If you’re a first-time buyer looking to break into the housing market but struggling to find a home to buy, condominiums (or condos) could be a great alternative for you.
Here are a few reasons condos may be something you’ll want to consider.
Exploring Condos Could Add Options That Fit Your Budget
Supply challenges are a reality across the board in today’s housing market. Broadening your home search to include condos could increase your overall pool of options. Just keep in mind, condos generally differ from single-family homes in average space and floorplans.
In a recent article, Bankrate covers some of these differences:
“Condos are generally more affordable because they come with less space — you likely won’t have your own backyard, for example, and the interior tends to be smaller than the square footage of a single-family home.”
But if the size of a condominium meets your needs, they could match your budget as well. Data from the National Association of Realtors (NAR) shows the difference in the median price for both housing types. For single-family homes, the median price is $363,800. And for condominiums, the median price is lower at $305,400.
So, if budget is top of mind for you, a condominium could be a great fit within your target price range.
Not to mention, buying a condo is a great way to break into the market and start building equity that can help power a future move up. The condo you purchase today may not be your forever home, but it can be a great stairstep that can help you buy your dream home later on.
Find Out if Condo Living Is Right for You
In addition, owning and living in a condo is also a lifestyle choice. While it’s true they may be smaller than single-family homes, the amenities condos provide could be a draw for many buyers. Less space in your home might mean minimal upkeep, lower maintenance, and more time for you to spend doing the things you enjoy.
To understand if condo life is for you, Bankrate recommends asking yourself a few simple questions:
“Hate to mow the lawn and trim the hedges? What about pressure washing your driveway? Are your finances such that having to lay out $5,000 or more for a new roof will be a burden? . . . Condos tend to work best for those comfortable with most of the aspects of apartment living, minus the built-in maintenance.”
Ultimately, talking with an expert real estate advisor is the best first step to determining if condo living might work for you.
Condominiums are a great option for many buyers, especially those looking to buy their first home. If you’re willing to consider condos in your search, you could find something that’s in line with your target numbers and your needs. To learn more, reach out to a trusted real estate professional with expertise in the condo-buying process.
Buyers are already off-to-the-races in today’s housing market. And if you're planning on selling this spring, doing so now gives you the best chance to get ahead of other sellers this season. DM me to get the sales process started so you can cross the finish line first this spring.
Based on the Primary Mortgage Market Survey from Freddie Mac, the average 30-year fixed-rate mortgage has increased by 1.2% (3.22% to 4.42%) since January of this year. The rate jumped by more than a quarter of a point from just a week ago. Here’s a visual to show how mortgage rate movement throughout 2021 was steady compared to the rapid increase in mortgage rates this year:
Just a few months ago, Freddie Mac projected mortgage rates would average 3.6% in 2022. Earlier this month, Fannie Mae forecast mortgage rates would average 3.8% in 2022. As the chart above shows, rates have already surpassed those projections.
Sam Khater, Chief Economist at Freddie Mac, explained in a press release last week:
“This week, the 30-year fixed-rate mortgage increased by more than a quarter of a percent as mortgage rates across all loan types continued to move up. Rising inflation, escalating geopolitical uncertainty and the Federal Reserve’s actions are driving rates higher and weakening consumers’ purchasing power.”
Where Are Mortgage Rates Going from Here?
In a recent article by Bankrate, several industry experts weighed in on where rates might be headed going forward. Here are some of their forecasts:
Greg McBride, Chief Financial Analyst, Bankrate:
“With inflation figures continuing to surprise to the upside, mortgage rates will remain above 4.0% on the 30-year fixed.”
Nadia Evangelou, Senior Economist and Director of Forecasting, National Association of Realtors (NAR):
“While higher short-term interest rates will push up mortgage rates, I expect some of this impact to be mitigated eventually through lower inflation. Thus, I expect the 30-year fixed mortgage rate to continue to rise, although we aren’t likely to see the big jumps that occurred over the past few weeks.”
Len Kiefer, Deputy Chief Economist, Freddie Mac:
“Mortgage rates are likely to continue to move higher throughout the balance of 2022, although the pace of rate increases is likely to moderate.”
In a recent realtor.com article, another expert adds to the conversation:
Danielle Hale, Chief Economist, realtor.com:
“. . . As markets digest the Fed’s updated economic projections, I anticipate a continued increase in mortgage rates over the next several months. . . .”
What Does This Mean for You if You’re Looking To Buy a Home?
With both mortgage rates and home values expected to increase throughout the year, it would be better to buy sooner rather than later if you’re able. That’s because it’ll cost you more the longer you wait. But, there is a possible silver lining to buying a home right now. While you’ll be paying a higher price and a higher mortgage rate than you would have last year, rising prices do have a long-term benefit once you buy.
If you purchase a home today valued at $400,000 and put 10% down, you would be taking out a $360,000 mortgage. According to mortgagecalculator.net, at a 4.42% fixed mortgage rate, your mortgage payment would be $1,807 a month (this does not include insurance, taxes, and other fees because those vary by location).
Now, let’s put that mortgage payment into a new perspective based on the substantial growth in equity that comes with the escalation in home prices. Every quarter, Pulsenomics surveys a panel of over 100 economists, investment strategists, and housing market analysts about their expectations for future home prices in the United States. Last week, Pulsenomics released their latest Home Price Expectation Survey. The survey reveals that the average of the experts’ forecasts calls for a 9% increase in home values in 2022.
Based on those projections, a $400,000 house you buy today could be valued at $436,000 by this time next year. If you break that down, that means the equity in your home would increase by $3,000 a month over that period. That’s greater than the estimated monthly payment above. Granted, the increase in your net worth is tied to the home, but it is one way to put the home price appreciation to use in a way that benefits you.
Paying a higher price for a home and a higher mortgage rate can be a difficult pill to swallow. However, waiting will just cost you more. If you’re ready, willing, and able to buy a home, now will be a better time than a year, or even six months from now. Connect with a real estate professional to begin the process today.
Are you thinking about selling your house? If so, you may want to make it a priority to start the process soon. According to realtor.com, the sweet spot for sellers is just around the corner. In a recent study, experts analyzed housing market trends by looking at data from the past several years (excluding 2020, since it was an atypical year). When applied to the current market, experts determined the ideal week to list a house this year. The research says:
“Home sellers on the fence waiting for that perfect moment to sell should start preparations, because the best time to list a home in 2022 is approaching quickly. The week of April 10-16 is expected to have the ideal balance of housing market conditions that favor home sellers, more so than any other week in the year.”
If you’ve been putting your move on the back burner waiting for the ideal time to sell, you should know your golden window of opportunity is coming up. If you’re able to get your house ready quickly, here’s what you can expect from that week.
You Should See More Buyer Activity
The article expects higher buyer demand based on what’s happened in previous years. This could result in increased competition among buyers and ultimately a bidding war over your house. And since mortgage rates recently ticked up over 4%, chances are good that analysis is right. When rates rise, experts say buyers often hurry to make their purchase before rates climb higher. As Nadia Evangelou, Senior Economist and Director of Forecasting at the National Association of Realtors (NAR), says:
“. . . Buyers are rushing to lock in lower rates as the outlook is for even higher mortgage rates in the following months.”
Your House Is Expected To Sell Quickly
Additionally, the realtor.com analysis shows houses sell even faster during this week of the year, likely due to the heightened buyer demand. If you work with a trusted real estate professional to price your house right, it should sell quickly. And when homes are already selling in just 18 days according to NAR, that could set you up for a big win.
Your House Will Be in the Spotlight
Since the beginning of the year, the number of homes available for sale has been at or near record lows. According to the realtor.com study, the typical trend for this week of the year is that there will be even fewer sellers on the market. If you list when inventory is low, your house will be the center of attention for eager buyers craving options.
If you’re ready to move fast, you may want to shoot for April 10th-16th as your target goal. Just remember, even if you’re not ready to list within the next couple of weeks, rest assured this is still a hot sellers’ market. If you list later in April, you’ll still be in the driver’s seat.
Ready to get the ball rolling? Contact a real estate professional today to kickstart the process. In the meantime, make a checklist of things you need to tackle to get your house ready. Your agent can help you prioritize your to-do list and get you on the road to selling your house.
SOURCE : KCM
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Planning to sell your house this spring? Here are just a few things you’ll want to tackle before you do. To determine the full list of what you’ll need to get your home ready to sell, you need the opinion of a trusted expert. DM me to help make sure your house shows well this season.
SOURCE : KCM
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The link between financial security and homeownership is especially important today as inflation rises. But many people may not realize just how much owning a home contributes to your overall net worth. As Leslie Rouda Smith, President of the National Association of Realtors (NAR), says:
“Homeownership is rewarding in so many ways and can serve as a vital component in achieving financial stability.”
Here are just a few reasons why, if you’re looking to increase your financial stability, homeownership is a worthwhile goal.
Owning a Home Is a Building Block for Financial Success
A recent NAR report details several homeownership trends and statistics, including the difference in net worth between homeowners and renters. It finds:
“. . . the net worth of a homeowner was about $300,000 while that of a renter’s was $8,000 in 2021.”
To put that into perspective, the average homeowner’s net worth is roughly 40 times that of a renter (see visual below):
The results from this report show that owning a home is a key piece to the puzzle when building your overall net worth.
Equity Gains Can Substantially Boost a Homeowner’s Net Worth
The net worth gap between owners and renters exists in large part because homeowners build equity. As a homeowner, your equity grows as your home appreciates in value and you make your mortgage payments each month.
In other words, when you own your home, you have the benefit of your mortgage payment acting as a contribution to a forced savings account. And when you sell, any equity you’ve built up comes back to you. As a renter, you’ll never see a return on the money you pay out in rent every month.
To sum it up, NAR says it simply:
“Homeownership has always been an important way to build wealth.”
The gap between a homeowner’s net worth and a renter’s shows how truly foundational homeownership is to wealth-building. If you’re ready to start on your journey to homeownership, talk with a trusted real estate advisor today.
SOURCE : KCM
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Have you thought about how you’ll use your tax refund? You can use any money you get back to fuel your home goals, like growing your down payment fund, helping to pay for closing costs, or customizing your new home. DM me today if you want to discuss how to get started on your journey to homeownership.
SOURCE : KCM
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SOURCE : KCM
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As the spring housing market kicks off, you likely want to know what you can expect this season when it comes to buying or selling a house. While there are multiple factors causing some uncertainty, including the conflict overseas, rising inflation, and the first rate increase from the Federal Reserve in over three years — the housing market seems to be relatively immune.
Here’s a look at what experts say you can expect this spring.
1. Mortgage Rates Will ClimbFreddie Mac reports the 30-year fixed mortgage rate has increased by more than a full point in the past six months. And despite some mild fluctuation in recent weeks, experts believe rates will continue to edge up over the next 90 days. As Freddie Mac says:
“The Federal Reserve raising short-term rates and signaling further increases means mortgage rates should continue to rise over the course of the year.”
If you’re a first-time buyer or a seller thinking of moving to a home that better fits your needs, realize that waiting will likely mean you’ll pay a higher mortgage rate on your purchase. And that higher rate drives up your monthly payment and can really add up over the life of your loan.
2. Housing Inventory Will IncreaseThere may be some relief coming for buyers searching for a home to purchase. Realtor.com recently reported that the number of newly listed homes has grown for each of the last two months. Also, the National Association of Realtors (NAR) just announced the months’ supply of inventory increased for the first time in eight months. The inventory of existing homes usually grows every spring, and it seems, based on recent activity, the next 90 days could bring more listings to the market.
If you’re a buyer who has been frustrated with the limited supply of homes available for sale, it looks like you could find some relief this spring. However, be prepared to act quickly if you find the right home.
If you’re a seller, listing now instead of waiting for this additional competition to hit the market makes sense. Your leverage in any negotiation during the sale will be impacted as additional homes come to market.
3. Home Prices Will RisePrices are always determined by supply and demand. Though the number of homes entering the market is increasing, buyer demand remains very strong. As realtor.com explains in their most recent Housing Report:
“During the final two weeks of the month, more new sellers entered the market than during the same time last year. . . . However, with 5.8 million new homes missing from the market and millions of millennials at first-time buying ages, housing supply faces a long road to catching up with demand.”
What does that mean for you? With the demand for housing still outpacing supply, home prices will continue to appreciate. Many experts believe the level of appreciation will decelerate from the high double-digit levels we’ve seen over the last two years. That means prices will continue to climb, just at a more moderate pace. Most experts are predicting home prices will not depreciate.
Won’t Increasing Mortgage Rates Cause Home Prices To Fall?While some people may believe a 1% increase in mortgage rates will impact demand so dramatically that home prices will have to fall, experts say otherwise. Doug Duncan, Senior Vice President and Chief Economist at Fannie Mae, says:
“What I will caution against is making the inference that interest rates have a direct impact on house prices. That is not true.”
Freddie Mac studied the impact that mortgage rates increasing by at least 1% has had on home prices in the past. Here are the results of that study:
As the chart shows, mortgage rates jumped by at least 1% six times in the last thirty years. In each case, home values increased.
So again, if you’re a first-time buyer or a repeat buyer, waiting to buy likely means you’ll pay more for a home later in the year (as compared to its current value).
There are three things that seem certain going into the spring housing market:
SOURCE : KCM
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If you’re ready to move up, you may be trying to decide whether you want to buy a home that’s already on the market or build a new one. And since the supply of homes available for sale today is low, you’re willing to consider either avenue. While home builders are doing everything they can to construct more houses and help narrow the supply shortage, they’re also facing delays due to factors outside of their control.
Here’s the latest on some of the key challenges homebuilders are experiencing today and how they could impact your plans to move up. When you know what’s happening in the industry, you can make an informed decision on whether to look for a newly built or an existing home in your home search.
Supply Chain Issues
The first hurdle builders are dealing with is the lack of supply of various building materials. According to a recent article from HousingWire:
“. . . Nearly everything needed in the homebuilding process is facing some sort of delay and subsequent price increase.”
The supply issue isn’t just with lumber, even though that’s what’s covered most in the news. The article explains many other supplies are impacted too, including roofing materials, windows, garage doors, siding, and gypsum (which is used in drywall).
The difficulty in getting these items is dragging out timelines for new homes as builders wait on what they need to finish construction. And since materials are in short supply, even when they do get the product, the principle of supply and demand is driving prices up for those goods. HousingWire explains it like this:
“When supplies are low, charges inevitably go up, . . . Meanwhile, a lack of availability is causing huge delays, meaning builders are struggling to stay on schedule.”
The National Association of Home Builders (NAHB) agrees:
“Builders are grappling with supply-chain issues that are extending construction times and increasing costs.”
Skilled Labor Shortage
But that’s not the only challenge with new home construction today. Builders are also having a hard time finding skilled labor, which means they’re short-handed, further dragging out their timelines. Odeta Kushi, Deputy Chief Economist at First American, says this is an ongoing challenge for the industry:
“The skilled labor shortage in the construction industry is not new – it’s been an issue for more than a decade now.”
But there is good news. The February jobs report shows employment gains in the construction industry. Kushi puts this encouraging news into perspective in the article mentioned above:
“Overall this was a good report, . . . The supply of workers continues to fall short of demand, but the underlying momentum of the labor market recovery is strong, and falling COVID case counts provide further forward momentum.”
That means, while finding workers continues to be a challenge for builders, there are signs of positive momentum moving forward.
How This Impacts You
HousingWire explains how these things can impact move-up buyers today:
“The residential construction industry is facing a crisis as builders manage the critical shortage of building materials and labor. Explosive supply and labor costs are forcing long delays. . . .”
So, when you weigh your options and try to decide between building a home or buying an existing one, factor the potential delay in new home construction into your decision. While it doesn’t mean you should cross newly built homes off your list, it does mean you should consider your timeline and if you’re willing to wait while your home is being constructed.
When planning your next move, understanding the latest market conditions is key to making the best decision possible. To make sure you have all the information you need, partner with a real estate professional. They’re experts in the local market and can help you confidently decide what’s right for you, your priorities, and your timeline.
SOURCE : KCM
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