What Sellers Need To Know in Today’s Housing Market

If you’re thinking about selling your house, you may have heard about the housing market slowing down in recent months. While it’s still a sellers’ market, the peak frenzy the market saw over the past two years has cooled some. If you’re asking yourself if you’ve missed your chance to sell your house and make a move, the good news is you haven’t – motivated buyers are still out there. But you do need to price your house right for today’s market. Here’s why.

As Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), says:

“Homes priced right are selling very quickly, but homes priced too high are deterring prospective buyers.”

It’s true buyer demand has slowed over the past few months as higher mortgage rates made it more expensive to buy a home. The result is fewer bidding wars and less competition among buyers (see visual below):

But don’t forget – that’s compared to the severely overheated market we saw over the past two years. According to the latest Confidence Index from NAR:

“. . . 39% of homes sold above list price, down from 51% a month ago and 50% a year ago.”

While this is a slower pace than even one month ago, serious buyers are still actively in the market, and they’re buying homes that are priced right. In fact, the Confidence Index also notes the average home is selling in just 14 days.

If you’re aiming to sell your house, be sure you’re working with your agent to price it for today’s housing market. As buyer demand softens, it’s important to understand this isn’t the same market as last year. It’s not even the same market as just a few months ago. But it is still a sellers’ market.

If you’re ready to sell your house, seek the advice of a real estate professional. In some cases, you’ll need to adjust your expectations accordingly to meet the market where it is today. Selma Hepp, Interim Lead, Deputy Chief Economist at CoreLogic, explains what’s happening and what it means when you sell:

“Signs of a broader slowdown in the housing market are evident, . . . This is in line with our previous expectations and given the notable cooling of buyer demand due to higher mortgage rates. . . . Nevertheless, buyers still remain interested, which is keeping the market competitive — particularly for attractive homes that are properly priced.”

Bottom Line

While the housing market has cooled from its overheated frenzy, it’s still a sellers’ market. Let’s connect so you understand what’s happening with buyer demand and home prices in our local area as you get ready to enter the market.

« 3 Tips for Buying a Home Today

The information contained, and the opinions expressed, in this article are not intended to be construed as investment advice. Keeping Current Matters, Inc. does not guarantee or warrant the accuracy or completeness of the information or opinions contained herein. Nothing herein should be construed as investment advice. You should always conduct your own research and due diligence and obtain professional advice before making any investment decision. Keeping Current Matters, Inc. will not be liable for any loss or damage caused by your reliance on the information or opinions contained herein.

Experts Increase 2022 Home Price Projections

If you’re wondering if home prices are going to come down due to the cooldown in the housing market or a potential recession, here’s what you need to know. Not only are experts forecasting home prices will continue to appreciate nationwide this year, but most of them also actually increased their projections for home price appreciation from their original 2022 forecasts (shown in green in the chart below):

As the chart shows, most sources adjusted up, and now call for more appreciation in 2022 than they originally projected this January. But why are experts so confident the housing market will see ongoing appreciation? It’s because of supply and demand in most markets. As Bankrate says:

“After all, supplies of homes for sale remain near record lows. And while a jump in mortgage rates has dampened demand somewhat, demand still outpaces supply, thanks to a combination of little new construction and strong household formation by large numbers of millennials.”

Knowing that experts forecast home prices will continue to appreciate in most markets and that they’ve actually increased their original projections for this year should help you answer the question: will home prices fall? According to the latest forecasts, experts are confident prices will continue to appreciate this year, although at a more moderate rate than they did in 2021.

Bottom Line

If you’re worried home prices are going to decline, rest assured many experts raised their forecasts to say they’ll continue to appreciate in most markets this year. If you have questions about what’s happening with home prices in our local area, let’s connect.

« What Would a Recession Mean for the Housing Market?

The information contained, and the opinions expressed, in this article are not intended to be construed as investment advice. Keeping Current Matters, Inc. does not guarantee or warrant the accuracy or completeness of the information or opinions contained herein. Nothing herein should be construed as investment advice. You should always conduct your own research and due diligence and obtain professional advice before making any investment decision. Keeping Current Matters, Inc. will not be liable for any loss or damage caused by your reliance on the information or opinions contained herein.

What Would a Recession Mean for the Housing Market?

According to a recent survey from the Wall Street Journal, the percentage of economists who believe we’ll see a recession in the next 12 months is growing. When surveyed in July 2021, only 12% of economists consulted thought there’d be a recession by now. But this July, when polled, 49% believe we will see a recession in the coming 12 months.

And as more recession talk fills the air, one concern many people have is: should I delay my homeownership plans if there’s a recession?

Here’s a look at historical data to show what happened in real estate during previous recessions to help prove why you shouldn’t be afraid of what a recession would mean for the housing market today.

A Recession Doesn’t Mean Falling Home Prices

To show that home prices don’t fall every time there’s a recession, it helps to turn to historical data. As the graph below illustrates, looking at the recessions going all the way back to 1980, home prices appreciated in four of the last six recessions. So, historically, when the economy slows down, it doesn’t mean home values will fall.

Most people remember the housing crisis in 2008 (the larger of the two red bars in the graph above) and think another recession would repeat what happened then. But this housing market isn’t about to crash. The fundamentals are very different today than they were in 2008. So, don’t assume we’re heading down the same path.

A Recession Means Falling Mortgage Rates

Research also helps paint the picture of how a recession could impact the cost of financing a home. As the chart below shows, historically, each time the economy slowed down, mortgage rates decreased.

Fortune explains that mortgage rates typically fall during an economic slowdown:

“Over the past five recessions, mortgage rates have fallen an average of 1.8 percentage points from the peak seen during the recession to the trough. And in many cases, they continued to fall after the fact as it takes some time to turn things around even when the recession is technically over.”

And while history doesn’t always repeat itself, we can learn from and find comfort in the historical data.

Bottom Line

There’s no doubt everyone remembers what happened in the housing market in 2008. But you don’t need to fear the word recession if you’re planning to buy or sell a home. According to historical data, in most recessions, home price gains have stayed strong, and mortgage rates have declined.

If you’re thinking about buying or selling a home, let’s connect so you have expert advice on what’s happening in the housing market and what that means for your homeownership goals.

The U.S. Homeownership Rate Is Growing

Monday August 15th, 2022 First Time Home Buyers, For Buyers, Housing Market Updates, Rent vs. Buy

The desire to own a home is still strong today. In fact, according to the Census, the U.S. homeownership rate is on the rise. To illustrate the increase, the graph below shows the homeownership rate over the last year:

That data shows more than half of the U.S. population live in a home they own, and the percentage is growing with time.

If you’re thinking about buying a home this year, here are just a few reasons why so many people see the value of homeownership.

Why Are More People Becoming Homeowners?

There are several benefits to owning your home. A significant one, especially when inflation is high like it is today, is that homeownership can help protect you from rising costs. Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), explains:

“In the 1970s, when inflation was running around 10%, home prices were rising at approximately the same rate. Renters actually have a harder time in inflationary periods, because rents tend to rise along with inflation, whereas mortgage payments stay the same for homeowners with fixed-rate mortgages.”

When you buy a home with a fixed-rate mortgage, you can lock in what’s likely your biggest monthly expense – your housing payment – for the duration of that loan, often 15-30 years.

That gives you a predictable monthly housing expense that can benefit you in the short term, but you’ll also gain equity over time as your home appreciates in value and you make your monthly mortgage payment.

And with that growing equity, your net worth will increase as well. In fact, the latest data from NAR shows the median household net worth of a homeowner is roughly $300,000, while the median net worth of renters is only about $8,000. That means a homeowner’s net worth is nearly 40 times that of a renter.

Bottom Line

The U.S. homeownership rate is growing. If you’re ready to purchase the home of your dreams, let’s connect so you can begin the homebuying process today.

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What Does the Rest of the Year Hold for Home Prices?

Thursday August 11th, 2022 For Buyers, For Sellers, Housing Market Updates, Pricing

Whether you’re a potential homebuyer, seller, or both, you probably want to know: will home prices fall this year? Let’s break down what’s happening with home prices, where experts say they’re headed, and why this matters for your homeownership goals.

Last Year’s Rapid Home Price Growth Wasn’t the Norm

In 2021, home prices appreciated quickly. One reason why is that record-low mortgage rates motivated more buyers to enter the market. As a result, there were more people looking to make a purchase than there were homes available for sale. That led to competitive bidding wars which drove prices up. CoreLogic helps explain how unusual last year’s appreciation was:

“Price appreciation averaged 15% for the full year of 2021, up from the 2020 full year average of 6%.”

In other words, the pace of appreciation in 2021 far surpassed the 6% the market saw in 2020. And even that appreciation was greater than the pre-pandemic norm which was typically around 3.8%. This goes to show, 2021 was an anomaly in the housing market spurred by more buyers than homes for sale.

Home Price Appreciation Moderates Today

This year, home price appreciation is slowing (or decelerating) from the feverish pace the market saw over the past two years. According to the latest forecasts, experts say on average, nationwide, prices will still appreciate by roughly 10% in 2022 (see graph below):

Why do all of these experts agree prices will continue to rise? It’s simple. Even though housing supply is growing today, it’s still low overall thanks to several factors, including a long period of underbuilding homes. And experts say that’s going to help keep upward pressure on home prices this year. Additionally, since mortgage rates are higher this year than they were last year, buyer demand has slowed.

As the market undergoes this change, it’s true price appreciation this year won’t match the feverish pace in 2021. But the rapid appreciation the market saw last year wasn’t sustainable anyway.

What Does That Mean for You?

Today, the market is beginning to move back toward pre-pandemic levels. But even the forecast for 10% home price growth in 2022 is well beyond the 3.8% that’s more typical for a normal market.

So, despite what you may have heard, experts say home prices won’t fall in most markets. They’ll just appreciate more moderately.

If you’re worried the house you’re trying to sell or the home you want to buy will decrease in value, you should know experts aren’t calling for depreciation in most markets, just deceleration. That means your home should still grow in value, just not as fast as it did last year.

Bottom Line

If you’re thinking of making a move, you shouldn’t wait for prices to fall. Experts say nationally, prices will continue to appreciate this year, just at a more moderate pace. When you’re ready to begin the process of buying or selling, let’s connect so you have a local market expert on your side each step of the way.