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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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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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.

The post What’s Ahead for the Housing Market in 2023 appeared first on Laffely Real Estate Associates.

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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Mortgage rates were expected to rise in 2022. At an all-time low in 2021, many forecasted that mortgage rates would rise gradually and end this year in the high three-percent range, according to a recent blog from Keeping Current Matters. However, we are only in April and mortgage rates are already steadily increasing; with recent numbers from the likes of Freddie Mac and Mortgage News Daily anywhere from the high four percent mark to just over five percent.

With this in mind, let’s turn to the real estate market. Common knowledge says when mortgage rates go up, home price growth should go down. However, we are still seeing home prices and multiple offer situations on the rise; especially in our local markets.

So, why are we not seeing home prices steadily decline with rising interest rates? First point, it’s not black and white. There are other factors in play beyond interest rates when looking at home value. In a recent blog by The Mortgage Reports’ Editor Paul Centopani, he writes, “To be clear, interest rates do not directly correlate with home prices, and vice versa. However, low rates stoke home buyer demand and higher demand leads to higher sales prices.”

Buyers also need to consider the lack of inventory which is keeping home prices inflated. Centopani’s post quotes Beeline Co-Founder and COO Jess Kennedy, who states:

“When you look at where the housing market is right now, you still see big gaps between available supply and demand. Until that demand is lowered due to rising rates, housing prices won’t go down.”

The Mortgage Reports blog also notes that the cost of renting versus owning a property also comes in to play. With inflation driving rent prices up, home ownership could still be the most affordable path. Why? Because even with rates in the high fours, they are still lower from a historical perspective.

After you’ve read these articles and with all this information in mind, if you are considering a move in 2022 you’ll want to stay informed of current market conditions. The best way to do this is to seek council from local lenders, underwriters and real estate professionals, who know and understand market conditions in your area.

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As we enter the New Year, it’s a time for predictions. What will the 2022 real estate market look like? If you are planning on buying or selling this year, we know this question is top of mind.

While no one can predict the future, it seems we may see some similarities to 2021. According to Danielle Hale, Chief Economist at realtor.com, 2022 will continue to be a seller’s market. However, if you watch her recent video post, she does note some shifts.

Yes, Hale mentions that homes will continue to move quickly and prices will rise; however, she also points to the fact that there will be less competition overall. Hale adds that price growth will return to a more normal rate, but we do have to consider that prices are starting at 2021’s highs. The market will also see rising mortgage rates and more inventory.

Fueling the market in 2022 will be a new generation of homebuyers. Millennials will be a key buying demographic in 2022 as many will be at the prime age for buying a home. This will help fuel the market; as well as the trend of suburban living. Many millennials, and homebuyers in general, will continue to search for their forever home outside the city; a trend accelerated by the pandemic. The suburbs tend to offer more flexible space to live, work and play, and as people continue to spend more time at home the need for this space will be prevalent.

A final note from Hale, rising rents will also push more buyers into the market this year as they weigh the benefits of renting versus owning (stay tuned we are working on a post on this topic).

As stated above, nothing is set in stone but these are some things to consider as we look ahead into 2022. As always, we are here to help navigate the market in our area and would love the opportunity to help with your next move.

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With the number of vaccinated individuals growing and things returning to a level of normal, more sellers will be ready to enter the market. This is good news for the many buyers who’ve been searching and bidding, and hoping and wishing for more inventory! For example, the Seacoast Board of Realtors’ June market report for single-family sales, noted that inventory levels for the month reached their highest level since October.

Even though inventory levels were up, sales for single-family homes and condo units in June remained flat, according to the Board. However, they did note, “For the first six months of 2021, sales are up 3.6% and median sale prices are up 14% at $600,000.”

Now more than ever, sellers entering the market will want to be careful they price their homes correctly to be competitive as inventory looks to rise. Buyers are fatigued and many are willing to walk away from a listing, if it means they avoid another bidding war. According to this recent Keeping Current Matters blog post, “…a high price tag doesn’t mean you’re going to cash in big on the sale.”

A higher list price can actually limit the number of prospects, or potential buyers, interested in your home; it could cause your house to sit on the market longer; and may require a price drop which can raise questions.

Work with a realtor to determine a fair list price for your home. A local realtor will know how the market is shifting in your area, and will look at current conditions and sales to determine a price that will get your property noticed, and sold.

Have you been thinking of selling? We’d love the opportunity to sit down and discuss current market conditions with you and your property’s value.

Photo credit: Sold Sign and House | by Guy Kilroy

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The current housing market has many buyers and potential buyers frustrated. As prices drive higher and inventory seems nonexistent, they are feeling like something has to give…this bubble has got to burst.

According to the National Association of Realtors chief economist, Lawrence Yun, in a recent Axios.com story, we are not in a bubble. “It is simply lack of inventory,” Yun says. For some context, we turn to Realtor.com, where they note that the total number of active listings is down 54 percent from this timeframe last year. This is driving prices higher, especially from bidding wars on the inventory that becomes available.

While buyers work with local real estate agents to navigate the housing market in their area, they can also use this extra time wisely. Okay, yes, we know, you didn’t ask for this extra time but we are trying to look on the bright side. This time can be spent planning, preparing and saving. Use it to create a wish list and to ask yourself some important questions that might normally get overlooked during a typical home search.

You can use this thorough questionnaire we found in a Zillow blog post from last year. It focuses on questions homeowners or potential homeowners should ask when thinking about their living space – both inside and out. Also, what is most important when it comes to a neighborhood and community?

Yes, we know many have asked these questions before, but have you really considered your answers? Have you written them down, and revisited them to see if your feelings have changed? Zillow’s post proposes this question, for example: “If money were no object, what’s the one feature your new home would have?”

A beautifully landscaped yard or patio

A garage or workshop

An extra unit or space to rent out

A dedicated home office

A master bedroom with bath

If I had asked myself this question last year, my answer would have been a large, covered patio area to extend our living space outside. However, after a winter that saw my husband and I working from home and our boys with virtual school days, I’d lean towards a dedicated home office space. Somewhere we could have privacy when on a call or the ability to focus, on say writing a blog post.

Patience will be key in the current market, but the list of questions is long. Really take your time to consider everything, including what you can’t live without and what you’re willing to sacrifice in order to make a move.

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As 2020 comes to a close, we are all hopeful for brighter days ahead. Many who’ve been considering buying or selling a home are wondering what to expect in 2021 from the housing marking. While nothing is set in stone and many things are still unpredictable as I type, a recent realtor.com post looked at predictions for the coming year.

Top trends they see on the horizon, include:

• Home prices will continue to rise but at a slower pace. The article notes a 5.7% jump in 2021.
• There will be more homes available during the second half of the year.
• This inventory will include existing homes and new builds.
• Mortgage rates will also start to climb in the last half of 2021. The prediction is rates will hit 3.4% by the end of next year.

Some of these factors could have first-time homebuyers worried. However, this news should not stop them from talking with a lender and realtor in their area to see what their options are. They should also follow President Elect Biden’s housing plan closely. Benefits for first-time buyers are outlined in the plan. Another realtor.com post covered five ways the plan could help first-time buyers.

1. First-time buyers could receive a hefty tax credit.
2. Public servants could receive additional home buying assistance.
3. Student loan debt forgiveness could help more Americans become homeowners.
4. A public credit agency would help more buyers qualify for mortgages.
5. More affordable homes could go up during a Biden presidency.

If you are thinking of making a move in 2021, now is the time to start planning. While the realtor.com articles above are great resources for what you can possibly expect from the 2021 housing market, talking to the professionals involved with a home purchase or sale is always a great first step.

Here are a few previous posts that may help you on your way, as well, and as always we’d love the opportunity to discuss your 2021 housing goals and how we might help.

2018 Real Estate Goal: Start Planning

5 Habits To Start Now If You Plan To Buy A Home In 2019

Packaging & Pricing Your Home to Sell

Infographic credit: realtor.com, “Housing 2021 Market”

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Stay-at-home orders are being lifted, and we are all ready to see the economy rebound. While this will take time as we all navigate the new normal, it will happen; and the housing market seems poised to play a key role.

Keeping Current Matters (KCM) has posted several recent blogs citing economists that tout the housing markets role in our economic recovery. We promise these posts are short and worth the read.

This article, from May 19^th, includes recent quotes from three economists who all looked at the role the housing market has played during economic downturns, how this time is different, and what we could see.

Housing Market Positioned to Bring Back the Economy

A May 21^st article looks at predictions of when an economic recovery could take place. Many economists are noting that this recovery will come in the second half of 2020. This would make sense as businesses reopen to breathe life back into the economy.

Experts Predict Economic Recovery Should Begin in the Second Half of the Year

And, another blog posted from today, shares a similar forecast for the economy.

Economists Forecast Recovery to Begin in the Second Half of 2020

Finally, and what might be the most important post for the housing market, a May 27^th article notes that in 2020 summer will be the real estate season. Yes, we know spring has traditionally been the time when most buyers and sellers are out looking, but this spring was drastically different…we don’t need to tell you. As the economy starts to rebound, there are benefits for buyers and sellers. We are talking about low interest rates and low inventory. This could make the summer of 2020 a sizzling one for real estate.

Why This Summer Is the 2020 Real Estate Season

Bottom line in all this, if you were thinking of buying or selling this year, now might just be the right time. A local realtor will be able to give you additional insight and guidance. As always, we are here and happy to talk with you about your options.

Photo credit: Housing Market by Nick Youngson CC BY-SA 3.0 Alpha Stock Images.

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