Everyone should realize that unless you are living somewhere rent-free, you are paying a mortgage – either yours or your landlord’s. Buying your own home provides you with a form of ‘forced savings’ that allows you to use your monthly housing costs to increase your family’s wealth.
Every month that you pay your mortgage, you are paying off a portion of the debt that you took on to purchase your home. Therefore, you own a little bit more of your home every month in the form of home equity. As your home’s value increases, you also gain home equity.
Every quarter, Pulsenomics surveys a nationwide panel of over 100 economists, real estate experts, and investment and market strategists. They are asked to project how residential home prices will appreciate over the next five years for their Home Price Expectation Survey (HPES).
The latest data from their Q1 2019 Survey revealed that home prices are expected to round out the year 4.3% higher than they were in January. For the next 5 years, home values will appreciate by an average of 3.21% a year.
For example, let’s assume a young couple purchased and closed on a $250,000 home in January of this year. Simply through their home appreciating in value, those homeowners can build their home equity by over $40,000 over the next five years.
In many cases, home equity is a large portion of a family’s overall net worth.
Whether it’s your first or your fifth, if your plan for this year includes buying a home, let’s get together to help you understand where prices are headed in our area.
The percentage of home price appreciation on a year-over-year basis has decreased each month for over a year. The question was how far annual appreciation would fall. It seems we may now have the answer.
In a recent post on the National Association of Realtors’ Economists’ Outlook Blog, it was revealed that Realtors are starting to sense that home values are beginning to stabilize and that we may see appreciation beginning to accelerate again:
“About 3,000 REALTORS® who responded to NAR’s February 2019 REALTORS Confidence Index Survey had more optimistic— although modest— home price growth expectations over the next 12 months. Respondents expect home prices to typically increase by 1.9 percent nationally, up from 1.4 percent in the January survey.”
The thinking that home appreciation has bottomed-out was also confirmed in two additional housing reports recently released:
CoreLogic Home Price Index – The analysts at CoreLogic increased their projection for home appreciation for the next twelve months to 4.7% as compared to the 4.6% they projected in their previous report.
The Home Price Expectation Survey – In the 2019 first quarter survey, the nationwide panel of over one hundred economists, real estate experts, and investment & market strategists increased their projection for home value growth in 2019 to 4.3% compared to the 3.8% increase they had projected in the fourth quarter of 2018.
Agents working the business every day, one of the premier data companies in the real estate space, and one hundred housing experts all agree: home price appreciation has ended its decline and looks to be stabilizing… and may even accelerate.
There has been a lot written about millennials and their preference to live in city centers above their favorite pizza place. Some have even gone so far as to say that millennials are a “Renter-Generation”.
And while this might be true for some millennials, more and more research has surfaced that shows for the vast majority, owning a home is a major part of their American Dream!
New research shows that 66% of millennials who currently rent are determined to buy a home! Seventy-three percent of those surveyed by Pulsenomics plan to buy a home in the next five years, with 40% planning to do so within the next two years!
"Millennials want to own a home as much as prior generations," Ali Wolf, Director of Economic Research at Meyers Researchsays. "We saw millennial shoppers scooping up homes in 2018—and 2019 will be no different."
Are you one of the millions of renters who are ready and willing to buy a home? Let’s get together to determine your ability to buy now!
In every area of the country, homes that are priced at the top 25% of the price range for that area are considered to be Premium Homes. In today’s real estate market there are deals to be had at the higher end! This is great news for homeowners who want to upgrade from their current house and move-up to a premium home.
Much of the demand for housing over the past couple years has come from first-time buyers looking for their starter home, which means that many of the more expensive homes that have been listed for sale have not seen as much interest.
This mismatch in demand and inventory has created a Buyer’s Market in the luxury and premium home markets according to the ILHM’s latest Luxury Report. For the purpose of the report, a luxury home is defined as one that costs $1 million or more.
“A Buyer’s Market indicates that buyers have greater control over the price point. This market type is demonstrated by a substantial number of homes on the market and few sales, suggesting demand for residential properties is slow for that market and/or price point.”
The authors of the report were quick to point out that the current conditions at the higher end of the market are no cause for concern,
“While luxury homes may take longer to sell than in previous years, the slower pace, increased inventory levels and larger differences between list and sold prices, represent a normalization of the market, not a downturn.”
Luxury can mean different things to different people. It could mean a secluded home with a ton of property for privacy to one person, or a penthouse in the center of it all for someone else. Knowing what characteristics you are looking for in a premium home and what luxury means to you will help your agent find your dream home.
If you are debating upgrading your current house to a premium or luxury home, now is the time!
Last week, realtor.com released a survey of active home shoppers (those who plan to purchase their next home in 1 year or less). The survey asked their opinion on an impending recession and its possible impact on the housing market.
Two major takeaways from the survey:
Over the last year, four separate surveys have been taken asking when we can expect the next recession to occur:
70% of all respondents to the four surveys believe that a recession will occur in 2019 or 2020 with an additional 18% saying 2021.
However, we must realize that a recession does not mean we will experience another housing crash. According to the dictionary definition, a recession is:
“A period of temporary economic decline during which trade and industrial activity are reduced, generally identified by a fall in GDP in two successive quarters.”
During the last recession, a dramatic fall in home values helped cause it.
However, according to research done by CoreLogic, home values weren’t negatively impacted as they were in 2008 during the previous four recessions:
During the four recessions prior to 2008, home values depreciated only once (at a level that was less than 2%). The other three times home values appreciated, twice well above the historic norm of 3.6%.
If there is an economic slowdown in our near future, there is no need for fear to set in. Most experts agree with Ralph McLaughlin, CoreLogic’s Deputy Chief Economist, who recently explained that there’s no reason to panic right now, even if we may be headed for a recession.
“We’re seeing a cooling of the housing market, but nothing that indicates a crash.”
The spring housing market is off to the races! The inventory of homes for sale is increasing, buyers are out in force, and interest rates have remained low, piquing the interest of buyers and sellers previously on the fence about making a move.
New research from realtor.com shows that the first week of April is actually the best time to list your house for sale! The report used “trends in median listing prices, views per property on realtor.com, home price drops, median days on market, and number of listings on the market over the last three years,” to determine a ranking for every week of the year.
Listing your home in the first week of April contributes 14x more property views, 5% less competition from other home sellers, and results in the home being sold 6 days faster!
Below is a graph indicating the average score for each month of the year.
It should come as no surprise that April and May dominate as the top months to sell. The second quarter of the year (April, May, June) is referred to as the Spring Buyers Season, when competition is fierce to find a dream home, often leading to bidding wars.
However, there is one caveat worth mentioning. When broken down by metro, realtor.com noticed that while warmer climates share an overall trend, they have different top sales months. The best month to get the most exposure in Miami, FL, for instance, is August, while in Phoenix, AZ, June leads the charge.
If you’re thinking of selling your home this year, the time to list is NOW! According to the National Association of Realtors, 41% of homes sold last month were on the market for less than 30 days! If you list now, you’ll have a really good chance to sell in April or May, setting yourself up for the most exposure!
Let’s get together to discuss the market conditions in our area to get you the most exposure to the buyers ready and willing to make a move!
There has been a lot written about the benefits of homeownership. One benefit that continues to rise to the top is the added wealth homeowners gain simply by paying their mortgage while their home increases in value over time.
The National Association of Realtors (NAR) recently broke down the equity gained from price appreciation and principal payments in their Economists Outlook Blog. Homeowners who purchased their homes five years ago have already gained almost $80,000 in equity over that time with 80% of the gains coming from price appreciation.
For a homeowner who purchased their home 30 years ago, they have gained nearly $250,000 in equity with 70% coming from price increases. The full results can be seen in the chart below.
According to the Home Price Expectation Survey, a family who purchased a median priced home this January can expect to gain more than $42,000 over the next five years simply from price appreciation alone.
Your home is one of the only investments you can live inside as you pay it off over time. If you are ready to use your housing costs to build wealth, let’s get together to discuss how to make your dream a reality.