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Do Elections Impact the Housing Market?
With the 2024 Presidential election on the horizon, potential home buyers and sellers are understandably curious about how such a major event might influence the housing market. It's a crucial consideration, as buying or selling a home is a significant decision.
Historically, Presidential elections have had only a minor, temporary effect on the housing market. Here’s a closer look at how home sales, prices, and mortgage rates have responded to elections in the past.
Home Sales
Typically, during Presidential election years, there's a slight dip in home sales in November. Ali Wolf, Chief Economist at Zonda, notes:
"Usually, home sales are unchanged compared to a non-election year with the exception being November. In an election year, November is slower than normal."
This slowdown is often due to the uncertainty and hesitation some people feel about making large decisions during an election period. However, this slowdown is temporary. Historical data shows that home sales tend to bounce back in December and continue to rise in the following year.
For instance, data from the Department of Housing and Urban Development (HUD) and the National Association of Realtors (NAR) reveals that after nine of the last eleven Presidential elections, home sales increased the next year.(see graph below):
Home Prices
When it comes to home prices, election years don’t typically disrupt the ongoing price trends. Ryan Lundquist, a residential appraiser and housing analyst, explains:
"An election year doesn’t alter the price trend that is already happening in the market."
Home prices generally continue to rise year-over-year, regardless of elections. Recent data from NAR shows that after seven of the last eight Presidential elections, home prices increased the following year. The only exception was during the housing market crash, which was an atypical year.(see graph below):
Mortgage Rates
Mortgage rates significantly affect monthly payments for home buyers. Data from Freddie Mac shows that in eight of the last eleven Presidential election years, mortgage rates decreased from July to November.(see chart below):
Current forecasts suggest that mortgage rates might ease slightly throughout the remainder of this year, potentially continuing the trend of declining rates seen in most previous election years. For those looking to buy a home, lower rates could result in a more affordable monthly payment.
What This Means for You
The key takeaway is that while Presidential elections do have some impact on the housing market, these effects are usually minor and temporary. As Lisa Sturtevant, Chief Economist at Bright MLS, summarizes:
"Historically, the housing market doesn’t tend to look very different in presidential election years compared to other years."
For most buyers and sellers, elections don’t significantly impact their plans.
Bottom Line
It's natural to feel uncertain during an election year, but history shows that the housing market remains strong and resilient. Whether you're buying or selling, it's essential to stay informed and work with a knowledgeable real estate professional to navigate the market effectively.
6-17-2024
Homeward Bound Newsletter June 2024
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6-14-2024
CATEGORIES: Newsletter
Your Equity Could Make a Move Possible
Many homeowners looking to sell feel like they’re stuck between a rock and a hard place right now. Today’s mortgage rates are higher than the ones they currently have, making it harder to want to sell and make a move. Maybe you’re in the same boat.
But what if there was a way to offset these higher borrowing costs? There is. The money you need probably already exists in your current home in the form of equity.
What Is Equity?
Think of equity as a simple math equation. Freddie Mac explains:
“. . . your home’s equity is the difference between how much your home is worth and how much you owe on your mortgage.”
Your equity grows as you pay down your loan over time and as home prices climb. Thanks to the rapid home price appreciation in recent years, you probably have a lot more equity than you realize.
The latest data from the Census and ATTOM shows that more than two out of three homeowners have either completely paid off their mortgages or have at least 50% equity:
This means the majority of homeowners have a game-changing amount of equity right now.
How Your Equity Can Help Fuel Your Move
After you sell your house, that equity can help you move without worrying as much about today’s mortgage rates. As Danielle Hale, Chief Economist for Realtor.com, says:
“A consideration today's homeowners should review is what their home equity picture looks like. With the typical home listing price up 40% from just five years ago, many home sellers are sitting on a healthy equity cushion. This means they are likely to walk away from a home sale with proceeds that they can use to offset the amount of borrowing needed for their next home purchase.”
Here are a few ways you can use equity to buy your next home:
- 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 your next home without taking out a loan. If that’s the case, you won’t need to borrow any money or worry about mortgage 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 at today’s rates.
The First Step: Determine How Much Equity You Have in Your Home
To find out how much equity you have, you’ll need two things:
- The current mortgage balance on your home
- The current value of your home
You can probably find the mortgage balance on your monthly mortgage statement. To understand the current market value of your house, you can pay for an appraisal, or you can contact a local real estate agent who can provide you with a professional equity assessment report (PEAR) at no charge.
Once you’ve connected with a trusted local agent and run the numbers, you’re one step closer to making a move you may not have thought was realistic – all thanks to your equity.
Bottom Line
If you want to find out how much equity you have and talk more about how it can make your next move possible, let’s connect.
6-14-2024
Home Prices Aren’t Declining, But Headlines Might Make You Think They Are
If you’ve been keeping up with the news about home sellers cutting prices, you might think the housing market is in decline. However, this is a perfect example of how headlines can be more alarming than informative. Here's the real story about home prices.
The Reality of Home Prices
Home prices are higher than they were a year ago, and they are projected to keep rising, though at a slower rate.
A recent Redfin article stated,
“Price Drops Hit Highest Level in 18 Months As High Rates Dampen Buyer Demand.”
This might lead you to believe that home prices are falling.
While the latest data from Realtor.com shows that 16.6% of homes on the market had price reductions in May, up from 12.7% last May, this does not indicate that overall home prices are declining.
Understanding Asking Price vs. Sold Price
The asking price, or listing price, is what the seller hopes to get for their home. However, sellers can't simply name any price and expect buyers to pay it. Today's buyers are knowledgeable and mindful of their budgets, especially with higher mortgage rates. This forces sellers to adjust their asking prices.
When a home doesn’t attract much interest, sellers might lower the asking price to draw in potential buyers. These adjustments are what headlines refer to as “price drops,” which can sound like home prices are declining.
Mike Simonsen, CEO and Founder of Altos Research, says:
“Not only is the share of homes with price cuts elevated compared to one year ago, but more price cuts are happening each week than last year.”
Conversely, the sold price is the actual amount a buyer pays for a home once the deal is finalized.
The key takeaway is that sold prices are still on the rise and are expected to continue increasing for at least the next five years.
What Does This Mean for Home Prices?
The recent increase in price reductions does not equate to a decrease in overall home values. It indicates that demand is cooling off, leading sellers to adjust their expectations to the current market conditions.
Despite more price reductions, home values are still increasing on an annual basis, which is a typical trend in the housing market. According to the Federal Housing Finance Agency (FHFA), home prices rose by 6.6% over the past year.(see below):
This map shows that prices increased almost everywhere across the country, confirming that the market is not in decline.
While price reductions can signal that prices may moderate in the future, this is not a reason for concern. The same Redfin article also notes:
“. . . those metrics suggest sale-price growth could soften in the coming months as persistently high mortgage rates turn off homebuyers. For now, the median-home sale price is up 4.3% year over year to another record high. . .”
With current inventory levels as low as they are, we are more likely to see price moderation rather than significant declines in the coming months.
Why This Is Good News for Buyers and Sellers
For buyers, more realistic asking prices mean a better chance of purchasing a home at a fair price. It also allows buyers to enter the market with more confidence, knowing that prices are stabilizing.
For sellers, understanding the need to adjust your asking price can lead to quicker sales and fewer price negotiations. Setting a realistic price from the beginning can attract serious buyers and result in smoother transactions.
Bottom Line
The increase in price reductions might seem concerning, but it’s actually a sign of a market adapting to new conditions. Home prices are still growing, just at a more moderate rate.
6-12-2024
Selling Smart: Why a Real Estate Agent Makes All the Difference
If you’re considering selling your house on your own as a “For Sale by Owner” (FSBO), you want to think about if it’s really worth the extra stress. Going this route means shouldering a lot of responsibilities by yourself – and, if you’re not an expert, that opens the door for mistakes to happen and can quickly become overwhelming.
A report from the National Association of Realtors (NAR) shows two key areas where people who sold their own house struggled the most: pricing and paperwork.
Here are just a few of the ways an agent makes those tasks a whole lot easier.
Getting the Price Right
Setting the right price for your house is important. And, if you’re selling your house on your own, two common issues can happen. You might ask for too much money (overpricing). Or you might not ask for enough (underpricing). Either can make it hard to sell your house. According to NerdWallet:
“When selling a home, first impressions matter. Your house’s market debut is your first chance to attract a buyer and it’s important to get the pricing right. If your home is overpriced, you run the risk of buyers not seeing the listing. ... But price your house too low and you could end up leaving some serious money on the table. A bargain-basement price could also turn some buyers away, as they may wonder if there are any underlying problems with the house.”
To avoid these problems, team up with a real estate agent. Agents know how to figure out the perfect price because they have a deep understanding of the local housing market. And they’ll use that expertise to set a price that matches what buyers are willing to pay, giving your house the best chance to impress from the start.
Understanding and Performing Paperwork
Selling a house involves a bunch of paperwork and legal documentation that has to be just right. There are a lot of rules and regulations to follow, and that makes it a bit tricky for homeowners to manage everything on their own. Without a pro by your side, you could end up facing liability risks and legal complications.
Real estate agents are experts in all the contracts and paperwork needed for selling a house. They know the rules and can guide you through it all, reducing the chance of mistakes that might lead to legal problems or delays. As an article from First American explains:
“To buy or sell a home you need to accurately complete a lot of forms, disclosures, and legal documents. A real estate agent ensures you cross every ‘t’ and dot every ‘i’ to help you avoid having a transaction fall through and/or prevent a costly mistake.”
So, instead of dealing with the growing pile of documents on your own, team up with an agent who can be your advisor, helping you avoid any legal bumps in the road.
Bottom Line
Selling a house on your own can cost you a lot of time and stress. Let’s connect so you have help with all the finer details, including setting the right price, handling all the paperwork, and so much more. That way we can take that stress off of your plate.
6-11-2024
The Optimal Moment for Acquiring Luxury Homes
If you've been on the hunt for a high-end property but haven't found the perfect match, you might have paused your search. However, recent data suggests that now could be the ideal time to dive back into the market. Here's why.
An Abundance of Luxury Homes
The definition of a luxury home varies by location, but typically, these are properties in the top 5% of any given market. According to the latest report from the Institute for Luxury Home Marketing, the availability of luxury homes is on the rise (see graph below):
The graph indicates a significant increase in the number of single-family luxury homes available compared to last year. In fact, there's been a noticeable uptick even from just a month ago. This surge in inventory means you have a broader selection of premium homes, each offering unique features and styles.
Whether your dream home includes the latest design trends like chef-grade kitchen appliances, breathtaking views, or integrated smart home technology, the expanded luxury inventory enhances your chances of finding a property that aligns with your tastes and lifestyle.
Appreciating Luxury Home Prices Can Boost Wealth
Another key point to consider is the rising prices of luxury homes. HousingWire reports that luxury home prices have surged by 8.7% over the past year. As noted:
“People with the means to buy high-end homes are jumping in now because they feel confident prices will continue to rise . . . They’re ready to buy with more optimism and less apprehension.” This sentiment underscores the potential advantage of purchasing now before prices escalate further. Increased prices not only suggest that buying now can be a smart financial move, but owning a luxury home could also contribute to building generational wealth over time. Conversely, delaying your purchase might result in higher costs for the same property as luxury home prices continue their upward trend.
Conclusion
With a growing inventory and rising prices, the current market presents a unique opportunity. You have a wider array of luxury homes to choose from and the potential to make a sound investment. Interested in exploring the upscale homes available in our area? Let’s connect today.
6-7-2024
What To Expect if You Buy or Sell a Home This June
June is a bustling month in the housing market, with many people looking to buy or sell homes. If you’re planning to make a move this month, here’s a detailed look at what to expect to ensure you're well-prepared.
If You’re Buying This June
Many homebuyers with school-aged children prefer to move after one school year ends and before the next begins, making late spring into summer a peak period for home transactions. Whether or not this is a factor for you, it's important to be prepared for increased competition among buyers. However, the good news is that this is also when more homes are listed for sale, giving you more options to choose from. As Bankrate notes:
“Late spring and early summer are the busiest and most competitive time of year for the real estate market. There’s usually more inventory listed for sale than other times of year... This is a double-edged sword for a buyer, as you will be met with more opportunities but [also] much more competition.”
In such a competitive environment, working with a trusted real estate agent is crucial. Your agent can help you stay updated on the latest listings, offer strategies for making a strong offer, and provide valuable insights into the actual market value of homes. Forbes emphasizes:
“Approaching the market confidently, armed with good information and grounded expectations will take you far. Don’t let the hustle of the market convince you to buy something that’s not in your budget, or not right for your lifestyle.”
If You’re Selling This June
As a seller, June puts you in an advantageous position due to the higher number of motivated buyers eager to move before the new school year starts. This can lead to strong offers and potentially a quicker sale at a favorable price. The National Association of Realtors (NAR) explains:
“Warmer weather and the end of the school year encourage more people to buy and sell, respectively. Buyers are looking to move and settle before the new school year begins, contributing to increased competition and, consequently, higher prices.”
Having a skilled real estate agent is essential to navigate through contingencies and negotiations, helping you select the best offer. It’s also important to coordinate closing dates with your agent, as buyers may have specific timelines based on their personal schedules or school calendars. According to U.S. News Real Estate:
“...if your house goes under contract in early summer, the buyer may ask for a delay in closing or move-in until the school year finishes or their current home has sold. Alternatively, a buyer later in summer may be looking to close quickly and move in under a month. Remain flexible to keep the deal running smoothly, and your buyer may be willing to throw in concessions, like covering some of your closing costs or overlooking the old roof.”
Bottom Line
If you’re planning a move this June, it's important to be informed and prepared for the dynamics of the current housing market. Let’s discuss your options and develop a strategy that considers current conditions while aligning with your personal needs and goals.
6-5-2024
More Than a House: The Emotional Benefits of Homeownership
Amid the constant discussions about housing affordability, it’s easy to get caught up in the financial aspects of buying a home. While it's crucial to ensure you can afford your purchase, it's also important to remember the original reasons homeownership was significant to you. Buying a home extends beyond a financial investment; it holds profound emotional value. As the National Association of Realtors (NAR) puts it:
“The benefits of purchasing and owning your place of residence are both financial and emotional – pride in homeownership and the feeling of security are huge intangible benefits.”
Here’s a glimpse at some of these emotional and lifestyle perks, reinforcing why homeownership is such a vital goal.
A Sense of Satisfaction
Owning a home is often linked with enhanced mental health and well-being. This connection likely stems from the fact that purchasing a home is a significant life milestone. The pride and satisfaction that accompany achieving this goal can lead to a profound sense of well-being. According to a recent article from the Mortgage Reports:
“By and large, homeownership brings more satisfaction than renting. . . Surveyees scored the overall happiness level of homeowners at 88% compared to 67% for renters.”
More Stability for Your Family
Homeownership also offers the benefit of stability, allowing you and your family to put down roots. If you’ve been accustomed to moving frequently due to lease renewals and increasing rent, the ability to stay in one place can be a tremendous relief. This stability is not just beneficial for you but also for any loved ones sharing your home.
A stable home environment fosters predictability and the opportunity to forge long-term friendships, reducing stress for everyone involved. The NAR highlights:
“Families also benefit from homeownership, with studies proving that parents are able to spend less time in a stressed state, therefore spending more time with their children. The ability for parents to feel stable has a huge impact on children’s behavioral issues, educational success, and future economic success.”
A Stronger Feeling of Community
Homeownership also enhances your sense of belonging. As FinHabits explains:
“Homeowners tend to be more involved in their local communities, leading to a stronger sense of belonging . . .”
This makes perfect sense. Owning a home ties you to your neighborhood and the broader community. Having a stake in the community’s future naturally fosters greater involvement and a desire to contribute positively to the area, helping you build long-term relationships with neighbors.
The Ability to Make the Space Your Own
One of the most significant advantages of owning a home is the freedom to personalize it. Unlike renting, where restrictions might limit your ability to make changes, homeownership allows you to customize your space to reflect your tastes and lifestyle.
Whether you're interested in small improvements or extensive renovations, your home can evolve with you. Imagine coming home each day to a place that truly feels like yours – a sensation that is uniquely satisfying.
Bottom Line
If you seek a sense of accomplishment and pride in your living space, let's discuss the steps you need to take now to make this future a reality for you. Homeownership is more than a financial decision; it’s a pathway to personal fulfillment and stability.
6-3-2024
June 2024 Newsletter
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