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If you’re thinking about retirement or have already retired this year, you may be planning your next steps. One of your goals could be selling your house and finding a home that more closely fits your needs.
Fortunately, you may be in a better position to make a move than you realize. Here are a few things to think about when making that decision.
From 1985 to 2008, the average length of time homeowners typically stayed in their homes was only six years. But according to the National Association of Realtors (NAR), that number is rising today, meaning many homeowners are living in their houses even longer (see graph below):
When you live in a home for a significant period of time, it’s natural for you to experience a number of changes in your life while you’re in that house. As those life changes and milestones happen, your needs may change. And if your current home no longer meets them, you may have better options waiting for you.
Additionally, if you’ve been in your home for more than a few years, you’ve likely built up significant equity that can fuel your next move. That’s because the longer you’ve been in your home, the more likely it’s grown in value due to home price appreciation. Data from the Federal Housing Finance Agency (FHFA) illustrates that point (see graph below):
While home price growth varies by state and local area, the national average shows the typical homeowner who’s been in their house for five years saw it increase in value by over 50%. And the average homeowner who’s owned their home for 30 years saw it almost triple in value over that time.
Whether you’re looking to downsize, relocate to a dream destination, or move so you live closer to loved ones, that equity can help you achieve your homeownership goals. NAR shares that for recent home sellers, the primary reason to move was to be closer to loved ones. Plus, retirement played a large role for those moving greater distances.
Whatever your home goals are, a trusted real estate advisor can work with you to find the best option. They’ll help you sell your current house and guide you as you buy the home that’s right for you and your lifestyle today.
Retirement can bring about major changes in your life, including what you need from your home. Let’s connect to explore your opportunities in our local market.
Did the frequency and intensity of bidding wars over the past two years make you put your home search on hold? If so, you should know the hyper competitive market has cooled this year as buyer demand has moderated and housing supply has grown. Those two factors combined mean you may see less competition from other buyers.
And with less competition comes more opportunity. Here are two trends that may be the news you need to reenter the market.
Over the last two years, more buyers were willing to skip important steps in the homebuying process, like the appraisal or the inspection, in hopes of gaining an advantage in a bidding war. But now, things are different.
The latest data from the National Association of Realtors (NAR) shows the percentage of buyers waiving their home inspection or appraisal is down. And a recent article from realtor.com points out more sellers are accepting contingencies:
“A year ago, sellers were calling all the shots and buyers were launching legendary bidding wars, waiving contingencies, and paying for homes in cash. But now, the shoe is on the other foot, and 92% of home sellers are accepting some buyer-friendly terms (frequently related to home inspections, financing, or appraisals), . . .”
This doesn’t mean we’re in a buyers’ market now, but it does mean you have a bit more leverage when it comes time to negotiate with a seller. The days of feeling like you may need to waive contingencies or pay drastically over asking price to get your offer considered may be coming to a close.
Before the pandemic, it was a common negotiation tactic for sellers to cover some of the buyer’s closing costs to sweeten the deal. This didn’t happen as much during the peak buyer frenzy over the past two years.
Today, data suggests this is making a comeback. A realtor.com survey shows 32% of sellers paid some or all of their buyer’s closing costs. This may be a negotiation tool you’ll see as you go to purchase a home. Just keep in mind, limits on closing cost credits are set by your lender and can vary by state and loan type. Work closely with your loan advisor to understand how much a seller can contribute to closing costs in your area.
Despite the extremely competitive housing market of the past several years, today’s data suggests negotiations are starting to come back to the table. To find out how the market is shifting in our area, let’s connect today.
At first glance, the increase in housing supply compared to last year may not sound like good news for prospective sellers, but it actually gives you two key opportunities in today’s housing market.
An article from Calculated Risk helps put the inventory gains the market has seen in 2022 into perspective by comparing it to recent years (see graph below). It shows supply has surpassed 2021 levels by 58%. But the further back you look, the more you’ll understand the bigger picture. And if you go all the way back to 2019, the last normal year in real estate, we’re roughly 35% below the housing supply we had at that time.
If your current house no longer meets your needs or lacks the space and features you want, this inventory growth gives you even more opportunity to sell and move into the home of your dreams. With more houses on the market, you’ll have more to choose from when you search for your next home.
Partnering with a local real estate professional can help you make sure you’re up to date on the homes available in your area. And when you do find the one, a professional can advise you on how to write a winning offer.
But again, despite the growth, inventory is still low compared to more normal years, and that isn’t going to change overnight. For you, that means your house should still be in demand among potential buyers if you price it right.
As an article from realtor.com says:
“Today’s shoppers generally have more homes to consider than last year’s shoppers did, but the market is still not back to pre-pandemic inventory levels.”
If you’re a homeowner looking to sell, you have more homes to choose from and can still sell your house while inventory is low overall. Let’s connect to get started, so you can have the best of both worlds.
If you’re trying to decide whether or not to sell your house, recent headlines about home prices may be top of mind. And if those stories have you wondering what that means for your home’s value, here’s what you really need to know.
It’s possible you’ve seen news stories mentioning a drop in home values or home price depreciation, but it’s important to remember those headlines are designed to make a big impression in just a few words. But what headlines aren’t always great at is painting the full picture.
While home prices are down slightly month-over-month in some markets, it’s also true that home values are up nationally on a year-over-year basis. The graph below uses the latest data from S&P Case-Shiller to help tell the story of what’s actually happening in the housing market today:
As the graph shows, it’s true home price growth has moderated in recent months (shown in green) as buyer demand has pulled back in response to higher mortgage rates. This is what the headlines are drawing attention to today.
But what’s important to notice is the bigger, longer-term picture. While home price growth is moderating month-over-month, the percent of appreciation year-over-year is still well above the home price change we saw during more normal years in the market.
The bars for January 2019 through mid-2020 show home price appreciation around 3-4% a year was more typical (see bars for January 2019 through mid-2020). But even the latest data for this year shows prices have still climbed by roughly 10% over last year.
While you may not be able to capitalize on the 20% appreciation we saw in early 2022, in most markets your home’s value, on average, is up 10% over last year – and a 10% gain is still dramatic compared to a more normal level of appreciation (3-4%).
The big takeaway? Don’t let the headlines get in the way of your plans to sell. Over the past two years alone, you’ve likely gained a substantial amount of equity in your home as home prices climbed. Even though home price moderation will vary by market moving forward, you can still use the boost your equity got to help power your move.
As Mark Fleming, Chief Economist at First American, says:
“Potential home sellers gained significant amounts of equity over the pandemic, so even as affordability-constrained buyer demand spurs price declines in some markets, potential sellers are unlikely to lose all that they have gained.”
If you have questions about home prices or how much equity you have in your current home, let’s connect so you have an expert’s advice.
There are many people thinking about buying a home, but with everything affecting the economy, some are wondering if it’s a smart decision to buy now or if it makes more sense to wait it out. As Bob Broeksmit, President and CEO of the Mortgage Bankers Association (MBA), explains:
“The desire for homeownership is strong. Many prospective buyers are waiting for the volatility in mortgage rates to subside, as well as for a clearer picture of the economic outlook.”
If you’re in that position, remember that it’s important to consider not just what’s happening today but also what benefits you may gain in the long run.
There’s a lot of information out there about how homeownership helps build a homeowner’s net worth over time. But even today, many people think first about things like 401(k)s before they think of owning a home as a wealth-building tool. It’s especially important if you’re a young prospective homebuyer to understand how homeownership is another key way to invest in your future. An article from Bloomberg notes:
“Millennials have higher average 401(k) balances than Generation X did when they were the same age, but they’re not any better off financially. . . . A lot of that has to do with being less likely to own a home.”
To help you understand just how much owning a home can have a positive impact on your life over the years, take a look at what the data shows. The same Bloomberg article helps show the gap in wealth between renters and homeowners who are 65 years and older (see graph below). The difference is substantial, even when incomes are similar.
So, if you want to create wealth to help set you up for success later on, it may be time to prioritize homeownership. That’s because, whether you decide to rent or buy a home, you’ll have a monthly housing expense either way. The question is: are you going to invest in yourself and your future, or will you help someone else (your landlord) increase their wealth?
Before putting your homeownership plans on hold, let’s connect to go over your options. That way, you’ll have expert advice on how to make the best decision right now and the best investment in your future.
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There’s no doubt buying a home today is different than it was over the past couple of years, and the shift in the market has led to advantages for buyers today. Right now, there are specific reasons that make this housing market attractive for those who’ve thought about buying but have sidelined their search due to rising mortgage rates.
Buying a home in any market is a personal decision, and the best way to make that decision is to educate yourself on the facts, not following sensationalized headlines in the news today. The reality is, headlines do more to terrify people thinking about buying a home than they do to clarify what’s actually going on with real estate.
Here are three reasons potential homebuyers should consider buying a home today.
According to data from the National Association of Realtors (NAR), this year, the supply of homes for sale has grown significantly compared to where we started the year (see graph below):
This growth has happened for two reasons: homeowners listing their homes for sale and homes staying on the market a bit longer as buyer demand has moderated in response to higher mortgage rates.
The good news for you is that more inventory means more homes to choose from. And when there are more homes on the market, you could also see less competition from other buyers because the peak frenzy of competing over the same home has eased too.
Experts don’t believe home prices will crash like they did in 2008. Instead, home prices will moderate at various levels depending on the local market and the factors, like supply and demand, at play in that area. That’s why some experts are calling for slight appreciation and others are calling for slight depreciation (see graph below):
If you consider the big picture and average the expert forecasts for 2023 together, the expectation is for relatively flat or neutral price appreciation next year. So, if you’re worried about buying a home because you’re afraid home prices will crash like they did in 2008, rest assured that’s not what expert projections tell us.
While mortgage rates have risen dramatically this year, the rapid increases we’ve seen have moderated in recent weeks as early signs hint that inflation may be easing slightly. Where they’ll go from here largely depends on what happens next with inflation. If inflation does truly begin to cool, mortgage rates may come down as a result.
When that happens, expect more buyers to jump back into the market. For you, that means you’ll once again face more competition. Buying your house now before more buyers reenter the market could help you get one step ahead. As Lawrence Yun, Chief Economist for NAR, says:
“The upcoming months should see a return of buyers, as mortgage rates appear to have already peaked and have been coming down since mid-November.”
When mortgage rates come down, those waiting on the sidelines will jump back in. Your advantage is getting in before they do.
If you’re thinking about buying a home, you should seriously consider the advantages today’s market offers. Let’s connect so you can make the dream of homeownership a reality.
There’s no denying mortgage rates are higher now than they were last year. And if you’re thinking about buying a home, this may be top of mind for you. That’s because those higher rates impact how much it costs to borrow money for your home loan. As you set out to make a purchase this winter, you’ll need to be strategic so you can find a home that meets your needs and budget.
Danielle Hale, Chief Economist at realtor.com, explains:
“The key to making a good decision in this challenging housing market is to be laser focused on what you need now and in the years ahead, . . . Another key point is to avoid stretching your budget, as tempting as it may be given the diminished purchasing power.”
In other words, it’s important to be mindful of what’s a necessity and what’s a nice-to-have when searching for a home. And the best way to understand this is to put together a list of desired features for your home search.
The first step? Get pre-approved for a mortgage. Pre-approval helps you better understand what you can borrow for your home loan, and that plays an important role in how you’ll craft your list. After all, you don’t want to fall in love with a home that’s out of reach. Once you have a good grasp of your budget, you can begin to list (and prioritize) all the features of a home you would like.
Here’s a great way to think about them before you begin:
Finally, once you’ve created your list and categorized it in a way that works for you, discuss it with your real estate advisor. They’ll be able to help you refine the list further, coach you through the best way to stick to it, and find a home in your area that meets your needs.
Putting together your list of necessary features for your next home might seem like a small task, but it’s a crucial first step on your homebuying journey today. If you’re ready to find a home that fits your needs, let’s connect.
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