Inventory on the market today is low, especially among existing homes in the entry and middle-level tiers of the market. It is hovering well below the 6-month supply typically found in a more normal market, as shown in the graph below:
With inventory being one of the biggest housing market challenges today, finding a starter home right now isn’t easy. According to the Q3 Housing Trends Report from the National Association of Homebuilders (NAHB), 68% of those searching for a home think their search will get harder or stay about the same over the next 12 months.
The same study reveals,
“In Qtr3’19, buyers actively engaged in the process of buying a home are more likely to have spent at least 3 months searching (58%) than a year earlier (55%).”
This is certainly no surprise, given the current inventory status. So, what’s the good news? The NAHB continues to say,
“If still unable to find a home in the next few months, the next step for most long-time searchers is to continue looking for the ‘right’ home in the same preferred location (52%). The next step for 35% is to expand their search area and for 16% is to accept a smaller/older home. Only 15% will give up looking.”
If you’re thinking of selling your home, buyer demand is high – and those looking in your neighborhood aren’t planning on giving up anytime soon. The majority of potential buyers who are still searching for their dream home are eager, willing, and ready to buy, so maybe it’s time to list your house and make your move.
With buyer demand as high as it is today, and inventory in the entry and middle-tier markets remaining low, it’s never been a better time to move up. Let’s get together to determine if now is your time to sell.
Some are afraid the real estate market may be looking a lot like it did prior to the housing crash in 2008. One of the factors they’re pointing at is the availability of mortgage money. Recent articles about the availability of low-down payment loans and down payment assistance programs are causing concern that we’re returning to the bad habits of a decade ago. Let’s alleviate the fears about the current mortgage market.
The Mortgage Bankers’ Association releases an index several times a year titled: The Mortgage Credit Availability Index (MCAI). According to their website:
“The MCAI provides the only standardized quantitative index that is solely focused on mortgage credit. The MCAI is…a summary measure which indicates the availability of mortgage credit at a point in time.”
Basically, the index determines how easy it is to get a mortgage. The higher the index, the more available the mortgage credit.
Here is a graph of the MCAI dating back to 2004, when the data first became available:
As we can see, the index stood at about 400 in 2004. Mortgage credit became more available as the housing market heated up, and then the index passed 850 in 2006. When the real estate market crashed, so did the MCAI (to below 100), as mortgage money became almost impossible to secure.
Thankfully, lending standards have eased since. The index, however, is still below 200, which is half of what it was before things got out of control.
It is easier to get a mortgage today than it was immediately after the market crash, but it is still difficult. The difference in 2006? At that time, it was difficult not to get a mortgage.
Many sellers believe spring is the best time to put their homes on the market because buyer demand traditionally increases at that time of year. What they don’t realize is if every homeowner believes the same thing, then that’s when they’ll have the most competition.
Housing supply traditionally shrinks at this time of year, so the choices buyers have will be limited. The chart below was created using the months supply of listings from the National Association of Realtors.
As you can see, the ‘sweet spot’ to list your house for the most exposure naturally occurs in the late fall and winter months (November – January).
Temperatures aren’t the only thing that heats up in the spring – so do listings!
In 2018, listings increased from December to May. Don’t wait for these listings and the competition that comes with them to come to the market before you decide to list your house.
At this time of year, purchasers who are serious about buying a home will be in the marketplace. You and your family will not be bothered and inconvenienced by mere ‘lookers.’ The lookers are at the mall or online doing their holiday shopping.
If you’ve been debating whether or not to sell your house and are curious about market conditions in your area, let’s get together to determine the best time to list your house.
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.”
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.
Here are four great reasons to consider buying a home today, instead of waiting.
1. Prices Will Continue to Rise
CoreLogic’s latest Home Price Insights Report shows that home prices have appreciated by 3.6% over the last 12 months. The same report predicts prices will continue to increase at a rate of 5.8% 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.
2. Mortgage Interest Rates Are Projected to Increase Next Year
The Primary Mortgage Market Survey from Freddie Mac indicates that interest rates for a 30-year mortgage have recently hovered just above 3.5%. This is great news for buyers in the market right now, because low interest rates increase your purchasing power – but don’t wait! Most experts predict rates will rise over the next 12 months. The Mortgage Bankers Association, Fannie Mae, Freddie Mac, and 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 needed to buy your next home.
3. Either Way, You Are Paying a Mortgage
There are some renters who haven’t purchased a home yet because they’re uncomfortable taking on the obligation of a mortgage. Everyone should realize that, unless you’re living rent-free with your parents, you are paying a mortgage – either yours or that of your landlord.
As an owner, your mortgage payment is a form of ‘forced savings’ that allows you to have equity in your home 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 costs to work for you?
4. It’s Time to Move on With Your Life
The ‘cost’ of a home is determined by two major components: the price of the home and the current mortgage rate. It appears both are on the rise.
But what if they weren’t? Would you wait?
Look at the actual reason you’re buying and decide if 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 custom renovations, maybe now is the time to buy.
Buying a home sooner rather than later could lead to substantial savings. Let’s get together to determine if home ownership is the right choice for you and your family this fall.
To understand today’s complex real estate market, it is critical to have a local, trusted advisor on your side – for more reasons than you may think.
In real estate today, there are essentially three different price points in the market: the starter-home market, the middle-home market, and the premium or luxury market. Each one is unique, and depending on the city, the price point in these categories will vary. For example, a starter or lower-end home in San Francisco, California is much more expensive than almost any other part of the country. Let’s explore what you need to know about each of these tiers.
Starter-Home Market: This market varies by price, and these homes are typically purchased by first-time home buyers or investors looking to flip them for a profit. Across the country, homes in this space currently have less than 6 months of inventory for sale. That means there aren’t enough homes on the lower end of the market for the number of people who want to buy them. A low supply like this generally increases competition, drives bidding wars, and sets up an environment where homes sell above the listing price. According to data from the National Association of Realtors (NAR) on realtor.com,
“The desire for affordability continues to push down the inventory for homes listed for less than $200,000.00.”
Middle-Home Market: This segment is often thought of as the move-up market. Typically, the buyer in this market is moving up to a larger, more custom home with more features, all coming at a higher price. Across the country, this market is looking more balanced than the lower end of the market, meaning it has closer to a 6-month supply of inventory for sale. This market is more neutral, but leaning towards a seller’s market.
Premium & Luxury Home Market: This is the top end of the market with larger homes that have even more custom features and upgrades. Nationwide, this market is growing in the number of homes for sale. In the same realtor.com article, we can see that year-over-year inventory of homes in this tier has grown by 4.7%. Today, there are more homes available in the premium and luxury space, leading to more of a buyer’s market at this end.
Depending on the segment of the market and the price point you’re looking at, you’re going to need the advice of a true local market expert. Let’s get together to help you navigate the home-buying or selling process in your market.
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