What If I Wait Until Next Year to Buy a Home?

 First Time Home Buyers, For Buyers, For Sellers, Interest Rates, Move-Up Buyers, Pricing

We recently shared that national home prices have increased by 6.7% year-over-year. Over that same time period, interest rates have remained historically low which has allowed many buyers to enter the market.

As a seller, you will likely be most concerned about ‘short-term price’ – where home values are headed over the next six months. As a buyer, however, you must not be concerned about price, but instead about the ‘long-term cost’ of the home.

The Mortgage Bankers Association (MBA), Freddie Mac, and Fannie Mae all project that mortgage interest rates will increase by this time next year. According to CoreLogic’s most recent Home Price Index Report, home prices will appreciate by 5.2% over the next 12 months.

What Does This Mean as a Buyer?

If home prices appreciate by 5.2% over the next twelve months as predicted by CoreLogic, here is a simple demonstration of the impact that an increase in interest rate would have on the mortgage payment of a home selling for approximately $250,000 today:

Bottom Line

If buying a home is in your plan for this year, doing it sooner rather than later could save you thousands of dollars over the terms of your loan.

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Data Says May is the Best Month to Sell Your Home

This Just In: Data Says May is the Best Month to Sell Your Home

 For Sellers, Move-Up Buyers, Pricing

According to a newly released study by ATTOM Data Solutions, selling your home in the month of May will net you an average of 5.9% above estimated market value for your home.

For the study, ATTOM performed an “analysis of 14.7 million home sales from 2011 to 2017” and found the average seller premium achieved for each month of the year. Below is a breakdown by month:

ATTOM even went a step further and broke their results down by day.

Top 5 Days to Sell:

• June 28th – 9.1% above market
• February 15th – 9.0% above market
• May 31st – 8.3% above market
• May 29th – 8.2% above market
• June 21st – 8.1% above market

It should come as no surprise that May and June dominate as the top months to sell and that 4 of the top 5 days to sell fall in those two months. The second quarter of the year (April, May, June) is referred to as the Spring Buyers Season when competition is fierce to find a dream home, which often leads to bidding wars.

One caveat to mention though is that when broken down by metro, ATTOM noticed that while warmer climates share in the overall trend, it turns out that they have different top months for sales. The best month to get the highest price in Miami, FL, for instance, was January, and Phoenix, AZ came in with November leading the charge.

If you’re thinking of selling your home this year, the time to list is NOW! According to the National Association of Realtors, homes sold in an average of just 30 days last month! If you list now, you’ll have a really good chance to sell in May or June, setting yourself up for getting the best price!

Bottom Line

Let’s get together to discuss the market conditions in our area and get you the most exposure to the buyers who are ready and willing to buy!

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Why Home Prices Are Increasing

  Buying Myths, First Time Home Buyers, For Buyers, Housing Market Updates, Move-Up Buyers, Pricing

There are many unsubstantiated theories as to why home values are continuing to increase. From those who are worried that lending standards are again becoming too lenient (data shows this is untrue), to those who are concerned that prices are again approaching boom peaks because of “irrational exuberance” (this is also untrue as prices are not at peak levels when they are adjusted for inflation), there seems to be no shortage of opinion.

However, the increase in prices is easily explained by the theory of supply & demand. Whenever there is a limited supply of an item that is in high demand, prices increase.

It is that simple. In real estate, it takes a six-month supply of existing salable inventory to maintain pricing stability. In most housing markets, anything less than six months will cause home values to appreciate and anything more than seven months will cause prices to depreciate (see chart below).

According to the Existing Home Sales Report from the National Association of Realtors (NAR), the monthly inventory of homes for sale has been below six months for the last five years (see chart below).

Bottom Line

If buyer demand continues to outpace the current supply of existing homes for sale, prices will continue to appreciate. Nothing nefarious is taking place. It is simply the theory of supply & demand working as it should.

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Housing Market Strong! Purchasing Cost Still Rising

“Short of a war or stock market crash…”

   First Time Home Buyers, For Buyers, Interest Rates, Move-Up Buyers,Pricing

This month, Arch Mortgage Insurance released their spring Housing and Mortgage Market Review. The report explained that an increase in mortgage rates and/or home prices would impact monthly payments this way:

• A 5% increase in home prices increases payments by roughly 5%
• A 1% rise in interest rates increases payments by roughly 13% or 14%

That begs the question…

What if both rates and prices increase as predicted?

The report revealed:

“If interest rates and home prices rise by year-end in the ballpark of what most analysts are forecasting, monthly mortgage payments on a new home purchase could increase another 10–15%. That would make 2018 one of the worst full-year deteriorations in affordability for the past 25 years.”

The percent increase in mortgage payments would negatively impact affordability. But, how would affordability then compare to historic norms?

Per the report:

“For the U.S. overall, even if affordability were to deteriorate as forecasted, affordability would still be reasonable by historic norms. That is because the percentage of pre-tax income needed to buy a typical home in 2019 would still be similar to the historical average during 1987–2004. Thus, nationally at least, even with higher rates and home prices, affordability will just revert to historical norms.”

What about home prices?

A decrease in affordability will cause some concern about home values. Won’t an increase in mortgage payments negatively impact the housing market? The report addressed this question:

“Even recent interest rate increases and higher taxes on some upper-income earners didn’t slow the market, as many had feared…Short of a war or stock market crash, housing markets could continue to surprise on the upside over the next few years.”

To this point, Arch Mortgage Insurance also revealed their Risk Index which estimates the probability of home prices being lower in two years. The index is based on factors such as regional unemployment rates, affordability, net migration, housing starts and the percentage of delinquent mortgages.

Below is a map depicting their projections (the darker the blue, the lower the probability of a price decrease):

Bottom Line

If interest rates and prices continue to rise as projected, the monthly mortgage payment on a home purchased a year from now will be dramatically more expensive than it would be today.

How Much are homes selling for in your Neighborhood?   Whats My North Texas Homes Value

See current homes For Sale here  Free MLS Home Search

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Should I Wait Until Next Year to Buy? Or Buy Now? 

 Friday February 16th, 2018  First Time Home Buyers, For Buyers, Infographics, Interest Rates,Millennials, Move-Up Buyers, Pricing

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 5.1% by 2019.
• CoreLogic predicts home prices to appreciate by 4.3% over the next 12 months.
• If you are ready and willing to buy your dream home, find out if you are able to!

Our economy is continuing to grow causing myself and many economic forecasters to anticipate higher home prices and higher interest rates. Now is the time!

How Much are homes selling for in your Neighborhood?   Whats My North Texas Homes Value

See the current homes available in your area by clicking the Free MLS Home Search tab above or here Free MLS Home Search

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Where Are the Home Prices Heading in The Next 5 Years?

 Tuesday August 29th, 2017  First Time Home Buyers, For Buyers, Housing Market Updates, Move-Up Buyers, Pricing

Today, many real estate conversations center on housing prices and where they may be headed. That is why we like the Home Price Expectation Survey.

Every quarter, Pulsenomics surveys a nationwide panel of over one hundred economists, real estate experts, and investment & market strategists about where they believe prices are headed over the next five years. They then average the projections of all 100+ experts into a single number.

The results of their latest survey:

Home values will appreciate by 5.0% over the course of 2017, 4.0% in 2018, 3.2% in 2019, 3.0% in 2020, and 3.0% in 2021. That means the average annual appreciation will be 3.64% over the next 5 years.

The prediction for cumulative appreciation increased from 17.8% to 18.4% by 2021. The experts making up the most bearish quartile of the survey are projecting a cumulative appreciation of 6.7%.

Bottom Line

Individual opinions make headlines. We believe this survey is a fairer depiction of future values.

Saving to Buy a Home? Do You Know the Difference Between Cost & Price?

 Monday July 11th, 2016  First Time Home Buyers, For Buyers, Move-Up Buyers, Pricing

As a seller, you will be most concerned with the ‘short term price’ – where home values are headed over the next six months. As a buyer, you must be concerned not with price but instead with the ‘long term cost’ of the home.

Many economists have pointed to Brexit (Britain’s exit from the European Union) as a reason that interest rates will remain low for the next few months. But Trulia’s Chief Economist Ralph McLaughlin warns that this will not always be the case in a recent post:

“While the departure of the UK from the European Union has driven down the 10-year bond, and thus mortgage rates, we expect them to rebound later in the year as uncertainty over the economic consequences of the departure lifts.”

The Mortgage Bankers Association (MBA), the National Association of Realtors (NAR) and Freddie Mac all project that mortgage interest rates will increase by close to a full percentage point over the next twelve months.

According to CoreLogic’s most recent Home Price Index Report, home prices will appreciate by 5.3% over the next 12 months.

What Does This Mean as a Buyer?

Here is a simple demonstration of what impact an interest rate increase would have on the mortgage payment of a home selling for approximately $250,000 today if home prices appreciate by the 5.3% predicted by CoreLogic over the next twelve months:

Home Prices Up 5.67% Across The Country! 

Some Highlights:

• Across the country, home prices are up by 5.67%.
• Each state is appreciating at a different rate, however, which is important to realize if you plan on relocating to a different state.
• Regionally, prices have appreciated year-over-year by as high as 8.15%.

Sell NOW Before Competition Hits the Market

 Wednesday May 25th, 2016  For Sellers, Housing Market Updates, Pricing

In their current edition of the Home Price Expectation Survey released last week, Pulsenomics asked this question of the 100+ economists, real estate experts and investment & market strategists they surveyed:

“In your opinion, what is the primary driver of recent home value growth in the U.S.?”

Here are the top four reasons given by those surveyed:

As we have stated before, the current lack of inventory in most housing markets has caused home appreciation to increase at greater percentages than historical averages. This means that this is a great time to sell your home as supply is low and demand is high.

However, things may be about to change…

The fortuitous situation sellers see themselves in may soon change for three reasons:

1. As more homeowners realize their equity situation has dramatically improved over the last four years, they will be more likely to put their homes on the market.
2. With the residential real estate sector outperforming a sluggish economy, more home builders will be looking to add new construction inventory to a depleted supply of housing stock.
3. Many banks are just now foreclosing on loans that have been delinquent since the housing bust. These houses will also be coming to market.

According to Daren Blomquist, senior vice president of RealtyTrac, in the Q2 2016 U.S. Residential Property Vacancy and Zombie Foreclosure Report:

“Lenders have been taking advantage of the strong seller’s market to dispose of lingering foreclosure inventory.” 

Bottom Line

In most housing markets, don’t wait for this additional competition to hit the market. If you are considering selling your house, now may be the time.