What You Should Do Before Interest Rates Rise

In todays real estate market, mortgage interest rates are near record lows. If you've been in your current home for several years and haven't refinanced lately, there's a good chance you have a mortgage with an interest rate higher than todays average. Here are some options you should consider if you want to take advantage of todays current low rates before they rise.

Sell and Move Up (or Downsize)

Many of todays homeowners are rethinking what they need in a home and redefining what their dream home means. For some, continued remote work is bringing about the need for additional space. For others, moving to a lower cost-of-living area or downsizing may be great options. If you're considering either of these, there may not be a better time to move. Here's why.

The chart below shows average mortgage rates by decade compared to where they are today:Todays rates are below 3%, but experts forecast rates to rise over the next few years.

If the interest rate on your current mortgage is higher than todays average, take advantage of this opportunity by making a move and securing a lower rate. Lower rates mean you may be able to get more house for your money and still have a lower monthly mortgage payment than you might expect.

Waiting, however, might mean you miss out on this historic opportunity. Below is a chart showing how your monthly payment will change if you buy a home as mortgage rates increase:

Breaking It All Down:

Using the chart above, lets look at the breakdown of a 300,000 mortgage:

• When mortgage rates rise, so does the monthly payment you can secure.
• Even the smallest increase in rates can make a difference in your monthly mortgage payment.
• As interest rates rise, you'll need to look at a lower-priced home to try and keep the same target monthly payment, meaning you may end up with less home for your money.

No matter what, whether you're looking to make a move up or downsize to a home that better suits your needs, now is the time. Even a small change in interest rates can have a big impact on your purchasing power.

Refinance

If making a move right now still doesn't feel right for you, consider refinancing. With the current low mortgage rates, refinancing is a great option if you're looking to lower your monthly payments and stay in your current home.

Bottom Line

Take advantage of todays low rates before they begin to rise. Whether you're thinking about moving up, downsizing, or refinancing, lets connect today to discuss which option is best for you.

3 Charts That Show This Isn't a Housing Bubble

With home prices continuing to deliver double-digit increases, some are concerned were in a housing bubble like the one in 2006. However, a closer look at the market data indicates this is nothing like 2006 for three major reasons.

1. The housing market isn't driven by risky mortgage loans.

Back in 2006, nearly everyone could qualify for a loan. The Mortgage Credit Availability Index (MCAI) from the Mortgage Bankers Association is an indicator of the availability of mortgage money. The higher the index, the easier it is to obtain a mortgage. The MCAI more than doubled from 2004 (378) to 2006 (869). Today, the index stands at 130. As an example of the difference between today and 2006, lets look at the volume of mortgages that originated when a buyer had less than a 620 credit score.Dr. Frank Nothaft, Chief Economist for CoreLogic, reiterates this point:

There are marked differences in todays run up in prices compared to 2005, which was a bubble fueled by risky loans and lenient underwriting. Today, loans with high-risk features are absent and mortgage underwriting is prudent.

2. Homeowners aren't using their homes as ATMs this time.

During the housing bubble, as prices skyrocketed, people were refinancing their homes and pulling out large sums of cash. As prices began to fall, that caused many to spiral into a negative equity situation (where their mortgage was higher than the value of the house).

Today, homeowners are letting their equity build. Tappable equity is the amount available for homeowners to access before hitting a maximum 80% combined loan-to-value ratio (thus still leaving them with at least 20% equity). In 2006, that number was 4.6 billion. Today, that number stands at over 8 billion.

Yet, the percentage of cash-out refinances (where the homeowner takes out at least 5% more than their original mortgage amount) is half of what it was in 2006.

3. This time, its simply a matter of supply and demand.

FOMO (the Fear Of Missing Out) dominated the housing market leading up to the 2006 housing bubble and drove up buyer demand. Back then, housing supply more than kept up as many homeowners put their houses on the market, as evidenced by the over seven months supply of existing housing inventory available for sale in 2006. Today, that number is barely two months.

Builders also overbuilt during the bubble but pulled back significantly over the next decade. Sam Khater, VP and Chief Economist, Economic & Housing Research at Freddie Mac, explains that pullback is the major factor in the lack of available inventory today:

The main driver of the housing shortfall has been the long-term decline in the construction of single-family homes.

Here's a chart that quantifies Khaters remarks:Today, there are simply not enough homes to keep up with current demand.

Bottom Line

This market is nothing like the run-up to 2006. Bill McBride, the author of the prestigious Calculated Risk blog, predicted the last housing bubble and crash. This is what he has to say about todays housing market:

Its not clear at all to me that things are going to slow down significantly in the near future. In 2005, I had a strong sense that the hot market would turn and that, when it turned, things would get very ugly. Today, I don't have that sense at all, because all of the fundamentals are there. Demand will be high for a while because Millennials need houses. Prices will keep rising for a while because inventory is so low.

 

 

Remote Work Has Changed Our Home Needs. Is It Time for Your Home To Change, Too?

Over the past year, many homeowners realized what they need in a home is changing, especially with the rise in remote work. If you're longing for a dedicated home office or a change in scenery, now may be the time to find the home that addresses your evolving needs.

Working from Home Isn't a Passing Fad

Before the pandemic, only 21% of individuals worked from home. However, if you've recently discovered remote work is your new normal, you're not alone.

A survey of hiring managers conducted by Statista and Upwork projects 37.5%of U.S. workers will work remotely in some capacity over the next 5 years (see chart below):

Working from Home Gives You More Flexibility and More Options

If you fall in that category, working from home may provide you with opportunities you didn't realize you had. The ongoing rise in remote work means a portion of the workforce no longer needs to be tied to a specific area for their job. Instead, it gives those workers more flexibility when it comes to where they can live.

If you're one of the nearly 23% of workers who will remain 100% remote, you have the option to move to a lower cost-of-living area or to the location of your dreams. If you search for a home in a more affordable area, you'll be able to get more house for your money, freeing up more options for your dedicated office space and more breathing room. You could also move to an area you've always dreamed of vacationing in somewhere near the beach, the mountains, or simply an area that features better weather and community amenities. Without your job tying you to a specific location, you're bound to find your ideal spot.

If you're one of the almost 15% of individuals who will have a partially remote or hybrid schedule, relocating within your local area to a home that's further away from your office could be a great choice. Since you wont be going into work every day, a slightly longer commute from a more suburban or rural area could be a worthy trade-off for a home with more features, space, or comforts. After all, if you'll still be at home part-time, why not find a home that better suits your needs?

According to the latest Top Ten Issues Affecting Real Estate from The Counselors of Real Estate (CRE), many homebuyers are already taking advantage of their newfound flexibility:

. . . after years of apparent but variant trends towards urbanization, the pandemic universally caused a movement away from urban cores, particularly for those with higher incomes who could afford to move and for lower-income individuals seeking lower costs of living.

Bottom Line

If you've found what you're looking for in a home has changed due to remote work, it may be time to make a move. Lets connect today to start prioritizing your home needs.

 

Todays Real Estate Market Explained Through 4 Key Trends

As we move into the second half of the year, one thing is clear: the current real estate market is one for the record books. The exact mix of conditions we have today creates opportunities for both buyers and sellers. Here's a look at four key components that are shaping this unprecedented market.

A Shortage of Homes for Sale

Earlier this year, the number of homes available for sale fell to an all-time low. In recent months, however, inventory levels are starting to trend up. The latest Monthly Housing Market Trends Report from realtor.com says:

In June, newly listed homes grew by 5.5% on a year-over-year basis, and by 10.9% on a month-over-month basis. Typically, fewer newly listed homes appear on the market in the month of June compared to May. This year, growth in new listings is continuing later into the summer season, a welcome sign for a tight housing market.

This is good news for buyers who crave more options. But even though were experiencing small gains in the number of available homes for sale, inventory remains a challenge in most states. That's why its still a sellers market, giving homeowners immense leverage when they decide to make a move.

Buyer Competition and Bidding Wars

Todays ongoing low supply, coupled with high demand, creates a market characterized by high buyer competition and bidding wars. Buyers are going above and beyond to make sure their offer stands out from the crowd by offering over the asking price, all cash, or waiving some contingencies. The number of offers on the average house for sale broke records this year and that's great news for sellers.

The latest Confidence Index from the National Association of Realtors (NAR) says the average home for sale receives five offers (see graph below):For buyers, the best way to put a compelling offer together is by working with a local real estate professional. That agent can act as your trusted advisor on what terms are best for you and what's most appealing to the seller.

Home Price Appreciation

The competition among buyers is driving prices up. Over the past year, we've seen home price appreciation rise across the country. According to the most recent Home Price Index (HPI) from CoreLogic, national home prices increased 15.4% year-over-year in May:

The May 2021 HPI gain was up from the May 2020 gain of 4.2% and was the highest year-over-year gain since November 2005. Low mortgage rates and low for-sale inventory drove the increase in home prices.

Rising home values are a big part of why real estate remains one of the top sought-after investments for Americans. For potential sellers, it also means its a great time to list your house to maximize the return on your investment.

A Rise in Home Values and Equity

The equity in a home doesn't just grow when a homeowner pays their mortgage it also grows as the homes value appreciates. Thanks to the jump in price appreciation, homeowners across the country are seeing record-breaking gains in home equity. CoreLogic recently reported:

homeowners with mortgages (which account for roughly 62% of all properties) have seen their equity increase by 19.6% year over year, representing a collective equity gain of over 1.9 trillion, and an average gain of 33,400 per borrower, since the first quarter of 2020.

That's a major perk for households to leverage. Homeowners can use that equity to accomplish major life goals or move into their dream homes.

Bottom Line

If you're thinking about buying or selling, there's no time like the present. Lets connect to talk about how you can take advantage of the conditions were seeing today to meet your homeownership goals.

 

 

Improve Your Home’s Organization!

Organization is an important part of keeping your home clean and tidy. Unfortunately, organization doesn’t always come easy to homeowners. It may be that your home just lacks the storage solutions that you need to effectively organize, or your house simply isn’t large enough to effectively contain all your family’s stuff. Maybe there is enough room, but the way your rooms are laid out makes things a bit difficult. Whatever the reason, you might feel like you’re fighting an uphill battle with organization and that it never lasts as long as you’d like.

There is no one-size-fits-all solution to getting your house organized, but there are some things that might help. Not all of these suggestions are likely to fit your specific situation, but a few might point you in the right direction to start getting a better grip on your home’s organization. Even if the individual suggestions don’t fully apply to your home and its layout, they still might give you ideas that will help you get your home’s excessive disarray under control.

Adjust Your Storage Methods

There are a number of things that you can do to help improve the storage options in your home. Here are a few suggestions:

• Don’t organize spices or dry goods items based on their names; sort them based on frequency of use instead. This lets the things that you use most often be near the front of your storage and those things that are less frequently used can go in the back or on a harder-to-reach shelf.
• Label folders, boxes, and any other long-term storage containers. You should also avoid having a catch-all or miscellaneous option; put things where they go at the start, instead of dealing with an ever-growing pile in need of sorting.
• Use dividers to improve organization in your drawers, allowing you to store multiple types of items together without causing a significant amount of clutter.
• Install hooks for coats and set up a container to hold shoes near your main entryway, then make sure that members of your household use both. This will help prevent those shoes, jackets, and coats from ending up strewn all over the house.

It’s also important to note that the solution for running low on storage isn’t to simply buy extra storage containers. If you’re running low on storage space, sort through what’s currently in storage and see if you can pare things down before adding additional storage.

Out With the Old, In With the New

A big cause of clutter and running low on space is buying new and upgraded products while still holding on to the items that they’re replacing. This doesn’t mean that you should only own one jacket or a single purse, of course; it makes sense to have multiples of some items, so long as the older items are still actively being used. If you buy something with the clear intention of replacing something else but that something else is still sticking around unused, though, then there may be a problem.

Electronics are the biggest culprit here; if you get a new phone or tablet, you should sell, donate, or give away the old one instead of sticking it in a drawer to take up space. The same goes with clothes that are damaged or threadbare, purses or backpacks with broken straps or other damage, and all those other items that you tell yourself you’ll get fixed eventually but never do. Go through all your old items that haven’t been touched for 6 months or more and see what you can get rid of. You should also get in the habit of prepping old items for donation soon after picking up a newer model.

Give Your Layout a Makeover

In some cases, all that it takes is a rearranging of furniture or some changes to your home’s layout to open up some extra space and cut back on the clutter. In many cases you can do this yourself, though you may decide to bring in a professional decorator or a decluttering pro to help. If you do decide this is the way to go, HomeKeepr is here to help. Sign up for a free account today and get connected with the pros who’ll help you conquer the clutter for good.

4 Major Incentives To Sell This Summer

While the housing market forecast for the second half of the year remains positive, there may not be a better time to sell than right now. Here are four things to consider if you're trying to decide if now's the right time to make a move.

1. Your House Will Likely Sell Quickly

According to the most recent Realtors Confidence Index released by the National Association of Realtors (NAR), homes continue to sell quickly. The report notes homes are selling in an average of just 17 days.

Average days on market is a strong indicator of buyer competition, and homes selling quickly is a great sign for sellers. Its one of several factors that indicate buyers are motivated to do what it takes to purchase the home of their dreams.

2. Buyers Are Willing To Compete for Your House

In addition to selling fast, homes are receiving multiple offers. NAR reports sellers are seeing an average of 5 offers, and these offers are competitive ones. Shawn Telford, Chief Appraiser at CoreLogic, said in a recent interview:

The frequency of buyers being willing to pay more than the market data supports is increasing.

This confirms buyers are ready and willing to enter bidding wars for your home. Receiving several offers on your house means you can select the one that makes the most sense for your situation and financial well-being.

3. When Supply Is Low, Your House Is in the Spotlight

One of the most significant challenges for motivated buyers is the current inventory of homes for sale, which while improving, remains at near-record lows. As NAR details:

Total housing inventory at the end of May amounted to 1.23 million units, up 7.0% from April’s inventory and down 20.6% from one year ago (1.55 million). Unsold inventory sits at a 2.5-month supply at the present sales pace, marginally up from April’s 2.4-month supply but down from 4.6-months in May 2020.

There are signs, however, that more homes are coming to market. Odeta Kushi, Deputy Chief Economist at First American, notes:

It looks like existing inventory is starting to inch up, which is good news for a housing market parched for more supply.

If you're looking to take advantage of buyer demand and get the most attention for your house, selling now before more listings come to the market might be your best option.

4. If You're Thinking of Moving Up, Now May Be the Time

Over the past 12 months, homeowners have gained a significant amount of wealth through growing equity. In that same period, homeowners have also spent a considerable amount of time in their homes, and many have decided their house doesn't meet their needs.

If you're not happy with your current home, you can leverage that equity to power your move now. Your equity, plus current low mortgage rates, can help you maximize your purchasing power.

But these near-historic low rates wont last forever. Experts forecast interest rates will increase in the coming months. Nadia Evangelou, Senior Economist and Director of Forecasting at NAR, says:

Nevertheless, as the economic outlook for the United States looks brighter for the rest of the year, mortgage rates are expected to rise in the following months.

As interest rates rise, even modestly, it could influence buyer demand and your purchasing power. If you've been waiting for the best time to sell to fuel your move up, you likely wont find more favorable conditions than those were seeing today.

Bottom Line

With supply challenges, low mortgage rates, and extremely motivated buyers, sellers are well-positioned to take advantage of current market conditions right now. If you're thinking about selling, lets connect today to discuss why it makes sense to list your home sooner rather than later.

 

Why This Isn't Your Typical Summer Housing Market

Why This Isn't Your Typical Summer Housing Market

In real estate, its normal to see ebbs and flows in the market. Typically, the summer months are slower-paced than the traditionally busy spring. But this isn't a typical summer. As the economy rebounds and life is returning to normal, the real estate market is expected to have an unusually strong summer season.

Here's how this summer is stacking up against the norm and what it means for you.

Inventory is increasing.

According to the latest Existing Home Sales Report from the National Association of Realtors (NAR), inventory levels have been rising since February of this year. Looking at the graph below, there's a clear upward trend, as shown in the green bars. Currently, there's roughly a 2.5 months supply of homes for sale. And while inventory is trending up as more houses are coming to the market, its still much lower than several of the previous summers, as the orange bars indicate.If you're looking to buy, some relief is on the way in the form of more homes coming to the market. Just remember, we still have less inventory than the norm, so be patient in your search.

If you're thinking of selling, now is the time. Work with your agent to list your house before it has more competition on the market.

Time on the market is still shorter than normal.

Unlike the typical summer trend, time on the market is moving at the fastest speed we've seen since NAR started collecting this survey-based information in 2011. The most recent Realtors Confidence Index shows that the average home is on the market for just 17 days, as shown in green in the graph below. This means houses are selling at a much faster pace than a typical summer, which the orange bars represent.If you're looking to buy, this means you need to be prepared to move fast. Brace for a quick pace and rely on your agent to stay in the know on the available homes in your area.

If you're thinking of selling, data shows your house will likely sell quickly. If you're worried about where you'll go once your house sells, consider a newly built home as a good way to move up.

Price appreciation is still rising.

The last big factor making this an unusually strong market this summer is home price appreciation. According to the State House Price Index from the Federal Housing Finance Agency (FHFA), were currently experiencing double-digit house price appreciation and have an average of 12.6% appreciation across the country. The graph below uses data from NAR to show a more granular view of how prices have changed month-to-month over the past few years. The green bars show the current price appreciation were experiencing today. Our current levels are well above what we've seen in recent summers, shown by the orange bars.If you're looking to buy, competition and bidding wars are driving prices up. Getting pre-approved on show the seller you're serious and help you know what you can afford. Once you do, work with your agent to make a strong offer that stands out.

If you're thinking of selling, seize this opportunity to use your additional equity from this price appreciation to power your next move.

Bottom Line

This isn't a typical summer. Whether you're buying or selling, lets connect to talk about how you can capitalize on todays market conditions to sell your house or find your dream home.