Equity continues to rise, helping American homeowners secure a much more stable financial future. According to the most recent data from CoreLogic, the average homeowner gained $9,800 in equity over the past year. In addition, experts project 2020 home prices to continue rising. With prices going up, equity gains will also keep accelerating. Black Knight just reported:

“The annual percent change in the overall median existing single-family-home price has skyrocketed in the past several months, with recent numbers at three to five times higher than rates seen in the past several years.”

Jeff Tucker, Senior Economist at Zillow, just qualified recent price increases as “jaw-dropping” and “within a hair's breadth of double-digit year-over-year appreciation.”

Knowing equity will help enable many homeowners to better survive the economic distress caused by the ongoing pandemic, it’s important to break down two key homeowner benefits of increasing equity.

1. Equity Increases a Homeowner’s Options to Buy a New Home

Aside from the financial damage of the last seven months, there has also been a tremendous emotional toll on many people. Shelter-in-place mandates, quarantine requirements, and virtual schooling have all made us re-evaluate the must-have requirements a home should deliver. Having equity in your current house gives you a better opportunity to move-up or build your perfect home from scratch.

Mark Fleming, Chief Economist at First American, recently explained:

“As homeowners gain equity in their homes, they are more likely to consider using that equity to purchase a larger or more attractive home – the wealth effect of rising equity.”

If you need to make a move, the equity in your current home can help make that possible – right now.

2. Equity Enables Homeowners to Help Future Generations

An increase in home equity grows overall wealth, which can transfer to future generations. The Federal Reserve, in an addendum to their recent Survey of Consumer Finances, explains:

“There are numerous ways families can transmit wealth and resources across generations. Families can directly transfer their wealth to the next generation in the form of a bequest. They can also provide the next generation with inter vivos transfers (gifts), for example, providing down payment support to enable a home purchase or a substantial wedding gift.”

The Federal Reserve also explains another way wealth (including the additional net worth generated by an increase in home equity) can benefit future generations:

“In addition to direct transfers or gifts, families can make investments in their children that indirectly increase their wealth. For example, families can invest in their children's educational success by paying for college or private schools, which can in turn increase their children's ability to accumulate wealth.”

Bottom Line

Equity can help a homeowner grow their confidence in a more stable financial future. It provides near-term move-up options and creates a positive impact for future generations. In many cases, the largest single investment a person has is their home. As that investment appreciates in value, financial options increase too.

Many industries have been devastated by the economic shutdown caused by the COVID-19 virus. Real estate is not one of them.

Mark Fleming, Chief Economist for First American, just reported:

“Since hitting a low point during the initial stages of the pandemic, the only major industry to display immunity to the economic impacts of the coronavirus is the housing market. Housing has experienced a strong V-shaped recovery and is now exceeding pre-pandemic levels.”

Buyer demand is still strong heading into the fall. ShowingTime, which tracks the average number of buyer showings on residential properties, just announced that buyer showings are up 61.9% compared to the same time last year. They went on to say:

“Normally, real estate activity begins to slow down in the late summer, but this year it peaked in July, August and into September.”

There Is One Big Challenge

Purchaser demand is so high, the market is running out of available homes for sale. Just last week, realtor.com reported:

“Since the beginning of the COVID pandemic in March, nearly 400,000 fewer homes have been listed compared to last year, leaving a gaping hole in the U.S. housing inventory.”

The National Association of Realtors (NAR) revealed that, while home sales are skyrocketing, the inventory of existing homes for sale is dropping dramatically. Below is a graph of existing inventory (September numbers are not yet available):Homebuilders are increasing construction, but they cannot keep up with the high demand. Bill McBride, founder of the Calculated Risk blog, in discussing inventory of newly constructed houses, notes:

“The months of supply decreased to 3.3 months...This is the all-time record low months of supply.”

What does this mean for sellers?

Anyone thinking of putting their home on the market should not wait. A seller will always negotiate the best deal when demand is high and supply is limited. That’s exactly the situation in the real estate market today.

Next year, when the pandemic is hopefully behind us, there will be many more properties coming to the market. Don’t wait for that increase in competition in your neighborhood. Now is the time to sell.

Bottom Line

Let’s connect today to get your house on the market at this optimal time to sell.

In today’s real estate market, setting the right price for your house is one of the most valuable things you can do.

According to the U.S. Economic Outlook by the National Association of Realtors (NAR), existing home prices nationwide are forecasted to increase 4.7% in 2020 and 4.1% in 2021. This means experts anticipate home values will continue climbing into next year. Today, low inventory is largely keeping prices from depreciating. Danielle Hale, Chief Economist at realtor.com, notes:

“Looking at the sheer number of buyers, low mortgage rates, and limited sellers, the strength of home prices–which are now growing at the highest pace since January 2018–makes sense.”

When it comes to pricing your home, the goal is to increase visibility and drive more buyers your way. Instead of trying to win the negotiation with one buyer, you should price your house so that demand is maximized and more buyers want to take a look.

How to Price Your Home

As a seller, you might be thinking about pricing your house on the high end while so many of today’s buyers are searching harder than ever just to find a home to purchase. You’re thinking, higher price, greater profit, right? But here’s the thing – a high price tag does not mean you’re going to cash in big on the sale. It’s actually more likely to deter buyers and have them looking at the houses your neighbors are selling instead.

Even today, when the advantage tips toward sellers because there are so few houses for sale, your house is more likely to sit on the market longer or require a price drop that can send buyers running in the other direction if it isn’t priced just right.

A Trusted Real Estate Professional Will Help

It’s important to make sure your house is priced correctly by working in partnership with a trusted real estate professional. When you price it competitively, you won’t be negotiating with one buyer over the price. Instead, you’ll have multiple buyers competing for the home, and that’s what ultimately increases the final sale price.

The key is making sure your house is priced to sell immediately. That way, it will be seen by the most buyers. More than one of them may be interested, and your house will be more likely to sell at a competitive price.

Bottom Line

If you're thinking about listing your house this fall, let’s discuss how to price it right so you can maximize your exposure and your return.

Homeownership is one of the best ways to invest in your financial future, especially as your home equity grows. Home equity is a form of forced savings that can work to your advantage as the value of your home appreciates. Across the country, home equity was increasing before the health crisis swept our nation, and it continues to grow throughout the year, giving sellers powerful options in this market.

According to the just-released Q2 Homeowner Equity Insights Report by CoreLogic:

“U.S. homeowners with mortgages (roughly 63% of all properties) have seen their equity increase by a total of nearly $620 billion since the second quarter of 2019, an increase of 6.6%, year over year.” 

Dr. Frank Nothaft, Chief Economist for CoreLogic, attributes much of the equity growth to rising home prices:

"The CoreLogic Home Price Index registered a 4.3% annual rise in prices through June, which supported an increase in home equity.”

As the map below shows, CoreLogic also indicates that home equity is increasing in every state:

“In the second quarter of 2020, the average homeowner gained approximately $9,800 in equity during the past year.”

What Does This Mean for Sellers? 

When equity is rising, as it is today, you may have more invested in your home than you realize. Mark Fleming, Chief Economist at First American, notes:

“As homeowners gain equity in their homes, they are more likely to consider using that equity to purchase a larger or more attractive home – the wealth effect of rising equity. In today’s housing market, fast rising demand against the limited supply of homes for sale has resulted in continued house price appreciation.”

If you’ve been considering making a move – whether that’s to get into a bigger home or to downsize to a smaller one – it’s a great time to reach out to a real estate professional to learn how to put your equity to work for you. You may be in a position to pay that equity forward toward your next home purchase and afford it sooner rather than later.

Bottom Line

If you’re thinking of selling, let’s connect so you can take advantage of what the current market has to offer today.

How long have you lived in your current home? If it’s been a while, you may be thinking about moving. According to the latest Profile of Home Buyers and Sellers by the National Association of Realtors (NAR), in 2019, homeowners were living in their homes for an average of 10 years. That’s a long time to time to be in one place, considering the average length of time homeowners used to stay put hovered closer to 6 years.

With today’s changing homebuyer needs, especially given how the current health crisis has altered our daily lifestyles, many homeowners are reconsidering where they’re at and thinking about moving to a home with more space for their families. Here’s why it might be a great time to make that happen.

The real estate market has changed in many ways over the past 10 years, and current homeowners are earning much more equity today than they used to have. According to CoreLogic, in the first quarter of 2020 alone, the average homeowner gained approximately $9,600 in equity. If you’re considering selling your house right now, you may have accumulated more equity to put toward a move than you realize.

Dialing back 10 years, many homeowners also locked in a fairly low mortgage rate. In 2010, the average rate was only 4.09%. This motivated homeowners to stay in their houses longer than usual to keep their rate low, rather than moving. Just last Thursday, however, average mortgage rates hit a new historic low at 2.86%. Sam Khater, Chief Economist at Freddie Mac explains:

“Mortgage rates have hit another record low due to a late summer slowdown in the economic recovery…These low rates have ignited robust purchase demand activity, which is up twenty-five percent from a year ago and has been growing at double digit rates for four consecutive months.”

Ten years ago, we couldn’t have imagined a mortgage rate under 3%. Looking at the math today, making a move into a new home and locking in a significantly lower rate than you have now could save you greatly on a monthly basis, and over the life of your loan (See chart below):As the example shows, you can save a substantial amount every month if you qualify for today’s low mortgage rate, and the savings can really add up over the life of a 30-year fixed-rate loan.

Bottom Line

As a homeowner, you have a huge opportunity to move up right now. Whether you want to save more each month or get more home for your money based on your family’s changing needs, it’s a great time to connect to discuss the market in our area. Buyers are actively looking for more homes to buy, and you can win big by making a move if the time is right for you.

One of the biggest surprises of 2020 is the resilience of the residential real estate market. Lawrence Yun, Chief Economist of the National Association of Realtors (NAR), is now forecasting that more homes will sell this year than last year. He’s also predicting home sales to increase by 8-12% next year. There’s strong evidence that he will be right.

ShowingTime, a leading showing software and market stat service provider for the residential real estate industry, just reported on their latest the ShowingTime Showing Index:

“Home buyer traffic jumped again in July, recording a 60.7 percent year-over-year increase in nationwide showing activity.”

That means there are 60% more buyers setting appointments to see homes than there were at this same time last year. The number of potential purchasers was also up dramatically in every region of the country:

• The Northeast was up 76.6%
• The West was up 56.7%
• The Midwest was up 52.1%
• The South was up 46.7%

The Housing Market Is Showing a ‘V’ Type Recovery

ShowingTime also indicates the real estate market has already come back from the downturn earlier this year that was caused by shelter-in-place orders. Here are the year-over-year numbers for each region on a monthly basis (See graph below):We’re way ahead of where we were at this time last year. This data validates the thoughts of Frank Martell, President and CEO of CoreLogic, who recently noted:

“On an aggregated level, the housing economy remains rock solid despite the shock and awe of the pandemic.”

Bottom Line

If you’re thinking about selling your house, this may be a great time to get the best price and the most favorable terms.

When shelter-in-place orders brought the economy to a screeching halt earlier this year, many believed the residential housing market would follow suit. Countless analysts predicted buyer demand would disappear and home values would depreciate for the first time in almost a decade. That, however, didn’t happen. It appears the opposite is taking place.

After the bottom fell out of the real estate market immediately following the shutdown, it has come roaring back – and seems to still be gaining steam. Here’s a look at two recent reports – one from the National Association of Home Builders (NAHB) and one from the National Association of Realtors (NAR) – showing this growing strength.

Builder Confidence Hits All-Time High

Last week, it was reported that applications for new home purchases with home builders were 39% higher than in July of 2019. That has builder confidence soaring.

Each month, NAHB releases its Housing Market Index, a survey of NAHB members who rate market conditions for the sale of new homes at the present time and over the next six months, as well as prospective buyer traffic for new homes.

This month, they reported that builder confidence in the market for newly-built single-family homes increased to the highest reading in the 35-year history of the series. NAHB Chairman, Chuck Fowke, explained:

“The demand for new single-family homes continues to be strong, as low interest rates and a focus on the importance of housing has stoked buyer traffic to all-time highs…Housing has clearly been a bright spot during the pandemic and the sharp rebound in builder confidence over the summer has led NAHB to upgrade its forecast for single-family starts, which are now projected to show only a slight decline for 2020.”

The number of newly constructed homes being built will be almost at the same level as last year, even though the economic shutdown crushed home building earlier in the year.

Existing Homes Are Also Selling Like Hotcakes

Last Friday, NAR released its Existing Home Sales Report. The report revealed that month-over-month sales increased by 24.7%, setting another record for the category. The Wall Street Journal reported that the increase crushed expert forecasts:

“Economists surveyed by The Wall Street Journal expected a 14.2% monthly increase in sales of previously-owned homes, which make up most of the housing market.”

Home sales increased by 8.7% year-over-year.

Lawrence Yun, Chief Economist for NAR, explained how the resale market is just as hot as the new construction market:

“The housing market is well past the recovery phase and is now booming with higher home sales compared to the pre-pandemic days. With the sizable shift in remote work, current homeowners are looking for larger homes and this will lead to a secondary level of demand even into 2021.”

In addition, the Housing Market Recovery Index, which is released monthly by realtor.com, also showed the market is recovering nicely. The latest index reading was 104.8, which means the housing market is doing better than it was in January and February of this year. As a reference, the highest point in the index was a 106.5 in early March, just prior to the health crisis setting in.

Bottom Line

Both the newly constructed and existing home sale markets are posting numbers greater than a year ago. Real estate is back. If you’re thinking of buying or selling, let’s connect so you have the expert counsel you need along the way.

In today’s housing market, it can be a big challenge for buyers to find homes to purchase, as the number of houses for sale is far below the current demand. Now, however, we’re seeing sellers slowly starting to come back into the market, a bright spark for potential buyers. Javier Vivas, Director of Economic Research at realtor.com, explains:

“Seller confidence has been improving gradually after reaching its bottom in mid-April, and now it appears to have reached an important recovery milestone…After five long months, sellers are back in the housing market; while encouraging, the improvement to new listings is only the first step in the long road to solving low inventory issues keeping many buyers at bay."

Even with the number of homes coming into the market, the available inventory is well below where it needs to be to satisfy buyer interest. The National Association of Realtors (NAR) reports:

“Total housing inventory at the end of June totaled 1.57 million units, up 1.3% from May, but still down 18.2% from one year ago (1.92 million). Unsold inventory sits at a 4.0-month supply at the current sales pace, down from both 4.8 months in May and from the 4.3-month figure recorded in June 2019.”

Houses today are selling faster than they’re coming to market. That’s why we only have inventory for 4 months at the current sales pace when in reality we need inventory for 6 months to keep up. But, as mentioned above, sellers are starting to return to the game. Realtor.com explains:

“The ‘housing supply’ component – which tracks growth of new listings – reached 101.7, up 4.9 points over the prior week, finally reaching the January growth baseline. The big milestone in new listings growth comes as seller sentiment continues to build momentum…After constant gradual improvements since mid-April, seller confidence appears to be reaching an important milestone. The temporary boost in new listings comes as the summer season replaces the typical spring homebuying season. More homes are entering the market than typical for this time of the year.”

Why is this good for sellers?

A good time to enter the housing market is when the competition in your area is low, meaning there are fewer sellers than interested buyers. You don’t want to wait for all of the other homeowners to list their houses before you do, providing more options for buyers to choose from. With sellers starting to get back into the market after five months of waiting, if you want to sell your house for the best possible price, now is a great time to do so.

Why is this good for buyers?

It can be challenging to find a home in today’s low-inventory environment. If more sellers are starting to put their houses up for sale, there will be more homes for you to choose from, providing a better opportunity to find the home of your dreams while taking advantage of the affordability that comes with historically low mortgage rates.

Bottom Line

While we still have a long way to go to catch up with the current demand, inventory is slowly starting to return to the market. If you’re thinking of moving this year, let’s connect today so you’re ready to make your move when the home of your dreams comes up for sale.