Advice Archives | Page 2 of 16

Why It May Be Time To Add Newly Built Homes to Your Search

If you put a pause on your home search because you weren’t sure where you’d go once you sold your house, it might be a good time to get back into the market. If you’re willing to work with a trusted agent to consider a newly built home, you may have even more options and incentives than you realize. That may be why the National Association of Home Builders (NAHB) says the share of buyers looking for new construction is increasing:

“According to the quarterly Housing Trends Report, the popularity of new construction homes is continuing to rebound . . .”

Here’s a few reasons more buyers may be drawn to newly built homes.

More Options To Choose from and Potential Builder Incentives

When looking for a home, you can choose between existing homes (those that are already built and previously owned) and newly constructed ones. While the inventory of existing homes has increased this year, it’s still below more typical years like 2019. Currently, according to the National Association of Realtors (NAR), there is a 3.2-month supply at the current sales pace. For reference, a roughly 6-month supply is considered a balanced market, leaving us in a sellers’ market today.

While it’s a smaller segment of the overall inventory of homes for sale, the supply of newly built homes has grown even more. The National Association of Home Builders (NAHB) explains:

“New single-family home inventory remained elevated at a 9.2 months’ supply (of varying stages of construction). A measure near a 6 months’ supply is considered balanced.”

Here’s why this matters for you. While you have more homes to choose from in either category, there’s one extra benefit of newly built homes. Because the inventory of newly built homes has grown so much, builders are motivated to sell their properties before they build more.

Back in the housing crash of 2008, builders were building too many homes, and that oversupply is part of what contributed to the housing bubble bursting. Now, builders don’t want to have a surplus of inventory in their pipeline, and many are offering buyers incentives to help move that inventory along. As Doug Duncan, Chief Economist at Fannie Mae, explains:

“. . . a continual increase in the number of completed homes available for sale is now occurring, with the inventories of such homes now at the highest level since July 2020. . . . This suggests to us that builders may be increasingly willing to offer more aggressive incentives and discounts to maintain sales of completed inventory.”

While specifics will vary by builder and market, some buyers are seeing builders reduce prices and offer incentives. To find out what’s available in your area, lean on a trusted real estate professional.

Lifestyle Benefits of Buying a Newly Built Home

In addition to more supply and the potential for builder incentives, newly built homes have various benefits that may suit your lifestyle. For example, you likely won’t have as many little repairs to tackle, like leaky faucets, shutters to paint, and other odd jobs around the house. That can free up time for you to do other things you’re passionate about.

Another perk of a new home is that nothing in the house is used. It’s brand new and uniquely yours from day one. You’ll have all new appliances, windows, roofing, and more. These things can help lower your energy costs, which can add up to significant savings over time. You may even have the latest and greatest technology features built into your new home.

Builder sums up why some buyers today are turning to newly built homes:

“For some, it’s the lure of something new and modern. For others, it’s the move-in ready experience. And now there’s another factor to consider when making this decision: technology.”

If any of these benefits appeal to you, it’s time to connect with a trusted real estate advisor to learn more.

Bottom Line

If you’re considering a newly built home, let’s connect so you have an expert guide on what’s available in our local market. Together we’ll explore your options and the benefits of an all-new home.

Home Equity: A Source of Strength for Homeowners Today

Experts agree there’s no chance of a large-scale foreclosure crisis like we saw back in 2008, and that’s good news for the housing market. As Mark Fleming, Chief Economist at First American, says:

“. . . don’t expect a housing bust like the mid-2000s, as lending standards in this housing cycle have been much tighter and homeowners have historically high levels of home equity, so there likely won’t be a surge in foreclosures.”

Data from the Mortgage Bankers Association (MBA) helps tell this story. It shows the overall percentage of homeowners at risk is decreasing significantly with time (see graph below):

But even though the volume of homeowners at risk is very low, there is still a small percentage of homeowners who may be coming face to face with foreclosure as a possibility today. If you’re facing difficulties yourself, it can help to understand your options. It starts with knowing what foreclosure is. Investopedia defines it like this:

“Typically, default is triggered when a borrower misses a specific number of monthly payments . . . Foreclosure is the legal process by which a lender attempts to recover the amount owed on a defaulted loan by taking ownership of and selling the mortgaged property.”

The good news is there are alternatives available to help you avoid going through the foreclosure process, including:

Reinstatement
Loan modification
Deed-in-lieu of foreclosure
Short sale

But before you go down any of those paths, it’s worth seeing if you have enough equity in your home to sell it and protect your investment.

You May Be Able To Use Your Equity To Sell Your House

Equity is the difference between what you owe on the home and its market value based on factors like price appreciation.

In today’s real estate market, many homeowners have far more equity in their homes than they realize due to the home price appreciation we’ve seen over the past few years. According to CoreLogic:

“The total average equity per borrower has now reached almost $300,000, the highest in the data series.”

So, what does that mean for you? If you’ve lived in your house for at least a few years or more, chances are your home’s value, and your equity, has risen dramatically. In addition, the mortgage payments you’ve made during that time chipped away at the balance of your loan. If your home’s current value is higher than what you still owe on your loan, you may be able to use that increase to your advantage.

Rick Sharga, Executive VP of Market Intelligence at ATTOM Data, explains how equity can help:

“Very few of the properties entering the foreclosure process have reverted to the lender at the end of the foreclosure. . . We believe that this may be an indication that borrowers are leveraging their equity and selling their homes rather than risking the loss of their equity in a foreclosure auction.”

Lean on Experts To Explore Your Options

To find out how much equity you have, work with a local real estate professional. They can give you an estimate of what your house could sell for based on recent sales of similar homes in your area. You may be able to sell your house to avoid foreclosure.

If you find out you have to pursue other options, your agent can help with that too. They’ll be able to connect you with other professionals in the industry, like housing counselors, who can look into your unique situation and offer advice on next steps if selling isn’t your best alternative.

Bottom Line

If you’re a homeowner facing hardship, let’s connect so you have an expert on your side to explore your options and see if you can sell your house to avoid foreclosure.

VA Loans: Making Homes for the Brave Achievable [INFOGRAPHIC]

Some Highlights

VA Loans can help make homeownership possible for those who have served our country.
These loans offer great benefits for eligible individuals and can help them buy a VA-approved house or condo, build a new home, or make improvements to their house.
Homeownership is the American Dream. One way we can honor and thank our veterans is to ensure they have the best information about the benefits of VA home loans.

VA Loans Can Help Veterans Achieve Their Dream of Homeownership

For over 78 years, Veterans Affairs (VA) home loans have provided millions of veterans with the opportunity to purchase homes of their own. If you or a loved one have served, it’s important to understand this program and its benefits.

Here are some things you should know about VA loans before you start the homebuying process.

What Are VA Loans?

VA home loans provide a pathway to homeownership for those who have served our nation. The U.S. Department of Veterans Affairs describes the program like this:

“VA helps Servicemembers, Veterans, and eligible surviving spouses become homeowners. As part of our mission to serve you, we provide a home loan guaranty benefit and other housing-related programs to help you buy, build, repair, retain, or adapt a home for your own personal occupancy.”

Top Benefits of the VA Home Loan Program

In addition to helping eligible buyers achieve their homeownership dreams, VA loans have several other great benefits for buyers who qualify. According to the Department of Veteran Affairs:

Qualified borrowers can often purchase a home with no down payment.
Many other loans with down payments under 20% require Private Mortgage Insurance (PMI). VA Loans do not require PMI, which means veterans can save on their monthly housing costs.
VA-Backed Loans often offer competitive terms and mortgage interest rates.

A recent article from Veterans United sums up just how impactful this loan option can be:

“For the vast majority of military borrowers, VA loans represent the most powerful lending program on the market. These flexible, $0-down payment mortgages have helped more than 24 million service members become homeowners since 1944.”

John Bell, Acting Executive Director of the Department of Veterans Affairs Loan Guaranty Service, also explains why this program is so powerful:

“It provides early ownership for many people that would not have that opportunity to begin with. Since there’s no down payment, it allows people to hold their wealth and it gives them the ability to have long term financial security by being able to own a house and let that equity grow.”

Bottom Line

Homeownership is the American Dream. Our veterans sacrifice so much in service of our nation, and one way we can honor and thank them is to ensure they have the best information about the benefits of VA home loans. Thank you for your service.

What’s Ahead for Mortgage Rates and Home Prices?

Now that the end of 2022 is within sight, you may be wondering what’s going to happen in the housing market next year and what that may mean if you’re thinking about buying a home. Here’s a look at the latest expert insights on both mortgage rates and home prices so you can make your best move possible.

Mortgage Rates Will Continue To Respond to Inflation

There’s no doubt mortgage rates have skyrocketed this year as the market responded to high inflation. The increases we’ve seen were fast and dramatic, and the average 30-year fixed mortgage rate even surpassed 7% at the end of last month. In fact, it’s the first time they’ve risen this high in over 20 years (see graph below):

In their latest quarterly report, Freddie Mac explains just how fast the climb in rates has been:

“Just one year ago, rates were under 3%. This means that while mortgage rates are not as high as they were in the 80’s, they have more than doubled in the past year. Mortgage rates have never doubled in a year before.”

Because we’re in unprecedented territory, it’s hard to say with certainty where mortgage rates will go from here. Projecting the future of mortgage rates is far from an exact science, but experts do agree that, moving forward, mortgage rates will continue to respond to inflation. If inflation stays high, mortgage rates likely will too.

Home Price Changes Will Vary by Market

As buyer demand has eased this year in response to those higher mortgage rates, home prices have moderated in many markets too. In terms of the forecast for next year, expert projections are mixed. The general consensus is home price appreciation will vary by local market, with more significant changes happening in overheated areas. As Mark Fleming, Chief Economist at First American, says:

“House price appreciation has slowed in all 50 markets we track, but the deceleration is generally more dramatic in areas that experienced the strongest peak appreciation rates.”

Basically, some areas may still see slight price growth while others may see slight price declines. It all depends on other factors at play in that local market, like the balance between supply and demand. This may be why experts are divided on their latest national forecasts (see graph below):

Bottom Line

If you want to know what’s happening with home prices or mortgage rates, let’s connect so you have the latest on what experts are saying and what that means for our area.

The Majority of Americans Still View Homeownership as the American Dream

Buying a home is a powerful decision, and it remains a key part of the American Dream. In fact, the 2022 Consumer Insights Report from Mynd found the majority of people polled still view homeownership as a key life achievement. Let’s explore just a few of the reasons why so many Americans continue to value homeownership.

The Financial Benefits of Owning a Home

One possible reason homeownership is viewed so highly is because owning a home is a significant wealth-building tool, and it provides meaningful financial stability over renting by locking in your monthly housing payments for the length of your home loan. An article from Forbes explains:

“Understanding the potential benefits of homeownership helps individuals see the value of owning property instead of renting. . . . household wealth among homeowners is a whopping 1,469% higher on average compared to renters, excluding home equity, making the allure of homeownership even more enticing.”

Over time, owning a home not only helps boost your own net worth, but it also sets future generations up for success as you pass that wealth down. That may be why the Mynd report also says:

“Most Americans (78%) still associate homeownership with the ‘American dream.’ And nearly two-thirds of Americans (65%) see homeownership as a means of building intergenerational wealth.”

The Non-Financial Benefits of Homeownership

While the financial benefits of owning a home are important, becoming a homeowner impacts you on a social and emotional level, too. As Mark Fleming, Chief Economist for First American, says:

“. . . buying a home is not just a financial decision. It’s also a lifestyle decision.”

Your home provides feelings of achievement, responsibility, and more. 3by30 highlights the top 10 benefits homeowners enjoy. A few non-financial advantages include:

Providing you with more freedom and control over your living space
Giving you a greater sense of pride
Helps with community engagement

What Does That Mean for You?

If your definition of the American Dream involves greater freedom and prosperity, then homeownership could play a major role in helping you achieve that dream. While it may feel challenging to buy a home today as mortgage rates and home prices rise, if the time is right for you, know that there are incredible benefits waiting for you at the end of your journey. You’ll have a place you can grow your wealth, call your own, and feel most comfortable.

Like the National Association of Realtors (NAR) says:

“. . . research has consistently shown that homeownership is also associated with multiple economic and social benefits to individual homeowners. Homeownership has always been an important way to build wealth.”

Bottom Line

Buying a home is a powerful decision and a key part of the long-term dream for many Americans. And if homeownership is part of your dreams this year, let’s connect to start the process today.

Key Factors Affecting Home Affordability Today

Every time there’s a news segment about the housing market, we hear about the affordability challenges buyers are facing today. Those headlines are focused on how much mortgage rates have climbed this year. And while it’s true rates have risen dramatically, it’s important to remember they aren’t the only factor in the affordability equation.

Here are three measures used to establish home affordability: home prices, mortgage rates, and wages. Let’s look closely at each one.

1. Mortgage Rates

This is the factor most people are focused on when they talk about homebuying conditions today. So far, current rates are almost four full percentage points higher than they were at the beginning of the year. As Len Kiefer, Deputy Chief Economist at Freddie Mac, explains:

“U.S. 30-year fixed mortgage rates have increased 3.83 percentage points since the end of last year. That’s the biggest year-to-date increase in rates in over 50 years.”

That increase in mortgage rates is impacting how much it costs to finance a home purchase, creating a challenge for many buyers that’s pricing some out of the market. While the current global uncertainty makes it difficult to project where mortgage rates will go in the future, experts do say that rates will likely remain high as long as inflation does.

2. Home Prices

The second factor at play is home prices. Home prices have made headlines over the past few years because they skyrocketed during the pandemic. Now, the most recent Home Price Index from S&P Case-Shiller shows home values continued to decelerate for a fifth consecutive month (shown in green in the graph below):

This deceleration is happening because higher mortgage rates are moderating demand, and as a result, easing the buyer competition and bidding wars that previously drove prices up.

What’s worth noting though, is how much higher home prices still are than they were before the pandemic (shown in blue in the graph above). Even now, we have a long way to go to get to more normal levels of home price appreciation, which is historically closer to 4%. When both mortgage rates and home prices are high, affordability and your purchasing power become a greater challenge.

But while prices are still elevated in many markets, some areas are seeing slight declines. It all depends on your local market. For insight into what’s happening in your area, reach out to a trusted real estate professional.

3. Wages

The one big, positive component in the affordability equation is the increase in American wages. The graph below uses data from the Bureau of Labor Statistics (BLS) to show how wages have grown over time. This year is no exception.

As the Bureau of Labor Statistics (BLS) reports:

“Median weekly earnings of the nation’s 120.2 million full-time wage and salary workers were $1,070 in the third quarter of 2022 (not seasonally adjusted), the U.S. Bureau of Labor Statistics reported…This was 6.9 percent higher than a year earlier…”

So, when you think about affordability, remember the full picture includes more than just mortgage rates. Home prices and wages need to be factored in as well. Because wages have been rising, they’re a big reason why serious buyers are still purchasing homes this year.

If you have questions or want to learn more, reach out to a trusted advisor who can explain how all of these variables work together and what’s happening in your area. As Leslie Rouda Smith, President of the National Association of Realtors (NAR), says:

“Buying or selling a home involves a series of requirements and variables, and it’s important to have someone in your corner from start to finish to make the process as smooth as possible… and objectivity to deliver trusted expertise to consumers in every U.S. ZIP code.”

Bottom Line

To learn more, let’s connect today and make sure you have a trusted lender so you’re able to make an informed decision if you’re planning to buy or sell a home right now.

Homeownership Wins Over Time [INFOGRAPHIC]

Some Highlights

If you’re questioning whether or not to buy a home this year due to today’s cooling market, consider the long-term financial benefits of homeownership.
As a homeowner, equity increases your wealth. On average, nationwide, home prices appreciated by 290.2% since 1991.
Homeownership wins in the long run. If you’re ready to buy a home, let’s connect today.

Do You Believe Homeownership Is Out of Reach? Maybe It Doesn’t Have To Be.

It turns out, millennials aren’t the renter generation after all. The 2022 Consumer Insights Report from Mynd says there’s a portion of millennial and Gen Z buyers who are pursuing homeownership as a way to build their wealth, but it may not be exactly the way previous generations have done it. The study explains how they’re breaking into the market:

“. . . younger generations of Americans are not buying into that dream in the same way that older generations have. A growing number of Americans are choosing to make their first real estate purchase as an investment property.”

Instead of buying a home and moving into it themselves, some young buyers are purchasing a home so they can use it as a rental. This tactic may be gaining popularity, at least in part, because of the affordability challenges brought about by today’s higher mortgage rates. The report above mentions how many people in this group are considering this approach. It says:

“Almost half of Millennials and Gen Z (43%) are considering buying an investment property compared to only 9% of Baby Boomers and 27% of Gen X.”

Why Younger Buyers Are Buying a Home To Use as a Rental

This strategy allows buyers to continue living in their current location, like the bustle of a city apartment or a neighborhood that they know and love, where they couldn’t afford to buy. But instead of giving up on the idea of owning a home, they buy a home in a more affordable area with the intention of renting it out.

In a way, they’re getting the best of both worlds. They live where they want, and they still own a home where they can afford it.

Their goal is to generate passive income and diversify their assets. It works like this: in addition to having a rental stream of income, the equity they build in their house will also help grow their net worth over time.

Bottom Line

If you’re thinking about buying a home as an investment strategy to build your wealth, let’s connect to explore your options and nearby areas that may have homes that fit what you’re looking for.

Sell Your House Before the Holidays

As you look ahead to the winter season, you’re likely making plans and thinking about what you want to achieve before the year ends. One of those key decision points could be whether or not you want to move this year. If the location or size of your current home no longer meets your needs, finding a house that better suits your lifestyle may be a top priority for you. But with today’s cooling housing market, is it really a good time to sell your house, or should you wait?

If you’re ready to make your decision, here are three reasons you may want to consider selling before the holidays.

1. Get One Step Ahead of Other Sellers

Typically, in the residential real estate market, homeowners are less likely to list their houses toward the end of the year. That’s because people get busy around the holidays and deprioritize selling their house until the start of the new year when their schedules and social calendars calm down.

Selling now, while other homeowners may hold off until after the holidays, can help your house stand out. Start the process with a real estate professional today so you can get your house on the market and get ahead of your competition.

2. Get in Front of Serious Buyers This Season

Even though housing supply has increased this year as buyer demand has moderated, it’s still low overall. That means there aren’t enough homes on the market today, especially as the millennial generation reaches their peak homebuying years. As Mark Fleming, Chief Economist at First American, says:

“While not the frenzy of 2021, the largest living generation, the Millennials, will continue to age into their prime home-buying years, creating a demographic tailwind for the housing market.”

Serious buyers will still be looking this winter and your house may be exactly what they’re searching for. If you work with an agent to list your house now, you’ll be able to get in front of the eager buyers who are hoping to make a move before the year ends.

3. Seize a Great Chance To Move Up

Don’t forget, today’s homeowners have record amounts of equity. According to CoreLogic, the average amount of equity per mortgage holder has climbed to almost $300,000. That’s an all-time high. That means the equity you have in your house right now could cover some, if not all, of a down payment on the home of your dreams.

And as you weigh the reasons to sell before winter, don’t lose sight of why you’re thinking about moving in the first place. Maybe it’s time to buy a house that’s in a better location for you, has the space you and your loved ones have been craving, or simply gives you that sense of home. A trusted real estate advisor can help you determine how much home equity you have and how you can use it to achieve your goal of making a move.

Bottom Line

If you’re thinking about selling your house so you can find a home that better suits your needs, don’t delay your plans. Let’s connect so you can accomplish your goals before winter.