Buying a Home May Help Shield You from Inflation in Phoenix, Arizona

Buying a Home May Help Shield You from Inflation

It feels like everything is getting more expensive these days. That’s because inflation has remained higher than normal for longer than expected – and that’s impacting the costs of goods, services, and more. And with rising costs all around you, you’re probably questioning: is now really the right time to buy a home?

Here’s the good news. Owning a home is actually one of the best ways to protect yourself from the rising costs that come with inflation.

A Fixed Mortgage Protects You from Rising Housing Costs

One of the key benefits of homeownership is that when you buy a home with a fixed-rate mortgage, your biggest monthly expense — your mortgage payment — stabilizes. Sure, your payment could rise slightly as your homeowner’s insurance and property taxes shift. But no matter what happens with inflation, your principal and interest payments won’t change.

That’s not the case if you rent. Rent tends to rise over time, and it usually goes up even faster than the rate of inflation. Just look at the data from the Bureau of Economic Analysis (BEA) and the Census Bureau (see graph below):

a graph of a price increaseSo, while renters face higher costs year after year, homeowners with a fixed mortgage rate lock in their monthly payments, making it easier to budget no matter what happens with inflation.

Home Prices Typically Rise Faster Than Inflation

Another big reason homeownership is a great hedge against inflation is that home values tend to appreciate over time — often at a higher rate than inflation, according to data from the BEA and Fannie Mae (see graph below):

a graph of a price appreciationThat makes real estate one of the strongest long-term investments during times of rising prices. While inflation can chip away at the value of cash savings, real estate typically holds or grows in value, allowing you to build wealth.

On the other hand, renting offers no protection against inflation. In fact, it does the opposite — when inflation drives up costs, landlords often pass those increases onto tenants through higher rents.

That means as a renter, you’re continually paying more without gaining any financial benefit. But as a homeowner, rising prices work in your favor by increasing the value of your home and growing your equity over time.

And with experts forecasting continued home price growth, that means you’re making an investment that usually grows in value and should outperform inflation in the years ahead.

In short, a fixed-rate mortgage protects your budget, and home price appreciation grows your net worth. That’s why homeownership is a strong hedge against inflation.

Bottom Line

Inflation can make everyday expenses unpredictable, but owning a home gives you stability. Unlike rent, your monthly mortgage payment stays pretty much the same over time. Plus, the value of your home is likely to increase after you buy.

How would having a fixed housing payment change the way you budget for the future?

The Real Story Behind What’s Happening with Home Prices in Ventura, California

The Real Story Behind What’s Happening with Home Prices

If you’re wondering what’s going on with home prices lately, you’re definitely not the only one. With so much information out there, it can be hard to figure out your next move.

As a buyer, you might be worried about paying more than you should. And if you’re thinking of selling, you might be concerned about not getting the price you’re aiming for.

So, here’s a quick breakdown to help clear things up and show you what’s really happening with prices—whether you’re thinking about buying or selling.

Home Price Growth Is Slowing, but Prices Aren’t Falling Nationally

Throughout the country, home price appreciation is moderating. What that means is, prices are still going up, but they’re not rising as quickly as they were in recent years. The graph below uses data from Case-Shiller to make the shift from 2023 to 2024 clear:

No Caption ReceivedBut rest assured, this doesn’t mean home prices are falling. In fact, all the bars in this graph show price growth. So, while you might hear talk of prices cooling, what that really means is they’re not climbing as fast as they were when they skyrocketed just a few years ago.

What’s Next for Home Prices? It’s All About Supply and Demand

You might be curious where prices will go from here. The answer depends on supply and demand, and it’s going to vary by local market.

Nationally, the number of homes for sale is going up, but there still aren’t enough of them to meet today’s buyer demand. That’s keeping upward pressure on prices – even though recent inventory growth has caused that home price appreciation to slow. Danielle Hale, Chief Economist at Realtor.com, said:

“. . . today’s low but quickly improving for-sale inventory has ushered in more market balance than would otherwise be expected . . . This should help home prices maintain a slower pace of growth.” 

And here’s one other thing you may not have considered that could play a role in where prices go from here. Since experts say mortgage rates should continue to decline, it’s likely more buyers will re-enter the market in the months ahead. If demand picks back up, that could make prices climb a bit further.

Why You Should Work with a Local Real Estate Agent

While national trends give a big-picture view, real estate is always local – especially when it comes to prices. What’s happening in your neighborhood might be different from the national average based on what supply and demand look like in your market. That’s why it’s crucial to get local insights from a knowledgeable real estate agent.

As your go-to source for everything related to home prices, a local agent can provide the most current data and trends specific to your area.

So, if you’re planning to sell, they can help you price your house accurately. And when you’re ready to buy, they can find the right home that fits your budget and your needs.

Bottom Line

Home prices are still rising, just not as quickly as before. Whether you’re thinking about buying, selling, or just curious about what your house is worth, let’s connect so you have the personalized guidance you need.

Are Home Prices Going To Come Down in Phoenix, Arizona?

Are Home Prices Going To Come Down?

Today’s headlines and news stories about home prices are confusing and make it tough to know what’s really happening. Some say home prices are heading for a correction, but what do the facts say? Well, it helps to start by looking at what a correction means.

Here’s what Danielle Hale, Chief Economist at Realtor.com, says:

 “In stock market terms, a correction is generally referred to as a 10 to 20% drop in prices . . . We don’t have the same established definitions in the housing market.”

In the context of today’s housing market, it doesn’t mean home prices are going to fall dramatically. It only means prices, which have been increasing rapidly over the last couple years, are normalizing a bit. In other words, they’re now growing at a slower pace. Prices vary a lot by local market, but rest assured, a big drop off isn’t what’s happening at a national level.

The Real Estate Market Is Normalizing

From 2020 to 2022, home prices skyrocketed. That rapid increase was due to high demand, low interest rates, and a shortage of homes for sale. But, that kind of aggressive growth couldn’t continue forever.

Today, price growth has started to slow down, which is a sign the market is beginning to normalize. The most recent data from Case-Shiller shows that after being basically flat for a couple of months last year, prices are going up at a national level – just not as quickly as before (see graph below):

No Caption ReceivedThe big takeaway? So far this year, there’s been a much healthier pace of price growth compared to the pandemic.

Of course, that’s what’s happening now, but you may be wondering what’s next for prices. Marco Santarelli, the Founder of Norada Real Estate Investments, says:

“Expert forecasts lean towards a moderation in home price growth over the next five years. This translates to a slower and more sustainable pace of appreciation compared to the breakneck speed witnessed in recent years, rather than a freefall in prices.”

It’s all about supply and demand. Increasing inventory plus limited buyer demand, due to relatively high mortgage rates, will continue to ease some of the upward pressure on prices.

 What This Means for You

 If you’re thinking about buying a home, slowing price growth is welcome news. Skyrocketing home prices during the pandemic left many would-be homebuyers feeling priced-out.

While it’s still a good thing to know the value of the home you buy will likely continue to go up once you own it, slowing price gains are making things feel more manageable. Odeta Kushi, Deputy Chief Economist at First American, says:

“While housing affordability is low for potential first-time home buyers, slowing price appreciation and lower mortgage rates could help — so the dream of homeownership isn’t boarded up just yet.”

Bottom Line

At the national level, home prices are not going down. And most experts forecast they’ll continue growing moderately moving forward. But prices vary a lot by local market. That’s where a trusted real estate agent comes into play. If you have questions about what’s happening with prices in our area, reach out.

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Housing Market Forecast: What’s Ahead for the 2nd Half of 2024 in Prescott, Arizona

Housing Market Forecast: What’s Ahead for the 2nd Half of 2024

As we move into the second half of 2024, here’s what experts say you should expect for home prices, mortgage rates, and home sales.

Home Prices Are Expected To Climb Moderately

Home prices are forecasted to rise at a more normal pace. The graph below shows the latest forecasts from seven of the most trusted sources in the industry:

No Caption Received

The reason for continued appreciation? The supply of homes for sale. Jessica Lautz, Deputy Chief Economist at the National Association of Realtors (NAR), explains:

“One thing that seems to be pretty solid is that home prices are going to continue to go up, and the reason is that we don’t have housing inventory.”

While inventory is up compared to the last couple of years, it’s still low overall. And because there still aren’t enough homes to go around, that’ll keep upward pressure on prices.

If you’re thinking of buying, the good news is you won’t have to deal with prices skyrocketing like they did during the pandemic. Just remember, prices aren’t expected to drop. They’ll continue climbing, just at a slower pace.

So, getting into the market sooner rather than later could still save you money in the long run. Plus, you can feel confident experts say your home will grow in value after you buy it.

Mortgage Rates Are Forecast To Come Down Slightly

One of the best pieces of news for both buyers and sellers is that mortgage rates are expected to come down a bit, according to Fannie Mae, the Mortgage Bankers Association (MBA), and NAR (see chart below):

No Caption ReceivedWhen you buy, even a small drop in mortgage rates can make a big difference in your monthly payments. For sellers, lower rates will bring more buyers back into the market, which can help you sell faster and potentially at a higher price. Plus, it may help you get off the fence, if you’ve been hesitant to sell due to today’s rates.

Home Sales Are Projected To Hold Steady

For 2024, the number of home sales will be about the same as last year and may even rise slightly. The graph below compares the 2024 home sales forecasts from Fannie Mae, MBA, and NAR to the 4.8 million homes that sold last year:

No Caption Received

The average of the three forecasts is about 5 million sales in 2024 – a small increase from 2023. Lawrence Yun, Chief Economist at NAR, explains why:

“Job gains, steady mortgage rates and the release of inventory from pent-up home sellers will lead to more sales.”

With more inventory available and mortgage rates expected to go down, a few more homes are expected to be sold this year compared to last year. This means more people will be able to move. Let’s work together to make sure you’re one of them.

Bottom Line

If you have any questions or need help navigating the market, reach out.

Home Prices Aren’t Declining, But Headlines Might Make You Think They Are in Prescott Valley, Arizona

Home Prices Aren’t Declining, But Headlines Might Make You Think They Are

If you’ve seen the news lately about home sellers slashing prices, it’s a great example of how headlines do more to terrify than clarify. Here’s what’s really happening with prices.

The bottom line is home prices are higher than they were a year ago at this time, and they’re expected to keep rising, just at a slower pace.

But a recent article from Redfin notes,

“Price Drops Hit Highest Level in 18 Months As High Rates Dampen Buyer Demand.”

And that might make you think prices are declining.

Now, while it’s true the latest report from Realtor.com also shows 16.6% of homes on the market had price reductions in May, which is up from 12.7% last May, that doesn’t mean overall home prices are falling.

The key is knowing the difference between the asking price and the sold price.

Understanding Asking Price vs. Sold Price

In essence, the asking price, also known as a listing price, is the amount a seller hopes to get for their home when they list it. In reality, sellers can’t just put any price tag on their house and expect it to sell for top dollar. Today’s buyers are savvy customers, and when they aren’t willing to pay a premium for a home because their budgets are strained by higher mortgage rates, sellers need to adjust. And that’s what’s happening right now.

Based on market factors and what offers that seller receives, that asking price can change. If a seller isn’t getting much foot traffic, you may see them revise the price and make an adjustment to reignite interest in the home – and sometimes that’s because they’ve overpriced it from the start. That’s where price reductions come in, and when you see “price drops” in a headline, it sounds like declining home prices.

Mike Simonsen, CEO and Founder of Altos Research, says:

“Not only is the share of homes with price cuts elevated compared to one year ago, but more price cuts are happening each week than last year.”

On the other hand, the final sold price is the amount a buyer actually pays when the transaction is complete.

Here’s the most important thing to note: Actual sold prices are still rising, and they’re expected to continue to do so at least over the next 5 years.

What Does This Mean for Home Prices?

So, while there’s been an increase in price reductions recently, this doesn’t mean overall home values are declining. Instead, it’s a sign that demand is moderating. And, as a result, sellers are adjusting their expectations to align with today’s market reality.

Even with more price reductions, home values are still growing on an annual basis, as they do nearly every year in the housing market. According to the Federal Housing Finance Agency (FHFA), home prices went up 6.6% over the last year (see below):No Caption Received

This map shows how prices rose just about everywhere in the country, indicating the market is not in decline.

So, while seller price reductions are often a leading indicator that prices may moderate in the months ahead, which experts have been saying for a while is expected to happen, they aren’t necessarily reason for alarm. The same article from Redfin also states:

“. . .those metrics suggest sale-price growth could soften in the coming months as persistently high mortgage rates turn off homebuyers. For now, the median-home sale price is up 4.3% year over year to another record high. . .”

And with inventory as tight as it is today, price moderation is much more likely in upcoming months than price declines.

Why This Is Good News for Buyers and Sellers

For buyers, more realistic asking prices mean a better chance of securing a home at a fair price. It also means you can enter the market with more confidence, knowing prices are stabilizing rather than continuing to skyrocket.

For sellers, understanding the need to adjust your asking price can lead to faster sales and fewer price negotiations. Setting a realistic price from the start can attract more serious buyers and lead to smoother transactions.

Bottom Line

While the uptick in price reductions might seem troubling, it’s not a cause for concern. It reflects a market adjusting to new conditions. Home prices are continuing to grow, just at a more moderate pace.

Home Prices Are Climbing in These Top Cities

Home Prices Are Climbing in These Top Cities

Thinking about buying a home or selling your current one to find a better fit? If so, you might be wondering what’s going on with home prices these days. Here’s the scoop.

The latest national data from Case-Shiller and the Federal Housing Finance Agency (FHFA) shows they’re going up (see graphs below):

No Caption Received

As you can see, home prices were rising for most of 2023. But over the course of December and January, they were virtually flat – which is pretty normal for that time of year.

But here’s what you need to know now. As of February, when the spring market kicked off, prices were on the rise again.

Home Prices Are Going Up in Most of America’s Top Cities

After seeing a jump in home prices nationally in February, you might be wondering if they’re going up in your area, too. While it depends on where you live, prices are rising in 18 of the top 20 cities Case-Shiller reports on in the monthly price index (see chart below):

No Caption Received

Most experts also think home prices will keep rising and end the year on a high note. Forbes explains why:

“Even as mortgage rates have reached their highest level since November, persistent demand coupled with limited housing supply are key drivers pushing home values upward.”

How This Impacts You

  • For Buyers: If you’re ready, willing, and able to buy a home, purchasing before prices go up even more might be a smart choice, since home values are expected to keep climbing.
  • For Sellers: Prices are going up because there still aren’t enough homes available for sale right now compared to today’s buyer demand. So, if you work with an agent to price your house right, you might receive multiple offers and sell quickly.

Bottom Line

The data shows home prices are increasing nationally. Let’s chat to see exactly what’s going on with prices in our neighborhood.

Does It Make Sense To Buy A Home Right Now in Simi Valley, California?

 

Does It Make Sense To Buy a Home Right Now?


 

Thinking about buying a home? If so, you’re probably wondering: should I buy now or wait? Nobody can make that decision for you, but here’s some information that can help you decide.

What’s Next for Home Prices?

Each quarter, Fannie Mae and Pulsenomics publish the results of the Home Price Expectations Survey (HPES). It asks more than 100 experts—economists, real estate professionals, and investment and market strategists—what they think will happen with home prices.

In the latest survey, those experts say home prices are going to keep going up for the next five years (see graph below):

a graph of green bars

Here’s what all the green on this chart should tell you. They’re not expecting any price declines. Instead, they’re saying we’ll see a 3-4% rise each year.

And even though home prices aren’t expected to climb by as much in 2025 as they are 2024, keep in mind these increases can really add up over time. It works like this. If these experts are right and your home’s value goes up by 3.78% this year, it’s set to grow another 3.36% next year. And another 3.87% the year after that.

What Does This Mean for You?

Knowing that prices are forecasted to keep going up should make you feel good about buying a home. That’s because it means your home is an asset that’s projected to grow in value in the years ahead.

If you’re not convinced yet, maybe these numbers will get your attention. They show how a typical home’s value could change over the next few years using expert projections from the HPES. Check out the graph below:

a graph of growth in a chart

In this example, imagine you bought a home for $400,000 at the start of this year. Based on these projections, you could end up gaining over $83,000 in household wealth over the next five years as your home grows in value.

Of course, you could also wait – but if you do, buying a home is just going to end up costing you more.

Bottom Line

If you’re thinking it’s time to get your own place, and you’re ready and able to do so, buying now might make sense. Your home is expected to keep getting more valuable as prices go up. Let’s team up to start looking for your next home today.

3 Key Factors Affecting Home Affordability in Simi Valley, California

3 Key Factors Affecting Home Affordability

Over the past year, a lot of people have been talking about housing affordability and how tight it’s gotten. But just recently, there’s been a little bit of relief on that front. Mortgage rates have gone down since their most recent peak in October. But there’s more to being able to afford a home than just mortgage rates.

To really understand home affordability, you need to look at the combination of three important factors: mortgage rates, home prices, and wages. Let’s dive into the latest data on each one to see why affordability is improving.

1. Mortgage Rates

Mortgage rates have come down in recent months. And looking forward, most experts expect them to decline further over the course of the year. Jiayi Xu, an economist at Realtor.com, explains:

“While there could be some fluctuations in the path forward … the general expectation is that mortgage rates will continue to trend downward, as long as the economy continues to see progress on inflation.”

And even a small change in mortgage rates can have a big impact on your purchasing power, making it easier for you to afford the home you want by reducing your monthly mortgage payment.

2. Home Prices

The second important factor is home prices. After going up at a relatively normal pace last year, they’re expected to continue rising moderately in 2024. That’s because even with inventory projected to grow slightly this year, there still aren’t enough homes for sale for all the people who want to buy them. According to Lisa Sturtevant, Chief Economist at Bright MLS:

“More inventory will be generally offset by more buyers in the market. As a result, it is expected that, overall, the median home price in the U.S. will grow modestly . . .”

That’s great news for you because it means prices aren’t likely to skyrocket like they did during the pandemic. But it also means it’ll probably cost you more to wait. So, if you’re ready, willing, and able to buy, and you can find the right home, purchasing before more buyers enter the market and prices rise further might be in your best interest.

3. Wages

Another positive factor in affordability right now is rising income. The graph below uses data from the Federal Reserve to show how wages have grown over time:

If you look at the blue dotted trendline, you can see the rate at which wages typically rise. But on the right side of the graph, wages are above the trend line today, meaning they’re going up at a higher rate than normal.

Higher wages improve affordability because they reduce the percentage of your income it takes to pay your mortgage. That’s because you don’t have to put as much of your paycheck toward your monthly housing cost.

What This Means for You

Home affordability depends on three things: mortgage rates, home prices, and wages. The good news is, they’re moving in a positive direction for buyers overall.

Bottom Line

If you’re thinking about buying a home, it’s important to know the main factors impacting affordability are improving. To get the latest updates on each, let’s connect.