[caption id="" align="alignnone" width="648"] Rising Prices[/caption] Over the next five years, home prices are expected to appreciate, on average, by 3.6% per year and to grow by 18.2% cumulatively, according to Pulsenomics’ most recent Home Price Expectation Survey.
So, what does this mean for homeowners and their equity position?As an example, let’s assume a young couple purchased and closed on a $250,000 home this January. If we only look at the projected increase in the price of that home, how much equity will they earn over the next 5 years? [caption id="attachment_37332" align="alignnone" width="650"] Rising Prices[/caption] Since the experts predict that home prices will increase by 5.0% in 2018, the young homeowners will have gained $12,500 in equity in just one year. Over a five-year period, their equity will increase by over $48,000! This figure does not even take into account their monthly principal mortgage payments. In many cases, home equity is one of the largest portions of a family’s overall net worth.
Bottom LineNot only is homeownership something to be proud of, but it also offers you and your family the ability to build equity you can borrow against in the future. If you are ready and willing to buy, find out if you are able to today!
- A trend that has been emerging for some time now is the contrast between inventory & demand in the Premium & Luxury Markets vs. the Starter & Trade-Up Home Markets and what that’s, in turn, doing to prices!
- Inventory continues to rise in the luxury & premium home markets which is causing prices to cool.
- Demand continues to rise with low inventory in the starter & trade-up home markets, causing prices to rise!
Mortgage Interest RatesWhether you are a first-time buyer or a homeowner looking to move up to your next home, you should pay attention to mortgage interest rates. Over the course of 2018, according to Freddie Mac’s Primary Mortgage Market Survey, rates have increased from 3.95% in the first week of January to 4.40% in the first week of April. At first glance, the difference between these numbers in such a short amount of time could be concerning. But if we look at the graph below, we’ll see that rates have already started to level off and return to the mark set in February. [caption id="attachment_37336" align="alignnone" width="650"] Mortgage Interest Rates[/caption] This is great news for anyone looking to buy a home this spring! The spring is always one of the busiest seasons for home buying. And with rates increasing even more, buyers have come off the fence to lock in great rates! This is still great advice as the experts believe that rates will continue to rise throughout the year. Every month, Freddie Mac, Fannie Mae, the Mortgage Bankers Association and the National Association of Realtors release their projections for where they believe mortgage rates will be in the coming months. If we take the average of what each of the four organizations is predicting for the second quarter, rates are expected to rise to about 4.48% by June.
That average climbs to 4.73% by the end of this year.
So, what does this mean?1Waiting until the end of the year to buy, with rates still projected to increase, will end up costing you more money on your monthly mortgage payment. For every $250,000 you need to borrow, you will spend $49.21 more per month, $590.52 per year, and over $17,700 by the end of your 30-year mortgage. And that’s just the impact of your interest rate going up!
Bottom LineIf you are ready and willing to purchase a home, find out if you’re able to. Let’s get together to evaluate your needs and help you with next steps! Feel free to call or text me at 516-429-9399. I'm only too glad to help!
[caption id="" align="alignnone" width="648"] House Prices: Simply a Matter of Supply & Demand[/caption] Why are home prices still rising? It is a simple answer. There are more purchasers in the market right now than there are available homes for them to buy. This is an example of the theory of “supply and demand” which is defined as:
“the amount of a commodity, product, or service available and the desire of buyers for it, considered as factors regulating its price.”When demand exceeds supply, prices go up. This is currently happening in the residential real estate market. Here are the numbers for supply and demand as compared to last year for the last three months (March numbers are not yet available): [caption id="attachment_37309" align="alignnone" width="650"] Simply a Matter of Supply & Demand[/caption] In each of the last three months, demand (buyer traffic) has increased as compared to last year while supply (number of available listings) has decreased. If this situation persists, home values will continue to increase.
Bottom LineThe reason home prices are still rising is because there are many purchasers looking to buy, but very few homeowners ready to sell. This imbalance is the reason prices will remain on the uptick. Especially in the first-time home buyer category!
[caption id="" align="alignnone" width="648"] Home Prices[/caption] Some believe that the combined effects of the new tax code and rising mortgage rates will have an adverse impact on residential real estate prices in 2018. However, the clear majority of recently surveyed housing experts believe that home prices will continue to rise this year. What is the Home Price Expectation Survey? Each quarter, Pulsenomics surveys a nationwide panel of economists, real estate experts and investment & market strategists. Those surveyed include experts such as:
- Daniel Bachman, Senior Manager, U.S. Economics at Deloitte Services, LP
- Kathy Bostjancic, Head of U.S. Macro Investors Service at Oxford Economics
- David Downs, Real Estate Finance Professor at VCU
- Edward Pinto, Resident Fellow at American Enterprise Institute
- Albert Saiz, Director at MIT Center for Real Estate
- 21.6% believe prices will appreciate by 6% or more
- 71.6% believe prices will appreciate between 3 and 5.99%
- 5.7% believe prices will appreciate between 0 and 2.99%
- Only 1.1% believe prices will depreciate
Bottom LineAlmost ninety-nine percent of the top experts studying residential real estate believe that prices will appreciate this year, and over 93% believe home values will appreciate by at least 3%. It is important to remember that this is a national projection. Just how home prices will fare in New York State and Nassau and Suffolk counties remain to be seen!
[caption id="" align="alignnone" width="648"] Buyer Demand[/caption] The price of any item is determined by the supply of that item, as well as market demand. The National Association of REALTORS (NAR) surveys “over 50,000 real estate practitioners about their expectations for home sales, prices and market conditions” for their monthly REALTORS Confidence Index. Their latest edition sheds some light on the relationship between Seller Traffic (supply) and Buyer Traffic (demand).
Buyer DemandThe map below was created after asking the question: “How would you rate buyer traffic in your area?” [caption id="attachment_37261" align="alignnone" width="650"] Buyer Demand[/caption] The darker the blue, the stronger the demand for homes in that area. Only four states had a ‘stable’ demand level.
Seller SupplyThe index also asked: “How would you rate seller traffic in your area?” As you can see from the map below, 25 states reported ‘weak’ seller traffic, 21 states reported ‘stable’ seller traffic, 3 states and Washington D.C. reported ‘strong’ seller traffic, and only 1 state reported ‘very strong’ seller traffic. This means there are far fewer homes on the market than what is needed to satisfy the buyer demand, those who are out looking for their dream homes.
Bottom LineLooking at the maps above, it is not hard to see why prices are appreciating in many areas of the country. Until the supply of homes for sale starts to meet buyer demand, prices will continue to increase. If you are debating listing your home for sale, let’s get together to help you capitalize on the demand in the market now!
[caption id="" align="alignnone" width="648"] Reasons to sell this spring[/caption]
Here are five reasons to sell this spring.
1. Demand Is StrongThe latest Buyer Traffic Report from the National Association of Realtors (NAR) shows that buyer demand remains very strong throughout the vast majority of the country. These buyers are ready, willing and able to purchase…and are in the market right now! More often than not, multiple buyers are competing with each other to buy a home. Take advantage of the buyer activity currently in the market.
2. There Is Less Competition NowHousing inventory has declined year over year for the last 32 months and is still under the 6-month supply needed for a normal housing market. This means that, in the majority of the country, there are not enough homes for sale to satisfy the number of buyers in the market. This is good news for homeowners who have gained equity as their home values have increased. However, additional inventory could be coming to the market soon. Historically, the average number of years a homeowner stayed in their home was six but has hovered between nine and ten years since 2011. There is a pent-up desire for many homeowners to move as they were unable to sell over the last few years because of a negative equity situation. As home values continue to appreciate, more and more homeowners will be given the freedom to move. The choices buyers have will continue to increase. Don’t wait until this other inventory comes to market before you decide to sell.
3. The Process Will Be QuickerToday’s competitive environment has forced buyers to do all they can to stand out from the crowd, including getting pre-approved for their mortgage financing. This makes the entire selling process much faster and much simpler as buyers know exactly what they can afford before home shopping. According to Ellie Mae’s latest Origination Insights Report, the average time it took to close a loan was 45 days.
4. There Will Never Be a Better Time to Move UpIf your next move will be into a premium or luxury home, now is the time to move up! The inventory of homes for sale at these higher price ranges has forced these markets into a buyer’s market. This means that if you are planning on selling a starter or trade-up home, your home will sell quickly, AND you’ll be able to find a premium home to call your own! Prices are projected to appreciate by 4.8% over the next year according to CoreLogic. If you are moving to a higher-priced home, it will wind up costing you more in raw dollars (both in down payment and mortgage payment) if you wait.
5. It’s Time to Move on With Your LifeLook at the reason you decided to sell in the first place and determine whether it is worth waiting. Is money more important than being with family? Is money more important than your health? Is money more important than having the freedom to go on with your life the way you think you should? Only you know the answers to the questions above. You have the power to take control of the situation by putting your home on the market. Perhaps the time has come for you and your family to move on and start living the life you desire.
That is what is truly important.
[caption id="" align="alignnone" width="648"] Tips for preparing your house for sale[/caption] [caption id="attachment_37239" align="alignnone" width="650"] Tips for preparing your house for sale[/caption]
- When listing your house for sale your top goal will be to get the home sold for the best price possible!
- There are many small projects that you can do to ensure this happens!
- Your real estate agent will have a list of specific suggestions for getting your house ready for market and is a great resource for finding local contractors who can help!
[caption id="" align="alignnone" width="648"] Home Renovation[/caption] Last week, we shared “7 Factors To Consider When Choosing A Home To Retire In.” For some homeowners, these seven factors can be taken into account with a home renovation, but is it worth it to remodel or change floor plans?
Let’s look at this example.Let’s say you have a 4-bedroom colonial style home in a great school district. The neighborhood is amazing, and you are very comfortable there, but your kids are all grown up and the original benefits of the home no longer apply. You’ve always wanted a huge master suite and are considering merging 3 of the smaller bedrooms on the second floor to achieve this dream. In the short term, you are over the moon excited about your newly renovated oasis. In the long term, when you go to sell your home down the road, you’ve now taken a 4-bedroom home in a great school district and turned it into a 2-bedroom home. Your pool of potential buyers has shrunk significantly and so has the value of your home (unless you are able to find someone who has the exact needs you have today!). Why not consider listing your 4-bedroom home now and moving into a gorgeous 2-bedroom with a master suite? Your house can become a home for the next family looking for that perfect neighborhood with a great school district to raise their kids in! You may even be able to achieve your dream in the same area you love, without having to give up your favorite restaurants and grocery stores.
Bottom LineIf you are debating a major renovation that would change the layout of your home, before you pick up that sledgehammer, let’s get together and discuss the available listings in our area that might meet your needs today!
[caption id="" align="alignnone" width="648"] Home Renovation[/caption] Last week, I shared “7 Factors To Consider When Choosing A Home To Retire In.” For some homeowners, these seven factors can be taken into account with a home renovation, but is it worth it to remodel or change floor plans?