Fears vs Realities: 3️ Reasons Why This Housing Market Wouldn't Be The Same As 2008

Today's homebuyers are a little wary, and it's understandable why. The ever-increasing mortgage rates, home prices at all-time highs, a housing bubble burst, and uncertain market conditions to name a few. There are lots of concerns over the past couple of years regarding the imminent crash similar to 2008 recession, but this year, they’re really being manifested. Despite these fears, however, many experts believe that these won’t be the same as 2008 recession and here are the reasons why:   FEAR #1 – BEING UNABLE TO PAY MORTGAGE After a lot of people lose their job because of the pandemic, it’s only natural to be wary of the possibility of not being able to pay your mortgage. Years prior to the 2008 recession, mortgage lenders were far less picky about who they would lend to. This meant that when financial hardship struck and borrowers lost their jobs, they were unable to pay their mortgages and, regrettably, were forced to go into default, losing their homes in the process.   REALITY: Mortgage approval has recently been stricter and lenders aren’t loaning money to just anyone these days. To get a mortgage these days, as compared to 2008 however, you have to prove that you can actually repay that debt, even if things get tough. Nowadays, lenders carefully look into your assets, employment, income, savings, and much, much more.   FEAR #2 – BEING UNABLE TO AFFORD OF BUYING A HOME Probably the biggest concern we hear from home buyers is related to whether or not they’ll actually be able to afford a home. The majority of the home buyer population recently just settle for renting and is now more afraid to take their first step because of the volatile market conditions and most homes are still unaffordable for them. Moreover, many are still struggling with finding a job even after finishing college, making them just give up on their dreams of having a home or just decided to wait on the sidelines until the market crashes.   REALITY: Even though rising mortgage rates are pushing some buyers out of the market, buying a home can help you escape the cycle of rising rents, it’s a powerful wealth-building tool, and it’s typically considered a good hedge against inflation. Purchasing a home can be your safety plan because you never know when your rent is going to go up when the lease ends. When you purchase a home and take out a 30-year fixed-rate mortgage, you’ve set your housing expense for the next 30 years. You know what to expect and what you’ll need to pay to keep a roof over your head.   FEAR #3 – BEING UNABLE TO YIELD THE BENEFITS OF HOMEOWNERSHIP Buying a home can be an exhaustive affair in terms of finance. As a buyer, you will exhaust most of your finances and security by only trying to afford a home. You may even fear the possibility of not being able to yield the benefits of homeownership. Prices may depreciate due to inflation, or maybe you’ll find a better job somewhere far from your home making renting more plausible as it gives you flexibility, etc.   REALITY: Homeownership wins in the long run. If you’re questioning whether or not to buy a home this year due to today’s cooling market, consider the long-term financial benefits of homeownership. According to Nar, the nationwide average for home appreciation is about 290% for the past 30 years. History also tells us that in four of the last six recessions, home prices actually appreciated, only falling during the early 90s and the housing crash in 2008. Mortgage rates, though, declined during each of the previous recessions. Homeownership also gives you a chance to build wealth and buy in your ideal neighborhood faster and more efficiently. When you own a home, you’ll be able to build equity which in turn can power your next move. So instead of renting and saving for the sake of flexibility, why not own and save and build wealth at the same time? WE’RE HERE TO HELP! When you head out to buy a home, there are a number of obstacles you’ll encounter along the way. The process includes everything from understanding your finances to going house hunting, making an offer, and more. Partnering with a real estate professional can help you have expert guidance at each step of the way. 

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Buying or Selling in the Next 12 Months: What You Need to Know Today

There are many different reasons you might be thinking about selling your home. Perhaps you want to downsize (or upsize), perhaps you want to take advantage of the market, or maybe you need to move to another area of the country for your company. Regardless of the reasons, there are many things to consider before you speak with a real estate agent. You probably already have a good grasp of how the home-buying process goes since you've done it at least once before. But if this is your first time selling a home, there’s plenty more to learn. Even if you have sold a home in the past, the market is always changing.  If you're thinking about buying a home within the next year, or buying a home after you sell your current one there are a few things that you can get started on to make the process that much smoother when you are ready to go house hunting.   Deciding To Sell Your Home: What You Should Do First Once you do decide you want to sell your home, there are several things you can do before you contact a real estate agent. The first is to prepare your home to be sold, and that usually means a lot of cleaning and sometimes some maintenance and repairs. Even in a seller’s market, you’ll want to make your home look as inviting and attractive as possible in order to receive a great offer. Homebuyers who will be looking at your home are more likely to make an offer right away if your home appears desirable, as they’ll be hoping to secure a home before another prospective buyer comes along.     Declutter Your Living Space When you were a first-time homebuyer, you probably saw several houses that still contained furniture and the occupants’ belongings. This is normal when the homeowners haven’t moved out yet. But you might also recall that some homes appeared a lot tidier and well-maintained than others. Think about that when preparing your own home for future sale. You’ll want to spend a good amount of time getting rid of any clutter and junk you don’t need. Even old, worn furniture and décor items should be removed. (You can put them in a storage unit or your garage if you have space.) The idea is to present a neat living space to prospective buyers.     Make Necessary Repairs Truthfully, this is up to you. In a seller’s market, you can likely get away with not making some repairs, since buyers are more desperate to secure a home. However, some first-time homebuyers might want the security of a home they know is in good shape. There’s also a difference between necessary repairs and home improvements. For example, it might be necessary to replace the hot water heater but not to renovate the kitchen or the bathroom. If you’re unsure which things you should spend your money on, focus on the most obvious maintenance issues that a home inspector will definitely point out.     Check Out the Market Have any homes similar to yours in the area sold recently? That might give you a good idea of what you could get for your home. The online sites providing estimates can serve as a good baseline, but they don’t always know the specifics of your local area or any specific improvements you’ve made in your home. Take this into consideration before you talk to a real estate agent. The agent will, of course, be more familiar with the current conditions of the market and how things are selling in your area. And once the agent sees your home, they will be able to give you a better idea of what it might sell for. Just remember to price it realistically. Even in a seller’s market, pricing your home too high could mean you’ll be waiting a while to sell.     Finally, Contact an Agent Once you’ve done all of the above, you are ready to contact an agent. Unless you already know an agent who you’d like to work with, you’ll want to interview a few different agents. You’ll be working with the agent of choice for a bit, so you want to ensure you feel comfortable with whomever you choose. Ask each agent for a comparative market analysis, as well as the details of their plan on how they will market your home. You also want to ensure that the agent will have time for you and your home.   Deciding To Buy a Home: What You Should Do First Once you do decide you're ready to buy a home, there are several things you can do before you contact a real estate agent. The first is to prepare your list of non-negotiables and really decide what you need from a home. The real estate market moves quickly, so understanding the current market, interest rates, and more will be important closer to the time when you're getting ready to purchase.     Make Your List of Must-Haves Do you need two or three bedrooms? Are you open-minded to a townhome or do you prefer a single-family residence? We'd recommend that you sit down and think deeply about what you need from a home and make your list of things you can't live without. This will make the house hunting process much easier, and you'll be able to share this information with your real estate agent when the time is right!     Cushion Your Savings Buying a home can bring several unexpected expenses your way, so the more that you can plan in advance the better. Of course, you'll need to pay the down payment on the home, but there are also closing costs and taxes. Once you move in, you'll likely need some furniture, and what if the HVAC system needs repair? Some experts recommend having six months of expenses set aside in your savings account, while others recommend having up to a year’s worth.     Get Pre-Approved Securing a pre-approval from the bank is going to let your real estate agent and the sellers that currently own the home that you're serious and ready to purchase. This will also give you a sense of your purchasing power and help you understand the budget that you'll need to stay within.     Finally, Contact an Agent Once you’ve done all of the above, you are ready to contact an agent! Unless you already know an agent who you’d like to work with, you’ll want to interview a few different agents. You’ll be working with the agent of choice for a bit, so you want to ensure you feel comfortable with whomever you choose. Make sure to ask each agent about their local expertise, their track record in negotiating on behalf of buyers, and to take a look at their reviews.   We're Here to Help Whether you're thinking about buying or selling in the next few months or the next few years, we're happy to help answer your questions! Click Here

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Spokane Housing Inventory has Exploded!

  In just over 3 months, Spokane’s housing inventory has more than tripled. What does this mean for you as a buyer or a seller? Today we’re talking about the shift that’s taking place in not only the Spokane housing market, but the housing market across the entire United states as well.   We’ve seen inventory skyrocket lately as well as interest rates and my goal in making this video is not to bore you with all the numbers and stats but help you make educated decisions when buying and selling real estate right now. So what does this all mean?     The beginning of 2022 was similar to 2021 in which we really saw the rock bottom of inventory in Spokane. In February of 2021 we saw an active inventory of 237 homes and in February of 2022 we saw 245 homes in active status.     Now there are some seasonality factors as Spokane usually has the lowest amount of inventory in February every year anyway, but this was the lowest amount of inventory we’ve seen in Spokane pretty much ever.   But in the span of 3 to 4 months we went from less than 400 active listings to now over 1400 active listings so we’ve made a significant jump. And even in comparison to this same week last year, we have a 93% increase in active listings.     So why are homes sitting longer on the market? Well as most of us know, interest rates have gone up significantly from the start of the year as well. They were in the 3’s went up over 6% and are now back down in the 5’s.   This has caused the buyer pool to dry up because between the appreciation we’ve continued to see this year along with those rising interest rates, many buyers who could afford a $400,000 home last year, can now only buy a $300,000 home. And not to mention that a $300,000 home was worth $275,000 less than 6 months ago.   So the supply and demand scale use to look like this and now it looks a little more like this.   Now because we’ve seen such a rapid change in the housing market, this has caused media outlets to start using the word crash and bubble even though we are still nowhere near that point.   It’s common for us realtors to talk about how lucky all you home buyers are because historically interest rates are still low because back in the 1980’s they were easily 18%. Well houses were also a quarter of what they are now and on average housing affordability was a lot greater compared to the income of that time.   So even though I often believe that history repeats itself and that we should look back in history to help make decisions for the future, I don’t think most of you relate or feel comforted by the data from forty years ago. I know for myself I wasn’t even born yet and my parents hadn’t even made it out of high school yet, so let's look at a time that we should all be fairly familiar with, 2018 and 2019.   A time when interest rates were around 5%, homes could take anywhere from 2 to 5 months to sell, dropping the price was a normal thing to do and some homes just didn’t sell.   Compared to today, homes might take 3 to 4 weeks to sell so much quicker than 3 years ago, interest rates are in the 5’s, and price reductions are become a normal part of doing business.   So maybe one of you out there can explain it to me, but I don’t know what there is to panic about? What’s the difference between the two? Honestly, it seems like we’re still in a better place than we were 3 years ago.   Now we could stay on this trajectory but we’re just heading back to where we were pre pandemic. And You want to know what’s interesting? Well You know that recession that we’re in right now, if we’re calling it a recession, that has caused your stocks or 401K to go down by about 20%? Well it’s very similar to the real estate market. Real estate has really been more of a lagging indicator of the economy. The stock market has reacted much faster than the real estate market which is totally normal. You can sell your stocks at the push of a button but a home sale takes much longer.   But stocks were here at the end of 2019, beginning of 2020 and they had a wild ride but ended way up here in 2021 and have moved down to about the halfway point between 2019 and 2021.   The real estate market is having a similar journey. It was here in 2019, made its way up here in 2021 and now so far we’ve only seen a slight dip in prices and activity. But you know what will continue to happen to both stocks and real estate? Over time, they will continue to keep going up and up like they always do.   So just know that the housing market might have a little more room to move to meet up with the stock market, but all these people waiting for home prices to tank and foreclosures to flood the market are just going to be waiting forever. Because even if it does come down a bit more, the gap between there and what was going in 2019 is still a major difference. Home prices would literally have to be cut in half to go back to what they were in 2019.     Okay, so what does this mean for you and your situation?   For Buyers, this time in the market is really good for you. Even though interest rates are higher and your monthly payment might go up, you’re able to do something that most buyers haven’t been able to do in the last two years, which is negotiate.   And even though your monthly payment might be a little higher, I think you’re going to be able to keep a lot more money in your pocket to get into your next home.   Sellers are offering concessions so they will cover your closing costs which could save you 2% or more of the purchase price in cash. For an average home in Spokane, that could be 7, $8000 that you get to keep in your pocket because the seller is going to cover it. Sellers are also offering interest rate buydowns which depending on how much you can negotiate could bring your interest rate down quite a bit and make your monthly payment much more affordable. If something comes up in the inspection, which you should feel blessed that you’re getting an inspection at all, you will actually be able to talk to the seller about getting it fixed instead of knowing they will move on to the next buyer because there is a line of people waiting for your deal to fall apart.   Additionally, being able to pay above the appraised value of a home with cash was a requirement so people with very deep pockets were winning all the bidding wars because they had a spare, 20, 30, even 50 thousand dollars in cash they could pay above the appraised value.   This is a fantastic time to get into the market if you don’t have tons of money saved up because the cash required out of pocket is much less.     As a seller, you need to be ready for those negotiations. It probably won’t be a feeding frenzy any more where people just throw money at you, waive all contingencies and are willing to kiss your feet or name their first child after you to get into the house.   What is your plan to make your house stand out from the one down the street that is for sale and nearly identical to yours? Are you going to offer the interest rate by down from the start?   This leads to the next major change in the market which is creating a strategy with your realtor. When you first meet with your realtor you want to know what is the strategy to get a solid deal on a house right now or what is the strategy to get your house sold for the most money possible?   In the last year you could definitely just stick a sign in the yard and expect multiple offers but now much more work needs to go into making sure the house is clean, staged, well presented in photos and videos and there is a plan in place for pricing including price drops. Some of the very beautiful homes that are priced well are still experiencing multiple offers. I had a listing that is closing tomorrow that got 4 offers on it and 3 being cash but the sellers had done a beautiful renovation and priced the home well. So buyers, you still want to know what to do in the event of a multiple offer scenario.     So, I think one of the biggest takeaways is that sellers, it’ll be slightly harder to find a buyer for your home, but not insanely difficult with the right plan.   Buyers, it’ll probably be easier to get your offer accepted.   But here’s what I’ve seen the most recently. Sellers still have a big ego because of the market we’re leaving, and buyers have a big ego because of the market we are entering, meaning both parties are going to have to work a lot harder to keep a deal together and across the finish line.   Partner up with an agent that can work for you but also help you make smart decisions that will benefit you but not totally kill a deal because you’re trying to take everything you can get.   I want to make this very clear though, the only thing that is going to go down is the rate of appreciation.   So that means that instead of homes appreciating 20% or more in a single year, they might only appreciate 3 to 5% in a year. And if you passed elementary school math, you can see that this means that home prices will still be going up year over year. Price reductions don’t reflect the entire market so please don’t let those scare you if you’re seeing them happen more and more. Asking price and value are two different things.   We Can Help Whether you’re a home seller or a home buyer looking to navigate these turbulent real estate market conditions, our team of expert real estate professionals can help. We are skilled at negotiating home prices and working with clients during volatile times. Let's Talk

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