In today’s housing market, home prices are increasing at a slower pace (3.7%) than they have over the last eight years (6-7%). However, they are still are above historical norms. Low supply of listed homes and high demand from buyers has pushed prices to rise rapidly.
In the mind of the homeowner, annual home price appreciation over 6% has become the new normal. This becomes a challenge when a homeowner looks to refinance or sell their home, as the expectation of what the homeowner believes the home should be worth does not always line up with the bank’s appraisal.
Every month, the Home Price Perception Index (HPPI) measures the disparity between what a homeowner seeking to refinance their home believes their house is worth and what an appraiser’s evaluation of that same home is.
Over the last five months, the gap between the homeowner’s opinion and the bank’s appraisal has widened to -0.78%. This is important for homeowners to note, as even a 0.78% difference in appraisal can mean thousands of dollars that a buyer or seller would have to come up with at closing (depending on the price of the home).
The chart below illustrates the changes in home price estimates over the last 12 months.
According to realtor.com, “the share of homes which had their prices cut increased by 2% compared to last year”. Thirty-seven out of the 50 largest US housing markets saw an increase in overall price reductions.
In today’s market, you need an expert agent who can help price your house right from the start. Homeowners who make the mistake of overpricing their homes will eventually have to drop the price. This leaves buyers wondering if the price drop was caused by something wrong with the house. In reality, nothing is wrong- the price was just too high!
If you are planning on selling your house in today’s market, let’s get together to set your listing price properly from the start!
The housing crisis is finally in the rear-view mirror as the real estate market moves down the road to a complete recovery. Home values are up and distressed sales (foreclosures and short sales) have fallen to their lowest point in years. The market will continue to strengthen in 2019.
However, there is one thing that may cause the industry to tap the brakes: a lack of housing inventory! Buyer demand naturally increases during the summer months, but supply has not kept up.
Lawrence Yun, Chief Economist at National Association of Realtors
“Further increases in inventory are highly desirable to keep home prices in check, the sustained steady gains in home sales can occur when home price appreciation grows at roughly the same pace as wage growth.”
Jessica Lautz, Vice President of NAR
“There’s a supply-demand mismatch… More inventory is needed at the lower end and a price reduction may be needed at the upper end.”
Danielle Hale, Chief Economist of Realtor.com
“Heading into spring, U.S. prices are expected to continue to rise and inventory is expected to continue to increase, but at a slower pace than we’ve seen the last few months as fewer sellers want to contend with this year’s more challenging conditions… A buyer’s experience will vary notably depending on the market and price point they’re targeting.”
If you are thinking of selling, now may be the time! Demand for your house will be strong at a time when there is very little competition. That could lead to a quick sale for a really good price!
Over the last several years, many “baby boomers” have undergone a metamorphosis. Their children have finally moved out and they can now dream about their own future. For many, a change in lifestyle might necessitate a change in the type of home they live in.
That two-story, four-bedroom colonial with three bathrooms no longer fits the bill. Taxes are too high. Utilities are too expensive. Cleaning and repair are too difficult. When they decide to travel to be with friends and family, locking up the house is too time-consuming and worrisome.
Instead, a nice ranch home with 2-3 bedrooms and two baths might better fulfill their new needs and lifestyle. The challenge many “boomers” have faced when trying to downsize to the perfect new home has been a lack of inventory.
The average number of years a family stays in their home has increased by fifty percent since 2008, causing fewer houses to come to the market. During the same time, new home builders were concentrating most of their efforts on large, luxury, expensive houses.
According to the U.S. Department of Housing and Urban Development and the U.S. Census Bureau, sales of newly built, single-family homes rose to a seasonally adjusted annual rate of 692,000 units in March. The great news is that more of those homes were sold at the lower end of the price range.
In a press release last week, the National Association of Home Builders (NAHB) explained that:
“The median sales price was $302,700, with strong gains in homes sold at lower price points. The median price of a new home sale a year earlier was $335,400.”
NAHB Chief Economist Robert Dietz offered further detail:
“We saw a large gain at lower price points where demand is strong. In March of 2019, 50% of new home sales were priced below $300,000, compared to 39% in March of 2018.”
If you are a “boomer” thinking of selling your old house in order to buy a new home that better fits your current lifestyle, now may be the perfect time!
9 Home Expenses You Have to Budget For
Article Shared From Trulia
If you think qualifying to buy a home takes financial stamina, budgeting for your home month by month and sticking to a long range plan can require the strategy and dedication of a marathon runner.
Ideally, lenders recommend that no more than a third of your income should go toward housing costs. Here's what you spend those dollars on:
Home budgeting: recurring monthly expenses
If you successfully figured out how to save for a down payment and budgeted your income to pay off debts like student loans and credit cards to qualify for a mortgage, you may feel like once you've bought a house you can relax. The reality, however, is that home budgeting doesn't stop when you close on your house. That was just the practice run. For as long as you own a home, exercise similar strategies to those you used when your goal was to buy. They can help you manage your income to cover recurring expenses like these:
Mortgage payments.
The Bureau of Labor Statistics' Consumer Expenditure survey indicates that 58 percent of the one third goes to pay your mortgage. If you have a fixed rate mortgage the payments remain the same, but escrow payments that can include property taxes, homeowners' insurance premiums, and private mortgage insurance fluctuate. Payment amounts, therefore, are adjusted by your lender periodically to cover increases.
Property taxes.
They increase with the value of your home but are tax-deductible
Homeowners insurance.
Typically insurance premiums increase each year. You may want or be required to have supplemental insurance for disasters such as floods and earthquakes, or elect to increase your coverage if you acquire more valuables. Shop around if this severely stretches your budget.
Private mortgage insurance (PMI).
If you purchased with less than a 20 percent down payment, you may be required to pay PMI for several years until you build at least 20 percent equity, or for the life of the mortgage. Double check with your lender for how long you must pay.
Homeowners' association (HOA) dues.
The amenities and services provided by an HOA vary considerably. They may or may not include full or partial landscaping services. HOA dues can increase as their budget requires.
Utilities.
These include your power bill, heating fuel, water, sewer, garbage, phone service, cable, and/or internet, all of which can increase.
But that is not all, oh, no. That is not all…
Budgeting for your home maintenance, emergency repairs, and upgrades
You don't buy a house just to pay the expenses listed above while you let it fall down around you. It's probably one of the largest investments, if not the largest, you'll make in your lifetime. You want to maintain its value, and when possible, improve and enhance it. If that one-third portion of your income seems bursting at the seams already, put your money-saving skills to work because you need to put something aside for the following expenses:
Budgeting for regular maintenance.
Routine maintenance includes inspections, replacing worn parts, cleaning, and landscaping. How much do you need to save for maintenance costs? Traditional advice says you can expect to spend annually from one to two percent of what you paid to buy your home, but if you bought an older home, a fixer, or a foreclosure in poor condition, it can likely be more. For a closer estimate, however, consult a home maintenance checklist and price out the current cost of these services in your area -- or the price of necessary tools and supplies if you plan to do routine maintenance yourself. Include cleaning supplies and associated costs, too. Add them all up and divide by 12 to establish a budget and a monthly savings plan for routine maintenance -- things like changing HVAC filters and annual inspections, gutter cleaning, window washing, and roof inspections.
Fund for emergency repairs and component replacements.
If you know the age of the various components of your home such as the roof, large appliances, furnace, windows, and wiring, for example, you can figure their remaining life expectancy by consulting the longevity chart for home components from the International Association of Certified Home Inspectors (InterNACHI). Research the approximate cost of replacing them, then prioritize budgeting based on when they might conk out. Establishing this type of emergency fund, especially if you expect some of them to need replacing at the same time, can help you manage some hefty expenses when the time comes. If you can't make necessary repairs or replacements and try to sell the house first, you may take a hit on the selling price or even lose buyers if a home inspector reveals that your house needs expensive repairs.
Saving for home improvements.
Even if your new home is move-in ready, most homeowners have a wish list for future renovations or necessary additions. Prioritize yours on the basis of your home's condition -- is the roof leaking, for example? -- then on your comfort or family growth. If you have anything left in your monthly home expense budget, put what you can aside for that dream kitchen, bathroom remodel, or attic bedroom each month.
Buying a home can be one of the best decisions you make, but if you're a first time buyer, you need to prepare yourself for the financial demands. Serious budgeting -- and sticking to your budget when consumer distractions abound -- takes fortitude. Are you up for the challenge?