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Key Terms for Homebuyers
![Key Terms for Homebuyers [INFOGRAPHIC] | MyKCM](https://files.mykcm.com/2022/03/09163312/20220311-MEM-1046x2681.png)
Some Highlights
- Knowing key housing terms and how they relate to today’s market is important. For example, when mortgage rates and home prices rise, it impacts how much home you can afford.
- Terms like appraisal (what lenders rely on to validate a home’s value) and the inspection contingency (which gives buyers essential information on a home’s condition) directly impact the transaction.
- Buying a home can be intimidating if you’re not familiar with the terms used throughout the process. Let’s connect so you have an expert guide and advice for any questions that may come up.
How Global Uncertainty Is Impacting Mortgage Rates
If you’re thinking about buying or selling a home, you’ll want to keep a pulse on what’s happening with mortgage rates. Rates have been climbing in recent months, especially since January of this year. And just a few weeks ago, the 30-year fixed mortgage rate from Freddie Mac approached 4% for the first time since May of 2019. But that climb has dropped slightly over the past few weeks (see graph below):
The recent decline in mortgage rates is primarily due to growing uncertainty around geopolitical tensions surrounding Russia and Ukraine. But experts say it’s to be expected.
Here’s a look at how industry leaders are explaining the impact global uncertainty has on mortgage rates:
Odeta Kushi, Deputy Chief Economist at First American, says:
“While mortgage rates trended upward in 2022, one unintended side effect of global uncertainty is that it often results in downward pressure on mortgage rates.”
In another interview, Kushi adds:
“Geopolitical events play an important role in impacting the long end of the yield curve and mortgage rates. For example, in the weeks following the ‘Brexit’ vote in 2016, the U.S. Treasury bond yield declined and led to a corresponding decline in mortgage rates.”
Kushi’s insights are a reminder that, historically, economic uncertainty can impact the 10-year treasury yield – which has a long-standing relationship with mortgage rates and is often considered a leading indicator of where rates are headed. Basically, events overseas can have an impact on mortgage rates here, and that’s what we’re seeing today.
Will Mortgage Rates Stay Down?
While no one has a crystal ball to predict exactly what will happen with rates in the future, experts agree this slight decline is temporary. Sam Khater, Chief Economist at Freddie Mac, echoes Kushi’s sentiment, but adds that the decline in rates won’t last:
“Geopolitical tensions caused U.S. Treasury yields to recede this week . . . leading to a drop in mortgage rates. While inflationary pressures remain, the cascading impacts of the war in Ukraine have created market uncertainty. Consequently, rates are expected to stay low in the short-term but will likely increase in the coming months.”
Rates will likely fluctuate in the short-term based on what’s happening globally. But before long, experts project rates will renew their climb. If you’re in the market to buy a home, doing so before rates start to rise again may be your most affordable option.
Bottom Line
Mortgage rates are an important piece of the puzzle because they help determine how much you’ll owe on your monthly mortgage payment in your next home. Let’s connect so you have up-to-date information on rates and trusted advice on how to time your next move.
February 2022 Housing Market Update
Geoff Green, President of Green Team Realty and Co-Founder and CEO of NuOp welcomed viewers to the February 2022 Housing Market Update. If you haven’t yet seen the webinar or would like to see it again, it’s available below.
Inflation – and its impact on homeownership
It seems that the “I”s (inventory, interest rates and inflation) have it when it comes to some of the major factors affecting the housing market. First, we have been talking about inventory, at historic lows. Then, there were interest rates; again, at historic lows although we have begun to see them rise. And now, inflation is taking top billing:
According to Mark P. Cussen, Financial Writer for Investopedia,
“Real estate is one of the time-honored inflation hedges. It’s a tangible asset, and those tend to hold their value when inflation reigns, unlike paper assets. More specifically, as prices rise, so do property values.”
A look at the US inflation rate since 1920 shows that we have been through worse. And, while current inflation is not as high as it was in the late 1970s, early 1980s, it is a serious problem.
Owning versus renting
According to James Royal, Senior Wealth Management Report, Bankrate,
“A fixed-rate mortgage allows you to maintain the biggest portion of housing expenses at the same payment. Sure, property taxes will rise and other expenses may creep up, but your monthly housing payment remains the same. That’s certainly not the case if you’re renting.”
In addition, rent increases have been greater than inflation most years.
Mortgage Rates
Before the pandemic, the 30-year fixed rate was 3.70%. It reached historic lows during the pandemic, dipping just below 2.7%. The rate is now 3.55% but are no higher than we were pre-pandemic. Historically, current mortgage rates are the lowest they’ve been in five decades. In fact, in the 1980s, they rose as high as 12.70%.
According to Sam Khater, Chief Economist, Freddie Mac,
“As mortgage rates rise, we do expect some moderation n housing demand, causing house prices growth to temper. However, the combination of large number of entry-level homebuyers facing a shortage of entry-level inventory of homes for sale should keep the housing market competitive.”
National Stats
The average home sales price has gone up, very much due to inventory going down. Accordingly, it is very much a case of supply and demand.
Meet the Panel
Joining Geoff Green is Keren Gonen of Green Team New Jersey Realty, Carol Buchanan of Green Team New York Realty, and Chad Barris, Family First Funding.
The panel discussed the information presented by Geoff as it relates to their experiences in the field. To watch the webinar and see the panel discussion, click here.
“Housekeeping Items”
January 2022 Housing Market Update
The January 2022 Housing Market Update took place on January 18 at 12 p.m. Geoff Green, President of Green Team Realty and Co-founder and CO of NuOp, hosts the monthly market updates. If you missed the live FaceBook and Zoom event, or you’d like to watch the webinar again, it is available below.
It all comes down to inventory – and the lack thereof
Geoff started the discussion with this quote from Bill McBride, Founder, Calculated Risk:
“It is possible that rising mortgage rates will slow the housing market… or the Fed might raise rates sooner than expected due to the recent pickup in inflation… but I believe one thing is certain: inventory will tell the tale!”
Inventory is at an all-time low throughout the U.S., down an average of 27% compared to December of 2020. As the industry survives on turnover, this is not good news. A normal market has 6 months’ inventory, while we are currently at less than 2 months.
Buyer demand remains strong
According to Michael Lane, VP & General Manager of ShowingTime,
“Showings traditionally lag during the holiday season, but the data remains strong. The fact that every region showed a year-over-year increase indicates that buyers are undeterred… It speaks to their desire to keep searching for their next home.”
Homeowner equity still strong, still surging
According to CoreLogic’s Q3 Homeowner Equity Report,
“This summer, home price growth reached the highest level in more than 45 years, pushing equity gains to another record high.”
Mortgage rate projections
Mortgage rate projections show rates slowly rising, but still remaining at historic lows. Maiclaire Boltonk-Smith, Senior Leader of Research, CoreLogic, says:
“So overall I do think that 2022 will be another strong year for housing. All be it a little bit higher mortgage rates and we do think home sales will continue to rise and actually reach a 16 year high in 2022.”
Other factors impacting the housing market
The discussion included Gen Z, a massive population in their late 20’s, with many looking to buy homes. Some people migrate back to cities following moving to suburbs and rural areas. Geoff predicts that many people who left the City due to the pandemic will be moving back as the commute and home maintenance are more difficult than anticipated.
Nationally, existing homes sales are still strong, as is average home price, though showing signs of deceleration (not decrease) of prices.
Meet the panel
Joining Geoff is Terry Gavan of Green Team New York Realty and Kristi Anderson of Green Team New Jersey Realty. Also joining in is Michael Giannetto of CrossCountry Mortgage, to lend his expertise to the discussion.
A lively discussion ensued regarding what these real estate professionals are seeing on the ground, and their take on Geoff’s prediction about homeowners returning to the cities, appraisal valuations, etc..
To watch the webinar, including current stats and the panel discussion, click here:
“Housekeeping” Items
December 2021 Housing Market Update
The December 2021 Housing Market Update took place on December 21 at 12 p.m. Geoff Green, President of Green Team Realty and co-founder and CEO of NuOp, hosts the monthly market updates. If you missed the live Zoom and Facebook event, or you’d like to watch it again, it’s available below:
Will there be a slowdown?
This seems to be the question on everyone’s mind. According to the National Association of Realtors,
“…the pandemic likely spurred occupants to shorten their homestay, as tenure in the home decreased to eight years from 10 years, according to the report. This is the largest single-year change in home tenure since NAR began collecting such data.”
Where are interest rates headed? Some historical perspective on today’s mortgage rates…
We are heading back to a more normal interest rate environment after enjoying historically low rates.
House price appreciation, inventory of homes for sale; home sales forecast
According to Mark Fleming, Chief Economist of First American,
“House price appreciation is resistant to rising mortgage rates primarily because most home sellers would rather withdraw from the market than sell at lower prices – a phenomenon we refer to as ‘downside sticky.'”
Fannie Mae, Freddie Mac, MBA, Zelman, and NAR all project that home prices are going to appreciate over the next five years.
Inventory is still very low, so we remain in a Seller’s market.
What are the National Stats telling us?
While 2021 sales dipped below 2020 numbers, year over year they were still higher than the previous 3 years. Home sale prices are decelerating, not depreciating. Prices are still increasing, just not at the rate they were increasing in years prior. The month’s supply of inventory is still very, very low..
Meet the Panel
Joining Geoff are Keren Gonen of Green Team New Jersey Realty, and Vikki Garby of Green Team New York Realty. In addition, Chad Barris, of Family First Funding shares his knowledge and expertise with our viewers.
Geoff asked if Keren had noted any changes in appraisals lately. Keren has experienced issues with appraisals. Some issues are stemming from appraisers not being local to the area, coming in much lower than the asking price. Vikki hasn’t had any problems with appraisals in the Orange County market. However, she has found that the bidding wars aren’t happening like they were. She’s seen some sellers now needing to drop their price, with buyers now gaining some control. Keren has also seen fewer bidding wars in Sussex County.
Geoff asked Chad Barris if there is subprime lending happening. An interesting discussion followed on this and other current issues impacting the current housing market. To view the panel discussion, click here.
“Housekeeping” Details
November 2021 Housing Market Update
The November 2021 Housing Market Update was held on November 16 at 12 p.m. Geoff Green, President of Green Team Realty and co-founder and CEO of NuOp, hosts the monthly market updates. If you missed the live Zoom and Facebook event or would like to watch it again, it’s available below.
It’s not depreciation. It’s deceleration
Housing market prices are not declining or depreciating, The rate at which they’re increasing is just slowing down.
Home Sales forecast
Rising Inflation
The impact on the housing market is very simple. According to Green, at the end of the day, it’s all about monthly cash flow. People know how much they make each month and how much they can afford to pay for their mortgage. The more things cost, the less money is available for a mortgage payment.
What are the national stats telling us?
Existing home sales have come down a little from last year. However, they are still very strong compared to the market pre-Pandemic. Average sales price is still up, above 2017 – 2020 prices. Furthermore, the months supply of inventory is starting to come up a little.
Meet the panel
Panelists for the November 2021 Housing Market Update are Keren Gonen, Green Team New Jersey Realty, Vikki Garby, Green Team New York Realty, and Gian Russo, Northpointe Bank Branch Manager.
The market is softening, according to Keren’s experience. Accordingly, buyers are having more options. Furthermore, she is seeing overpriced homes no longer selling as they did 6-months ago. Keren’s advice to those thinking about selling? Do it now!
Vikki agrees that we have reached a point where sellers can no longer just slap on a high price and have buyers in a bidding war. Buyers are not throwing crazy offers in desperation to buy a home Furthermore, some appraisals seem to be pushing back against the pricing.
Rental prices have shot up even more than sales prices. Geoff talked about the importance of owning real estate as a hedge against inflation. Real estate increases in value. Gian explained the process of mortgage origination and how an increase in rates impacts monthly payments. Gian’s advice to buyers is to make sure you stay with a one-on-one lender as well as a one-on-one real estate agent. The market and its changes are complex and buyers will benefit from working with local real estate and mortgage professionals.
For the complete webinar, including the panel discussion, click here:
“Housekeeping” Details
September 2021 Housing Market Update
The September 2021 Housing Market Update was moderated by Geoff Green and held on September 21 at 12 p.m.
The entire webinar is available here if you missed it live or if you’d like to watch it again.
Where things are… And where they’re headed
This quote from Odeta Kushi, Deputy Chief Economist, First American, sums up what’s happening:
“We are seeing some signs of softening in the housing market, but context is important here… We’re still very much in a sellers’ market, but we are seeing some early signs of softening.”
Geoff presented statistics that support this statement. Context is very important. Firstly, before the pandemic the market was robust. Secondly, the impact of the pandemic on the market was tremendous. According to ShowingTime’s Monthly Index, the number of showings is softening. However, it’s still higher than before the pandemic. Thus, the market remains strong.
Statistics presented on the percentage of homes selling over list price confirm that the market remains strong. Furthermore, new monthly listings are increasing over pandemic levels.
Affordability
Homes are becoming less affordable. But, they are not unaffordable. Affordability takes into account wages, cost of living, etc. However, affordability is still high compared to the stats of the last 30 years. In addition, rental prices have soared, making buying a home a more desirable option. Percentage of income needed for mortgage payment increases as home prices continue to climb. However, it still remains below the 25% required by mortgage lenders. It is still a good time to buy!
Five reasons today’s housing market is anything but normal
Geoff went over the stats for the following categories:
- Mortgage rates
- Annual home price appreciation
- Monthly inventory of homes for sale i
- Days on market
- Average number of offers received on closed sales
According to George Ratiu, Senior Economist at Realtor.com,
“I expect an unusually busy fall season. Sellers are putting homes on the market. Normally, this activity happens early in the spring.”
National Housing Market Stats
Year-over-year numbers for existing home sales, average home sales price, and months supply of inventory support a softening of the market.
“Housekeeping” Items:
The September 2021 Housing Market Update Panel
Geoff introduced the panel of experts. They are Carol Buchanan, Associate Real Estate Broker, Green Team New York Realty; Rob Lang, Realtor, with At Home Kansas, and Laura Moritz, Classic Mortgage. Panel members discussed their take on the above information, based on their experiences and what they are seeing in their businesses.
To view the entire presentation and panel discussion, click here
Panelist Contact Information
Sign up for Local Updates at
Http://HMupdate.com
August 2021 Housing Market Update
The August 2021 Housing Market Update, hosted by Geoff Green, was held on August 7 at 12 p.m. One focus of the webinar was the possibility of a housing bust, with the market imploding. The overall consensus is that it is not going to happen. Geoff presented several reasons why it won’t, including this quote from Dr. Frank Nothaft, Chief Economist at CoreLogic:
“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.”
The entire presentation is available below if you missed the live webinar or would like to watch it again,
Forbearance
The original projection of forbearance was 30%. It has been nowhere near that. Today the actual percentage is 3.5%. The number of mortgages in active forbearance is now under 2 million.
44.1% of those in forbearance have paid in full. Another 38.7% worked out repayment plans. However, 17.2% have remained in trouble. Because of the inventory shortage, foreclosures through the forbearance program could easily be absorbed by the market.
Headlines in the news
We’re starting to see headlines in news media:
“Home sales drop in June as prices continue to rise.” CNN
“Pending home sales drop in June – more evidence of a housing turnaround.” CNBC”
“The Housing Boom is officially over.” YahooFinance
However…
According to the ShowingTime Index, in June there was more showing traffic than at any time in 2020.
While the fever pitch of the market is fading, the market is still extremely strong. The sellers’ market does not appear to be ending any time soon. And, the main reason? Lack of inventory. However, sellers must be careful in how they price their homes. According to Lawrence Yun, Chief Economist, NAR,
“… given that the sales activities are coming down, we may be sensing some turn in the market. We are seeing less prevalence of multiple offers. It is still a seller’s market, no doubt… Still a seller’s market, but people need to be very cautious how they price their home to attract buyers. knowing that these sales activities are declining somewhat.”
National Stats
Year-over-year existing home sale numbers are similar to those of past years. However, the average home sale price is much higher than any year since 2017. Months supply of inventory is still extremely low. There are many people who bought homes during the pandemic and have since been called back to work in cities. Some of them may find the commute too difficult and put those homes on the market.
“Housekeeping” Details
Meet our panel:
Two very experienced realtors joined Geoff Green for the panel discussion. Keren Gonen, Green Team New Jersey Realty. operates in the New York metro area, North Jersey. Realtor Pete Galyon, United Real Estate Experts, is based in Chattanooga, Tennessee. They discussed the softening of the market and a return to “normalcy.” They also discussed the importance of using an experienced local realtor for both buyers and sellers.
To view the entire presentation and panel discussion, click here.
Sign up for local updates at
http://HMupdate.com
July 2021 Housing Market Update
Geoff Green, host of the July 2021 Housing Market Update, welcomed viewers. Panelists for this month’s update were Keren Gonen and Kristi Anderson, both with Green Team New Jersey Realty, and Laura Moritz, Director of Sales at Classic Mortgage.
If you missed the July 20 webinar or would like to view it again, it is available here:
Is now a good time to buy a home?
According to J.P. Morgan Insights Report,
“Homebuyers – interest rates are still historically low, though they are inching up. Housing prices have spiked during the last six to nine months, but we don’t expect them to fall soon, and we believe they are more likely to keep rising. If you are looking to purchase a new home, conditions now may be better than 12 months hence…”
However, record price appreciation, extremely low inventory, record high percent of sales over list price, and record low days on market are all contributing to buyer fatigue.
Advice for Sellers
Even though we are in a Seller’s Market, here are some talking points for Sellers:
- Don’t be (too) unrealistic
- Wait and you’ll miss out on an extremely attractive market
- It’s never been a better time to sell
- Price appreciation will moderate as rates and inventory rise later this year
“Housekeeping” Items
July 2021 Housing Market Update Panel Discussion
Geoff Green and panelists Keren Gonen, Kristi Anderson, and Laura Moritz discussed what they were seeing in their day-to-day experience with both buyers and sellers. To view the data and panel discussion, click here.
Contact the Panelists
We’ll see you at the next Housing Market Update Tuesday, August 17, 2021 at 12:00 p.m.
To sign up for Housing Market Updates, click here.
June 2021 Housing Market Update
Geoff Green, the host of the June 2021 Housing Market Update, welcomed viewers. Panelists for this month’s update include Keren Gonen, Green Team New Jersey Realty; Jennifer DiCostanzo, Green Team New York Realty, and Jessica Imparato, Loan Originator with Cardinal Financial
If you missed the webinar or would like to watch it again, it is available here:
The three “i’s” that will inform the housing market: inventory, interest rates, and inflation
According to Bill McBride at Calculated Risk,
“If inventory increases slowly, house prices will continue to rise rapidly, and if inventory increases sharply, house price growth will slow.”
J.P. Morgan Insights Report stated the following:
“Homebuyers – interest rates are still historically low, though they are inching up. Housing prices have spiked during the last six-to-nine months, but we don’t expect them to fall soon, and we believe they are more likely to keep rising. If you are looking to purchase a new home, conditions now may be better than 12 months hence… Those who remember the housing bubble of 2006-2007 may be nervous watching U.S. housing prices soar now. But the previous bubble was fueled by speculative buying, which we do not think is the case today.”
Robert Dietz, Chief Economist at NAHB states:
“The decline in single-family permits indicates that builders are slowing construction activity as costs rise… While housing starts were strong at the beginning of the year, due to home builders constructing houses that were sold pre-construction, higher costs and limited availability of building materials have now paused some projects.”
“Housekeeping” Items
Panel discussion:
Geoff and the panelists discussed the impact of the pandemic, and what may happen when people start being called back to work. In addition, the discussion addressed the status of appraisals, as well as buyers waiving appraisal contingencies and buying in cash. For the entire panel discussion, watch the webinar above.
To contact our panelists, their information is below.
