Homebuyers: Take Advantage of Today’s Market

Have you been browsing real estate listings, driving by homes for sale, or even visiting open houses with the dream of becoming a homeowner? If you’ve been putting off buying a home in the uncertain economic landscape, now may be the time you’ve been waiting for. After years of a seller’s market where it was difficult and sometimes impossible for buyers to find their dream home, the trend is shifting in the buyers’ favor. A local real estate agent can help you navigate these trends and find the right home.   Why Now is the Time to Buy Home buyers may be aware that the Fed keeps increasing interest rates, which reduces affordability. What they may not realize is that some changes in the housing market are beneficial to them. After a couple of years where homes went off the market just days after being listed, they are now sitting on the market longer. Instead of selling in days or a couple of weeks, you see homes in some areas listed for more than a month. With it taking longer for the properties to sell, it leads to the seller lowering the price. Price reductions help out buyers who may have a tight budget. Rising prices have made everyone’s budgets tighter, which may mean that homeowners decide to sell if they have more homes than they can comfortably afford. More homes on the market also lowers the price, benefiting buyers. Mortgage rates have reached the 6% mark for the first time since 2008. With higher rates, buying a home today is often less appealing and more expensive than a couple of years ago. This leads to fewer buyers feeling confident in making a significant investment now, knowing that a recession could lead to job loss and even tighter finances.   More Options for Buying a Home If you’re one of the home buyers looking for a property amid economic uncertainty, you’ll be happy to know that options exist to help you get into a new home you can afford. More buyers are turning to adjustable-rate mortgages to lower their monthly payments and qualify for more homes. An adjustable-rate mortgage (ARM) allows you to get into a home at a lower interest rate than a fixed interest rate mortgage. Adjustable-rate mortgages charge a lower interest rate now than fixed loans with the ability to change the rate in a specific time period. For instance, a 5/1 ARM means that in five years, the interest rate will adjust to whatever is current at that time. Buyers can benefit from an ARM in today’s market because it increases their buying power. If the interest rates go down in five years or whenever the rates on an ARM adjust, the buyer will lower their payments. Another option for home buyers in today’s economy is the 2-1 Buy Down. This type of loan allows you to pay a lower interest rate now than current mortgage rates, raising it some in the next year and getting to the final rate in the third and future years. Sellers and developers will often pay for a buy-down to entice buyers to make an offer.   Ways to Reduce the Cost of Buying a Home You don’t have to let the rising interest rates keep you from buying a home now if you’re ready. You can take steps to make it easier to get an affordable loan. For example, make sure you have excellent credit to get the best interest rates. Come up with a larger down payment to reduce the interest rate on your mortgage. Because you’re assuming more risk, lenders are often willing to negotiate. Fewer buyers are willing to waive real estate contingencies, such as not having a home inspection. Sellers also set up contingencies, such as having financing in place before putting in an offer. All these real estate contingencies limited the pool of buyers competing for the same property. With the loss of these contract contingencies, it has leveled the field for all buyers. You also still have the option of paying mortgage points to lower the rate. Lenders often offer the option of paying these mortgage points to make loans more affordable. For each point you pay to the lender, the interest rate goes down by one percent. If you plan to live in the home for a long time, this extra cost may pay off in the long run. If you’re a first-time buyer, you have access to various first-time buyer programs. These programs provide you with assistance for your down payment. Your real estate agent can point you toward local, state, and federal programs that will help make your home more affordable. Home buyers can take advantage of the changes in the market if they are willing to adjust their expectations. You may need to consider living in another area or a smaller home if you want to buy now. Your real estate agent can help you find an affordable home that will suit your needs.   We're Here to Help The key to buying is to be prepared and know which tools you want to utilize to make your home more affordable. We'd love to help you decide if now is the time to begin the home buying process. Let's chat!

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When Will Home Prices Come Down?

As the market continues to shift, more and more questions are being asked about how home prices will behave in the coming months. Will home prices continue to rise, or will they finally start to come down? If you’ve been interested in selling your home and/or buying a new one but have been intimidated by the fast-moving market, you’re in the right place. This post will explore real estate market conditions and when we may start to see home prices drop.     Rising Interest Rates: What They Mean for the Real Estate Market The cost of buying a home skyrocketed by more than 20% across the country in April of this year compared to last year. In some cities, that number was even higher, including: 34.8% in Tampa 32.4% in Phoenix 32.0% in Miami The red-hot real estate market conditions were caused by a few factors, including the Covid-19 pandemic and ensuing Great Resignation, limited inventory, and historically low interest rates. Interest rates are now on their way back up — while this may not sound like the best news for home sellers or home buyers, it does mean the market has started to settle. In fact, rates are expected to rise to 5.7% by the end of the year. These increased costs are putting pressure on the housing market.  According to the Mortgage Bankers Association, there has already been a steep drop in mortgage applications. The drop was so significant that it pushed the market index down to its lowest level since 2000. About 20% of home sellers dropped their prices during the month of May, but that doesn’t signify a serious shift in the market quite yet. Although the real estate market conditions are cooling, that doesn’t mean you can expect significant drops in home prices overnight. Most experts agree it will be at least 2023 before we see home prices drop.     Will the Housing Market Crash? There have been a lot of murmurings online and in social circles that we may be heading towards another 2006-style housing market crash. Most experts are not anticipating this kind of “bubble burst.”  Instead, Capital Economics predicts we’ll see a 5% drop in home price growth by the middle of next year. Then, they expect a gradual recovery to happen to 3% annual price growth by the end of 2024.     Should I Wait for Real Estate Market Conditions to Improve? Since there are no signs of a bubble or any kind of chaotic downturn in the housing market, if you are interested in selling your home, you should not wait. Start the process now! Remember, there’s a lot that goes into selling a home — getting it deep cleaned, de-cluttered, and staged, fixing broken appliances and cosmetic issues, finding a real estate agent, listing the home, preparing the home for showings, having an inspection and appraisal and fixing issues these processes find — and the list goes on.  If that list seems excessively long, it’s because the process can be arduous. So, there’s no need to wait. Get ahead of it and get started now! As the market slows down, it is taking longer for homes to sell — they are still selling fast, but we’re not seeing people lined around the block, and multiple above-asking price cash offers roll in like we were a few months ago.  If you’re a home seller, it’s also important to list your home ASAP before the real estate market conditions change and prices drop. This is key so that you can make the highest profit possible on your home. If you wait too long, you risk missing out on full-price offers that will likely be a thing of the past when the market changes later this year and into next.  Spring and summer are also considered the best times of year to sell a home. If you start the home-selling process now, you’ll still have time to capture the market of people looking to move before the new school year. If you wait any longer, you’ll be entering the market during an awkward time of year when many families won’t want to move until at least the holiday break or even the end of the school year. The bottom line is that continued supply shortages and high buyer demand mean that now is a great time for home sellers to list their homes before prices start dropping significantly as interest rates continue to rise.   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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How Do You Know If You're Ready To Buy a Home?

The Wild Wild West housing market had many people in panic mode — worrying that if they didn't act now, they may never be able to buy a house amid record-high housing prices and increasing interest rates. With the changing market conditions of today, hopeful homebuyers may be in a better position to act. It’s important to remember, though, that no matter what the market is doing, buying a home is something you shouldn't rush into.  A mortgage is one of the biggest — and most important — responsibilities you’ll have in your life. Entering into home ownership before you’re ready could have negative impacts on your financial wellbeing. In this post, we’ll take you through some steps to help you decide whether or not you’re actually ready to purchase a home.   Ready or Not? How To Determine if You’re Ready To Buy a Home In today’s changing market conditions, homebuyers must ensure they are in a good financial position before buying a home. Here are a few top things to consider.     You Have Little to No Debt While there’s no hard rule that you have to be out of debt to buy a house, the lower your debt, the higher your pre-approval and the lower your interest rate — a homebuyer’s dream formula. In addition to these perks of having little to no debt, you should have more dispensable income to spend on your mortgage payment, repairs, furnishings, and anything else your heart desires.     Your Savings Account Is Robust When buying a home and going into owning a home, expenses are a plenty and seem to pop out of nowhere — any homeowner knows this. From the down payment to closing costs to real estate taxes — and that’s before you even move in! Then, you have to be prepared for furnishing your home, replacing appliances, the AC going out, and any other emergencies that come up.  It’s imperative — especially amid today’s changing market conditions and potential looming recession — to give yourself a healthy safety net when it comes to all of the bills and expenses that come with home ownership. Some experts recommend having six months of expenses set aside in your savings account, while others recommend having up to a year’s worth.  One thing’s for sure, the more money you have in your savings account, the less stressful all of the expenses that come with homeownership will be. So, make sure your savings account is up to par before you sign on the dotted line for your new home.     You Have a Steady Job Of course, no job comes with a 100% guarantee of permanent employment. But, the longer you’ve held a position, the more likely your job will be viewed as steady enough to get your mortgage approved. One big no-no during the home buying process is switching jobs, or, God forbid, up and quitting your job. Changing jobs can impact your loan approval, which means you may lose the approval on your dream, or your monthly payment could increase to something that’s out of your ability to pay comfortably. Also, having a steady job will ease the burden of making your mortgage payment because you’ll have an idea of what you can expect on each paycheck and whether you can realistically afford your mortgage.     You Can Realistically Afford the Monthly Payment We’ve all been there, scrolling through Zillow, and we find the perfect house — and it even has a pool! We use the website’s payment calculator, and much to our surprise, the monthly payment seems completely manageable! Not so fast. It’s important to remember these online payment calculators often don’t consider all of the expenses associated with a mortgage payment. They also default to you providing a full 20% down payment. In reality, there are many more factors that will go into your house payment, including: Property taxes — which can increase each year (sometimes pretty significantly). Homeowner’s insurance. Homeowner’s association fees. City taxes and fees. Water, sewage, and garbage. Private mortgage insurance (PMI) if you’re unable to provide the full down payment. These added charges will likely add hundreds of dollars to your monthly payment, so it’s critically important that you don’t forget to factor these in to get a full picture of what you’ll be paying each month. Then you can ask yourself whether or not you can realistically afford it.   Looking for Your Dream Home? We Can Help To navigate these changing market conditions, hopeful homebuyers need expert help. If you’re interested in buying a home, contact our team today. We’ll guide you through the process and help you find your dream home. Click Here

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