3.0% the next three years (as shown below). That means the average annual appreciation will be 3.24% over the next 5 years.
The prediction for cumulative appreciation ticked up from 18.7% to 21.4% by 2021. The experts making up the most bearish quartile of the survey are projecting a cumulative appreciation of 10.2%.
Individual opinions make headlines. We believe this survey is a fairer depiction of future values.
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There are some who are calling for a decrease in home prices should mortgage interest rates begin to rise rapidly. Intuitively, this makes sense as the cost of a home is determined by the price of the home, plus the cost of financing that home. If mortgage interest rates increase, fewer people will be able to buy, and logic says prices will fall if demand decreases.
However, history shows us that this has not been the case the last four times mortgage interest rates dramatically increased.
Here is a graph showing what actually happened:
Last week, in an article titled “Higher Rates Don’t Mean Lower House Prices After All,” the Wall Street Journal revealed that a recent study by John Burns Real Estate Consulting Inc. found that:
“[P]rices weren’t especially sensitive to rising rates, particularly in the presence of other positive economic factors, such as strong job growth, rising wages and improving consumer confidence.”
Last week’s jobs report was strong and the Conference Board just reported that the Consumer Confidence Index was back to pre-recession levels.
We will have to wait and see what happens as we move forward, but a decrease in home prices should rates go up is anything but guaranteed.
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A recent study of more than 7 million home sales over the past four years revealed that the season in which a home is listed may be able to shed some light on the likelihood that the home will sell for more than asking price, as well as how quickly the sale will close.
It’s no surprise that listing a home for sale during the spring saw the largest return, as the spring is traditionally the busiest month for real estate. What is surprising, though, is that listing during the winter came in second!
“Among spring listings, 18.7 percent of homes fetched above asking, with winter listings not far behind at 17.5 percent. While 48.0 percent of homes listed in spring sold within 30 days, 46.2 percent of homes in winter did the same.”
The study goes on to say that:
“Buyers [in the winter] often need to move, so they’re much less likely to make a lowball offer and they’ll often want to close quickly — two things that can make the sale much smoother.”
If you are debating listing your home for sale within the next 6 months, keep in mind that the spring is when most other homeowners will decide to list their homes as well. Listing your home this winter will ensure that you have the best exposure to the serious buyers who are out looking now!
The study used the astronomical seasons to determine which season the listing date fell into (Winter: Dec. 21 – Mar. 20; Spring: Mar. 21 – June 20; Summer: June 21 – Sept 21; Autumn: Sept 21 – Dec. 20).
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People often ask if now is a good time to buy a home. No one ever asks when a good time to rent is. However, we want to make certain that everyone understands that today is NOT a good time to rent.
The Census Bureau recently released their third quarter median rent numbers. Here is a graph showing rent increases from 1988 until today:
As you can see, rents have steadily increased and are showing no signs of slowing down. If you are faced with the decision of whether you should renew your lease or not, you might be pleasantly surprised at your ability to buy a home of your own instead.
One way to protect yourself from rising rents is to lock in your housing expense by buying a home. If you are ready and willing to buy, let’s get together to determine if you are able to, today!
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As the temperature in many areas of the country starts to cool down, you might think that the housing market will do the same. This couldn’t be further from the truth! Here are 4 reasons you should consider buying your dream home this winter instead of waiting for spring!
CoreLogic’s latest Home Price Index reports that home prices have appreciated by 6.3% over the last 12 months. The same report predicts that prices will continue to increase at a rate of 5.2% over the next year.
The bottom in home prices has come and gone. Home values will continue to appreciate for years. Waiting no longer makes sense.
Your monthly housing cost is as much related to the price you pay for your home as it is to the mortgage interest rate you secure.
Freddie Mac’s Primary Mortgage Market Survey shows that interest rates for a 30-year mortgage are currently at 4.08%. The Mortgage Bankers Association, Fannie Mae, Freddie Mac & the National Association of Realtors are in unison, projecting that rates will increase by this time next year.
An increase in rates will impact YOUR monthly mortgage payment. A year from now, your housing expense will increase if a mortgage is necessary to buy your next home.
There are some renters who have not yet purchased a home because they are uncomfortable taking on the obligation of a mortgage. Everyone should realize that, unless you are living with your parents rent free, you are paying a mortgage – either yours or your landlord’s.
As an owner, your mortgage payment is a form of ‘forced savings’ that allows you to have equity in your home that you can tap into later in life. As a renter, you guarantee your landlord is the person with that equity.
Are you ready to put your housing cost to work for you?
The ‘cost’ of a home is determined by two major components: the price of the home and the current mortgage rate. It appears that both are on the rise.
But what if they weren’t? Would you wait?
Look at the actual reason you are buying and decide whether it is worth waiting. Whether you want to have a great place for your children to grow up, you want your family to be safer or you just want to have control over renovations, maybe now is the time to buy.
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