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Why Home Prices Keep Going Up

If you’ve ever dreamed of buying your own place, or selling your current house to upgrade, you’re no stranger to the rollercoaster of emotions changing home prices can stir up. It’s a tale of financial goals, doubts, and a dash of anxiety that many have been through.

But if you put off moving because you’re worried home prices might drop, make no mistake, they’re not going down. In fact, it’s just the opposite. National data from several sources says they’ve been going up consistently this year (see graph below):

Here’s what this graph shows. In the first half of 2022, home prices rose significantly (the green bars on the left side of the graphs above). Those increases were dramatic and unsustainable.

So, in the second half of the year, prices went through a correction and started dipping a bit (shown in red). But those slight declines were shallow and short-lived. Still, the media really focused on those drops in their headlines – and that created a lot of fear and uncertainty among consumers.

But here’s what hasn’t been covered fully. So far in 2023, prices are going up once more, but this time at a more normal pace (the green bars on the right side of the graphs above). And after price gains that were too high and then the corrections that followed in 2022, the fact that all three reports show more normal or typical price appreciation this year is good news for the housing market.

Orphe Divounguy, Senior Economist at Zillow, explains changing home prices over the past 12 months this way:

“The U.S. housing market has surged over the past year after a temporary hiccup from July 2022-January 2023. . . . That downturn has proven to be short lived as housing has rebounded impressively so far in 2023. . .”

Looking ahead, home price appreciation typically starts to ease up this time of year. As that happens, there’s some risk the media will confuse slowing price growth (deceleration of appreciation) with home prices falling (depreciation). Don’t be fooled. Slower price growth is still growth.

Why Are Home Prices Increasing Now?

One reason why home prices are going back up is because there still aren’t enough homes for sale for all the people who want to buy them.

Even though higher mortgage rates cause buyer demand to moderate, they also cause the supply of available homes to go down. That’s because of the mortgage rate lock-in effect. When rates rise, some homeowners are reluctant to sell and lose their current low mortgage rate just to take on a higher one for their next home.

So, with higher mortgage rates impacting both buyers and sellers, the supply and demand equation of the housing market has been affected. But since there are still more people who want to purchase homes than there are homes available to buy, prices continue to rise. As Freddie Mac states:

“While rising interest rates have reduced affordability—and therefore demand—they have also reduced supply through the mortgage rate lock-in effect. Overall, it appears the reduction in supply has outweighed the decrease in demand, thus house prices have started to increase . . .”

Here’s How This Impacts You

Buyers: If you’ve been waiting to buy a home because you were afraid its value might drop, knowing that home prices have gone back up should make you feel better. Buying a home allows you to own something that becomes more valuable over time.
Sellers: If you’ve been holding off on selling your house because you were worried about how changing home prices would impact its value, it could be a smart move to work with a real estate agent and put your house on the market. You don’t have to wait any longer because the most recent data indicates home prices have turned in your favor.

Bottom Line

If you put off moving because you were worried that home prices might go down, data shows they’re increasing across the country. Give James a call to understand how home prices are changing here in your local area.

Home Price Growth Is Returning to Normal [INFOGRAPHIC]

Some Highlights

If you’re wondering what’s happening with home prices, know they’re still rising, just at a slower pace – and that’s perfectly normal for this time of year.
Based on typical seasonality in the market, prices go up most in the spring during the peak buying season, and then price growth slows down as the year goes on.
Home prices aren’t falling. They’re just rising slower and going back to normal seasonal trends. That’s a good thing. If you’re curious about prices in your area, reach out to a real estate agent for answers.

The Risks of Selling Your House on Your Own

Are you thinking about selling your house as a For Sale by Owner (FSBO)? If so, know there’s a whole lot more time and expertise needed in that process than you might think. While the idea of doing it all by yourself might seem tempting, it’s important to recognize the challenges you may face if you take it on all by yourself. As a recent article from Bankrate explains:

“Choosing the right price, crafting a compelling listing, marketing to potential buyers, coordinating showings, preparing paperwork: All of these are tasks that, in the absence of a real estate agent, you will have to do yourself.”

Here’s a bit more information on just a few of those things and how you may miss out if you don’t use an agent.

You May Not Price it Right

Pricing your house right is key to a successful sale. Real estate agents have experience navigating this housing market and understand the art of pricing a home to sell today. Unfortunately, homeowners who sell on their own often lack this all-important experience. That can lead to two common consequences: overpricing or underpricing the house.

An article from Nerd Wallet offers this advice:

“If your home is overpriced, you run the risk of buyers not seeing the listing. . . . But price your house too low and you could end up leaving some serious money on the table. A bargain-basement price could also turn some buyers away, as they may wonder if there are any underlying problems with the house.”

Don’t run this risk. Instead, partner with an agent to make sure your house is priced at current market value, so it catches the eyes of eager buyers. This will put your house in a position to make the best first impression possible.

You Don’t Have as Much Experience in Marketing a House

In this digital age, online marketing has become a real game-changer, especially when it comes to selling your house. A recent report from the National Association of Realtors (NAR), explains:

“Among all generations of home buyers, the first step taken in the home search process was to look online for properties.”

When you partner with a real estate agent who knows how to take advantage of online marketing tools and resources, you’ll be able to get in front of these tech-savvy house hunters, boosting your chances of a successful sale. But, if you’re attempting to sell your house on your own, you might find yourself missing out on the full power of online and social media strategies.

You May Not Be Comfortable Handling All the Back-and-Forth

When you decide to sell your house, you’re not just on a quest to find a buyer; you’re also stepping into a world of negotiations. You’ll have to coordinate with a bunch of people, including the buyer, the buyer’s agent, the inspection company, the appraiser, and more. It’s a dance where every move counts, and the expertise of a real estate agent can make a world of difference in keeping these negotiations on track and sealing the deal.

As NerdWallet says:

“Your listing agent will also, of course, be on your side throughout negotiations. They’ll double-check paperwork that comes through, communicate with the buyer’s agent and other parties to the sale, and generally stay on top of things through to closing day.”

Bottom Line

If you’re thinking about selling your house and the idea of going it alone has crossed your mind, be sure to think through that decision carefully. Connect with a local real estate agent to discuss how a professional has the experience needed to take all that stress off your plate.

What Are the Real Reasons You Want To Move Right Now?

If you’re considering selling your house right now, it’s likely because something in your life has changed. And while things like mortgage rates play a big role in your decision, you don’t want that to overshadow why you thought about making a move in the first place.

It’s true mortgage rates are higher right now, and that has an impact on affordability. As a result, some homeowners are deciding they’ll wait to sell because they don’t want to move and have a higher mortgage rate on their next home.

But your lifestyle and your changing needs matter, too. As a recent article from Realtor.com says:

“No matter what interest rates and home prices do next, sometimes homeowners just have to move—due to a new job, new baby, divorce, death, or some other major life change.”

Here are a few of the most common reasons people choose to sell today. You may find any one of these resonates with you and may be reason enough to move, even today.

Relocation

Some of the things that can motivate a move to a new area include changing jobs, a desire to be closer to friends and loved ones, wanting to live in your ideal location, or just looking for a change in scenery.

For example, if you just landed your dream job in another state, you may be thinking about selling your current home and moving for work.

Upgrading

Many homeowners decide to sell to move into a larger home. This is especially common when there’s a need for more room to entertain, a home office or gym, or additional bedrooms to accommodate a growing number of loved ones.

For example, if you’re living in a condo and your household is growing, it may be time to find a home that better fits those needs.

Downsizing

Homeowners may also decide to sell because someone’s moved out of the home recently and there’s now more space than needed. It could also be that they’ve recently retired or are ready for a change.

For example, you’ve just kicked off your retirement and you want to move somewhere warmer with less house to maintain. A different home may be better suited for your new lifestyle.

Change in Relationship Status

Divorce, separation, or marriage are other common reasons individuals sell.

For example, if you’ve recently separated, it may be difficult to still live under one roof. Selling and getting a place of your own may be a better option.

Health Concerns

If a homeowner faces mobility challenges or health issues that require specific living arrangements or modifications, they might sell their house to find one that works better for them.

For example, you may be looking to sell your house and use the proceeds to help pay for a unit in an assisted-living facility.

With higher mortgage rates and rising prices, there are some affordability challenges right now – but your needs and your lifestyle matter too. As a recent article from Bankrate says:

“Deciding whether it’s the right time to sell your home is a very personal choice. There are numerous important questions to consider, both financial and lifestyle-based, before putting your home on the market. . . . Your future plans and goals should be a significant part of the equation . . .”

Bottom Line

If you want to sell your house and find a new one that better fits your needs, get in touch with a real estate expert. They’ll be there to guide you through the process and help you find a home that works for you.

How Buying a Multi-Generational Home Helps with Affordability Today

In today’s world of rising housing costs, many buyers are looking for ways to still be able to buy a home. Some of them have found a solution in multi-generational living.

Multi-generational living is when two or more adult generations live together under one roof. This includes siblings, parents, or even grandparents. Here’s an in-depth look at why more buyers are choosing this option today, so you can see if it may be right for you too.

Reasons To Buy a Multi-Generational Home

According to a recent study by the National Association of Realtors (NAR), the top two reasons people are opting for multi-generational homes today have to do with affordability (see graph below):

Cost Savings: About 28% of first-time buyers and 11% of repeat buyers are deciding on a multi-generational home to save on costs. By pooling their resources, households can share the financial responsibilities like mortgage payments, utilities, property taxes, and maintenance, to make homeownership more affordable. This is especially helpful for first-time homebuyers who may be finding it tough to afford a home on their own in today’s market.

More Space: Another 28% of first-time buyers and 18% of repeat buyers are doing it because they want a larger home they couldn’t afford on their own. For some of the repeat buyers who listed this as a main motivator, it could be because they find themselves taking care of older parents while also welcoming back young adults who’ve returned to the nest. With everyone chipping in and combining their incomes, suddenly, that big dream home with more space is within reach. As the Triangle Business Journal explains:

“Choosing multi-gen living allows people to purchase a home much larger than they could afford on their own by leveraging the combined income, credit and a down payment of those that they will be occupying the home with.”

Lean on an Expert

If you’re interested in this too, partner with a local real estate agent. Finding the perfect multi-generational home isn’t as simple as shopping for a regular house. That’s because there are more people with even more opinions and needs that should be considered.

You’ve got to make sure everyone has their own space, find room for shared household time, and possibly even create adaptable areas for older relatives. It’s a puzzle, and the pieces need to fit just right. Your real estate agent has the expertise and local knowledge to help you find that home where everyone can be comfortable without breaking the bank. As MoneyGeek.com puts it:

“Having a good multigenerational property can improve the prospects of success when living with loved ones. A multigenerational home should fit the specific needs of most family members regardless of age or health. Speaking to a real-estate agent can help you gain clarity and locate a fit.”

Bottom Line

Buying a multi-generational home can be a smart way to tackle some of today’s affordability challenges. When you team up to share expenses, you can make your dream of homeownership more attainable. If this sounds like an option for you and your loved ones, connect with a local real estate agent to help you find a home that’s the perfect fit.

Are Higher Mortgage Rates Here To Stay?

Mortgage rates have been back on the rise recently and that’s getting a lot of attention from the press. If you’ve been following the headlines, you may have even seen rates recently reached their highest level in over two decades (see graph below):

That can feel like a little bit of a gut punch if you’re thinking about making a move. If you’re wondering whether or not you should delay your plans, here’s what you really need to know.

How Higher Mortgage Rates Impact You

There’s no denying mortgage rates are higher right now than they were in recent years. And, when rates are up, that affects overall home affordability. It works like this. The higher the rate, the more expensive it is to borrow money when you buy a home. That’s because, as rates trend up, your monthly mortgage payment for your future home loan also increases.

Urban Institute explains how this is impacting buyers and sellers right now:

“When mortgage rates go up, monthly housing payments on new purchases also increase. For potential buyers, increased monthly payments can reduce the share of available affordable homes . . . Additionally, higher interest rates mean fewer homes on the market, as existing homeowners have an incentive to hold on to their home to keep their low interest rate.”

Basically, some people are deciding to put their plans on hold because of where mortgage rates are right now. But what you want to know is: is that a good strategy?

Where Will Mortgage Rates Go from Here?

If you’re eager for mortgage rates to drop, you’re not alone. A lot of people are waiting for that to happen. But here’s the thing. No one knows when it will. Even the experts can’t say with certainty what’s going to happen next.

Forecasts project rates will fall in the months ahead, but what the latest data says is that rates have been climbing lately. This disconnect shows just how tricky mortgage rates are to project.

The best advice for your move is this: don’t try to control what you can’t control. This includes trying to time the market or guess what the future holds for mortgage rates. As CBS News states:

“If you’re in the market for a new home, experts typically recommend focusing your search on the right home purchase — not the interest rate environment.”

Instead, work on building a team of skilled professionals, including a trusted lender and real estate agent, who can explain what’s happening in the market and what it means for you. If you need to move because you’re changing jobs, want to be closer to family, or are in the middle of another big life change, the right team can help you achieve your goal, even now.

Bottom Line

The best advice for your move is: don’t try to control what you can’t control – especially mortgage rates. Even the experts can’t say for certain where they’ll go from here. Instead, focus on building a team of trusted professionals who can keep you informed. When you’re ready to get the process started, connect with a local real estate agent.

The Difference Between Renting and Buying a Home [INFOGRAPHIC]

Deciding to own a home or rent one is still a big choice for many people. The decision depends on personal circumstances and financial goals. Both options have advantages. This article will discuss the advantages of owning a home versus renting one. It will help you make a smart choice that fits your needs and dreams.

Building Equity

One of the primary advantages of owning a home is the opportunity to build equity. When you make your mortgage payment, some of it goes towards the loan’s principal, increasing your home’s equity. Over time, your home typically appreciates in value, allowing you to build wealth and financial stability. When you rent a property, you don’t have the chance to build equity. Your monthly payments benefit the landlord’s equity.

Investment Potential

Real estate has been a sound investment. Homeowners may see their property value increase if they buy in a popular area. Additionally, homeowners can leverage their property as collateral for loans or even generate income by renting out a portion of the property. These investment opportunities are generally not available to renters.

Stability and Control

Owning a home provides stability and control over your living space. You can renovate, paint, and decorate as much as you want without asking the landlord. This control extends to decisions about landscaping, security measures, and energy-efficient upgrades. Renters, however, must typically adhere to restrictions set by the landlord or property management.

Predictable Monthly Payments

With a fixed-rate mortgage, homeowners enjoy predictability in their monthly housing expenses. Your mortgage payment stays the same throughout the loan, making it easier to plan for future goals. Rent costs can increase yearly because of market conditions or landlord choices. This can make it difficult to budget for future expenses.

Tax Benefits

Homeownership offers several tax advantages. You can deduct mortgage interest and property taxes on your federal income tax return. This might lower your tax liability. Additionally, if you sell your primary residence, you can benefit from a capital gains tax exclusion on profits (up to a certain threshold), which can result in substantial savings.

Sense of Community

Owning a home often fosters a stronger sense of community and belonging. You’re more likely to establish long-term relationships with neighbors and engage in local activities when you plan to stay in an area for an extended period. Renters may not have the same level of commitment to a community, as their tenure can be more transient.

Retirement Planning

Homeownership can be an integral part of retirement planning. Paying off your mortgage before retirement can significantly reduce your monthly expenses, allowing you to live comfortably on a fixed income. Moreover, if you decide to downsize or sell your home upon retirement, you can use the proceeds to fund your retirement lifestyle or pass down wealth to your heirs.

Conclusion

The decision to own or rent a home is a personal one that depends on individual circumstances, financial goals, and lifestyle preferences. Owning a home offers numerous benefits, including building equity, investment potential, stability, and tax advantages. However, renting can be flexible for those who prioritize mobility and lower upfront costs. Ultimately, the right choice is the one that aligns with your long-term objectives and provides you with the security and satisfaction you seek in your liv

Some Highlights

Consider these three important factors when deciding between buying a home or renting.
Buying a home means avoiding rising rents, owning a tangible and valuable asset, and growing wealth over time.
If you’re ready to enjoy the advantages of owning a home, connect with a local real estate expert to discuss your options.

Growing Your Net Worth with Homeownership

Imagine where you want to be in a few years. You might be thinking about your job, wanting more financial stability, or setting goals you wish to achieve soon. Is owning a home a part of that vision? If it is, you should know that homeownership comes with a lot of financial benefit

Owning a home is a smart investment because it helps you build wealth and achieve financial security. As the value of homes typically appreciate over time, it increases your net worth. Currently, the value of homes is on the rise, as reported by Zillow.

“The total value of the U.S. housing market – the sum of Zillow’s estimated value for every U.S. home – is now slightly less than $52 trillion, which is $1.1 trillion higher than the previous peak reached last June.”

Homeownership is a great way to build wealth, and with home values rising nationwide, it may be a good time to consider owning a home.

Here’s a look at some data to see how much owning a home can really make a difference in your life.

Household Net Worth Is Rising

Data shows that while those in the top 1% saw the most dramatic net worth increase, people from every single tax bracket have seen their wealth grow over the past few years (see graph below):

For many of those people, the rising value of their home plays a big part in that.

Owning a Home Helps You Achieve Financial Success

You can tell homeownership had a lot to do with that growth because there’s a significant net worth gap between homeowners and renters. As Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), says:

“. . . homeownership is a catalyst for building wealth for people from all walks of life. A monthly mortgage payment is often considered a forced savings account that helps homeowners build a net worth about 40 times higher than that of a renter.”

The big reason why? Homeowner’s build equity. Home equity is the value of your home minus the amount you owe on your mortgage. And for most homeowners, that’s the largest contributor to their net worth. Here’s the data from First American to prove it (see graph below):

The blue part of each bar in the chart represents the proportion of net worth that comes from housing – and it is clearly a more significant contributor than other investments such as stocks, gold, and cryptocurrencies. As you can see, regardless of income levels, owning a home does more to increase the wealth of an average household than any other investment.

Bottom Line

Investing in homeownership can grow your net worth. Contact me , James Jestes 386-315-4744 to learn more.

The Latest Expert Forecasts for Home Prices in 2023

If you’re contemplating a move, you may feel anxious due to the rumors about home prices crashing this year. However, you can rest assured that the data and experts indicate that prices are not on a downward trend and will conclude the year on a strong note. So, read further to make your decision based on these facts.

Despite the speculations that the prices of homes would drop by 5, 10 or even 20 percent this year, it hasn’t happened yet. The primary reason behind this is the insufficient supply of homes available for sale. There is a higher number of buyers in the market seeking to purchase a house, but the limited supply has resulted in fairly stable pricing.

To prove that this year’s home prices weren’t a bust, let’s take a look at the latest 2023 forecast from multiple experts..

Most Experts Project Home Prices Will Net Positive This Year

The general consensus from industry experts is that home price appreciation will actually be positive for 2023. The graph below shows the latest 2023 year-end forecasts from six different organizations:

As you can see, all but one project nationally prices will net positive this year. That’s significant because it shows the majority are optimistic about home price growth.

If you’re still worried about the one red bar indicating an overall drop in home prices for the year, remember this: The National Association of Realtors (NAR) projects only a slight decline, not the big crash that many headlines called for. Additionally, if you average all six forecasts together, the expectation is that prices will increase by around 3.3% for the year.

Consider the following six organizations, which should be enough to convince you that home prices are expected to remain stable. One of these six forecasts is the Home Price Expectation Survey (HPES) from Pulsenomics. It is a combination of survey results from more than 100 economists, investment strategists, and housing market analysts. According to HPES, the average prediction of all 100 experts is a 3.3% growth in home prices for the year.

If you look back at the graph above, you’ll notice the blue average for the forecasts in this graph is also 3.3%. While individual forecasts may vary, both the HPES survey and the average of these forecasts provide the same projection. And 3.3% appreciation is a completely different story than prices falling.

Bottom Line

If you’re worried about home prices falling this year, let the experts reassure you. Based on the average of the latest forecasts, home prices will actually show positive growth this year. If you have questions about what’s happening with home prices in your area, connect with me and lets talk about whats going on! 386-315-4744.

Are Grandparents Moving To Be Closer to Their Grandkids?

Due to the pandemic, a lot of people had to maintain distance from their close ones for health purposes. It was suggested that grandparents should refrain from meeting their grandkids, especially after schools reopened. This was because it was deemed unsafe to visit the grandchildren who might have contracted the virus from school.

Now that the pandemic is subsiding, many grandparents are eager to be closer to their grandchildren again in order to make up for lost time. But how exactly are they fulfilling this “Grandparent Wish?” According to data, many are deciding to move in order to ensure they have more opportunities for quality time with their grandkids.

Grandparents are relocating to be closer to their beloved family members.

Recent data from the National Association of Realtors (NAR) shows people between the ages of 55 and 74 are moving farther (more than 100 miles) than any other age group (see graph below):

The average age of grandparents in the U.S. is 67 years. The logical leap is that at least some of the people who are moving the furthest are grandparents. But what’s causing them to move so far?

The same report from NAR shows the top reason people move is to be closer to loved ones (see graph below):

It can be inferred from the data that a significant number of grandparents are fulfilling their desire for spending more quality time with their grandchildren by relocating closer to them. This is particularly beneficial after the COVID pandemic, where many people suffered from isolation and loneliness.

If you’re a grandparent, you know how important your grandchildren are. And you may be willing to sell and move just to be closer by. As Vance Cariaga, a journalist at Go Bank Rates, explains:

“Never underestimate the power of grandchildren – especially when it comes to lifestyle and financial decisions. Recent data shows that many baby boomers are relocating further away from home than they used to so they can be closer to their grandbabies.”

Bottom Line

The data shows grandparents are moving further to be near their grandchildren. If you have grandchildren of your own, maybe you can relate. When you decide it’s time to be closer to your loved ones, connect with me 386-315-4744 and let’s find the best option for you and your family

Why Are Home Prices Increasing Now?

Here’s How This Impacts You

Bottom Line

Some Highlights

You May Not Price it Right

You Don’t Have as Much Experience in Marketing a House

You May Not Be Comfortable Handling All the Back-and-Forth

Bottom Line

Relocation

Upgrading

Downsizing

Change in Relationship Status

Health Concerns

Bottom Line

Reasons To Buy a Multi-Generational Home

Lean on an Expert

Bottom Line

How Higher Mortgage Rates Impact You

Where Will Mortgage Rates Go from Here?

Bottom Line

Building Equity

Investment Potential

Stability and Control

Predictable Monthly Payments

Tax Benefits

Sense of Community

Retirement Planning

Conclusion

Some Highlights

Household Net Worth Is Rising

Owning a Home Helps You Achieve Financial Success

Bottom Line

Most Experts Project Home Prices Will Net Positive This Year

Bottom Line

Grandparents are relocating to be closer to their beloved family members.

Bottom Line

James Jestes, Your new favorite Realtor.

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