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In April, rates averaged 6.3%. At this rate, Americans need to put 20% down for a median-priced home if they don’t want their monthly mortgage payment to take up more than 25% of their income. However, data shows that nearly half of renters – 21 million renter households – spend more than 30% of their income on rent.
All •
April 27, 2023
Mortgage Interest Rates Inch Up
Freddie Mac today released the results of its Primary Mortgage Market Survey® (PMMS®), showing the 30-year fixed-rate mortgage (FRM) averaged 6.43 percent.
“The 30-year fixed-rate mortgage increased modestly for the second straight week, but with the rate of inflation decelerating rates should gently decline over the course of 2023,” said Sam Khater, Freddie Mac’s Chief Economist. “Incoming data suggest the housing market has stabilized from a sales and house price perspective. The prospect of lower mortgage rates for the remainder of the year should be welcome news to borrowers who are looking to purchase a home.”
- 30-year fixed-rate mortgage averaged 6.43 percent as of April 27, 2023, up from last week when it averaged 6.39 percent. A year ago at this time, the 30-year FRM averaged 5.10 percent.
- 15-year fixed-rate mortgage averaged 5.71 percent, down from last week when it averaged 5.76 percent. A year ago at this time, the 15-year FRM averaged 4.40 percent.
The PMMS® is focused on conventional, conforming, fully amortizing home purchase loans for borrowers who put 20 percent down and have excellent credit.
National Association of Realtors Economist Nadia Evangelou posted this reaction to the latest report from Freddie Mac.
All •
April 27, 2023
Today’s Foreclosure Numbers Are Nothing Like 2008
You’ve likely seen headlines about the number of foreclosures climbing in today’s housing market. That may leave you with a few questions, especially if you’re thinking about buying a house. Understanding what they really mean is mission-critical if you want to know the truth about what’s happening today.
According to a recent report from ATTOM, a property data provider, foreclosure filings are up 6% compared to the previous quarter and 22% since one year ago. As media headlines call attention to this increase, reporting on just the number could actually generate worry and may even make you think twice about buying a home for fear that prices could crash. The reality is, while increasing, the data shows a foreclosure crisis is not where the market is headed.
Let’s look at the latest information with context so we can see how this compares to previous years.
It Isn’t the Dramatic Increase Headlines Would Have You Believe
In recent years, the number of foreclosures has been down to record lows. That’s because, in 2020 and 2021, the forbearance program and other relief options for homeowners helped millions of homeowners stay in their homes, allowing them to get back on their feet during a very challenging period. And with home values rising at the same time, many homeowners who may have found themselves facing foreclosure under other circumstances were able to leverage their equity and sell their houses rather than face foreclosure. Moving forward, equity will continue to be a factor that can help keep people from going into foreclosure.
As the government’s moratorium came to an end, there was an expected rise in foreclosures. But just because foreclosures are up doesn’t mean the housing market is in trouble. As Clare Trapasso, Executive News Editor at Realtor.com, says:
“There’s no reason to panic, at least not yet. Foreclosure filings began ticking up . . . after the federal foreclosure moratorium ended. The moratorium was enacted in the early days of COVID-19, when millions of Americans lost their jobs, to prevent a tsunami of homeowners losing their properties. So some of these proceedings would have taken place during the pandemic but got delayed due to the moratorium. This is a bit of a catch-up.”
Basically, there’s not a sudden flood of foreclosures coming. Instead, some of the increase is due to the delayed activity explained above while more is from economic conditions. As Rob Barber, CEO of ATTOM, explains:
“This unfortunate trend can be attributed to a variety of factors, such as rising unemployment rates, foreclosure filings making their way through the pipeline after two years of government intervention, and other ongoing economic challenges. However, with many homeowners still having significant home equity, that may help in keeping increased levels of foreclosure activity at bay.”
To further paint the picture of just how different the situation is now compared to the housing crash, take a look at the graph below. It shows foreclosure activity has been lower since the crash by looking at properties with a foreclosure filing going all the way back to 2005.
While foreclosures are climbing, it’s clear foreclosure activity now is nothing like it was during the housing crisis. In addition to all of the factors mentioned above, that’s also largely because buyers today are more qualified and less likely to default on their loans.
Today, foreclosures are far below the record-high number that was reported when the housing market crashed.
Bottom Line
Right now, putting the data into context is more important than ever. While the housing market is experiencing an expected rise in foreclosures, it’s nowhere near the crisis levels seen when the housing bubble burst, and that won’t lead to a crash in home prices.
Factors Affecting Home Affordability Today
There’s been a lot of focus on higher mortgage rates and how they’re creating affordability challenges for today’s homebuyers. It’s true that rates climbed dramatically since the record-low we saw during the pandemic. But home affordability is based on more than just mortgage rates – it’s determined by a combination of mortgage rates, home prices, and wages.
Considering how each one of these factors is changing gives you the full picture of home affordability today. Here’s the latest.
1. Mortgage Rates
While mortgage rates are higher than they were a year ago, they’ve hovered primarily between 6% and 7% for nearly eight months now (see graph below):
As the graph shows, mortgage rates have experienced some volatility during that time. And even a small change in mortgage rates impacts your purchasing power. That’s why it’s so important to lean on your team of real estate professionals for expert advice to stay up to date on what’s happening in the market. While it’s hard to project where mortgage rates will go from here, many experts agree they’ll likely continue to remain around 6%-7% in the immediate future.
2. Home Prices
Over the past few years, home prices appreciated rapidly as the record-low mortgage rates we saw during the pandemic led to a surge in buyer demand. The heightened buyer demand happened while the supply of homes for sale was at record lows, and that imbalance put upward pressure on home prices. However, today’s higher mortgage rates have slowed down price appreciation.
And, the truth is, home price appreciation varies by market. Some areas are seeing slight declines while others have prices that are climbing. As Selma Hepp, Chief Economist at CoreLogic, explains:
“The divergence in home price changes across the U.S. reflects a tale of two housing markets. Declines in the West are due to the tech industry slowdown and a severe lack of affordability after decades of undersupply. The consistent gains in the Southeast and South reflect strong job markets, in-migration patterns and relative affordability due to new home construction.”
To find out what’s happening with prices in your local market, reach out to a trusted real estate agent.
3. Wages
The most positive factor in affordability right now is rising income. The graph below uses data from the Bureau of Labor Statistics (BLS) to show how wages have grown over time:
Higher wages improve affordability because they reduce the percentage of your income it takes to pay your mortgage since you don’t have to put as much of your paycheck toward your monthly housing cost.
Home affordability comes down to a combination of rates, prices, and wages. If you have questions or want to learn more, reach out to a real estate professional who can explain what’s happening locally and how these factors work together.
Bottom Line
If you’re planning to buy a home, knowing the key factors that impact affordability is important so you can make an informed decision. To stay up to date on the latest on each, let’s connect today.
What The Experts Are Saying About The Spring Housing Market
The housing market’s been going through a lot of change lately, and there’s been uncertainty surrounding what will happen this spring. You may be wondering if more homes will go on the market, what’s next with home prices and mortgage rates, or what the best advice is for someone in your position right now.
Here’s what industry experts are saying right now about the spring housing market and what it means for you:
Selma Hepp, Chief Economist, CoreLogic:
“We see more competition among buyers . . . Housing supply also tends to grow during the spring months. And this is also the time of year when relatively more migration happens, as people graduate and move elsewhere looking for jobs.”
Greg McBride, Chief Financial Analyst, Bankrate:
“I don’t expect big moves in prices in the span of a month, but like the flower buds of spring, the housing market is showing signs of improvement. A pick up in activity with inventory still low does bode well for home prices.”
Rick Sharga, Founder and CEO, CJ Patrick Company:
“If you can find a home you love and can afford at today’s prices, don’t wait. Home prices in most of the country are unlikely to crash, and mortgage rates will only come down very gradually if they decline at all this year.”
Jeff Tucker, Senior Economist, Zillow:
“The market is still much friendlier this spring for buyers who can overcome affordability hurdles, but buyers are going to see more competition than they might expect because there are not many homes on the market to go around. New listings are increasing, which they almost always do this time of year, but not nearly as quickly as usual.”
Bottom Line
If you’re thinking about selling your house, this spring’s a great time to do so while inventory is still so low. And if you’re in a good position to buy, lean on your team of expert advisors for the best advice. Whatever your plans, let’s connect to make sure you’re able to navigate the spring housing market with confidence.
Buying •
April 24, 2023
The Difference Between a Home Inspection and an Appraisal?
If you’re planning to buy a home, an inspection is an important step in the process. It assesses the condition of the home before you finalize the transaction. It’s also a different step in the process from an appraisal, which is a professional evaluation of the market value of the home you’d like to buy. In most cases, an appraisal is ordered by the lender to confirm or verify the value of the home prior to lending a buyer money for the purchase. Here’s the breakdown of each one and why they’re both important when buying a home.
Home Inspection
Here’s the key difference between an inspection and an appraisal. Bankrate says:
“In short, while an appraisal helps you understand a home’s value, inspections help you understand a home’s condition.”
The home inspection is a way to determine the current state, safety, and condition of the home before you finalize the sale. If anything is questionable in the inspection process – like the age of the roof, the state of the HVAC system, or just about anything else – you as a buyer have the option to discuss and negotiate any potential issues or repairs with the seller before the transaction is final. Your real estate agent is a key expert to help you through this part of the process.
Home Appraisal
The National Association of Realtors (NAR) explains:
“A home purchase is typically the largest investment someone will make. Protect yourself by getting your investment appraised! An appraiser will observe the property, analyze the data, and report their findings to their client. For the typical home purchase transaction, the lender usually orders the appraisal to assist in the lender’s decision to provide funds for a mortgage.”
When you apply for a mortgage, an unbiased appraisal (which is required by the lender) is the best way to confirm the value of the home based on the sale price. Regardless of what you’re willing to pay for a house, if you’ll be using a mortgage to fund your purchase, the appraisal will help make sure the bank doesn’t loan you more than what the home is worth.
This is especially critical in today’s sellers’ market where low inventory is driving an increase in bidding wars, which can push home prices upward. When sellers are in a strong position like this, they tend to believe they can set whatever price they want for their house under the assumption that competing buyers will be willing to pay more.
However, the lender will only allow the buyer to borrow based on the value of the home. This is what helps keep home prices in check. If there’s ever any confusion or discrepancy between the appraisal and the sale price, your trusted real estate professional will help you navigate any additional negotiations in the buying process.
Bottom Line
The inspection and the appraisal are critical steps when buying a home, and you don’t need to manage them by yourself. Let’s connect today so you have the expert guidance you need to navigate the entire homebuying process.
Buying •
April 24, 2023
Don’t Leave Out The Pre-Approval Piece
If you’re buying a home this spring, today’s housing market can feel like a challenge. With so few homes on the market right now, plus higher mortgage rates, it’s essential to have a firm grasp on your homebuying budget. You’ll also need a sense of determination to find the right house and act quickly when you go to put in an offer. One thing you can do to help you prepare is to get pre-approved.
To understand why it’s such an important step, you need to know what pre-approval is. As part of the process, a lender looks at your finances to determine what they’d be willing to loan you. From there, your lender will give you a pre-approval letter to help you understand how much money you can borrow.
Freddie Mac explains it like this:
“A pre-approval is an indication from your lender that they are willing to lend you a certain amount of money to buy your future home. . . . Keep in mind that the loan amount in the pre-approval letter is the lender’s maximum offer. Ultimately, you should only borrow an amount you are comfortable repaying.”
Basically, pre-approval gives you critical information about the homebuying process that’ll help you understand how much you may be able to borrow so you have a stronger grasp of your options. And with higher mortgage rates impacting affordability for many buyers today, a solid understanding of your numbers is even more important.
Pre-Approval Helps Show You’re a Serious Buyer
That’s not the only thing pre-approval can do. Another added benefit is it can help a seller feel more confident in your offer because it shows you’re serious about buying their house. And, with sellers seeing a slight increase in the number of offers again this spring, making a strong offer when you find the perfect house is key.
As a recent article from the Wall Street Journal (WSJ) says:
“If you plan to use a mortgage for your home purchase, preapproval should be among the first steps in your search process. Not only can getting preapproved help you zero in on the right price range, but it can give you a leg up on other buyers, too.”
Bottom Line
Getting pre-approved is an important first step when you’re buying a home. It lets you know what you can borrow for your loan and shows sellers you’re serious. Connect with a local real estate professional and a trusted lender so you have the tools you need to purchase a home in today’s market.
Selling •
April 19, 2023
Falling out of Love with Your House?
Owning a home means having a place that’s solely your own and provides the space, features, and location you and your loved ones need. But what happens when your needs change? If this hits home for you, it may be time to make a move.
According to the latest Home Buyers and Sellers Generational Trends Report from the National Association of Realtors (NAR), the average person has lived in their current house for ten years. If you’ve been in your home for a while, think about how much in your life has changed since you moved in. Even if you thought it would be your forever home when you bought it, it doesn’t have to be. Work with a local real estate agent to explore all your options in today’s market before settling for your current home.
That’s actually what a lot of homeowners are doing right now. A recent survey from Realtor.com finds that, of people who are considering selling in 2023, one in three are thinking about moving because their home no longer meets their needs. And according to the same report from NAR, that’s consistent with this year’s top reasons for selling, which include:
- Want to move closer to friends or family
- Moving due to retirement
- Home is too small or too large
- Change in family situation
- Job relocation
If things in your life have changed, it may be time to make a move. And there’s good news: it’s still a great time to sell. Here’s why.
We’re in a strong sellers’ market. That means homes listed at market value and in good condition are getting attention from buyers and selling quickly. Lean on your expert real estate advisor for the best advice on getting your house ready to sell.
Your equity can power your next move. There’s a good chance you have a significant amount of equity right now thanks to record levels of price appreciation in recent years. When you sell, you can use that equity to help afford your next home. In fact, NAR’s report from above shows 38% of recent buyers used the money from the sale of their previous home to cover the down payment on their next one. Work with a local real estate agent to learn how much equity you have and what you can do with it in today’s housing market.
Bottom Line
If your home no longer meets your needs, consider selling it so you can find your dream home. Let’s connect so you can learn about your options.
Reasons Millennials Are Buying Homes
In the United States, there are over 72 million millennials. If you’re part of that generation and have thought about buying a home, you aren’t alone. According to Zonda, 98% of millennials want to become a homeowner at some point if they aren’t already. But why? There are plenty of reasons you may choose to become a homeowner. Here’s why other millennials have made that decision (see graph below):
This graph shows why millennials are buying homes according to Zonda’s 6th annual millennial survey. The top reasons include building equity, a change in life stage, wanting stability, rising home values, and wanting to make somewhere truly their own. Here’s a look at each in more detail.
Building equity – Homeownership is a long-term investment that allows you to build wealth, increase your net worth, and become more financially stable. Beyond that, the alternative to owning a home is typically renting. With the way rents have risen so dramatically over time, it may make sense to build your own equity instead of the equity of the person you’re renting from.
A change in life stage – As a millennial, you’re reaching your prime homebuying years. That means you may be at the point where you need more space or a different location.
Stability or settling down – This could mean establishing your career or just generally deciding more concretely what you want your life to look and feel like. As that idea becomes clearer, you may want to establish that lifestyle in a particular place and put down roots.
Rising home values – By purchasing a home, you own an asset that traditionally increases in value over time. That can mean your home will have a higher resale value if you decide to move again.
Wanting to make somewhere “mine” – Owning a home gives a sense of freedom because you can customize it however you want, make updates as you see fit, and be yourself in a place that’s solely your own.
Bottom Line
There are plenty of great reasons why millennials are buying homes today. If you’ve thought about becoming a homeowner and any of these reasons resonate with you too, let’s connect to explore your options.
