Are Interest Rates Expected to Rise Over the Next Year?

So far this year, mortgage rates continue to hover around 3%, encouraging many hopeful homebuyers to enter the housing market. However, there's a good chance rates will increase later this year and going into 2022, ultimately making it more expensive to borrow money for a home loan. Here's a look at what several experts have to say.

Danielle Hale, Chief Economist, realtor.com:

Our long-term view for mortgage rates in 2021 is higher. As the economic outlook strengthens, thanks to progress against coronavirus and vaccines plus a dose of stimulus from the government, this pushes up expectations for economic growth . . . .

Lawrence Yun, Chief Economist, National Association of Realtors (NAR):

In 2021, I think rates will be similar or modestly higher . . . mortgage rates will continue to be historically favorable.

Freddie Mac:

We forecast that mortgage rates will continue to rise through the end of next year. We estimate the 30-year fixed mortgage rate will average 3.4% in the fourth quarter of 2021, rising to 3.8% in the fourth quarter of 2022.

Below are the most recent mortgage rate forecasts from four top authorities Freddie Mac, Fannie Mae, the Mortgage Bankers Association (MBA), and NAR:

Bottom Line

If you're planning to buy a home, purchasing before mortgage interest rates rise may help you save significantly over the life of your home loan.

 

Why Waiting to Buy a Home Could Cost You a Small Fortune

Many people are sitting on the fence trying to decide if now's the time to buy a home. Some are renters who have a strong desire to become homeowners but are unsure if buying right now makes sense. Others may be homeowners who are realizing that their current home no longer fits their changing needs.

To determine if they should buy now or wait another year, they both need to ask two simple questions:

1. Do I think home values will be higher a year from now?
2. Do I think mortgage rates will be higher a year from now?

Lets shed some light on the answers to these questions.

Where will home prices be a year from now?

If you average the most recent projections from the major industry forecasters, the expectation is home prices will increase by 7.7%. Lets take a house that's valued today at 325,000 as an example.

If the buyer makes a 10% down payment (32,500), they'll end up borrowing 292,500 for their mortgage. Applying the projected rate of home price appreciation, that same house will cost 350,025 next year. With a 10% down payment (35,003), they'd then have to borrow 315,022.

Therefore, as a result of rising home prices alone, a prospective buyer will have to put down an additional 2,503 and borrow an additional 22,523 just for waiting a year to make their move.

Where will mortgage rates be a year from now?

Today, mortgage rates are hovering around 3%. However, most experts believe they'll rise as the economy continues to recover. Any increase in the mortgage rate will also increase a purchasers cost. Here are the forecasts for the first quarter of 2022 from four major entities:

• Freddie Mac 3.5%
• Fannie Mae 3.5%
• National Association of Realtors 3.5%
• Mortgage Bankers Association 3.9%

The projections average out to 3.6% among these four forecasts, a jump up from where they are today.

What does it mean to you if home values and mortgage rates increase?

A buyer will pay a lot more in mortgage payments each month if both of these variables increase. Assuming a buyer purchases a 325,000 home this year with a 30-year fixed-rate loan at 3% after making a 10% down payment, their monthly principal and interest payment would be 1,233.

That same home one year from now could be 350,025, and the mortgage rate could be 3.6% (based on the industry forecasts mentioned above). That monthly principal and interest payment, after putting down 10%, totals 1,432.

The difference in the monthly mortgage payment would be 199. That's 2,388 more per year and 71,640 over the life of the loan.

Add to that the approximately 25,000 a house with a similar value would build in home equity this year as a result of home price appreciation, and the total net worth increase a purchaser could gain by buying this year is nearly 100,000. That's a small fortune.

Bottom Line

When asking if they should buy a home, many potential buyers think of the nonfinancial benefits of owning a home. When asking when to buy, the financial benefits make it clear that doing so now is much more advantageous than waiting until next year.

 

 

Are You Cleaning These Spots Often Enough?

Cleaning up around the house is obviously an important task, and some areas require cleaning more often than others. There are some spots that might need a bit more attention than they’re getting, though. This is especially true for those areas that are out of sight or otherwise not as easily noticed as higher-profile and more visible areas that get cleaned on the regular. While the specifics of your cleaning and maintenance schedule will depend on your home and what you have in it, here are a few common areas for you to consider in case they’re not getting enough attention in your home.

Interior Cleaning

Most of the time when you think of cleaning in the house, you’re likely thinking of tasks like dusting, vacuuming, and other common indoor cleaning tasks. Here are a few other places to clean that might not be getting nearly as much attention as they need:

• Washer and dryer: You should clean your washing machine every week or two, or at least once a month if it isn’t used very often. The dryer should also be cleaned at least once a month, and make sure you take a vacuum and suck out some of the lint that might build up around your lint trap.
• Blinds: While dust on the blinds is the most obvious sign that they need to be cleaned, they also build up with grease and other dirt over time which can stick and even stain. Even if they don’t look like they need it, clean your blinds at least once a month.
• Refrigerator: The coils on the back of your fridge need periodic cleaning, but you should also clean the grill, shelves, and other internal locations as well. This not only keeps buildup from stopping airflow, but also helps to prevent food contamination.
• Furniture: If your furniture is upholstered, try to vacuum its surface at least once a month. This will get rid of crumbs and dirt while also cutting back on dust, dander, and other allergens that can plague you throughout the year.

These obviously aren’t the only locations that you need to hit when cleaning up around the house, but they’re some of the more easily overlooked. Other appliances and features of rooms that are frequently used might need to go on the list as well when thinking of what to clean.

Exterior Cleaning

There are a lot of areas outside that could probably use more attention than they’re getting. This can vary significantly depending on where you live and the features of your home and yard, but here are a few of the most common:

• External HVAC components: If you have central heat and air, you’ve likely got a large exterior unit that at best only gets cleaned once or maybe twice a year. If you rely on window-mounted air conditioners, those may get even less love. Check these components at least 3 or 4 times a year if not more often and remove built-up leaves, dirt, dust, and other potential hazards that could hurt their efficiency.
• Patios and walkways: Leaves, cut grass, and a variety of types of dirt can have a negative effect on walkways, stonework, and even wooden features like patios if left alone. They can cause unsightly stains, chips, and other decay. Clean these outdoor features at least once a month, and more often during the summer and fall when there’s a lot of mowing and falling leaves around.
• Garage doors: There’s a good chance that you clean your garage at least a few times per year, but what about the garage doors? Not only do the tracks need to be cleaned periodically to prevent dirt or debris from clogging them up, but you also might want to add some appropriate lubricant to the rollers at least once or twice per year.
• Gutters: If your home has gutters, you likely clean them at least once a year when the leaves are falling. What about other times, though? Falling seed pods, pollen, and even dirt and dust that washes down from your shingles can all have a negative effect on your gutters. Try to clean them at least once per season if not more often.

There are other areas that may be overlooked as well, such as bricks or siding and the outside of windows (which should be cleaned at least as often as the inside window glass is cleaned.) Stay mindful of this as you make a list of things to clean and maintain around the outside of your home.

Other Considerations

There are a lot of tasks around the home when it comes to cleaning, and some of them are things you might not even consider. To help make sure that you get everything, try hiring a professional cleaner or home maintenance pro at least a few times a year to help you tackle everything. HomeKeepr can help you find pros in your area to get the job done; just sign up for a free account today and you’ll be on your way.

4 Tips to Maximize the Sale of Your House

Homeowners ready to make a move are definitely in a great position to sell today. Housing inventory is incredibly low, driving up buyer competition. This gives homeowners leverage to sell for the best possible terms, and its fueling a steady rise in home prices.

In such a hot market, houses are selling quickly. According to the National Association of Realtors (NAR), homes are typically on the market for just 18 short days. Despite the speed and opportunity for sellers, there are still steps you can take to prep your house to shine so you get the greatest possible return.

1. Make Buyers Feel at Home

One of the ways to make this happen is to take time to declutter. Pack away any personal items like pictures, awards, and sentimental belongings. The more neutral and tidy the space, the easier it is for a buyer to picture themselves living there. According to the 2021 Profile of Home Staging by NAR:

82% of buyers agents said staging a home made it easier for a buyer to visualize the property as a future home.

Not only will your house potentially attract the attention of more buyers and likely sell quickly, but the same report also notes:

Eighteen percent of sellers’ agents said home staging increased the dollar value of a residence between 6% and 10%.

As Jessica Lautz, Vice President of Demographics and Behavior Insights for NAR, says:

Staging a home helps consumers see the full potential of a given space or property It features the home in its best light and helps would-be buyers envision its various possibilities.

2. Keep It Clean

On top of making an effort to declutter, its important to keep your house neat and clean. Before a buyer stops by, be sure to pick up toys, make the beds, and wash the dishes. This is one more way to reduce the number of things that can distract a buyer from the appeal of the home.

Ensure your home smells fresh and clean as well. Buyers will remember the smell of your house, and according to the same report from NAR, the kitchen is one of the most important rooms of the house to focus on if you want to attract more buyers.

3. Give Buyers Access

Buyers are less likely to make an offer on your house if they aren't able to easily schedule a time to check it out. If your home is available anytime, that opens up more opportunities for multiple buyers to go from curious to eager. It also allows buyers on tight schedules to still get in to see your house.

While health continues to be a great concern throughout the country, its important to work with your agent to find the best safety measures and digital practices for your listing. This will drive visibility and create access options that also keep everyone in the process safe.

4. Price It Right

Even in a sellers market, its crucial to set your house at the right price to maximize selling potential. Pricing your house too high is actually a detriment to the sale. The goal is to drive high attention from competing buyers and let bidding wars push the final sales price up.

Work with your trusted real estate professional to determine the best list price for your house. Having an expert on your side in this process is truly essential.

Bottom Line

If you want to sell on your terms, in the least amount of time, and for the best price, todays market sets the stage to make that happen. Lets connect today to determine the best ways to maximize the sale of your house this year.

 

Will the Housing Market Maintain Its Momentum?

Last weeks Existing Home Sales Report from the National Association of Realtors (NAR) shows sales have dropped by 3.7% compared to the month before. This is the second consecutive month that sales have slumped. Some see this as evidence that the red-hot real estate market may be cooling. However, there could also be a simple explanation as to why existing home sales have slowed there aren't enough homes to buy. There are currently 410,000 fewer single-family homes available for sale than there were at this time last year.

Lawrence Yun, Chief Economist at NAR, explains in the report:

“The sales for March would have been measurably higher, had there been more inventory. Days-on-market are swift, multiple offers are prevalent, and buyer confidence is rising.”

Yuns insight was supported the next day when the Census Bureau released its Monthly New Residential Sales Report. It shows that newly constructed home sales are up 20.7% over the previous month.

Buyer demand remains strong. With more of the adult population becoming vaccinated and job creation data showing encouraging signs, existing-home inventory is expected to grow in the coming months.

What will this mean for home sales going forward?

Fannie Mae, Freddie Mac, and the Mortgage Bankers Association (MBA) have all forecasted that total home sales (existing homes and new construction) will continue their momentum both this year and next. Here's a graph showing those projections:

Bottom Line

Living through a pandemic has caused many to re-evaluate the importance of a home and the value of homeownership. The residential real estate market will benefit from both as we move forward.

 

 

Garden Walkway Lighting Basics

There’s not much that makes as big of an impact on a garden or other outdoor space as some mood lighting. Although your garden or walkway lighting won’t shine quite as brightly in the daytime, the lighting you choose can make a huge difference to the functionality and look of the space where you install it. There are several different options when it comes to outdoor lighting, so how do you begin to choose the right lighting for your space?

What’s Your Lighting Goal?

Before you so much as shop for lighting, it’s important to determine what it is that you want your lighting to do. Should it simply illuminate a path? Is it going to highlight a particular garden element like a nice plant or a fountain? Do you need to brighten stairs to help prevent falls? There are so many different types of garden and walkway lighting available today that identifying your needs can help to narrow your focus before you begin. That way you won’t waste a lot of time poring over options that will never be suitable for the job at hand.

Next, your lighting location should be considered. There are plenty of benefits to choosing a wired lighting system, but if your garden is far from your home, you may need to bring an electrician onto the project to properly run the wiring to the location in question. If that’s not an option, you’ll need to seriously consider solar lighting kits. Although a freestanding solar panel can be installed to power all your lights, there are many lighting kits made of lights fitted with individual tiny solar panels.

Solar Versus Wired Lighting

Solar garden walkway lighting is undoubtedly a convenient option, but it won’t work for every space or every need. Because solar lighting is powered by the sun, the location of your solar panels is vital. Bright, direct sunlight is best for charging these lights, so if you live in a location that tends to have a lot of cloud cover or your vegetation is dense, you’re going to lose a lot of potential lighting hours. Generally, solar-powered lights need to be recharged daily, making them difficult to rely on during the darker, colder months of the year, even if they’re in an ideal location.

Low voltage landscape lighting, on the other hand, receives continuous power from your electrical system, allowing them to work on demand. Some homeowners worry this means they’ll run all day long and create expensive electricity bills, but most lighting systems are designed to come on at or near dark and turn off at sunrise, or on demand, or both, depending on the system you’re using. On-demand systems come in pretty handy when there’s a weird noise outside and you need to go chase a raccoon out of the trash.

Many solar systems are also built to be disposable, so if that’s the way you’re leaning, be prepared to spend quite a bit more than you might expect for a low-end plastic solar light. There are solar lighting kits made to last much longer, but you should be looking for light sets made with metal bodies that allow you to change the bulb, should it need replacement.

Need Help Selecting the Right Outdoor Lighting?

There are a whole host of professionals who can help you make these important lighting decisions, based on your specific situation. For example, if you want to know if your site is suitable for solar lighting or needs a permanently powered lighting solution, calling an electrician into the project can get the right answers quickly. If you already know the type of system you’d prefer but aren’t quite sure about how to configure your lighting system to meet your goals, a landscape professional may be an excellent investment.

The good news is that no matter who you’d like to bring into your project, you can find them with the help of your HomeKeepr community! Just look for a recommendation for your situation or specific professional need, and before you know it, you’ll be well on your way to lighting the neighbors will envy.

Patience Is the Key to Buying a Home This Year

The question many homebuyers are facing this year is, Why is it so hard to find a house? Were in the ultimate sellers market, which means real estate is ultra-competitive for buyers right now. The National Association of Realtors (NAR) notes homes are getting an average of 4.8 offers per sale, and that number keeps rising. Why? Its because there are so few houses for sale.

Low inventory in the housing market isn't new, but its becoming more challenging to navigate. Danielle Hale, Chief Economist at realtor.com, explains:

The housing market is still relatively under supplied, and buyers cant buy what's not for sale. Relative to what we saw in 2017 to 2019, March 2021 was still roughly 117,000 new listings lower, adding to the pre-existing early-year gap of more than 200,000 fresh listings that would typically have come to market in January or February. Despite this weeks gain from a year ago, were 19 percent below the new seller activity that we saw in the same week in 2019.

While many homeowners paused their plans to sell during the height of the pandemic, this isn't the main cause of todays huge gap between supply and demand. Sam Khater, Vice President and Chief Economist at Freddie Mac, Economic Housing and Research Division, shares:

The main driver of the housing shortfall has been the long-term decline in the construction of single-family homes . . . That decline has resulted in the decrease in supply of entry-level single-family homes or, starter homes.

When you consider the number of homes built in the U.S. by decade, the serious lack of new construction is clear (See graph below):The number of newly built homes is disproportionately lower than the rate of household formation, which, according to the U.S. Census Bureau, has continued to increase. Khater also explains:

Even before the COVID-19 pandemic and current recession, the housing market was facing a substantial supply shortage and that deficit has grown. In 2018, we estimated that there was a housing supply shortage of approximately 2.5 million units, meaning that the U.S. economy was about 2.5 million units below what was needed to match long-term demand. Using the same methodology, we estimate that the housing shortage increased to 3.8 million units by the end of 2020. A continued increase in a housing shortage is extremely unusual; typically in a recession, housing demand declines and supply rises, causing inventory to rise above the long-term trend.

To catch up to current demand, Freddie Mac estimates we need to build almost four million homes. The good news is builders are working hard to get us there. The U.S. Census Bureau also states:

Privately-owned housing units authorized by building permits in March were at a seasonally adjusted annual rate of 1,766,000. This is 2.7 percent (1.7 percent) above the revised February rate of 1,720,000 . . . Privately-owned housing starts in March were at a seasonally adjusted annual rate of 1,739,000. This is 19.4 percent (13.7 percent) above the revised February estimate of 1,457,000. . . .

What does this mean? Lawrence Yun, Chief Economist at NAR, clarifies:

The March figure of 1.74 million housing starts is the highest in 14 years. Both single-family units and multifamily units ramped up. After 13 straight years of underproduction the chief cause for todays inventory shortage this construction boom needs to last for at least three years to make up for the part shortfall. As trade-up buyers purchase newly constructed homes, their prior homes will show up in MLSs, and hence, more choices for consumers. Housing starts to housing completion could be 4 to 8 months, so be patient with the improvement to inventory. In the meantime, construction workers deserve cheers.

Bottom Line

If you're planning to buy this year, the key to success will be patience, given todays low inventory environment. Lets connect today to talk more about what's happening in our area.

Note: The original version of this blog included a graph showing total number of housing units built, which included houses and apartment units. The revised graph, shown here, includes only single-family homes, which more accurately explains the current situation.