Area Real Estate News & Market Trends

You’ll find our blog to be a wealth of information, covering everything from local market statistics and home values to community happenings. That’s because we care about the community and want to help you find your place in it. Please reach out if you have any questions at all. We’d love to talk with you!

Aug. 11, 2021

4 Reasons Why the End of Forbearance Will Not Lead to a Wave of Foreclosures

 

 

With forbearance plans about to come to an end, many are concerned the housing market will experience a wave of foreclosures like what happened after the housing bubble 15 years ago. Here are four reasons why that won’t happen.

1. There are fewer homeowners in trouble this time

After the last housing crash, about 9.3 million households lost their home to a foreclosure, short sale, or because they simply gave it back to the bank.

As stay-at-home orders were issued early last year, the overwhelming fear was the pandemic would decimate the housing industry in a similar way. Many experts projected 30% of all mortgage holders would enter the forbearance program. Only 8.5% actually did, and that number is now down to 3.5%.

As of last Friday, the total number of mortgages still in forbearance stood at  1,863,000. That’s definitely a large number, but nowhere near 9.3 million.

2. Most of the 1.86M in forbearance have enough equity to sell their home 

Of the 1.86 million homeowners currently in forbearance, 87% have at least 10% equity in their homes. The 10% equity number is important because it enables homeowners to sell their houses and pay the related expenses instead of facing the hit on their credit that a foreclosure or short sale would create.

The remaining 13% might not all have the option to sell, so if the entire 13% of the 1.86M homes went into foreclosure, that would total 241,800 mortgages. To give that number context, here are the annual foreclosure numbers of the three years leading up to the pandemic:

  • 2017: 314,220
  • 2018: 279,040
  • 2019: 277,520

The probable number of foreclosures coming out of the forbearance program is nowhere near the number of foreclosures coming out of the housing crash 15 years ago. The number does, however, draw a similar comparison to the three years prior to the pandemic.

3. The current market can absorb any listings coming to the market

When foreclosures hit the market in 2008, there was an excess supply of homes for sale. The situation is exactly the opposite today. In 2008, there was a 9-month supply of listings for sale. Today, that number stands at less than 3 months of inventory on the market.

As Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), explains when addressing potential foreclosures emerging from the forbearance program:

“Any foreclosure increases will likely be quickly absorbed by the market. It will not lead to any price declines.”

4. Those in power will do whatever is necessary to prevent a wave of foreclosures

Just last Friday, the White House released a fact sheet explaining how homeowners with government-backed mortgages will be given further options to enable them to keep their homes when exiting forbearance. Here are two examples mentioned in the release:

  • “For homeowners who can resume their pre-pandemic monthly mortgage payment and where agencies have the authority, agencies will continue requiring mortgage servicers to offer options that allow borrowers to move missed payments to the end of the mortgage at no additional cost to the borrower.”
  • “The new steps the Department of Housing and Urban Development (HUD), Department of Agriculture (USDA), and Department of Veterans Affairs (VA) are announcing will aim to provide homeowners with a roughly 25% reduction in borrowers’ monthly principal and interest (P&I) payments to ensure they can afford to remain in their homes and build equity long-term. This brings options for homeowners with mortgages backed by HUD, USDA, and VA closer in alignment with options for homeowners with mortgages backed by Fannie Mae and Freddie Mac.”

When evaluating the four reasons above, it’s clear there won’t be a flood of foreclosures coming to the market as the forbearance program winds down.

Bottom Line

As Ivy Zelman, founder of the major housing market analytical firm Zelman & Associatesnotes:

“The likelihood of us having a foreclosure crisis again is about zero percent.”

 

Posted in Market Updates
Aug. 11, 2021

With Rents on the Rise – Is Now the Time To Buy?

 

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.

Monthly Rents Are Higher Than Monthly Mortgage Payments

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.comIn 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):With Rents on the Rise – Is Now the Time To Buy? | Keeping Current Matters

Rents Are Rising Sharply, and They Continue To Increase

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.


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.

Bottom Line

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. Give us a call so you can make your most powerful decision.

 

Posted in Market Updates
July 6, 2021

Are We In A Housing Bubble?

 

 

The question of whether the real estate market is a bubble ready to pop seems to be dominating a lot of conversations – and everyone has an opinion. Yet, when it comes down to it, the opinions that carry the most weight are the ones based on experience and expertise.

 

Here are four expert opinions from professionals and organizations that have devoted their careers to giving great advice to the housing industry.

 

The Joint Center for Housing Studies in their The State of the Nation’s Housing 2021 report:

“… conditions today are quite different than in the early 2000s, particularly in terms of credit availability. The current climb in house prices instead reflects strong demand amid tight supply, helped along by record-low interest rates.”

 

Nathaniel Karp, Chief U.S. Economist at BBVA:

“The housing market is in line with fundamentals as interest rates are attractive and incomes are high due to fiscal stimulus, making debt servicing relatively affordable and allowing buyers to qualify for larger mortgages. Underwriting standards are still strong, so there is little risk of a bubble developing.”

 

Bill McBride of Calculated Risk:

“It’s 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.”

 

Mark Fleming, Chief Economist at First American:

Looking back at the bubble years, house prices exceeded house-buying power in 2006 nationally, but today house-buying power is nearly twice as high as the median sale price nationally…

Many find it hard to believe, but housing is actually undervalued in most markets and the gap between house-buying power and sale prices indicates there’s room for further house price growth in the months to come.”

 

Bottom Line

All four strongly believe that we’re not in a bubble and won’t see crashing home values as we did in 2008. And they’re not alone – Goldman Sachs, JP Morgan, Morgan Stanley, and Merrill Lynch share the same opinion.

Posted in Market Updates
Dec. 4, 2020

Mortgage Rates Hit New Low!

Mortgage rates fall to record new low as home sales begin to sputter

 

The average rate for a 30-year, fixed-rate mortgage once again hit a new all-time low, clocking in at 2.71 percent, according to data released Thursday by Freddie Mac. But even with a new historic low for the 14th time this year, Freddie Mac Chief Economist Sam Khater believes home sales are hitting a wall.

 

“While homebuyer appetite remains robust, the scarce inventory has effectively put a limit on how much higher sales can increase,” Khater said, in a statement. “Unfortunately, the record low supply combined with strong demand means home prices are rapidly escalating and eroding the benefits of the low mortgage rate environment.”

 

The average rate for a 30-year, fixed-rate mortgage fell to 2.71 percent, the lowest number ever recorded by Freddie Mac’s weekly survey of rates, which dates back to 1971. This time last year, the average rate for a 30-year, fixed-rate mortgage was 3.68 percent.

 

The 15-year fixed-rate mortgage meanwhile average 2.28 percent, down from last week’s 2.28 percent average and below the 3.14 percent average for the same week in 2019.

 

The 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) had the highest rate, averaging 2.86 percent, down from last week’s 3.16 percent. A year ago at this time, it averaged 3.39 percent.

 

Rates continue to sit at historic lows as investors watch COVID-19 vaccine progress and deliberations on a potential stimulus package in Congress, according to George Ratiu, realtor.com’s senior economist.

 

While low interest rates have been fuel for the blazing housing market in 2020, double-digit price gains over the past three months have chipped away at affordability gains for Americans, according to Ratiu.

 

The National Association of Realtors pending home sale index, a forward-looking indicator of home sale activity based on contract signings, fell 1.1 percent from September to October. And while contract signings were still up more than 20 percent year over year, the month-to-month decline shows signs that sales are slowing down.

 

“For many Americans today, these low rates do not offer the same monthly savings that they did even six months ago,” Ratiu said.

 

“Moreover, millions of people are staring at a wall of expiring support programs, such as the pandemic unemployment insurance and eviction protections, which dampen the brightness of the incoming holiday season,” Ratiu added. “While we see a light at the end of the pandemic tunnel with upcoming vaccines, there is still a big question around whether Congress can come to terms on a new stimulus package to help the country recover from the current economic downturn.”

Posted in Market Updates
Nov. 19, 2020

Will Mortgage Rates Remain Low Next Year?

In 2020, buyers got a big boost in the housing market as mortgage rates dropped throughout the year. According to Freddie Mac, rates hit all-time lows 12 times this year, dipping below 3% for the first time ever while making buying a home more and more attractive as the year progressed. When you continually hear how rates are hitting record lows, you may be wondering: Are they going to keep falling? Should I wait until they get even lower?

The Challenge with Waiting

The challenge with waiting is that you can easily miss this optimal window of time and then end up paying more in the long run. Last week, mortgage rates ticked up slightly. Sam Khater, Chief Economist at Freddie Mac, explains:

“Mortgage rates jumped this week as a result of positive news about a COVID-19 vaccine. Despite this rise, mortgage rates remain about a percentage point below a year ago.”

While rates are still lower today than they were one year ago, as the economy continues to get stronger and the pandemic is resolved, there’s a very good chance interest rates will rise again. Several top institutions in the real estate industry are projecting an increase in mortgage rates over the next four quarters.

Will Mortgage Rates Remain Low Next Year?

If you’re planning to wait until next year or later, Mike Fratantoni, Chief Economist at the Mortgage Bankers Association (MBA), forecasts mortgage rates will begin to steadily rise.

As a buyer, you need to decide if waiting makes financial sense for you.

 

Bottom Line

If you’re planning to buy a home and want to take advantage of today’s low rates, now is the time to do so. Don’t assume they’re going to stay this low forever.

Posted in Market Updates
April 24, 2020

5 Reasons to Own Instead of Rent

 

Owning a home has great benefits. Let’s breakdown 5 major benefits of homeownership:

 

1. It’s a Good Investment

 

While home prices move in cycles over the short-term, if you stay in your home for a long time, it could increase in value and give you a substantial return on your investment.

 

2. You Build Equity

 

When you subtract the amount you owe on your home loan from the total value of your house, the amount left over is your home equity-the “dollar” value of your home that actually belongs to you. There are two ways to build equity:

 

With each monthly mortgage payment you make, a portion goes toward reducing the amount you owe on your loan, which increases your equity. In a sense, paying your mortgage is a form of savings, as it increases the equity in your home.

 

As your home increases in the value, it creates more equity for you.

In a sense, paying your mortgage is a form of savings, since it increases your home equity which you can tap into if you need money in the future.

 

When necessary, you can borrow against your home equity to meet a variety of financial needs, including home improvements, education or medical expenses. A home equity loan or line of credit can also be used to pay off high interest credit card debt, since the interest rate is generally lower and the interest payments are tax deductible.

 

3. You Enjoy Significant Tax Deductions

 

Owning a home can reduce the amount you pay in income taxes each year. Your mortgage interest and property tax payments may be deductible from your federal taxes, as well as many state taxes. Certain closing costs and loan discount points also may be tax deductible. In the early years of your mortgage, when interest represents the bulk of your monthly mortgage payment, these tax deductions can put a significant amount of money back in your pocket.

 

4. You Build a Strong Credit History

 

When you buy a home and consistently make your monthly loan payments on time, it demonstrates to other lenders that you are a good borrower and the risk of you defaulting on a loan is low. This strong credit history will be helpful in the future when you need other loans for buying a car, making improvements to your home, or paying other major expenses.

 

5. You’re Free to Create the Home You Want

Homeownership offers tremendous freedom to create the living environment that you have always wanted. You can own pets, paint rooms whatever color you like, make changes to floors and carpeting and do all the things that make a house your home – all without having to get approval from a landlord.

 

Bottom Line

From a financial standpoint, owning a home has always been and will always be better than renting.

Posted in Market Updates
March 25, 2020

Is Now a Good Time to Refinance My Home?

 

With interest rates hitting all-time lows over the past few weeks, many homeowners are opting to refinance. To decide if refinancing your home is the best option for you and your family, start by asking yourself these questions:

 

Why do you want to refinance?

There are many reasons to refinance, but here are three of the most common ones:

 

1. Lower Your Interest Rate and Payment: This is the most popular reason. Is your current interest rate higher than what’s available today? If so, it might be worth seeing if you can take advantage of the current lower rates.

 

2. Shorten the Term of Your Loan: If you have a 30-year loan, it may be advantageous to change it to a 15 or 20-year loan to pay off your mortgage sooner rather than later.

 

3. Cash-Out Refinance: You might have enough equity to cash out and invest in something else, like your children’s education, a business venture, an investment property, or simply to increase your cash reserve.

 

Once you know why you might want to refinance, ask yourself the next question:

 

How much is it going to cost?

There are fees and closing costs involved in refinancing, and The Lenders Network explains:

 

“As an example, let’s say your mortgage has a balance of $200,000. If you were to refinance that loan into a new loan, total closing costs would run between 2%-4% of the loan amount. You can expect to pay between $4,000 to $8,000 to refinance this loan.”

 

They also explain that there are options for no-cost refinance loans, but be on the lookout:

 

“A no-cost refinance loan is when the lender pays the closing costs for the borrower. However, you should be aware that the lender makes up this money from other aspects of the mortgage. Usually charging a slightly higher interest rate so they can make the money back.”

 

Keep in mind that, given the current market conditions and how favorable they are for refinancing, it can take a little longer to execute the process today. This is because many other homeowners are going this route as well. As Todd Teta, Chief Officer at ATTOM Data Solutions notes about recent mortgage activity:  

 

“Refinancing largely drove the trend, with more than twice as many homeowners trading in higher-interest mortgages for cheaper ones than in the same period of 2018.”

 

Clearly, refinancing has been on the rise lately. If you’re comfortable with the up-front cost and a potential waiting period due to the high volume of requests, then ask yourself one more question:

 

Is it worth it? 

To answer this one, do the math. Will it help you save money? How much longer do you need to own your home to break even? Will your current home meet your needs down the road? If you plan to stay for a few years, then maybe refinancing is your best move.

 

If, however, your current home doesn’t fulfill your needs for the next few years, you might want to consider using your equity for a down payment on a new home instead. You’ll still get a lower interest rate than the one you have on your current house, and with the equity you’ve already built, you can finally purchase the home you’ve been waiting for.

 

Bottom Line

Today, more than ever, it’s important to start working with a trusted real estate advisor. Whether you connect by phone or video chat, a real estate professional can help you understand how to safely navigate the housing market so that you can prioritize the health of your family without having to bring your plans to a standstill. Whether you’re looking to refinance, buy, or sell, a trusted advisor knows the best protocol as well as the optimal resources and lenders to help you through the process in this fast-paced world that’s changing every day.

 

Posted in Market Updates
March 19, 2020

Are We About to See a New Wave of Foreclosures?

 

 

With all of the havoc being caused by COVID-19, many are concerned we may see a new wave of foreclosures. Restaurants, airlines, hotels, and many other industries are furloughing workers or dramatically cutting their hours. Without a job, many homeowners are wondering how they’ll be able to afford their mortgage payments.

 

In spite of this, there are actually many reasons we won’t see a surge in the number of foreclosures like we did during the housing crash over ten years ago. Here are just a few of those reasons:

 

The Government Learned its Lesson the Last Time

 

During the previous housing crash, the government was slow to recognize the challenges homeowners were having and waited too long to grant relief. Today, action is being taken swiftly. Just this week:

 

  • The Federal Housing Administration indicated it is enacting an “immediate foreclosure and eviction moratorium for single family homeowners with FHA-insured mortgages” for the next 60 days.
  • The Federal Housing Finance Agency announced it is directing Fannie Mae and Freddie Mac to suspend foreclosures and evictions for “at least 60 days.”

 

Homeowners Learned their Lesson the Last Time

 

When the housing market was going strong in the early 2000s, homeowners gained a tremendous amount of equity in their homes. Many began to tap into that equity. Some started to use their homes as ATM machines to purchase luxury items like cars, jet-skis, and lavish vacations. When prices dipped, many found themselves in a negative equity situation (where the mortgage was greater than the value of their homes). Some just walked away, leaving the banks with no other option but to foreclose on their properties.

 

Today, the home equity situation in America is vastly different. From 2005-2007, homeowners cashed out $824 billion worth of home equity by refinancing. In the last three years, they cashed out only $232 billion, less than one-third of that amount. That has led to:

 

  • 37% of homes in America having no mortgage at all
  • Of the remaining 63%, more than 1 in 4 having over 50% equity

 

Even if prices dip (and most experts are not predicting that they will), most homeowners will still have vast amounts of value in their homes and will not walk away from that money.

 

There Will Be Help Available to Individuals and Small Businesses

 

The government is aware of the financial pain this virus has caused and will continue to cause. Yesterday, the Associated Press reported:

 

“In a memorandum, Treasury proposed two $250 billion cash infusions to individuals: A first set of checks issued starting April 6, with a second wave in mid-May. The amounts would depend on income and family size.”

 

The plan also recommends $300 billion for small businesses.

 

Bottom Line

These are not going to be easy times. However, the lessons learned from the last crisis have Americans better prepared to weather the financial storm. For those who can’t, help is on the way.

 

 

Posted in Market Updates
March 7, 2020

All White Kitchens: Is This Trend Here to Stay?

 

 

Kitchens are one of the most remodeled areas of the home and it’s not difficult to see why. Often seen as the heart of the home, many families tend to spend a significant amount of time in the kitchen. Whether cooking, eating, or just congregating there, people are drawn to the kitchen, which makes it a space that most people will want to look great and be on the cutting edge. As far as kitchen trends go, the all-white kitchen is one that’s always been a staple of kitchen design, and many wonder if it’s a trend that will remain popular indefinitely.

 

There are many variations of the white kitchen: those with only white cabinets and countertops, those that are white from top to bottom including the appliances and even the floor, and those of varying levels in between. White kitchens are considered timeless and classic, likely because they look clean to the point of sterile. The all-white kitchen can be traditional, contemporary, or transitional, making it a versatile color palette that can fit anyone’s individual style.

 

As a color, white has many benefits. For one thing, it’s everywhere. Just about any product, whether it’s paint or an appliance or even a cellphone, that comes in more than one color will offer a white variation. And since white is such a basic, staple color, white things tend to match by default, unlike worrying about the differences in shades of blue or green. Additionally, white tends to make a space feel light, airy, and clean.

 

All-white kitchens tend to have a timeless quality and are almost able to camouflage their age. Since it is such a universal color, white is appropriate for any style of decor, whether it’s traditional Victorian, modern contemporary, retro and vintage, mid-century, industrial, or otherwise. This versatility is another reason why the all-white kitchen is so popular; it tends to be appealing to most people due to being both basic and bold, vivid and nonabrasive, dramatic and understated. White kitchens could also be considered a template for additional personalization if you choose, such as adding a colored backsplash or countertop.

 

So are all-white kitchens here to stay? The answer is likely: Yes. Even if the all-white kitchen is becoming excessively common, the universality of it is something that probably will never go out of style.

Posted in Market Updates
Nov. 19, 2019

Expert Advice: 3 Benefits to Owning a Home

Success is something often worth repeating, and Brent Sutherland, a Certified Financial Planner and Real Estate Investor, has certainly made his way in a momentum-driving direction. Here are 3 tips he shares from a recent piece in Business Insider on the benefits of owning real estate:

1. Real estate diversifies your income

“While it is certainly important to be properly diversified with your investments, it is even more important to be diversified with your income. This is because the largest financial risk for most of you is the loss of your primary source of income, which is typically in the form of a day job.”

The article highlights how having multiple sources of income, such as those derived from real estate investments, can eventually lead to relying less and less on a day job. Sound dreamy? It can be. When done well, real estate investments may eventually open up your time and the financial freedom to explore other things, like travel and other aspirations you may have for the future, particularly in the golden years of retirement.

2. Real estate produces near-immediate results

“You can achieve and feel the results almost immediately. Property improvements are visible and tangible. You can cash, spend, and invest rent payments. Today! Not 30 years in the future.”

Currently, home prices are appreciating in all price ranges, and just last week CoreLogic announced their 12-month home value projection at 5.6%, an increase from 4.5% noted earlier this summer. With that in mind, real estate today is definitely driving immediate results!

3. Passive income can help you become financially independent sooner

“If you need $40,000 a year to live, you could alternatively invest in assets that generate an 8% cash-on-cash return. This is a very reasonable assumption. And it means you would only need to save a total of $500,000 (instead of $1 million). Yet, your investments would still meet your annual household living needs.

While returns, taxes, and inflation can, of course, affect your timeline, cash-flowing real-estate is a clear asset.”

Homeownership is a form of ‘forced savings.’ Every time you pay your mortgage, you’re contributing to your net worth by increasing the equity in your home, bringing you one step closer to true financial independence.

Bottom Line:

If you want to increase your savings and overall net worth, real estate is a great way to go. To learn how you can make it happen, let’s get together to discuss the process.

Posted in Market Updates