A Realtor.com post from October 16th titled, “10 Things Most Homebuyers Get Wrong About Getting a Mortgage Today,” looks at common mistakes and provides insight to help home buyers navigate this process. 

1. Focusing too much on the interest rate.
   Be sure you understand any fees that could go along with the rate you’ve secured.
2. Assuming you need a 20% down payment.
   You can put down less, but will need to factor in private mortgage insurance.
3. Assuming you can get a loan instantly.
   There are applications, phone calls, document collection to consider… It takes time.
4. Thinking pre-qualification means you are approved for the loan.
   Pre-approval is more valuable, as it shows the lender has looked at your finances.
5. Not considering first-time homebuyer programs.
   Explore these options, and how they help free up savings.
6. Failing to check your credit score.
   Knowing your score before speaking with a lender is key.
7. Picking the wrong type of loan.
   There are pros and cons to each, do some reading to get a basic understanding.
8. Understanding fees beyond the down payment.
   Yes there are other fees when buying a home, i.e. closing costs, title, transfer taxes, etc.
9. Not preparing for the possibility of a low appraisal.
   With high listing prices this is a reality. Another recent post covered ways to deal with a low appraisal; ultimately you’ll want to consider what you are comfortable paying when making an offer.
10. Not shopping around for the right lender.
    Reliability is key, especially in today’s market when getting a response from a lender so you can make an offer is top priority. 

Bottomline if you want to avoid these common missteps that can trip up first time home buyers, or really anyone looking to buy a home in today’s market; understand your options, do your research and have a team of local professionals on your side.

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With interest rates remaining high and inventory low, many who were considering selling and then buying, are now considering staying in place. That doesn’t mean their current home is everything they need it to be, however; maybe more space is needed. So, what are the options? This is a question my family has been pondering while the real estate market has been in flux. We’ve contemplated every type of home addition or renovation, mainly looking at the return on investment if/when we decide to sell.

In comes a recent Realtor.com video, “Out of Space-and Out of Your Mind?” Yes!! This video looks at different building options, and the value that is gained for specific rooms. Here’s a summary:

First, the post looks at what the building options are? Option one is to build outward. This would add square footage to your existing space, and can be less expensive than building up. You’ll want to consider your yard and if you can part with the outdoor space you’ll lose when adding on. Generally the cost for building outward is around $60,000-80,000, for a 400 square foot addition.

Second, is the option to build upward. If you don’t have the space to build out, this may be your best option; especially if you have a smaller lot. However, consider that removing the roof, or adding or renovating stairs can quickly add up. If you live in an older New England home, like we do, you also need to think about the age of the home and what added costs may come when deconstructing. The average cost for a 400 square foot addition going up can range from $72,000-100,000. 

Next the realtor.com video looks at adding specific rooms; starting with a bathroom. Often this is a big want, particularly in one-bath homes. If you are hoping to add a bathroom, you’ll want to think about plumbing, fixtures, tile, labor, etc. When adding a bathroom it can cost around $20,000-90,000, depending on your selections. The return on investment, however, can be around 53 percent.

Another room many homeowners think about adding is a bedroom. Number of bedrooms matters, especially when listing a home for sale. This was our biggest need when considering our addition. Our now teenage boys are sharing the smallest room in our house… time for their own space. We know adding a true third bedroom to our home will bring value when selling so this is the room we were focused on having. According to realtor.com, while a bedroom addition can cost $50,000, it can bring over 54 percent return.

The final room the video looks at is a sunroom. This can be a great space for gathering, and enjoying the sun. Plus, staged correctly, sunrooms always look great in listing photos. Average cost is between $8,000-80,000; this all depends on the existing structure of the home and selections. A sunroom can bring in a return on investment of 49 percent, according to realtor.com.  

Ultimately, we decided to build out. We had the yard space, and the addition will actually afford us more privacy in our backyard. What are we adding on? A master bedroom; although we are holding off on finishing the bathroom until costs come down a bit. In the end, it wasn’t exactly what we had envisioned when starting this process but it will give us the necessities – a space for everyone that is more functional. It will also increase the value of our home when it’s time to move. 

If this is a decision you’ve been thinking about because of the current real estate market, you’ll want to watch the video from realtor.com. You’ll also want to talk to contractors and even a local real estate professional to figure out what is best for you, and what will give you the best return. 

Photo credit: Davizro, iStock

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The main purpose of these rate hikes, according to the recent Bankrate.com article “What the Fed’s May rate hike means for homebuyers and sellers,” is to calm inflation. The Bankrate.com article goes on to point out that the housing market tends to be resilient in general. This is because mortgage rates often have no bearing on the life events that lead to a move.

I found this information given in the article very telling of this point. The article notes, “History bears this out. In the 1980s, mortgage rates soared as high as 18 percent, yet Americans still bought homes. In the 1990s, rates of 8 percent to 9 percent were common, and Americans continued snapping up homes. During the housing bubble of 2004 to 2007, mortgage rates were higher than they are today — and prices soared.” (Ostrowski and Petry)

Mary Marengi of Academy Mortgage also shared her thoughts on this topic in a recent post titled, “Homebuyers want to know: Why a 3rd Fed hike?” In this post, she also points to the fact that a Fed rate hike has no direct bearing on mortgage rates. Rather, she notes how it could be a good thing, saying, “…the Federal Reserve’s efforts to calm inflation may be welcome news to you. Mortgage rates typically rise in times of inflation. If inflation cools, mortgage rates are likely to follow suit.” (Marengi)

So, if you are thinking of buying, know there’s a light at the end of the tunnel. If you do buy now while rates are high, you will always have the opportunity to refinance when rates come down. In Marengi’s post, she also notes these key points regarding buying a home:

• Homeownership is historically considered a reliable hedge against inflation.
• Home price growth is moderating.
• Homeownership can still help you build prosperity. (Marengi)

In the end, do your homework. Read these articles, talk with a lender and even a local realtor to get a sense of the market in the area you plan to buy. After doing the due diligence, only then can you make the best decision for your next move.

Sources: 

Marengi, Mary. “Homebuyers want to know: Why a 3rd Fed hike?” Academy Mortgage Corporation. 3 May 2323, https://academymortgage.com/learning-center/fed-rate-hike?lo=Mary-Marengi. Accessed 9 May 2023. 

Ostrowski , Jeff, (Edited by:Michele Petry). “What the Fed’S May Rate Hike Means for Homebuyers and Sellers.” Bankrate.Com, 3 May 2323, www.bankrate.com/real-estate/how-fed-rate-hike-affects-housing/. Accessed 9 May 2023. 

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In the early 1900s, before brokers and agencies existed, buyers interested in a particular home would come out when homes were “open for inspection.” These viewings were similar to the open houses of today in many ways. They took place on the weekends, but would often last days or weeks with a house often being open from 9 a.m. to 9 p.m., according to a recent Realtor.com post. The post, “A Brief History of Opening Our Homes to Total Strangers (aka the Open House),” looks back at the early days of real estate and how we got to where we are today.

The post notes that in these early days there was a real “Wild West” vibe to the industry. With no license laws, anyone could claim they were an agent. Yards were often littered with signs for different “agents” hoping to find the right buyer and make the sale. Therefore, anyone could reap the benefits of a home sale as long as they were picked by the buyer.

This scenario made it hard for individuals who were serious about being real estate professionals. They sought ways to separate themselves from those looking to make a quick dollar. From this, local and national associations, brokerages that employed multiple agents, and exclusive contracts were born. All this provided some much needed structure to the industry. Looking at the timeline in the Realtor.com post, you’ll see not much has changed since the early 1950s. Why? Because it worked!

Okay, there’s been minor adjustments. We now hold Open Houses which tend to be shorter, allowing agents to represent multiple listings. Marketing has also evolved with the Internet and social media. Finally, if you check out the listing from 1917 in the post, you’d probably add that prices have definitely changed. At its core, however, the concept of buying and selling hasn’t changed too much over the last century or so. From browsing listings, to open houses and agents, to buyers and sellers, we are enamored with real estate!

Photo by Maria Ziegler on Unsplash (cropped from original size).

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A recent Realtor.com blog post quotes Casey Ames, Owner and CEO of Taylor Jene Homes in Boise, ID, who notes, “The key to buying a house on the cheap is knowing how to balance achieving your dreams while staying within your budget.”

The blog goes on to discuss options for down payment assistance to help alleviate some of the cost when buying a home in today’s market. These tactics include:

1. Get a low-down payment—or no-down payment—loan
2. Look into down payment assistance programs
3. Use a family down payment gift
4. Consider auctions, short sales, and more

While these options may not work for all of those in the market for a new home, they are worth exploring to see if they can help you. This is definitely a leave no rock unturned real estate market, so make sure you do your research when it comes to financing, buying and/or selling; and be sure to schedule some time with a local mortgage expert and real estate agent. They can help you best understand your options.

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With yesterday’s news that the Federal Reserve (aka the Fed) may raise interest rates again, many homebuyers may be considering what their next move is.

Do they continue to house hunt?

Is now still the right time to buy a home?

Should they leap at the next house that becomes available?

Since buying a home is a big decision, these questions are always swirling. However, with the current housing market, they are more commonplace. One thing is certain, homebuyers should not panic. Panic leads to mistakes. The market always has its ups and downs, but any decision made should be based on the day-to-day needs of the prospective homebuyer.

Today’s blog post from Realtor.com, “The Massive Mistake Homebuyers May Be Tempted To Make Right Now: Is This You, Too?,” highlights concerns buyers have; especially when the market is unpredictable.

Example of Buyer Mistake

The post shares the story of buyers that put their housing search on hold. Their thought was prices would come down, but instead prices continued to rise. They inevitably panicked and purchased the home they were renting, even though it was too small and the layout didn’t suit their family. This is considered “FOMO buying” by an agent with Pacific Sotheby’s International Realty in San Diego. Fear of missing out should not be the reason to purchase a home…ever.

As Realtor.com’s Chief Economist Danielle Hale notes, “It is not a good idea to try to time the market. No one has a perfect view into the future. Whether you think rates or prices are going up or going down, the world may not evolve the way you expect it to. We all have to make decisions with that uncertainty.”

If you are in the market to buy a home, you’ll want to read through this post. Next step, meet with a realtor in the area of your home search. They will be able to guide and advise you to make the best decision based on your needs alone; not the ups and downs of the housing market.

Photo credit: Marco Verch Professional Photographer on Flickr. This image is available under Creative Commons 2.0.

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With the current state of the market and the high rate of inflation over the past year, it is imperative now more than ever that you know what you want and what you are willing to take on when buying or selling a home. This will include your needs now and in the future. First step is always to write things down; think pros and cons list but this time you’ll be answering specific questions to help you define your goals.

A blog post from Keeping Current Matters from January 2^nd of this year highlights the key questions you should be asking yourself if you plan to enter the housing market in 2023. These include:

• What’s Motivating You?
• What Does Your Next Home Look Like?
• How Ready Are You To Buy?

Go ahead; answer these questions. Even with uncertainty in the market, you’ll know for certain what you are looking for. Once you have that piece, local experts from mortgage professionals to realtors are ready to step in and help you reach your goals.

The post Your Housing Market Goals in 2023 appeared first on Laffely Real Estate Associates.

A recent article posted on Bankrate notes that 2023 will be a transitional year with several factors creating uncertainty. The article looks at each of these factors in depth, calling on industry experts for their predictions. We’ve summarized here, but the full article is worth a read.

Mortgage and Interest Rates

With continued inflation, many experts believe rates will continue to rise for some, if not all, of 2023. The experts cited in the article all see interest rates in the 8 percent range at some time during the year. However, predictions are mixed on whether they remain there or stabilize toward the end of the year.

Housing Sales

The consensus here is that the market will cool down. Higher interest rates will lead to a drop in home sales. Experts also believe that average days on the market will increase in 2023, as buyers are more hesitant to jump into a purchase situation.

Home Values

Experts are split on where home values will land in 2023. Some believe home values will remain steady due to low inventory; while others suggest that home values could see a decline based on higher rates and more patient buyers.

Buyer’s or Seller’s Market

We’ve been in a steady seller’s market for the past few years, and many experts see this shifting slightly. One expert notes it will vary nationally, however. Markets with more demand could continue to favor the seller. That said another expert believes the sides may be on more even terms overall in the year ahead.

Housing Inventory

Low inventory has fueled the housing frenzy over the past few years. Experts believe this will not change; mainly due to the fact that homeowners won’t be willing to trade in their low interest rate mortgages for a higher rate loan. However, there are some that believe housing inventory could increase based on demand throughout the year.

Affordability

Experts do agree that home prices will not waiver significantly. We may see prices lower slightly, but any shift in prices will be cancelled out by rising interest rates. Some experts believe that in certain cases this could make homes seem even less affordable due to high interest rates and the amount they add to a monthly payment.

As with any forecast, no one can predict the future. We can only wait and see how the year unfolds, and remember that local experts and agents can provide the best insight into the market in your area. They are the best resource if you are looking to buy or sell in 2023.

For a deeper dive into the housing market in 2023 and these topics, you’ll also want to look at Realtor.com’s predictions.

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Calmer Market Ahead

Expect some easing in sales, though prices will continue to inch higher

By Lawrence Yun (originally printed in the Spring 2022 issue of Realtor Magazine)

The past two years have been quite exceptional for real estate. Home sales boomed. Home prices rose at the fastest rate in modern times. However, such a strong housing market created growing pains. Inventory shrank to its lowest count ever. Even through the recent winter months, the inventory that has made it onto the market has typically attracted multiple bidders—and, increasingly, investors offering cash. Twenty-two percent of recent transactions were investor purchases, up from 15% a year ago, and 27% of transactions were cash-only deals, up from 19% a year ago. That’s putting a strain on first-time buyers. Moreover, mortgage rates are notably higher as the Federal Reserve moves from a quantitative easing monetary policy, quickly buying up mortgages, to what is in essence a quantitative squeezing that does the opposite. With all this in mind, what’s ahead?

Let’s begin with the jobs picture. Although the unemployment rate is back to normal at 4%, the economy is still short by nearly 3 million jobs compared to before the pandemic. But that hasn’t held back housing sales. Existing-home sales reached 6.12 million in 2021, the best since 2006. The median home price reached an all-time high of $347,100, a one-year gain of 16.9%.

A few states actually have more jobs now than before the COVID-19 days. They are Utah, Idaho, Texas, Arizona, Georgia, and Montana in order of performance. Those are also the states experiencing extra strong real estate activity, both in residential and commercial markets. Jobs are important.

What now, given the diminishing pandemic— fingers crossed—and rising mortgage rates? Office workers will need to get back to the office. Maybe the new work model will be some form of hybrid, with a few days each week spent in the office. This still means locational choices do not have to be inherently dependent on big-city downtowns. It’s fine to live farther from the city, given less time spent on the commute. Higher mortgage rates, though, will lock out some would-be buyers. In very high-cost areas, the increase means about $500 more in monthly mortgage payments for the typical borrower. Consequently, home sales will come down 2% to 4% in 2022. If inflation remains stubbornly high and the Fed is forced to be even more aggressive, then home sales could fall by as much as 10%.

Prices will keep rising, though, since getting to a balanced market will take time. The turnaround may occur by the middle of the year. Expect calmer home price gains of 3% to 6% per year in 2022 and 2023.

Reprinted from REALTOR® Magazine by permission of the National Association of REALTORS®. Copyright 2022. All rights reserved.

Photo by Sonja Langford on Unsplash

About the Author: Lawrence Yun
Chief Economist and Senior Vice President of Research at the National Association of REALTORS®

Yun oversees and is responsible for a wide range of research activity for the association including NAR’s Existing Home Sales statistics, Affordability Index, and Home Buyers and Sellers Profile Report. He regularly provides commentary on real estate market trends for its 1.3 million REALTOR® members.

Dr. Yun creates NAR’s forecasts and participates in many economic forecasting panels, among them the Blue Chip Council and the Wall Street Journal Forecasting Survey. He also participates in the Industrial Economists Discussion Group at the Joint Center for Housing Studies of Harvard University. He appears regularly on financial news outlets, is a frequent speaker at real estate conferences throughout the United States, and has testified before Congress. Dr. Yun has appeared as a guest on CSPAN’s Washington Journal and is a regular guest columnist on the Forbes website and The Hill, an “inside the beltway” publication on public affairs.

Dr. Yun received his undergraduate degree from Purdue University and earned his Ph.D. from the University of Maryland at College Park.

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The biggest story in real estate hasn’t changed much over the past few months. Inventory of homes for sale remains low, while demand remains high. It doesn’t appear this tale is set for a plot twist anytime soon either. According to several recent blog posts since the turn of the year from Keeping Current Matters (KCM), now is the time to sell!

Why? We already mentioned the top two reasons, and this KCM post from February 10^th titled, “Want Top Dollar for Your House? Now’s the Time To List It,” gives you all the details regarding why they are still the top two reasons. Hint: High Demand, Low Inventory and the industry is still seeing record home sales!

These are not the only two reasons to factor in if you are considering selling. A post from January 18^th of this year titled, “Sellers: Don’t Wait Until Spring To Make Your Move,” the KCM crew points out that home owners are sitting on record amounts of equity. They site a recent report by CoreLogic that noted in the past 12 months the average homeowner has gained $56,700 in equity. With this much equity alone, you may be able to cover the down payment if you are considering buying a new home.

Another factor is mortgage rates which are set to rise in 2022. This reason is pushing more buyers into the market sooner, but can also affect sellers who are planning to move up or downsize. A January 19^th KCM story titled, “With Mortgage Rates Climbing, Now’s the Time To Act,” highlights this point. The post looks at projections from Freddie Mac which suggests rates will rise by 0.1 percent per quarter. This would bring us from 3.4 percent in Q1 to 3.7 percent in Q4 of this year. Even though this may seem like a small increase, even small increases add to your overall payment.

Finally, one other point we came across when perusing KCM’s recent posts. New construction will be a home sellers’ greatest competition this spring. Now we know new homes have their appeal, as do existing homes. So, why will this be a concern this year over others? The post titled, “Why Waiting To Sell Your House Could Cost You a Small Fortune,” notes that over 979,000 new single-family units were approved for building permits in 2020, according to the U.S. Census Bureau. However, these homes are yet to be built due to labor and materials shortages.

Yes, this is a lot to take in but you’ll want to weigh all these factors to determine what makes the most sense for your home sale. Is now the time to list your home? One step that can help you determine this is understanding the local real estate market in your area and your home’s value in that market. A local realtor can provide this information as well as other insight to help with your next move.

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