Sometimes it can feel like everyone has advice when it comes to buying a home. While your friends and loved ones may have your best interests in mind, they may also be missing crucial information about todays housing market that you need to make your best decision.
Before you decide whether you're ready to buy a home, you should know how to answer these three questions.
Home prices are one factor that directly impacts how much it will cost to buy a home and how much you stand to gain as a homeowner when prices appreciate.
The graph below shows just how much experts are forecasting prices to rise this year:
Continued price appreciation is great news for existing homeowners but can pose a significant challenge if you wait to buy. Using these forecasts, you can determine just how much waiting could cost you. If prices increase based on the average of all forecasts (12.46%), a median-priced home that cost 350,000 in January of 2021 will cost an additional 43,610 by the end of the year. What does this mean for you? Put simply, with home prices increasing, the longer you wait, the more it could cost you.
Another significant factor that should inform your decision is mortgage interest rates. Todays average rates remain close to record-lows. Much like prices, though, experts forecast rates will rise over the coming months, as the chart below shows:
Your monthly mortgage payment can be significantly impacted by even the slightest increase in mortgage rates, which makes the overall cost of the home greater over time when you wait.
The final question is a personal one. Before deciding, you'll need to understand your motivation to buy a home and why homeownership is an important goal for you. The financial benefits of owning a home are often easier to account for than the many emotional ones.
The 2021 National Homeownership Market Survey shows that six of the nine reasons Americans value homeownership are because of how it impacts them on a personal, aspirational level. The survey says homeownership provides:
The National Housing & Financial Capability Survey from NeighborWorks America also highlights the emotional benefits of homeownership:
Clearly, there's a value to homeownership beyond the many great financial opportunities it provides. It gives homeowners a sense of pride, safety, security, and accomplishment which impacts their lives and how they feel daily.
Homeownership is life-changing, and buying a home can positively impact you in so many ways. With any decision this big, it helps to have a trusted advisor by your side each step of the way. If you're ready to begin your journey toward homeownership, lets connect to discuss your options and begin your journey.
According to recent data from realtor.com, median rental prices have reached their highest point ever recorded in many areas across the country. The report found rents rose by 8.1% from the same time last year. As it notes:
Beyond simply recovering to pre-pandemic levels, rents across the country are surging. Typically, rents fluctuate less than 1% from month to month. In May and June, rents increased by 3.0% and 3.2% from each month to the next.
If you're a renter concerned about rising prices, now may be the time to consider purchasing a home.
When you weigh your options of whether to buy a home or continue renting, how much you'll pay each month is likely top of mind. According to the National Association of Realtors (NAR), monthly mortgage payments are rising, but they're still significantly lower than the typical rental payment. NAR indicates the latest data on homes closed shows the median monthly mortgage payment is 1,204.
By contrast, the median national rent is 1,575 according to the most current data provided by realtor.com. In other words, buyers who recently purchased a home locked in a monthly payment that is, on average, 371 lower than what renters pay today (see graph below):
The difference in monthly housing costs when comparing renting and homebuying today is significant, but many would-be homebuyers wonder about the future of rental prices. If we look to historical Census data as a reference, the median asking rent has risen consistently since 1988 (see graph below):
The rise in rent over time clearly shows one of the major advantages homeownership has over renting: stable housing costs. Renters face increasing costs every year. When you purchase your home, your mortgage rate is locked in for 30 years, meaning your monthly payment stays the same over time. That gives you welcome peace of mind and predictability for many years ahead.
With rents continuing to rise across the country, renters should consider if now is the right time to buy. There are multiple benefits to buying sooner rather than later. Lets discuss your options so you can make your most powerful decision.
Home prices continue to rise as we move through the summer, and that's good news for sellers who are looking to maximize their homes potential. If you're on the fence about whether to list your house now or later, the question you should really ask is: will this price appreciation last?
At a broad level, home prices are in no danger of a decline due to tight inventory conditions, but I do expect prices to appreciate at a slower pace by the end of the year.
The imbalance between robust demand and dismal availability of for-sale homes has led to a continual bidding over asking prices, which reached record levels in recent months . . . . Nevertheless, with more new listings and new home construction, home price acceleration that has built momentum, and continues to reach new highs, will likely slow later this summer but remain in double digits.
Many sellers are going to take advantage of higher prices. This summer is going to signal the move to the next chapter, and this will very much be the year they're going to put their home on the market.
The experts agree that the summer months give sellers a great opportunity to capitalize on todays home prices. And while prices aren't expected to depreciate, the rise in prices is forecast to moderate over the next few years. That means selling your house today could set you up for a bigger win.
Listen to the experts. If you're ready to make a move, lets connect to discuss selling your house sooner rather than later so you can take advantage of todays home price appreciation before it moderates.
In April, the National Association of Home Builders (NAHB) posted an article, Home Buyers Preferences Shift Towards New Construction, which reported:
60% of people who were looking to buy a home in 2020 said they’d prefer new construction to an existing home.
The latest Consumer Confidence Survey reveals the percentage of Americans planning to buy a home in the next six months is virtually the same as it was back in March. However, the percentage that plan to buy a newly constructed home is lower for that same period.
NAHB confirms this sentiment in their latest Housing Trends Report. The organization explains that existing homes are now the top preference among todays buyers. Here's a breakdown of those findings:
There are several reasons why buyer preference is shifting. Here are two that impact purchasers looking to move in now:
If you're a homeowner looking to sell, your house is more attractive to a greater number of buyers as compared to earlier in the year. This might be the time for us to connect to discuss the possibility.
If you're a prospective buyer or seller, its important to understand the current real estate market conditions and how they affect you. The Counselors of Real Estate(CRE) just released its Top Ten Issues Affecting Real Estate report. Here are three hot topics from the list and how they impact todays housing market.
The past year ushered in many changes to the real estate industry, especially when it comes to technology. The CRE report elaborates on this:
Lockdown-driven changes in our work, in the economy, in social structures, and in our personal behavior have pushed our reluctance aside. The acceleration and adoption of technology during the pandemic has impacted everything, and real estate is no exception.
For real estate, innovations like digital documentation, virtual tours, and video chat enable agents to connect with clients no matter their location. These options are ideal for prospective buyers and sellers who aren't local to the area or those that need the added flexibility signing documents online or doing virtual tours provide. That's why many trusted real estate advisors will continue to use these technologies moving forward to best serve their clients.
Working from home became the reality for many individuals during the pandemic, and the latest list from the CRE identified remote work and mobility as an important influence on the real estate market. As the report notes:
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. Most of these relocations remained within their original region84%and, while some are returning, it is unknown as to the permanence of these movements or whether they represent a true urban exodus.
With the added mobility remote work offers, where people are moving and where they can ultimately purchase a home is less dependent on a physical office location. This newfound flexibility is giving remote workers the opportunity to move to more affordable areas and buy more home for their money.
Finally, the limited supply of houses for sale and the related affordability challenges also makes CREs list of key factors this year:
According to the National Association of Realtors, the state of Americas housing inventory is dire, with a chronic shortage of affordable and available homes needed to support the nations population.
There is good news. Homes are still more affordable than they have been historically thanks to todays low mortgage rates. And while housing supply is still low, were seeing steady increases in the number of homes coming to market, which gives hope to homebuyers. As the supply of homes for sale improves, buyers will have more options.
New technology, remote work, housing supply, and home affordability are key factors in the housing market right now for both buyers and sellers. If you want to better understand how these topics can impact you, lets connect today.
