Category: Buying Myths

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Experts Project Home Prices Will Rise over the Next 5 Years

Posted on December 4, 2023 by - Buying Myths, For Buyers, For Sellers, Housing Market Updates, Selling Myths

Experts Project Home Prices Will Rise over the Next 5 Years Simplifying The Market

Even with so much data showing home prices are actually rising in most of the country, there are still a lot of people who worry there will be another price crash in the immediate future. In fact, a recent survey from Fannie Mae shows that 23% of consumers think prices will fall over the next 12 months. That’s nearly one in four people who are dealing with that fear – maybe you’re one of them.

To help ease that concern, here’s what the experts say will happen with home prices not just next year, but over the next five years.

Experts Project Ongoing Appreciation

While seeing a small handful of expert opinions may not be enough to change your mind, hopefully, a larger group of experts will reassure you. Here’s that larger group.

The Home Price Expectation Survey (HPES) from Pulsenomics is a great resource to show what experts forecast for home prices over a five-year period. It includes projections from over 100 economists, investment strategists, and housing market analysts. And the results from the latest quarterly release show home prices are expected to go up every year through 2027 (see graph below):

 

And while the projected increase in 2024 isn’t as large as 2023, remember home price appreciation is cumulative. In other words, if these experts are correct after your home’s value rises by 3.32% this year, it should go up by another 2.17% next year.

If you’re worried home prices are going to fall, here’s the big takeaway. Even though prices vary by local area, experts project they’ll continue to rise across the country for years to come at a pace that’s more normal for the market.

What Does This Mean for You?

If you’re not convinced yet, maybe these numbers will get your attention. They show how a typical home’s value could change over the next few years using the expert projections from the HPES. Check out the graph below:

 

In this example, let’s say you bought a $400,000 home at the beginning of this year. If you factor in the forecast from the HPES, you could potentially accumulate more than $71,000 in household wealth over the next five years.

Bottom Line

If you’re someone who’s worried home prices are going to fall, rest assured a lot of experts say it’s just the opposite – nationally, home prices will continue to climb not just next year, but for years to come. If you have any questions or concerns about what’s next for home prices in your local area, connect with a real estate agent.

Is Owning a Home Still the American Dream for Younger Buyers?

Posted on November 30, 2023 by - Buying Myths, Demographics, First Time Home Buyers, For Buyers, Housing Market Updates

Is Owning a Home Still the American Dream for Younger Buyers? Simplifying The Market

Everyone has their own idea of the American Dream, and it’s different for each person. But, in a recent survey by Bankrate, people were asked about the achievements they believe represent the American Dream the most. The answers show that owning a home still claims the #1 spot for many Americans today (see graph below):

 

In fact, according to the graph, owning a home is more important to people than retiring, having a successful career, or even getting a college degree. But is the dream of homeownership still alive for younger generations?

A recent survey by 1000watt dives into how the two generations many people believed would be the renter generations (Gen Z and millennials) feel about homeownership. Specifically, it asks if they want to buy a home in the future. The resounding answer is yes (see graph below):

While there are plenty of reasons why someone might prefer homeownership to renting, the same 1000watt survey shows, that for 63% of Gen Z and millennials, it’s that your place doesn’t feel like “home” unless you own it – maybe you feel the same way.

That emotional draw is further emphasized when you look at the reasons why Gen Z and millennials want to become homeowners. For all the financial benefits homeownership provides, in most cases it’s about the lifestyle or emotional benefits (see graph below):

 

What Does This Mean for You?

If you’re a part of Gen Z or are a millennial and you’re ready, willing, and able to buy a home, you’ll want a great real estate agent by your side. Their experience and expertise in the local housing market will help you overcome today’s high mortgage rates, low inventory, and rising home prices to find your first home and turn your dream into a reality.

Working with a local real estate agent to find your dream home is the key to unlocking the American Dream.

Bottom Line

Buying a home is a big, important decision that represents the heart of the American Dream. If you want to accomplish your goal, begin by talking to a local real estate expert to start the process today.

Are the Top 3 Housing Market Questions on Your Mind?

Posted on November 28, 2023 by - Buying Myths, First Time Home Buyers, For Buyers, For Sellers, Housing Market Updates, Move-Up Buyers, Selling Myths

Are the Top 3 Housing Market Questions on Your Mind? Simplifying The Market

When it comes to what’s happening in the housing market, there’s a lot of confusion going around right now. You may hear one thing in conversation with your friends, see something totally different on the news, and read something on social media that contradicts both of those thoughts. And, if you’re thinking about making a move, that can leave you with a lot of lingering questions. That’s where a trusted local real estate agent comes in.

Here are the top 3 questions people are asking about today’s housing market, and the data to help answer them.

1. What’s Next for Mortgage Rates?

Mortgage rates are higher than they’ve been in recent years. And, if you’re looking to buy a home, that impacts how much you can afford. That’s why so many buyers want to know what’s ahead for mortgage rates. The answer to that question is: no one can say for certain, but here’s what we know based on historical trends.

There’s a long-standing relationship between mortgage rates and inflation. Basically, when inflation is high, mortgage rates tend to follow suit. Over the past year, inflation was up, so mortgage rates were as well. But inflation is easing now. And this is why the Federal Reserve has recently paused their federal funds rate hikes, which means many experts believe mortgage rates will begin to come down.

And in some ways, we’ve started to see hints of slightly lower mortgage rates in recent weeks. But it’s certainly been volatile and will likely continue to be that way going into next year. Some ongoing variation is to be expected, but the anticipation is, that in 2024, we’ll see a downward trend. As Aziz Sunderji, Strategist at Home Economics, says:

“The bottom line is that interest rates are likely to be lower-perhaps even lower than many optimists think – in the weeks and months to come.”

2. Where Are Home Prices Headed?

While there’s been a lot of concern prices would come crashing down this year, data shows that didn’t happen. In fact, home prices are rising in most of the nation. Experts say that trend will continue, just at a slower pace that’s much more normal for the housing market – and that’s a good thing.

To help show just how confident experts are in this continued appreciation, take a look at the Home Price Expectation Survey from Pulsenomics. It’s a survey of a national panel of over 100 economists, real estate experts, and investment and market strategists. As the graph below shows, the consensus is, that prices will keep climbing next year, and in the years to come.

 

3. Is a Recession Around the Corner?

While recession talk has been a common thing over the past few years, there’s good news on that front.

The Wall Street Journal (WSJ) polls experts on this topic regularly. And last year at this time, most of them thought a recession would have happened by now. But as experts look at all the leading indicators today, they’re changing their minds and saying a recession is getting less and less likely. The latest results show that more experts now think we’re not headed for another recession (see chart below):

 

This is big news for the housing market. And while the 48% to 52% split may seem close to half and half, the key thing to focus on is that the majority of these experts think we’ve avoided a recession already.

Bottom Line

The big takeaway? The data shows there isn’t cause for concern – there are actually more signs of hope. Reach out to a local real estate agent to talk more about the housing market questions on your mind heading into the new year. 

Is Wall Street Buying Up All the Homes in America?

Posted on November 27, 2023 by - Buying Myths, For Buyers, Housing Market Updates, Move-Up Buyers

Is Wall Street Buying Up All the Homes in America? Simplifying The Market

If you’re thinking about buying a home, you may find yourself interested in the latest real estate headlines so you can have a pulse on all of the things that could impact your decision. If that’s the case, you’ve probably heard mention of investors, and wondered how they’re impacting the housing market right now. That could leave you asking yourself questions like:

  • How many homes do investors own?
  • Are institutional investors, like large Wall Street Firms, really buying up so many homes that the average person can’t find one?

To answer those questions, here’s the real story of what’s happening based on the data.  

Let’s start with establishing how many single-family homes (SFHs) there are and what portion of those are rentals owned by investors. According to SFR Investor, which studies the single-family rental market in the United States, there are eighty-two million single-family homes in this country. But how many of them are actually rentals?

According to data shared in a recent post, sixty-eight million (82.93%) of those homes are owner-occupied – meaning the person who owns the home lives in it. If you subtract that sixty-eight million from the total number of single-family homes (82 million), that leaves just about fourteen million homes left that are single-family rentals (SFRs).

Do institutional investors own all of those remaining fourteen million homes? Not even close. Let’s take it one step further. There are four categories of investors:

  • The mom & pop investor who owns between 1-9 SFRs
  • The regional investor who owns between 10-99 SFRs
  • Smaller national investor who owns between 100-999 SFRs
  • The institutional investor who owns over 1,000 SFRs

These categories show that not all investors are large institutional investors. To help convey that even more clearly, here are the percentages of rental homes owned by each type of investor (see chart below):

 

As you can see in the chart, despite what the news and social media would have you believe, the green shows the vast majority are not owned by large institutional investors. Instead, most are owned by small mom & pop investors, like your friends and neighbors.

What’s actually happening is, that there are people out there, just like you, who believe in homeownership, and they view buying a home (or a second home) as an investment. Maybe they saw an opportunity to buy a second home over the last few years to use it as a rental and generate additional income. Or maybe they just decided to keep their first house rather than sell it when they moved up.

So, don’t believe everything you read or hear about institutional investors. They aren’t buying up all the homes and making it impossible for the average person to buy. That’s just not what the numbers show. Institutional investors are actually the smallest piece of the pie chart.

Bottom Line

While it’s true that institutional investors are a player in the single-family rental marketplace, they’re not buying up all of the houses on the market. If you have other questions about things you’re hearing about the housing market, connect with a trusted real estate professional so you have an expert to give you the context you need.

Why Homeowners Are Thankful They Own

Posted on November 23, 2023 by - Buying Myths, First Time Home Buyers, For Buyers, Rent vs. Buy

Why Homeowners Are Thankful They Own Simplifying The Market

Countless people have set out on the exciting journey of homeownership. Ask around and you’ll find the vast majority are thankful they took the leap and bought a home. But why? It’s because of the many emotional and lifestyle benefits that come with being a homeowner.

So, if you’re trying to decide if you want to rent or buy a home, here are just a few of the many benefits you could look forward to if you buy.

It’s a Safe Haven

Owning a home goes beyond just having a roof over your head. It provides a sense of security and safety. In fact, in a survey from Fannie Mae, respondents say “having a sense of privacy and security” is one of the top reasons homeownership is preferred to renting. And in a different Fannie Mae survey, “living in a place where you and your family feels safe” is another one of the top benefits of homeownership.

Your home is a place where you can truly relax and unwind. Knowing that you have a sanctuary to return to at the end of the day is a great source of comfort.

It’s a Canvas for Self-Expression

For many homeowners, their home is a reflection of who they are. The National Association of Realtors (NAR), says:

“The home is yours. You can decorate any way you want and choose the types of upgrades and new amenities that appeal to your lifestyle.”

From the color of the front door to the art hanging on the walls, every detail contributes to a unique expression of personal style. Put simply, owning a home gives you the freedom to make changes and improvements that resonate with your personality.

It Helps You Feel More Connected to the Community

Stability is another cornerstone of homeownership. The longer you stay put, the more emotionally connected you are to your community. For example, if your neighborhood does cook-outs, block parties, or other events, you’ll feel more engaged and probably build meaningful relationships with those around you. As NAR states:

“Remaining in one neighborhood for several years allows you and your family time to build long-lasting relationships within the community.”

The sense of community where you can make life-long friends helps give you more stability and predictability than you’d have if you move each time a rental lease renews.

Its Where Lifelong Memories Are Made

Not to mention, your home is where you’ll make many memories. It’s a backdrop for the stories of your life. Celebrating milestones, hosting gatherings, and building a treasure trove of special moments within the walls of your home is a heartwarming experience to be thankful for.

Bottom Line

As you start thinking about buying a home, remember why so many people are glad they did. Homeownership isn’t just a financial decision. It’s about having a stable place where you can make lasting memories. If you’re thinking of buying a home and want advice, talk with a trusted real estate agent.

Are There Actually More Homes for Sale Right Now?

Posted on November 21, 2023 by - Buying Myths, For Buyers, For Sellers, Housing Market Updates, Selling Myths

Are There Actually More Homes for Sale Right Now? Simplifying The Market

If you’re looking to make a move, you want to be sure you have the latest information on the housing market. To help make that possible, here’s an update on the supply of homes for sale today. Whether you’re looking to buy or sell, the number of homes available in your local market matters to you. Take a look below.  

What’s the Truth About Today’s Housing Inventory?

While the story for the past few years has been how few homes are on the market, recent national data may leave you feeling a bit confused. That’s because Realtor.com shows inventory is actually growing a bit month-over-month in many parts of the country (see the blue states in the map below):

As the map shows, nationally, housing supply increased just over 5% last month.

Does That Mean the Days of Limited Inventory Are Over?

That might make you wonder: are the days of tight housing supply behind us? The short answer is no. Context is important. While you may see headlines saying inventory is up, data also shows there are still significantly fewer homes for sale than there would usually be in a more normal market.

The graph below compares the latest active listing counts (homes currently available for sale) with the most recent normal years in the housing market (2017-2019):

As Lance Lambert, Founder, ResiClub Analytics, explains:

“Housing market inventory is so far below pre-pandemic levels that October’s big jump is still just a drop in the bucket.”

What does that mean for you? Remember, real estate is hyper-local. Partnering with a trusted real estate agent will help you gain a better understanding of the inventory situation in your specific market.

If you’re looking to buy, you may have slightly more options than you did in recent months, but you still need to brace for low inventory. A great agent will be able to share their expertise and key strategies that have helped other buyers navigate today’s ongoing low housing supply.

And, if you’re trying to sell, rest assured you haven’t missed your window of opportunity to potentially get multiple offers or see your house sell quickly. While inventory has ticked up some nationally, overall, it’s still low and may be down even more in your area. 

Bottom Line

If you’re looking to buy or sell a home, connect with a local real estate agent so you can make sure you’re up to date on all the latest trends that could impact your move, including today’s housing supply. 

People Are Still Moving, Even with Today’s Affordability Challenges

Posted on November 16, 2023 by - Buying Myths, For Buyers, For Sellers, Housing Market Updates, Selling Myths

People Are Still Moving, Even with Today’s Affordability Challenges Simplifying The Market

If you’re thinking about buying or selling a home, you might have heard that it’s tough right now because mortgage rates are higher than they’ve been over the past few years, and home prices are rising. That much is true. Take a look at the graph below. It breaks down how the current affordability situation stacks up to recent years.

 

The National Association of Realtors (NAR) explains how to read the values on the graph:

“To interpret the indices, a value of 100 means that a family with the median income has exactly enough income to qualify for a mortgage on a median-priced home.”

The black dotted line represents that 100 value on the index. Essentially, the higher the bar, the more affordable homes are. As you can see, the orange bar for today shows higher mortgage rates and home prices have created a clear challenge. But, while affordability is definitely tighter right now, that doesn’t mean the housing market is at a standstill.

According to NAR, based on the pace of sales right now, just under 4 million homes will sell this year. With some simple math, let’s break down what that really means for you:

  • 3.96 million homes divided by 365 days in a year = 10,849 houses sell each day
  • 10,849 divided by 24 hours in a day = 452 houses sell per hour
  • 452 divided by 60 minutes in an hour = about 8 houses sell each minute

So, on average, over 10,000 homes sell each day in this country. Whether you’re a buyer or a seller, this goes to show there are still ways to make your move possible, even at a time when affordability is tight.

An Agent Can Help You Make Your Move a Reality

You may be wondering how other homebuyers and sellers are making this happen now. One of the biggest game-changers in today’s market is working with a trusted local real estate agent. Great agents are helping other people just like you navigate today’s market and the current affordability situation, and their insight is invaluable right now.

True professionals will be able to offer advice tailored to your specific wants, needs, budget, and more. Not to mention, they’ll also be able to draw on their experience of what’s working for other buyers and sellers right now. This could mean broadening your search, if needed, to include other housing types like condos, townhouses, or neighborhoods a bit further out to help offset some of the affordability challenges today. 

Bottom Line

You might think there aren’t many people buying or selling homes right now since affordability is tighter than it’s been in quite some time, but that’s not the case. It’s true that buying a home has become more expensive over the past couple of years, but people are still moving.

 

If you’re hoping to buy or sell a home today, know that other people are still making their goals a reality – and that’s happening in large part because of the help and advice of skilled real estate agents. Want to talk to a trusted professional about your own move? Connect with a local real estate agent.  

Life-Changing Events That Move the Housing Market

Posted on November 13, 2023 by - Buying Myths, Demographics, First Time Home Buyers, For Buyers, Move-Up Buyers

Life-Changing Events That Move the Housing Market Simplifying The Market

Life is a journey filled with unexpected twists and turns, like the excitement of welcoming a new addition, retiring and starting a new adventure, or the bittersweet feeling of an empty nest. If something like this is changing in your own life, you may be considering buying or selling a house. That’s because through all these life-altering events, there is one common thread—the need to move.

Reasons People Still Need To Move Today

According to the National Association of Realtors (NAR) there have been a lot of this type of milestone or life change over the last two years (see graph below):

 

And, these big life changes are going to continue to impact people moving forward, even with the current affordability challenges brought on by higher mortgage rates and rising home prices.

As Claire Trapasso, Executive News Editor at Realtor.com, says:

“Because high mortgage rates, elevated home prices, and stubbornly low inventory make today’s housing market particularly challenging, many of today’s buyers are motivated by life changes, such as growing families, supporting elderly parents or grown children, or accommodating professional needs. . .”

Lean On a Real Estate Professional for Help

Whether you’re beginning your search for a home or preparing to sell your current house, you don’t have to go it alone. With their expertise, a real estate agent is an invaluable partner who can help you smoothly transition through these big moments in your life. Here are just a few examples.

When Buying a Home

If you’re welcoming a new addition and want more space, the need for a new home may be a top priority. While higher home prices and mortgage rates are creating challenges for buyers, you may have to find a way to meet your changing needs, even with today’s mortgage rates.

A skilled real estate agent can help. Their expertise and knowledge of the local housing market can save you a considerable amount of time and stress. An agent will take the time to understand your specific needs, budget, and preferences, allowing them to narrow down your search and present you with suitable options.

When Selling a House

If you’re retiring or going through a separation or divorce, your main focus may be to make the most out of your investment when selling your house, so you can find one that works better for you moving forward.

This is another place where a real estate agent’s expertise truly shines. They can accurately assess your home’s market value, suggest improvements to enhance its appeal, and craft a strategic marketing plan. Their negotiation skills are a big asset when it comes to making sure you get a fair price for your house, allowing you to move on to the next chapter of your life with confidence and peace of mind.

No matter your situation, lean on a trusted professional for help as you buy or sell a home.

Bottom Line

If recent life-changing events have you wanting or needing to move, connect with a local real estate agent.

How VA Loans Can Help Make Homeownership Dreams Come True

Posted on November 9, 2023 by - Buying Myths, Demographics, First Time Home Buyers, For Buyers, Move-Up Buyers

How VA Loans Can Help Make Homeownership Dreams Come True Simplifying The Market

For more than 79 years, Veterans Affairs (VA) home loans have helped millions of veterans buy their own homes. If you or someone you care about has served in the military, it’s essential to learn about this program and its advantages.

Here are some important things to know about VA loans before you buy a home.

The Many Advantages of VA Home Loans

VA home loans provide a pathway to homeownership for those who have served our nation, and they’re a great benefit for buyers who qualify. According to the Department of Veteran Affairs:

  • Options for No Down Payment: Qualified borrowers can often purchase a home with no down payment. That’s a huge weight lifted when you’re trying to save for a home.
  • Limited Closing Costs: There are limits on the types of closing costs you pay when you qualify for a VA home loan. So, more money stays in your pocket when it’s time to seal the deal.
  • Don’t Require Private Mortgage Insurance (PMI): Many other loans with down payments under 20% require PMI. VA loans do not, which means veterans can save on their monthly housing costs.

A recent article from Veterans United sums up just how impactful this loan option can be:

“For the vast majority of military borrowers, VA loans represent the most powerful lending program on the market. These flexible, $0-down payment mortgages have helped more than 24 million service members become homeowners since 1944.”

Bottom Line

Owning a home is the American Dream. Veterans sacrifice a lot to protect our country, and one way we can show our appreciation is by making sure they know all the benefits of VA home loans. Thank you for your service.

Thinking About Using Your 401(k) To Buy a Home?

Posted on November 8, 2023 by - Buying Myths, First Time Home Buyers, For Buyers, Move-Up Buyers

Thinking About Using Your 401(k) To Buy a Home? Simplifying The Market

Are you dreaming of buying your own home and wondering about how you’ll save for a down payment? You’re not alone. Some people think about tapping into their 401(k) savings to make it happen. But before you decide to dip into your retirement to buy a home, be sure to consider all possible alternatives and talk with a financial expert. Here’s why.

The Numbers May Make It Tempting

The data shows many Americans have saved a considerable amount for retirement (see chart below):

 

It can be really tempting when you have a lot of money saved up in your 401(k) and you see your dream home on the horizon. But remember, dipping into your retirement savings for a home could cost you a penalty and affect your finances later on. That’s why it’s important to explore all your options when it comes to saving for a down payment and buying a home. As Experian says:

“It’s possible to use funds from your 401(k) to buy a house, but whether you should depends on several factors, including taxes and penalties, how much you’ve already saved and your unique financial circumstances.”

Alternative Ways To Buy a Home

Using your 401(k) is one way to finance a home, but it’s not the only option. Before you decide, consider a couple of other methods, courtesy of Experian:

  • FHA Loan: FHA loans allow qualified buyers to put down as little as 3.5% of the home’s price, depending on their credit scores.
  • Down Payment Assistance Programs: There are many national and local programs that can help first-time and repeat homebuyers come up with the necessary down payment.

Above All Else, Have a Plan

No matter what route you take to purchase a home, be sure to talk with a financial expert before you do anything. Working with a team of experts to develop a concrete plan prior to starting your journey to homeownership is the key to success. Kelly Palmer, Founder of The Wealthy Parent, says:

“I have seen parents pausing contributions to their retirement plans in favor of affording a larger home often with the hope they can refinance in the future… As long as there is a tangible plan in place to get back to saving for their retirement goals, I encourage families to consider all their options.”

Bottom Line

If you’re still thinking about using your 401(k)-retirement savings for a home down payment, consider all your options and work with a financial professional before you make any decisions.