Housing Market News July 12, 2022

Expert Housing Market Forecasts for the Second Half of the Year

The housing market is at a turning point, and if you’re thinking of buying or selling a home, that may leave you wondering: is it still a good time to buy a home? Should I make a move this year? To help answer those questions, let’s turn to the experts for projections on what the second half of the year holds for residential real estate.

Where Mortgage Rates Will Go Depends on Inflation

While one of the big questions on all buyers’ minds is where will mortgage rates go in the months ahead, no one has a crystal ball to know exactly what’ll happen in the future. What housing market experts know for sure is that the record-low mortgage rates during the pandemic were an outlier, not the norm.

This year, rates have climbed over 2% due to the Federal Reserve’s response to rising inflation. If inflation continues to rise, it’s likely that mortgage rates will respond. Greg McBride, Chief Financial Analyst at Bankrateexplains it well:

“Until inflation peaks, mortgage rates won’t either. Without improvement on the inflation front, we don’t know where the interest rate ceiling will be.”

Whether you’re buying your first home or selling your current house to make a move, today’s mortgage rate is an important factor to consider. When rates rise, they impact affordability and your purchasing power. That’s why it’s crucial to work with a team of professionals, so you have expert advice to help you make an informed decision about your best move.

Expert Housing Market Forecasts for the Second Half of the Year | MyKCM

The Supply of Homes for Sale Projected To Continue Increasing

This year, particularly this spring, the number of homes for sale has grown. That’s partly due to more homeowners listing their houses, but also because higher mortgage rates have helped ease the intensity of buyer demand. Moderating buyer demand slows down the pace of home sales, which in turn helps inventory rise.

Experts say that growth will continue. Recently, realtor.com updated their 2022 inventory forecast. In the latest release, they increased their projections for inventory gains dramatically, going from a 0.3% increase at the beginning of the year to a 15.0% jump by the end of 2022 (see graph below):

Expert Housing Market Forecasts for the Second Half of the Year | MyKCM

More homes to choose from is great news if you’re craving more options for your home search – just know that there isn’t a sudden surplus of inventory on the horizon. Housing supply is still low, so you’ll need to partner with an agent to stay on top of what’s available in your market and move fast when you find the one. It’s not going to be easy to find a home, but it certainly won’t be as difficult as it has been over the past two years.

Home Price Forecasts Call for Ongoing Appreciation

Due to the imbalance between the number of homes for sale and the number of buyers looking to make a purchase, the pandemic led to record-breaking increases in home prices. According to CoreLogic, homes appreciated by 15% in 2021, and they’ve continued to rise this year.

Even though housing supply is increasing today, there are still more buyers than there are homes for sale, and that’s maintaining the upward pressure on home prices. That’s why experts are not calling for prices to decline, rather they’re forecasting they’ll continue to climb, just at a more moderate pace this year. On average, homes are projected to appreciate by about 8.5% in 2022 (see graph below):

Expert Housing Market Forecasts for the Second Half of the Year | MyKCM

Selma Hepp, Deputy Chief Economist at CoreLogic, explains why the housing market will see deceleration, but not depreciation, in prices:

“The current home price growth rate is unsustainable, and higher mortgage rates coupled with more inventory will lead to slower home price growth but unlikely declines in home prices.

For current homeowners looking to sell, know your home’s value isn’t projected to fall, but waiting to make your purchase does mean your next home could cost more as home prices continue to appreciate. That’s why, if you’re thinking about buying your first home or you’re ready to make a move, it may make sense to do so now before prices climb higher. But rest assured, once you buy a home, that price appreciation will help grow the value of your investment.

Bottom Line

Whether you’re a homebuyer or seller, you need to know what’s happening in the housing market, so you can make the most informed decision possible. Let’s connect to discuss your goals and what lies ahead, so you can determine the best plan for your move.

Housing Market News July 12, 2022

The Drop in Mortgage Rates Brings Good News for Homebuyers

Over the past few weeks, the average 30-year fixed mortgage rate from Freddie Mac fell by half a percent. The drop happened over concerns about a potential recession. And since mortgage rates have risen dramatically this year, homebuyers across the country should see this decline as welcome news.

Freddie Mac reports that the average 30-year rate was down to 5.30% from 5.81% two weeks prior (see graph below):

The Drop in Mortgage Rates Brings Good News for Homebuyers | MyKCM

But why is this recent dip such good news for homebuyers? As Nadia Evangelou, Senior Economist and Director of Forecasting at the National Association of Realtors (NAR), explains:

“According to Freddie Mac, the 30-year fixed mortgage rate dropped sharply by 40 basis points to 5.3 percent. . . . As a result, home buying is about 5 percent more affordable than a week ago. This translates to about $100 less every month on a mortgage payment.

The Drop in Mortgage Rates Brings Good News for Homebuyers | MyKCM

That’s because when rates go up (as they have for the majority of this year), they impact how much you’ll pay in your monthly mortgage payment, which directly affects how much you can comfortably afford. The inverse is also true. A decrease in mortgage rates means an increase in your purchasing power.

The chart below shows how a half-point, or even a quarter-point, change in mortgage rates can impact your monthly payment:

The Drop in Mortgage Rates Brings Good News for Homebuyers | MyKCM

Bottom Line

If your home doesn’t meet your needs, this may be the opportunity you’ve been waiting for. Let’s connect to see how you can benefit from the current drop in mortgage rates.

Housing Market News July 10, 2022

Why Growing Home Equity Is Great News if You Plan To Move [INFOGRAPHIC]

Why Growing Home Equity Is Great News if You Plan To Move [INFOGRAPHIC] | MyKCM

Some Highlights

  • According to the latest data from CoreLogic, the average homeowner gained $64,000 in home equity over the past 12 months.
  • That much equity can be a game-changer when you move. When you sell, it could be some (if not all) of what you need for a down payment on your next home.
  • To find out how much equity you have in your home and how you can use it, let’s connect today.
Housing Market News July 7, 2022

What Does an Economic Slowdown Mean for the Housing Market?

According to a recent survey, more and more Americans are concerned about a possible recession. Those concerns were validated when the Federal Reserve met and confirmed they were strongly committed to bringing down inflation. And, in order to do so, they’d use their tools and influence to slow down the economy.

All of this brings up many fears and questions around how it might affect our lives, our jobs, and business overall. And one concern many Americans have is: how will this affect the housing market? We know how economic slowdowns have impacted home prices in the past, but how could this next slowdown affect real estate and the cost of financing a home?

According to Mortgage Specialists: 

Throughout history, during a recessionary period, interest rates go up at the beginning of the recession. But in order to come out of a recession, interest rates are lowered to stimulate the economy moving forward.”

Here’s the data to back that up. If you look back at each recession going all the way to the early 1980s, here’s what happened to mortgage rates during those times (see chart below):

What Does an Economic Slowdown Mean for the Housing Market? | MyKCM

As the chart shows, historically, each time the economy slowed down, mortgage rates decreased. Fortune.com helps explain the trend like this:

“Over the past five recessions, mortgage rates have fallen an average of 1.8 percentage points from the peak seen during the recession to the trough. And in many cases, they continued to fall after the fact as it takes some time to turn things around even when the recession is technically over.”

And while history doesn’t always repeat itself, we can learn from it. While an economic slowdown needs to happen to help taper inflation, it hasn’t always been a bad thing for the housing market. Typically, it has meant that the cost to finance a home has gone down, and that’s a good thing. 

What Does an Economic Slowdown Mean for the Housing Market? | MyKCM

Bottom Line

Concerns of a recession are rising. As the economy slows down, history tells us this would likely mean lower mortgage rates for those looking to refinance or buy a home. While no one knows exactly what the future holds, you can make the right decision for you by working with a trusted real estate professional to get expert advice on what’s happening in the housing market and what that means for your homeownership goals.

Housing Market News July 7, 2022

How Your Equity Can Grow over Time

It’s true that record levels of home price appreciation have spurred significant equity gains for homeowners over the past few years. As Diana Olick, Real Estate Correspondent at CNBC, says:

“The stunning jump in home values over the course of the Covid-19 pandemic has given U.S. homeowners record amounts of housing wealth.”

That’s great for your home’s value over the last couple of years, but what if you’ve lived in your home for longer than that? You may be wondering how much equity you truly have.

The National Association of Realtors (NAR) has done a study to calculate the typical equity gains over longer spans of time. The data they compiled could be enough to motivate you to move. Just remember, to find out how much equity you have in your specific home, you’ll want to get a professional equity assessment from a trusted real estate advisor.

How Your Equity Grows

Let’s start by establishing how you build equity in your home. While price appreciation is clearly a factor that can help boost your equity, you also build equity over time as you pay down your home loan. NAR explains:

Home equity gains are built up through price appreciation and by paying off the mortgage through principal payments.

How Your Equity Can Grow over Time | MyKCM

Average Equity Growth over Time

The study from NAR breaks down the typical equity gain over time (see graph below). It calculates the equity a homeowner potentially gained if they purchased the median-priced home 5, 10, or 30 years ago and still own it today.

How Your Equity Can Grow over Time | MyKCM

These six-figure numbers are impressive and certainly enough to help you fuel a move into your next home, but they’re not a promised amount. Remember, your own equity gain will be different. It depends on how long you’ve been in the house, your home’s condition, any upgrades you’ve made, your area, and much more.

If you want to find out how much equity you have, partner with a trusted real estate professional for an equity assessment on your home. They can provide an expert opinion on what your house is worth today and how the equity you’ve gained over time can help you when you purchase your next home. It may be some (if not all) of what you need for your next down payment.

Bottom Line

If you’re thinking about selling your house and making a move, home equity can be a real game-changer, especially if you’ve been in your current home for a while. If you’re ready to find out how much equity you have, let’s connect.

Buying a home July 5, 2022

Is Homeownership Still the American Dream?

Defining the American dream is personal, and no one individual will have the same definition as another. But the feelings it brings about – success, freedom, and a sense of prosperity – are universal. That’s why, for many people, homeownership remains a key part of the American dream. Your home is your stake in the community, a strong financial investment, and an achievement to be proud of.

A recent survey from Bankrate asked respondents to rank achievements as indicators of financial success, and the responses prove that owning a home is still important to so many Americans today (see graph below):

Is Homeownership Still the American Dream? | MyKCM

As the graph shows, homeownership ranks above other significant milestones, including retirement, having a successful career, and earning a college degree.

That could be because owning a home is a significant wealth-building tool and provides meaningful financial stability. The National Association of Realtors (NAR) explains:

Homeownership builds financial security. With 65.5% of Americans owning homes, the net worth of a typical homeowner is nearly 40 times the net worth of a non-owner.”

There are other ways your home acts as more than just a roof over your head, too. The Mortgage Reports highlights a few of the many benefits homeowners enjoy, including:

  • Your equity (and wealth) grows through home price appreciation.
  • Your housing costs are fixed – and that can help combat rising costs from inflation.
  • You’ll have greater privacy and the opportunity to customize your living space.

Plus, homeowners tend to be more active in their community. Like NAR says:

“Living in one place for a longer amount of time creates and [sic] obvious sense of community pride, which may lead to more investment in said community.”

Is Homeownership Still the American Dream? | MyKCM

What Does That Mean for You?

If your definition of the American Dream involves greater freedom and prosperity, then homeownership could play a major role in helping you achieve that dream. When you set out to buy, know there are incredible benefits waiting for you at the end of your journey. You’ll have a place you can call your own, feel most comfortable, and grow your wealth.

First American puts it best, saying:

Homeownership remains central to the pursuit of the American Dream. It is a critical driver of economic mobility, delivering financial and social advantages. . . .”

Bottom Line

Buying a home is a powerful decision and a key part of the American Dream. And if homeownership is part of your personal dreams this year, let’s connect and start the process today.

Buying a homeCommercial and Investment Real Estate July 5, 2022

Real Estate Consistently Voted Best Investment [INFOGRAPHIC]

Real Estate Consistently Voted Best Investment [INFOGRAPHIC] | MyKCM

Some Highlights

  • Based on a recent Gallup poll, real estate has been rated the best long-term investment for nine years in a row.
  • Owning real estate is more than just a place to call home. It’s also an investment in your future. That’s because it’s typically a stable and secure asset that can grow in value over time.
  • If you’re ready to buy a home and invest in your future, let’s connect.
Buying a home June 30, 2022

Homeownership Could Be in Reach with Down Payment Assistance Programs

A recent survey from Bankrate asks prospective buyers to identify the biggest obstacles in their homebuying journey. It found that 36% of those polled said saving for a down payment is one of their primary hurdles to buying a home.

If you feel the same way, the good news is there are many down payment assistance programs available that can help you achieve your homeownership goals. The key is understanding where to look and learning what options are available. Here’s some information that can help you.

You Can Qualify Even if You’ve Purchased a Home Before

There are several misconceptions about down payment assistance programs. For starters, many people believe there’s only assistance available for first-time homebuyers. While first-time buyers have many options to explore, repeat buyers have some, too. According to the latest Homeownership Program Index from downpaymentresource.com:

“It is a common misconception that homebuyer assistance is only available to first-time homebuyers, however, 38% of homebuyer assistance programs in Q1 2022 did not have a first-time homebuyer requirement.

That means repeat buyers could qualify for over one-third of the assistance programs available. And if you’re a repeat buyer, you may still be able to take advantage of some first-time homebuyer programs, depending on your personal situation. That’s because downpaymentresource.com also notes many of the first-time homebuyer programs use the U.S. Department of Housing and Urban Development’s definition of a first-time homebuyer. Under their definition, you could qualify as a first-time buyer if you’re:

  • Someone who hasn’t owned a primary residence in 3 years.
  • A single parent who’s only ever owned a home with a former spouse.

That means no matter where you are in your homeownership journey, there could be an option available for you.

Homeownership Could Be in Reach with Down Payment Assistance Programs | MyKCM

You May Be Eligible for Programs Based on Your Location or Profession

In addition to broader options available for repeat and first-time homebuyers, there are other types of down payment assistance programs that you could qualify for based on your location. According to the National Association of Realtors (NAR):

“Many local governments and non-profit organizations offer down-payment assistance grants and loans, targeted to area borrowers and often with specific borrower requirements.”

Plus, there are programs and special benefits for individuals working in certain professions or with unique statuses, including teachers, doctors and nurses, and veterans.

Ultimately, that means there are many federal, state, and local programs available for you to explore. The best way to do that is to connect with a local real estate professional and your lender to learn more about what’s available in your area.

Bottom Line

Down payment assistance programs have helped many homebuyers achieve their dreams, and if you qualify, they could help you too. Let’s connect today so you can begin exploring your options.

Buying a home June 30, 2022

A Key Opportunity for Homebuyers

There’s no denying the housing market has delivered a fair share of challenges to homebuyers over the past two years. Two of the biggest hurdles homebuyers faced during the pandemic were the limited number of homes for sale and the intensity and frequency of bidding wars. But those two things have reached a turning point.

As you may have already heard, the number of homes for sale has increased this year, and even more so this spring. As Danielle Hale, Chief Economist for realtor.comexplains:

New listings–a measure of sellers putting homes up for sale–were up 6% above one year ago. Home sellers in many markets across the country continue to benefit from rising home prices and fast-selling homes. That’s prompted a growing number of homeowners to sell homes this year compared to last, giving home shoppers much needed options.”

This is encouraging news. More homes coming onto the market give you a greater chance of finding one that checks all your boxes.

Buyer Competition Moderating Helps Inventory Grow Even More

Mark Fleming, Chief Economist at First Americansays inventory growth is happening not just because there’s an increase in the number of listings coming onto the market, but also because buyer demand has moderated some in light of higher mortgage rates and other economic factors:

There has been a pickup in the inventory that we’ve seen recently, but it’s not from a big increase in new listings . . . but rather a slowdown in the pace of sales. And remember that months’ supply measures the inventory of sale relative to the pace of sales. Same inventory, fewer sales, means more months’ supply.”

Basically, the market is shifting away from the frenzy of buyer competition seen during the pandemic, and that’s helping available inventory grow. In their latest forecastrealtor.com also mentions the moderation of demand as a key factor and projects the inventory growth should continue:

As rising inflation and mortgage rates bring U.S. housing demand back from the 2021 frenzy, . . . inventory will grow double-digits over 2021 and offer buyers a better-than-expected chance to find a home.”

A Key Opportunity for Homebuyers | MyKCM

How This Impacts You

The combination of more homes coming onto the market and a slower pace of home sales means you’ll have more options to choose from as you search for your next home. That’s great news if you’ve been searching for a while with little to no luck. Just remember, there isn’t a sudden surplus of inventory, just more homes to choose from than even a few months ago. So, you’ll still want to be decisive and move fast when you find the right home for you.

And when you do, you may be faced with less competition from other buyers too. If you’ve been waiting to jump into the market because the intensity of the bidding wars was intimidating or if you’ve been outbid on several homes, this moderation could help make the homebuying process a bit smoother. It’s not that it’ll be easy or that bidding wars are a thing of the past – that’s not the case. But it won’t feel nearly as impossible.

Bottom Line

As the housing market begins its shift back toward pre-pandemic levels, you could have a unique opportunity in front of you. With moderating levels of buyer competition and more homes actively for sale, your home search may have gotten a bit less challenging. Let’s connect to begin the process today.

Housing Market News June 30, 2022

Two Reasons Why Today’s Housing Market Isn’t a Bubble

You may be reading headlines and hearing talk about a potential housing bubble or a crash, but it’s important to understand that the data and expert opinions tell a different story. A recent survey from Pulsenomics asked over one hundred housing market experts and real estate economists if they believe the housing market is in a bubble. The results indicate most experts don’t think that’s the case (see graph below):

Two Reasons Why Today’s Housing Market Isn’t a Bubble | MyKCMAs the graph shows, a strong majority (60%) said the real estate market is not currently in a bubble. In the same survey, experts give the following reasons why this isn’t like 2008:

  • The recent growth in home prices is because of demographics and low inventory
  • Credit risks are low because underwriting and lending standards are sound

If you’re concerned a crash may be coming, here’s a deep dive into those two key factors that should help ease your concerns.

Two Reasons Why Today’s Housing Market Isn’t a Bubble | MyKCM

1. Low Housing Inventory Is Causing Home Prices To Rise

The supply of homes available for sale needed to sustain a normal real estate market is approximately six months. Anything more than that is an overabundance and will causes prices to depreciate. Anything less than that is a shortage and will lead to continued price appreciation.

As the graph below shows, there were too many homes for sale from 2007 to 2010 (many of which were short sales and foreclosures), and that caused prices to tumble. Today, there’s still a shortage of inventory, which is causing ongoing home price appreciation (see graph below):

Two Reasons Why Today’s Housing Market Isn’t a Bubble | MyKCMInventory is nothing like the last time. Prices are rising because there’s a healthy demand for homeownership at the same time there’s a limited supply of homes for sale. Odeta Kushi, Deputy Chief Economist at First American, explains:

“The fundamentals driving house price growth in the U.S. remain intact. . . . The demand for homes continues to exceed the supply of homes for sale, which is keeping house price growth high.”

2. Mortgage Lending Standards Today Are Nothing Like the Last Time

During the housing bubble, it was much easier to get a mortgage than it is today. Here’s a graph showing the mortgage volume issued to purchasers with a credit score less than 620 during the housing boom, and the subsequent volume in the years after:

Two Reasons Why Today’s Housing Market Isn’t a Bubble | MyKCMThis graph helps show one element of why mortgage standards are nothing like they were the last time. Purchasers who acquired a mortgage over the last decade are much more qualified than they were in the years leading up to the crash. Realtor.com notes:

. . . Lenders are giving mortgages only to the most qualified borrowers. These buyers are less likely to wind up in foreclosure.”

Bottom Line

A majority of experts agree we’re not in a housing bubble. That’s because home price growth is backed by strong housing market fundamentals and lending standards are much tighter today. If you have questions, let’s connect to discuss why today’s housing market is nothing like 2008.