Home values have risen dramatically over the last twelve months. The latest Existing Home Sales Report from the National Association of Realtors puts the annual increase in the median existing-home price at 5.6%. CoreLogic, in their most recent Home Price Index Report, revealed that national home prices have increased by 6.7% year-over-year.
CoreLogic broke appreciation down ever further into four price ranges which gives a more detailed view than simply looking at the year-over-year increases of the national median home price.
The chart below shows the four tiers and each one’s growth from July 2016 to July 2017 (the latest data available).
It is important to pay attention to how prices are changing in your local market. The location of your home is not the only factor in determining how much it has appreciated over the course of the last year. Lower priced homes have appreciated at greater rates than homes at the upper ends of the spectrum, due to demand from first-time home buyers and baby boomers looking to downsize.
If you are planning on listing your home for sale in today’s market, let’s get together to go over exactly what’s going on in your area and your price range.
The number of building permits issued for single-family homes is the best indicator of how many newly built homes will rise over the next few months. According to the latest U.S. Census Bureau and U.S. Department of Housing & Urban Development Residential Sales Report, the number of these permits were up 7.7% over last year.
How will this impact buyers?
More inventory means more options. Danielle Hale, Realtor.com’s Chief Economist, explained this is good news for the housing market - especially for those looking to buy:
"It's not spectacular construction growth, but it's slow and steady in the right direction. Eventually, the pickup in single-family home construction will mean [buyers] will have more options. Especially with the limited number of sales right now, more options are really needed."
How will this impact sellers?
More inventory means more competition. Today, because of the tremendous lack of inventory, a seller can expect:
- A great price on their home as buyers outbid each other for it
- A quick sale as buyers have so little to choose from
- Fewer hassles as buyers don’t want to “rock the boat” on the deal
With an increase in competition, the seller may not enjoy these same benefits. As Hale said:
"As new construction continues to increase, home shoppers will eventually have more [choices] and a bit more time...
How do you select the members of your team who are going to help you make your dream of owning a home a reality? What should you be looking for? How do you know if you’ve found the right agent or lender?
The most important characteristic that you should be looking for in your agent is someone who is going to take the time to really educate you on the choices available to you and your ability to buy in today’s market.
As 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.”
Do your research. Ask your friends and family for recommendations of professionals whom they have used in the past and have had good experiences with.
Look for members of your team who will be honest and trustworthy; after all, you will be trusting them with helping you make one of the biggest financial decisions of your life.
Whether this is your first or fifth time buying a home, you want to make sure that you have an agent who is going to have the tough conversations with you, not just the easy ones. If your offer isn’t accepted by the seller, or they think that there may be something wrong with the home that you’ve fallen in love with, you would rather know what they think than make a costly mistake.
According to a Consumer Housing Trends Study, millennials have already started to prefer a more hands-on approach to their real estate experience:
“While older generations rely on real estate agents for information and expertise, millennials expect real estate agents to become trusted advisers and strategic partners.”
According to a survey conducted by ClosingCorp, over half of all homebuyers are surprised by the closing costs required to obtain their mortgage.
After surveying 1,000 first-time and repeat homebuyers, the results revealed that 17% of homebuyers were surprised that closing costs were required at all, while another 35% were stunned by how much higher the fees were than expected.
“Homebuyers reported being most surprised by mortgage insurance, followed by bank fees and points, taxes, title insurance and appraisal fees.”
Bankrate.com gathered closing cost data from lenders in every state and Washington, D.C. in order to share the average costs in each state. The map below was created using the closing costs on a $200,000 mortgage with a 20% down payment.
Keep in mind that if you are in the market for a home above this price range, your costs could be significantly greater. According to Freddie Mac,
“Closing costs are typically between 2 and 5% of your purchase price.”
Speak with your lender and agent early and often to determine how much you’ll be responsible for at closing. Finding out that you’ll need to come up with thousands of dollars right before closing is not a surprise anyone is ever looking forward to.
Every homeowner wants to make sure they maximize their financial reward when selling their home. But how do you guarantee that you receive maximum value for your house? Here are two keys to ensure that you get the highest price possible.
1. Price it a LITTLE LOW
This may seem counterintuitive. However, let’s look at this concept for a moment. Many homeowners think that pricing their home a little OVER market value will leave them room for negotiation. In actuality, this just dramatically lessens the demand for your house (see chart below).
Instead of the seller trying to ‘win’ the negotiation with one buyer, they should price it so that demand for the home is maximized. By doing this, the seller will not be fighting with a buyer over the price, but will instead have multiple buyers fighting with each other over the house.
Realtor.com gives this advice:
“Aim to price your property at or just slightly below the going rate. Today’s buyers are highly informed, so if they sense they’re getting a deal, they’re likely to bid up a property that’s slightly underpriced, especially in areas with low inventory.”
2. Use a Real Estate Professional
This, too, may seem counterintuitive. The seller may think they would make more money if they didn’t have to pay a real estate...
There is no doubt that the largest challenge in today’s housing market is a lack of housing inventory for sale. This challenge has been defined as an “overwhelming lack of supply,” and even a “straight up inventory crisis.”
First American just released the results of a survey which sheds light on the reasons for the current lack of supply.
The survey asked title agents and real estate professionals to identify what they believe are the top reasons for this lack of inventory in their markets. Here are the results of the survey:
- 47% - existing homeowners are worried that they will not be able to find a home to buy
- 26.5% - first-time buyer demand is absorbing a large share of available homes
- 11.3% - existing homeowners’ mortgage rates are lower than the current rates
- 10.6% - insufficient or negative equity in the home
- 4.6% - foreign buyer demand is absorbing a large share of available homes
As the survey revealed, there is a shortage of current homeowners willing to put their homes on the market for one of three reasons (see numbers 1, 3 and 4 above).
Is this an opportunity for some homeowners?
The report on the survey explains:
“The crowd has spoken, and it seems in many markets home buyers and sellers alike are ‘imprisoned’ by the lack of housing inventory."
That leaves a tremendous opportunity for every homeowner not facing these concerns. If you can put your home on the market today, you are subject to far less competition...
Recently released data from Fannie Mae’s National Housing Survey revealed that rising home prices were the catalyst behind an eight-point jump in the net percentage of respondents who say now is a good time to sell. The index is now 21 points higher than it was this time last year.
Overall, 62% of Americans surveyed said that now is a good time to sell (up from 58%), while 26% of respondents said that now is not a good time to sell (down from 30%). The net score is the difference between the two percentages, or 36%.
According to CoreLogic, home prices are now up 6.7% over last year and 78.8% of homeowners with a mortgage in the US now have significant equity (defined as 20% or more).
As home prices have increased, more and more homeowners have realized that now is a good time to sell their homes in order to take advantage of the extra equity they now have.
At the same time, however, rising prices have had the exact opposite impact on the good-time-to-buy scale as many buyers are nervous that they will not be able to afford a home; the net score dropped 5 points to 18%.
Doug Duncan, Vice President & Chief Economist at Fannie Mae, had this to say,
“In the early stages of the economic expansion, home selling sentiment trailed home buying sentiment by a significant margin. The reverse is true today.
The net good time to sell share is now double the net good time to buy share, with record high percentages of consumers citing home prices as the primary reason for both perceptions.Such a sizable gap between selling and buying...
Freddie Mac, Fannie Mae, and The Mortgage Bankers Association are all projecting that home sales will increase in 2018. Here is a chart showing what each entity is projecting in sales for the remainder of this year and the next.
As we can see, each entity is projecting sizable increases in home sales next year. If you have considered selling your house recently, now may be the time to put it on the market.
Here are five 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 very strong throughout the vast majority of the country. These buyers are ready, willing, and able to purchase… and are in the market right now! More often than not, multiple buyers are competing with each other to buy a 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 housing market.
This means that, in the majority of the country, there are not enough homes for sale to satisfy the number of buyers in the market. This is good news for homeowners who have gained equity as their home values have increased. However, additional inventory could be coming to the market soon.
Historically, the average number of years a homeowner stayed in their home was six, but that number has jumped to an average of almost nine years since 2008. There is a pent-up desire for many homeowners to move, as they were unable to sell over the last few years because of a negative equity situation. As home values continue to appreciate, more and more homeowners will be given the freedom to move.
The choices buyers have will continue to increase. Don’t wait until this other 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...
In this day and age of being able to shop for anything anywhere, it is really important to know what you’re looking for when you start your home search.
If you’ve been thinking about buying a home of your own for some time now, you’ve probably come up with a list of things that you’d LOVE to have in your new home. Many new homebuyers fantasize about the amenities that they see on television or Pinterest, and start looking at the countless homes listed for sale through rose-colored glasses.
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? Could the ‘man cave’ of your dreams be a future renovation project instead of a make-or-break right now?
The first step in your home buying process should be getting pre-approved for your mortgage. This allows you to know your budget before you fall in love with a home that is way outside of it.
The next step is to list all the features of a home that you would like, and to qualify them as follows:
- ‘Must-Haves’ – if this property does not have these items, then it shouldn’t even be considered (ex: distance from work or family, number of bedrooms/bathrooms).
- ‘Should-Haves’ – if the property hits all of the ‘must-haves’ and some of the ‘should-haves,’ it stays in contention but does not need to have all of these features.
- ‘Absolute-Wish List’ – if we find a property in our budget that has all of the ‘must-haves,’ most of the ‘should-haves,’ and ANY of these, it’s the winner!
Having this list fleshed out before starting your search will save you time and frustration, while also...
Hearth just released their 2017 State of the American Dream report which showed that Americans still see homeownership as an integral piece of the American Dream. The report confirmed that “all generations–including millennials–agree homeownership is very important to achieving the American Dream.”
Americans ranked “owning a home I love” higher than any other options (including “starting a family” and “finding a fulfilling career”) as an important part of the American Dream.
Despite some claims that homeownership’s importance to the American Dream is in decline, the report found that the dream of homeownership remains strong.
Of Americans who said they think achieving the American Dream is important, 70% think homeownership is important to the dream, and 41% think homeownership is very important to the dream.
What about Millennials?
Hearth addresses the desires of millennials by explaining:
“Contrary to popular opinion, millennials who want to achieve the American Dream are 5% more likely than Baby Boomers to think homeownership is important. And two-thirds of millennial renters view homeownership as important to the American Dream.
Although millennials are often portrayed as fickle and transient, they actually seek the stability of homeownership even more than their parents.”
Other Key Findings from the Report:
- Homeowners are 126% more likely than non-homeowners to view homeownership as a way to build wealth. Nevertheless, homeowners still overwhelmingly associated homeownership with a family living space.
- Homeowners are 24% more likely than non-homeowners to see homeownership as an achievement that reflects hard work.
Married couples once again dominated the first-time homebuyer statistics last year at 66% of all buyers, according to the most recent Profile of Home Buyers & Sellers. It is no surprise that having two incomes to save for down payments and contribute to monthly housing costs makes buying a home more attainable.
Many couples are deciding to use what would otherwise be their wedding fund as a down payment on their first home, as unmarried couples made up 8% of all first-time buyers last year. If you’re single, don’t fret; you can still buy your dream home! Single women made up 17% of first-time buyers in 2016, while single men accounted for 7% of buyers.
According to a survey by the Wedding Report, the average cost of a wedding in the United States at the start of the year was $25,961, which equates to a 10% down payment on a median priced home.
A recent article from the New York Times found that many singles are now asking their parents to allow them to use the money they’ve saved up for their wedding day to instead buy a home.
In the case of Carrie Graham, a Protestant minister from Austin, TX, her parents had saved a ‘five-figure sum’ for her wedding and were more than willing to give her that money as a down payment on her dream home. Graham told The New York Times,
“Buying the home wasn’t me saying, ‘I’m never going to get married’ or I am going...
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 Index reports that home prices have appreciated by 6.7% over the last 12 months. The same report predicts that prices will continue to increase at a rate of 5.0% 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
Freddie Mac’s Primary Mortgage Market Survey shows that interest rates for a 30-year mortgage have hovered around 4%. Most experts predict that 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 necessary to buy your next home.
3. Either Way, You Are Paying a Mortgage
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....
The biggest challenge in today’s real estate market is a lack of housing inventory. How big of a challenge is the housing shortage? Here are what four industry economists are saying on the issue (emphases added):
“The underlying fundamental issue is an overwhelming lack of supply… The supply of newly constructed homes is also sagging, adding to the supplychallenges. Over the last eight years, housing demand has increased by 5.9 million, but the net new number of housing units has only increased by 3.5 million.”
“Everyone has been talking about tight inventory but I think we are OK calling it a straight up inventory crisis at this point. We just don’t have enough homes.”
“House prices today are higher than they were at the peak in the summer of 2006, near-record-low mortgage rates have boosted housing demand, and sales volume is robust. The spoiler is the lean inventory of houses for sale.”
The latest edition of CoreLogic’s Home Price Index shows that nationally, home prices have appreciated 6.7% over the last year and 0.9% month-over-month. The release of the report included this headline,
“National Home Prices Now 50% Above March 2011 Bottom”
The real estate market has come a long way since 2011, which is great news for homeowners!
Nearly 79% of homeowners with a mortgage in the US now have significant equity in their homes (defined as over 20%), according to the latest Equity Report. The challenge is that not every homeowner knows how much their home’s value has appreciated.
Homeowners in Denver, CO lead the way with 8.7% appreciation over the last year, while owners in Washington and Utah have experienced a 3% increase in values since the start of this year!
Nationally, CoreLogic forecasts that home values will increase another 5.0% by this time next year.
Bill Banfield, VP of Capital Markets at Quicken Loans, recently explained the importance of knowing the conditions in your area,
“With home values constantly changing, and the rates of change varying across the country, this is one more way to show how important it is for homeowners to stay aware of their local housing market.”
Do you know what...
There are some homeowners who are patiently waiting to get the price they hoped for when they originally listed their houses for sale. Something these homeowners might want to take into consideration is the fact that if their homes haven’t sold yet, maybe they’re not priced properly.
After all, 14,904 houses sold yesterday, 14,904 will sell today, and 14,904 will sell tomorrow.
This is the average number of homes that sell each and every day in this country, according to the National Association of Realtors’ (NAR) latest Existing Home Sales Report. NAR reported that sales are at an annual rate of 5.44 million. Divide that number by 365 (days in a year) and we can see that, on average, over 14,904 homes sell every day.
The report from NAR also revealed that there is currently only a 4.2-month supply of inventory available for sale (6-months inventory is considered ‘historically normal’).
This means that there are not enough homes available for sale to satisfy all of the buyers who currently are out in the market in record numbers.
We realize that you want to get the fair market value for your home. However, if it hasn’t sold in today’s active real estate market, perhaps you should reconsider your current asking price.