Month: July 2021

Once you know where the mortgage loan problems are, you can easily get around them.

From HouseLogic

Mortgages don’t have to be scary. After all, they’re just business transactions, albeit big ones.  

Yet, a survey by mortgage website Freeandclear.com found that 75% of home loan applicants compared the mortgage loan process to an annual physical or a dentist visit. Yep, a credit check and a ton of paperwork scared them as much as flu shots, dental drills, and lectures on flossing.

6 Ways to Avoid Mortgage Mistakes

We asked for confidence-building advice from a couple of mortgage lenders: Manny Delgadillo, manager of the Wells Fargo Home Mortgage Center in Los Angeles, and Evan Geiselhart, president of Midwest Home Trust Mortgage in Schaumburg, Ill. They described how to bypass some of the mortgage mistakes they’re seeing.

#1  Communicate with All Parties

This deal involves several people: you, the seller, your agent, the seller’s agent, and the lender. Keep everyone in the loop on every bit of information, or your closing could get delayed. Geiselhart tells of a home sale where the buyer and the seller had agreed on a credit, but neither had told their agents or the lender. That oversight meant the credit they had sealed with a handshake didn’t make it into the paperwork. And if something isn’t on paper, it’s not happening. “Be transparent about everything,” Geiselhart says. “There’s no such thing as too much communication.”

#2 Have Enough Money to Pay Closing Costs

Of course, you’ll need to pay closing costs – thousands of dollars for an appraisal, credit check, and title search. Closing costs are usually 2-5% of the amount you’re borrowing. If you don’t have enough money, there are a few ways to work around the problem.

• Look for assistance programs that cover some of the closing costs.
  Wells Fargo has a program that gives first-time home buyers $750 toward closing costs if they take an online course about owning a home, Delgadillo says. In addition, Geiselhart notes that “some cities, counties, and states have programs that give money to borrowers to cover closing costs and down payments. In fact, there are more than 2,000 down payment and closing cost assistance programs across the country, typically run by state and local governments or local nonprofits. What you’re eligible for depends on where you live. Ask your lender about programs you might quality for. You can also check the U.S. Department of Housing and Urban Development for a state-by-state list of assistance programs.
• Call a relative and ask for a gift.
  If you’re fortunate enough to have relatives who are both generous and flush with cash, ask them for the money, Geiselhart says. “Call Grandma. See if she can help out. It’s a nice, easy solution and doesn’t affect your credit rating.”
• Negotiate with the seller to pay the closing costs.
  Ask your agent to help you strike the deal, Geiselhart says. To motivate the seller, you’ll need to be willing to pay the full asking price, close quickly, and accept the house as is. “Once a seller understands they’re getting the same net money for the house, they’re usually willing to deal on the closing costs,” he adds.

#3 Unfreeze Your Credit

Buyers may have placed a security freeze on their credit, which restricts access to their reports. This can prevent identity thieves from opening new accounts in their name, but can cause trouble when they’re applying for a mortgage. Head off problems as soon as you begin mortgage shopping. Log into your online accounts at the three credit reporting agencies and unfreeze your credit. If you forget your password or get locked out of your account, you’ll have to reset it by snail mail. “It can take 10 to 14 days to unfreeze your credit that way,” Delgadillo says. This delay could force a rescheduling of the closing. 

#4 Steer Clear of Big Purchases After Mortgage Pre-approval

Your lender will check your credit twice: when you apply for the mortgage and days before you close on the house and get the keys. In the interim, if you buy a houseful of furniture, you could delay your close or even cause it to fall through. “We had a guy go out and buy a Mercedes a couple of days before closing,” Geiselhart says. “It was a real heart thumper at the last minute for my staff. We had to recheck to make sure he still qualified for the loan or if he was going to have to pay a higher interest rate.” Fortunately, he had enough money to cover the giant car payment and his mortgage payment, so the rate and the deal held. “But we had to do a lot of last-minute scrambling.”

Even applying for a credit card or car loan can affect your mortgage rate. To get the information it needs, the lender will request your credit file from the credit bureaus. That results in a “hard inquiry” that shows up on your credit report and may affect your credit rating, according to Experian. Let’s say you had a 740 credit rating and you shopped for a car, Geiselhart says. “If three dealers pulled a credit report on you and those inquiries resulted in your score falling to 699, it could raise your rate at the last minute.” 

#5  Expand Your Employer’s Contact Information

The COVID pandemic has millions of people working from home, making it tougher for lenders to do routine employment verification. “We have to call their boss or their company’s HR department,” Delgadillo says. “Most of the time these days there is nobody at the office numbers we have.” To prevent loan approval delays, Delgadillo suggests getting emails and home or cell phone numbers for your employer.

#6 Ask Questions So Your Lender and Agent Can Help

There are no dumb questions. Lenders and agents are there to help you, so pick their brains. For example, ask if there are home loan programs to help you get into a home and how to access them. See about getting the seller to pay closing costs. Check on anything you don’t understand. “More people can get down payment and closing cost assistance now than ever before,” Delgadillo says. “There’s a lot of help out there to get into your first home, and interest rates are low. We want to help you get into a home. It’s why we are here.”

Taking these simple actions can keep your home loan application on track. And that means fewer hassles and less stress for you.

Hear what title pros say to do — and not do — before closing on a house.

From HouseLogic

Ever notice that when you’re unprepared, it heats up stressful situations? Take the preclosing stage of the home-buying process. You may keep thinking about the money at stake, while forms, disclosures, and reports fly at you. It’s enough to overwhelm anyone. Anyone who isn’t well prepared, that is.

You can get a head start, though, by following advice from three title professionals:  Cynthia Durham Blair, an attorney at Blair Cato Pickren Casterline in Columbia, S.C., and a past president of the American Land Title Association; Charles J. Esposito, managing attorney at JK Closing Attorneys in Coconut Creek, Fla.; and Cheryl Monahan, an escrow officer at Clark County Title in Vancouver, Wash.

7 Common Mistakes When Closing on a House

Here’s a list of the most typical closing-on-a-house problems the title pros see IRL and how you can steer clear of them.

#1 Sprinting Through Documents and Emails

Attention spans are short in the digital age, and you’re probably not in the habit of reading thousands of words at a single sitting. That’s understandable, but you must read every word in documents and emails your lender, agent, appraiser, and title officer put in front of you. And you must read them carefully.

Yes, it’s a lot of reading. But you are making the biggest purchase of your life. The details are important. “Contracts are legal documents, so what they say matters,” Esposito says. “Once a contract is signed, it’s legally enforceable.”

#2 Paying Too Little Attention to the Paperwork

Monahan describes a buyer who didn’t read all the paperwork and was left high and dry – literally. “It was a fast close for out-of-town buyers,” she says. The sellers were flippers who had never lived in the house. They checked the “don’t know” box in the section of the disclosure form that asks if the home’s water system has problems or needs repairs. The buyers didn’t read the disclosure form carefully, so they didn’t see that the condition of a major system in the home was unknown. The buyers closed on the house, and a few weeks later found out the well had dried up. “They didn’t have a drop of drinking water,” Monahan says.   

Esposito recommends asking your title representative for a copy of as much of the paperwork as you can get before the closing date and reading it a few days in advance. He says you should be able to get everything but the lender documents, which aren’t available until the close. “Reading them early gives you time to make notes or ask questions,” he says.

That said, it’s OK to wait until the closing to read some of the docs, even if it means making everybody wait while you delve into the minutiae of the escrow statement, sale agreement, or deed of trust. “Buying a home is a huge and important decision,” Esposito says. “Take your time!”

#3 Leaving People Out of the Loop About Major Life Changes

This deal involves several people: you, the seller, your agent, the seller’s agent, the lender, and the title rep. Keep relevant participants in the know about every bit of information, or you could delay your closing. If you have a job change right before closing, let the lender know. If you and the seller do a handshake deal on a credit for a last-minute repair, notify your agent and the lender.

“The paperwork has to reflect any deals,” Blair says. If the lender knows about the deal, they’ll capture it in the paperwork. 

Esposito has seen buyers who were laid off or furloughed during the nation’s initial COVID-19 outbreak after being pre-approved for a mortgage but before closing. They didn’t tell anyone. “They thought we wouldn’t find out,” Esposito says.

Lenders always find out, he explains. They do a second check on your employment just before the closing date. Speak up when you have a job change, so that your lender can restructure the deal. It’s better than being silent and having the sale fall through at the last minute.

#4 Using Inconsistent Versions of Your Name in Your Documentation

Have you recently gotten married or divorced but not updated your driver’s license with the name change? If so, you could run into trouble at closing.

On closing day, a notary will look at your license to be sure the name matches the name on your paperwork. “If the names don’t match, we can’t sign the title,” Monahan says. You’ll either have to get a new ID with a name that matches the one on the paperwork, or redo the paperwork to match the name on the ID. “Either way, you’re not closing on your house that day,” Monahan adds.

To avoid this snafu, make sure your state-issued ID has your current name on it. At the beginning of the deal, tell your lender, agent, and title officer your full legal name – your first, middle, and last name as it appears on your ID. No nicknames or stage names allowed.

#5 Being in the Dark About the Home Closing Process

A lot of buyers, especially first-timers, don’t understand their role in a home closing. Blair, Esposito, and Monahan have seen buyers who:

• Brought their checkbook to a closing thinking they could pay with a personal check 
• Didn’t know the location of the closing or who should come with them
• Were surprised to learn they would be reading and signing a stack of important documents 

Spend some time learning about the steps and the players in the home– buying transaction. That way, you’ll know what’s expected of you.

#6 Forgetting to Line up Your Wire Transfer or Cashier’s Check or Not Allowing Enough Time

As mistake #5 indicates, you can’t use a personal check to cover the amount you owe at closing, including the down payment. You’ll need to pay the balance with a wire transfer or a cashier’s check.

You can get a cashier’s check at a bank where you hold an account, assuming you have enough money in your account to cover the transaction and all recent deposits have cleared. Keep in mind that some banks require advance notice, so it’s not a good idea to plan on a quick stop on the way to closing.

Most banks send wire transfers electronically. You can request the wire transfer in person, over the phone, or sometimes over the internet. Even though this sounds fast, delays can happen. The money might need to be sent to a corresponding bank, or you may miss your bank’s cutoff time for sending wire transfers or lose time waiting for an approval.

If you’re trying to decide between the two options, consider the fact that some closing agents  won’t accept cashier’s checks at the closing table. “It’s a risk,” says Esposito. “The funds won’t be available in their escrow account until the next business day. So, when [closing agents] accept a cashier’s check, they are closing the transaction with insufficient funds. The larger the amount of the cashier’s check, the less likely it will be accepted.”

WIth either a wire transfer or a cashier’s check, ask questions about payment requirements and be sure to allow enough time.

#7 Asking Too Few Questions at Closing

If you see an acronym you don’t recognize, ask. Is there a word you don’t understand? Ask. Do you wonder if the well has been checked? Ask. No question is too big or too small.

Blair suggests calling the title company and asking questions a few days before closing. “If a buyer calls us in advance and asks us to walk them through the transaction, we’re happy to do it, either on the phone or in person,” Blair says. “It means the process will go smoothly on closing day.”

You can ask questions at the closing, too. Remember, your agent and the title officer are there to help. “At some point we were all first-time home buyers,” Monahan says. “We were all scared; we understand. Don’t be afraid to use us.”  

You may think the stress of closing is a given. But you can keep your cool if you communicate and ask questions, read the documents, and understand the home closing process.

And now for my mommy’s lasagna recipe!

Graziella’s Lasagna

This creamy Italian dish came from a family friend while my family was living in Milan, Italy. The key ingredients are the besciamella and the sofritto in the Bolognese sauce.

Bolognese sauce
2 tbs. olive oil
1 onion, chopped
4 carrots, sliced thinly
4 stalks celery, sliced thinly
1.5-2 lbs. ground beef or veal
1 can chopped tomatoes (or a similar substitute)
2 cans tomato sauce
1 tbs. oregano
2 cloves garlic, chopped finely
1/4 tsp. cinnamon
1 tbs. thyme
1 tbs. basil
2 tsp. salt
2 tsp. pepper
1 bay leaf

Sauté the onion, carrots and celery until onion is tender but not golden. This is called a soffrito. Add the garlic and sauté briefly. Add the meat and brown it. Drain the fat. Add remaining ingredients and one can of water. Simmer 1/2 hour. Remove bay leaf.

Bescimillia sauce
1 pint heavy cream
2 cups milk
4 tbs. butter or margarine
4 tbs. flour
1tsp salt
1tsp white pepper (if available, if not use black pepper)
1 tsp. nutmeg

Melt the butter and blend in the flour, salt and pepper. Add the cream and milk. Increase heat to high and whisk constantly until mixture boils. Remove from heat and stir in nutmeg.

Assembling lasagna

15 lasagna noodles
1 cup Parmesan cheese

Boil 3 quarts of water. Determine how many noodles will fit in one layer in your pan. When water boils, cook that many noodles until they are flexible, but not quite al dente. Use a tongs to lift them from the water and place in a layer in the pan (this assumes a 10 x 14 pan). Layer 1/3 of the meat sauce and then 1/3 of the bescimellia sauce. Repeat twice. Top with cheese. Bake in a 350 oven for 45 minutes.

Home buyers who do mortgage loan shopping can avoid leaving money on the table.

From HouseLogic

Whether you’re shopping for new bed sheets or a new car, the drill is usually the same. Hit the reviews, check with friends, and scope out the best deal. After all, who wants to buy a car that racks up repair bills right away? Yet when picking a mortgage loan, borrowers don’t always think about comparison shopping.

In a Bankrate survey of recent home buyers, 12% of millennials said they believe their mortgage rates were too high. Some buyers may think that when mortgage rates are low, they don’t need to shop for the best offer. But even a few basis points can make a difference of thousands of dollars over the life of a loan, according to Bankrate, the Consumer Financial Protection Bureau, and the Federal Trade Commission.

You may think mortgage shopping is as enjoyable as prepping for a tax audit. It’s true that comparing home mortgages can get complicated. But you don’t need a finance degree to make an informed decision. Here are some steps to get there.

Find a Few Lenders

When looking for lenders to consider, loan officers recommend going to a few sources:

• Locals you know and trust: “Make sure the lenders you’re comparing come from referrals from local people you know who’ve worked with them — like your friends or relatives,” advises Jeff Koch, vice president of residential lending at Draper & Kramer Mortgage Corp in Schaumburg, Ill. “Wherever you have trust established would be a good source.”
• Your real estate agent: “If you’re working with a real estate agent, find out if they have any feedback or advice on a lender or a loan officer,” recommends Jim DeMarco, branch manager and senior loan advisor at Flagstar Bank in Seattle.
• Online reviews: These can be a good starting point, DeMarco says. “If you see a lot of really good reviews, that means people are taking the time to provide them.”

Have an Intro Mortgage Loan Meeting

During a meet and greet, you and the loan officer will usually ask each other questions, and the loan officer will use that information to assess your qualifications. That may sound cut and dried, but the meeting should be fluid based on what you’re ready to do.

Typically, the loan officer would schedule a meeting focused on comparison shopping separately. If that sounds painful to borrowers who want to (literally) get moving, no problem, Koch says. “The borrower may be well versed and want to get right to what’s most relevant for them, which are the financial and comparison details. But a lot of people need to go over their own questions or cover key topics first.”

Want to meet virtually? “Some folks are just more comfortable virtually, and that’s OK,” DeMarco says. “I’ve closed loans with people I’ve never talked to on the phone. It’s all via text.”

Interview the Mortgage Loan Officer

Whichever way you choose, this meeting is prime time to interview the loan officer. Borrowers need to find someone who will be in there with them and who can problem solve. “We call unanticipated problems ‘icebergs,’” DeMarco says. “You think there’s smooth sailing. And then, suddenly, you smack into an iceberg.” 

Scope out the lender’s communication strategy and their process for delivering on time. “The process is highly complex, and you’d think professional lenders all would have mastered it. That’s not the case,” says Koch. “When a loan is not delivered on time, people’s finances and lives are basically balanced on the head of a pin, which is the closing date.”

To avoid problems, ask questions like these: 

Fact finding about the process:

• Would you take me through the process?
• What should I expect? 
• What will I need to supply?

Compatibility with the loan officer or mortgage banker or broker:

• What’s your communication style? Are you willing to communicate virtually?
• When would I work with you? Are you available in the evening?
• Will I be working with you or a member of your team?
• What do you think of my time frame to get to closing?
• What if any issue do you foresee being a problem?

Track record of loan officer and lender:

• How long do loans you process typically take to close?
• What are some ways you could expedite the process if there’s a tight time frame?
• About what percentage of loans you work on close on time?
• How many loans have you worked on that haven’t closed or haven’t met deadlines? 
• What’s the biggest problem you’ve had with a loan and how did you fix it?

Use the Meeting to Learn

You can also use the meeting to clarify general info you’ve picked up online and talk about your concerns. DeMarco gives an example. “You may have switched careers or industries in the last year or started having bonus or commission income. Your research may have shown that you can just divide your salary by 12 to figure monthly income. But it may not be as simple as that.”

You’ll also want to bring up concerns like the impact on your credit score. Thirty-eight percent of buyers think comparing multiple mortgage offers in a short time will hurt their credit rating, according to a 2020 LendingTree survey. “As long as the lenders all pull the borrower’s credit within a couple of weeks, it’s counted as a single credit inquiry. So, it’s not a problem if they do it within a narrow band of time,” Koch explains.

Get and Compare Financial Information

Whether you’re looking at a federal form called a loan estimate or a precursor form called the fees worksheet, you’ll see a breakout of closing costs, explains Koch. “To compare the lender financials, you’ll want to drill down to origination charges in the lender section. Make sure you’re comparing apples to apples. If one lender is offering a 30-year fixed rate at 2.875% with no lender fees and another is offering 2. 75% with $1,500 in lender fees, those are unlike products. Get the fees at the same rate to find out who’s less expensive.”

6 Tips to Get Mortgage Loan Information

Comparison shopping can get complicated. Here are six ways to simplify the process.

1. Keep Your Pool Manageable

Mortgage shopping “depends on the borrower and the personality type and how they’re wired,” Koch says. “The process can seem overwhelming. That’s why it makes sense to have a select few options to compare so borrowers can process and assimilate them.”

2. Get a Fees Worksheet

The best way to compare effectively is to zero in on the fees worksheet, which the loan officer should provide. “You’ll be able to figure out just what the lender’s direct fees are, and you can make a nice, simple comparison.”

3. Understand a Fees Worksheet Versus a Loan Estimate

Keep in mind that the numbers on the worksheet are estimates and not locked in. Interest rates are fluid and change daily or even more often, DeMarco says. On the other hand, after you have a contract with a seller, “the loan estimate and loan application are where the information is binding barring structural changes to the loan,” Koch says. Make sure the information reflects previous discussions with and disclosures by the loan officer.

4. Be Careful Interpreting Third-Party Fees

Third-party fee estimates are included on the worksheet. Two lenders could each come up with different estimates for title, escrow, or appraisal fees, Koch explains. But not all are negotiable. For instance, the seller chooses the title company, so the lender doesn’t control the choice or the fees. The lender could be choosing the high or low end of a range, but it’s only an estimate.

5. Think About Timing

Make sure lenders are using the same time frame for locking in pricing and that it will extend through the closing, Koch notes. “A lender might offer a rate that’s a lock for three weeks, but if you anticipate or know your closing date will be five or six weeks out, that’s a problem.”

6. Consider Applying for Loan Approval Before Finding a Property

“Many lenders will not do this,” Koch says. “But some will allow borrowers to go through the formal underwriting process — not just preapproval — without having a property. The borrowers can get a bona fide mortgage commitment with all of the major buyer financials truly underwritten at that point. Then when borrowers make an offer, they can close more quickly.”

You’ll have to invest some time and effort into comparison shopping for a mortgage loan and selecting a lender and a loan officer. But your return on investment can pay off over the long haul.

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.

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.

Some Highlights

• The language of buying and selling a home may sound scary at first, but knowing how key terms relate to today’s market can help you. For example, current low mortgage rates and higher wages positively impact affordability for buyers, while home price appreciation continues to grow home equity, which sellers can use to fuel a move up.
• Terms like appraisal (what lenders rely on to validate a home’s value) and contingencies (which buyers can minimize to make their offer stand out) directly impact the transaction.
• You don’t need to be fluent in the language of the market to buy or sell. Instead, let’s connect today so that we can translate the process together.

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.

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.