3 Expert Insights On Inventory In The Current Market

Lack of Inventory Is Holding Down the Housing Market | Simplifying The Market The current housing landscape presents greater home values, low interest rates, and high buyer demand. All of these factors point to the strong market forecasted to continue throughout the rest of the year. There is, however, one thing that may cause the industry to tap the brakes: an overall lack of housing inventory. Buyer demand naturally increases during the summer months, but the current supply is not keeping up.

Here is a look at what a few industry experts have to say:

Lawrence Yun, Chief Economist at National Association of Realtors
“Imbalance persists for mid-to-lower priced homes with solid demand and insufficient supply, which is consequently pushing up home prices.”
Mark Fleming, Chief Economist of First American
“Market conditions are ripe for increasing home sales with one glaring exception. The supply of homes for sale remains tight, keeping existing home sales below potential.”
Danielle Hale, Chief Economist of Realtor.com
“We’re not seeing as many new listings come up on the market…It was only 18 months ago that the number of homes for sale hit its lowest level in recorded history and sparked the fiercest competition among buyers we’ve ever seen.”

Bottom Line

If you’re thinking of selling, now may be the time. Demand for your house will be strong during a period when there is very little competition, ideally leading to a quick sale and a great return on your investment.

4 Reasons to Buy A Home This Summer

4 Reasons to Buy A Home This Summer | Simplifying The Market Here are four reasons to buy a home today instead of waiting.

1. Prices Will Continue to Rise

CoreLogic’s latest U.S. Home Price Insights reports that home prices have appreciated by 3.7% over the last 12 months. The same report predicts that prices will continue to increase at a rate of 4.8% over the next year. Home values will continue to appreciate. Waiting may no longer makes sense.

2. Mortgage Interest Rates Are Projected to Increase

Freddie Mac’s Primary Mortgage Market Survey shows that interest rates for a 30-year fixed rate mortgage have started to level off around 4.3%. Most experts predict that rates will rise over the next 12 months. The Mortgage Bankers Association, Fannie Mae, Freddie Mac, and the National Association of Realtors are in unison, projecting rates will increase by this time next year. An increase in rates will impact YOUR monthly mortgage payment. A year from now, your housing expense will increase if a mortgage is necessary to buy your next home.

3. Either Way, You Are Paying a Mortgage

Some renters have not yet purchased a home because they are uncomfortable taking on the obligation of a mortgage. Everyone should realize that unless you are living with your parents rent-free, you are paying a mortgage – either yours or your landlord’s. As an owner, your mortgage payment is a form of ‘forced savings’ which allows you to have equity in your home that you can tap into later in life. As a renter, you guarantee your landlord is the person with that equity. Are you ready to put your housing cost to work for you?

4. It’s Time to Move On with Your Life

The ‘cost’ of a home is determined by two major components: the price of the home and the current mortgage rate. It appears that both are on the rise. But what if they weren’t? Would you wait? Examine the actual reason you are buying and decide if it is worth waiting. Whether you want to have a great place for your children to grow up, greater safety for your family, or you just want to have control over renovations, now could be the time to buy.

Bottom Line

If the right thing for you and your family is to purchase a home this year, buying sooner rather than later could lead to substantial savings.

Why is Housing Inventory Up With Sales Down?

Why Has Housing Supply Increased as Sales Have Slowed Down? | Simplifying The Market According to the latest Existing Home Sales Report from the National Association of Realtors (NAR), the inventory of homes for sale this year compared to last year has increased for the last four months, all while sales of existing homes have slowed compared to last year’s numbers. For over three years leading up to this point, the exact opposite was true; Inventory dropped as sales soared. NAR’s Chief Economist Lawrence Yun shed some light on what could be contributing to this shift,
“This is the lowest existing home sales level since November 2015. A decade’s high mortgage rates are preventing consumers from making quick decisions on home purchases. All the while, affordable home listings remain low, continuing to spur underperforming sales activity across the country.”

Let’s take a deeper look:

Interest Rates

Since January, 30-year fixed mortgage interest rates have increased nearly a full percentage point (from 3.95% to 4.9%). Fannie Mae, Freddie Mac, the National Association of Realtors, and the Mortgage Bankers Association are all in agreement that rates will continue to increase to about 5.2% over the next 12 months.
“The rise in [mortgage] rates paired with this very strong price appreciation absolutely is slowing housing,” said Fannie Mae’s Chief Economist Doug Duncan.
Even though rates are higher than they’ve been in a decade, they still remain below the average for the 1970s, 80s, 90s, and 2000s!

Mismatch of Inventory

Elizabeth Mendenhall, President of NAR, said it best, “Despite small month over month increases, the share of first-time buyers in the market continues to underwhelm because there are simply not enough listings in their price range.” Prices of starter and trade-up homes have appreciated faster than their higher-priced counterparts. Over the last 5 years, the lowest-priced homes have appreciated by 47% while the highest-priced homes have appreciated by only 24%. According to the Institute of Luxury Home Market’s Luxury Market Report, the $1M-and-up price range is now experiencing a buyer’s market. This means that supply (inventory) has finally caught up with demand and buyers are in the driver’s seat when it comes to negotiations. Additionally, many listings in this price range have experienced price cuts in order to entice buyers to put in offers.

Natural Disasters

Although not fully to blame for the national shortage in sales and inventory, natural disasters like Hurricane Florence, Hurricane Michael, and the wildfires on the West Coast have certainly had an impact.

Bottom Line

Additional inventory coming to market could help normalize the housing market and allow incomes to catch up to home prices. For more information about sales and inventory in your area, let’s get together so we can help you make the best decision for you and your family.  Call or text me today! P.S. See a list of Nassau County and Suffolk County towns as inventory has changed from December 2017 to December 2018, Not every town has seen an increase - Click here.

2 Factors to Watch in Today’s Real Estate Market Whether Buying or Selling

2 Factors to Watch in Today’s Real Estate Market Whether Buying or Selling | Simplifying The Market When it comes to buying or selling a home there are many factors you should consider. Where you want to live, why you want to buy or sell, and who will help you along your journey are just some of those factors. When it comes to today’s real estate market, though, the top two factors to consider are what’s happening with interest rates & inventory.

Interest Rates

Mortgage interest rates have been on the rise and are now over three-quarters of a percentage point higher than they were at the beginning of the year. According to Freddie Mac’s latest Primary Mortgage Market Survey, rates climbed to 4.72% for a 30-year fixed rate mortgage last week. The interest rate you secure when buying a home not only greatly impacts your monthly housing costs, but also impacts your purchasing power. Purchasing power, simply put, is the amount of home you can afford to buy for the budget you have available to spend. As rates increase, the price of the house you can afford to buy will decrease if you plan to stay within a certain monthly housing budget. The chart below shows the impact that rising interest rates would have if you planned to purchase a $400,000 home while keeping your principal and interest payments between $2,020-$2,050 a month. 2 Factors to Watch in Today’s Real Estate Market Whether Buying or Selling | Simplifying The Market With each quarter of a percent increase in interest rate, the value of the home you can afford decreases by 2.5% (in this example, $10,000). Experts predict that mortgage rates will be over 5% by this time next year.

Inventory

A ‘normal’ real estate market requires there to be a 6-month supply of homes for sale in order for prices to increase only with inflation. According to the National Association of Realtors (NAR), listing inventory is currently at a 4.3-month supply (still well below the 6-months needed), which has put upward pressure on home prices. Home prices have increased year-over-year for the last 78 straight months. The inventory of homes for sale in the real estate market had been on a steady decline and experienced year-over-year drops for 36 straight months (from July 2015 to May 2018), but we are starting to see a shift in inventory over the last three months. The chart below shows the change in housing supply over the last 12 months compared to the previous 12 months. As you can see, in June, July, and August, inventory levels have started to increase as compared to the same time last year. 2 Factors to Watch in Today’s Real Estate Market Whether Buying or Selling | Simplifying The Market This is a trend to watch as we move further into the fall and winter months. If we continue to see an increase in homes for sale, we could start moving further away from a seller’s market and closer to a normal market.

Bottom Line

If you are planning to enter the housing market, either as a buyer or a seller, let’s get together to discuss the changes in mortgage interest rates and inventory and what they could mean for you.

Mortgage Interest Rates are Rising!

Mortgage Interest Rates are Still Going Up… Should You Wait to Buy? |Simplifying The Market Mortgage interest rates, as reported by Freddie Mac, have increased by close to a quarter of a percent over the last several weeks. Freddie Mac, Fannie Mae, the Mortgage Bankers Association, and the National Association of Realtors are all calling for mortgage rates to rise another quarter of a percent by next year. In addition to the predictions from the four major reporting agencies mentioned above, the Federal Open Market Committee recently voted “unanimously to approve a 1/4 percentage point increase in the primary credit rate to 2.75 percent.” Historically, an increase in the primary credit rate has translated to an overall jump in mortgage interest rates as well. This has caused some purchasers to lament the fact that they may no longer be able to get a rate below 4%. However, we must realize that current rates are still at historic lows. Here is a chart showing the average mortgage interest rate over the last several decades: Mortgage Interest Rates are Still Going Up… Should You Wait to Buy? |Simplifying The Market

Bottom Line

Though you may have missed the lowest mortgage rate ever offered, you can still get a better interest rate than your older brother or sister did ten years ago, a lower rate than your parents did twenty years ago, and a better rate than your grandparents did forty years ago.

Should I Buy Now? Or Wait Until Next Year? [INFOGRAPHIC]

I Would Buy Now!

Should I Buy Now? Or Wait Until Next Year? [INFOGRAPHIC] | Simplifying The Market

Some Highlights:

  • The cost of waiting to buy is defined as the additional funds it would take to buy a home if prices & interest rates were to increase over a period of time.
  • Freddie Mac predicts interest rates to rise to 5.2% by the third quarter of 2019.
  • CoreLogic predicts home prices to appreciate by 5.1% over the next 12 months.
  • If you are ready and willing to buy your dream home, find out if you are able to!