Why Pricing Your House Right Is Essential

 

Why Pricing Your House Right Is Essential

In today’s real estate market, setting the right price for your house is one of the most valuable things you can do.

According to the U.S. Economic Outlook by the National Association of Realtors (NAR), existing home prices nationwide are forecasted to increase 4.7% in 2020 and 4.1% in 2021. This means experts anticipate home values will continue climbing into next year. Today, low inventory is largely keeping prices from depreciating. Danielle Hale, Chief Economist at realtor.com, notes:

“Looking at the sheer number of buyers, low mortgage rates, and limited sellers, the strength of home prices–which are now growing at the highest pace since January 2018–makes sense.”

When it comes to pricing your home, the goal is to increase visibility and drive more buyers your way. Instead of trying to win the negotiation with one buyer, you should price your house so that demand is maximized and more buyers want to take a look.

How to Price Your Home

As a seller, you might be thinking about pricing your house on the high end while so many of today’s buyers are searching harder than ever just to find a home to purchase. You’re thinking, higher price, greater profit, right? But here’s the thing – a high price tag does not mean you’re going to cash in big on the sale. It’s actually more likely to deter buyers and have them looking at the houses your neighbors are selling instead.

Even today, when the advantage tips toward sellers because there are so few houses for sale, your house is more likely to sit on the market longer or require a price drop that can send buyers running in the other direction if it isn’t priced just right.

A Trusted Real Estate Professional Will Help

It’s important to make sure your house is priced correctly by working in partnership with a trusted real estate professional. When you price it competitively, you won’t be negotiating with one buyer over the price. Instead, you’ll have multiple buyers competing for the home, and that’s what ultimately increases the final sale price.

The key is making sure your house is priced to sell immediately. That way, it will be seen by the most buyers. More than one of them may be interested, and your house will be more likely to sell at a competitive price.

Bottom Line

If you're thinking about listing your house this fall, let’s discuss how to price it right so you can maximize your exposure and your return.

Rising Home Equity Can Power Your Next Move

 

Rising Home Equity Can Power Your Next Move [INFOGRAPHIC]

Some Highlights

• According to CoreLogic, homeowners across the country are gaining significant equity.
• Over the past year, the average homeowner gained $9,800 in equity, growing their overall net worth.
• If you’re ready to sell your house and begin looking for your dream home, let’s connect to plan how your equity can make that possible.

Buyers Are Finding More Space in the Luxury Home Market

Buyers Are Finding More Space in the Luxury Home Market

A year ago, additional space and extra amenities had a very different feel for homebuyers. Today, the health crisis has brought to light how valuable more square footage and carefully designed floorplans can be. Home offices, multi-purpose rooms, gyms, and theaters are becoming more popular, and some families are finding the space they need for these upgrades in the luxury market.

The Institute for Luxury Home Marketing (ILHM) explains:

“With quarantine concerns still top of mind for many luxury buyers, we see large, sprawling estates making their comeback.

For instance, the last six months have seen a resurgence in the buying of mega mansions and estate-size homes – specifically properties that offer space (both inside and outside), separate home offices, gyms, and private amenities such as swimming pools, yoga studios, and recreation rooms.”

This was not the case at this time last year, as the most recent Luxury Market Report from ILHM emphasizes:

“Exactly one year ago, we reported that demand for large properties, mega mansions, private estates, and luxury ranches had reduced significantly over the previous few years; especially from the younger generation of luxury property buyers.”

For today’s buyers looking for larger homes, steady increases in equity might be what makes a move possible. Leveraging home equity makes it easier to afford the down payment on a luxury home, and current low interest rates are making mortgage payments more affordable than they have been in years. The report from ILHM also notes:

“Luxury real estate prices may continue to strengthen further into the third quarter, as the affluent continue to see large investment returns from the currently strong stock market.

Coupled with the low interest rates, the policies granting (and insisting) on working from home implemented by many employers, and the concerns of the pandemic, all translate to the affluent increasingly trading in their city lifestyle for a home that has it all.”

Clearly, today’s strong gains in home equity paired with record-low interest rates make fall a great time to move up into the luxury market to meet those changing needs.

Bottom Line

If you’re ready to gain some breathing room in a larger home, let’s connect so you have the guidance you need to find more space in the luxury home market.

Why Selling this Fall May Be Your Best Move

 

Why Selling this Fall May Be Your Best Move

If you’re thinking about moving, selling your house this fall might be the way to go. Here are four highlights in the housing market that may make your decision to sell this fall an easy one.

1. Buyers Are Actively in the Market

ShowingTime, a leading real estate showing software and market stat service provider, just reported that buyer traffic jumped 60.7% compared to this time last year. That’s a huge increase.

It’s clear that buyers are ready, willing, and able to purchase – and they’re in the market right now. In many regions of the country, multiple buyers are entering bidding wars to compete for the home they want. Take advantage of the buyer activity currently in the market so you can sell your house in the most favorable terms.

2. There Are Not Enough Homes for Sale

In the latest Existing Home Sales Report, the National Association of Realtors (NAR) announced that there were only 1.49 million units available for sale. That number was down 18.6% from one year ago. This means in the majority of the country, there aren’t enough homes for sale to satisfy the number of buyers.

Due to the health crisis, many homeowners were reluctant to list their homes earlier this year. That will change as the economy continues to recover. The choices buyers have will increase going into the new year. Don’t wait until additional sellers come to market before you decide to make a move.

3. The Process Is Going Quickly

Today’s ultra-competitive environment has forced buyers to do all they can to stand out from the crowd, including getting pre-approved for their mortgage financing. This makes the entire selling process much faster and simpler, as buyers know exactly what they can afford before shopping for a home. According to the latest Origination Insights Report from Ellie Mae, the time needed to close a loan is just 49 days.

4. There May Never Be a More Important Time to Move

You’ve likely spent much of the last six months in your current home. Perhaps you now realize how small it is, and you need more space. If you’re working from home, your children are doing virtual school, or you just need more space, your current floor plan may not work for your family’s changing needs.

Homebuilders are beginning to build houses again, so you can choose the exact floor plan to match what your family needs, and you can make sure the outdoor space is what you want too.

Bottom Line

The housing market is prime for sellers right now, so let’s connect to get the process started this fall. If the timing is right for you and your family, the market is calling your name.

Where Are Home Values Headed Over the Next 12 Months?

 

Where Are Home Values Headed Over the Next 12 Months?

As shelter-in-place orders were implemented earlier this year, many questioned what the shutdown would mean to the real estate market. Specifically, there was concern about home values. After years of rising home prices, would 2020 be the year this appreciation trend would come to a screeching halt? Even worse, would home values begin to depreciate?

Original forecasts modeled this uncertainty, and they ranged anywhere from home values gaining 3% (Zelman & Associates) to home values depreciating by more than 6% (CoreLogic).

However, as the year unfolded, it became clear that there would be little negative impact on the housing market. As Mark Fleming, Chief Economist at First American, recently revealed:

“The only major industry to display immunity to the economic impacts of the coronavirus is the housing market.”

Have prices continued to appreciate so far this year?

Last week, the Federal Housing Finance Agency (FHFA) released its latest Home Price Index. The report showed home prices actually rose 6.5% from the same time last year. FHFA also noted that price appreciation accelerated to record levels over the summer months:

“Between May & July 2020, national prices increased by over 2%, which represents the largest two-month price increase observed since the start of the index in 1991.”

What are the experts forecasting for home prices going forward?

Below is a graph of home price projections for the next year. Since the market has changed dramatically over the last few months, this graph shows forecasts that have been published since September 1st.

Bottom Line

The numbers show that home values have weathered the storm of the pandemic. Let’s connect if you want to know what your home is currently worth and how that may enable you to make a move this year.

Even though home values have appreciated, it’s a great time to buy a home because mortgage rates are at historic lows.

 

The Cost of a Home Is Far More Important than the Price

Housing inventory is at an all-time low. There are 39% fewer homes for sale today than at this time last year, and buyer demand continues to set records. Zillow recently reported:

“Newly pending sales are up 25.5% compared to the same week last year, the highest year-over-year increase in the weekly Zillow database.”

Whenever there is a shortage in supply of an item that’s in high demand, the price of that item increases. That’s exactly what’s happening in the real estate market right now. CoreLogic’s latest Home Price Index reports that values have increased by 5.5% over the last year.

This is great news if you’re planning to sell your house; on the other hand, as either a first-time or repeat buyer, this may instead seem like troubling news. However, purchasers should realize that the price of a house is not as important as the cost. Let’s break it down.

There are several factors that influence the cost of a home. The two major ones are the price of the home and the interest rate at which a buyer can borrow the funds necessary to purchase the home.

Last week, Freddie Mac announced that the average interest rate for a 30-year fixed-rate mortgage was 2.87%. At this time last year, the rate was 3.73%. Let’s use an example to see how that difference impacts the true cost of a home.

Assume you purchased a home last year and took out a $250,000 mortgage. As mentioned above, home values have increased by 5.5% over the last year. To buy that same home this year, you would need to take out a mortgage of $263,750.

How will your monthly mortgage payment change based on today’s lower mortgage rate?

This table calculates the difference in your monthly payment:That’s a savings of $61 monthly, which adds up to $732 annually and $21,960 over the life of the loan.

Bottom Line

Even though home values have appreciated, it’s a great time to buy a home because mortgage rates are at historic lows.

Is the Economic Recovery Beating All Projections?

 

Is the Economic Recovery Beating All Projections?

Earlier this year, many economists and market analysts were predicting an apocalyptic financial downturn that would potentially rattle the U.S. economy for years to come. They immediately started to compare it to the Great Depression of a century ago. Six months later, the economy is still trying to stabilize, but it is evident that the country will not face the total devastation projected by some. As we continue to battle the pandemic, forecasts are now being revised upward. The Wall Street Journal (WSJ) just reported:

“The U.S. economy and labor market are recovering from the coronavirus-related downturn more quickly than previously expected, economists said in a monthly survey.

Business and academic economists polled by The Wall Street Journal expect gross domestic product to increase at an annualized rate of 23.9% in the third quarter. That is up sharply from an expectation of an 18.3% growth rate in the previous survey.”

What Shape Will the Recovery Take?

Economists have historically cast economic recoveries in the form of one of four letters – V, U, W, or L.

A V-shaped recovery is all about the speed of the recovery. This quick recovery is treated as the best-case scenario for any economy that enters a recession. NOTE: Economists are now also using a new term for this type of recovery called the “Nike Swoosh.” It is a form of the V-shape that may take several months to recover, thus resembling the Nike Swoosh logo.

A U-shaped recovery is when the economy experiences a sharp fall into a recession, like the V-shaped scenario. In this case, however, the economy remains depressed for a longer period of time, possibly several years, before growth starts to pick back up again.

A W-shaped recovery can look like an economy is undergoing a V-shaped recovery until it plunges into a second, often smaller, contraction before fully recovering to pre-recession levels.

An L-shaped recovery is seen as the worst-case scenario. Although the economy returns to growth, it is at a much lower base than pre-recession levels, which means it takes significantly longer to fully recover.

Many experts predicted that this would be a dreaded L-shaped recovery, like the 2008 recession that followed the housing market collapse. Fortunately, that does not seem to be the case.

The same WSJ survey mentioned above asked the economists which letter this recovery will most resemble. Here are the results:

What About the Unemployment Numbers?

It’s difficult to speak positively about a jobs report that shows millions of Americans are still out of work. However, when we compare it to many forecasts from earlier this year, the numbers are much better than most experts expected. There was talk of numbers that would rival the Great Depression when the nation suffered through four consecutive years of unemployment over 20%.

The first report after the 2020 shutdown did show a 14.7% unemployment rate, but much to the surprise of many analysts, the rate has decreased each of the last three months and is now in the single digits (8.4%).

Economist Jason Furman, Professor at Harvard University's John F. Kennedy School of Government and the Chair of the Council of Economic Advisers during the previous administration, recently put it into context:

“An unemployment rate of 8.4% is much lower than most anyone would have thought it a few months ago. It is still a bad recession but not a historically unprecedented event or one we need to go back to the Great Depression for comparison.”

The economists surveyed by the WSJ also forecasted unemployment rates going forward:

• 2021: 6.3%
• 2022: 5.2%
• 2023: 4.9%

The following table shows how the current employment situation compares to other major disruptions in our economy:

Bottom Line

The economic recovery still has a long way to go. So far, we are doing much better than most thought would be possible.