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Is the Housing Market Correcting?
If you’re following the news, all of the headlines about conditions in the current housing market may leave you with more questions than answers. Is the boom over? Is the market crashing or correcting? Here’s what you need to know.
The housing market is moderating compared to the last two years, but what everyone needs to remember is that the past two years were record-breaking in nearly every way. Record-low mortgage rates and millennials reaching peak homebuying years led to an influx of buyer demand. At the same time, there weren’t enough homes available to purchase thanks to many years of underbuilding and sellers who held off on listing their homes due to the health crisis.
This combination led to record-high demand and record-low supply, and that wasn’t going to be sustainable for the long term. The latest data shows early signs of a shift back to the market pace seen in the years leading up to the pandemic – not a crash nor a correction. As realtor.com says:
“The housing market is at a turning point. . . . We’re starting to see signs of a new direction, . . .”
Home Showings Then and Now
The ShowingTime Showing Index tracks the traffic of home showings according to agents and brokers. It’s a good indication of buyer demand. Here’s a look at that data going back to 2019 (see graph below):
The 2019 numbers give a good baseline of pre-pandemic demand (shown in gray). As the graph indicates, home showings skyrocketed during the pandemic (shown in blue). And while current buyer demand has begun to moderate slightly based on the latest data (shown in green), showings are still above 2019 levels.
And since 2019 was such a strong year for the housing market, this helps show that the market isn’t crashing – it’s just at a turning point that’s moving back toward more pre-pandemic levels.
Existing Home Sales Then and Now
Headlines are also talking about how existing home sales are declining, but perspective matters. Here’s a look at existing home sales going all the way back to 2019 using data from the National Association of Realtors (NAR) (see graph below):
Again, a similar story emerges. The pandemic numbers (shown in blue) beat the more typical year of 2019 home sales (shown in gray). And according to the latest projections for 2022 (shown in green), the market is on pace to close this year with more home sales than 2019 as well.
It’s important to compare today not to the abnormal pandemic years, but to the most recent normal year to show the current housing market is still strong. First American sums it up like this:
“. . . today’s housing market looks a lot like the 2019 housing market, which was the strongest housing market in a decade at the time.”
Bottom Line
If recent headlines are generating any concerns, look at a more typical year for perspective. The current market is not a crash or correction. It’s just a turning point toward more typical, pre-pandemic levels. Let’s connect if you have any questions about our local market and what it means for you when you buy or sell this year.
The Largest Green to Green Residential Sale
Congratulations to Jennifer DiCostanzo as the listing agent for 30 Cardinal Lane. This magnificent home sold for $1,490,000, the largest residential Green Team to Green Team listing sale to date. Tiffany Megna represented the buyers.
Jennifer DiCostanzo
Listing and showing high-end luxury homes requires a real estate professional who understands the quintessential details the property offers, aligning to the buyer’s specific criteria. Jennifer has expertise in marketing such homes, as was the case with 30 Cardinal Lane. This magnificent home was built to provide sustainability, privacy, and luxury living, both indoors and out. By customizing marketing approaches for her selling clients, Jennifer understands the uniqueness of each property. She intuitively captures buyers’ interest with strategic strategies emphasizing the lifestyle and story these prestigious homes offer to prospective buyers- case in point 30 Cardinal Lane.
Tiffany Megna
Tiffany Megna works hard, with her goal to be better every year. A former teacher, Tiffany understands the importance of listening and understanding her clients’ needs. She has achieved designations as a Pricing Strategy Advisor, Accredited Buyer Representative, and an At Home with Diversity certification. Furthermore, she has her Seller Representative Specialist and Short Sales and Foreclosure Resource certifications. With each designation, she feels she has more to offer her clients.
A dynamic Team
The real estate market has been booming since the pandemic affected the way we live and our ideas of what a home should be. Jennifer has been working non-stop and for the 6th straight year, is GTNYR Yearly Sales Leader, as well as the Q1 Sales Leader for 2022. Tiffany, also working non-stop, is ranked 2nd in Green Team New York Realty sales for 2021.
Now take a video tour of this magnificent home and property…
For many homebuyers, the beauty of Orange County, NY, and its picturesque villages and towns provide the perfect lifestyle balance with all the recreational amenities they desire. Ultimately, this property showcases some of the best that Orange County has to offer.
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Are There More Homes Coming to the Market?
According to a recent survey from the National Association of Realtors (NAR), one of the top challenges buyers face in today’s housing market is finding a home that meets their needs. That’s largely because the inventory of homes for sale is so low today.
If you’re looking to buy a home, you may have noticed this yourself. But there is good news. Recent data shows more sellers are listing their houses this season, which may give you more options for your home search.
Early Signs Inventory May Be Growing
The latest data from realtor.com shows the number of listings coming onto the market, known in the industry as “new listings,” has increased since the start of the year (see graph below):
This indicates more sellers are listing their homes for sale each month this year. And according to realtor.com, this growth is expected to continue. Their research finds the majority of potential sellers plan to list their homes over the next six months. Realtor.com says:
“. . . markets may see a noticeable bump in the number of homes for sale as we move through spring and into summer. A majority of homeowners planning to sell this year indicated that they aim to list in the next six months, with almost 10% having already placed their properties on the market.”
Homes Are Still Selling Quickly
But while new listings are increasing, it’s important to know they’re also selling quickly. The latest Realtors Confidence Index from NAR shows the median days on market for recently sold homes since the beginning of the year (see chart below). The time on market has decreased month-over-month. That means homes are selling even faster than they did the previous month.
What That Means for You
While a low-inventory market is difficult to navigate as a buyer, there is hope. The growing number of new listings and the expectation more sellers will list their homes in the coming months is great news if you’ve had a hard time finding a home that fits your needs. Just remember, those new listings are going fast. That means you’ll want to keep your foot on the gas and be ready to act if you find a home you love this season.
Your agent can help you stay on top of the latest listings in your area so you can find the home that’s right for you and submit your strongest offer as quickly as possible.
Bottom Line
If you’ve been having a hard time finding your dream home, stick with your search. More options are coming to market and your ideal home could be one of them. Let’s connect so you can stay up to date on the latest listings in our market, so you can be ready to move fast when you find the one that’s right for you.
2022 Housing Market Forecast [INFOGRAPHIC]
![2022 Housing Market Forecast [INFOGRAPHIC] | MyKCM](https://files.mykcm.com/2022/05/05130426/20220506-MEM-1046x1885.png)
Some Highlights
- What does the rest of the year hold for the housing market? Here’s what experts have to say about what lies ahead.
- Home prices are projected to rise and so are mortgage rates. Experts are also forecasting another strong year for home sales as people move to meet their changing needs.
- Let’s connect so you can make your best move this year.
Things That Could Help You Win a Bidding War on a Home
With a limited number of homes for sale today and so many buyers looking to make a purchase before mortgage rates rise further, bidding wars are common. According to the latest report from the National Association of Realtors (NAR), nationwide, homes are getting an average of 4.8 offers per sale. Here’s a look at how that breaks down state-by-state (see map below):
The same report from NAR shows the average buyer made two offers before getting their third offer accepted. In this type of competitive housing market, it’s important to know what levers you can pull to help you beat the competition. While a real estate professional is your ultimate guide to presenting a strong offer, here are a few things you could consider.
Offering over Asking Price
When you think of sweetening the deal for sellers, the first thought you likely have is around the price of the home. In today’s housing market, it’s true more homes are selling for over asking price because there are more buyers than there are homes for sale. You just want to make sure your offer is still within your budget and realistic for the market value in your area – that’s where a local real estate professional can help you through the process. Bankrate says:
“Simply put, being willing to pay more money than other buyers is one of the best ways to get your offer accepted. You may not have to increase it by a lot — it’ll depend on the area and other factors — so look to your real estate agent for guidance.”
Putting Down a Bigger Earnest Money Deposit
You could also consider putting down a larger deposit up front. An earnest money deposit is a check you write to go along with your offer. If your offer is accepted, this deposit is credited toward your home purchase. NerdWallet explains how it works:
“A typical earnest money deposit is 1% to 2% of the home’s purchase price, but the amount varies by location. A higher earnest money deposit may catch a seller’s attention in a hot housing market.”
That’s because it shows the seller you’re seriously interested in their house and have already set aside money that you’re ready to put toward the purchase. Talk to a professional to see if this is something you can do in your area.
Making a Higher Down Payment
Another option is increasing how much of a down payment you’re going to make. The benefit of a higher down payment is you won’t have to finance as much. This helps the seller feel like there’s less risk of the deal or the financing falling through. And if other buyers put less down, it could be what helps your offer stand out from the crowd.
Non-Financial Options To Make a Strong Offer
Realtor.com points out that while increasing these financial portions of the deal can help, they’re not your only options:
“. . . Price is not the only factor sellers weigh when they look at offers. The buyer’s terms and contingencies are also taken into account, as well as pre-approval letters, appraisal requirements, and the closing time the buyer is asking for.”
When it’s time to make an offer, partner with a trusted professional. They have insight into what sellers are looking for in your local market and can give you expert advice on what levers you may or may not want to pull when it’s time to write an offer.
From a non-financial perspective, this can include things like flexible move-in dates or minimal contingencies (conditions you set that the seller must meet for the purchase to be finalized). For example, you could make an offer that’s not contingent on the sale of your current home. Just remember, there are certain contingencies you don’t want to forego, like your home inspection. Ultimately, the options you have can vary state-to-state, so it’s best to lean on an expert real estate professional for guidance.
Bottom Line
In today’s hot housing market, you need a partner who can serve as your guide, especially when it comes to making a strong offer. Let’s connect so you have a trusted resource and coach on how to make the strongest offer possible for your specific situation.
What Is Multigenerational Housing? [INFOGRAPHIC]
![What Is Multigenerational Housing? [INFOGRAPHIC] | MyKCM](https://files.mykcm.com/2022/04/14144240/20220415-MEM-1046x2456.png)
Some Highlights
- If you have additional loved ones coming to live with you but don’t have enough space, it may be time to consider a larger, multigenerational home.
- Some key benefits of multigenerational living include a combined homebuying budget, shared caregiving duties, enhanced relationships, and more. These benefits might be why more people are choosing to live in multigenerational homes today.
- Let’s connect so you can find a house that meets your changing needs and has plenty of space for you and your loved ones.
Using Your Tax Refund To Achieve Your Homeownership Goals This Year
If you’re buying or selling a home this year, you’re likely saving up for a variety of expenses. For buyers, that might include things like your down payment and closing costs. And for sellers, you’re probably working on a bit of spring cleaning and maintenance to spruce up your house before you list it.
Either way, any money you get back from your taxes can help you achieve your goals. Using a tax refund is a common tactic for buyers and sellers. SmartAsset estimates the average American will receive a $2,897 tax refund this year. The map below provides a more detailed estimate by state:
If you’re getting a refund this year, here are a few tips to help with your home purchase or sale this season.
How Buyers Can Use Their Tax Refund
According to American Financing, there are multiple ways your refund check can help you as a homebuyer. A few include:
- Growing your down payment fund – If you haven’t started saving for your down payment, let your tax refund kick off the process. And if you have a fund already, the money you get back could put you closer to your goal.
- Paying for your home inspection – Your home inspection can save you a lot of headaches down the road by helping you determine the condition of the house. As a buyer, you’ll typically be responsible for paying for your inspection, and it’s definitely worth the investment.
- Saving for closing costs – Closing costs are additional expenses you’ll need to pay once it’s time to close. They average anywhere between 2-5% of the purchase price of your home.
This list is a great start, but it isn’t exhaustive of all the costs you may encounter as you set out on your homebuying journey. The best way to prepare is to work with a trusted real estate professional to make sure you understand what’s to come in the process.
How Sellers Can Use Their Tax Refund
If you own a home and are planning to sell this spring, your tax refund can help you make sure your home is ready to list. Here are a few ways current homeowners can put their tax refund to good use:
- Making small upgrades – NerdWallet provides a list of great ways to use your tax refund, including tackling small projects or boosting your curb appeal to help your home stand out.
- Making repairs – If there’s anything in your house that needs to be fixed, American Financing notes that completing repairs is another great use of that money.
- Buying your next home – Whether you’re selling to move up or downsize, you can use your tax refund to help pay for any costs on the purchase of your next home.
Of course, it’s important to talk with your trusted real estate advisor before taking on any projects. They’ll make sure you can focus on areas that’ll help you receive the best possible price when you sell.
Bottom Line
Funding your home purchase or sale can feel like a daunting task, but it doesn’t have to be. Your tax refund can help you reach your goals. Let’s connect to discuss how you can start on your journey.
Why a Real Estate Professional Is Key When Selling Your House
With today’s real estate market moving as fast as it is, working with a real estate professional is more essential than ever. They have the skills, experience, and expertise it takes to navigate the highly detailed and involved process of selling a home. That may be why the percentage of people who list their houses on their own, known as a FSBO or For Sale By Owner, has reached its lowest point since 1985 (see graph below):
Here are five reasons why selling with a real estate professional makes more sense, even in today’s hot market:
1. They Know What Buyers Want To See
Before you decide which projects and repairs to take on, connect with a real estate professional. They have first-hand experience with today’s buyers, what they expect, and what you need to do to make sure your house shows well.
If you don’t lean on their expertise, you may spend your time and money on something that isn’t essential. That’s because, in today’s low-inventory market, buyers are willing to take on more of the renovation work themselves. A survey from Freddie Mac finds that:
“. . . nearly two-in-five potential homebuyers would consider purchasing a home requiring renovations.”
A professional can help you decide what you need to tackle. It’s not canned advice you could find online – it’s recommendations specific to your house and your area.
2. They Help Maximize Your Buyer Pool
Today, the average home is getting 4.8 offers per sale according to recent data from the National Association of Realtors (NAR), and that competition is pushing prices up. While that’s promising for you as a seller, it’s important to understand your agent’s role in bringing buyers in.
Real estate professionals have an assortment of tools at their disposal, such as social media followers, agency resources, and the MLS to ensure your house is viewed by the most buyers. According to realtor.com:
“Only licensed real estate agents can list homes on the MLS, which is a one-stop online shop of sorts for getting a house seen by thousands of agents and home buyers. . . . This is certainly one of many good reasons why the majority of home sellers decide to employ the services of a listing agent rather than going it alone.”
Without access to these tools, your buyer pool is limited. And you want more buyers to view your house since buyer competition can drive your final sales price higher.
3. They Understand the Fine Print
Today, more disclosures and regulations are mandatory when selling a house. That means the number of legal documents you’ll need to juggle is growing. That’s why Investopedia says:
“One of the biggest risks of FSBO is not having the experience or expertise to navigate all of the legal and regulatory requirements that come with selling a home.”
A real estate professional knows exactly what needs to happen, what all the paperwork means, and how to work through it efficiently. They’ll help you review the documents and avoid any costly missteps that could occur if you try to handle them on your own.
4. They’re Trained Negotiators
If you sell without a professional, you’ll also be solely responsible for all the negotiations. That means you’ll have to coordinate with:
- The buyer, who wants the best deal possible
- The buyer’s agent, who will use their expertise to advocate for the buyer
- The inspection company, which works for the buyer and will almost always find concerns with the house
- The appraiser, who assesses the property’s value to protect the lender
Instead of going toe-to-toe with all these parties alone, lean on an expert. They’ll know what levers to pull, how to address everyone’s concerns, and when you may want to get a second opinion.
5. They Know How To Set the Right Price for Your House
If you sell your house on your own, you may over or undershoot your asking price. That could mean you’ll leave money on the table because you priced it too low or your house will sit on the market because you priced it too high. Pricing a house requires expertise. Investopedia explains it like this:
“. . . There is no easy or universal way to determine market value for real estate.”
Real estate professionals know the ins and outs of how to price your house accurately and competitively. To do so, they compare your house to recently sold homes in your area and factor in the current condition of your house. These factors are key to making sure it’s priced to move quickly while still getting you the highest possible final sale price.
Bottom Line
There’s a lot that goes into selling your house. Instead of tackling it alone, let’s connect so you have an expert on your side throughout the entire process.
Do You Know How Much Equity You Have in Your Home? [INFOGRAPHIC]
![Do You Know How Much Equity You Have in Your Home? [INFOGRAPHIC] | MyKCM](https://files.mykcm.com/2022/04/05162315/20220408-MEM-1046x2334.png)
Some Highlights
- If you’re a homeowner, your net worth has gotten a big boost. That’s because recent home price appreciation has increased your equity.
- Your equity grows as you pay down your loan and as your home increases in value. Over the past year, the average homeowner’s equity grew by $55,300.
- Ready to sell? Let’s connect to talk about how you can use that equity to fuel your next move.
The Future of Home Price Appreciation and What It Means for You
Many consumers are wondering what will happen with home values over the next few years. Some are concerned that the recent run-up in home prices will lead to a situation similar to the housing crash 15 years ago.
However, experts say the market is totally different today. For example, Odeta Kushi, Deputy Chief Economist at First American, tweeted just last week on this issue:
“. . . We do need price appreciation to slow today (it’s not sustainable over the long run) but high price growth today is supported by fundamentals- short supply, lower rates & demographic demand. And we are in a much different & safer space: better credit quality, low DTI [Debt-To-Income] & tons of equity. Hence, a crash in prices is very unlikely.”
Price appreciation will slow from the double-digit levels the market has seen over the last two years. However, experts believe home values will not depreciate (where a home would lose value).
To this point, Pulsenomics just released the latest Home Price Expectation Survey – a survey of a national panel of over 100 economists, real estate experts, and investment and market strategists. It forecasts home prices will continue appreciating over the next five years. Below are the expected year-over-year rates of home price appreciation based on the average of all 100+ projections:
- 2022: 9%
- 2023: 4.74%
- 2024: 3.67%
- 2025: 3.41%
- 2026: 3.57%
Those responding to the survey believe home price appreciation will still be relatively high this year (though half of what it was last year), and then return to more normal levels over the next four years.
What Does This Mean for You as a Buyer?
With a limited supply of homes available for sale and both prices and mortgage rates increasing, it can be a challenging market to navigate as a buyer. But buying a home sooner rather than later does have its benefits. If you wait to buy, you’ll pay more in the future. However, if you buy now, you’ll actually be in the position to make future price increases work for you. Once you buy, those rising home prices will help you build your home’s value, and by extension, your own household wealth through home equity.
As an example, let’s assume you purchased a $360,000 home in January of this year (the median price according to the National Association of Realtors rounded up to the nearest $10K). If you factor in the forecast for appreciation from the Home Price Expectation Survey, you could accumulate over $96,000 in household wealth over the next five years (see graph below):
Bottom Line
If you’re trying to decide whether to buy now or wait, the key is knowing what’s expected to happen with home prices. Experts say prices will continue to climb in the years ahead, just at a slower pace. So, if you’re ready to buy, doing so now may be your best bet for your wallet. It’ll also give you the chance to use the future home price appreciation to build your own net worth through rising equity. If you want to get started, let’s connect today.
