With the U.S. economy on everyone’s minds right now, questions about the country’s financial outlook continue to come up daily. The one that seems to keep rising to the top is: when will the economy begin to recover? While no one knows exactly how a rebound will play out, expert economists around the country are becoming more aligned on when the recovery will begin.
According to the latest Wall Street Journal Economic Forecasting Survey, which polls more than 60 economists on a monthly basis, 85.3% believe a recovery will begin in the second half of 2020(see graph below):There seems to be a growing consensus among these experts that the second half of this year will be the start of a turnaround in this country.
Chris Hyzy, Chief Investment Officer for Merrillnotes:
“We fully expect the economy could begin to pick up in late June and July with a strong recovery in the fourth quarter.”
In addition, five of the major financial institutions are also forecasting positive GDP in the second half of the year. Today, four of the five expect a recovery to begin in the third quarter of 2020, and all five agree a recovery should start by the fourth quarter (see graph below):
The vast majority of economists, analysts, and financial institutions are in unison, indicating an economic recovery should begin in the second half of 2020. Agreement among these leading experts is stronger than ever.
We’ve all heard the saying, 40 is the new 30, but does that carry over to every area of life? We are living longer and healthier than anytime in history, but is there an age limit for a major purchase, like a home?
I’m Too Old To…
Here’s another old saw, one that’s increasingly true: Age is just a number. Our definition of elderly is rapidly changing. People are not only living longer, they are living healthier. Generations ago, folks who made it to their eighties were usually infirm. Now, we see octogenarians running marathons and graduating from college. Advancements in medicine and in the way we understand health and fitness have given us not only a longer life, but a better quality of life. Many people who, 20 years ago, would have been considered too old to purchase a home are now buying, without considering their ages. This is good news, if you are approaching middle age and are contemplating a home purchase.
What You Should Consider
You want to buy a home. Great! But before you dive into the housing market, do some research. There are questions you must ask yourself before you sign on the dotted line.
Need vs. want. It’s easy to get caught up in all the bells and whistles of a new home purchase. Evaluate what you need. Think about how this home will serve your plans. If you want to live in this house permanently, your needs at 45 will be different than they will be at 75. Look for a home that can grow with you as you become older. You may want to buy a home with enough bedrooms to accommodate sleepovers with the grandkids, but what if those grandkids live out of state? Make sure your home suits your daily needs before you think of your wants.
Don’t settle for a bad mortgage. The 30-year mortgage has been the industry standard for years. If you are in your 20s or 30s, it’s probably the best mortgage for you. But what if you are in your 40s, 50s or 60s? If you plan to pay off your mortgage while you are still working, a shorter 15-year mortgage may make the most sense.
What will your retirement look like? Do you plan to settle down and garden? Or do you plan to hit the road in a motor home and travel the country? Your home purchase should reflect your retirement plans. If you plan to use your retirement to travel, a large home purchase may not be right for you.
Asking questions is the first step in your planning. If you need direction on the best path to take, give our agents a call. Buying a home can be the single best investment you can make. We can help you make that vision a reality.
With stay-at-home orders starting to gradually lift throughout parts of the country, data indicates homebuyers are jumping back into the market. After many families put their plans on hold due to the COVID-19 pandemic, what we once called the busy spring real estate season is shifting into the summer. In 2020, summer is the new spring for real estate.
Joel Kan, Economist at The Mortgage Bankers Association (MBA) notes:
“Applications for home purchases continue to recover from April’s sizable drop and have now increased for five consecutive weeks…Government purchase applications, which include FHA, VA, and USDA loans, are now 5 percent higher than a year ago, which is an encouraging turnaround after the weakness seen over the past two months.”
Additionally, according to Google Trends, which scores search terms online, searches for real estate increased from 68 points the week of March 15th to 92 points last week. As we can see, more potential homebuyers are looking for homes virtually.
What’s the Opportunity for Buyers?
Another reason buyers are coming back to the market, even with forced unemployment and stay-at-home orders, is historically low mortgage rates. Sam Khater, Chief Economist at Freddie Mac indicates:
“For the fourth consecutive week, the 30-year fixed-rate mortgage has been below 3.30 percent, giving potential buyers a good reason to continue shopping even amid the pandemic…As states reopen, we’re seeing purchase demand improve remarkably fast, now essentially flat relative to a year ago.”
With mortgage rates at such low levels and states gradually beginning to reopen, there’s more incentive than ever to buy a home this summer.
What’s the Opportunity for Sellers?
Finding a home to buy, however, is still a challenge, as this spring sellers removed many listings from the market. Though more people are now putting their houses up for sale this month as compared to last month, current inventory is still well below last year’s level.
According to last week’s Weekly Economic and Housing Market Update from realtor.com:
“Weekly Housing Inventory showed continued tightening. New Listings declined 28% compared with a year ago, as sellers grappled with uncertainty and hesitated bringing homes to market. Total Listings dropped 20% YoY, a faster rate than in prior weeks, leaving very few homes available for sale. As Time on Market was 15 days slower YoY, asking prices moved up 1.5% YoY.”
If you’re thinking of selling your house this summer, now may be your best opportunity. With so few homes on the market for buyers to purchase, this season may be the time for your house to stand out from the crowd. Trusted real estate professionals can help you list safely and effectively, keeping your family’s needs top of mind. Buyers are looking, and your house may be at the top of their list.
If you’re thinking of selling, many buyers may be eager to find a home just like yours. Let’s connect today to make sure you can get your house in on the action this summer.
In a normal housing market, whether you’re buying or selling a home, you need an experienced guide to help you navigate through the process. You need someone you can turn to who will tell you how to price your home correctly right from the start. You need someone who can help you determine what to offer on your dream home without paying too much or offending the seller with a low-ball offer.
We are, however, in anything but a normal market right now. We are amid one of the greatest health crises our nation has ever seen. The pandemic has had a dramatic impact on the journey consumers take to purchase or sell a home. To successfully navigate the landscape today, you need more than an experienced guide. You need a ‘Real Estate Sherpa.’
According to Lexico, a Sherpa is a “member of a Himalayan people living on the borders of Nepal and Tibet, renowned for their skill in mountaineering.” Sherpas are skilled in leading their parties through the extreme altitudes of the peaks and passes in the region – some of the most treacherous trails in the world. They take pride in their hardiness, expertise, and experience at very high altitudes.
They are much more than just guides.
This is much more than a normal real estate market.
Today, the average guide just won’t do. You need a Sherpa. You need an expert who understands how COVID-19 is impacting the thoughts and actions of the consumer (ex: virtual showings, proper safety protocols, e-signing documents). You need someone who can simply and effectively explain the changes in today’s process to you and your family. You need an expert who will guarantee you make the right decision, especially in these challenging times.
Hiring an agent who understands how the pandemic is reshaping the real estate processes is crucial right now. Let’s connect today to guarantee your journey is a safe and successful one.
One of the biggest questions we all seem to be asking these days is: When are we going to start to see an economic recovery? As the country begins to slowly reopen, moving forward in strategic phases, business activity will help bring our nation back to life. Many economists indicate a recovery should begin to happen in the second half of this year. Here’s a look at what some of the experts have to say.
“I think there’s a good chance that there’ll be positive growth in the third quarter. And I think it’s a reasonable expectation that there’ll be growth in the second half of the year…
So, in the long run, I would say the U.S. economy will recover. We’ll get back to the place we were in February; we’ll get to an even better place than that.I’m highly confident of that. And it won’t take that long to get there.”
“The economy is expected to begin recovering during the second half of 2020 as concerns about the pandemic diminish and as state and local governments ease stay-at-home orders, bans on public gatherings, and other measures. The labor market is projected to materially improve after the third quarter; hiring will rebound and job losses will drop significantly as the degree of social distancing diminishes.”
“I think we need to prepare for a more gradual recovery while we hope for that quicker rebound.”
We’re certainly not out of the woods yet, but clearly many experts anticipate we’ll see a recovery starting this year. It may be a bumpy ride for the next few months, but most agree that a turnaround will begin sooner rather than later.
During the planned shutdown, as the economic slowdown pressed pause on the nation, many potential buyers and sellers put their real estate plans on hold. That time coincided with the traditionally busy spring real estate season. As we look ahead at this economic recovery and we begin to emerge back into our communities over the coming weeks and months, perhaps it’s time to think about putting your real estate plans back into play.
The experts note a turnaround is on the horizon, starting as early as later this year. If you paused your 2020 real estate plans, let’s connect today to determine how you can re-engage in the process as the country reopens and the economy begins a much-anticipated rebound.
There are many benefits to working with a real estate professional when selling your house. During challenging times like the one we face today, it becomes even more important to have an expert help guide you through the process. If you’re considering selling on your own, known in the industry as a For Sale By Owner or FSBO, please consider the following:
1. Your Safety Is a Priority
During this pandemic, your family’s safety comes first. When you FSBO, it is incredibly difficult to control entry into your home. A real estate professional will have the proper protocols in place to protect not only your belongings, but your family’s health and well-being too. From regulating the number of people in your home at one time to ensuring proper sanitization during and after a showing, and even facilitating virtual tours for buyers, agents are equipped to follow the latest industry standards recommended by the National Association of Realtors (NAR) to help protect you and your family.
2. A Powerful Online Strategy Is a Must to Attract a Buyer
Recent studies have shown that, even before COVID-19, the first step 44% of all buyers took when looking for a home was to search online. Throughout the process, that number jumped to 93%. Today, those numbers have grown exponentially. Most real estate agents have developed a strong Internet and social media strategy to promote the sale of your house. Have you?
3. There Are Too Many Negotiations
Here are just a few of the people you’ll need to negotiate with if you decide to FSBO:
The buyer, who wants the best deal possible
The buyer’s agent, who solely represents the best interest of the buyer
The inspection companies, which work for the buyer and will almost always find challenges with the house
The appraiser, if there is a question of value
As part of their training, agents are taught how to negotiate every aspect of the real estate transaction and how to mediate the emotions felt by buyers looking to make what is probably the largest purchase of their lives.
4. You Won’t Know if Your Purchaser Is Qualified for a Mortgage
Having a buyer who wants to purchase your house is the first step. Making sure they can afford to buy it is just as important. As a FSBO, it’s almost impossible to be involved in the mortgage process of your buyer. A real estate professional is trained to ask the appropriate questions and, in most cases, will be intimately aware of the progress that’s being made toward a purchaser’s mortgage commitment.
Further complicating the situation is how the current mortgage market is rapidly evolving because of the number of families out of work and in mortgage forbearance. A loan program that was there yesterday could be gone tomorrow. You need someone who is working with lenders every day to guarantee your buyer makes it to the closing table.
5. FSBOing Has Become More Difficult from a Legal Standpoint
The documentation involved in the selling process has increased dramatically as more and more disclosures and regulations have become mandatory. In an increasingly litigious society, the agent acts as a third-party to help the seller avoid legal jeopardy. This is one of the major reasons why the percentage of people FSBOing has dropped from 19% to 8% over the last 20+ years.
6. You Net More Money When Using an Agent
Many homeowners believe they’ll save the real estate commission by selling on their own. Realize that the main reason buyers look at FSBOs is because they also believe they can save the real estate agent’s commission. The seller and buyer can’t both save the commission.
A study by Collateral Analytics revealed that FSBOs don’t actually save anything by forgoing the help of an agent. In some cases, the seller may even net less money from the sale. The study found the difference in price between a FSBO and an agent-listed home was an average of 6%. One of the main reasons for the price difference is effective exposure:
“Properties listed with a broker that is a member of the local MLS will be listed online with all other participating broker websites, marketing the home to a much larger buyer population. And those MLS properties generally offer compensation to agents who represent buyers, incentivizing them to show and sell the property and again potentially enlarging the buyer pool.”
The more buyers that view a home, the greater the chance a bidding war will take place.
Listing on your own leaves you to manage the entire transaction yourself. Why do that when you can hire an agent and still net the same amount of money? Before you decide to take on the challenge of selling your house alone, let’s connect to discuss your options.
All eyes are on the American economy. As it goes, so does the world economy. With states beginning to reopen, the question becomes: which sectors of the economy will drive its recovery? There seems to be a growing consensus that the housing market is positioned to be that driving force, the tailwind that is necessary.
Some may question that assertion as they look back on the last recession in 2008 when housing was the anchor to the economy – holding it back from sailing forward. But even then, the overall economy did not begin to recover until the real estate market started to regain its strength. This time, the housing market was in great shape when the virus hit.
“Many still bear scars from the Great Recession and may expect the housing market to follow a similar trajectory in response to the coronavirus outbreak. But, there are distinct differences that indicate the housing market may follow a much different path. While housing led the recession in 2008-2009, this time it may be poised to bring us out of it.”
Fleming is not the only economist who believes this. Last week, Dr. Frank Nothaft, Chief Economist for CoreLogic, (@DrFrankNothaft) tweeted:
“For the first 6 decades after WWII, the housing sector led the rest of the economy out of each recession. Expect it to do so this time as well.”
And, Robert Dietz, Chief Economist for the National Association of Home Builders, in an economic update last week explained:
“As the economy begins a recovery later in 2020, we expect housing to play a leading role. Housing enters this recession underbuilt, not overbuilt…Based on demographics and current vacancy rates, the U.S. may have a housing deficit of up to one million units.”
Every time a home is sold it has a tremendous financial impact on local economies. As the real estate market continues its recovery, it will act as a strong tailwind to the overall national economy.
While growing up, we were taught by our parents and grandparents that owning a home is a financially savvy move. They explained how a mortgage is like a “forced savings plan.” When you pay rent, that money is lost forever. When you make a mortgage payment, much of that money accumulates as equity in the home. So, what exactly is equity?
The equity in your home is the amount of money you can sell it for minus what you still owe on the mortgage. Every month you make a mortgage payment, and every month a portion of what you pay reduces the amount you owe. That reduction of your mortgage every month increases your equity.
A recent study by CoreLogic explained that homeowners gained substantial equity over the last twelve months, and are essentially sitting on large sums of cash in their homes. In the study, Frank Nothaft, Chief Economist for CoreLogic explained:
“The CoreLogic Home Price Index recorded a quickening of home price gains during the fourth quarter of 2019, helping to boost home equity wealth. The average family with a mortgage had a $7,300 gain in home equity during the past year, and a total of $177,000 in home equity wealth.”
For most families, their home is their largest financial asset. This increase in equity drives the net worth, or family wealth, of the homeowner. Renters are not earning that benefit. Instead, they’re building the net worth of their landlord.
Home price growth will moderate during the pandemic. But once a cure is available, most experts agree that home values will again begin to appreciate at levels similar to what we’ve seen over the last several years. In the long run, our family elders will be proven correct: owning a home is a savvy financial move.
Today, many people are asking themselves if they should buy or sell a home in 2020. Some have shifted their plans or put them on hold over the past couple of months, and understandably so. Everyone seems to be wondering if the market is going to change and when the economy will turn around. If you’re trying to figure out what’s going to happen and how to play your cards this year, you’re not alone.
This spring in the 2020 NAR Flash Survey: Economic Pulse, the National Association of Realtors (NAR) has been tracking the behavior changes of homebuyers and sellers. In a reaction to their most recent survey, Lawrence Yun, Chief Economist at NAR, noted the beginnings of a turn in the market:
“After a pause, home sellers are gearing up to list their properties with the reopening of the economy…Plenty of buyers also appear ready to take advantage of record-low mortgage rates and the stability that comes with these locked-in monthly payments into future years.”
What does the survey indicate about sellers?
Sellers are positioning themselves to make moves this year. More than 3 in 4 potential sellers are preparing to sell their homes once stay-at-home orders are lifted and they feel more confident, which means more homes will start to be available for interested buyers.Just this week, Zillow also reported an uptick in listings, which is great news for the health of the market:
“The number of new for-sale listings overall has shown improvement, up 5.9% last week from the previous week. New listings of the most-expensive homes…are now seeing the biggest resurgence, up 8%. The uptick is likely a sign sellers are feeling more confident because of improving buyer demand, as newly pending sales have also jumped up during the same period.”
What does the survey note about buyers?
The recent pandemic has clearly impacted buyer preferences, showing:
5% of the respondents said buyers are shifting their focus from urban to suburban areas.
1 in 8 Realtors report changes in desired home features, with home offices, bigger yards, and more space for their families becoming increasingly important.
Only 17% said buyers stopped looking due to concerns about their employment or loss of a job.
As we’ve mentioned before, buyer demand is strong right now, and many are simply waiting for more inventory to become available so they can make a move, especially as the country begins to reopen.
If you’re thinking about putting your house on the market, let’s connect today. There’s a good chance an eager buyer is looking for a home just like yours.