If your house no longer fits your needs and you are planning on buying a luxury home, now is a great time to do so! We recently shared data from Trulia’s Market Mismatch Study which showed that in today’s premium home market, buyers are in control.
The inventory of homes for sale in the luxury market far exceeds those searching to purchase these properties in many areas of the country. This means that homes are often staying on the market longer which can eventually lead to a price change.
Those who have a starter or trade-up home to sell will find buyers competing, and often entering bidding wars, to be able to call your house their new home.
The sale of your starter or trade-up house will aid in coming up with a larger down payment for your new luxury home. Even a 5% down payment on a million-dollar home is $50,000.
But not all who are buying luxury properties have a home to sell first.
In a Washington Post article, Daryl Judy, an associate broker with Washington Fine Properties, gave some insight into what many millennials are choosing to do:
“Some high-earning millennials save money until they are in their early 30s to buy a place and just skip over that starter-home phase. They’ll stay in an apartment until they can afford to pay for the place they want.”
The best time to sell anything is when demand is high and supply is low, which is NOW! If you are currently in a starter or trade-up house that no longer fits your needs and you are looking to step into a luxury home, now’s the time to list your house for sale and make your dreams come true.
Spring is traditionally the busiest season for real estate. Buyers, experiencing cabin fever all winter, emerge like flowers through the snow in search of their dream home. Homeowners, in preparation for the increased demand, are enticed to list their house for sale and move on to the home that will better fit their needs.
New data from CoreLogic shows that even though buyers came out in force, as predicted, homeowners did not make the jump to list their home in the second quarter of this year. Frank Nothaft, Chief Economist for CoreLogic had this to say,
“The growth in sales is slowing down, and this is not due to lack of affordability, but rather a lack of inventory. As of Q2 2017, the unsold inventory as a share of all households is 1.9 percent, which is the lowest Q2 reading in over 30 years.”
CoreLogic’s President & CEO, Frank Martell added,
“Home prices are marching ever higher, up almost 50 percent since the trough in March 2011.
While low mortgage rates are keeping the market affordable from a monthly payment perspective, affordability will likely become a much bigger challenge in the years ahead until the industry resolves the housing supply challenge.”
Overall inventory across the United States is down for the 25th consecutive month according to the latest report from the National Association of Realtors and now stands at a 4.3-month supply.
Market conditions in the starter and trade-up home markets are in line with the median US figures, but conditions in the luxury and premium markets are following an opposite path. Premium homes are staying on the market longer with ample inventory to suggest a buyer’s market.
Buyers are out in force, and there has never been a better time to move-up to a premium or luxury home. If you are considering selling your starter or trade-up home and moving up this year, let’s get together to discuss the exact conditions in our area.
Recently there has been a lot of talk about home prices and if they are accelerating too quickly. As we mentioned before, in some areas of the country, seller supply (homes for sale) cannot keep up with the number of buyers who are out looking for homes, which has caused prices to rise.
The great news about rising prices, however, is that according to CoreLogic’s Homeowner Equity Report, the average American household gained over $14,000 in equity over the course of the last year, largely due to home value increases.
The map below was created using the same report from CoreLogic and shows the average equity gain per mortgaged home during the 1st quarter of 2017 (the latest data available).
For those who are worried that we are doomed to repeat 2006 all over again, it is important to note that homeowners are investing their new-found equity in their homes and themselves, not in depreciating assets.
The added equity is helping families put their children through college, invest in starting small businesses, pay off their mortgages sooner and even move up to the home that will better suit their needs now.
If you are a homeowner looking to take advantage of your home equity by moving up to your dream home, let’s get together to discuss your options!
Forbes.com recently released the latest results of their American Dream Index, in which they measure “the prosperity of the middle class, and…examine which states best support the American Dream.”
The monthly index measures several different economic factors, including goods-producing employment, personal and commercial bankruptcies, building permits, startup activity, unemployment insurance claims, labor force participation, and layoffs.
The national index score was rounded out to 100.0 in January as a baseline for comparison and it rose the fourth straight month in a row to 101.8.
Alaska, coming in at 89.4, represented the lowest score on the index due in part to the recent collapse in oil prices. In contrast, Wyoming came in with the highest score at 115.1. The full results can be seen in the map below.
Forbes Senior Editor Kurt Badenhausen explained why many states saw a boost in the index last month:
“The American Dream Index rose for the fourth straight month to 101.8 propelled by gains in goods-producing jobs and building permits, as well as declines in unemployment claims and mass layoffs.
Goods-producing jobs (manufacturing, mining, construction and agriculture) were up for the ninth straight month in May…Building permits rose for the fourth straight month compared to the prior year.”
The American Dream, for many, includes being able to own a home of one’s own. With the economy improving in many areas of the country, that dream can finally become a reality.
We all realize that the best time to sell anything is when demand is high and the supply of that item is limited. Two major reports issued by the National Association of Realtors (NAR) revealed information that suggests that now continues to be a great time to sell your house.
Every month, NAR surveys “over 50,000 real estate practitioners about their expectations for home sales, prices and market conditions.” This month, the index showed (again) that home-buying demand continued to outpace supply in May.
The map below illustrates buyer demand broken down by state (the darker your state, the stronger the demand is there).
In addition to revealing high demand, the index also mentioned that “compared to conditions in the same month last year, seller traffic conditions were ‘weak’ in 24 states, ‘stable’ in 25 states, and ‘strong’ in D.C and West Virginia.”
Takeaway: Demand for housing continues to be strong throughout 2017, but supply is struggling to keep up, and this trend is likely to continue into 2018.
The most important data revealed in the report was not sales, but was instead the inventory of homes for sale (supply). The report explained:
According to Lawrence Yun, Chief Economist at NAR:
"Current demand levels indicate sales should be stronger, but it’s clear some would-be buyers are having to delay or postpone their home search because low supply is leading to worsening affordability conditions.”
In real estate, there is a guideline that often applies; when there is less than a 6-month supply of inventory available, we are in a seller’s market and we will see appreciation. Between 6-7 months is a neutral market, where prices will increase at the rate of inflation. More than a 7-month supply means we are in a buyer’s market and should expect depreciation in home values.
As we mentioned before, there is currently a 4.2- month supply, and houses are going under contract fast. The Confidence Index shows that 55% of properties were on the market for less than a month when sold.
In May, properties sold nationally were typically on the market for 27 days. As Yun notes, this will continue, unless more listings come to the market.
"With new and existing supply failing to catch up with demand, several markets this summer will continue to see homes going under contract at this remarkably fast pace of under a month.”
Takeaway: Inventory of homes for sale is still well below the 6-month supply needed for a normal market. And the supply will continue to ‘fail to catch up with demand’ if a ‘sizable’ supply does not enter the market.
If you are going to sell, now may be the time to take advantage of the ready, willing, and able buyers that are still out searching for your house.
The results of the latest Rent vs. Buy Report from Trulia show that homeownership remains cheaper than renting with a traditional 30-year fixed rate mortgage in the 100 largest metro areas in the United States. The report was rather long so, I broke it down for you in simple terms.
The updated numbers actually show that the range is an average of 3.5% less expensive in San Jose (CA), all the way up to 50.1% less expensive in Baton Rouge (LA), and 33.1% nationwide!
Buying a home makes sense socially and financially. If you are one of the many renters out there who would like to evaluate your ability to buy this year, let's get together so that we can find your dream home!
With housing prices appreciating at levels that far exceed historical norms, some are fearful that the market is heading for another bubble. To alleviate that fear, we just need to look back at the reasons that caused the bubble ten years ago.
Last decade, demand for housing was artificially propped up because mortgage lending standards were way too lenient. People that were not qualified to purchase were able to obtain a mortgage anyway. Prices began to skyrocket. This increase in demand caused homebuilders in many markets to overbuild.
Eventually, the excess in new construction and the flooding of the market with distressed properties (foreclosures & short sales), caused by the lack of appropriate lending standards, led to the housing crash.
1. If we look at lending standards based on the Mortgage Credit Availability Index released monthly by the Mortgage Bankers Association, we can see that, though standards have become more reasonable over the last few years, they are nowhere near where they were in the early 2000s.
2. If we look at new construction, we can see that builders are not “
3. If we look at home prices, most homes haven’t even returned to prices seen a decade ago. Trulia just released a report that explained:
“When it comes to the value of individual homes, the U.S. housing market has yet to recover. In fact, just 34.2% of homes nationally have seen their value surpass their pre-recession peak.”
Mortgage lending standards are appropriate, new construction is below what is necessary and home prices haven’t even recovered. It appears fears of a housing bubble are over-exaggerated.
If you are considering moving up to your dream home, it may be better to do it earlier in the year than later. The two components of your monthly mortgage payment (home prices and interest rates) are both projected to increase as the year moves forward, and interest rates may increase rather dramatically. Here are some predictions on where rates will be by the end of the year:
“While full employment and rising inflation are signs of a strong economy, they also have the potential to push mortgage rates and house prices up. The higher rates and higher prices create significant affordability concerns, which may continue to characterize the housing market for the rest of 2017.”
“By the time we get to the fourth quarter of this year, we will still be under 5 percent – we are thinking 4.7 percent…Something north of 5 percent by the time we get to 2018, and by the time we get to 2019, we show fourth-quarter rates hitting 5.5 percent.”
“Despite some regional disparities, title agents and real estate professionals do not expect increasing mortgage rates to have a significant impact on the housing market this spring. Continued good economic news, increasing Millennial demand and confidence that buyers will remain in the market even if rates exceed 5 percent bode well for 2017 real estate.”
“We will probably see rates higher at the end of year, around 4.5%.”
If you are feeling good about your family’s economic future and are considering making a move to your dream home, doing it sooner rather than later makes the most sense.
There are some experts questioning whether the current pace of residential home sales is maintainable. Are too many people buying homes like in 2004-2006? Are we headed for another housing crisis? Actually, if we look closely at the numbers, we can see that we are looking at a very healthy real estate market.
Some are looking at the last four years of home sales and comparing them to the three years just prior to the housing bubble. Looking at the graph below, we can understand that thinking.
However, if we go further back in history, we can see the real picture. After taking out the “boom & bust” years, the pace of sales is growing at quite a natural pace.
And new home sales are way below historic numbers. Dave Liniger, Re/Max CEO explains:
“We expect a seasonal uptick in sales this time of year and March certainly met and somewhat exceeded that expectation. We don’t anticipate the tightening inventory to ease up in most markets until new home construction can catch up to its pre-recession pace. Until then, sellers will enjoy a fast-paced market and buyers will need to work with their agents to get in the right home.”
The current pace of residential home sales definitely seems maintainable.
In school, we all learned the theory of supply and demand. When the demand for an item is greater than the supply of that item, the price will surely rise.
The National Association of Realtors (NAR) recently reported that the inventory of homes for sale stands at a 3.8-month supply. This is considerably lower than the 6-month supply necessary for a normal market.
Every month NAR reports on the number of buyers out in the market looking for homes, which is also known as buyer traffic. As seen on the map below, buyer demand in March was strong or very strong in 45 out of 50 states nationwide, and Washington, DC.
Many buyers are being confronted with a very competitive market in which they must compete with other buyers for their dream homes (if they are even able to find a home they wish to purchase).
Listing your house for sale now will allow you to capitalize on the shortage of homes for sale in the market, which will translate into a better pricing situation.
Many homeowners underestimate the amount of equity they currently have in their homes. According to a recent Fannie Mae study, 37% of homeowners believe that they have more than 20% equity in their homes. In reality, CoreLogic’s latest Equity Report tells us that 78.9% actually do!
Many homeowners who are undervaluing the equity they have in their homes may feel trapped, which may be contributing to the lack of inventory in the market.
If you are debating selling your home this year, let's meet up to evaluate the equity you have in your home, as well as the opportunities available in your market.