The language of buying and selling a home may sound scary at first, but knowing how key terms relate to today’s market can help you. For example, current low mortgage rates and higher wages positively impact affordability for buyers, while home price appreciation continues to grow home equity, which sellers can use to fuel a move up.
Terms like appraisal (what lenders rely on to validate a home’s value) and contingencies (which buyers can minimize to make their offer stand out) directly impact the transaction.
You don’t need to be fluent in the language of the market to buy or sell. Instead, let’s connect today so that we can translate the process together.
Green Team Realty has announced its 2nd Quarter Sales Leaders. They are Keren Gonen, of Green Team New Jersey Realty, and Kasey Malone, Green Team New York Realty.
Keren Gonen
Since joining Green Team New Jersey Realty in 2017, Keren has been a quarterly sales leader many times. In addition, she has twice been the yearly sales leader. Geoff Green, President of Green Team Realty, had this to say about Keren:
“What is most amazing about Keren is not her continued success as a top-producing Realtor, but rather her devotion to people. Keren donates time out of her very busy day to organizations such as Team Up for Hope, and the Sussex County Association of Realtors on top of being a great Mom and Realtor. Congratulations once again Super Star. Keep up the good work.”
Keren stated:
“Being able to assist buyers, sellers, and investors in this market has proven to be a test of my craft. I love Real Estate and hope that each and every one of my clients has felt my passion and desire to serve others. Learning how to serve my clients best in this crazy Market has been the biggest learning curve for me. I’ve had to get creative and definitely think outside the box. I am so grateful that I have been able to assist so many clients in finding or selling their homes or investment. Thank you, to all of you who have chosen me to accompany you on this journey. Be safe and let’s make 2021 the best year we’ve ever had!”
Kasey Malone
Geoff Green congratulated Kasey on being the 2nd Quarter Sales Leader for the New York office:
“A big congratulations to Kasey who is a first-time Quarterly Sales Leader. Kasey lives out the phrase, “work by referral”. Kasey’s friends, neighbors, and relatives all know how honest and hard-working she is. Now the rest of the world does too. Great job Kasey, and keep up the good work.”
Kasey shared her thoughts on being the Q2 Sales Leader at Green Team New York Realty:
“Doing real estate part-time and strictly by word of mouth has made me solely rely on building my reputation as a real estate agent. Each year I set a goal for myself to beat last year’s sales, this year has been my best so far! I had the distinct opportunity to work with famous clients who were referred to me through a close friend and I am grateful that they chose me for their real estate needs. I love my Green Team! They give you all the tools you need to succeed and we get to build great business relationships with each other along the way! This is a huge milestone for me in my real estate career and I am so excited to receive this award!”
As we move into the second half of the year, one thing is clear: the current real estate market is one for the record books. The exact mix of conditions we have today creates opportunities for both buyers and sellers. Here’s a look at four key components that are shaping this unprecedented market.
A Shortage of Homes for Sale
Earlier this year, the number of homes available for sale fell to an all-time low. In recent months, however, inventory levels are starting to trend up. The latest Monthly Housing Market Trends Report from realtor.com says:
“In June, newly listed homes grew by 5.5% on a year-over-year basis, and by 10.9% on a month-over-month basis. Typically, fewer newly listed homes appear on the market in the month of June compared to May. This year, growth in new listings is continuing later into the summer season, a welcome sign for a tight housing market.”
This is good news for buyers who crave more options. But even though we’re experiencing small gains in the number of available homes for sale, inventory remains a challenge in most states. That’s why it’s still a sellers’ market, giving homeowners immense leverage when they decide to make a move.
Buyer Competition and Bidding Wars
Today’s ongoing low supply, coupled with high demand, creates a market characterized by high buyer competition and bidding wars. Buyers are going above and beyond to make sure their offer stands out from the crowd by offering over the asking price, all cash, or waiving some contingencies. The number of offers on the average house for sale broke records this year – and that’s great news for sellers.
The latest Confidence Index from the National Association of Realtors (NAR) says the average home for sale receives five offers (see graph below):For buyers, the best way to put a compelling offer together is by working with a local real estate professional. That agent can act as your trusted advisor on what terms are best for you and what’s most appealing to the seller.
Home Price Appreciation
The competition among buyers is driving prices up. Over the past year, we’ve seen home price appreciation rise across the country. According to the most recent Home Price Index (HPI) from CoreLogic, national home prices increased 15.4% year-over-year in May:
“The May 2021 HPI gain was up from the May 2020 gain of 4.2% and was the highest year-over-year gain since November 2005. Low mortgage rates and low for-sale inventory drove the increase in home prices.”
Rising home values are a big part of why real estate remains one of the top sought-after investments for Americans. For potential sellers, it also means it’s a great time to list your house to maximize the return on your investment.
A Rise in Home Values and Equity
The equity in a home doesn’t just grow when a homeowner pays their mortgage – it also grows as the home’s value appreciates. Thanks to the jump in price appreciation, homeowners across the country are seeing record-breaking gains in home equity. CoreLogic recently reported:
“…homeowners with mortgages (which account for roughly 62% of all properties) have seen their equity increase by 19.6% year over year, representing a collective equity gain of over $1.9 trillion, and an average gain of $33,400 per borrower, since the first quarter of 2020.”
That’s a major perk for households to leverage. Homeowners can use that equity to accomplish major life goals or move into their dream homes.
Bottom Line
If you’re thinking about buying or selling, there’s no time like the present. Let’s connect to talk about how you can take advantage of the conditions we’re seeing today to meet your homeownership goals.
Maybe with the leverage you currently have, you can negotiate a deal that will allow you to make the move of your dreams. What’s your home’s value?
Congratulations to Pip Klein as she celebrates 10 years with the Green Team!
In the beginning…
When Pip started at the Green Team as a part-time marketing consultant, she had not even considered real estate as a career. But Geoff Green encouraged her because he felt she had the personality, contacts AND most importantly, her late parents’ home was on the market with another broker!!! “Get your license PIP,” she remembers him saying loudly. And so she did – a decision which she is very grateful that she made. In addition, her techie son Ben was in high school at the time and also joined the team, working on redesigning the Green Team website. It was the right time for both Ben and Pip. Plus, it was fun for them to work together during those last years of his high school.
Goals
One of Pip’s original sales goals was to earn Captains Club status by reaching the $3 million mark. Pip got her license in May 2011, and she made Captains Club in 2015, 2016, 2017, and 2020. She made Presidents Club (for $5-$10 million in sales) in 2018. In addition, she was the 3rd Quarter Sales Leader for that year. Pip achieved honorable mention (for sales of $1.5 to $3 million) in 2019. She found that once her business was up and running, it became easier to achieve goals. Also, the market improved, providing the opportunity for more sales. She is also very proud of being named the Green Team’s first “Momentum Builder,” a new award in 2015 for achievements and helping inspire others. Pip’s goals have been consistent. Keep learning, growing, and enjoying the work. And, to make at least Captains Club every year!
Teamwork and Friendship
Pip has found Green Team is truly a great “team” of people. Over her decade there, she has made valuable friendships with both agents and clients. Indeed, friends for life.
Pip Klein, Associate Broker/Manager Lucyann Tinnirello, and Toni Vogel
A few of Pip’s favorite (and least favorite) things
Pip likes connecting people to the right home. She calls it being a house matchmaker. Once she gets to know people, she can really get a sense of the type of house they want. Pip and her husband Bob bought a unique home 30 years ago. It was a renovated onion barn! She also enjoys writing and hopes to continue with personal blogging about real estate. Pip’s least favorite thing? When transactions become tangled in situations beyond control while everyone is waiting to close. That can be frustrating. Red tape, legal snafus, etc. can be difficult. You have to focus on the endpoint, which is closing.
Biggest Accomplishments since starting at Green Team
Pip believes it has been a decade of accomplishments. Sometimes the smaller transactions are big victories as you help people buy or sell and make their next chapter easier to move on to. According to Pip, no one likes transition, and realtors are in the middle of that angst on all sides. They have to be calm and extend the best advice. Communication is key. She did have one memorable day in 2018. Three closings, $2.4 million volume in a day! That was a once-in-a-lifetime tsunami of good luck. What’s more, the commission hit her bank account on her birthday.
But of course, it’s not about the dollars. Truly, for Pip, it’s the culmination of hard work and getting things to the finish line. Her father always said, “Do what you enjoy, then you enjoy what you do.” Sage advice. He didn’t see his “work” as something separate. When you are a Realtor, you are living, breathing real estate all the time. And it doesn’t feel like “work” when you are truly happy with what you are doing.
Some sage advice from Pip
“Life is an adventure and you have to take risks!” Starting a new career at age 60 was challenge enough, but the best part was that she didn’t realize how much she would learn about herself and others. It really is the type of work that embraces a lot of different aspects of a “job.” Especially because Realtors deal so closely with people, most of whom they don’t know and never met. That keeps it fresh. According to Pip, it was sort of like having a baby in her 40s, which she did. It was a great learning experience and chock full of new friends and experiences. She has no regrets!
One of the biggest lessons that Pip has learned is to accept rejection. Not everything works out in your favor. Sometimes, you just don’t get the listing for whatever reason. Or the deal falls through. Don’t take it personally. Be yourself and carry on.
Memories
Pip has had many memorable experiences. One of her favorites is this:
“A family from NY was looking for their dream home/farm property. They had a very specific wish list, but I found 3 homes for them to see. The FIRST house was spectacular and everything they hoped for. The land, the extra house, and all redone – a great Victorian. While racing around the bottom level I noticed a painting on the wall. There was something familiar about it and I went up close to look. Yes, there it was – my mother’s signature – Phyllis Klein. This was a painting I had donated to a fundraiser years before and the owner of this house had purchased it. I turned to my new client and said, “Well, you simply have to buy this house. My mother’s painting is hanging on the wall!” They did!”
Over the past year, many homeowners realized what they need in a home is changing, especially with the rise in remote work. If you’re longing for a dedicated home office or a change in scenery, now may be the time to find the home that addresses your evolving needs.
Working from Home Isn’t a Passing Fad
Before the pandemic, only 21% of individuals worked from home. However, if you’ve recently discovered remote work is your new normal, you’re not alone.
A survey of hiring managers conducted by Statista and Upwork projects 37.5% of U.S. workers will work remotely in some capacity over the next 5 years (see chart below):
Working from Home Gives You More Flexibility and More Options
If you fall in that category, working from home may provide you with opportunities you didn’t realize you had. The ongoing rise in remote work means a portion of the workforce no longer needs to be tied to a specific area for their job. Instead, it gives those workers more flexibility when it comes to where they can live.
If you’re one of the nearly 23% of workers who will remain 100% remote, you have the option to move to a lower cost-of-living area or to the location of your dreams. If you search for a home in a more affordable area, you’ll be able to get more house for your money, freeing up more options for your dedicated office space and more breathing room. You could also move to an area you’ve always dreamed of vacationing in – somewhere near the beach, the mountains, or simply an area that features better weather and community amenities. Without your job tying you to a specific location, you’re bound to find your ideal spot.
If you’re one of the almost 15% of individuals who will havea partially remote or hybridschedule, relocating within your local area to a home that’s further away from your office could be a great choice. Since you won’t be going into work every day, a slightly longer commute from a more suburban or rural area could be a worthy trade-off for a home with more features, space, or comforts. After all, if you’ll still be at home part-time, why not find a home that better suits your needs?
According to the latest Top Ten Issues Affecting Real Estate from TheCounselors of Real Estate (CRE), many homebuyers are already taking advantage of their newfound flexibility:
“. . . after years of apparent but variant trends towards urbanization, the pandemic universally caused a movement away from urban cores,particularly for those with higher incomes who could afford to move and for lower-income individuals seeking lower costs of living.”
Bottom Line
If you’ve found what you’re looking for in a home has changed due to remote work, it may be time to make a move. Let’s connect today to start prioritizing your home needs.
Maybe with the leverage you currently have, you can negotiate a deal that will allow you to make the move of your dreams. What’s your home’s value?
With home prices continuing to deliver double-digit increases, some are concerned we’re in a housing bubble like the one in 2006. However, a closer look at the market data indicates this is nothing like 2006 for three major reasons.
1. The housing market isn’t driven by risky mortgage loans.
Back in 2006, nearly everyone could qualify for a loan. The Mortgage Credit Availability Index (MCAI) from the Mortgage Bankers’ Association is an indicator of the availability of mortgage money. The higher the index, the easier it is to obtain a mortgage. The MCAI more than doubled from 2004 (378) to 2006 (869). Today, the index stands at 130. As an example of the difference between today and 2006, let’s look at the volume of mortgages that originated when a buyer had less than a 620 credit score.Dr. Frank Nothaft, Chief Economist for CoreLogic, reiterates this point:
“There are marked differences in today’s run up in prices compared to 2005, which was a bubble fueled by risky loans and lenient underwriting. Today, loans with high-risk features are absent and mortgage underwriting is prudent.”
2. Homeowners aren’t using their homes as ATMs this time.
During the housing bubble, as prices skyrocketed, people were refinancing their homes and pulling out large sums of cash. As prices began to fall, that caused many to spiral into a negative equity situation (where their mortgage was higher than the value of the house).
Today, homeowners are letting their equity build. Tappable equity is the amount available for homeowners to access before hitting a maximum 80% combined loan-to-value ratio (thus still leaving them with at least 20% equity). In 2006, that number was $4.6 billion. Today, that number stands at over $8 billion.
Yet, the percentage of cash-out refinances (where the homeowner takes out at least 5% more than their original mortgage amount) is half of what it was in 2006.
3. This time, it’s simply a matter of supply and demand.
FOMO (the Fear Of Missing Out) dominated the housing market leading up to the 2006 housing bubble and drove up buyer demand. Back then, housing supply more than kept up as many homeowners put their houses on the market, as evidenced by the over seven months’ supply of existing housing inventory available for sale in 2006. Today, that number is barely two months.
Builders also overbuilt during the bubble but pulled back significantly over the next decade. Sam Khater, VP and Chief Economist, Economic & Housing Research at Freddie Mac, explains that pullback is the major factor in the lack of available inventory today:
“The main driver of the housing shortfall has been the long-term decline in the construction of single-family homes.”
Here’s a chart that quantifies Khater’s remarks:Today, there are simply not enough homes to keep up with current demand.
Bottom Line
This market is nothing like the run-up to 2006. Bill McBride, the author of the prestigious Calculated Risk blog, predicted the last housing bubble and crash. This is what he has to say about today’s housing market:
“It’s not clear at all to me that things are going to slow down significantly in the near future. In 2005, I had a strong sense that the hot market would turn and that, when it turned, things would get very ugly. Today, I don’t have that sense at all, because all of the fundamentals are there. Demand will be high for a while because Millennials need houses. Prices will keep rising for a while because inventory is so low.”
In today’s real estate market, mortgage interest rates are near record lows. If you’ve been in your current home for several years and haven’t refinanced lately, there’s a good chance you have a mortgage with an interest rate higher than today’s average. Here are some options you should consider if you want to take advantage of today’s current low rates before they rise.
Sell and Move Up (or Downsize)
Many of today’s homeowners are rethinking what they need in a home and redefining what their dream home means. For some, continued remote work is bringing about the need for additional space. For others, moving to a lower cost-of-living area or downsizing may be great options. If you’re considering either of these, there may not be a better time to move. Here’s why.
The chart below shows average mortgage rates by decade compared to where they are today:Today’s rates are below 3%, but experts forecast rates to rise over the next few years.
If the interest rate on your current mortgage is higher than today’s average, take advantage of this opportunity by making a move and securing a lower rate. Lower rates mean you may be able to get more house for your money and still have a lower monthly mortgage payment than you might expect.
Waiting, however, might mean you miss out on this historic opportunity. Below is a chart showing how your monthly payment will change if you buy a home as mortgage rates increase:
Breaking It All Down:
Using the chart above, let’s look at the breakdown of a $300,000 mortgage:
When mortgage rates rise, so does the monthly payment you can secure.
Even the smallest increase in rates can make a difference in your monthly mortgage payment.
As interest rates rise, you’ll need to look at a lower-priced home to try and keep the same target monthly payment, meaning you may end up with less home for your money.
No matter what, whether you’re looking to make a move up or downsize to a home that better suits your needs, now is the time. Even a small change in interest rates can have a big impact on your purchasing power.
Refinance
If making a move right now still doesn’t feel right for you, consider refinancing. With the current low mortgage rates, refinancing is a great option if you’re looking to lower your monthly payments and stay in your current home.
Bottom Line
Take advantage of today’s low rates before they begin to rise. Whether you’re thinking about moving up, downsizing, or refinancing, let’s connect today to discuss which option is best for you.
Maybe with the leverage you currently have, you can negotiate a deal that will allow you to make the move of your dreams. What’s your home’s value?
It’s been a while since our Green Team family has been able to be together. The 2020 Green Team Summer Social was canceled due to the pandemic. The annual Awards Ceremony took place on Zoom. COVID-19 has had the world adjusting to a new normal. In addition to the physical effects of COVID-19, many small businesses and industries have been impacted negatively. However, the impact on the real estate market was just the opposite. Sheltering-in-place led many to reconsider what their needs were in terms of home. Remote learning, remote working, and the need for privacy as well as communal space had many urban dwellers seeking homes that would accommodate their needs. Many decided to move to suburban and rural areas, including here in Orange and Sussex Counties. Despite all of the regulations and restrictions governing the real estate industry in New York and New Jersey, business was booming and our Green Team sales associates rose to the challenges.
Now, it is a time to come together once again as the Green Team Family. On July 24 at 4 p.m. we’re gathering at beautiful Spring Brook Farm in Warwick, NY. We’ll have a chance to reconnect with colleagues and meet new members of the Green Team family, as well as some of our sponsors. Of course, we’ll get to meet their family members, too! There will be lots of food, and games, as well as fun with a purpose.
Team Up for Hope with us!
For those of you not familiar with Team Up for Hope, it is a 501(c)(3) non-profit organization created by Geoff Green and Amy Green. It is an all-volunteer organization with a team of Green Team Sales Associates and staff lending their time, efforts, ideas, and passion for its mission. TUH seeks to address the impact of mental illness, drug use, and suicide in our communities. We do that by raising funds for and awareness of the local non-profit organizations at the forefront of these crises. However, we also want to do our part in ending the stigma that goes along with mental health diagnoses, drug use, and suicide. We do this by collaborating with experts from organizations and private practice who share their knowledge and expertise through the webinars we produce.
The 2021 Summer Social is also a fundraiser for Team Up for Hope. There will be a 50/50 raffle – and the winner must take the cash! We’ll have t-shirts for sale. Perhaps best of all, there will be a dunk tank. And, Geoff Green has graciously volunteered to be dunked to raise money for Team Up for Hope. We’ll have representatives from the National Alliance on Mental Illness (NAMI) Orange and Sussex County affiliates, who will talk to us about the important work being done by their organizations. Daniel McQuade, local artist, sculptor, photographer, and mental health advocate will also be joining us. Donations to Team Up for Hope are distributed to NAMI Orange and NAMI Sussex, as well as to other local organizations. So, come prepared, cash in hand, to support Team Up for Hope.
Thanks to our Sponsors
We would not be able to do events like the Green Team Summer Social without the generous support of our sponsors. They are:
It’s important to us to utilize the services of local businesses and vendors whenever possible. These are some of the vendors that we’re working with to make the Summer Social a big success:
Buyers hoping for more homes to choose from may be in luck as housing inventory begins to rise. Many experts agree – new sellers listing their homes is great news for buyers and the overall market.
Although the supply increases are modest, more homes means more options for buyers. A rise in inventory may also help slow the price gains we’ve seen recently and could be a sign of good things to come.
If you’re searching for a home, rising inventory is welcome news. Let’s connect today to discuss new listings in our area.
Last week, Fannie Mae released their Home Purchase Sentiment Index (HPSI). Though the survey showed 77% of respondents believe it’s a “good time to sell,” it also confirms what many are sensing: an increasing number of Americans believe it’s a “bad time to buy” a home. The percentage of those surveyed saying it’s a “bad time to buy” hit 64%, up from 56% last month and 38% last July.
The latest HPSI explains:
“Consumers also continued to cite high home prices as the predominant reason for their ongoing and significant divergence in sentiment toward homebuying and home-selling conditions.While all surveyed segments have expressed greater negativity toward homebuying over the last few months, renters who say they are planning to buy a home in the next few years have demonstrated an even steeper decline in homebuying sentiment than homeowners. It’s likely that affordability concerns are more greatly affecting those who aspire to be first-time homeowners than other consumer segments.”
Let’s look closely at the market conditions that impact home affordability.
A mortgage payment is determined by the price of the home and the mortgage rate on the loan used to purchase it. Lately, monthly mortgage payments have gone up for buyers for two key reasons:
Mortgage rates have increased from 2.65% this past January to 2.9%.
Home prices have increased by 15.4% over the last 12 months.
Based on these rising factors, a home may be less affordable today, but it doesn’t mean it’s not affordable.
Three weeks ago, ATTOM Data released their second-quarter 2021 U.S. Home Affordability Report which explained that the major ownership costs on the typical home as a percent of the average national wage had increased from 22.2% in the second quarter of 2020 to 25.2% in the second quarter of this year. They also went on to explain:
“Still, the latest level is within the 28 percent standard lenders prefer for how much homeowners should spend on mortgage payments, home insurance and property taxes.”
In the same report, Todd Teta, Chief Product Officer with ATTOM, confirms:
“Average workers across the country can still manage the major expenses of owning a home, based on lender standards.”
It’s true that monthly mortgage payments are greater than they were last year (as the ATTOM data shows), but they’re not unaffordable when compared to the last 30 years. While payments have increased dramatically during that several-decade span, if we adjust for inflation, today’s mortgage payments are 10.7% lower than they were in 1990.
What’s that mean for you? While you may not get the homebuying deal someone you know got last year, that doesn’t mean you shouldn’t still buy a home. Here are your alternatives to buying and the trade-offs you’ll have with each.
Alternative 1: I’ll rent instead.
Some may consider renting as the better option. However, the monthly cost of renting a home is skyrocketing. According to the July National Rent Report from Apartment List:
“…So far in 2021, rental prices have grown a staggering 9.2%. To put that in context, in previous years growth from January to June is usually just 2 to 3%. After this month’s spike, rents have been pushed well above our expectations of where they would have been had the pandemic not disrupted the market.”
If you continue to rent, chances are your rent will keep increasing at a fast pace. That means you could end up spending significantly more of your income on your rental as time goes on, which could make it even harder to save for a home.
Alternative 2: I’ll wait it out.
Others may consider waiting for another year and hoping that purchasing a home will be less expensive then. Let’s look at that possibility.
We’ve already established that a monthly mortgage payment is determined by the price of the home and the mortgage rate. A lower monthly payment would require one of those two elements to decrease over the next year. However, experts are forecasting the exact opposite:
The Home Price Expectation Survey (HPES), a survey of over 100 economists, investment strategists, and housing market analysts, calls for home prices to increase by 5.12% in 2022.
Based on these projections, let’s see the possible impact on a monthly mortgage payment:By waiting until next year, you’d potentially pay more for the home, need a larger down payment, pay a higher mortgage rate, and pay an additional $3,696 each year over the life of the mortgage.
Bottom Line
While you may have missed the absolute best time to buy a home, waiting any longer may not make sense. Mark Fleming, Chief Economist at First American, says it best:
“Affordability is likely to worsen before it improves, so try to buy it now, if you can find it.”
Maybe with the leverage you currently have, you can negotiate a deal that will allow you to make the move of your dreams. What’s your home’s value?
Facebook
X
Pinterest
Copy Link
![Pop Quiz: Can You Define These Key Terms in Today’s Housing Market? [INFOGRAPHIC] | MyKCM](https://files.mykcm.com/2021/07/22135823/20210723-MEM-1046x2651.png)
![Experts Agree: Options Are Improving for Buyers [INFOGRAPHIC] | MyKCM](https://files.mykcm.com/2021/07/15150442/20210716-MEM-1046x1908.png)
