Each week I round-up the best real estate articles and break them down for you in an easy to digest format. Here are the articles I’ve found most interesting over the last couple weeks:
The Article: Redfin: Sales Are Slow To Kick Off New Year, But More Buyers Start Searching
The Highlights: There are signs that homebuyer demand is on its way up. Redfin’s Homebuyer Demand Index–a measure of tour requests and other buying services from Redfin agents–posted a 6% increase over the last month, and Google searches for “homes for sale” are up nearly 50% from November.
Buyers who felt iced out from high rates in the fall and intense competition last spring are getting back in the game now that rates have dropped to 6.33% from their November peak of over 7%, saving the typical U.S. homebuyer roughly $250 on monthly housing payments.
My Take: Things have shifted again. From a crazy housing market in spring of 2022, to a massive halt in the fall of the same year due to a sharp rise in interest rates--now, just a few months later, we have a completely different environment.
Now that inflation is starting to come down, mortgage rates have fallen to just over 6% and that has been enough to get people moving again. I think these two critical data points from Redfin point to an active and stable market in 2023. Anecdotally, two of my January listings sold within days of being listed and one sold for $40,000 over list price.
It’s still a good time to be a seller since inventory is still low, and with rates dropping, it’s a good time for buyers too.
The Article: CNBC: Robert Reffkin says “Near a Housing Bottom?”
The Highlights: Compass CEO Robert Reffkin shared this week that he believes December 2022 was our housing bottom. Compass has a unique vantage point being the #1 real estate brokerage brand in the country with over 30,000 agents and 18% of the top 1,000 agents in the country. For the first time in 10 months, all the most important indicators are trending positive:
· There are more buyer showing requests now than there have been in months
· The homebuilder sentiment improved month-over-month for the first time in over a year
· There was a 25% increase in weekly purchase mortgage applications
· Pending closings were down over 30% year-over-year in the fall and now it’s nearly flat in the overall market.
· Mortgage rates are at a 4 month low
My Take: I think Robert is on to something. Locally we’ve seen pending sales go through the roof this month. There’s obviously a bit of a back log from people who put their purchase plans on hold back in the fall, so we’ll have to see if this kind of enthusiasm continues throughout the spring,
I think if mortgage rates stay in the low-mid 6% range we’ll see buyers continue to buy. If rates fall to the high 5% range, I think that will be enough to get sellers active too which would help with the inventory crunch.
The Article: Hunker: Planning a Remodel in 2023? Here Are the Home Improvement Projects That Have the Best ROI
The Highlights: The median price of home remodeling projects exceeds $18,000 so it’s important for homeowners need to focus their spending on projects that improve their comfort level and provide a good return on investment (ROI). The average ROI for home renovations is only 56%, though some projects provide much better returns.
My Take: My first caution to home sellers--do NOT take on home renovation projects when prepping your home for market that don’t pay back. It’s not a question of whether it will increase the sale price, but will it increase it more than the cost of what it takes to complete.
At the top of the list in this article is building a home addition with just a 53% ROI (not high at all) with an average cost of $175,473…yikes! Steer clear of this one especially if you’re planning a move some day.
Adding on square footage is extremely costly and if you really need more livable space, it pays off way more to convert an existing attic or basement to a livable space. This can be done affordably (thereby increasing your ROI) if you opt to paint the ceiling, install drywall, and lay some simple flooring.
Social Spotlight
Here are our three most-loved posts on social this week! While you’re checking these out, be sure to follow along so you don’t miss a thing.
Best place to live in IL? Check out this post to see where it is.
An attention-grabbing listing photo can really get people talking. This one on Zillow might be the most effective one ever.
This is one of the best places to go in Chicago to beat the winter blues.