Month: December 2021

If you’re a homeowner who’s decided your current house no longer fits your needs, or a renter with a strong desire to become a homeowner, you may be hoping that waiting until next year could mean better market conditions to purchase a home.

To determine whether you should buy now or wait another year, you can ask yourself two simple questions:

1. Where will home prices be a year from now?
2. Where will mortgage rates be a year from now?

Let’s shed some light on the answers to both of these questions.

Where Will Home Prices Be a Year from Now?

Three major housing industry entities are projecting ongoing home price appreciation in 2022. Here are their forecasts:

• Fannie Mae: 7.4%
• Freddie Mac: 7%
• Mortgage Bankers Association: 5.1%

According to the National Association of Realtors (NAR), the median price of a home today is $353,900. Using an average of the three price projections above (6.5%), a home that sold for $353,900 today would be valued at $376,904 at the end of next year. As a prospective buyer, you would therefore pay an additional $23,004 by waiting.

Where Will Mortgage Rates Be a Year from Now?

Today, Freddie Mac announced their 30-year fixed mortgage rate was at 3.1%. However, most experts believe mortgage rates will rise as the economy recovers. Here are the forecasts for the fourth quarter of 2022 by the three major entities mentioned above:

• Fannie Mae: 3.4%
• Freddie Mac: 3.7%
• Mortgage Bankers Association: 4%

That averages out to 3.7% if you include all three forecasts. Any increase in mortgage rates will increase your costs.

What Does It Mean for You if Home Values and Mortgage Rates Increase?

If both variables increase, you’ll pay a lot more in mortgage payments each month. Let’s assume you purchase a $353,900 home today with a 30-year fixed-rate loan at 3.1% (the current rate from Freddie Mac) after making a 10% down payment. According to mortgagecalculator.net, your monthly mortgage payment would be approximately $1,360 (this does not include insurance, taxes, and other fees because those vary by location).

That same home one year from now could cost $376,904, and the mortgage rate could be 3.7% (based on the industry forecasts mentioned above). Your monthly mortgage payment after putting down 10%, would be approximately $1,561.The difference in your monthly mortgage payment would be $201. That’s $2,412 more per year and $72,360 over the life of the loan.

Add to that the approximately $23,004 a house with a similar value would build in home equity this year due to home price appreciation, and the total net worth increase you could gain by buying this year is over $95,364 (the $72,360 mortgage savings plus the $23,004 potential gain in equity if you buy now).

Bottom Line

When asking if you should buy a home, you may think of the non-financial benefits of homeownership. When asking when to buy, the financial benefits make it clear that doing so now is much more advantageous than waiting until next year.

Some Highlights

• It’s no secret that we love our furry friends – about 70% of U.S. households have pets. What may come as a surprise is how large a role they play in the homebuying process.
• Americans spend $1,163 a year on their pets, and nearly half of pet owners say they would move for better accommodations and amenities for their pets.
• If you’re thinking of adding a furry friend, or if you already have, let’s connect to discuss how you can find a home that meets all your pet’s needs.

There’s no question that the financial benefits of selling a house are outstanding today. Now is truly a great time to list if you’re ready to make a change. But if you do sell your house right now, you may be wondering where you’ll go when you move.

With so few homes available to buy right now, you might be considering building a new home as one of your options. But you may be unsure if that’s the way to go. Let’s compare the benefits of a newly built home versus moving into an existing one, and why working with a real estate agent throughout the process is mission-critical to your success no matter what you decide.

The Pros of Newly Built Homes

First, let’s look at the benefits of purchasing a newly constructed home. With a brand-new home, you’ll be able to:

1. Create your perfect home.

If you build a home from the ground up, you’ll have the option to select the custom features you want, including appliances, finishes, landscaping, layout, and more.

2. Cash-in on energy efficiency.

When building a home, you can choose energy-efficient options to help lower your utility costs, protect the environment, and reduce your carbon footprint.

3. Minimize the need for repairs.

Many builders offer a warranty, so you’ll have peace of mind on unlikely repairs. Plus, you won’t have as many little projects to tackle. QuickenLoans puts it like this: 

“Buying a new construction vs. existing home typically means you’ll have fewer repairs to do. It can be a huge relief to know that it’s unlikely you’ll have to repair the roof or replace the furnace.”

4. Have brand new everything.

Another perk of a new home is that nothing in the house is used. It’s all brand new and uniquely yours from day one.

The Pros of Existing Homes

Now, let’s compare that to the perks that come with buying an existing home. With a pre-existing home, you can:

1. Explore a wider variety of home styles and floorplans.

With decades of homes to choose from, you’ll have a broader range of floorplans and designs available.

2. Join an established neighborhood.

Existing homes give you the option to get to know the neighborhood, community, or traffic patterns before you commit.

3. Enjoy mature trees and landscaping.

Established neighborhoods also have more developed landscaping and trees, which can give you additional privacy and curb appeal. As Investopedia says, if you buy an existing home:

“Odds are, too, that the home will have mature landscaping, so you won’t have to worry about starting a lawn, planting shrubs, and waiting for trees to grow.”

4. Appreciate that lived-in charm.

The character of older homes is hard to reproduce. If you value timeless craftsmanship or design elements, you may prefer an existing home. According to Houseopedia:

“Charm is priceless. Existing homes, especially those built in the 1950’s or before, often offer architectural elements, historic charm and a quality of craftsmanship not available in new homes.”

The choice is yours. When you start your search for the perfect home, remember that you can go either route – you just need to decide which features and benefits are most important to you. Working with the guidance of your trusted real estate advisor will help you make the most informed and educated decision, so you can move into the home of your dreams.

Bottom Line

If you have questions about the options in your area, let’s discuss what’s available and what’s right for you, so you’re ready to make your next move with confidence.

Since the pandemic began, Americans have reevaluated the meaning of the word home. That’s led some renters to realize the many benefits of homeownership, including the feelings of security and stability and the financial benefits that come with rising home equity. At the same time, many current homeowners have decided their house no longer meets their needs, so they moved into homes with more space inside and out, including a home office for remote work.

However, not every purchaser has been able to fulfill their desire for a new home. Here are two obstacles some homebuyers are facing:

• The ability to save for a down payment
• The ability to qualify for a mortgage at the current lending standards

This past week, both of those challenges have been mitigated to some degree for many purchasers. The FHFA (which handles mortgages by Freddie Mac, Fannie Mae, and the Federal Housing Administration) is raising its loan limit for prospective purchasers in 2022. The term used to describe the maximum loan amount they will entertain is the Conforming Loan Limit.

What Is the Difference Between a Conforming Loan and a Non-Conforming Loan?

Investopedia explains the difference in a recent post:

“Conforming loans are the only loans that meet the requirements to be acquired by Fannie Mae and Freddie Mac. Jumbo loans, which exceed the conforming limit, are the most common type of nonconforming loan.”

What Difference Does It Make to Me as a Home Buyer?

A Forbes article earlier this year explains the benefits of a conforming loan and why they exist:

“Since lenders can’t sell non-conforming loans to Fannie Mae or Freddie Mac to free up their cash, they’re a bit riskier for the lender. This is especially true for jumbo loans, which aren’t backed by any government guarantees. If you default on a jumbo loan, it’s a huge blow to the lender.

Thus, lenders generally charge higher interest rates to compensate, and they can have even more requirements. For example, lenders who give out jumbo loans often require that you make a down payment of at least 20% and show that you have at least six months’ worth of cash in reserve, if not more.”

What Happened Last Week?

The FHFA has significantly increased its Conforming Loan Limits for 2022. Sandra L. Thompson, FHFA Acting Director, explains in the press release that:

“Compared to previous years, the 2022 Conforming Loan Limits represent a significant increase due to the historic house price appreciation over the last year. While 95 percent of U.S. countie​s will be subject to the new baseline limit of $647,200, approximately 100 counties will have conforming loan limits approaching $1 million.”

This means that more homes now qualify for a conforming loan with lower down payment requirements and easier lending standards – the two challenges holding many buyers back over the last year.

The Federal Housing Administration (FHA) also increased its Conforming Loan Limits for 2022. That could also mean an easier path to homeownership for many prospective buyers. As the Forbes article explains:

“FHA loans can be very beneficial if you don’t have as much savings, or if your credit score could use some work.”

Bottom Line

Buying your first or your next home may have just gotten much easier (less stringent qualifying standards) and less expensive (possibly lower mortgage rate). Let’s connect to discuss how these changes may impact you.

Resources:

1. To get more information on the new FHFA Conforming Loan Limits, click here.
2. To get more information on the new FHA Conforming Loan Limits, click here.

If you’re trying to decide when to sell your house, there may not be a better time than this winter. Selling this season means you can take advantage of today’s strong sellers’ market when you make a move.

Win When You Sell

Right now, conditions are very favorable for current homeowners looking for a change. If you sell now, here’s what you can expect:

• Your House Will Stand Out – While recent data shows there are more sellers getting ready to list their homes this winter, there are still more buyers in the market than there are homes for sale. If you sell your house now before more houses are listed, it will get more attention from serious buyers who are eager to find a home.
• Your House Will Likely Get Multiple Offers – When supply is low and demand is high, buyers have to compete with each other for a limited number of homes. The latest Realtors Confidence Index from the National Association of Realtors (NAR) shows sellers are getting an average of 3.6 offers in today’s market.
• Your House Should Sell Quickly – According to the same report from NAR, homes are selling in an average of just 18 days. As a seller, that’s great news for you if you’re looking for a quick process.

Win When You Move

In addition to these great perks, you’ll also win big on your next move if you sell now. CoreLogic reports homeowners gained an average of $51,500 in equity over the past year. This wealth boost is the result of buyer competition driving home prices up. You can leverage that equity to fuel a move, before mortgage rates and home prices climb higher. To get a feel for how rates are projected to rise, see the chart below.The longer you wait to make your move, the more it will cost you down the road. As mortgage rates rise, even modestly, it will impact your monthly payment when you purchase your next home. Waiting just a few months to make that change could mean a long-term financial impact.

The good news is today’s rates are still hovering in a historically low range. According to Doug Duncan, Senior VP and Chief Economist at Fannie Mae:

“Right now, we forecast mortgage rates to average 3.3 percent in 2022, which, though slightly higher than 2020 and 2021, by historical standards remains extremely low . . .”

Selling before rates climb higher means you can make your move and lock in a low rate on the mortgage for your next home. This helps you get more home for your money and keeps your payments down too.

Bottom Line

As a homeowner, you have a great opportunity to get the best of both worlds this season. You can truly win when you sell and when you buy. If you’re thinking about making a move, let’s connect so you have the information you need to get the process started.

Some Highlights

• If you’re planning to sell your house this winter, you’ll want it to look its best inside and out.
• Take the time and focus on tasks that make it inviting, show it’s cared for, and boost your curb appeal.
• Let’s connect so you have an expert opinion on what to focus on, so it shows well and catches a buyer’s eye.

If you’re living on your own and looking to buy a home, know that you can make your dream a reality with thoughtful planning and the right team of experts. Research from Freddie Mac shows 28% of all households (36.1 million) are sole-person, and that number is growing. Over the past 40 years, the number of sole-person households has nearly doubled, and that’s a trend that’s expected to continue. According to Freddie Mac:

“Our calculation suggests that there will be an additional 5 million sole-person households in the United States by the next decade. This means 42% of the household growth will be contributed by sole-person households, . . .”

If you fall into this category, here are three tips to help you achieve your homeownership goals.

1. Know Your Credit Score

When you buy a home on your own, you have to qualify for your loan based solely on your own finances and credit history. Investopedia says:

“. . . lenders will be looking at just one credit profile: yours. Needless to say, it has to be in great shape. It is always a good idea to review your credit report beforehand, and this is especially true of solo buyers.”

It’s important to find out your score so you know where it falls. If you’re not sure if it’s strong enough or where to focus your energy to improve it, meet with a professional for expert advice on your individual situation.

2. Explore Down Payment Options

Next, look into down payment programs so you can get a feel for what you’ll need to save to buy a home. Rob Chrane, CEO of Down Payment Resource, explains:

“Buyers should discuss their program options with their loan officer and real estate agent to make sure they choose the program best suited to their personal needs.”

In this step, lean on the pros to determine what you’re eligible for and what’s right for you.

3. Think About Your Future Home and Your Needs

You should also spend time thinking about what you want. What type of home do you picture yourself in? To answer that question, Quicken Loans shares this advice:

“Think about your lifestyle, what you want out of your home and your needs. Is being close to work important? Do you need a lot of yard space? Do you want an extra bedroom that you can transform into a home office? Condo or detached home? Lots of space for entertaining? It’s all up to you (and your budget).”

Again, a professional can help you balance what you want and how much you should spend on your monthly housing costs to determine what type of home is right for you.

While buying a home solo can feel like a big challenge, it doesn’t have to be. If you lean on the professionals, they can help you navigate these waters and make sure you’re able to take advantage of the great opportunities in today’s housing market (like low mortgage rates) to buy your dream home.

Bottom Line

The share of sole-person households is growing. If you’re looking to buy a home on your own, be confident that the dream is achievable. When you’re ready to begin your search, let’s connect so you have expert advice each step of the way.

By WPJ Staff | December 2, 2021 8:10 AM ET

According to national property broker Redfin, the number of homes for sale hit an all-time low during the week ending November 28, 2021. During that period, sustained demand pushed the median home price to another record high, and a third of homes sold in one week or less.” The number of homes for sale typically declines another 15% in December,” said Redfin Chief Economist Daryl Fairweather. “That means that by the end of the year, there will likely be 100,000 fewer homes for sale than there were in February when housing supply last hit rock bottom. I think more new listings will hit the market in the new year, but there will also be a long line of buyers who are queuing up right now.”

“Meanwhile, headlines and new restrictions related to the omicron variant of the coronavirus might fuel some uncertainty and volatility in the economy,” Fairweather continued. “In the short term, global interest rates, including mortgage rates, could fall. In this extremely tight housing market, we would quickly see a proportional increase in competition and home prices.”

Key housing market takeaways for 400+ U.S. metro areas:

• The median home-sale price hit a new all-time high of $360,375, up 14% year over year. This was up 31% from the same period in 2019 and up 1.5% from a month earlier, far greater than the 0.2% increase seen during the same period last year.
• Asking prices of newly listed homes were up 12% from the same time a year ago and up 27% from 2019 to a median of $349,750.
• Pending home sales were up 8% year over year, and up 49% compared to the same period in 2019.
• New listings of homes for sale were down 4% from a year earlier, but up 12% from 2019.
• During the seven-day period ending November 28, active listings fell to a new all-time low. For the four-week period, active listings fell 23% from 2020 and 42% from 2019.
• 45% of homes that went under contract had an accepted offer within the first two weeks on the market, above the 39% rate of a year earlier and the 28% rate in 2019. Since the four-week period ending September 19, the share of homes under contract within two weeks is up 2.3 percentage points. During the same time in 2019, the share fell 3.1 points.
• 33% of homes that went under contract had an accepted offer within one week of hitting the market, up from 27% during the same period a year earlier and 18% in 2019. Since the four-week period ending September 12, the share of homes under contract within a week is up 2.9 percentage points. During the same time in 2019, the share fell 2.3 points.
• Homes that sold were on the market for a median of 25 days, down from 31 days a year earlier and 46 days in 2019.
• 43% of homes sold above list price, up from 35% a year earlier and 21% in 2019.
• On average, 3.8% of homes for sale each week had a price drop, up 0.7 percentage points from the same time in 2020 and up 0.2 points from this time in 2019.
• The average sale-to-list price ratio, which measures how close homes are selling to their asking prices, was 100.5%. In other words, the average home sold for 0.5% above its asking price.
• Mortgage purchase applications increased 5% week over week (seasonally adjusted) during the week ending November 26. For the week ending November 24, 30-year mortgage rates were flat at 3.1%.
• Touring activity through November 21 fell about 1 percentage point behind 2019 relative to the first week of January according to home tour technology company ShowingTime.
• The Redfin Homebuyer Demand Index fell 7% during the week ending November 28 but was up 9% from a year earlier.

Rates increased one basis point to 3.11% in the week ending Dec. 2

December 2, 2021, 9:50 am By Flávia Furlan Nunes

Mortgage rates increased one basis point to 3.11% in the week ending Dec. 2, ignoring the volatility in the financial markets caused by the Omicron Covid variant, according to the latest Freddie Mac PMMS mortgage report.

A year ago at this time, the average 30-year fixed-rate loan averaged just 2.71%, according to the report published on Thursday. Mortgage rates are in a historical low level, but the expectation is that they will increase in the coming months due to higher interest rates.

Sam Khater, Freddie Mac’s chief economist, said in a statement that the consistency of rates, in the face of changes in the economy, is primarily due to the evolution of the pandemic, which lingers and continues to pose uncertainty. “This low mortgage rate environment offers favorable conditions for refinancing,” he added.

The survey focuses on conventional, conforming, and fully amortizing home purchase loans for borrowers who put 20% down and have excellent credit.

Economists at Freddie Mac said the 15-year fixed-rate mortgage averaged 2.39% last week, down from 2.42% the week prior. However, it’s higher than it was a year ago, at 2.26%. Meanwhile, the five-year ARM increased to 2.49%, up two basis points from last week. A year ago, 5-year ARMs averaged 2.86%.

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Mortgage rates tend to move in concert with the 10-year Treasury yield, which reached 1.43% on Dec. 1, down from 1.54% a week before.

The year-over-year increase in rates is impacting mortgage applications. The latest Mortgage Bankers Association (MBA) survey published on Wednesday showed a 7.2% decline for the week ending Nov. 26, in comparison to the previous week.  

Compared to a year ago, the overall market composite index dipped 29.6% on a seasonally adjusted basis. “Over the past three weeks, rates are up 15 basis points, and refinance activity has declined over 18%,” Joel Kan, the MBA’s associate vice president of economic and industry forecasting, said in a statement.