Category: For Buyers

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Buyer Interest Is Growing among Younger Generations

Posted on October 28, 2020 by - Demographics, First Time Home Buyers, For Buyers, Gen Z, Generation X, Interest Rates, Millennials, Move-Up Buyers

Buyer Interest Is Growing among Younger Generations | Simplifying The Market

The demand for homes this year is extraordinary as record-breaking numbers of hopeful buyers continue to shop for homes. In a normal year, the peak homebuying season comes to a close by early fall. However, 2020 is anything but a normal year, and the housing market is no exception. Lawrence Yun, Chief Economist for the National Association of Realtors (NAR), explains:

“Home sales traditionally taper off toward the end of the year, but in September they surged beyond what we normally see during this season…I would attribute this jump to record-low interest rates and an abundance of buyers in the marketplace, including buyers of vacation homes given the greater flexibility to work from home.”

What’s drawing so many buyers to the market?

As Yun mentioned, record-low interest rates are key. Today’s rates are strengthening purchasing power for buyers, too. Sam Khater, Chief Economist at Freddie Mac, emphasizes:

“Mortgage rates today are on average more than a full percentage point lower than rates over the last five years.”

If you’re a homebuyer right now, there’s no question that you want to take advantage of this opportunity – and you’re not alone. Competition among buyers is definitely increasing as more buyers enter the market and mortgage interest rates remain so low.

Who’s planning to buy a home right now?

Today’s affordability is appealing to all generations and seems to be especially attractive to younger buyers who want to begin growing their wealth through homeownership. There’s a distinct increase this year in the percentage of those in younger generations searching for homes. The National Association of Home Builders (NAHB) notes:

“Between the third quarters of 2019 and 2020, the share of Gen Z adults planning a home purchase rose three points to 14%. Millennials, however, are the generation most likely to be considering buying a home (22%).”

Here’s a graph showing the year-over-year increase in homebuying interest by generation:Buyer Interest Is Growing among Younger Generations | Simplifying The MarketAccording to Mark Fleming, Chief Economist for First American, millennials are reaching their prime home-buying years, a likely driver in this increase:

“Record low mortgage rates and millennials continuing to age into their prime home-buying years has boosted demand, but a lack of housing supply remains a challenge.”

What’s the biggest challenge for today’s buyers?

Finding a home, however, as Fleming notes above, is clearly a challenge today. Yun also explains:

“There is no shortage of hopeful, potential buyers, but inventory is historically low.”

With so many buyers actively searching for homes this year and so few houses for sale, it’s more important than ever to work with a trusted real estate professional to navigate today’s market. From pre-approval to bidding wars and guidance on down payment assistance resources, having an agent by your side might make the difference in your ability to land your dream home.

Bottom Line

Let’s connect if you’re ready to buy a home. More buyers mean more competition, so you need an expert guide to help you stand out from the crowd.

How Down Payment Assistance Opens the Door to Homeownership

Posted on October 27, 2020 by - Buying Myths, Down Payments, First Time Home Buyers, For Buyers, Move-Up Buyers

How Down Payment Assistance Opens the Door to Homeownership | Simplifying The Market

Many people are eager to buy a home right now while affordability continues to be a highlight of the current housing market. However, a recent survey by Sparks Research shows that 20% of first-time homebuyers cite a lack of financial education as a barrier to homeownership. This is definitely understandable. If you don’t feel comfortable with the financial process of buying a home, it’s hard to make a confident decision. In fact, four in five homebuyers say they need help to understand what they can even afford in the first place. This is why finding the right professionals to help you through the process is so important.

On top of that, the same survey reports over two-thirds of prospective homebuyers believe they’ll need assistance to save enough for a down payment. What they may not realize is that there are a lot of down payment assistance programs at the state and regional levels, and many of them have funds available for potential buyers. Down Payment Resources recently released its Q3 2020 Homeownership Program Index, which explains:

“The number of total programs is 2,340, and over 81 percent (81.1%) of programs currently have funds available for eligible homebuyers.”

Down Payment Assistance Programs Are Not Only for First-Time Homebuyers

Keep in mind, these programs aren’t just for first-time homebuyers, so it’s worth exploring your options no matter where you are in your homeownership journey. For example, if you’re working from home now, you may be thinking of relocating to a more affordable area where you can stretch your dollar further and have more space, inside and out. Lawrence Yun, Chief Economist for the National Association of Realtors (NAR), explains:

“Rural areas have mortgages (USDA loans) that don’t require down payments; and some workers who can work from home may want to consider outer suburbs or small towns where USDA home loans are available and where homes are very affordable.”

If affordability is on your mind and you’re expecting to be working from home long-term, the right home may be in an area you haven’t considered yet. In addition, the assistance program you need might be within reach too.

If you’re interested in learning more about down payment assistance programs, additional information is available through Down Payment Resource. Your real estate advisor can help you decide which option is best for you personally.

Bottom Line

Thanks to a range of down payment assistance programs, affordable options are out there for today’s hopeful homebuyers. It’s important to get the financial education you need to understand the homebuying process and accomplish your real estate goals. Let’s connect today to get you started on the path to your dream home.

Two Important Impacts of Home Equity

Posted on October 26, 2020 by - For Buyers, For Sellers, Move-Up Buyers, Pricing

Two Important Impacts of Home Equity | Simplifying The Market

Equity continues to rise, helping American homeowners secure a much more stable financial future. According to the most recent data from CoreLogic, the average homeowner gained $9,800 in equity over the past year. In addition, experts project 2020 home prices to continue rising. With prices going up, equity gains will also keep accelerating. Black Knight just reported:

“The annual percent change in the overall median existing single-family-home price has skyrocketed in the past several months, with recent numbers at three to five times higher than rates seen in the past several years.”

Jeff Tucker, Senior Economist at Zillow, just qualified recent price increases as “jaw-dropping” and “within a hair’s breadth of double-digit year-over-year appreciation.”

Knowing equity will help enable many homeowners to better survive the economic distress caused by the ongoing pandemic, it’s important to break down two key homeowner benefits of increasing equity.

1. Equity Increases a Homeowner’s Options to Buy a New Home

Aside from the financial damage of the last seven months, there has also been a tremendous emotional toll on many people. Shelter-in-place mandates, quarantine requirements, and virtual schooling have all made us re-evaluate the must-have requirements a home should deliver. Having equity in your current house gives you a better opportunity to move-up or build your perfect home from scratch.

Mark Fleming, Chief Economist at First American, recently explained:

“As homeowners gain equity in their homes, they are more likely to consider using that equity to purchase a larger or more attractive home – the wealth effect of rising equity.”

If you need to make a move, the equity in your current home can help make that possible – right now.

2. Equity Enables Homeowners to Help Future Generations

An increase in home equity grows overall wealth, which can transfer to future generations. The Federal Reserve, in an addendum to their recent Survey of Consumer Finances, explains:

“There are numerous ways families can transmit wealth and resources across generations. Families can directly transfer their wealth to the next generation in the form of a bequest. They can also provide the next generation with inter vivos transfers (gifts), for example, providing down payment support to enable a home purchase or a substantial wedding gift.”

The Federal Reserve also explains another way wealth (including the additional net worth generated by an increase in home equity) can benefit future generations:

“In addition to direct transfers or gifts, families can make investments in their children that indirectly increase their wealth. For example, families can invest in their children’s educational success by paying for college or private schools, which can in turn increase their children’s ability to accumulate wealth.”

Bottom Line

Equity can help a homeowner grow their confidence in a more stable financial future. It provides near-term move-up options and creates a positive impact for future generations. In many cases, the largest single investment a person has is their home. As that investment appreciates in value, financial options increase too.

Not So Quick Fixes When Purchasing a Home

Posted on October 22, 2020 by - First Time Home Buyers, For Buyers

When you find that perfect home and know it’s the property for you, the temptation to sign a check there and then is overwhelming. If this sounds like you, pause for a second and think of the wise philosopher, Murphy, who once said: “Anything that can go wrong will go wrong.”

When it comes to buying property, first appearances are often deceiving. Every home has flaws, including physical defects that affect structural integrity and value. Without proper inspections, you could end up paying over the odds for pretty looking mess. 

Roof Damage

You can usually easily fix minor roof damage but if there are structural issues or water has already leaked into the roof space you are in for a world of repair costs. In extreme cases, the roof may need replacing altogether, which is never good news. 

Rotting Wood

Rotting wood is a bad sign. You are either dealing with damp, moisture intrusion, or thousands of houseguests in the form of termites. In the latter case, they aren’t even paying rent and are known for smugly ignoring legally binding eviction notices. 

Dangerous Building Materials

The building materials used in the construction must not pose a danger to you, your family and your pets. Shoddy building work that doesn’t meet acceptable standards is one thing, but other potential dangers aren’t so obvious. If you are thinking about purchasing an older home, consider that asbestos or lead paint could be lurking in every wall and ceiling. 

Before you jump the gun on a property that’s phonier than homey, speak to the experienced and savvy folks here at Voila! We know a great deal from a deadbeat spiel. Just don’t expect us to win a rap battle anytime soon.

Home Values Projected to Keep Rising

Posted on October 22, 2020 by - For Buyers, For Sellers, Pricing

Home Values Projected to Keep Rising | Simplifying The Market

As we enter the final months of 2020 and continue to work through the challenges this year has brought, some of us wonder what impact continued economic uncertainty could have on home prices. Looking at the big picture, the rules of supply and demand will give us the clearest idea of what is to come.

Due to the undersupply of homes on the market today, there’s upward pressure on prices. Consider simple economics: when there is high demand for an item and a low supply of it, consumers are willing to pay more for that item. That’s what’s happening in today’s real estate market. The housing supply shortage is also resulting in bidding wars, which will also drive price points higher in the home sale process.

There’s no evidence that buyer demand will wane. As a result, experts project price appreciation will continue over the next twelve months. Here’s a graph of the major forecasts released in the last 60 days:Home Values Projected to Keep Rising | Simplifying The Market

I hear many foreclosures might be coming to the market soon. Won’t that drive prices down?

Some are concerned that homeowners who entered a mortgage forbearance plan might face foreclosure once their plan ends. However, when you analyze the data on those in forbearance, it’s clear the actual level of risk is quite low.

Ivy Zelman, CEO of Zelman & Associates and a highly-regarded expert in housing and housing-related industries, was very firm in a podcast last week:

“The likelihood of us having a foreclosure crisis again is about zero percent.”

With demand high, supply low, and little risk of a foreclosure crisis, home prices will continue to appreciate.

Bottom Line

Originally, many thought home prices would depreciate in 2020 due to the economic slowdown from the coronavirus. Instead, prices appreciated substantially. Over the next year, we will likely see home values rise even higher given the continued lack of inventory of homes for sale.

Americans Are Gaining Confidence in the Economy

Posted on October 20, 2020 by - For Buyers, For Sellers, Housing Market Updates

Americans Are Gaining Confidence in the Economy | Simplifying The Market

The September Jobs Report issued by the Bureau of Labor Statistics reported that the unemployment rate dropped to 7.9%. Though that percentage is well below what experts projected earlier this year, it still means millions of people are without work. There’s no way to minimize the tremendous impact this pandemic-induced recession continues to have on many Americans.

However, the latest Home Purchase Sentiment Index from Fannie Mae shows how more and more Americans believe the worst is behind us, and their personal employment situation is good. The index revealed:

“The percentage of respondents who say they are not concerned about losing their job in the next 12 months increased from 78% to 83%, while the percentage who say they are concerned decreased from 22% to 16%. As a result, the net share of Americans who say they are not concerned about losing their job increased 11 percentage points.”

Americans Are Game-Changers Too

Americans are naturally optimistic and have always responded to challenges with both resiliency and resourcefulness. Today is no different. As an example, the Wall Street Journal (WSJ) just reported:

“Americans are starting new businesses at the fastest rate in more than a decade, according to government data, seizing on pent-up demand and new opportunities after the pandemic shut down and reshaped the economy.”

Why would someone start a business in the middle of an economic crisis? The WSJ explains:

“The jump may be one sign that the pandemic is speeding up ‘creative destruction,’ the concept…to describe how new, innovative businesses often displace older, less-efficient ones, buoying long-term prosperity.”

The WSJ also notes that these new businesses will have a positive impact on the overall employment situation, as new businesses “are a critical engine of job creation. Startups have historically accounted for around one-fifth of job creation.”

Bottom Line

For the millions of Americans still unemployed, we hope for a quick return to the workforce. We should, however, realize that over 90% of people are still employed, and some are venturing into new business start-ups. Perhaps the next big game-changing company is right around the corner.

Real Estate Continues to Show Unprecedented Strength This Year

Posted on October 19, 2020 by - For Buyers, For Sellers, Housing Market Updates, Pricing

Real Estate Continues to Show Unprecedented Strength This Year | Simplifying The Market

The 2020 housing market has surpassed all expectations and continues to drive the nation’s economic recovery. The question is, will this positive trend continue throughout the rest of the year, especially given the uncertainty around the current health crisis, the upcoming election, and more?

Here’s a look at what several industry-leading experts have to say.

Lawrence Yun, Chief Economist, National Association of Realtors

“Home sales continue to amaze, and there are plenty of buyers in the pipeline ready to enter the market…Further gains in sales are likely for the remainder of the year, with mortgage rates hovering around 3% and with continued job recovery.”

Frank Martell, President and CEO, CoreLogic

“Homeowners’ balance sheets continue to be bolstered by home price appreciation, which in turn mitigated foreclosure pressures…Although the exact contours of the economic recovery remain uncertain, we expect current equity gains, fueled by strong demand for available homes, will continue to support homeowners in the near term.”

Zillow

“Zillow’s predictions for seasonally adjusted home prices and pending sales are more optimistic than previous forecasts because sales and prices have stayed strong through the summer months amid increasingly short inventory and high demand.

The pandemic also pushed the buying season further back in the year, adding to recent sales. Future sources of uncertainty including lapsed fiscal relief, the long-term fate of policies supporting the rental and mortgage market, and virus-specific factors, were incorporated into this outlook.”

Bottom Line

Many economists are in unison, indicating the housing market will continue to fuel the economy through the end of the year, maintaining this unprecedented strength.

The #1 Reason Not to Wait to List Your House for Sale

Posted on October 14, 2020 by - For Buyers, For Sellers, Housing Market Updates, New Construction, Pricing

The #1 Reason Not to Wait to List Your House for Sale | Simplifying The Market

Many industries have been devastated by the economic shutdown caused by the COVID-19 virus. Real estate is not one of them.

Mark Fleming, Chief Economist for First American, just reported:

“Since hitting a low point during the initial stages of the pandemic, the only major industry to display immunity to the economic impacts of the coronavirus is the housing market. Housing has experienced a strong V-shaped recovery and is now exceeding pre-pandemic levels.”

Buyer demand is still strong heading into the fall. ShowingTime, which tracks the average number of buyer showings on residential properties, just announced that buyer showings are up 61.9% compared to the same time last year. They went on to say:

“Normally, real estate activity begins to slow down in the late summer, but this year it peaked in July, August and into September.”

There Is One Big Challenge

Purchaser demand is so high, the market is running out of available homes for sale. Just last week, realtor.com reported:

“Since the beginning of the COVID pandemic in March, nearly 400,000 fewer homes have been listed compared to last year, leaving a gaping hole in the U.S. housing inventory.”

The National Association of Realtors (NAR) revealed that, while home sales are skyrocketing, the inventory of existing homes for sale is dropping dramatically. Below is a graph of existing inventory (September numbers are not yet available):The #1 Reason Not to Wait to List Your House for Sale | Simplifying The MarketHomebuilders are increasing construction, but they cannot keep up with the high demand. Bill McBride, founder of the Calculated Risk blog, in discussing inventory of newly constructed houses, notes:

“The months of supply decreased to 3.3 months…This is the all-time record low months of supply.”

What does this mean for sellers?

Anyone thinking of putting their home on the market should not wait. A seller will always negotiate the best deal when demand is high and supply is limited. That’s exactly the situation in the real estate market today.

Next year, when the pandemic is hopefully behind us, there will be many more properties coming to the market. Don’t wait for that increase in competition in your neighborhood. Now is the time to sell.

Bottom Line

Let’s connect today to get your house on the market at this optimal time to sell.

Do You Have Enough Money Saved for a Down Payment?

Posted on October 13, 2020 by - Buying Myths, Down Payments, For Buyers, Millennials, Pricing

Do You Have Enough Money Saved for a Down Payment? | Simplifying The Market

One of the biggest misconceptions for first-time homebuyers is how much you’ll need to save for a down payment. Contrary to popular belief, you don’t always have to put 20% down to buy a house. Here’s how it breaks down.

A recent survey by Point2Homes mentions that 74% of millennials (ages 25-40) say they’re interested in purchasing a home over the next 12 months. The study notes, “88% say they have significantly less savings than the average national down payment amount, which is $62,600.”

Thankfully, $62,600 is not the amount every buyer needs for a down payment in the United States. There are many different options available, especially for first-time homebuyers (millennial or not). That amount can also be significantly less, depending on the purchase price of the house.

According to the National Association of Realtors (NAR), “The median existing-home price for all housing types in August was $310,600.” (These are the latest numbers available). NAR also indicates that:

“In 2019, the median down payment was 12 percent for all buyers, six percent for first-time buyers, and 16 percent for repeat buyers.” (See graph below):

Do You Have Enough Money Saved for a Down Payment? | Simplifying The MarketThat means if a qualified first-time buyer purchases a home at today’s median price, $310,600, with a 6% down payment, in reality, the down payment only amounts to $18,636. That’s nowhere near $62,600.

Knowing there are also programs like FHA where the down payment can be as low as 3.5% of the purchase price for a first-time buyer, that up-front cost could be significantly less – as little as $10,871 for the same home noted above. There are also other programs like USDA and loans for Veterans that waive down payment requirements.

The Point2Homes study also shares how much millennials have indicated they’ve saved for a down payment. As we can see in the graph below, 39% have already saved enough for a down payment on a median-priced home. Another 47% are close to reaching that goal, depending on the purchase price of the home.Do You Have Enough Money Saved for a Down Payment? | Simplifying The MarketUnfortunately, the lack of knowledge about the homebuying process is keeping many motivated first-time buyers on the sidelines. That’s why it’s important to contact a local real estate professional to understand the requirements in your local area if you want to buy a home. A trusted agent and your lender can guide you through the process.

Bottom Line

Be careful not to let big myths about homebuying keep you and your family out of the housing market. Let’s connect to discuss your options today.

Should You Buy a Retirement Home Sooner Rather than Later?

Posted on October 8, 2020 by - Baby Boomers, For Buyers, For Sellers, Interest Rates, Senior Market

Should You Buy a Retirement Home Sooner Rather than Later? | Simplifying The Market

Every day in the U.S., roughly 10,000 people turn 65. Prior to the health crisis that swept the nation in 2020, most people had to wait until they retired to make a move to the beach, the golf course, or the senior living community they were looking to settle into for their later years in life. This year, however, the game changed.

Many of today’s workers who are nearing the end of their professional careers, but maybe aren’t quite ready to retire, have a new choice to make: should I move before I retire? If the sand and sun are calling your name and you have the opportunity to work remotely for the foreseeable future, now may be a great time to purchase that beach bungalow you’ve always dreamed of or the single-story home in the sprawling countryside that might be a little further out of town. Whether it’s a second home or a future retirement home, spending the next few years in a place that truly makes you smile every day might be the best way to round out a long and meaningful career.

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

“The pandemic was unexpected, working from home was unexpected, but nonetheless many companies realized that workers can be just as productive working from home…We may begin to see a boost in people buying retirement homes before their retirement.”

According to the 20th Annual Transamerica Retirement Survey, 3 out of 4 retirees (75%) own their homes, and only 23% have mortgage debt (including any equity loans or lines of credit). Since entering retirement, almost 4 in 10 retirees (38%) have moved into a new home. They’re making a profit by selling their current homes in today’s low inventory market and using their equity to purchase their future retirement homes. It’s a win-win.

Why These Homeowners Are Making Moves Now

The health crisis this year made us all more aware of the importance of our family and friends, and many of us have not seen our extended families since the pandemic started. It’s no surprise, therefore, to see in the same report that 32% of those surveyed cited the top reason they’re making a move is that they want to be closer to family and friends (See graph below):Should You Buy a Retirement Home Sooner Rather than Later? | Simplifying The MarketThe survey also revealed that 73% percent of retirees currently live in single-family homes. With the overall number of homes for sale today hitting a historic low, and with the buyer demand for single-family homes skyrocketing, there’s never been a more ideal time to sell a single-family home and make a move toward retirement. Today’s market has the perfect combination of driving forces to make selling optimal, especially while buyers are looking to take advantage of low interest rates.

If you’re one of the 73% of retirees with a single-family home and want to move closer to your family, now is the time to put your house on the market. With the pace homes are selling today, you could essentially wrap up your move – start to finish – before the holidays.

Bottom Line 

Whether you’re looking to fully retire or to buy a second home with the intent to use it as your retirement home in the future, the 2020 fall housing market may very well work in your favor. Let’s connect today to discuss your options in our local market.