Home Price Forecasts Revised for 2023

Some Highlights

  • Last year, some housing experts projected a decline in home prices by the end of 2023. But that didn’t happen – inventory was just too low.
  • While it’s normal for experts to re-forecast throughout the year, the good news for 2023 is that prices are no longer projected to decrease.
  • Let’s connect so you know what’s happening with home values in our local area.

Sources

 

Planning to Retire? Your Equity Can Help You Make a Move To Phoenix, AZ

Planning to Retire? Your Equity Can Help You Make a Move To Phoenix, AZ

 

Reaching retirement is a significant milestone in life, bringing with it a lot of change and new opportunities. As the door to this exciting chapter opens, one thing you may be considering is selling your house and finding a home better suited for your evolving needs.

Fortunately, you may be in a better position to make a move than you realize. Here are a few reasons why.

Consider How Long You’ve Been in Your Home

From 1985 to 2009, the average length of time homeowners stayed in their homes was roughly six years. But according to the National Association of Realtors (NAR), that number is higher today. Since 2010, the average home tenure is just over nine years (see graph below):

This means many homeowners have been living in their houses even longer in recent years. When you live in a home for such a significant amount of time, it’s natural for you to experience changes in your life while you’re in that house. As those life changes and milestones happen, your needs may change. And if your current home no longer meets them, you may have better options waiting for you.

Consider the Equity You’ve Gained

And, if you’ve been in your home for more than a few years, you’ve likely built-up substantial equity that can fuel your next move. That’s because you gain equity as you pay down your loan and as home prices appreciate. And, the longer you’ve been in your home, the more you may have gained. Data from the Federal Housing Finance Agency (FHFA) illustrates that point (see graph below):

While home prices vary by area, the national average shows the typical homeowner who’s been in their house for five years saw it increase in value by nearly 60%. And the average homeowner who’s owned their home for 30 years saw it almost triple in value over that time.

Whether you’re looking to downsize, relocate to a dream destination, or move so you live closer to friends or loved ones, that equity can help. Whatever your home goals are, a trusted real estate agent can work with you to find the best option. They’ll help you sell your current house and guide you as you buy the home that’s right for you and your lifestyle today.

Bottom Line

As you plan for your retirement, let’s connect so we can find out how much equity you’ve built up over the years and plan how you can use it toward the purchase of a home that fits your changing needs.

Get Ready for Smaller, More Affordable Homes In Ventura, CA

Get Ready for Smaller, More Affordable Homes In Ventura, CA

Have you been trying to buy a home, but higher mortgage rates and home prices are limiting your options? If so, here’s some good news – based on what Ali Wolf, Chief Economist at Zonda, has to say – smaller, more affordable homes are on the way:

“Buyers should expect that over the next 12 to 24 months there will be a notable increase in the number of entry-level homes available.”

In some ways, smaller homes are already here. When the pandemic hit, the meaning of home changed. People needed the space their home provided not only as a place to live, but as a place to work, go to school, exercise, and more. Those who had that space were more likely to keep it. And those that didn’t were in a position where they were trying to sell their smaller house to move up to a larger one. That meant the homes coming to the market during the pandemic were smaller than those on the market before the pandemic – and that trend continues today (see graph below):This graph also shows how the size of homes on the market changes seasonally. Larger homes tend to come on the market during the summer months when households with children who are out of school are looking to move.

That seasonality means, based on historical trends and the fact that fall is now approaching, we can expect smaller, more affordable homes to come to the market throughout the rest of the year.

That’s great news because, as Robert Dietz, Chief Economist at the National Association of Home Builders (NAHB), states, the need for these types of homes has gone up recently:

“. . . as interest rates increased in 2022, and housing affordability worsened, the demand for home size has trended lower.”

What Does This Mean for You?

The seasonal trend of smaller homes coming to the market in the later months of the year, coupled with builders bringing smaller, more affordable newly built homes to the market right now, is good news – especially if you’re finding it difficult to afford a home. Mikaela Arroyo, Director of the New Home Trends Institute at John Burns Real Estate Consulting, says this about a potential increase in the availability of smaller homes:

“It’s not solving the affordability crisis, but it is creating opportunities for people to be able to afford an entry-level home in an area.”

Bottom Line

If a smaller, more affordable home sounds appealing to you, good news – they’re coming. To keep up with what’s available in our area, let’s connect.

Why It’s Still a Seller’s Market In Camarillo, CA Today

Why It’s Still a Seller’s Market In Camarillo, CA Today

Even though activity in the housing market has slowed from the frenzy that was the ‘unicorn’ years, it’s still a seller’s market because the supply of homes for sale is so low. But what does that really mean for you? And why are conditions today so good if you want to sell your house?

The latest Existing Home Sales Report from the National Association of Realtors (NAR) shows housing supply is still astonishingly low. Housing inventory is measured by the number of available homes on the market. It’s also measured by months’ supply, meaning the number of months it would take to sell all those available homes based on current demand. In a balanced market, there’s usually about a six-month supply. Today, we have only about 3 months’ supply of homes at the current sales pace (see graph below):

As the visual shows, given the current inventory of homes, it’s still a seller’s market.

Today, we’re nowhere near what’s considered a balanced market. In fact, the current months’ supply is half of what’s typical of a normal market. That means there just aren’t enough homes to go around based on today’s buyer demand.

As Lawrence Yun, Chief Economist for NAR, says:

“There are simply not enough homes for sale. The market can easily absorb a doubling of inventory.”

How Does Being in a Seller’s Market Benefit You?

Sellers, these conditions give you a real edge. Right now, there are buyers who are ready, willing, and able to purchase a home. And, because there’s a shortage of homes up for sale, the ones that do hit the market are like magnets for those buyers.

If you work with a local real estate agent to list your house right now, in good condition, and at the right price, it could get a lot of attention. You might even end up with multiple offers.

Bottom Line

Today’s seller’s market sets you up with a big advantage when you sell your house. Because supply is so low, your house will be in the spotlight for motivated buyers who are craving more options. Let’s connect so you understand what’s happening in our local area as you get ready to enter the market.

Homeowners Have a Lot of Equity Right Now 

Some Highlights

  • Your equity grows as you pay down your home loan and as home prices increase. With home prices rising again, your equity is getting an extra boost.
  • Almost half of homeowners are equity rich because they have at least 50% equity in their homes. If you’ve been in your home for a while, you might have gained a considerable amount of equity, too.
  • Want to find out how much equity you have? Connect with a trusted real estate agent for a Professional Equity Assessment Report (PEAR).

How Inflation Affects the Housing Market In Simi Valley, CA

How Inflation Affects the Housing Market In Simi Valley, CA

Have you ever wondered how inflation impacts the housing market? Believe it or not, they’re connected. Whenever there are changes to one, both are affected. Here’s a high-level overview of the connection between the two.

The Relationship Between Housing Inflation and Overall Inflation

Shelter inflation is the measure of price growth specific to housing. It comes from a survey of renters and homeowners that’s done by the Bureau of Labor Statistics (BLS). The survey asks renters how much they’re paying in rent, and homeowners how much they’d rent their homes for, if they weren’t living in them.

Much like overall inflation measures the cost of everyday items, shelter inflation measures the cost of housing. And for four consecutive months, based on that survey, shelter inflation has been coming down (see graph below):

Why does this matter? Well, shelter inflation makes up about one-third of overall inflation, as measured by the Consumer Price Index (CPI). So, when shelter inflation moves, it leads to noticeable moves in overall inflation. That means the recent dip in shelter inflation might be a sign that overall inflation could fall in the months ahead.

That moderation would be a welcome sight for the Federal Reserve (the Fed). They’ve been working to get inflation under control since early 2022. While they’ve made some headway (it peaked at 8.9% in the middle of last year), they’re still trying to get to their 2% goal (the latest report is 3.3%).

Inflation and the Federal Funds Rate 

What’s the Fed been doing to lower inflation? They’ve been increasing the Federal Funds Rate. That interest rate influences how much it costs banks to borrow money from each other. When inflation climbed, the Fed responded by raising the Federal Funds Rate to keep the economy from overheating.

The graph below shows the relationship between the two. Each time inflation (shown in the blue line) starts to climb, the Fed raises the Federal Funds Rate (shown in the orange line) to try to get it back to their target of 2% (see below):

The circled portion of the graph shows the most recent spike in inflation, the Fed’s actions to raise the Federal Funds Rate to fight that, and the moderation of inflation that happened in response to that hike. As inflation gets closer to the Fed’s current 2% goal, they may not need to raise the Federal Funds Rate much further.

A Brighter Future for Mortgage Rates?

So, what does all of this mean for you? While the actions coming out of the Fed don’t determine mortgage rates, they do have an impact. As Mortgage Professional America (MPA) explains:

“. . . mortgage rates and inflation are connected, however indirectly. When inflation rises, mortgage rates rise to keep up with the value of the US dollar. When inflation drops, mortgage rates follow suit.”

While no one can predict the future for mortgage rates, it’s encouraging to see the signs of moderating inflation in the economy.

Bottom Line

Whether you’re looking to buy, sell, or just stay informed about the housing market, let’s connect.

Today’s Housing Market Has Only Half the Usual Inventory

Some Highlights

  • There are only about half the number of homes for sale compared to the last normal years in the market.
  • That means buyers don’t have enough options right now. So, if you work with an agent to list your house, it should be in the spotlight.
  • If you’re thinking of selling, let’s connect so your house can stand out while there’s such a shortage of supply and buyers are craving more options.

Gen Z: The Next Generation Is Making Moves in the Housing Market In Prescott Valley, AZ

Gen Z: The Next Generation Is Making Moves in the Housing Market In Prescott Valley, AZ

Generation Z (Gen Z) is eager to put down their own roots and achieve financial independence. As a result, they’re turning to homeownership. According to the latest Home Buyers and Sellers Generational Trends Report from the National Association of Realtors (NAR), 30% of Gen Z buyers transitioned straight from living under their parents’ roofs to owning their own homes.

If you’re a member of this generation, and you’re interested in pursuing your own dream of homeownership, here’s some information you may find helpful on why and where your peers are buying.

The Reasons Gen Z Want To Become Homeowners

A recent survey by Rocket Mortgage identifies some of the top motivators driving Gen Z buyers to purchase a home:

“Of those surveyed, 34% said that starting or growing their family was their main motivation to buy a home. . . . Along with growing a family comes establishing a home base.”

Another key reason the survey says Gen Z wants to buy is because homeownership can give them more stability (20.8%). That’s because buying a home allows you to stabilize what’s typically your biggest monthly expense: your housing cost.

When you have a fixed-rate mortgage on your home, you can lock in your monthly payment for the duration of your loan, often 15 to 30 years. If you keep renting, you don’t have that same benefit, and you won’t be protected from rising housing costs.

So, if you’re ready to start a new chapter in your life or if you’re craving more stability, know that your peers feel the same way, and those motivators are why they’re turning to homeownership.

Gen Z’s Next Stop: Where Are They Making Their Moves?

If those reasons have you feeling ready to buy, here’s some information on where your peers are finding their homes that could help you with your search. According to a recent Lending Tree survey, Gen Z buyers are focusing on more affordable areas to help boost their buying power and offset the challenges that come with today’s mortgage rates.

Many Gen Z buyers still want the convenience and excitement of city life, but also value the affordability, open air, and space more suburban areas offer. Jacob Channel, Senior Economist at LendingTree, explains:

“. . . they want to live in a city, but they also want to be close to nature.”

Locating a home that offers both of those things requires expertise. Working with a trusted real estate professional can help you find a home in your budget and desired area. Your agent will know the most affordable neighborhoods to search in. They can also highlight the amenities and features that location offers and how those are aligned with your goals. They’ll also be able to walk you through how things like remote work can help you cast a broader net for your search.

Bottom Line

If you’re a member of Gen Z and are just getting started on your homebuying journey, or if you want to learn more about the process, let’s connect. That way, you have a guide to help you find a home that fits both your lifestyle and your budget.

More Jobs and Better Pay Leads to More Buyer Demand In Prescott, Arizona

More Jobs and Better Pay Leads to More Buyer Demand In Prescott, Arizona

There’s been talk about a recession for quite a while now. But the economy has been remarkably resilient. Why? One reason is employment and wages have stayed strong. Let’s look at the latest information on each one and why both are good news if you’re thinking about selling your house.

More Jobs Are Being Created

Instead of facing the job losses typical of any recession, the economy has been growing and adding jobs. According to the Bureau of Labor Statistics (BLS), 187,000 jobs were created in July, which is up from the 185,000 created in June. That means more people are finding work. In fact, so many jobs are being added that the unemployment rate is far lower than the long-term average of 5.7% (see graph below):

A low unemployment rate means that most people who want to work are finding jobs. When people have jobs, they have steady incomes – and that can help set them up to consider homeownership.

People Are Making More Money

And data also shows hourly earnings have been going up pretty steadily over the past few years (see graph below):

When wages rise, people have more money that they could save or use toward buying a home. This increase in income helps offset some of the affordability challenges in the housing market today. Affordability depends on three main factors: wages, home prices, and mortgage rates. With higher home prices and mortgage rates right now, Builder Online summarizes how growing wages can help:

“The housing market has been a beneficiary of the strong economy and labor market. Many of those employed have saved money over the past few years and used those funds toward a down payment on a home.”

If you’re thinking about selling your house, a strong job market, growing wages, and the resulting buyer demand is fantastic news. It means there’s a larger pool of potential buyers out there who are in a position to pursue their dreams of homeownership.

Bottom Line

With more jobs and rising wages creating eager buyers, there’s a lot going in your favor. Let’s connect so you have someone who can guide you through the process of selling your house, from setting the right price to getting your home ready to show.

Why You Don’t Need To Fear the Return of Adjustable-Rate Mortgages In Phoenix, Arizona

Why You Don’t Need To Fear the Return of Adjustable-Rate Mortgages IN PHOENix, Arizona

If you remember the housing crash back in 2008, you may recall just how popular adjustable-rate mortgages (ARMs) were back then. And after years of being virtually nonexistent, more people are once again using ARMs when buying a home. Let’s break down why that’s happening and why this isn’t cause for concern.

Why ARMs Have Gained Popularity More Recently

This graph uses data from the Mortgage Bankers Association (MBA) to show how the percentage of adjustable-rate mortgages has increased over the past few years:

As the graph conveys, after hovering around 3% of all mortgages in 2021, many more homeowners turned to adjustable-rate mortgages again last year. There’s a simple explanation for that increase. Last year is when mortgage rates climbed dramatically. With higher borrowing costs, some homeowners decided to take out this type of loan because traditional borrowing costs were high, and an ARM gave them a lower rate.

Why Today’s ARMs Aren’t Like the Ones in 2008

To put things into perspective, let’s remember these aren’t like the ARMs that became popular leading up to 2008. Part of what caused the housing crash was loose lending standards. Back then, when a buyer got an ARM, banks and lenders didn’t require proof of their employment, assets, income, etc. Basically, people were getting loans that they shouldn’t have been awarded. This set many homeowners up for trouble because they couldn’t pay back the loans that they never had to qualify for in the first place.

This time around, lending standards are different. Banks and lenders learned from the crash, and now they verify income, assets, employment, and more. This means today’s buyers actually have to qualify for their loans and show they’ll be able to repay them.

Archana Pradhan, Economist at CoreLogic, explains the difference between then and now:

“Around 60% of Adjustable-Rate Mortgages (ARM) that were originated in 2007 were low- or no-documentation loans . . . Similarly, in 2005, 29% of ARM borrowers had credit scores below 640 . . . Currently, almost all conventional loans, including both ARMs and Fixed-Rate Mortgages, require full documentation, are amortized, and are made to borrowers with credit scores above 640.”

In simple terms, Laurie Goodman at Urban Institute helps drive this point home by saying:

“Today’s Adjustable-Rate Mortgages are no riskier than other mortgage products and their lower monthly payments could increase access to homeownership for more potential buyers.”

Bottom Line

If you’re worried today’s adjustable-rate mortgages are like the ones from the housing crash, rest assured, things are different this time.

 

And, if you’re a first-time homebuyer and you’d like to learn more about lending options that could help you overcome today’s affordability challenges, reach out to a trusted lender.