Housing Market Updates – Page 35

Surprising Shift Favors Homeowners: Buyers Now Prefer Existing Homes

Author:KCM Crew

Categories:Buying Myths,For Buyers,For Sellers,Housing Market Updates,Move-Up Buyers,New Construction

In April, the National Association of Home Builders (NAHB) posted an article, Home Buyers’ Preferences Shift Towards New Construction, which reported:

“60% of people who were looking to buy a home in 2020 said they’d prefer new construction to an existing home.”

However, it seems buyers are now shifting their preferences back to existing homes.

The latest Consumer Confidence Survey reveals the percentage of Americans planning to buy a home in the next six months is virtually the same as it was back in March. However, the percentage that plan to buy a newly constructed home is lower for that same period.

NAHB confirms this sentiment in their latest Housing Trends Report. The organization explains that existing homes are now the top preference among today’s buyers. Here’s a breakdown of those findings:

Why the shift?

There are several reasons why buyer preference is shifting. Here are two that impact purchasers looking to move in now:

The process may move faster. Builders may not be able to guarantee when the house will be complete and ready for move-in due to supply chain challenges with materials like lumber and appliances. If you buy an existing home, not only is it ready, it also likely has a refrigerator, range, and other necessary home appliances already.
There are no unexpected costs during the buying process. With the price of land, labor, and lumber being so volatile, many builders are including an escalation clause in the price negotiation to cover rising expenses. With an existing home, the final price you will pay is negotiated upfront.

Bottom Line

If you’re a homeowner looking to sell, your house is more attractive to a greater number of buyers as compared to earlier in the year. This might be the time for us to connect to discuss the possibility.

Aug 04 No Comments

Sellers: Make Today’s Home Price Appreciation Work for You

Author:KCM Crew

Categories:For Sellers,Housing Market Updates,Move-Up Buyers,Pricing

Home prices continue to rise as we move through the summer, and that’s good news for sellers who are looking to maximize their home’s potential. If you’re on the fence about whether to list your house now or later, the question you should really ask is: will this price appreciation last?

Here’s what three leading industry experts have to say about what lies ahead:

Lawrence Yun, Chief Economist, National Association of Realtors (NAR):

“At a broad level, home prices are in no danger of a decline due to tight inventory conditions, but I do expect prices to appreciate at a slower pace by the end of the year.”

Selma Hepp, Deputy Chief Economist, CoreLogic:

“The imbalance between robust demand and dismal availability of for-sale homes has led to a continual bidding over asking prices, which reached record levels in recent months . . . . Nevertheless, with more new listings and new home construction, home price acceleration that has built momentum, and continues to reach new highs, will likely slow later this summer but remain in double digits.”

George Ratiu, Chief Economist, realtor.com:

“Many sellers are going to take advantage of higher prices. This summer is going to signal the move to the next chapter, and this will very much be the year they’re going to put their home on the market.”

What It Means for You:

The experts agree that the summer months give sellers a great opportunity to capitalize on today’s home prices. And while prices aren’t expected to depreciate, the rise in prices is forecast to moderate over the next few years. That means selling your house today could set you up for a bigger win.

Bottom Line

Listen to the experts. If you’re ready to make a move, let’s connect to discuss selling your house sooner rather than later so you can take advantage of today’s home price appreciation before it moderates.

Jul 28 No Comments

4 Reasons Why the End of Forbearance Will Not Lead to a Wave of Foreclosures

Author:KCM Crew

Categories:Distressed Properties,Foreclosures,Housing Market Updates,Pricing,Short Sales

With forbearance plans about to come to an end, many are concerned the housing market will experience a wave of foreclosures like what happened after the housing bubble 15 years ago. Here are four reasons why that won’t happen.

1. There are fewer homeowners in trouble this time

After the last housing crash, about 9.3 million households lost their home to a foreclosure, short sale, or because they simply gave it back to the bank.

As stay-at-home orders were issued early last year, the overwhelming fear was the pandemic would decimate the housing industry in a similar way. Many experts projected 30% of all mortgage holders would enter the forbearance program. Only 8.5% actually did, and that number is now down to 3.5%.

As of last Friday, the total number of mortgages still in forbearance stood at 1,863,000. That’s definitely a large number, but nowhere near 9.3 million.

2. Most of the 1.86M in forbearance have enough equity to sell their home

Of the 1.86 million homeowners currently in forbearance, 87% have at least 10% equity in their homes. The 10% equity number is important because it enables homeowners to sell their houses and pay the related expenses instead of facing the hit on their credit that a foreclosure or short sale would create.

The remaining 13% might not all have the option to sell, so if the entire 13% of the 1.86M homes went into foreclosure, that would total 241,800 mortgages. To give that number context, here are the annual foreclosure numbers of the three years leading up to the pandemic:

2017: 314,220
2018: 279,040
2019: 277,520

The probable number of foreclosures coming out of the forbearance program is nowhere near the number of foreclosures coming out of the housing crash 15 years ago. The number does, however, draw a similar comparison to the three years prior to the pandemic.

3. The current market can absorb any listings coming to the market

When foreclosures hit the market in 2008, there was an excess supply of homes for sale. The situation is exactly the opposite today. In 2008, there was a 9-month supply of listings for sale. Today, that number stands at less than 3 months of inventory on the market.

As Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), explains when addressing potential foreclosures emerging from the forbearance program:

“Any foreclosure increases will likely be quickly absorbed by the market. It will not lead to any price declines.”

4. Those in power will do whatever is necessary to prevent a wave of foreclosures

Just last Friday, the White House released a fact sheet explaining how homeowners with government-backed mortgages will be given further options to enable them to keep their homes when exiting forbearance. Here are two examples mentioned in the release:

“For homeowners who can resume their pre-pandemic monthly mortgage payment and where agencies have the authority, agencies will continue requiring mortgage servicers to offer options that allow borrowers to move missed payments to the end of the mortgage at no additional cost to the borrower.”
“The new steps the Department of Housing and Urban Development (HUD), Department of Agriculture (USDA), and Department of Veterans Affairs (VA) are announcing will aim to provide homeowners with a roughly 25% reduction in borrowers’ monthly principal and interest (P&I) payments to ensure they can afford to remain in their homes and build equity long-term. This brings options for homeowners with mortgages backed by HUD, USDA, and VA closer in alignment with options for homeowners with mortgages backed by Fannie Mae and Freddie Mac.”

When evaluating the four reasons above, it’s clear there won’t be a flood of foreclosures coming to the market as the forbearance program winds down.

Bottom Line

As Ivy Zelman, founder of the major housing market analytical firm Zelman & Associates, notes:

“The likelihood of us having a foreclosure crisis again is about zero percent.”

Jul 27 No Comments

A Look at Housing Supply and What It Means for Sellers

Author:KCM Crew

Categories:For Sellers,Housing Market Updates,Move-Up Buyers,New Construction,Selling Myths

A Look at Housing Supply and What It Means for Sellers | Simplifying The Market

One of the hottest topics of conversation in today’s real estate market is the shortage of available homes. Simply put, there are many more potential buyers than there are homes for sale. As a seller, you’ve likely heard that low supply is good news for you. It means your house will get more attention, and likely, more offers. But as life begins to return to normal, you may be wondering if that’s something that will change.

While it may be tempting to blame the pandemic for the current inventory shortage, the pandemic can’t take all the credit. While it did make some sellers hold off on listing their houses over the past year, the truth is the low supply of homes was years in the making. Let’s take a look at the root cause and what the future holds to uncover why now is still a great time to sell.

Where Did the Shortage Come From?

It’s not just today’s high buyer demand. Our low supply goes hand-in-hand with the number of new homes built over the past decades. According to Sam Khater, VP and Chief Economist at Freddie Mac:

“The main driver of the housing shortfall has been the long-term decline in the construction of single-family homes.”

Data in a recent report from the National Association of Realtors (NAR) tells the same story. New home construction has been lagging behind the norm for quite some time. Historically, builders completed an average of 1.5 million new housing units per year. However, since the housing bubble in 2008, the level of new home construction has fallen off (see graph below):The same NAR report elaborates on the impact of this below-average pace of construction:

“. . . the underbuilding gap in the U.S. totaled more than 5.5 million housing units in the last 20 years.”

“Looking ahead, in order to fill an underbuilding gap of approximately 5.5 million housing units during the next 10 years, while accounting for historical growth, new construction would need to accelerate to a pace that is well above the current trend, to more than 2 million housing units per year. . . .”

That means if we build even more new houses than the norm every year, it’ll still take a decade to close the underbuilding gap contributing to today’s supply-and-demand mix. Does that mean today’s ultimate sellers’ market is here to stay?

We’re already starting to see an increase in new home construction, which is great news. But newly built homes can’t bridge the supply gap we’re facing right now on their own. In the State of the Nation’s Housing 2021 Report, the Joint Center for Housing Studies of Harvard University (JCHS) says:

“…Although part of the answer to the nation’s housing shortage, new construction can only do so much to ease short-term supply constraints. To meet today’s strong demand, more existing single-family homes must come on the market.”

Early Indicators Show More Existing-Home Inventory Is on Its Way

When we look at existing homes, the latest reports signal that housing supply is growing gradually month-over-month. This uptick in existing homes for sale shows things are beginning to shift. Based on recent data, Odeta Kushi, Deputy Chief Economist at First American, has this to say:

“It looks like existing inventory is starting to inch up, which is good news for a housing market parched for more supply.”

Lawrence Yun, Chief Economist at NAR, echoes that sentiment:

“As the inventory is beginning to pick up ever so modestly, we are still facing a housing shortage, but we may have turned a corner.”

So, what does all of this mean for you? Just because life is starting to return to normal, it doesn’t mean you missed out on the best time to sell. It’s not too late to take advantage of today’s sellers’ market and use rising equity and low interest rates to make your next move.

Bottom Line

It’s still a great time to sell. Even though housing supply is starting to trend up, it’s still hovering near historic lows. Let’s connect to discuss how you can list your house now and use the inventory shortage to get the best possible terms for you.

Jul 26 No Comments

3 Hot Topics in the Housing Market Right Now

Author:KCM Crew

Categories:For Buyers,For Sellers,Housing Market Updates

If you’re a prospective buyer or seller, it’s important to understand the current real estate market conditions and how they affect you. The Counselors of Real Estate (CRE) just released its Top Ten Issues Affecting Real Estate report. Here are three hot topics from the list and how they impact today’s housing market.

Technology Acceleration and Innovation

The past year ushered in many changes to the real estate industry, especially when it comes to technology. The CRE report elaborates on this:

“Lockdown-driven changes in our work, in the economy, in social structures, and in our personal behavior have pushed our reluctance aside. The acceleration and adoption of technology during the pandemic has impacted everything, and real estate is no exception.”

For real estate, innovations like digital documentation, virtual tours, and video chat enable agents to connect with clients no matter their location. These options are ideal for prospective buyers and sellers who aren’t local to the area or those that need the added flexibility signing documents online or doing virtual tours provide. That’s why many trusted real estate advisors will continue to use these technologies moving forward to best serve their clients.

Remote Work and Mobility

Working from home became the reality for many individuals during the pandemic, and the latest list from the CRE identified remote work and mobility as an important influence on the real estate market. As the report notes:

“…the pandemic universally caused a movement away from urban cores, particularly for those with higher incomes who could afford to move and for lower-income individuals seeking lower costs of living. Most of these relocations remained within their original region—84%—and, while some are returning, it is unknown as to the permanence of these movements or whether they represent a true urban exodus.”

With the added mobility remote work offers, where people are moving and where they can ultimately purchase a home is less dependent on a physical office location. This newfound flexibility is giving remote workers the opportunity to move to more affordable areas and buy more home for their money.

Housing Supply and Affordability

Finally, the limited supply of houses for sale and the related affordability challenges also makes CRE’s list of key factors this year:

“According to the National Association of Realtors®, the state of America’s housing inventory is dire, with a chronic shortage of affordable and available homes needed to support the nation’s population.”

There is good news. Homes are still more affordable than they have been historically thanks to today’s low mortgage rates. And while housing supply is still low, we’re seeing steady increases in the number of homes coming to market, which gives hope to homebuyers. As the supply of homes for sale improves, buyers will have more options.

Bottom Line

New technology, remote work, housing supply, and home affordability are key factors in the housing market right now for both buyers and sellers. If you want to better understand how these topics can impact you, let’s connect today.

Jul 22 No Comments

Today’s Real Estate Market Explained Through 4 Key Trends

Author:KCM Crew

Categories:For Buyers,For Sellers,Housing Market Updates,Pricing

As we move into the second half of the year, one thing is clear: the current real estate market is one for the record books. The exact mix of conditions we have today creates opportunities for both buyers and sellers. Here’s a look at four key components that are shaping this unprecedented market.

A Shortage of Homes for Sale

Earlier this year, the number of homes available for sale fell to an all-time low. In recent months, however, inventory levels are starting to trend up. The latest Monthly Housing Market Trends Report from realtor.com says:

“In June, newly listed homes grew by 5.5% on a year-over-year basis, and by 10.9% on a month-over-month basis. Typically, fewer newly listed homes appear on the market in the month of June compared to May. This year, growth in new listings is continuing later into the summer season, a welcome sign for a tight housing market.”

This is good news for buyers who crave more options. But even though we’re experiencing small gains in the number of available homes for sale, inventory remains a challenge in most states. That’s why it’s still a sellers’ market, giving homeowners immense leverage when they decide to make a move.

Buyer Competition and Bidding Wars

Today’s ongoing low supply, coupled with high demand, creates a market characterized by high buyer competition and bidding wars. Buyers are going above and beyond to make sure their offer stands out from the crowd by offering over the asking price, all cash, or waiving some contingencies. The number of offers on the average house for sale broke records this year – and that’s great news for sellers.

The latest Confidence Index from the National Association of Realtors (NAR) says the average home for sale receives five offers (see graph below):For buyers, the best way to put a compelling offer together is by working with a local real estate professional. That agent can act as your trusted advisor on what terms are best for you and what’s most appealing to the seller.

Home Price Appreciation

The competition among buyers is driving prices up. Over the past year, we’ve seen home price appreciation rise across the country. According to the most recent Home Price Index (HPI) from CoreLogic, national home prices increased 15.4% year-over-year in May:

“The May 2021 HPI gain was up from the May 2020 gain of 4.2% and was the highest year-over-year gain since November 2005. Low mortgage rates and low for-sale inventory drove the increase in home prices.”

Rising home values are a big part of why real estate remains one of the top sought-after investments for Americans. For potential sellers, it also means it’s a great time to list your house to maximize the return on your investment.

A Rise in Home Values and Equity

The equity in a home doesn’t just grow when a homeowner pays their mortgage – it also grows as the home’s value appreciates. Thanks to the jump in price appreciation, homeowners across the country are seeing record-breaking gains in home equity. CoreLogic recently reported:

“…homeowners with mortgages (which account for roughly 62% of all properties) have seen their equity increase by 19.6% year over year, representing a collective equity gain of over $1.9 trillion, and an average gain of $33,400 per borrower, since the first quarter of 2020.”

That’s a major perk for households to leverage. Homeowners can use that equity to accomplish major life goals or move into their dream homes.

Bottom Line

If you’re thinking about buying or selling, there’s no time like the present. Let’s connect to talk about how you can take advantage of the conditions we’re seeing today to meet your homeownership goals.

Jul 21 No Comments

Remote Work Has Changed Our Home Needs. Is It Time for Your Home To Change, Too?

Author:KCM Crew

Categories:For Buyers,For Sellers,Housing Market Updates,Move-Up Buyers

Over the past year, many homeowners realized what they need in a home is changing, especially with the rise in remote work. If you’re longing for a dedicated home office or a change in scenery, now may be the time to find the home that addresses your evolving needs.

Working from Home Isn’t a Passing Fad

Before the pandemic, only 21% of individuals worked from home. However, if you’ve recently discovered remote work is your new normal, you’re not alone.

A survey of hiring managers conducted by Statista and Upwork projects 37.5% of U.S. workers will work remotely in some capacity over the next 5 years (see chart below):

Working from Home Gives You More Flexibility and More Options

If you fall in that category, working from home may provide you with opportunities you didn’t realize you had. The ongoing rise in remote work means a portion of the workforce no longer needs to be tied to a specific area for their job. Instead, it gives those workers more flexibility when it comes to where they can live.

If you’re one of the nearly 23% of workers who will remain 100% remote, you have the option to move to a lower cost-of-living area or to the location of your dreams. If you search for a home in a more affordable area, you’ll be able to get more house for your money, freeing up more options for your dedicated office space and more breathing room. You could also move to an area you’ve always dreamed of vacationing in – somewhere near the beach, the mountains, or simply an area that features better weather and community amenities. Without your job tying you to a specific location, you’re bound to find your ideal spot.

If you’re one of the almost 15% of individuals who will have a partially remote or hybrid schedule, relocating within your local area to a home that’s further away from your office could be a great choice. Since you won’t be going into work every day, a slightly longer commute from a more suburban or rural area could be a worthy trade-off for a home with more features, space, or comforts. After all, if you’ll still be at home part-time, why not find a home that better suits your needs?

According to the latest Top Ten Issues Affecting Real Estate from The Counselors of Real Estate (CRE), many homebuyers are already taking advantage of their newfound flexibility:

“. . . after years of apparent but variant trends towards urbanization, the pandemic universally caused a movement away from urban cores, particularly for those with higher incomes who could afford to move and for lower-income individuals seeking lower costs of living.”

Bottom Line

If you’ve found what you’re looking for in a home has changed due to remote work, it may be time to make a move. Let’s connect today to start prioritizing your home needs.

Jul 20 No Comments

3 Charts That Show This Isn’t a Housing Bubble

Author:KCM Crew

Categories:For Buyers,For Sellers,Housing Market Updates,New Construction,Pricing

With home prices continuing to deliver double-digit increases, some are concerned we’re in a housing bubble like the one in 2006. However, a closer look at the market data indicates this is nothing like 2006 for three major reasons.

1. The housing market isn’t driven by risky mortgage loans.

Back in 2006, nearly everyone could qualify for a loan. The Mortgage Credit Availability Index (MCAI) from the Mortgage Bankers’ Association is an indicator of the availability of mortgage money. The higher the index, the easier it is to obtain a mortgage. The MCAI more than doubled from 2004 (378) to 2006 (869). Today, the index stands at 130. As an example of the difference between today and 2006, let’s look at the volume of mortgages that originated when a buyer had less than a 620 credit score.Dr. Frank Nothaft, Chief Economist for CoreLogic, reiterates this point:

“There are marked differences in today’s run up in prices compared to 2005, which was a bubble fueled by risky loans and lenient underwriting. Today, loans with high-risk features are absent and mortgage underwriting is prudent.”

2. Homeowners aren’t using their homes as ATMs this time.

During the housing bubble, as prices skyrocketed, people were refinancing their homes and pulling out large sums of cash. As prices began to fall, that caused many to spiral into a negative equity situation (where their mortgage was higher than the value of the house).

Today, homeowners are letting their equity build. Tappable equity is the amount available for homeowners to access before hitting a maximum 80% combined loan-to-value ratio (thus still leaving them with at least 20% equity). In 2006, that number was $4.6 billion. Today, that number stands at over $8 billion.

Yet, the percentage of cash-out refinances (where the homeowner takes out at least 5% more than their original mortgage amount) is half of what it was in 2006.

3. This time, it’s simply a matter of supply and demand.

FOMO (the Fear Of Missing Out) dominated the housing market leading up to the 2006 housing bubble and drove up buyer demand. Back then, housing supply more than kept up as many homeowners put their houses on the market, as evidenced by the over seven months’ supply of existing housing inventory available for sale in 2006. Today, that number is barely two months.

Builders also overbuilt during the bubble but pulled back significantly over the next decade. Sam Khater, VP and Chief Economist, Economic & Housing Research at Freddie Mac, explains that pullback is the major factor in the lack of available inventory today:

“The main driver of the housing shortfall has been the long-term decline in the construction of single-family homes.”

Here’s a chart that quantifies Khater’s remarks:Today, there are simply not enough homes to keep up with current demand.

Bottom Line

This market is nothing like the run-up to 2006. Bill McBride, the author of the prestigious Calculated Risk blog, predicted the last housing bubble and crash. This is what he has to say about today’s housing market:

“It’s not clear at all to me that things are going to slow down significantly in the near future. In 2005, I had a strong sense that the hot market would turn and that, when it turned, things would get very ugly. Today, I don’t have that sense at all, because all of the fundamentals are there. Demand will be high for a while because Millennials need houses. Prices will keep rising for a while because inventory is so low.”

Jul 16 No Comments

Experts Agree: Options Are Improving for Buyers [INFOGRAPHIC]

Author:KCM Crew

Categories:Buying Myths,First Time Home Buyers,For Buyers,Housing Market Updates,Infographics,Move-Up Buyers

Some Highlights

Buyers hoping for more homes to choose from may be in luck as housing inventory begins to rise. Many experts agree – new sellers listing their homes is great news for buyers and the overall market.
Although the supply increases are modest, more homes means more options for buyers. A rise in inventory may also help slow the price gains we’ve seen recently and could be a sign of good things to come.
If you’re searching for a home, rising inventory is welcome news. Let’s connect today to discuss new listings in our area.

Jul 14 No Comments

Housing Supply Is Rising. What Does That Mean for You?

Author:KCM Crew

Categories:For Buyers,For Sellers,Housing Market Updates

An important factor in today’s market is the number of homes for sale. While inventory levels continue to sit near historic lows, there are indications we may have hit the lowest point we’ll see. Odeta Kushi, Deputy Chief Economist at First American, recently said of our supply challenges:

“It looks like inventory may have hit a bottom (we’ve seen this in the higher frequency data as well). Unsold inventory in May was at 2.5 months supply, up from 2.4.”

To put it into perspective, the graph below shows levels of inventory rising since the beginning of the year:We’re still not close to a balanced market, which would be a 6 months’ supply of homes for sale. However, we are seeing a slow but steady increase in homes coming up for sale. And that leaves many buyers and sellers wondering the same thing: what does that mean for me?

Buyers: More Options Are Arriving, so It’s Time To Act

If you’re a buyer, more inventory coming to market is a welcome sight. More supply means more options and less competition, which could mean fewer bidding wars.

According to the latest Monthly Housing Market Trends Report, supply levels are continuing to increase, which is different from the typical summer market:

“In June, newly listed homes grew by 5.5% on a year-over-year basis, and by 10.9% on a month-over-month basis. Typically, fewer newly listed homes appear on the market in the month of June compared to May. This year, growth in new listings is continuing later into the summer season, a welcome sign for a tight housing market.”

If you’re having trouble finding your next home, this news should give you the hope and motivation to keep your buying process moving forward. Experts project mortgage rates will begin increasing, which will make purchasing a home less affordable as time passes. You can still capitalize on today’s low interest rates, so stick with your search as more homes come to market.

Sellers: Our Supply Challenges Aren’t Over Yet, so Now Is the Time To Sell

If you’ve been putting off selling your house, you shouldn’t wait much longer. The year’s month-over-month gains in homes for sale have helped buyers, but we’re still very much in a sellers’ market.

As the graph below shows, even with the number of homes for sale rising, we’re still well below the supply levels we’ve seen historically:Of course, more homes are coming to market now, and more are expected in the coming months. Selling your house this summer gives you the chance to get ahead of the competition and maximize your sales potential before more homes are put up for sale in your neighborhood.

Bottom Line

More homes for sale means more options for buyers and more competition for sellers. Whether you’re looking to buy or sell, let’s connect today to discuss your options and why it’s still a good time to make your move.