• Home Prices in 2023: What's Next,Haydn Halsted

    Home Prices in 2023: What's Next

    In the past year, there has been a lot of debate about home prices. While some have predicted a significant drop in prices like in 2008, this hasn't happened. Others have forecasted slight appreciation or depreciation depending on the region of the country. As we approach the spring real estate market, experts continue to make predictions about home prices for the rest of the year and beyond.   According to Selma Hepp, Chief Economist at CoreLogic, recent mortgage rate volatility highlights the uncertainty that remains, but the continued shortage of homes for sale is likely to keep price declines modest, projected to top out at 3% peak to trough.   In addition, a panel of over 100 economists, investment strategists, and housing market analysts surveyed by Pulsenomics quarterly predict future home prices in the United States over the next five years.   Given this information and expert opinions on home prices, you may be wondering whether you should buy a home this spring. Here are three reasons why you should consider making a move: First, buying a home allows you to escape the cycle of rising rents. Over the past several decades, the median price of rent has consistently risen, making homeownership a more appealing option. Second, homeownership serves as a hedge against inflation. By buying a home with a fixed-rate mortgage, you can secure your housing payment, ensuring that it won't increase as it would if you rented. Finally, homeownership is a powerful wealth-building tool. The average net worth of a homeowner is significantly higher than that of a renter.   Experts predict a slight price depreciation in the housing market this year, followed by steady appreciation. Before making a decision to purchase a home, it's essential to have all the facts and an expert on your side.

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  • Will Mortgage Rates Go Down in 2023?,Haydn Halsted

    Will Mortgage Rates Go Down in 2023?

    Mortgage rates fell to an all-time low of 2.65% in 2021. Now they’re more than double that, and everyone is asking the same question. Will mortgage rates drop in 2023? Let’s break it down.   Why are mortgage rates so high? Mortgage rates are influenced by several factors, the foundation of which is the overall state of the economy. When the economy is doing well and moving fast, rates are typically higher. When the economy is sluggish, rates are usually lower. Seem backward? Here’s why it works that way:   The Fed Many people think that the Federal Reserve (also known as “the Fed”) sets mortgage rates, but that’s not quite true. The Fed sets the federal funds target rate, which guides the amount that banks charge each other to borrow money and impacts the rates they charge consumers, too. That’s because it changes the amount banks must charge to cover their own costs. Why does the Fed ever raise rates? Everyone likes a lower interest rate—right? The Federal Reserve has two jobs, called its “dual mandate,” as assigned by Congress. It must act to keep prices stable in the economy and to support maximum employment. One of the ways it does this is by moderating interest rates to support a stable financial system (O’Connell, 2023).    For example… When the economy is slow—like it was during the initial COVID-19 crisis—the Fed lowers its rates to increase cash flow and encourage consumer spending. But when the economy is doing well and moving fast, borrowing, consumer spending, and demand are all elevated—which can cause inflation. A major problem with inflation is when prices rise at a rate with which salaries don’t keep pace, people suddenly can’t afford to buy things, and the economy grinds to a halt. For that reason, when the economy is moving too quickly and inflation is growing unsustainably, the Fed increases the federal funds rate to constrict cash flow. The idea is that higher rates—while uncomfortable—will slow spending to a sustainable pace while preventing an economic crash down the road. Since the housing market, consumer spending, and inflation all hit peaks in late 2022, the Fed pumped the brakes with interest rate hikes in an effort to divert a full-blown recession.   Will mortgage rates drop in 2023? Now that we know why rates are so high, we can make an educated guess about their future. Many experts suggest that 2023 will see a slowdown in the U.S. economy, and if that’s true, mortgage rates will drop as well. Will mortgage rates go down in 2023? Here are the detailed answers from top industry experts:   Mortgage Bankers Association The Mortgage Bankers Association has stated that “long-term rates have already peaked. We expect that 30-year mortgage rates will end 2023 at 5.20%.” As of this writing, the average APR for the benchmark 30-year fixed-rate mortgage is over 7%, so that prediction represents a significant drop by 2023’s end.   National Association of Realtors The NAR Director of Forecasting, Nadia Evangelou, predicts that “mortgage rates likely will settle below 6% and experience less volatility this year.” She continued by saying that “Although rates remain more than double a year ago, they will likely stabilize as inflation will continue to slow down in the coming months.”   Goldman Sachs Analysts at Goldman Sachs are less optimistic, predicting that mortgage rates will average 6.5% in 2023. Why this rate? The investment bank expects a “significant decline in U.S. inflation,” but also notes “that the rapid decline in mortgage origination, especially refinances, has caused some lenders to exit or scale back lending. This has the potential to allow the remaining lenders to expand their margins by pushing mortgage rates higher” (Lambert, 2023).   Freddie Mac In its most recent forecast, Freddie Mac predicted that the 30-year fixed-rate mortgage will average 6.4% in 2023, with a lower average of 6.2% in the fourth quarter. The financial company cited the job market, moves from the Fed, and the decelerating housing market.   Morgan Stanley In its U.S. housing market outlook forecast, Morgan Stanley predicts that 30-year fixed mortgage rates will average 6.2% in 2023. In a best-case scenario, the investment bank writes that mortgage rates could fall below 6%, but that would require the Fed to successfully tame inflation sooner than expected (Lambert, 2022).   Bankrate Bankrate’s chief financial analyst, Greg McBride, CFA, forecasts mortgage rates to fall to 5.25% by the end of 2023. He explained that “we should see a notable pullback in mortgage rates as inflation pressures ease and as the economy slows” (Ostroski, 2023).   Final thoughts Financial and real estate industry experts agree that mortgage rates will fall in 2023. By how much? That’s still up for debate, with some experts forecasting a nearly 2% drop and others one of less than 1%. No matter the number, lower mortgage rates represent relief for buyers struggling with affordability. If you’ve been waiting to buy due to high home prices and high mortgage rates, 2023 is shaping up to be a good year for you. But even as rates come down, they’re not likely to hit 2021 levels—so you’ll want to do everything you can to reduce your rate on your own. That means working on your credit score, looking into a rate buydown, and shopping around to find the lender with the best terms for you.    Let’s buy your dream home in 2023 If falling mortgage rates are music to your ears and you’re ready to buy in 2023, get in touch. Not quite sure about the next steps? Our expert team can help. Click the button below so we can help you make your homeownership goals a reality.

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  • Standing Out in a Competitive Real Estate Market: Tips for Making an Irresistible Offer on Your Dream Home,Haydn Halsted

    Standing Out in a Competitive Real Estate Market: Tips for Making an Irresistible Offer on Your Dream Home

    Buying a home is an exciting and significant investment, but it can also be a daunting task, especially in today's competitive real estate market. With sellers having the upper hand, it's crucial to make a strong and appealing offer when you find your dream home. To help you navigate this process successfully, here are four tips to keep in mind when making an offer.   Lean on a Real Estate Professional A real estate agent can be your biggest ally in the home-buying process, especially in a competitive market. They have local market knowledge, know what works best for buyers in your area, and what sellers may be looking for in an offer. So, it's essential to choose the right agent who understands your goals and can provide you with sound advice and support throughout the process.   Know Your Budget Understanding your budget is critical, especially in a sellers' market. Take the time to assess your financial situation, including your expenses, spending habits, and debt obligations. Consider working with a lender to get pre-approved for a loan, which not only shows the seller that you're serious but also helps you be more financially confident. Knowing your budget will also help you determine the maximum amount you're willing to pay for a property and avoid overbidding.   Think Through Everything Before Making an Offer While the market may not be moving as fast as it did during the pandemic, it's still important to act quickly and thoughtfully when you find a property you like. However, you may have more time to think before making an offer, especially if the property doesn't sell immediately. So, take the time to consider all the factors that could affect your decision, including the location, condition, and price of the property, and work with your agent to negotiate the best deal possible.   Work with Your Advisor To Negotiate Finally, it's crucial to work with your real estate advisor to negotiate the terms of your offer. While you may have more negotiating power than before, it's still essential to approach the negotiation process strategically. Consider factors like contingencies, repairs, and closing costs when putting together your offer. Your advisor can help you think through what levers to pull to make the most attractive offer while still protecting your interests.   In conclusion, buying a home in a sellers' market can be challenging, but by following these four tips and working with a trusted real estate professional, you can make a strong offer that stands out from the competition. So, when you find your dream home this spring, lean on your advisor to help you navigate the process successfully.

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