Real Estate Market Update • May 3, 2024

What Is Going on with Mortgage Rates?

by Robin Milton

You may have heard mortgage rates are going to stay a bit higher for longer than originally expected. And if you’re wondering why, the answer lies in the latest economic data. Here’s a quick overview of what’s happening with mortgage rates and what experts say is ahead.

Economic Factors That Impact Mortgage Rates

When it comes to mortgage rates, things like the job market, the pace of inflation, consumer spending, geopolitical uncertainty, and more all have an impact. Another factor at play is the Federal Reserve (the Fed) and its decisions on monetary policy. And that’s what you may be hearing a lot about right now. Here’s why.

The Fed decided to start raising the Federal Funds Rate to try to slow down the economy (and inflation) in early 2022. That rate impacts how much it costs banks to borrow money from each other. It doesn’t determine mortgage rates, but mortgage rates do respond when this happens. And that’s when mortgage rates started to really climb.

And while there’s been a ton of headway seeing inflation come down since then, it still isn’t back to where the Fed wants it to be (2%). The graph below shows inflation since the spike in early 2022, and where we are now compared to their target rate:

As the graph shows, we’re much closer to their goal of 2% inflation than we were in 2022 – but we’re not there yet. It’s even inched up a hair over the last 3 months – and that’s having an impact on the Fed’s plans. As Sam Khater, Chief Economist at Freddie Mac, explains:

“Strong incoming economic and inflation data has caused the market to re-evaluate the path of monetary policy, leading to higher mortgage rates.”

Basically, long story short, inflation and its impact on the broader economy are going to be key moving forward. As Greg McBride, Chief Financial Analyst at Bankrate, says:

“It’s the longer-term outlook for economic growth and inflation that have the greatest bearing on the level and direction of mortgage rates. Inflation, inflation, inflation — that’s really the hub on the wheel.”

When Will Mortgage Rates Come Down?

Based on current market data, experts think inflation will be more under control and we still may see the Fed lower the Federal Funds Rate this year. It’ll just be later than originally expected. As Mike Fratantoni, Chief Economist at the Mortgage Bankers Association (MBA), said in response to the Federal Open Market Committee (FOMC) decision yesterday:

“The FOMC did not change the federal funds target at its May meeting, as incoming data regarding the strength of the economy and stubbornly high inflation have resulted in a shift in the timing of a first rate cut. We expect mortgage rates to drop later this year, but not as far or as fast as we previously had predicted.”

In the simplest sense, what this says is that mortgage rates should still come down later this year. But timing can shift as new employment and economic data come in, geopolitical uncertainty remains, and more. This is one of the reasons it’s usually not a good strategy to try to time the market. An article in Bankrate gives buyers this advice:

“ . . . trying to time the market is generally a bad idea. If buying a house is the right move for you now, don’t stress about trends or economic outlooks.”

Bottom Line

If you have questions about what’s happening in the housing market and what that means for you, let’s connect.

Real Estate Market Update • April 30, 2024

EQUITY Can Make Your Move Possible When Affordability Is Tight

by Robin Milton

What Is Equity?

Over the years, you gain equity as you pay down your home loan and as home values rise. It can grow faster than you realize.

Americans Are Sitting on Tremendous Equity
Over 2/3 of homeowners have either completely paid off their mortgage or have at least 50% equity.

According to CoreLogic, the average homeowner with a mortgage has $298,000 in equity.

When You Sell, You Can Use Your Equity To:

Make a larger down payment.
That way you’re borrowing less at today’s mortgage rate.

Be an all-cash buyer.
Lived there a long time? You may be able to avoid having a mortgage by buying your next house in cash.

Want to find out how much equity you have? Connect with an agent to get a Professional Equity Assessment Report (PEAR).

Real Estate Market Update • April 23, 2024

What You Really Need To Know About Home Prices

by Robin Milton

According to recent data from Fannie Mae, almost 1 in 4 people still think home prices are going to come down. If you’re one of the people worried about that, here’s what you need to know.

A lot of that fear is probably coming from what you’re hearing in the media or reading online. But here’s the thing to remember. Negative news sells. That means, you may not be getting the full picture. You may only be getting the clickbait version. As Jay Thompson, a Real Estate Industry Consultant, explains:

“Housing market headlines are everywhere. Many are quite sensational, ending with exclamation points or predicting impending doom for the industry. Clickbait, the sensationalizing of headlines and content, has been an issue since the dawn of the internet, and housing news is not immune to it.”

Here’s a look at the data to set the record straight.

Home Prices Rose the Majority of the Past Year

Case-Shiller releases a report each month on the percent of monthly home price changes. If you look at their data from January 2023 through the latest numbers available, here’s what you’d see:

What do you notice when you look at this graph? It depends on what color you’re more drawn to. If you look at the green, you’ll see home prices rose for the majority of the past year.

But, if you’re drawn to the red, you may only focus on the two slight declines. This is what a lot of media coverage does. Since negative news sells, drawing attention to these slight dips happens often. But that loses sight of the bigger picture.

Here’s what this data really says. There’s a lot more green in that graph than red. And even for the two red bars, they’re so slight, they’re practically flat. If you look at the year as a whole, home prices still rose overall.

It’s perfectly normal in the housing market for home price growth to slow down in the winter. That’s because fewer people move during the holidays and at the start of the year, so there’s not as much upward pressure on home prices during that time. That’s why, even the green bars toward the end of the year show smaller price gains.

The overarching story is that prices went up last year, not down.

To sum all that up, the source for that data in the graph above, Case Shiller, explains it like this:

“Month-over-month numbers were relatively flat, . . . However, the annual growth was more significant for both indices, rising 7.4 percent and 6.6 percent, respectively.”

If one of the expert organizations tracking home price trends says the very slight dips are nothing to worry about, why be concerned? Even Case-Shiller is drawing your attention to how those were virtually flat and how home prices actually grew over the year.

Bottom Line

The data shows that, as a whole, home prices rose over the past year. If you have questions about what’s happening with home prices in our area, let’s chat.

Senior Real Estate Resources • April 15, 2024

The Perks of Downsizing When You Retire

by Robin Milton

If you’ve recently retired or are about to, saving money where you can has a lot of appeal. Downsizing is one way to do that.

To see if it’s the right move for you, ask yourself:

Have my needs changed since I bought my current home?
Can I really keep up with the space I have right now?
Is trying to save on housing expenses a priority?

If you said yes to any of those, it may be time to downsize.

Downsize Your Home and Your Expenses

Opting for something smaller typically means cutting down on your energy and maintenance costs too.

A smaller home typically means lower bills and less upkeep.
Realtor.com

Use Your Equity To Fuel Your Move

When you sell, the equity you’ve built up in your current house may be enough to cover some (if not all) of your down payment on your next home or make you an all-cash buyer.

$298,000
The average amount of homeowner equity today
CoreLogic

If you’re thinking about moving to a smaller home, let’s go over your goals and look at your options in our local market.

Real Estate Market Update • April 15, 2024

The Top 5 Reasons You Need a Real Estate Agent when Buying a Home

by Robin Milton

You may have heard headlines in the news lately about agents in the real estate industry and discussions about their commissions. And if you’re following along, it can be pretty confusing. But here’s the thing you really need to know – expert advice from a trusted real estate agent is priceless, now more than ever. And here’s why.

A real estate agent does a lot more than you may realize.

Your agent is the person who will guide you through every step when buying a home and look out for your best interests along the way. They smooth out a complex process and take away the bulk of the stress of what’s likely your largest purchase ever. And that’s exactly what you want and deserve.

This is at least a part of the reason why a recent survey from Bright MLS found an overwhelming majority of people agree an agent is a key part of the homebuying process (see visual below):

To give you a better idea of just a few of the top ways agents add value, check out this list.

1. Deliver Industry Experience

The right agent – the professional – will coach you through everything from start to finish. With professional training and expertise, agents know the ins and outs of the buying process. And in today’s complex market, the way real estate transactions are executed is constantly changing, so having the best advice on your side is essential.

2. Provide Expert Local Knowledge

In a world that’s powered by data, a great agent can clarify what it all means, separate fact from fiction, and help you understand how current market trends apply to your unique search. From how quickly homes are selling to the latest listings you don’t want to miss, they can explain what’s happening in your specific local market so you can make a confident decision.

3. Explain Pricing and Market Value

Agents help you understand the latest pricing trends in your area. What’s a home valued at in your market? What should you think about when you’re making an offer? Is this a house that might have issues you can’t see on the surface? No one wants to overpay, so having an expert who really gets true market value for individual neighborhoods is priceless. An offer that’s both fair and competitive in today’s housing market is essential, and a local expert knows how to help you hit the mark.

4. Review Contracts and Fine Print

In a fast-moving and heavily regulated process, agents help you make sense of the necessary disclosures and documents, so you know what you’re signing. Having a professional that’s trained to explain the details could make or break your transaction, and is certainly something you don’t want to try to figure out on your own.

5. Bring Negotiation Expertise

From offer to counteroffer and inspection to closing, there are a lot of stakeholders involved in a real estate transaction. Having someone on your side who knows you and the process makes a world of difference. An agent will advocate for you as they work with each party. It’s a big deal, and you need a partner at every turn to land the best possible outcome.

Bottom Line

Real estate agents are specialists, educators, and negotiators. They adjust to market changes and keep you informed. And keep in mind, every time you make a big decision in your life, especially a financial one, you need an expert on your side.

Expert advice from a trusted professional is priceless. Let’s connect today.

Real Estate Market Update • April 8, 2024

Boomers Moving Will Be More Like a Gentle Tide Than a Tsunami

by Robin Milton

Have you heard the term “Silver Tsunami” getting tossed around recently? If so, here’s what you really need to know. That phrase refers to the idea that a lot of baby boomers are going to move or downsize all at once. And the fear is that a sudden influx of homes for sale would have a big impact on housing. That’s because it would create a whole lot more competition for smaller homes and would throw off the balance of supply and demand, which ultimately would impact home prices.

But here’s the thing. There are a couple of faults in that logic. Let’s break them down and put your mind at ease.

Not All Baby Boomers Plan To Move

For starters, plenty of baby boomers don’t plan on moving at all. A study from the AARP says more than half of adults aged 65 and older want to stay in their homes and not move as they age (see graph below):

While it’s true circumstances may change and some people who don’t plan to move (the red in the chart above) may realize they need to down the road, the vast majority are counting on aging in place.

As for those who stay put, they’ll likely modify their homes as their needs change over time. And when updating their existing home won’t work, some will buy a second home and keep their original one as an investment to fuel generational wealth for their loved ones. As an article from Inman explains:

“Many boomers have no desire to retire fully and take up less space . . . Many will modify their current home, and the wealthiest will opt to have multiple homes.”

Even Those Who Do Move Won’t Do It All at Once

While not all baby boomers are looking to sell their homes and move – the ones who do won’t all do it at the same time. Instead, it’ll happen slowly over many years. As Freddie Mac says:

“We forecast the ‘tsunami’ will be more like a tide, bringing a gradual exit of 9.2 million Boomers by 2035 . . .”

As Mark Fleming, Chief Economist at First American, says:

“Demographics are never a tsunami. The baby boomer generation is almost two decades of births. That means they’re going to take about two decades to work their way through.”

Bottom Line

If you’re stressed about a Silver Tsunami shaking the housing market overnight, don’t be. Baby boomers will move slowly over a much longer period of time.

Real Estate Market Update • March 29, 2024

12 Things To Do After Closing On A House | Next Steps 2024

by Robin Milton

After you finish signing at the closing of your new house, you’re handed the keys and the house is officially yours. But there some things you should do to make sure your transition from your old place to your new address goes as smoothly as possible.

Every area of the country is different, which can mean different protocols and rules to follow. Hopefully, your real estate agent can help you with a list of to do’s after your closing for that particular area. But no matter where you live, here are a few important things to do after you get possession of your house.

Check your home buying eligibility. Start here (Mar 29th, 2024)

Hire a pest control company

“If you are in an area such as southwest Florida and other warm climates, we have lots of ants, cockroaches and other bugs. The northern states have issues with mice,” says Terry Records, broker/owner of Records Results Real Estate in Cape Coral, Fla. “If you don’t spray your yard now, these bugs will visit you inside your house.”

Change your driver’s license

“I got in trouble with this one. I waited too long when I moved and got a ticket,” Records says.

Every state is different, but some states require a change of address on your license within 10 days of moving. If you are new to a state, you may have to take a written exam and possibly even a driving test.

Secure closing papers & other documents

If you haven’t done so already, get a safe deposit box at your bank or purchase a fireproof safe. Put all your closing papers inside it, along with your passport, birth certificate, Social Security card, and other official papers for safekeeping.

Check with your auto insurance

Insurance companies are picky about where you live, and prices do change from place to place. Records has moved to many states through the years including North Dakota, Minnesota, California and Florida. She was caught off-guard when Florida required that her car insurance be from a Florida company.

Check your mortgage rates. Start here (Mar 29th, 2024)

Contact government officials about homesteading

You can get a reduction in your assessed value by thousands of dollars – which gives you a discount on your property taxes – by just filling out a form saying you occupy the home you just bought. Some counties give other homestead exemptions like for senior citizens or returning veterans. “This doesn’t happen automatically,” Records says. “You have to tell them you live there. It all depends on your city or your county of what type of homestead credit is available.”

Clean the gutter

Who knows how long it’s been since the previous owners did this dirty chore. But if leaves and other gunk are blocking the flow of rain, you could have problems such as water leaking into the house if you don’t keep them free flowing.

Meet your neighbors & others in the community

This can be hard for some, but you really should get to know your neighbors by introducing yourself. Records says she has moved many times in her lifetime and has found that joining groups on Meetup.com helps you connect with other new residents in your area who have the same interests.

Check your home buying eligibility. Start here (Mar 29th, 2024)

Hire a fireplace expert

Whether it’s a wood-burning or gas fireplace, get a professional to check it out. With thumbs up from the expert, you can then enjoy cozy nights near the warmth of the fire.

Change furnace filters

It’s best if you make sure to replace the furnace and air conditioner filters every three months. There are lots of options out there when choosing air filters for different seasons. Choosing the right filter can not only save money by letting your furnace and air conditioner work more efficiently, but it also improves air quality, removes odors, and even prevents the growth of antimicrobial particulates.

Find the main water shutoff

You never know when you will need to shut off the water because of a broken water pipe. So, find the shutoff and test it to see if it works.

Change every lock

You never know who the former owners gave a house key to. A locksmith can rekey your locks if they are expensive ones, and some stores can also rekey certain brand-named locks, which can be done quite inexpensively.

You can also choose to get four-digit keyless locks. That can be a great option, especially with kids who lose their keys all the time anyways. Also, don’t forget to reset a garage door keypad from the outside of your garage. There are great instructions online on how to do it, or call a garage door company for assistance.

Cover the windows

The former owners might have taken all the curtains and blinds with them. So before your neighbors get to know you real well because they can see through your windows, purchase coverings to give yourself some privacy.

Then it’s time to relax and enjoy the home of your dreams.

Check your mortgage rates. Start here (Mar 29th, 2024)

Source: https://mymortgageinsider.com/things-you-need-to-do-after-closing-on-your-house/

Real Estate Market Update • March 25, 2024

What Every Homebuyer Should Know About Closing Costs

by Robin Milton

Before making the decision to buy a home, it’s important to plan for all the costs you’ll be responsible for. While you’re busy saving for the down payment, don’t forget you’ll want to prep for closing costs too.

Here’s some helpful information on what those costs are and how much you should budget for them.

What Are Closing Costs?

A recent article from Bankrate explains:

“Closing costs are the fees and expenses you must pay before becoming the legal owner of a house, condo or townhome . . . Closing costs vary depending on the purchase price of the home and how it’s being financed . . .”

Simply put, your closing costs are the additional fees and payments you have to make at closing. According to Freddie Mac, while they can vary by location and situation, closing costs typically include:

Government recording costs
Appraisal fees
Credit report fees
Lender origination fees
Title services
Tax service fees
Survey fees
Attorney fees
Underwriting Fees

How Much Are Closing Costs?

According to the same Freddie Mac article mentioned above, they’re typically between 2% and 5% of the total purchase price of your home. With that in mind, here’s how you can get an idea of what you’ll need to budget.

Let’s say you find a home you want to purchase at today’s median price of $384,500. Based on the 2-5% Freddie Mac estimate, your closing fees could be between roughly $7,690 and $19,225.

But keep in mind, if you’re in the market for a home above or below this price range, your closing costs will be higher or lower.

Make Sure You’re Prepared To Close

Freddie Mac provides great advice for homebuyers, saying:

“As you start your homebuying journey, take the time to get a sense of all costs involved – from your down payment to closing costs.”

The best way to do that is by partnering with a team of trusted real estate professionals. That gives you a group of experts to help you understand how much you’ll need to save and what you’ll want to be prepped for. It also means you have go-to resources for any questions that pop up along the way.

Bottom Line

Planning for the fees and payments you’ll need to cover when you’re closing on your home is important. Partnering with a local real estate professional can give you the guidance and confidence you need throughout the process.

Real Estate Market Update • March 18, 2024

The Latest National Trends in Housing

by Robin Milton

New Listings

Month-Over-Month Change
⬆️ 15%

While inventory is still low, more people are selling their houses. If you’re looking to buy, this gives you more options for your search.

Home Prices

Month-Over-Month Change
⬆️ 1.5%

But even with that growth, there aren’t enough homes to go around. And that keeps upward pressure on home prices.

Time on Market

Month-Over-Month Change
⬇️ 8 Days

Since supply is too low for the number of buyers out there, houses are selling fast and getting multiple offers.

There are more buyers than there are homes available, so each home that comes on the market becomes more of a hot commodity than it might if there were more options to choose from.
-Bankrate

What This Means for You

For Buyers
You may have more options, but you’ll still want to move fast and come in with a strong offer.

For Sellers
Your house should still stand out and may get multiple offers, if you price it right.

If you want to know more about what’s happening in our area, let’s connect.

Sources: Realtor.com, Bankrate

Senior Real Estate Resources • March 11, 2024

The Benefits of Downsizing When You Retire

by Robin Milton

If you’re taking a look at your expenses as you retire, saving money where you can has a lot of appeal. One long-standing, popular way to do that is by downsizing to a smaller home.

When you think about cutting down on your spending, odds are you think of frequent purchases, like groceries and other goods. But when you downsize your house, you often end up downsizing the bills that come with it, like your mortgage payment, energy costs, and maintenance requirements. Realtor.com shares:

“A smaller home typically means lower bills and less upkeep. Then there’s the potential windfall that comes from selling your larger home and buying something smaller.”

That windfall is thanks to your home equity. If you’ve been in your house for a while, odds are you’ve built up a considerable amount of equity. And that equity is something you can use to help you buy a home that better fits your needs today. Daniel Hunt, CFA at Morgan Stanley, explains:

“Home equity can be a significant source of wealth for retirees, often representing a large portion of their net worth. . . . Retirement planning can be complex, but your home equity shouldn’t be overlooked.”

And when you’re ready to use that equity to fuel your next move, your real estate agent will be your guide through every step of the process. That includes setting the right price for your current house when you sell, finding the home that best fits your evolving needs, and understanding what you can afford at today’s mortgage rate.

What This Means for You

If you’re thinking about downsizing, ask yourself these questions:

Do the original reasons I bought my current house still stand, or have my needs changed since then?
Do I really need and want the space I have right now, or could somewhere smaller be a better fit?
What are my housing expenses right now, and how much do I want to try to save by downsizing?

Then, meet with a real estate agent to get an answer to this one: What are my options in the market right now? A local real estate agent can walk you through how much equity you have in your house and how it positions you to win when you downsize.

Bottom Line

Want to save money in retirement? Consider downsizing – it could really help you out. When you’re ready, let’s connect about your goals in the housing market this year.