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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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.

The post Demand High, Inventory Still Low…Time to Sell? appeared first on Laffely Real Estate Associates.

The real estate market over the past few years – dare I say real estate’s COVID years – have been a lot of the same for all parties involved: record high home prices, lack of inventory and crazy bidding wars. All of this brings feelings of uncertainty and doubt for sellers and buyers, and sadly we can’t say it will be changing soon. So, how do you prepare for an anything goes market?

Being cautious and prepared for whatever comes your way is the golden rule. Something Real Estate Editor Clare Trapasso learned during her first home search. She shared her story in a recent post for Realtor.com. A MUST read if you are considering buying this year!

She writes about her confidence going into her search. She knew what to expect; heck she’d been writing about the market conditions and she was ready. But as Trapasso writes, “That optimism abruptly evaporated once we made our first offer on a house—and were promptly outbid by about $100,000.”

She goes on to admit that she realized covering this housing market would be nothing like actually entering the fray. After a long search and lots of disappointment, Trapasso and her partner closed on their home just outside of New York late last year. What lessons did she learn from her search?

1. Homebuying can take an emotional toll

2. You’ll likely have to make some compromises

3. Buying a home can be terrifying financially

4. Don’t settle for the first mortgage you’re offered

5. Don’t move money around, close bank accounts—or buy a new iPhone

6. Property taxes can add quite a bit to your monthly mortgage payments

7. Set some extra cash aside for your first few months in your new home

8. Expect the unexpected

If you are considering buying, read through each of Trapasso’s lessons. They are a true first-hand account of a home search and her story provides insight that will help you prepare. After reading, if you are ready to start the journey of buying a home, sit down with a local realtor; someone who can guide you through the market during this unprecedented time.

The post Lessons Learned From A First Time Homebuyer appeared first on Laffely Real Estate Associates.

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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If you live in a hot real estate market, the rumor mill is constantly spinning. Neighbors share stories about houses selling way over asking price, sight unseen! For sellers, these stories are encouraging but often misleading.

Many of these home-sale tales are anomalies. Not every seller will see the same results; especially if they price themselves out of the market hoping to be the next real estate success story everyone in town is talking about. With buyers exiting the market until things cool down, lower prices and inventory numbers up, we wanted to share some common real estate myths from Realtor.com’s recent post and the truth behind them.

1. ‘You don’t need to renovate—buyers will take anything’

Even in a super competitive market, like we are currently seeing, a seller cannot expect to garner top dollar for their home, if they are unwilling to make repairs or upgrades. Houses that need too much work can be a turn off to buyers, as many in today’s market are looking for move-in-ready.

The truth: Taking time to clean both inside and out, freshening up paint where needed, and minor repairs and upgrades, can go a long way.

2. ‘You can price your house sky high and get that amount’

In a hot market, sellers often feel they can list their home for whatever price they’d like. They need to consider that buyers need to see the list price as realistic based on the type of home, location and condition.

The truth: Pricing too high could cause the home to sit on the market for too long. This can create doubt for buyers, and lead to a lower sale price.

3. ‘Sellers don’t need to market their listing much—it will sell’

Just because the market is hot, does not mean no effort should be put into the marketing of the home. Listing details, photos, videos, virtual tours, etc. are all important pieces to a successful listing.

The truth: Many homebuyers start their search online. The more information you can provide potential buyers, the greater success you’ll have in bringing in solid prospects.

4. ‘In a bidding war, it’s a no-brainer to just pick the highest offer’

When sellers ask for potential buyers highest and best offers, many believe that the seller is going to take the highest offer price. This is not always the case because the highest offer may not be the best.

The truth: A seller often considers the terms of the offer as well. All cash can be attractive because it takes financing hurdles out of the equation. Buyers who have flexibility in regards to closing date, giving the sellers more time to find their next home, can also be quite appealing.

Read the full article from Realtor.com, as they provide additional insight. Then, if you are thinking about selling your home, or buying a home for that matter, take some time to discuss the market with a local realtor. They will be your voice of reason to ensure your next move is a success.

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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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This past weekend, we celebrated the first day of spring with warmer temps and sunny days. Typically, spring marks the hottest time for the housing market. The temperature is not the only thing continuing to rise, however. Homeowners are also seeing major gains in home equity according to a recent Infographic produced by Keeping Current Matters.

Home price appreciation is driving equity higher, and the Infographic highlights increases in home equity across the country in 2020. The average increase was $26,300, with Massachusetts seeing an increase of $38K and New Hampshire at $36K. This highlights two facts:

1. We are still very much in a sellers market.
2. If you are thinking of listing your home for sale, this spring may be a great time to take advantage of the equity gains you’ve made.

Why are we seeing these gains? As we move into this spring market, inventory remains at record lows and more buyers continue to enter the fray, hoping there will be an uptick in inventory as we move into the season.

To give some perspective on the market, we turn to NH’s Seacoast Board of Realtors’ February market report, which states, “While the 51 February single-family transactions were not a new monthly record, it was still the best February since 2017. The month ends with only 64 active listings, matching the all-time low set in January.”

Need more insight while you consider your next move? The National Association of Realtors (NAR) often notes that a typical market has a six-month supply of homes for sale. According to their February market data issued on March 22:

“Total housing inventory at the end of February amounted to 1.03 million units, equal to January’s inventory and down 29.5% from one year ago (1.46 million). Unsold inventory sits at a 2.0-month supply at the current sales pace, slightly up from January’s 1.9-month supply and down from the 3.1-month amount recorded in February 2020.”

If you’ve been following our posts, you’ll agree that this one strengthens the content we provided on January 21^st of this year, “Is It Time to List Your House For Sale?”. That post also highlights a strong sellers market and addresses how long it could last.

If you’ve been considering selling your home, the first step is to talk with the experts. Your financial advisor or lender can help you better understand how to take advantage of home equity gains you’ve made; and a local realtor can provide insight into the housing market in your area.

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