This summer has been tumultuous for homebuyers and home sellers as they navigated blistering inflation, higher mortgage interest rates, and record home prices. But, the latest existing housing sales report from the National Association of REALTORS suggests that the market may be headed toward stabilization.
Housing sales volume in July 2022 retreated 5.9% from the previous month and was 20.2% lower than in July 2021. Meanwhile, median home prices shrank from $413,800 in June to $403,800 in July, but prices were still 10.8% higher than a year ago in July 2021, marking 125 consecutive months of year-over-year price increases.
Among the reasons cited for the declines was mortgage interest rates that went above 6% in June, but have since fallen to nearly 5%. Compared to 2021 when the average commitment rate for a conventional 30-year fixed rate mortgage was 2.96%, consumers paid double that percentage (5.41%) for the same loan in July 2022.
Homes are staying on the market slightly longer – from 2.6 months of inventory on hand in July 2021 to 3.3 month’s supply in July 2022. Yet, housing sales are still brisk. Eighty-two percent of homes sold in July 2022 were on the market for less than a month.
Housing shortages still abound, which is why prices aren’t falling any more than they have. Exacerbating the shortage is a slowdown in new single-family home starts as home builders turn instead to multi-family projects.
If interest rates and home prices continue to drop, sales volume could heat up again.
Hot market or not, the agent you have representing you truly makes all of the difference in how your transaction will play out. The latest installment in our Responding To Today series addresses how to fix, or better yet avoid, mistakes that can have a serious impact on your checkbook!
Real Estate in 2021: How to Avoid – and Fix – Costly Mistakes
For those buying or selling a home in today’s ultra-competitive real estate market, time is not a luxury afforded to most. Decisions are made quickly, with many buyers in particular left to worry that they’re setting themselves up to make a costly mistake. And while homeowners seemingly have the upper hand in this universally hot sellers’ market, the myriad of factors that play a role in a frenzied sales and negotiation scenario leaves much room for error.
So what’s a buyer or seller to do in this unprecedented market? We sat down with two leaders in the industry-Christy Budnick, CEO of Berkshire Hathaway HomeServices and Allan Dalton, SVP of Research and Development for Berkshire Hathaway HomeServices-to hear their recommendations for avoiding, or fixing, many common and current real estate missteps.
Q: A recent Wall Street Journal article chronicles the regrets and mistakes of recent buyers who rushed into a purchase-but in this market, many buyers feel that’s the only option. How can would-be buyers feel confident that they’re buying the right house at the right price?
Christy Budnick: Ifs normal for buyers to feel this type of stress in such a strong sellers’ market. But I would encourage them to look at the big picture and the benefits of a real estate purchase in the long term. With interest rates at historic lows, if a buyer plans on staying in a home for 10 years, the average appreciation of that home, plus the tax advantages of home ownership, will typically make the higher-than-normal sales price more than worth it.
Allan Dalton: In a highly competitive, multioffer environment, you want to be able to buy on the best terms, but you don”! want to lose it. So as you’re figuring out what your top offer number will be, ask yourself this question: “Am I willing to deprive myself or my family of this lifestyle because of $100 a week, $50 a day, $50 a week?” I never want to be cavalier with money, but the point I’m trying to make is that I’ve never bought a home I wouldn’t have paid more for. If you’re investing in your lifestyle and you break the numbers down in that manner, it’s much easier to answer that question and understand if you actually feel like you’d be paying too much.
Aside from the money side of things, don’t use a competitive market as an excuse not to do your due diligence. I would never buy a home without going back five or six times, parking in front of the home in the morning and also in the evening to see what traffic is like. Make sure you walk around the neighborhood and talk to the neighbors, especially the next-door neighbors if possible. If you’re buying from out of town, have your realtor do that work for you. I once bought a home from across the country and had my realtor take videos at 5:00 in the morning, 6:00 in the morning, 7:00 in the morning. That drove the realtor crazy, but the safety of my family is worth it to me. Before you make that offer, ensure there·s nothing that you could know that you don’t know-about the town, the schools, the home, the neighborhood, values, zoning restrictions. Because these are the things that end up making people think they made a mistake in buying a home.
Q: Many sellers have been waiting to list their homes, potentially hoping to capture the apex of the market. What steps can these sellers take to avoid missing the right moment to list?
Christy Budnick: This is such a debatable topic. The critical consideration in this decision is the relationship between supply and demand, and what can we anticipate about what might happen to supply and demand? Right now, supply and demand is completely in the favor of sellers. But what might happen to the frothy market as economic conditions change? By every indication, the strength of the economy and !he anticipation of inflation probably means that interest rates will continue to go up. Well, as rates continue to go up, fewer and fewer buyers will have the ability to afford the homes that they want to buy. As fewer buyers are in the marketplace, the relationship between supply and demand starts to level out, which will result in a cooling of home price appreciation. The summer is also a traditional time of the year where homes come on the market for sale. So you·ve got this combination of fewer buyers in the market moving forward and more homes for sale as we move forward. Those two things will most likely and I think undoubtedly create a cooling of home price appreciation.
Allan Dalton: When the market is moving and changing so fast, it’s more valuable than ever to have a real estate agent-particularly if you are a seller in a competitive bidding war scenario. Let me give you an analogy: If you were a great football player and about to become a free agent, would you do that without the help of an agent? Of course not! When you have an asset that has great appeal and great demand, that’s when a realtor has the greatest value in maximizing that demand. It’s always better to rely on somebody who can navigate and manage and negotiate on your behalf-and create even more demand.
Q: Some homeowners are waiting to list because they’re worried they’ll pay too much for their next home. Do you think this is a mistake or a good strategy?
Christy Budnick: I just feel like now, 2021, is really the time to consider a sale and purchase, especially because of where I see interest rates going. Consider this: A buyer might be paying
$30,000, $40,000 or even $50,000 more for a house today than they potentially could by waiting until next year. But wait. what are they getting for the home that they’re selling? Assuming the home you are selling is less expensive than the one you are buying, are you going to get $15,000. $20,000 or $25,000 more today than you might next year? So now I’m paying $50,000 more for the home I’m buying, but I’m earning $25,000 more for the home I’m selling, so my net differential is $25,000 negative to me. What”s the monthly payment differential?
And if that seller takes a short-term hit to their equity-let’s say they buy at $50,000 right at the top of the market and it corrects-well, if they’re buying a home that they’re going to be in for eight, 10, 13 years, what does that appreciation annually need to look like, even if there’s a short-term blip in the value for the first one, two or three years that they own? It is so critical for people to think about these scenarios of value, payment and equity in a holistic way to make the right decision. Using a real estate professional with extensive knowledge of the local market is critical here in understanding the entire equation and its impact on your finances in the long term.
Spring is here, and so is spring home-buying and -selling. Buyers and sellers preparing to take action this season should put those plans into play now—according to Zillow Group’s Report on Consumer Housing Trends, the No. 1 regret for both buyers and sellers is “not starting their home search or prepping their home to sell soon enough.”
“This spring, both buyers and sellers should be prepared for fast-moving sales, intense negotiations, and even bidding wars,” says Jeremy Wacksman, CMO at Zillow Group. “Home shoppers and sellers are motivated to become more strategic and knowledgeable about what’s happening in their neighborhood. Understanding whether you are in a buyer’s or a seller’s environment will help you manage your expectations and will give you insight into what you’re going to need to bring to the table in order to close the deal.”
For buyers, that means:
Keep your options open.More than half (52 percent) of homebuyers surveyed in the report said they also considered renting, and more than one-third (37 percent) of first-time buyers seriously considered continuing to rent. Savvy shoppers should have a Plan B in place, hoping to buy if it works out, but willing to sign a lease for a home if they don’t make a deal by the time they need to move.
Be realistic with your budget.Once you set it, stick to it. First-time home buyers are more likely to exceed their budget than repeat buyers (39 percent versus 26 percent), according to the report. Before you meet with a lender to determine how much mortgage you’ll be approved for, take a good look at your individual finances and spending preferences to determine the monthly payment range that you feel you can comfortably afford.
Get your financing squared away early.Plan to meet a few lenders four to six months ahead of when you’re planning to buy to ensure you can make a competitive offer quickly when you find your dream home. The majority (82 percent) of buyers get pre-approved, with 77 percent getting pre-approval from a lender before finding a home on which they are interested in placing an offer.
Find an agent with a winning track record.Take the time to find an agent who has expertise in fast negotiation, leveraging escalation clauses, and winning bidding wars. Only 46 percent of buyers got the first home on which they made an offer, according to the report, demonstrating that competition is now part of the process. Choose an agent based on sales and listing activity, area of expertise and reputation.
Communication is key.Make sure your preferred method—and frequency—of communication matches that of your agent. One-third (33 percent) of all buyers surveyed in the report preferred phone calls with their agent over emailing (21 percent) or texting (15 percent). Buyers can use the agent reviews on Zillow to learn more about prospective agents and their clients’ experiences.
And for sellers:
Start early and be strategic.Sellers consider putting their home on the market for five months before they list it—but the top seller regret is that they wished they spent more time prepping for the sale. Many cities have a magic window in the spring when homes have a higher likelihood of selling quickly for more money.
Work with an agent from the start.The vast majority (90 percent) of sellers surveyed in the report who sold quickly and for more than list price worked with an agent, and two out of three (58 percent) began working with an agent at the very beginning of their selling journey.
Pay attention to your online curb appeal.The majority of buyers begin their search online. Sellers who sold their home for more than list price made imagery and home information available online: 48 percent had professional photos taken of the home; 30 percent shot video footage; and 21 percent shot drone footage. Zillow’s video walk-throughs give sellers an easy way to show home features that are hard to capture in photos.
Home improvements can be a worthwhile investment.Sellers who fetched above list price tackled home improvements before listing their home, being 50 percent more likely to take on a large project like modifying an existing home plan and 20 percent more likely to renovate a kitchen than the average seller.
Don’t be afraid to try again.In many markets, nearly half of listing views occur in the first week the home is on the market. Twenty-six percent of those who sold above list price took their home off the market once to adjust the sales price, opting to start anew, rather than letting the home languish on the market with minimal activity.
According to NAR, the HOME report was created to monitor consumer sentiment about the housing market. It covers core topics that will be tracked on a monthly basis such as views on housing as a good financial investment, whether homeownership is part of the American Dream, if now is a good time to buy or sell a home and perception of home price changes.
Highlights include:
In the second quarter of 2016, 74 percent of people believe that now is a good time to buy a home.
Only 26 percent of people believe that now is not a good time to buy a home.
Sixty-one percent of people believe that now is a good time to sell a home, up from 56 percent in Q1 2016. Thirty-two percent believe that strongly, up from 28 percent in Q1 2016.
Forty-seven percent of those 34 years or younger have student loan debt.
The 2016 home-buying season is in full swing, with homes in April moving 7 percent faster than one year ago, even as asking prices continue to break records. This, according to new data released this week by Realtor.com.
Median age of inventory is now 68 days, moving five days faster in April than a year earlier and 6 days faster than last month – pointing to solid momentum this spring. The median-priced home was listed at $245,500, 9 percent higher than one year ago and 2 percent higher than March. For-sale housing inventory is increasing on a monthly basis, but remains lower than one year ago.
“A robust buying season has already fully bloomed this spring, clearly demonstrated by our preliminary read on April inventory and activity on realtor.com,” says Jonathan Smoke, chief economist of realtor.com. “Pent-up demand, lower mortgage rates and strong employment continue to power the strongest and healthiest real estate market we have seen in a decade. Close to 550,000 new listings came onto the market in April, which helped total inventory grow 2 percent over March. However, we know that sales are picking up faster than inventory since the median age of inventory fell again by six days after falling a whopping 22 days in March. As a result we have 4 percent fewer homes available for sale compared to last year and homes stay on the market five fewer days.”
The median age of inventory for April is expected to be 68 days, down 7 percent year over year and down 8 percent from March.
The median listing price for April will likely reach a record high of $245,500, a 9 percent increase year over year and a two percent increase month over month.
Listing inventory in April showed a 2 percent increase over March. However, inventory decreased 4 percent year over year.
Realtor.com’s Hottest Markets receive two to three times the number of views per listing compared to the national average. In terms of supply, these markets are seeing inventory move 17-45 days more quickly than the rest of the U.S. They have also seen days on market drop by an average of four days from March.
Prospective homeowners express concern over increase and perceived effect on real estate decisions and lifestyles; existing homeowners stand indifferent to rate boost
Berkshire Hathaway HomeServices, part of the HSF Affiliates LLC family of real estate brokerage franchise networks, released results from its 2015 Homeowner Sentiment Survey indicating a significant split in the way real estate consumers perceive the Federal Reserve’s anticipated raising of its benchmark interest rate and the subsequent impact on mortgage rates.
Existing homeowners expressed indifference to the notion of a lift in mortgage rates as a result of the Fed’s action. By contrast, 62% of prospective homeowners – a survey group composed mainly of millennials and Gen-Xers – said rising mortgage rates would make them feel anxious about their current financial situations.
It’s been nearly 10 years since the Fed raised its benchmark rate, which stands near zero as part of the Fed’s effort to stimulate the U.S. economy. Accordingly, mortgage rates, which move in response to the fed funds rate, have hovered at or near historic lows for years. Yet in the survey, 67% of prospective homebuyers categorized the level of today’s mortgage rates as “average” or “high.”
“The Fed is seeing more people going back to work and with the expectation of job growth for America it feels comfortable with its intent to raise rates,” said Berkshire Hathaway HomeServices President Stephen Phillips. “But the reality is that an entire generation of first-time buyers has never experienced a meaningful rate increase; this is a new and unfamiliar phenomenon to them.”
Should mortgage rates rise in response to a boost in the fed fund rate, many prospective homeowners said they would have to alter their home searches and 51% would adjust their savings pace. In addition, exactly half of prospective homeowners believed they would experience more difficulty affording their ideal home. Current homeowners, whose ranks are mostly Boomers and Gen-Xers, said that increased mortgage payments would mean more personal sacrifices in areas such as family vacations, home improvements and shopping.
Fed policymakers have said the pace at which they’ll raise interest rates will be gradual – an increase of a quarter of a percentage point is typical. A similar rise in mortgage rates would add about $43 a month to a hypothetical $300,000, 30-year mortgage with a 3.75% rate, explained Gino Blefari, CEO of HSF Affiliates. “A bump in mortgage rates has more bark than bite,” he said. “The average American spends about twice as much every month on coffee[1].”
A majority of current homeowners (59%) and half of prospective homeowners believed interest rates are holding steady. Lower interest rates remain the top reason why many survey respondents view the current housing market favorably.
Respondents also identified factors they believed are driving U.S. real estate forward. Increased residential construction and increased construction in urban areas offering more housing choices closer to work topped the list. Respondents also indicated that the housing market is benefiting from an increase in millennial buyers and by a boost in housing inventory; the latter factor has hamstrung real estate in many markets since the downturn. (See Homeowner Sentiment Survey results from September.)
“As always, our agents and the industry as a whole must take great care to educate buyers and sellers about the real estate process, which includes mortgage rates,” said Blefari. “A Fed rate increase may grab people’s attention, yet the cost of borrowing money to buy a home remains historically low by all measurements. From our perspective, even though we can’t predict the future, it looks like mortgage rates will remain attractive, and that’s good for consumers and the real estate market.”
The full survey details are available upon request.
Interviews with 2,502 respondents were conducted online by Edelman Berland in November 2015. The respondents captured were either current homeowners (individuals who currently own a home as a primary residence) or prospective homeowners (individuals who are looking to buy a home within the next six months). The margin of error is +/-2.2% for current homeowners and +/- 4.4% for prospective homeowners.
Real Estate News
About Berkshire Hathaway HomeServices and HSF Affiliates LLC
Berkshire Hathaway HomeServices, based in Irvine, CA, is a real estate brokerage network built for a new era in residential real estate. The network, among the few organizations entrusted to use the world-renowned Berkshire Hathaway name, brings to the real estate market a definitive mark of trust, integrity, stability and longevity. Visit www.berkshirehathawayhs.com.
Irvine, CA-based HSF Affiliates LLC operates Berkshire Hathaway HomeServices, Prudential Real Estate and Real Living Real Estate franchise networks. The company is a joint venture of which HomeServices of America, Inc., the nation’s second-largest, full-service residential brokerage firm, is a majority owner. HomeServices of America is an affiliate of world-renowned Berkshire Hathaway Inc.
[1] According to a National Coffee Association study.
In a recent Forbes article Lawrence Yun, Chief Economist and Senior Vice President National Association of Realtors, predicted that nationally the housing market should show another gain in 2016, simply because there is still sizable pent-up demand for home buying — and supply will steadily rise to help meet that demand.
But what exactly does that look like? Hear it right from Mr. Yun himself as he talks to Washington Journal about housing and mortgage trends, the housing market’s impact on the overall U.S. economy, and what recent trends might portend for 2016.
Hey DC property owners and renters… this just in from Capitol Title, one of our title partners…
The federal law that was enacted in 2009, which protected tenants from immediate eviction by persons or entities that became owners of residential property through the foreclosure process, expired as of Dec. 31, 2014. The law provided that the purchaser in a foreclosure sale of a residential dwelling, including a bank that takes title to a house upon foreclosure, will assume the interest subject to the rights of any bona fide tenant and will need to comply with certain notice requirements. Under this law, the immediate successor in interest of a dwelling or residential real property must provide tenants with a notice to vacate at least 90 days before the effective date of such notice. The date of a “notice of foreclosure” is defined as the date on which complete title to a property is transferred to a successor entity or a person as a result of a court order or pursuant to provisions in a mortgage, deed of trust, or security deed.
Two bills were introduced during last Congress, but neither were enacted and. as of yet, nothing in regard to renewing the Protecting Tenants at Foreclosure Act has been filed in the 114th Congress.
Bathrooms need to be cleaned and maintained often, just like your kitchen. In the long run, it can prevent costly problems such as mold, mildew and plumbing leaks. Here are three ways to keep your bathroom looking great and working well for years to come:
1. Maintain grout and sealant. Moisture, heat and humidity can cause the tub and tile grouting in your bath to crumble and crack. Apply new grout to crumbly tiles and seams to prevent water from leaking into the walls or beneath the floor. When you are cleaning the bathroom, use bleach to disinfect the area and kill any mold growth. Keep an eye on the grout for new growth and be ready to scrub.
2. Look for leaks around the shower, bathtub, sink and toilet. Check the basement beneath the bathroom too, if possible. If you find puddles of water anywhere, look for the source of the leak and use waterproof caulk to seal it.
3. Clean your bathroom once a week. It may seem like a lot to fit in, but think about how many times you and your family use the bathroom each day. A clean bathroom will make it easier to maintain appliances and fixtures that should last for years.
Do you make time to clean and maintain your bathroom every week? Be sure to keep an eye out for drips, cracks, leaks and mold, and don’t put off any necessary repairs. They can quickly turn into bigger messes and cost you more in the long run.
This great article is compliments of our friends at HMS Home Warranty
Patience is a virtue for just about any circumstance including selling your home, even in a real estate market when homes are on the market for just a short period of time. Assuming your home is in good condition and you are in a positive equity situation, here are some tips to help you sell your house quickly and for the best price whether your home is in Northern Virginia, Washington, DC or anywhere else in the country!
1. Price your house correctly: Working with your agent, choose a price that is realistic- preferably on the low side of realistic – but not too low that it will send up red flags. Let your agent establish a price he or she feels will make your house the buzz of the neighborhood. The more interest you have the more showing you will have and the better chance you have of being in a multiple offer situation.
Prudential PenFed Realty agents use current market data from the multiple listing service, RBIntel, the National Association of REALTORS’ Realtors Property Resource, and other market statistics to help estimate the price range your home will bring.
2. Be flexible, compromise: know your basement price and don’t be offended by offers within those parameters. Consider negotiating housewares and fixtures that may appeal to prospective buyers, such as those expensive new drapes you just installed, the dining-room chandelier or that slick, washer-drier combo. Conduct a complete inventory of household features to determine what you can and can’t live without.
3. Remove the clutter from your home: This must be done regardless of time frame. Throw away anything you won’t be taking with you and pack in storage items that you won’t miss during the sale process. Consider renting a storage pod that can be picked up and eventually moved to your new home.
4. Offer incentives: One popular incentive for a fast closing is to share or pay for your buyer’s closing costs. You may also offer higher commissions for a fast sale, which may lead to even more showings.
5. Rent to buy: If there’s interest in your home but no one is willing to step up to meet your timeline, offer prospective buyers the chance to rent your property with the right to buy it in six months or a year. Both parties win, as buyers can experience the home and neighborhood firsthand while you transition with cash flow to cover expenses.
Indeed, home-selling requires time and patience yet there are several things you can do to help expedite the process, if necessary. With flexibility and creativity, you can increase your chances of a quick sale.
iAlexandriaHomes 