Home Sellers Are Feeling More Optimistic

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As home prices rise by double-digit margins year over year, homeowners are increasingly viewing selling favorably. Consumers reported a significantly more positive view of homeselling conditions month over month in January, jumping 16 percentage points on net, according to Fannie Mae’s Home Purchase Sentiment Index, based on a survey of 1,000 consumers.

“Overall, the index’s monthly increase was driven largely by a substantial jump in the share of consumers reporting that it’s a good time to sell a home, with many citing favorable mortgage rates, high home prices, and low housing inventory as their primary rationale,” says Doug Duncan, Fannie Mae’s chief economist. “Among owners and higher-income groups, however, the other five components of the index remained relatively flat or slightly negative, suggesting to us that some consumers are waiting to gauge the effectiveness of any new fiscal policies and vaccination distribution programs on both housing and the larger economy.”

Duncan notes that lower-income and renter groups were more optimistic in January across nearly all of the index’s components. “We will pay close attention to see if this newfound optimism develops into a trend, which could indicate either that some demographics who have been negatively impacted by the pandemic may be starting to feel the economic recovery or that this is a response to the additional stimulus enacted in December,” Duncan says.

More highlights from the January index reading:

  • 52% of consumers say it’s a good time to buy a home, mostly unchanged from December 2020.
  • 57% of consumers say it is a good time to sell a home, increasing from 50% the month prior.
  • 41% of consumers believe home prices will go up over the next 12 months.
  • 75% of consumers say they are not concerned about losing their job in the next 12 months, unchanged from December 2020.
  • 21% of consumers say their household income is significantly higher than it was 12 months ago, while the percentage who say their household income is significantly lower decreased to 14%. Sixty-four percent of consumers say their household income is about the same.
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Wow! How Home Sellers Can Make a Bundle in the ‘Best’ Winter Sales Season in Years

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 | Jan 14, 2020

Selling a home in winter is often a slow process. Since many home buyers traditionally hunker down as the temperature drops, particularly during the holidays, home sellers with real estate on the market typically see fewer buyers and lower offers.

That’s your typical winter, but this winter is shaping up to be a whole different reality, even a hot seller’s market.

According to Lawrence Yun, chief economist at the National Association of Realtors®, “It will be one of the best winter sales years ever.”

Even amid the coronavirus pandemic, buyer demand this winter is expected to be sky-high—particularly among first-timers who are keen to take advantage of record-low interest rates, which have been hovering below 3%. Combine that with a dearth of homes on the market (in a recent realtor.com report, December’s home inventory was nearly 40% lower compared with the same month last year), and things look clutch for sellers.

“Sellers will have the ball in their court so to speak, as there are more buyers than sellers,” says Danielle Hale, chief economist at realtor.com®. “This means seller-friendly trends like rising home prices and quick-selling homes.”

Here’s how sellers can make the most of this unprecedented time and enjoy a blizzard of buyers this winter.

Price your home on the high end

COVID-19 has created a shaky economy, so you may think pricing your home on the low end is the way to go. But that’s not the case.

According to a realtor.com report, the national median home listing price jumped 13.4% in December compared with last year, reaching $340,000, and price per square foot rose 15.9%.

The upshot? These days, you’re likely to get offers at list price, or even higher.

“Prices are very high,” says Simon Isaacsowner/broker of Simon Isaacs Real Estate in Palm Beach, FL. “People are getting what they’re asking.”

Another plus: The low interest rates could keep monthly mortgage payments low. So buyers may be able to afford a more expensive home.

Make your home move-in ready

Today, buyers are keen to find a home that won’t need a lot of work after they move in. As such, it behooves sellers more than ever to make small repairs and upgrades that will increase a home’s value and justify a high offer.

“Sellers need to make sure their house is turnkey,” says Matt van Winkle, a real estate broker/owner of Re/Max Northwest Realtors in Seattle. “The buyer is not going to want to remodel or do repairs in the winter.”

Cleaning up the landscaping and painting are two upgrades that Isaacs always recommends to sellers.

“Landscaping is definitely something that helps to sell a home more than anything,” he says.

Sellers would also be smart to highlight (in their listing and in person) features in their home that appeal to buyers today. Since the coronavirus, people are spending more time at home, and are thus keen to purchase property with more space, privacy, rooms that can double as home offices or learning spaces, and top-notch outdoor spaces.

Make sure your listing provides a virtual tour

The pandemic has made many buyers leery of checking out homes in person unless they see one they truly love. The upshot for sellers? Your listing will really need to shine online—and one of the best ways to do this is by offering a virtual tour.

“Depending on where you live and how COVID-19 is trending in your area, sellers may want to consider having a 3D tour readily available for buyers who do not wish to do an in-person tour,” says Tracy Jones, a real estate agent with Re/Max Platinum Realty in Sarasota, FL.

This approach is also more convenient for sellers, since it can help minimize the number of strangers touring their home. Buyers can get a good sense if your home meets their needs without actually stepping inside.

Take safety seriously

Selling a home during a pandemic brings a new set of challenges. Virtual tours can minimize the foot traffic in your home, but eventually a buyer will want to see it in person. So it’s a good idea to ensure that you and your real estate agent are doing everything you can to make in-person tours as safe as possible.

Some ways to do this include limiting the number of showings per day, including gaps between showings, and limiting the size of groups seeing a home at once. Requiring masks and social distancing are also par for the course.

When people do have to see your home, leave doors, closets, and cabinets open throughout the house to minimize what they have to touch. Keep in mind, too, that once everyone leaves, it will be up to you to clean and sanitize your home.

Don’t accept an offer too quickly

The real estate market this winter is incredibly competitive. With so few homes on the market, sellers are poised to receive multiple offers, sometimes all at once. But Matt Curtis, owner of Matt Curtis Real Estatein Huntsville, AL, cautions sellers not to get in a hurry and accept an offer too quickly.

Typically, sellers have 24 to 48 hours to accept an offer. If you jump the gun and say yes too soon, you could be leaving money on the table.

“Select a real estate agent that has a strategy to handle multiple offers versus an agent that’s not equipped to handle multiple-offer situations,” Curtis says. “Literally eight hours of sleep could net you an extra $30,000.”

So take time to mull over each offer you receive. If the offer is too low, you can always counter with something closer to the asking price.

Close remotely if you can

Along with virtual home tours, home sellers should strive to make as much of the home-buying process as virtual and digital as possible. Now, more buyers and sellers are able to complete the closing processremotely in most areas of the country, something that wasn’t possible a few months ago.

Pre-pandemic, remote closings weren’t possible everywhere, because some states didn’t allow documents to be notarized remotely. To keep real estate transactions and other business flowing during the COVID-19 crisis, most states issued emergency declarations now allowing for remote notarizations, according to the National Notary Association.

Along with limiting in-person contact, remote closings are much more convenient.

“You can sign all the documents now electronically,” Isaacs says. These days it’s all about “making sure that everybody is comfortable and as safe as possible.”

Looking to sell your home?  Get in touch with me to learn more about your home’s value.  al@nexthomerealtyselect.com

Housing Market in 2021

The housing market recovery coming into the new year has been nothing short of remarkable. Many experts agree the turnaround from the nation’s economic pause is playing out extremely well for real estate, and the current market conditions are truly making this winter an ideal time to make a move. Here’s a dive into some of the biggest wins for homebuyers this season.

1. Mortgage Rates Are Historically Low

In 2020, mortgage rates hit all-time lows 16 times. Continued low rates have set buyers up for significant long-term gains. In fact, realtor.com notes:

“Given this means homes could cost potentially tens of thousands less over the lifetime of the loan.”

Essentially, it’s less expensive to borrow money for a home loan today than it has been in years past. Although mortgage rates are expected to remain relatively low in 2021, even the slightest increase can make a big difference in your payments over the lifetime of a home loan. So, this is a huge opportunity to capitalize on right now before mortgage rates start to rise.

2. Equity Is Growing

According to John Burns Consulting58.7% of homes in the U.S. have at least 60% equity, and 42.1% of all homes in this country are mortgage-free, meaning they’re owned free and clear.

In addition, CoreLogic notes the average equity homeowners gained since last year is $17,000. That’s a tremendous amount of forced savings for homeowners, and an opportunity to use this increasing equity to make a move into a home that fits your changing needs this season.

3. Home Prices Are Appreciating

According to leading experts, home prices are forecasted to continue appreciating. Today, many experts are projecting more moderate home price growth than last year, but still moving in an upward direction through 2021.

Knowing home values are increasing while mortgage rates are so low should help you feel confident that buying a home before prices rise even higher is a strong long-term investment.

4. There Are Not Enough Homes for Sale

With today’s low inventory of homes on the market, which is contributing to this home price appreciation, sellers are in the driver’s seat. The competition is high among buyers, so homes are selling quickly.

Making a move while so many buyers are looking for homes to purchase may mean your house rises to the top of the buyer pool. Selling your house before more listings come to the market in the traditionally busy spring market might be your best chance to shine.

Bottom Line

If you’re considering making a move, this may be your moment, especially with today’s low mortgage rates and limited inventory. Let’s connect to get you set up for homebuying success in the new year.

Are Home Prices Headed Toward Bubble Territory?

Boy blowing bubbles in a wooden playhouse
Boy blowing bubbles in a wooden playhouse

Talk of a housing bubble is beginning to crop up as home prices have appreciated at a rapid pace this year. This is understandable since the appreciation of residential real estate is well above historic annual averages. According to the Federal Housing Finance Agency (FHFA), annual appreciation since 1991 has averaged 3.8%. Here are the latest 2020 appreciation numbers from three reliable sources:

It’s easy to jump to the conclusion that house appreciation is out of control in today’s market. However, we need to put these numbers into context first.

Inflation and the Comeback from the Housing Crash

Following the housing crash, home values depreciated dramatically from 2007-2011. Values are still recovering from that unusually long period of falling prices. We must also realize that normal inflation has had an impact.

Bill McBride, the founder of the well-respected Calculated Risk blog, recently summed it up this way:

“It has been over fourteen years since the bubble peak. In the Case-Shiller release today, the seasonally adjusted National Index, was reported as being 22.2% above the previous bubble peak. However, in real terms (adjusted for inflation), the National index is still about 2% below the bubble peak…As an example, if a house price was $200,000 in January 2000, the price would be close to $291,000 today adjusted for inflation.”

The COVID Impact on Home Prices

The pandemic caused many households to reconsider whether their current home still fulfills their lifestyle. Many homeowners now want larger yards that are both separate and private.

Their needs on the inside of the home have changed too. People now want home offices, gyms, and living rooms well-suited for video conferencing. Barbara Ballinger, a freelance writer and the author of several books on real estate, recently wrote:

“While homeowners continue to want their outdoor spaces that offer a safe retreat, that appeal has shifted into other parts of the home, coupling comfort with function. In other words, homeowners want amenities for work and leisure, and they plan to enjoy them long after the pandemic.”

At the same time, concerns about the pandemic have caused many homeowners to put their plans to sell on hold. Realtor.com just released their November Monthly Housing Market Trends Report. It explains:

“Nationally, the inventory of homes for sale decreased 39.2% over the past year in November…This amounted to 490,000 fewer homes for sale compared to November of last year.”

More people buying and fewer people selling has caused home prices to escalate. However, with a vaccine on the horizon, more homeowners will be putting their houses on the market. This will better balance supply with demand and slow down the rapid appreciation.

That’s why major organizations in the housing industry are calling for much more moderate home appreciation next year. Here are the most recent forecasts for 2021:

This Is Nothing Like 2006

Finally, let’s put to rest some of the concerns that today’s scenario is anything like what led up to the last housing crash. Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), explains why this is nothing like 2006:

“Such a frenzy of activity, reminiscent of 2006, raises questions about a bubble and the potential for a painful crash. The answer: There’s no comparison. Back in 2006, dubious adjustable-rate mortgages taxed many buyers’ budgets. Some loans didn’t even require income documentation. Today, buyers are taking out 30-year fixed-rate mortgages. Fourteen years ago, there were 3.8 million homes listed for sale, and home builders were putting up about 2 million new units. Now, inventory is only about 1.5 million homes, and home builders are underproducing relative to historical averages.”

Bottom Line

Most aspects of life have been anything but normal in 2020. That includes buying and selling real estate. High demand coupled with restricted supply has caused home prices to appreciate above historic levels. With the end of the health crisis in sight, we will see price appreciation return to more normal levels next year.

Is Buying A Home Today A Good Financial Move?

Father and son looking out of window on rainy day

There’s no doubt 2020 has been a challenging year. A global pandemic coupled with an economic recession has caused heartache for many. However, it has also prompted more Americans to reconsider the meaning of “home.” This quest for a place better equipped to fulfill our needs, along with record-low mortgage rates, has skyrocketed the demand for home purchases.

This increase in demand, on top of the severe shortage of homes for sale, has also caused more bidding wars and thus has home prices appreciating rather dramatically. Some, therefore, have become cautious about buying a home right now.

The truth of the matter is, even though homes have appreciated by a whopping 6.7% over the last twelve months, the cost to buy a home has actually dropped. This is largely due to mortgage rates falling by a full percentage point.

Let’s take a look at the monthly mortgage payment on a $300,000 house one year ago, and then compare it with that same home today, after it has appreciated by 6.7% to $320,100:Is Buying a Home Today a Good Financial Move? | MyKCMCompared to this time last year, you’ll actually save $87 dollars a month by purchasing that home today, which equates to over one thousand dollars a year.

But isn’t the economy still in a recession?

Yes, it is. That, however, may make it the perfect time to buy your first home or move up to a larger one. Tom Gil, a Harvard trained negotiator and real estate investor, recently explained:

“When volatile assets are facing recessions, hard assets, such as gold and real estate, thrive. Historically speaking, residential real estate has done better compared to other markets during and after recessions.”

That thought is substantiated by the fact that homeowners have 40 times the net worth of renters. Odeta Kushi, Deputy Chief Economist for First American Financial Corporation, recently said:

“Despite the risk of volatility in the housing market, numerous studies have demonstrated that homeownership leads to greater wealth accumulation when compared with renting. Renters don’t capture the wealth generated by house price appreciation, nor do they benefit from the equity gains generated by monthly mortgage payments, which become a form of forced savings for homeowners.”

Bottom Line

With home prices still increasing and mortgage rates perhaps poised to begin rising as well, buying your first home, or moving up to a home that better fits your current needs, likely makes a ton of sense.

9 Tips From a Burglar on How to Keep Him Out of Your House

Electronics box outside home on trash day

You come home to an open front door, a ransacked house, and missing valuables. How did a burglar know you’d be gone? How did they get in?

Below are 9 tips, from a burglar’s perspective, to keep him out. And try these home security tips, too.

#1 Put Ladders Away

Call me a social climber if you will, but I love ladders. Makes it so easy to reach a second-story window. I really love it when upper story openings aren’t wired to a home security system!

So, if you want to keep me out, store your ladder in the basement or a locked garage. And call your security company to wire upper-story windows into your alarm system.

#2 Don’t Make Your Trash So Visible

Can’t tell you how much fun I have driving around neighborhoods on trash day (especially after big gift holidays) when the empty boxes on the curb reveal what wonderful new toys you have. That made it possible for me to land a new laptop and a flat-screen television in one easy trip to your home!

Next time, break down the boxes and conceal them in the recycling or trash bins.

#3 Keep Shrubs Trimmed

Oh, how I love overgrown shrubs and trees. A wonderful place to hide while I break in and grab all your cool stuff.

Trim back bushes and trees near windows and doors. Make sure entry points to your home are easily visible from the street — I much prefer to work in private! While you’re at it, install motion-sensor lighting.

#4 Be Sure Your Exterior Doors Are Steel

A plain wood-panel door is an invitation. I have no trouble kicking it in.

You may want to install steel-wrapped exterior doors with deadbolts on all your entries. And be sure your windows are locked when you’re away.

#5 Watch Where You Hang Mirrors

You’d be surprised how many homeowners position a mirror in their entry hall so I can see from a window if the alarm system is armed.

A little free advice: Relocate the mirror so your alarm system isn’t visible if someone else would peer through a window.

#6 Have Someone Attend to Your Home When You’re Away

Wow, isn’t it amazing how fast the grass grows these days? An uncut lawn, newspapers piling up on the front steps, and shades always closed scream, “I’m empty, come inside!”

Hire someone you trust to mow regularly, pick up around the doorstep, open and close various window shades, and turn different lights on and off (or put a few on timers). One more thing: Lock any car you leave in the driveway, or I can use your garage door opener to get in quickly.

#7 Don’t Put Valuables in an Easy-Carry Case

I can carry that right out your back door.

You may want to invest in a wall safe, which I rarely attempt to open. Or, rent a lock box at your bank.

#8 Be Wary of Posting on Social Sites When on Vacation

It’s quite likely that I’m a friend of a friend of yours in the interwebs. And through them, I may discover you’re away for the week in Puerto Vallarta, having the time of your life. And I’ll have the time of my iife ransacking your place.

If only you had known that posting comments and photos of your trip on social networks is fine — but do that after you return so you won’t broadcast your absence.

#9 Inviting People to Your Home to See Stuff You’re Selling

Great! You’re downsizing! Selling a bunch of stuff like TVs, computers, jewelry. I just have to call you up, and when you invite me to your home, I just grab the items and run.

It’s called “robbery by appointment.” If you want to sell high-ticket items to strangers, I suggest you arrange to meet at the parking lot of your local police station. I definitely won’t show up, and you’ll still have your valuables.

For more tips, see our list of low-cost tricks to fool burglars. Did you know there’s a gizmo that mimics the glow of a TV?

Happy woman at desk at home

Housing Market on Track to Beat Last Year’s Success

Back in March, as the nation’s economy was shut down because of the coronavirus, many were predicting the real estate market would face a major collapse. Some forecasts called for a 15-20% decline in transactions. However, six months later, it seems as though the housing market has fully recovered.

Mark Fleming, Chief Economist at First Americanannounced last week:

“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.”

The Economic & Strategic Research Group at Fannie Mae upgraded its forecast for home sales last week:

“Housing data over the past month continued to show a strong V-shape rebound, helping drive the broader economy. Existing home sales jumped to a pace not seen since 2006…We have substantially upgraded our forecasts for both new and existing home sales. For 2020, total home sales are now expected to be 1.3% higher than in 2019.”

The National Association of Realtors (NAR) agrees. In their last Pending Sales Report, NAR shared projections from Chief Economist Lawrence Yun:

“Yun forecasts existing-home sales to ramp up to 5.8 million in the second half. That expected rebound would bring the full-year level of existing-home sales to 5.4 million, a 1.1% gain compared to 2019.”

Yun’s forecast for 2021 was even more optimistic, stating, “Home sales will ramp up again next year, increasing between 8% – 12%.”

Bottom Line

The housing market has come roaring back and looks as though it may even surpass last year’s success.

Frank Martell, President and CEO of CoreLogic, hit the nail on the head when he said“On an aggregated level, the housing economy remains rock solid despite the shock and awe of the pandemic.”