Freddie Mac, Fannie Mae, and the Mortgage Bankers Association are all projecting that home sales will increase nicely in 2019. Below is a chart depicting the projections of each entity for the remainder of 2018, as well as for 2019.
As we can see, Freddie Mac, Fannie Mae, and the Mortgage Bankers Association all believe that homes sales will increase steadily over the next year. If you are a homeowner who has considered selling your house recently, now may be the best time to put it on the market.
Some are attempting to compare the current housing market to the market leading up to the “boom and bust” that we experienced a decade ago. They look at price appreciation and conclude that we are on a similar trajectory, speeding toward another housing crisis.
However, there is a major difference between the two markets. Last decade, while demand was being artificially created by extremely loose lending standards, a tremendous amount of inventory was coming to the market to satisfy that demand. Below is a graph of the inventory of homes available for sale leading up to the 2008 crash.
A normal market should have approximately 6 months supply of housing inventory. As we can see, that number jumped to over 11 months supply leading up to the housing crisis. When questionable mortgage practices ceased, and demand dried up, there was a glut of inventory on the market which caused prices to drop as there was too much supply and not enough demand.
Today is radically different!
There are those who believe that low mortgage rates have created an artificial demand in the current market. They fear that if mortgage rates continue to rise, some of the current demand will dry up (which is a possibility).
However, if we look at supply again, we can see that the current supply of homes is well below the norm of 6 months.
We will not have a glut of inventory like we did back in 2008 and home values won’t come tumbling down. Instead, if demand weakens, we will return to a normal market (approximately a 6-month supply) with historic levels of appreciation (3.6% annually).
Economists and analysts know that the country has experienced economic growth for almost a decade. They also know that a recession can’t be too far off. A recent report by Zillow Research shed light on a survey conducted by Pulsenomics in which they asked economists, investment strategists and market analysts how they felt about the current housing market. That report revealed the possible timing of the next recession:
“Experts largely expect the next recession to begin in 2020.”
That timing concurs with a recent survey of economists by the Wall Street Journal:
“The economic expansion that began in mid-2009 and already ranks as the second-longest in American history most likely will end in 2020 as the Federal Reserve raises interest rates to cool off an overheating economy, according to forecasters surveyed.”
Here is a graph comparing the opinions of those surveyed by both the Wall Street Journal and Pulsenomics:
Recession DOES NOT Equal Housing Crisis According to the Merriam-Webster Dictionary, a recession is defined as follows:
“A period of temporary economic decline during which trade and industrial activity are reduced, generally identified by a fall in GDP in two successive quarters.”
A recession means the economy has slowed down markedly. It does not mean we are experiencing another housing crisis. Obviously, the housing crash of 2008 caused the last recession. However, during the previous five recessions home values appreciated.
According to the experts surveyed by Pulsenomics, the top three probable triggers for the next recession are:
Others agree that housing will not be impacted like it was a decade ago.
Mark Fleming, First American’s Chief Economist, explained:
“If a recession is to occur, it is unlikely to be caused by housing-related activity, and therefore the housing sector should be one of the leading sources to come out of the recession.”
And U.S. News and World Report agreed:
“Fortunately – and hopefully – the history of recessions and current issues that could harm the economy don’t lead many to believe the housing market crash will repeat itself in an upcoming decline.”
Bottom Line: A recession is probably less than two years away. A housing crisis is not.
A recent survey conducted by Harris Poll and released by SunTrust Mortgage found that “55% of homeowners with a child under the age of 18 at the time when they purchased their home said that the opinion of their offspring played a major role in their home buying decision.”
When the results were broken down by the parent’s age, millennials (those 18-36) led the way with 74% of homeowners saying that their child’s opinion was a factor in choosing which home to buy. Eighty-three percent of renters believe that their child’s opinion would be a deciding factor when looking to purchase a home.
So what features in a home are most important to kids?
Coming in at 57%, it should come as no surprise that gaining their own bedrooms was the top most-desirable feature of any home for kids, followed by a large back yard to play in at 34%.
Todd Chamberlain, Head of Mortgage Banking at SunTrust explained the reasoning behind the survey,
“As a parent of two kids, I know from experience that including children in the home buying process is not only fun for the whole family, but also educational for our homebuyers of tomorrow.”
Bottom Line: If you’re thinking about selling your home this year, make sure to highlight all the kid-friendly features your home has to offer so that you can sway the real decision makers.
June is National Homeownership Month! Now is a great time to reflect on the many benefits of homeownership that go way beyond the financial. What reasons do you have to own your own home?
A new trend has begun to emerge. With home prices skyrocketing in the starter home category, many first-time homebuyers are skipping the traditional starter homes and moving right into their dream homes.
What’s a Starter Home? According to the National Association of Realtors (NAR), simply put, a starter home is a one or two-bedroom home (sometimes even a small, three bedroom). “Prices vary widely by market but starters on average cost $150,000 to $250,000 while trade-up and premium homes cost upwards of $300,000.”
Finding Their Forever Homes Now: A recent CNBC article revealed that there are many factors that delayed older millennials (ages 25-35) from buying a home earlier in their lives. The aftereffects of the Great Recession teaming up with larger education costs forced many to either remain living in their parent’s homes or to rent.
With the economy continuing to improve, many millennials have been able to break into better-paying jobs which has helped spur down payment savings. As the dream of homeownership comes closer to reality, many millennials are saving for their forever homes.
According to the latest statistics from NAR, 30% of millennials bought homes for $300,000 or more this year (up from 14% in 2013). Diane Swonk, Chief Economist at Grant Thornton weighed in saying, “They rented for longer. Now they’re going to where they want to stay.”
More and more millennials are settling down, getting married, and starting families, which is a huge factor driving them to look for larger homes.
Increased competition in the starter home market has also been a driving force in waiting to afford their dream homes. Inventory in the starter home market is down 14.2% from last year, according to research from Trulia. This has driven prices up and has led to bidding wars.
Many first-time buyers who were originally looking for starter homes are realizing that for just a little bit more of an investment, they could afford trade-up or premium homes instead.
Bottom Line: If you plan on purchasing your first home this year, let’s get together to determine how much house you can afford. You may be pleasantly surprised.
All new Lennar homes will come standard with Amazon's Alexa. New homes will include built-in Wi-Fi, smart locks, doorbells, thermostats, and lights. Additional smart devices can be added. Click below to learn more,
So you made an offer, it was accepted, and now your next task is to have the home inspected prior to closing. Oftentimes, agents make your offer contingent on a clean home inspection.
This contingency allows you to renegotiate the price you paid for the home, ask the sellers to cover repairs, or even, in some cases, walk away. Your agent can advise you on the best course of action once the report is filed.
How to Choose an Inspector: Your agent will most likely have a short list of inspectors that they have worked with in the past that they can recommend to you. HGTV recommends that you consider the following 5 areas when choosing the right home inspector for you:
Ask your inspector if it’s okay for you to tag along during the inspection, that way they can point out anything that should be addressed or fixed.
Don’t be surprised to see your inspector climbing on the roof or crawling around in the attic and on the floors. The job of the inspector is to protect your investment and find any issues with the home, including but not limited to: the roof, plumbing, electrical components, appliances, heating & air conditioning systems, ventilation, windows, the fireplace and chimney, the foundation, and so much more!
Bottom Line: They say ‘ignorance is bliss,’ but not when investing your hard-earned money into a home of your own. Work with a professional who you can trust to give you the most information possible about your new home so that you can make the most educated decision about your purchase.
The results of the 2018 Rental Affordability Report from ATTOM show that buying a median-priced home is more affordable than renting a three-bedroom property in 54% of U.S. counties analyzed for the report.
The updated numbers show that renting a three-bedroom property in the United States requires an average of 38.8% of income.
The least affordable market for renting was Marin County, CA, just over the Golden Gate Bridge from San Francisco, where renters spend a staggering 79.5% of average wages on rent, while the most affordable market was Madison County, AL where 22.3% of average wages went to rent.
Other interesting findings in the report include:
Bottom Line: Buying a home makes sense socially and financially. If you are one of the many renters out there who would like to evaluate your ability to buy this year, let’s get together to find your dream home.
Buying a home may be more affordable then you think! Many potential first-time home buyers believe that they have to have a perfect credit score and a 15-20% down payment. Did you know,
If you would like to evaluate your ability to buy this year, let’s get together to find your dream home!
Interest rates hovered around 4% for the majority of 2017, which gave many buyers relief from rising home prices and helped with affordability. In the first quarter of 2018, rates have increased from 3.95% up to 4.45%, and experts predict that rates will increase even more by the end of the year.
The rate you secure greatly impacts your monthly mortgage payment and the amount you will ultimately pay for your home. Don’t let the prediction that rates will increase stop you from purchasing your dream home this year.
Let’s take a look at a historical view of interest rates over the last 45 years.
Be thankful that you can still get a better interest rate than your older brother or sister did ten years ago, a lower rate than your parents did twenty years ago, and a better rate than your grandparents did forty years ago.
Should you buy now, or wait until next year? Find out the difference a year could make below.
Interest rates are projected to increase steadily heading into 2019. Freddie Mac predicts interest rates to rise to 5.1% by 2019. The higher your interest rate, the more money you end up paying for your home, and the higher your monthly payment will be. CoreLogic also predicts home prices to appreciate by 4.3% over the next 12 months.
If you are ready and willing to buy your dream home, find out if you are able to! Interest rates are still low right now. Don’t wait until rates hit 5% to start searching for your dream home!
Daylight Savings Time is here. Don’t forget to set your clocks forward this Sunday, March 11th at 2:00 AM EST. Unless of course, you are a resident of Arizona or Hawaii! Every hour in the United States: 614 homes are sold, 81 homes regain equity (meaning they are no longer underwater on their mortgage), and the median home price rises $1.51!
We all realize that the best time to sell anything is when demand for that item is high, and the supply of that item is limited. Two major reports released by the National Association of Realtors (NAR) revealed information that suggests that now is a great time to sell your house.
Let’s look at the data covered in the latest REALTORS® Confidence Index and Existing Home Sales Report.
REALTORS® CONFIDENCE INDEX - Every month, NAR surveys “over 50,000 real estate practitioners about their expectations for home sales, prices and market conditions.” This month, the index showed (again) that homebuying demand continued to outpace the supply of homes available in January.
The map below illustrates buyer demand broken down by state (the darker your state, the stronger demand there is).
In addition to revealing high demand, the index also shows that compared to conditions in the same month last year, seller traffic conditions were ‘weak’ in 22 states, ‘stable’ in 25 states, and ‘strong’ in only 4 states (Alaska, Nevada, North Dakota & Utah).
Demand for housing continues to be strong but supply is struggling to keep up, and this trend is likely to continue throughout 2018. In Orlando, Florida, there is currently only a 2.47 month supply of homes available for sale, compared to the average 6 month supply. This is down 11% from this time last year.
THE EXISTING HOME SALES REPORT - The most important data revealed in the report was not sales but was instead the inventory of homes for sale (supply). The report explained:
“Another month of solid price gains underlines this ongoing trend of strong demand and weak supply. The underproduction of single-family homes over the last decade has played a predominant role in the current inventory crisis that is weighing on affordability.”
In real estate, there is a guideline that often applies; when there is less than a 6-month supply of inventory available, we are in a seller’s market and we will see appreciation. Between 6-7 months is a neutral market, where prices will increase at the rate of inflation. More than a 7-month supply means we are in a buyer’s market and should expect depreciation in home values.
As we mentioned before, there is currently a 3.4-month supply, and houses are going under contract fast. The Existing Home Sales Report shows that 43% of properties were on the market for less than a month when sold.
In January, properties sold nationally were typically on the market for 42 days. As Yun notes, this will continue unless more listings come to the market.
“While the good news is that Realtors in most areas are saying buyer traffic is even stronger than the beginning of last year, sales failed to follow course and far lagged last January’s pace. It’s very clear that too many markets right now are becoming less affordable and desperately need more new listings to calm the speedy price growth.”
Takeaway: Inventory of homes for sale is still well below the 6-month supply needed for a normal market and supply will ‘fail to catch up with demand’ if a ‘sizable’ supply does not enter the market.
Bottom Line: If you are going to sell, now may be the time to take advantage of the ready, willing, and able buyers that are still out searching for your house.
If you bought a home in 2017, don't forget to file for your Homestead Exemption before March 1st! Florida state law allows Florida homeowners to claim Homestead Exemption on their primary residence. Click here to learn more about the Florida homestead exemption, and other exemptions available to Florida homeowners,
Please let me know if you have any questions about the process!
The interest rate you pay on your home mortgage has a direct impact on your monthly payment. The higher the rate the greater the payment will be. That is why it is important to know where rates are headed when deciding to start your home search.
Below is a chart created using Freddie Mac’s U.S. Economic & Housing Marketing Outlook. As you can see, interest rates are projected to increase steadily over the course of the next 12 months.
How Will This Impact Your Mortgage Payment?
Depending on the amount of the loan that you secure, a half of a percent (.5%) increase in interest rate can increase your monthly mortgage payment significantly.
According to CoreLogic’s latest Home Price Index, national home prices have appreciated 7.0% from this time last year and are predicted to be 4.2% higher next year.
If both the predictions of home price and interest rate increases become reality, families would wind up paying considerably more for their next home.
Bottom Line: Even a small increase in interest rate can impact your family’s wealth. Let’s get together to evaluate your ability to purchase your dream home.
There are many benefits to homeownership. One of the top benefits is protecting yourself from rising rents, by locking in your housing cost for the life of your mortgage.
Don’t Become Trapped, a recent article by Apartment List addressed rising rents by stating:
“Rents are up 2.7% year-over-year at the national level. Year-over-year growth continues to fall between the 2.1% rate from this time last year and the 3.4% growth rate from October 2015.”
The article continues explaining that:
“Despite the seasonal slowdown, rents are still up year-over-year in 89 of the 100 Largest cities.
Additionally, the Urban Institute revealed that,
“Over a quarter of renters, or 11.1 million households, are severely cost burdened, spending at least half their income on rental housing.
These households struggle to save for a rainy day and pay other bills, including groceries and healthcare.
It’s Cheaper to Buy Than Rent
As we have previously mentioned, the results of the latest Rent vs. Buy Report from Trulia shows that homeownership remains cheaper than renting with a traditional 30-year fixed rate mortgage in the 100 largest metro areas in the United States.
The updated numbers show that the range is an average of 6.5% less expensive in San Jose (CA), all the way up to 57% less expensive in Detroit (MI) and 37.4% nationwide!
Know Your Options
Perhaps you have already saved enough to buy your first home. A nationwide survey of about 24,000 renters found that 80% of millennial renters plan to eventually buy a house, but 72% cite affordability as their primary obstacle. Aside from affordability, one in three millennial renters have concerns about their credit scores, and another 53% said that a down payment is an obstacle.
Many first-time homebuyers who believe that they need a large down payment may be holding themselves back from their dream homes. As we have reported before, in many areas of the country, a first-time home buyer can save for a 3% down payment in less than two years. You may have already saved enough!
Don’t get caught in the trap that so many renters are currently in. If you are ready and willing to buy a home, find out if you are able. Let’s get together to determine if you can qualify for a mortgage now!
Smart home technology is changing the way we live. It is making our life easier and more convenient. I recently viewed a kitchen with a built in Wolf coffee maker. You could control many of the coffee maker’s features right from your smart phone. This allows you to start brewing your first cup of coffee before you are out of bed by using an app. Click here to learn more about all of Wolf’s connected kitchen appliances, http://www.subzero-wolf.com/use-and-care/connect-appliances. Smart kitchen appliances can automate parts of the cooking process, keep you updated on the progress of your food, or make sure you are following recipes correctly.
Here are a few other smart home technology trends,
Smart thermostats can lower your electric bill and conserve energy over time by monitoring different aspects of your home, such as light and air conditioning usage. Smart thermostats, such as the Nest, will learn your schedule and temperature preferences, and can even detect your presence. This allows your home to leave the air off while you’re not home, or let it auto-adjust to a comfortable temperature when you’re on your way. I am seeing more and more homes equipped with this smart thermostat. Click here to learn more about Nest thermostats, https://nest.com/thermostats/
Smart Home Security Cameras
Security is a big concern these days. Smart home security systems allow you to monitor your home while you are home or away. This technology will send you alerts to your smartphone, and allow you to view, talk, and listen to your home remotely. Many home security companies also offer smart door locks that you can operate remotely through your smartphone.
Smart Door Bells
Smart door bells are quick and easy to install and have built in cameras, speakers, and microphones. They can detect if someone comes to your door, even if they do not ring the doorbell. You can get alerts sent directly to your smartphone. Click here to learn more about the smart door bell by Ring, https://ring.com/
Smart Garage Doors
Smart garage doors allow you to monitor your garage door from anywhere. Check the open or closed status from an app on your smartphone, and, if it’s open, you can close it, even remotely. You can be miles and miles away from home and still control your garage door.
Voice Controlled Technology
Voice controlled digital assistants, such as Amazon Alexa and Google Home, are so common in homes it is hard to believe they were not around just a couple years ago. Many families have them in the kitchen so everyone is not pulling out their smart phones during meals. This home technology will play music, and respond to users request for information. There are other services available, such as setting up Amazon Alexa to also control the lights in your home by listening to your voice.
Smart Home Lighting
Smart home lighting allows you to control the lights in your home through your smartphone, by voice (many can be connected to voice controlled technology like the Amazon Alexa), light switch, or by motion. This allows you to control your lights while at home or while you are away. You can adjust the brightness and set to be on during certain hours. If you leave a light on, you can check and then turn it off from anywhere.
Halloween is almost here, and Orlando has a lot to offer! There is something for everyone. Here are seven great events going on around town,
1. Mickey’s Not-So-Scary Halloween Party
Wear your costume and go trick-or-treating through Walt Disney World’s Magic Kingdom! This is one of Magic Kingdom’s most popular special events. You will be able to meet and greet Disney characters dressed in Halloween costumes, ride on the parks attractions, watch Mickey’s Halloween Parade, and end the night watching “HalloWishes,” a green and orange fireworks show featuring the Disney villains.
Here is the link to view more information on this event,
2. SeaWorld’s Halloween Spooktacular
During this daytime event, children and families can trick-or-treat around the park, meet and greet with sea creatures, and create sea-themed arts and crafts. This event is included with SeaWorld Park Admission.
Click here to view SeaWorld’s Halloween Spooktacular’s event website,
3. Universal Orlando's Halloween Horror Nights 27
Universal’s Halloween Horror Nights is not for the faint-hearted. Explore nine terrifying haunted houses, two live shows, and many of the parks rides and attractions. Watch out for the “scare zones”as you make your way around the park. Click here to learn more,http://www.halloweenhorrornights.com/orlando/
4. LEGOLAND Florida's Brick or Treat
LEGOLAND Florida celebrates Halloween with their Brick or Treat event. Trick-or-Treat through Legoland, meet and greet with LEGO Vampyre, LEGO Mummy and other spooky characters, explore unique LEGO build activities, and watch a themed fireworks show. Click here to view more,
5. Hallow Eye at I-Drive 360
From October 27-31, experience Hallow Eye. This is the final part of I-Drive 360’s 3 week long "Spooky Nights and Spider Frights," https://www.officialorlandoeye.com/spooky-nights-and-spider-frights/ . This event features trick or treating around I-Drive 360, a pumpkin decorating contest, music, dancing, and a Halloween movie night on the 29th. Each night over 64,000 LED lights will bring the Orlando Eye (the tallest observation wheel on the United States East Coast) to life in a kaleidoscopic ten-minute show synchronized to an iconic Halloween soundtrack.
6. Zoo Boo Bash
The Central Florida Zoo & Botanical Gardens hosts the Zoo Boo Bash October 28-29, 2017. Kids are invited to wear costumes and stop at the trick-or-treat stations around the zoo. Other activities include children’s crafts, face painting, children’s hayride, costume contest, music time, and Halloween book readings. Click here for more information, http://www.centralfloridazoo.org/events
7. Enzian Theater's 13 Films of Halloween
On select nights in October, the Enzian Theater, http://enzian.org/, will present its annual "13 Films of Halloween." The theater's Eden Bar will also be selling their 13 Cocktails of Halloween, http://enzian.org/wp-content/uploads/2017/09/13-Cocktails-of-Halloween-Menu-2017.pdf, named after the featured movies. Eden Bar will host its 10th annual Halloween Party on October 28th . Click here to learn more, http://enzian.org/film/halloween-party/ .
Have a Safe and Happy Halloween!
Katie Tedesco is a FULL-TIME REALTOR® with Watson Realty Corp.