To keep the holiday dinner conversations peaceful, instead of talking politics and religion, talk about REAL ESTATE! Here are your talking points. (Although it could easily lead back to the aforementioned subjects so beware.)
October Existing Home Sales Plunge
Much higher mortgage rates have ensured that this will be the coldest 4Q in quite some time â at least as far as existing home sales go.
According to the NAR, October existing home sales fell 5.9% month-on-month (compared to September 2022) and plunged 28.4% year-on-year (compared to October 2021). This is the 9th-consecutive monthly drop. This is much more than just a seasonal slowdown.
Note: The 4.43 million figure you see in the chart below is a seasonally-adjusted, annualized figure. 4.43 million homes were not sold in October. Instead, itâs telling you that if the pace of sales seen in October (adjusted for seasonality) continued for the next 12 months, youâd sell 4.33 million homes. This figure is just 10% above the May 2020 low of 4.07 million.
Source: NAR
In addition, there continues to be a big difference from region to region. Things were much worse in the West, where existing home sales were down 38% YoY and there was a dramatic contraction (41%-45%) in the sale of higher-end homes. On the other hand, the Northeast is performing the best (smallest contraction of 23% YoY). Also note that the big decline in homes priced between $100â250K across the US is at least partially due to fewer homes listed within that price range thanks to rapid home price increases.
October 2022 Existing Single Family Homes Sold
By Region and Sales Price
Source: NAR
Mortgage Market
After the big decline two weeks ago, average 30-year mortgage rates have hovered around the 6.6% level. This means that monthly mortgage payments are $100â200/month lower than they would have been in mid-November when rates were at 7.25% (with no points purchased).
â VA Loans can help make homeownership possible for those who have served our country.
â These loans offer great benefits for eligible individuals and can help them buy a VA-approved house or condo, build a new home, or make improvements to their house.
â Homeownership is the American Dream. One way we can honor and thank our veterans is to ensure they have the best information about the benefits of VA home loans.
While higher mortgage rates are creating affordability challenges for homebuyers this year, there is some good news for those people still looking to buy a home.
As the market has cooled this year, some of the intensity buyers faced during the peak frenzy of the pandemic has cooled too. Here are just a few trends that may benefit you when you go to buy a home today.
1. More Homes To Choose from
During the pandemic, housing supply hit a record low at the same time buyer demand skyrocketed. This combination made it difficult to find a home because there just werenât enough to meet buyer demand. According to Calculated Risk, the supply of homes for sale increased by 39.5% for the week ending October 28 compared to the same week last year.
Even though itâs still a sellersâ market and supply is still lower than more normal levels, you have more to choose from in your home search. That makes finding your dream home a bit less difficult.
2. Bidding Wars Have Eased
One of the top stories in real estate over the past two years was the intensity and frequency of bidding wars. But today, things are different. With more options, youâll likely see less competition from other buyers looking for homes. According to the National Association of Realtors (NAR), the average number of offers on recently sold homes has declined. This September, the average was 2.5 offers per sale. In contrast, last September, the average was 3.7 offers per sale.
If you tried to buy a house over the past two years, you probably experienced the bidding war frenzy firsthand and may have been outbid on several homes along the way. Now you have a chance to jump back into the market and enjoy searching for a home with less competition.
3. More Negotiation Power
And when you have less competition, you also have more negotiating power as a buyer. Over the last two years, more buyers were willing to skip important steps in the homebuying process, like the appraisal or inspection, to try to win a bidding war. But the latest data from the National Association of Realtors (NAR) shows the percentage of buyers waiving those contingencies is going down.
As a buyer, this is good news. The appraisal and the inspection give you important information about the value and condition of the home youâre buying. And if something turns up in the inspection, you have more power today to renegotiate with the seller.
A survey from realtor.com confirms more sellers are accepting offers that include contingencies today. According to that report, 95% of sellers said buyers requested a home inspection, and 67% negotiated with buyers on repairs as a result of the inspection findings.
Bottom Line
While buyers still face challenges today, theyâre not necessarily the same ones you may have been up against just a year or so ago. If you were outbid or had trouble finding a home in the past, now may be the moment youâve been waiting for. Letâs connect to start the homebuying process today.
While the Federal Reserve is working hard to bring down inflation, the latest data shows the inflation rate is still high, remaining around 8%. This news impacted the stock market and added fuel to the fire for conversations about a recession.
Youâre likely feeling the impact in your day-to-day life as you watch the cost of goods and services climb. The pinch itâs creating on your wallet and the looming economic uncertainty may leave you wondering: âshould I still buy a home right now?â If that question is top of mind for you, hereâs what you need to know.
Homeownership Is Historically a Great Hedge Against Inflation
In an inflationary economy, prices rise across the board. Historically, homeownership is a great hedge against those rising costs because you can lock in whatâs likely your largest monthly payment (your mortgage) for the duration of your loan. That helps stabilize some of your monthly expenses. James Royal, Senior Wealth Management Reporter at Bankrate, explains:
âA fixed-rate mortgage allows you to maintain the biggest portion of housing expenses at the same payment. Sure, property taxes will rise and other expenses may creep up, but your monthly housing payment remains the same.â
And with rents being as high as they are, the ability to stabilize your monthly payments and protect yourself from future rent hikes may be even more important. Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), explains what happened to rents in the latest inflation report:
âInflation refuses to budge. In September, consumer prices rose by 8.2%. Rents rose by 7.2%, the highest pace in 40 years.â
When you rent, your monthly payment is determined by your lease, which typically renews on an annual basis. With inflation high, your landlord may be more likely to increase your payments to offset the impact of inflation. That may be part of the reason why a survey from realtor.com shows 72% of landlords said they plan to raise the rent on one or more of their properties in the next year.
Becoming a homeowner, if youâre ready and able to do so, can provide lasting stability and a reliable shelter in times of economic uncertainty.
Bottom Line
The best hedge against inflation is a fixed housing cost. If youâre ready to learn more and start your journey to homeownership, letâs connect.
Rising interest rates have begun to slow an overheated housing market as monthly mortgage payments have risen dramatically since the beginning of the year. This is leaving some people who want to purchase a home priced out of the market and others wondering if now is the time to buy one. But this rise in borrowing cost shows no signs of letting up soon.
Economic uncertainty and the volatility of the financial markets are causing mortgage rates to rise. George Ratiu, Senior Economist and Manager of Economic Research at realtor.com, says this:
âWhile even two months ago rates above 7% may have seemed unthinkable, at the current pace, we can expect rates to surpass that level in the next three months.â
So, is now the right time to buy a home? Anyone thinking about buying a home today should ask themselves two questions:
1. Where Do I Think Home Prices Are Heading?
There are two places to turn to answer this question. First is the consensus of what experts are saying. If you look at what experts are projecting for home prices in 2023, theyâre forecasting home price appreciation around 2%. While itâs true some are calling for depreciation, most are calling for appreciation in home values over the next year.
The second spot to turn to for information is the Home Price Expectation Survey from Pulsenomics â a survey of a national panel of over one hundred economists, real estate experts, and investment and market strategists. According to the latest release, the experts surveyed are also calling for home price appreciation for the next several years (see graph below):
2. Where Do I Think Interest Rates Are Heading?
Like mentioned above, Ratiu sees mortgage rates rising over the next several months. Another expert agrees. Mark Fleming, Chief Economist at First American, says:
âWhile mortgage rates are expected to continue to drift higher over the coming months, much of the rapid increase in rates is likely behind us.âÂ
The instability in the world and higher inflation are driving this volatile market, resulting in higher borrowing rates for those looking to buy homes.
Bottom Line
If youâre thinking about buying a home, asking yourself about home prices and mortgage rates will help you make a powerful and confident decision. Experts see both prices and rates rising in the future. The alternative is to rent, but rents are also increasing. That may mean buying a home makes more sense than renting.
Let’s chat and connect!
Christine Almarines @carealestategroup
Realtor DRE # 01412944
714-476-4637 | christine@carealestategroup.com
Michelle Kim @michellejeankim_homes
Realtor DRE # 01885912
714-253-7531 | michelle@carealestategroup.com
Esther Oh @estheroh_realtor
Realtor DRE # 02155451
323-0899-7065 | esther@carealestategroup.com
While watching the stock market recently may have started to feel pretty challenging, checking the value of your home should come as welcome relief in this volatile time. If youâre a homeowner, your net worth got a big boost over the past few years thanks to rising home prices. And that increase in your wealth came in the form of home equity. Hereâs how it works.
Equity is the current value of your home minus what you owe on the loan. Because there was a significant imbalance between the number of homes available for sale and the number of buyers looking to make a purchase over the past few years, home prices appreciated substantially. And while rising inventory and mortgage rates have cooled the market some in recent months, home prices nationally remain strong.
Thatâs why, according to the latest Homeowner Equity Insights from CoreLogic, the average homeowner equity has grown by $60,000 over the last 12 months. While thatâs the national number, if you want to know what happened, on average, over the past year in your area, look at the map below from CoreLogic:
Why This Is So Important Right Now
Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), helps explain why this matters so much today:
â. . . the decline in the stock market has dented overall net wealth. It has fallen by $6 trillion from the first to the second quarter. Only housing wealth has held on, with homeownersâ real estate wealth (home value minus mortgage balance) rising by $1.2 trillion.â
While equity helps increase your overall net worth, it can also help you achieve other goals like buying your next home. When you sell your current house, the equity you built up comes back to you in the sale, and it may be just what you need to cover a large portion â if not all â of the down payment on your next home.
Bottom Line
Thereâs volatility in todayâs stock market, but home equity is still incredibly strong. To find out just how much equity you have in your current home, letâs connect.
Thereâs no denying the housing market is undergoing a shift this season as buyer demand slows and the number of homes for sale grows. But that shift actually gives you some unique benefits when you sell. Hereâs a look at the key opportunities you have if you list your house this fall.
Opportunity #1: You Have More Options for Your Move
One of the biggest stories today is the growing supply of homes for sale. Housing inventory has been increasing since the start of the year, primarily because higher mortgage rates helped cool off the peak frenzy of buyer demand. But what you may not realize is, that actually could benefit you.
If youâre selling your house to make a move, it means youâll have more options for your own home search. That gives you an even better chance to find a home that checks all of your boxes. So, if youâve put off selling because you were worried about being able to find somewhere to go, know your options have improved.
Opportunity #2: The Number of Homes on the Market Is Still Low
Just remember, while data shows the number of homes for sale has increased this year, housing supply is still firmly in sellersâ market territory. To be in a balanced market where there are enough homes available to meet the pace of buyer demand, there would need to be a six monthsâ supply of homes. According to the latest report from the National Association of Realtors (NAR), in July, there was only a 3.3 monthsâ supply.
While youâll have more options for your own home search, inventory is still low, and that means your home will still be in demand if you price it right. Thatâs why the most recent data from NAR also shows the average home sold in July still saw multiple offers and sold in as little as 14 days.
Opportunity #3: Your Equity Has Grown by Record Amounts
The home price appreciation the market saw over the past few years has likely given your equity (and your net worth) a considerable boost. Danielle Hale, Chief Economist at realtor.com, explains:
âHome owners trying to decide if now is the time to list their home for sale are still in a good position in many markets across the country as a decade of rising home prices gives them a substantial equity cushion . . .âÂ
If youâve been holding off on selling because youâre worried about how rising prices will impact your next home search, rest assured your equity can help. It may be just what you need to cover a large portion (if not all) of the down payment on your next home.
Bottom Line
If youâre thinking about selling your house this season, work with a real estate professional so you have the expert insights you need to make the best possible move today.
đĄ For more Real Estate Tips like these, Home Maintenance Tips on Mondays, and Fun Fridays, follow us at @carealestategroup — we are more than just real estate!
If youâre raring to buy a home, chances are youâll need a mortgage. But which kind of mortgage should you get?
Home loans arenât one size fits all, but come in a variety of forms to suit home buyers in different circumstances. One good place to start figuring out your options is a mortgage calculator, where you can plug in various home prices and and have this sum broken down into monthly payments. Still, in addition to a homeâs price, you should carefully consider the type of loan you get.
Two of the main types of mortgages home buyers consider getting are a fixed-rate mortgage and an adjustable-rate mortgage, or ARM.
So whatâs the difference between these two types of home loans? In a nutshell, a fixed-rate mortgage has an interest rate that stays the same over the life of the loan. An ARM, by contrast, has an interest rate that changes over time.
Before you seek out mortgage pre-approval, letâs break down the pros and cons of each loan so you can decide which one is right for you.
Fixed-rate mortgage
According to Wells Fargo Home Mortgage Area branch manager Chris Jurilla, the majority of homeowners tend to prefer fixed-rate mortgages. And for good reason: A fixed interest rate means your mortgage payments remain steady over the life of your loan.
âFixed-rate mortgages provide more long-term stability,â Jurilla says. âAnd with rates still low, borrowers prefer the security of not risking a rate increase or adjustment if the market were to turn.â
If youâre a home buyer with steady employment who wants to put down roots in a community, a fixed-rate mortgage might appeal to you. This kind of loan is also advantageous to people approaching retirement, because the fixed payments make it easier to plan their finances.
The pros of a fixed-rate mortgage:
Predictability:Â The interest rate doesnât change for the life of the loan, giving home buyers peace of mind.
Fixed costs:Â You can budget more easily as the rate and payments remain constant.
Straightforward numbers:Â The math involved with figuring out your loan is way easier than for an ARM.
Stability:Â This predictable loan is more appealing for the risk-averse.
And the cons:
Youâre locked in:Â You wonât be able to take advantage of falling interest rates without refinancing.
Your borrowing has a ceiling:Â You may not qualify for as much house as you would like, because those mortgage payments are typically higher.
Adjustable-rate mortgage
An ARM starts out at a fixed, predetermined interest rate, likely lower than what you would get with a comparable fixed-rate mortgage. However, the rate adjusts after a specified initial periodâusually three, five, seven, or 10 yearsâbased on market indexes. If those indexes go up, your payment will go up, too (sometimes way up).
If youâre a more mobile or first-time home buyer who wants to keep your long-term options open, an ARMâs low introductory interest rate is certainly tempting. As long as youâre ready to move on before the introductory period ends, youâll benefit from the advantage of making lower payments while youâre living in the home. And because your lender will be qualifying you based on a lower monthly payment, you could qualify for a more expensive house than you would with a fixed-rate mortgage.
âARMs are best suited for investors or home buyers who have short-term ownership goals in mind,â says Jurilla. âMost opt for an ARM if they donât foresee themselves staying in the home for an extended period of time. There are some who use it as a stepping-stone loan, a short-term solution with a lower monthly payment.â
The pros of an ARM:
Low initial rate:Â There are lower rates and payments early in the loan term than in a traditional fixed-rate mortgage.
You can borrow more:Â You have a chance of being approved for a more expensive house because your lender will look at the lower payment when qualifying you for the loan.
Falling rates:Â Some ARMs allow you to automatically take advantage of lower rates without the hassle and expense of refinancing.
And the cons:
Unpredictable rates:Â After the introductory term, payments and rates can rise substantially. However, if market indexes go down, that doesnât necessarily mean your mortgage payments will, too. Be sure to read the fine print on your mortgage.
Complicated mortgage agreements:Â Youâll need to understand the complex terms of your agreement, such as margins, caps, and adjustment indexes.
Math and more math:Â You have to put in significantly more work to figure out the math of an ARM and how it could potentially affect your budget.
Prepayment penalty:Â You canât pay off your loan for the number of years specified in your agreement. So if interest rates jump while you still have a prepayment penalty in place, you canât refinance or sell your home without incurring a huge cost.
Choose the loan thatâs best for you
The 30-year fixed-rate mortgage is the most popular in America, but that doesnât mean itâs perfect for you. An adjustable-rate mortgage can work well for many young or financially savvy homeowners. Still, many borrowers would rather deal with the stability of a fixed rate than the fluctuating payments of an ARM.
So, who wins? Either mortgage canâit all depends on your individual circumstances. Talk to a mortgage lender or mortgage broker to learn more about which one is right for you. And be sure you understand each loanâs terms, and always compare rates before signing onto a mortgage.
ListReports | Aug 4, 2022
“Depreciation” and “Deceleration” are two similar but different terms that you may be seeing in headlines right now.
If you follow the news you may be reading headlines right now that give the impression that home prices are going to take a dive. The reality is that this isn’t completely accurate, and headlines don’t provide a full picture into what’s going on. If you have questions about the market and current trends I’m here to help shed some light.
Leave us a comment or call us and let’s start the conversation!