The new year is right around the corner, and you might be wondering if 2024 will be the right time to buy or sell your home. If you want to make the most informed decision possible, it’s important to know what the experts have to say about what's ahead for the housing market. Spoiler alert: the projections may be better than you think. Here’s why.

Experts Forecast Ongoing Home Price Appreciation

Take a look at the latest home price forecasts from Fannie Mae, the Mortgage Bankers Association (MBA), and the National Association of Realtors (NAR):

 

 

As you can see in the orange bars on the left, on average, experts forecast prices will end this year up about 2.8% overall, and increase by another 1.5% by the end of 2024. That’s big news, considering so many people thought prices would crash this year. The truth is, prices didn’t come tumbling way down in 2023, and that’s because there just weren’t enough homes for sale compared to the number of people who wanted or needed to buy them, and that inventory crunch is still very real. This is the general rule of supply and demand, and it continues to put upward pressure on prices as we move into the new year.

Looking forward, experts project home prices will continue to rise next year, but not quite as much as they did this year. Even though the expected rise in 2024 isn't as big as in 2023, it's important to understand home price appreciation is cumulative. In simpler terms, this means if the experts are right, according to the national average, after your home's value goes up by 2.8% this year, it should go up by another 1.5% next year. That ongoing price growth is a big part of why owning a home can be a smart decision in the long run.

Projections Show Sales Should Increase Slightly Next Year

While 2023 hasn’t seen a lot of home sales relative to more normal years in the housing market, experts are forecasting a bit more activity next year. Here’s what those same three organizations project for the rest of this year, and in 2024 (see graph below):

 

 

While expectations are for just a slight uptick in total sales, improved activity next year is a good thing for the housing market, and for buyers and sellers like you. As people continue to move, that opens up options for hopeful buyers who are looking for a home.

So, what do these forecasts show? The housing market is expected to be more active in 2024. That may be in part because there will always be people who need to move. People will get new jobs, have children, get married or divorced – these and other major life changes lead people to move regardless of housing market conditions. That will remain true next year, and for years to come. And if mortgage rates come down, we’ll see even more activity in the housing market.

Bottom Line: If you’re thinking about buying or selling, it’s important to know what the experts are forecasting for the future of the housing market. When you’re in the know about what’s ahead, you can make the most informed decision possible. Let's chat about the latest forecasts together, and craft a plan for your next move.

Joe

 

As the year winds down, you may have decided it's time to make a move and put your house on the market. But should you sell now or wait until January? While it may be tempting to hold off until after the holidays, here are three reasons to make your move before the new year.

Get One Step Ahead of Other Sellers

Typically, in the residential real estate market, homeowners are less likely to list their houses toward the end of the year. That’s because people get busy around the holidays and sometimes deprioritize selling their house until the start of the new year when their schedules and social calendars calm down. But that gives you an opportunity to get one step ahead.

Selling now, while other homeowners may hold off until after the holidays, can help you get a leg up on your competition. Start the process today so you can get your house on the market before your neighbors do.

Get Your House in Front of Eager Buyers 

Even though the supply of homes for sale did grow compared to last year, it’s still low. That means there aren’t enough homes on the market today. While some buyers may also delay their plans to move until January, others will still need to move for personal reasons or because something in their life has changed.

Those buyers are still going to be active later this year and will be seriously motivated to make their move happen because they need to. Unfortunately, the challenge they'll face is a shortage of available inventory to meet their needs. A recent article from Investopedia says:

“. . . if your house is up for sale in the winter and someone is looking at it, chances are that person is serious and ready to buy. Anyone shopping for a new home between Thanksgiving and New Year’s is likely going to be a serious buyer. Putting your home on the market at this time of year and attracting a serious buyer can often result in a quicker sale.”

Use Your Equity To Fuel Your Move

Keep in mind that homeowners today have record amounts of equity According to CoreLogic, the average amount of equity per mortgage holder has climbed to almost $290,000. That means the equity you have in your house right now could cover some, if not all, of a down payment on the home of your dreams.

And as you weigh the reasons to sell before year-end, it's important to remember the reasons that sparked your desire to move in the first place. Maybe it’s time for a new home in a location that suits you better, one that offers the perfect space for you and your loved ones, or maybe your needs have evolved over time. A local real estate agent can help you determine how much home equity you have and how you can use it to achieve your goal of making a move.

The bottom line is that listing your home before the new year can offer unique benefits: less competition, motivated buyers, and your equity gains can all play to your advantage. Reach out, and let's achieve your goals before winter sets in.

Joe

 

If you're considering selling your house right now, it's likely because something in your life has changed. And while things like mortgage rates play a big role in your decision, you don’t want that to overshadow why you thought about making a move in the first place.

It’s true mortgage rates are higher right now, and that has an impact on affordability. As a result, some homeowners are deciding they’ll wait to sell because they don’t want to move and have a higher mortgage rate on their next home.

But your lifestyle and your changing needs matter, too. As a recent article from Realtor.com says:

“No matter what interest rates and home prices do next, sometimes homeowners just have to move—due to a new job, new baby, divorce, death, or some other major life change.”

Here are a few of the most common reasons people choose to sell today. You may find any one of these resonates with you and may be reason enough to move, even today.

Relocation

Some of the things that can motivate a move to a new area include changing jobs, a desire to be closer to friends and loved ones, wanting to live in your ideal location, or just looking for a change in scenery.

For example, if you just landed your dream job in another state, you may be thinking about selling your current home and moving for work.

Upgrading

Many homeowners decide to sell to move into a larger home. This is especially common when there’s a need for more room to entertain, a home office or gym, or additional bedrooms to accommodate a growing number of loved ones.

For example, if you’re living in a condo and your household is growing, it may be time to find a home that better fits those needs.

Downsizing

Homeowners may also decide to sell because someone’s moved out of the home recently and there’s now more space than needed. It could also be that they’ve recently retired or are ready for a change.

For example, you’ve just kicked off your retirement and you want to move somewhere warmer with less house to maintain. A different home may be better suited for your new lifestyle.

Change in Relationship Status

Divorce, separation, or marriage are other common reasons individuals sell.

For example, if you’ve recently separated, it may be difficult to still live under one roof. Selling and getting a place of your own may be a better option.

Health Concerns

If a homeowner faces mobility challenges or health issues that require specific living arrangements or modifications, they might sell their house to find one that works better for them.

For example, you may be looking to sell your house and use the proceeds to help pay for a unit in an assisted-living facility.

With higher mortgage rates and rising prices, there are some affordability challenges right now – but your needs and your lifestyle matter too. As a recent article from Bankrate says:

“Deciding whether it’s the right time to sell your home is a very personal choice. There are numerous important questions to consider, both financial and lifestyle-based, before putting your home on the market. . . . Your future plans and goals should be a significant part of the equation . . .”

 

If you want to sell your house and find a new one that better fits your needs, please reach out to me. I'll guide you through the process and help you find a home that works for you.

Joe

 

Mortgage rates have been back on the rise recently and that’s getting a lot of attention from the press. If you’ve been following the headlines, you may have even seen rates recently reached their highest level in over two decades (see graph below):  

 

That can feel like a little bit of a gut punch if you’re thinking about making a move. If you’re wondering whether or not you should delay your plans, what you really need to know is how higher mortgage rates impact you.

There’s no denying mortgage rates are higher right now than they were in recent years. And, when rates are up, that affects overall home affordability. It works like this. The higher the rate, the more expensive it is to borrow money when you buy a home. That’s because, as rates trend up, your monthly mortgage payment for your future home loan also increases.  

 Urban Institute explains how this is impacting buyers and sellers right now: 

 “When mortgage rates go up, monthly housing payments on new purchases also increase. For potential buyers, increased monthly payments can reduce the share of available affordable homes . . . Additionally, higher interest rates mean fewer homes on the market, as existing homeowners have an incentive to hold on to their home to keep their low interest rate.” 

Basically, some people are deciding to put their plans on hold because of where mortgage rates are right now. But what you want to know is: is that a good strategy? 

 Where Will Mortgage Rates Go from Here? 

If you’re eager for mortgage rates to drop, you’re not alone. A lot of people are waiting for that to happen. But here’s the thing. No one knows when it will. Even the experts can’t say with certainty what’s going to happen next.  

Forecasts project rates will fall in the months ahead, but what the latest data says is that rates have been climbing lately. This disconnect shows just how tricky mortgage rates are to project.  

 The best advice for your move is this: don’t try to control what you can’t control. This includes trying to time the market or guess what the future holds for mortgage rates. As CBS News states: 

 “If you're in the market for a new home, experts typically recommend focusing your search on the right home purchase — not the interest rate environment.” 

Instead, work on building a team of skilled professionals including a trusted lender and real estate agent, who can explain what’s happening in the market and what it means for you. If you need to move because you’re changing jobs, want to be closer to family, or are in the middle of another big life change, the right team can help you achieve your goal, even now. 

Bottom Line: The best advice for your move is don’t try to control what you can’t control – especially mortgage rates. Even the experts can’t say for certain where they’ll go from here. Instead, focus on building a team of trusted professionals who can keep you informed. When you’re ready to get the process started, let’s connect.

Joe

 

If your listing expired and your house or condo didn’t sell you’re likely feeling *just a little* frustrated. Not to mention, you're also probably wondering what went wrong. Here are three questions to think about as you figure out what to do next.

Did You Limit Access to Your House?

One of the biggest mistakes you can make when selling your house or condo is restricting showing times or days. Being flexible with your schedule is important. After all, minimal access means minimal exposure to buyers. Sometimes, the most determined and qualified buyers might come from far away or be very busy. They may not be able to change their plans easily if you only offer limited times for showings. Try to make your house available as much as you can to accommodate them. If no one’s able to look at it, how’s it going to sell? And how will you get the best terms/best price sale that you desire?

Possible solution: Ask for prior-day notice as a default. That way you do not have to drop everything at a moment's notice. 

Did You Make Your House Stand Out?

The old saying applies: you never get a second chance to make a first impression.  If it's a house (as opposed to a condo), the exterior needs to look appealing. As an article from U.S. News says:

“After all, if people drive by, but aren’t interested enough to walk through the front door, you’ll never sell your house.”

But don’t let that impact stop at the front door. Whether it's a house or a condo, having it staged properly is vital. By removing personal items and reducing clutter inside, you enable buyers to picture themselves in the home. Additionally, a new coat of paint or cleaning the floors (or replacing them with fresh carpet or wood or an attractive engineered product) can go a long way to freshening up a room. If called for, having your agent recommend a staging designer is smart. The cost will be far outweighed by the return on your investment. An experienced agent should be able to help you with all of this.

Did Your Agent Market the Property Properly?

You and your agent must determine who is the target demographic for your property. A full-service brokerage like Gibson Sotheby's International Realty will be able to provide the proper local, statewide, national, and international marketing platforms, as well as provide attractive, professional print, social, mass email, and other electronic media.

Experienced Sales Representation?

Was your agent able to represent your property professionally and to its best advantage? An experienced agent with a track record will be able to provide quality professional showings to prospective buyers. What comes out of one's mouth during a showing can have consequences down the road. DId your agent perform all the showings or did they pass them off to a newbie "team member"? Or did they just have the property on lockbox?

Did You Price Your House Compellingly?

Setting the right price is extremely important when you're selling your house.  Overpricing in relation to existing market will scare away buyers and make it hard to sell quickly...or at all.  Business Insider notes:

“. . . the biggest mistake sellers make is overpricing their home.”

Price your home accurately. If your house is priced higher than others like it, it will make buyers lose interest. If your property is presented, marketed, represented, and located well, there's only one problem. Can you guess what that problem is? Time is *not* your friend in this case. 

Let's get your home represented properly.

A skilled and experienced agent can offer expert advice on relisting your house with effective strategies to get it sold. It’s natural to feel disappointed when your listing has expired and your house didn’t sell. Let’s connect to figure out what happened and what to reconsider or change if you want to get your house back on the market. Here are some of my more recent sales

Joe

 

If you’re looking to buy a home this fall, there are a few things you need to know. Affordability is tight with today’s mortgage rates and rising home prices. At the same time, there’s a limited number of homes on the market right now and that’s creating some competition among buyers. If you’re strategic, there are ways to navigate these waters. The first thing you’ll want to do is get pre-approved for a mortgage. That way you’ll know your numbers and can set yourself up for success from the start of your home search.

What does pre-approval do for you? To understand why it’s such an important step, you need to know what pre-approval is. As part of the homebuying 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 know 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. Why does this help you, especially today? With higher mortgage rates and home prices impacting affordability for many buyers right now, a solid understanding of your numbers is even more important so you can truly wrap your head around your options.

Pre-Approval Helps Show Sellers You’re a Serious Buyer

There are more buyers looking to buy than there are homes available for sale and that imbalance is creating some competition among homebuyers. That means you could see yourself in a multiple-offer scenario when you make an offer on a home. But getting pre-approved for a mortgage can help you stand out from other hopeful buyers.

As an article from 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.”

Pre-approval shows the seller you’re a serious buyer who has already undergone a credit and financial check, making it more likely that the sale will move forward without unexpected delays or financial issues.

Getting pre-approved is an important first step when you’re buying a home. The more prepared you are, the better chance you have of getting the home you want. Let's connect so that you have the tools you need to purchase a home in today’s market.

Joe

 

Week Ending 9/22/2023

Fed Projections

From the Joe Smith Team at Cross Country Mortgage At the highly anticipated meeting on Wednesday, Fed officials confirmed their outlook for short-term rates to remain at elevated levels for quite a while. While this was not much of a surprise, the news caused mortgage rates to climb to their highest levels in decades.

As expected, the Fed made no change in the federal funds rate, and the statement released after the meeting was very similar to the prior one. The key information was the latest set of projections from officials for future monetary policy. First, the median forecast from 19 Fed officials is for an additional 25 basis point rate hike this year. In addition, they anticipate that the federal funds rate will remain near current levels for a substantially longer period of time than in the last set of projections released three months ago. The bottom line is that officials currently do not see rate cuts coming as soon as investors expected. According to Chair Powell, they want to see "convincing evidence" that inflation is on track to return to target levels before loosening monetary policy. In housing news, sales of existing homes in August fell slightly from July and were 15% lower than last year at this time. Inventory levels stand at just a 3.3-month supply nationally, far below the 6-month supply typical in a balanced market. The median existing-home price of $407,100 was 4% higher than last year at this time. There is no doubt that additional inventory of homes available for sale continues to be desperately needed, but the latest data contained mixed news. Overall housing starts in August were disappointing with a larger than expected decline of 11% from July to the lowest level since June 2020. Most of the weakness came from the multi-family sector, however, with just a modest drop in single-family units. More encouragingly, building permits, a leading indicator, increased for both single-family and multi-family units. Builders again cited tight credit conditions for loans and high prices for land, labor, and materials as obstacles to a faster pace of construction.

Week ahead

Investors will continue to watch for Fed officials to elaborate on their plans for future monetary policy. For economic reports, Consumer Confidence and New Home Sales will be released on Tuesday. Personal Income and the PCE price index, the inflation indicator favored by the Fed, will come out on Friday.

Tue 9/26 New Home Sales Tue 9/26 Consumer Confidence Fri 9/29 Core PCE Fri 9/29 Personal Income

Mortgage Rates Rose 0.15% Dow Fell 500 NASDAQ Fell 400

Joe Smith Branch Manager / SVP M 617-308-3337 D 617-236-1555 W crosscountrymortgage.com/the-joe-smith-team E jsmith@ccm.com We would like to thank our partner, MBSQuoteline for their insightful information. All material Copyright © Ress No. 1, LTD (DBA MBSQuoteline) and may not be reproduced without permission.

We want to take a moment to introduce you to Cross-County Mortgage's Debt-Service-Coverage-Ratio (DSCR) program and share a recent success story involving some of their clients. CCM is a preferred lending partner of mine. This program is for investment properties only and allows borrowers to qualify based on the cash-flow of the property. Several of the DSCR highlights are below.  The borrower's employment and income is not verified or documented. In other words, we don't need paystubs, tax returns, etc, even if they are self-employed or own other properties. Previous landlord experience is not required if certain conditions are met, including current ownership of their primary residence. DSCR can be as low as 75% in some situations. For example, for qualified individuals, if the monthly housing payment on the subject property is $1,000, the rent could be as low as $750. Interest only option available, which can help reduce the monthly cost and potentially increase borrowing power. Gift funds are allowed after a 10% contribution from the borrower's own funds. Success Story  CCM recently worked with buyers who were under contract to purchase an investment property but had just started a new business, so they were lacking a two year history of self-employment and tax returns. They wouldn't have qualified under most traditional loan programs given these circumstances. However, we were able to approve and close their loan using our DSCR program! This is another example of The Joe Smith Team finding a way to make a deal work. In this market, it is more important than ever to align yourself with a team that has the tools, knowledge, and experience to help you and your customers close more transactions on time and without issues! As always, don't hesitate to call/email them with any questions about this or any other of their amazing portfolio of products! And please tell them that Joe Wolvek sent you...:) -The Joe Smith Team/Joe Smith Branch Manager / SVP M 617-308-3337 D 617-236-1555 W crosscountrymortgage.com/the-joe-smith-team E jsmith@ccm.com

 

Are you thinking about selling your home or condo? If so, today’s mortgage rates may be making you wonder if that’s the right decision. Some homeowners are reluctant to sell and take on a higher mortgage rate on their next home. If you’re worried about this too, know that even though rates are high right now, so is home equity. Here’s what you need to know.

Bankrate explains exactly what equity is and how it grows:

“Home equity is the portion of your home that you’ve paid off and own outright. It’s the difference between what the home is worth and how much is still owed on your mortgage. As your home’s value increases over the long term and you pay down the principal on the mortgage, your equity stake grows.”

In other words, equity is how much your home is worth now, minus what you still owe on your home loan.

How Much Equity Do Homeowners Have Now?

Recently, your equity has been growing faster than you might think. To help contextualize just how much the average homeowner has, CoreLogic says:

“. . . the average U.S. homeowner now has about $290,000 in equity.”

That’s because, over the past few years, home prices went up significantly – and those rising prices helped your equity to accumulate faster than usual. While the market has started to normalize, there are still more people wanting to buy homes than there are homes available for sale. This high demand is causing home prices to go up again.

According to the Federal Housing Finance Agency (FHFA), the Census, and ATTOM, a property data provider, nearly two-thirds (68.7%) of homeowners have either fully paid off their mortgages or have at least 50% equity (see chart below):

That means nearly 70% of homeowners have a tremendous amount of equity right now.

How Equity Helps with Your Affordability Concerns

With today’s affordability challenges, your equity can make a big difference when you decide to move. After you sell your house, you can use the equity you've built up in your home to help you buy your next one. Here’s how:

• Be an all-cash buyer: If you've been living in your current home for a long time, you might have enough equity to buy a new house without having to take out a loan. If that's the case, you won't need to borrow any money or worry about mortgage rates. The National Association of Realtors (NAR) states:

“These all-cash home buyers are happily avoiding the higher mortgage interest rates . . .”

• Make a larger down payment: Your  equity could be used toward your next down payment. It might even be enough to let you put a larger amount down, so you won't have to borrow as much money so today’s rates become less of a sticking point. Experian explains:

“Increasing your down payment lowers your principal loan amount and, consequently, your loan-to-value ratio, which could lead to a lower interest rate offer from your lender.”

If you're thinking about moving, the equity you've built up can make a big difference, especially today. To find out how you can use your equity for your next home, let’s connect.

Joe

 

Have you ever wondered how inflation impacts the housing market? Believe it or not, they’re connected. Whenever there are changes to one, both are affected. Here’s a high-level overview of the connection between the two.

The Relationship Between Housing Inflation and Overall Inflation

Shelter inflation is the measure of price growth specific to housing. It comes from a survey of renters and homeowners that’s done by the Bureau of Labor Statistics (BLS). The survey asks renters how much they’re paying in rent, and homeowners how much they’d rent their homes for, if they weren’t living in them.

Much like overall inflation measures the cost of everyday items, shelter inflation measures the cost of housing. And for four consecutive months, based on that survey, shelter inflation has been coming down (see graph below):

Why does this matter? Well, shelter inflation makes up about one-third of overall inflation, as measured by the Consumer Price Index (CPI). So, when shelter inflation moves, it leads to noticeable moves in overall inflation. That means the recent dip in shelter inflation might be a sign that overall inflation could fall in the months ahead.

That moderation would be a welcome sight for the Federal Reserve (the Fed). They’ve been working to get inflation under control since early 2022. While they’ve made some headway (it peaked at 8.9% in the middle of last year), they’re still trying to get to their 2% goal (the latest report is 3.3%). 

Inflation and the Federal Funds Rate  

What’s the Fed been doing to lower inflation? They’ve been increasing the Federal Funds Rate. That interest rate influences how much it costs banks to borrow money from each other. When inflation climbed, the Fed responded by raising the Federal Funds Rate to keep the economy from overheating.

The graph below shows the relationship between the two. Each time inflation (shown in the blue line) starts to climb, the Fed raises the Federal Funds Rate (shown in the orange line) to try to get it back to their target of 2% (see below):

The circled portion of the graph shows the most recent spike in inflation, the Fed’s actions to raise the Federal Funds Rate to fight that, and the moderation of inflation that happened in response to that hike. As inflation gets closer to the Fed’s current 2% goal, they may not need to raise the Federal Funds Rate much further.

A Brighter Future for Mortgage Rates?

So, what does all of this mean for you? While the actions coming out of the Fed don’t determine mortgage rates, they do have an impact. As Mortgage Professional America (MPA) explains:

“. . . mortgage rates and inflation are connected, however indirectly. When inflation rises, mortgage rates rise to keep up with the value of the US dollar. When inflation drops, mortgage rates follow suit.”

While no one can predict the future for mortgage rates, it’s encouraging to see the signs of moderating inflation in the economy. 

Bottom Line

Whether you’re looking to buy, sell, or just stay informed about the housing market, let’s connect.