Real Estate Information Archive

Is the idea of saving for a down payment holding you back from buying a home right now? You may be eager to take advantage of today’s low mortgage rates, but the thought of needing a large down payment might make you want to pump the brakes. Today, there’s still a common myth that you have to come up with 20% of the total sale price for your down payment. This means people who could buy a home may be putting their plans on hold because they don’t have that much saved yet. The reality is, whether you’re looking for your first home or you’ve purchased one before, you most likely don’t need to put 20% down. Here’s why.

According to Freddie Mac:

“The most damaging down payment myth—since it stops the homebuying process before it can start—is the belief that 20% is necessary.”

If saving that much money sounds daunting, potential homebuyers might give up on the dream of homeownership before they even begin – but they don’t have to.

Data in the 2020 Profile of Home Buyers and Sellers from the National Association of Realtors (NAR) indicates that the median down payment actually hasn’t been over 20% since 2005, and even then, that was for repeat buyers, not first-time homebuyers. As the image below shows, today’s median down payment is clearly less than 20%.

What does this mean for potential homebuyers?

As we can see, the median down payment was lowest for first-time buyers with the 2020 percentage coming in at 7%. If you’re a first-time buyer and putting down 7% still seems high, understand that there are programs that allow qualified buyers to purchase a home with a down payment as low as 3.5%. There are even options like VA loans and USDA loans with no down payment requirements for qualified applicants.

It’s important for potential homebuyers (whether they’re repeat or first-time buyers) to know they likely don’t need to put down 20% of the purchase price, but they do need to do their homework to understand the options available. Be sure to work with trusted professionals from the start to learn what you may qualify for in the homebuying process.

Bottom Line

Don’t let down payment myths keep you from hitting your homeownership goals. If you’re hoping to buy a home this year, let’s connect to review your options.

Some Highlights

• Buying a home in today’s sellers’ market doesn’t have to feel like an uphill battle.
• Here are four ways to make sure you’re positioned for success when making a home purchase, even when the scale tips toward sellers.
• Let's connect to make sure you're armed for victory in the housing market this season.

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.

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.

There’s great opportunity for today’s homeowners to sell their houses and make a move, yet due to the impact of the ongoing health crisis, some sellers are taking their time coming back to the market. According to Javier Vivas, Director of Economic Research at realtor.com:

“Sellers continue returning to the market at a cautious pace and further improvement could be constrained by lingering coronavirus concerns, economic uncertainty, and civil unrest.”

For homeowners who need a little nudge of motivation to get back in the game, it’s good to know that buyers are ready to purchase this season. After spending several months at home and re-evaluating what they truly want and need in their space, buyers are ready and they’re in the market now. Lawrence Yun, Chief Economist at the National Association of Realtors (NAR) explains:

“A number of potential buyers noted stalled plans due to the pandemic and that has led to more urgency and a pent-up demand to buy…After being home for months on end – in a home they already wanted to leave – buyers are reminded how much their current home may lack certain desired features or amenities.”

The latest Market Recovery Survey from NAR shares some of the features and amenities buyers are looking for, especially since the health crisis has shifted many buyer priorities. The most common home features cited as increasingly important are home offices and space to accommodate family members new to the residence (See graph below):The survey results also show that among buyers who indicate they would now like to live in a different area due to COVID-19, 47% have an interest in purchasing in the suburbs, 39% cite rural areas, and 25% indicate a desire to be in small towns.

As we can see, buyers are eager to find a new home, but there’s a big challenge in the market: a lack of homes available to purchase. Danielle Hale, Chief Economist at realtor.com explains:

“The realtor.com June Housing Trends Report showed that buyers still outnumber sellers which is causing the gap in time on market to shrink, prices to grow at a faster pace than pre-COVID, and the number of homes available for sale to decrease by more than last month. These trends play out similarly in the most recent week’s data with the change in time on market being most notable. In the most recent week homes sat on the market just 7 days longer than last year whereas the rest of June saw homes sit 2 weeks or more longer than last year.”

In essence, home sales are picking up speed and buyers are purchasing them at a faster rate than they’re coming to the market. Hale continues to say:

“The housing market has plenty of buyers who would benefit from a few more sellers. If the virus can be contained and home prices continue to grow, this may help bring sellers back to the housing market.”

Bottom Line

If you’re considering selling and your current house has some of the features today’s buyers are looking for, let's connect. You’ll likely be able to sell at the best price, in the least amount of time, and will be able to take advantage of the low interest rates available right now when buying your new home.

The last few weeks and months have caused a major health crisis throughout the world, leading to a pause in the U.S. economy as businesses and consumers work to slow the spread of the coronavirus. The rapid spread of the virus has been compared to prior pandemics and outbreaks not seen in many years. It also has consumers remembering the economic slowdown of 2008 that was caused by a housing crash. This economic slowdown, however, is very different from 2008.

One thing the experts are saying is that while we’ll see a swift decline in economic activity in the second quarter, we’ll begin a sharp rebound in the second half of this year. According to John Burns Consulting:

“Historical analysis showed us that pandemics are usually V-shaped (sharp recessions that recover quickly enough to provide little damage to home prices), and some very cutting-edge search engine analysis by our Information Management team showed the current slowdown is playing out similarly thus far.” 

Given this situation, if you’re thinking about buying a home this year, the best thing you can do right now is use this time to get pre-approved for a mortgage, which you can do from the comfort of your home. Pre-approval will help you better understand how much you can afford so that you can confidently do the following two things when you’re ready to buy:

1. Gain a Competitive Advantage

Today’s low inventory, like we’ve seen recently and will continue to see, means homebuyers need every advantage they can get to make a strong offer and close the deal. Being pre-approved shows the sellers you’re serious about buying a home, which is always a plus in your corner.

2. Accelerate the Homebuying Process

Pre-approval can also speed-up the homebuying process so you can move faster when you’re ready to make an offer. Being ready to put your best foot forward when the time comes may be the leg-up you need to cross the finish line first and land the home of your dreams.

Bottom Line

Pre-approval is the best thing you can do right now to be in a stronger position to buy a home when you’re ready. Let’s connect today to get the process started.

Some Highlights:

• There are many benefits to love about homeownership, and they’re not all financial.
• Being a part of a neighborhood, driving academic achievement, and improving mental health are just a few of these advantages.
• Let’s get together today to determine if you’re ready to embrace the rewards of owning your own home.

This will be an interesting year for residential real estate. With a presidential election taking place this fall and talk of a possible recession occurring before the end of the year, predicting what will happen in the 2020 U.S. housing market can be challenging. As a result, taking a look at the combined projections from the most trusted entities in the industry when it comes to mortgage rates, home sales, and home prices is incredibly valuable – and they may surprise you.

Mortgage Rates

Projections from the experts at the National Association of Realtors (NAR), the Mortgage Bankers Association (MBA), Fannie Mae, and Freddie Mac all forecast mortgage rates remaining stable throughout 2020:Since rates have remained under 5% for the last decade, we may not fully realize the opportunity we have right now.

Here are the average mortgage interest rates over the last several decades:

• 1970s: 8.86%
• 1980s: 12.70%
• 1990s: 8.12%
• 2000s: 6.29%

Home Sales

Three of the four expert groups noted above also predict an increase in home sales in 2020, and the fourth sees the transaction number remaining stable:With mortgage rates remaining near all-time lows, demand should not be a challenge. The lack of available inventory, however, may moderate the increase in sales.

Home Prices

Below are the projections from six different expert entities that look closely at home values: CoreLogic, Fannie Mae, Ivy Zelman’s “Z Report”, the National Association of Realtors (NAR), Freddie Mac, and the Mortgage Bankers Association (MBA).Each group has home values continuing to improve through 2020, with four of them seeing price appreciation increasing at a greater pace than it did in 2019.

Is a Recession Possible?

In early 2019, a large percentage of economists began predicting a recession may occur in 2020. In addition, a recent survey of potential home purchasers showed that over 50% agreed it would occur this year. The economy, however, remained strong in the fourth quarter, and that has caused many to rethink the possibility.

For example, Goldman Sachs, in their 2020 U.S. Outlook, explained:

“Markets sounded the recession alarm this year, and the average forecaster now sees a 33% chance of recession over the next year. In contrast, our new recession model suggests just a 20% probability. Despite the record age of the expansion, the usual late-cycle problems—inflationary overheating and financial imbalances—do not look threatening.”

Bottom Line

Mortgage rates are projected to remain under 4%, causing sales to increase in 2020. With growing demand and a limited supply of inventory, prices will continue to appreciate, while the threat of an impending recession seems to be softening. It looks like 2020 may be a solid year for the real estate market.

Millennials have waited longer than any other generation to become homeowners, but the wait for this cohort is just about over.

According to National Mortgage News,

 “Millennials, those young adults now aged 23 to 38, are now entering their peak household formation and homebuying years.”

If you’re a Millennial, you’re already well aware that you’re among a generation of those who favor fast-paced, real-time answers – and results. When you’re ready to make a decision, it’s go-time, and you probably want the latest technology at your fingertips to make it happen.

National Mortgage News agrees, stating,

“Millennials are different than previous generations—not only in their delayed homebuying but also in how they approach interactions with financial institutions, including mortgage lenders. Taking a picture of a check on their phone and depositing it without visiting a branch is not novel, it’s the way Millennials learned to do banking. They expect real-time access to account and transaction data and are frustrated when it’s not available.”

Here's the catch – the overall speed of the homebuying process can take some time, and it might feel like it is slowing you down. When you’re ready to buy, you can make an offer and go under contract quickly, but the rest of the process might take a little longer. The same article explains why:

“When Millennials apply for a loan, the mortgage lender must qualify the borrower and determine who owns the property, how much the property is worth, and the property’s risk profile. Traditionally, this has been one of the most time-consuming and fragmented parts of the mortgage process…There are many moving pieces, each data point being sourced from a different provider, which can ultimately lead to a lengthy or delayed process.

 What has historically been accepted as the process norm does not align with the expectations of the most prominent generation in the home buying market today. Millennials have come to expect rapid, digital workflows in their daily purchase decisions, and in their mind, the home buying process shouldn’t be any different.”

So, where do you go from here?

 If you’re pre-approved for a mortgage, that will help speed things up. But the steps it takes and the time to finalize a loan with most traditional lenders may feel like an eternity to you and your generational peers. Don’t worry, though - it’s well worth the wait when you finally get the keys to your new castle!

The financial benefits of homeownership, like increasing your net worth by building equity, and the non-financial benefits, like being able to customize and improve your space, will ultimately set you on the course to happiness, success, overall satisfaction, and much, much more.

Bottom Line

If you’re feeling like it’s go-time, let’s get together and get the process moving to determine if homeownership is your next best step.