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There’s been talk about a recession for quite a while now. But the economy has been remarkably resilient. Why? One reason is employment and wages have stayed strong. Let’s look at the latest information on each one and why both are good news if you’re thinking about selling your house.
Instead of facing the job losses typical of any recession, the economy has been growing and adding jobs. According to the Bureau of Labor Statistics (BLS), 187,000 jobs were created in July, which is up from the 185,000 created in June. That means more people are finding work. In fact, so many jobs are being added that the unemployment rate is far lower than the long-term average of 5.7% (see graph below):
A low unemployment rate means that most people who want to work are finding jobs. When people have jobs, they have steady incomes – and that can help set them up to consider homeownership.
And data also shows hourly earnings have been going up pretty steadily over the past few years (see graph below):
When wages rise, people have more money that they could save or use toward buying a home. This increase in income helps offset some of the affordability challenges in the housing market today. Affordability depends on three main factors: wages, home prices, and mortgage rates. With higher home prices and mortgage rates right now, Builder Online summarizes how growing wages can help:
“The housing market has been a beneficiary of the strong economy and labor market. Many of those employed have saved money over the past few years and used those funds toward a down payment on a home.”
If you’re thinking about selling your house, a strong job market, growing wages, and the resulting buyer demand is fantastic news. It means there’s a larger pool of potential buyers out there who are in a position to pursue their dreams of homeownership.
With more jobs and rising wages creating eager buyers, there’s a lot going in your favor. Reach out to a local real estate agent so you have someone who can guide you through the process of selling your house, from setting the right price to getting your home ready to show.
The housing market continues to shift and change, and in a fast-moving landscape like we’re in right now, it’s more important than ever to have a trusted real estate agent on your side. Whether you’re buying your first home or selling once again, it’s mission critical to work with an expert who can guide you through each unique step of the process.
The reality is, not all agents operate the same way. To truly make a powerful and confident decision as you buy or sell a home, you need a real estate expert who uses their knowledge of what’s really happening with home prices, housing supply, industry projections, and more to give you the best possible advice. Someone who can provide clarity and trust like that is essential to your success. Jay Thompson, Real Estate Industry Consultant, explains:
“Housing market headlines are everywhere. Many are quite sensational, ending with exclamation points or predicting impending doom for the industry. Clickbait, the sensationalizing of headlines and content, has been an issue since the dawn of the internet, and housing news is not immune to it.”
Unfortunately, when information in the media isn’t clear, it can generate a lot of fear and uncertainty for consumers. As Jason Lewris, Co-Founder and Chief Data Officer at Parcl, says:
“In the absence of trustworthy, up-to-date information, real estate decisions are increasingly being driven by fear, uncertainty, and doubt.”
But it doesn’t have to be that way. Buying a home is a big decision, and it should be one you feel confident making. You can lean on an expert to help you separate fact from fiction and get the answers you need.
The right agent can assist you in figuring out what’s going on at the national level and in your local area. They can debunk headlines using data you can trust. Experts have in-depth knowledge of the industry and can provide context, so you know how current trends compare to the normal ebbs and flows in the housing market, historical data, and more.
Then, to make sure you have the full picture, an agent can tell you if your local area is following the national trend or if they’re seeing something different in your market. Together, you can use all that information to make the best possible decision.
After all, making a move is a potentially life-changing milestone. It should be something you feel ready for and excited about. And that’s where a trusted expert comes in.
If you want sound advice and trusted information about the housing market, reach out to a local real estate professional today.
The National Association of Realtors (NAR) is set to release its most recent Existing Home Sales (EHS) report tomorrow. This monthly release provides information on the volume of sales and price trends for homes that have previously been owned. In the upcoming release, it’ll likely say home prices are down. This may seem a bit confusing, especially if you’ve been following along and reading the blogs saying home prices have hit the bottom and have since rebounded.
So, why would this say home prices are falling when so many other price reports say they’re going back up? It all depends on the methodology of each one. NAR reports on the median home sales price, while some other sources use repeat sales prices. Here’s how those approaches differ.
The Center for Real Estate Studies at Wichita State University explains median sales prices like this:
“The median sale price measures the ‘middle’ price of homes that sold, meaning that half of the homes sold for a higher price and half sold for less . . . For example, if more lower-priced homes have sold recently, the median sale price would decline (because the “middle” home is now a lower-priced home), even if the value of each individual home is rising.”
Investopedia helps define what a repeat sales approach means:
“Repeat-sales methods calculate changes in home prices based on sales of the same property, thereby avoiding the problem of trying to account for price differences in homes with varying characteristics.”
As the quotes above say, the approaches can tell different stories. That’s why median home sales price data (like EHS) may say prices are down, even though the vast majority of the repeat sales reports show prices are appreciating again.
Bill McBride, Author of the Calculated Risk blog, sums the difference up like this:
“Median prices are distorted by the mix and repeat sales indexes like Case-Shiller and FHFA are probably better for measuring prices.”
To drive this point home, here’s a simple explanation of median value (see visual below). Let’s say you have three coins in your pocket, and you decide to line them up according to their value from low to high. If you have one nickel and two dimes, the median value (the middle one) is 10 cents. If you have two nickels and one dime, the median value is now five cents.
That’s why using the median home sales price as a gauge of what’s happening with home values may be confusing right now. Most buyers look at home prices as a starting point to determine if they match their budgets. But most people buy homes based on the monthly mortgage payment they can afford, not just the price of the house. When mortgage rates are higher, you may have to buy a less expensive home to keep your monthly housing expense affordable.
That’s why a greater number of ‘less-expensive’ houses are selling right now – and that’s causing the median home sales price to decline. But that doesn’t mean any single house lost value.
When you see the stories in the media that prices are falling later this week, remember the coins. Just because the median home sales price changes, it doesn’t mean home prices are falling. What it means is the mix of homes being sold is being impacted by affordability and current mortgage rates.
For a more in-depth understanding of home price trends and reports, reach out to a local real estate professional.
The rising cost of just about everything from groceries to gas right now leads to speculation that more people won’t be able to afford their mortgage payments. And that’s creating concern that many foreclosures are on the horizon. While it’s true that foreclosure filings have gone up a bit compared to last year, experts say a flood of foreclosures isn’t coming.
Take it from Bill McBride of Calculated Risk. McBride is an expert on the housing market, and after closely following the data and market environment leading up to the crash, he was able to see the foreclosures coming in 2008. With the same careful eye and analysis, he has a different take on what’s ahead in the current market:
“There will not be a foreclosure crisis this time.”
Let’s look at why another flood is so unlikely.
One of the main reasons there were so many foreclosures during the last housing crash was that relaxed lending standards made it easy for people to take out mortgages, even if they couldn’t show that they’d be able to pay them back. At that time, lenders weren’t being very strict when assessing applicant credit scores, income levels, employment status, and debt-to-income ratio.
But now, lending standards have tightened, leading to more qualified buyers who can afford to make their mortgage payments. And data from Freddie Mac and Fannie Mae shows the number of homeowners who are seriously behind on their mortgage payments is declining (see graph below):
“May’s overall mortgage delinquency rate matched the all-time low, and serious delinquencies followed suit. Furthermore, the rate of mortgages that were six months or more past due, a measure that ballooned in 2021, has receded to a level last observed in March 2020.”
Before there can be a significant rise in foreclosures, the number of people who can’t make their mortgage payments would need to rise. Since so many buyers are making their payments today, a wave of foreclosures isn’t likely.
If you’re worried about a potential flood of foreclosures, know there’s nothing in the data today to suggest that’ll happen. In fact, qualified buyers are making their mortgage payments at a very high rate.
Equity is the current value of your home minus what you owe on the loan. And recently, that equity has been growing far faster than you may expect.
Over the last few years, home prices have risen dramatically, which gave your equity a big boost very quickly. While the market has started to normalize, there’s still an imbalance between the number of homes available for sale and the number of buyers looking to make a purchase. And it’s because homes are in such high demand that prices are back on the rise today. Rob Barber, CEO of ATTOM, a property data provider, explains:
“Equity levels were high even during the recent downturn, and now they are going back up and better than ever.”
With today’s affordability challenges, that equity can be a game changer when you move. Here’s why. Based on data from ATTOM and the Census, nearly two-thirds (68.7%) of homeowners have either paid off their mortgages or have at least 50% equity (see chart below):
That means roughly 70% have a tremendous amount of equity right now.
Once you sell your house, you can use your equity to help with your next purchase. It could be some (if not all) of what you’ll need for your next down payment. It may even be enough to allow you to put a considerably larger down payment on your next home, so you don’t have to finance quite as much. And, if you’ve been in your current house for years, you may have even built up enough equity to pay in all cash. If that’s true for you, you’d be able to avoid borrowing altogether, so you wouldn’t have to worry about today’s mortgage rates.
The best way to learn how much you have is to reach out to a trusted real estate agent for a Professional Equity Assessment Report (PEAR).
If you’re planning to make a move, the equity you’ve gained can make a big impact. To find out just how much equity you have in your current home and how you can use it to fuel your next purchase, connect with a trusted real estate advisor.
Some homeowners have been waiting for months to put their house on the market because they don’t think people are buying homes right now. If that’s you, know that even though the housing market has slowed compared to the frenzy of a couple of years ago, it isn’t at a standstill. Contrary to what you may believe, buyers are still active and plenty of homes are selling right now.
According to the National Association of Realtors (NAR), based on the pace of sales right now, just over 4 million homes will sell this year. With some simple math, let’s break down what that really means for you:
So, on average, about 11,000 homes sell each day in this country.
A real estate expert can give you more information about how many houses are being sold in your neighborhood, the amazing advantages that sellers are experiencing right now, and the most important things buyers are searching for in your area. Together you’ll use this knowledge to shape how you market your house based on local trends.
If you’ve been waiting to sell because you don’t think there are buyers out there, know today’s market is active. Every day you wait, around 11,000 other homeowners are selling. In the time it took you to read this, eight homes sold. When you’re ready to sell too, let’s talk. give me a call
Wondering if it still makes sense to sell your house right now? The short answer is, yes especially if you consider how few homes there are for sale today.
You may have heard inventory is low right now, but you may not fully realize just how low or why that’s a perk when you go to sell your house. This graph from Calculated Risk can help put that into perspective:
Let’s compare it to 2019 (the last normal year in the market) to gauge just how far off from normal today’s inventory is. When you compare the same week this year with the matching week in 2019, supply is about 50% lower. That means there are half the homes for sale now than there’d usually be.
The key takeaway? We’re still nowhere near what’s considered a balanced market. There’s plenty of demand for your house because there aren’t enough homes. As Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), explains:
“There are simply not enough homes for sale. The market can easily absorb a doubling of inventory.”
So, if you want to list your house, know that there’s only about half the inventory there’d usually be in a more normal year. That means your house will be in the spotlight if you sell now and you may see multiple offers and a fast home sale.
With the number of homes for sale roughly half of what there’d usually be in a more normal year, you can rest assured there’s demand for your house. If you want to sell, connect with a local real estate agent now so your house can shine above the rest while inventory is so low.
Many householders fascinated about selling have two key issues holding them again. That’s feeling locked in by in the present day’s increased mortgage charges and worrying they gained’t be capable of discover one thing to purchase whereas provide is so low. Let’s dive into every problem and offer you some useful recommendation on easy methods to overcome these obstacles.
In accordance with the Federal Housing Finance Company (FHFA), the average interest rate for present householders with mortgages is lower than 4% (see graph under):
Whereas specialists undertaking mortgage rates will step by step fall this yr as inflation cools, that doesn’t essentially imply you must wait to promote. Mortgage charges are notoriously onerous to foretell. And, proper now home prices are again on the rise. Should you transfer now, you’ll at the very least beat rising house costs whenever you purchase your subsequent house. And, if specialists are proper and charges fall, you possibly can all the time refinance later if that occurs.
When so many householders are reluctant to tackle the next price, fewer houses are going to come back onto the market. That’s going to maintain inventory low. As Lawrence Yun, Chief Economist on the Nationwide Affiliation of Realtors (NAR), explains:
“Stock will stay tight within the coming months and even for the subsequent couple of years. Some householders are unwilling to commerce up or commerce down after locking in historically-low mortgage charges in recent times.”
Despite the fact that this limited housing supply helps your home stand out to keen patrons, it might additionally make you are feeling hesitant to sell since you don’t wish to battle to seek out one thing to buy.
If worry you gained’t be capable of discover your subsequent house is the first factor holding you again, bear in mind to think about all of your choices. all housing sorts together with condos, townhouses, and even newly built homes will help offer you extra to select from. Plus, if you happen to’re in a position to work absolutely remote or hybrid, you might be able to take into account areas you hadn’t beforehand searched. Should you can look additional out of your workplace, you will have extra reasonably priced choices.
As a substitute of specializing in the challenges, concentrate on what you possibly can management. Attain out to a neighborhood agent so that you’re working with an expert who has the expertise to navigate these waters and discover the proper house for you.
Despite the fact that the housing market is not experiencing the frenzy that was so attribute of the final couple of years, it doesn’t imply in the present day’s market is at a standstill. Genuinely, purchaser visitors continues to be sturdy in the present day.
The ShowingTime Showing Index is a measure of how a lot patrons are touring properties. The graph beneath makes use of that index as an instance purchaser exercise traits over time to assist put in the present day into the correct perspective.
It reveals there’s seasonality in actual property. In the event you have a look at the final regular years out there (proven in grey), there was a constant sample as purchaser exercise peaked within the first half of every yr (through the peak homebuying season within the spring) and slowed as every year got here to an in depth.
When the pandemic hit in March of 2020, that development was disrupted because the market responded to the ensuing uncertainty (proven in blue within the center). From there, we entered the ‘unicorn’ years of housing (proven in pink). That is when mortgage charges have been record-low and purchaser demand was sky excessive. Comparable seasonal traits nonetheless existed even throughout that point, simply at a lot increased ranges.
Now, let’s have a look at 2023. Site visitors is down from the earlier month and it’s additionally decrease than the peaks we noticed within the ‘unicorn’ years. However what’s taking place isn’t a steep drop off in demand – it’s a sluggish return towards extra regular seasonality. Because the ShowingTime report explains:
“Displaying visitors declined about 10% in Could . . . This follows a typical seasonal sample – disrupted by the pandemic however now starting to return . . .”
And, to focus on this isn’t a drastic decline, let’s zoom in. Right here’s a graph utilizing simply the Could knowledge for the final 5 years. It reveals simply how sturdy purchaser demand nonetheless is.
Consumers are nonetheless on the market touring properties. They’re extra energetic than they have been in Could 2022 (when sticker shock over increased mortgage rates began to set in) and definitely greater than they have been within the final regular years. So, keep in mind, purchaser exercise continues to be sturdy. And it might truly be even stronger if it wasn’t constrained by the limited supply of properties on the market. In line with U.S. News:
“Housing markets have cooled barely, however demand hasn’t disappeared, and in lots of locations stays sturdy largely because of the scarcity of properties in the marketplace.”
Don’t lose sight of simply how energetic the market nonetheless is in the present day. If your home isn’t in the marketplace, it’s not getting in entrance of all these patrons who need to make a purchase order proper now. Join with an actual property agent to start out the method.
