RealNews RoundUp
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: Forbes: Will the Silicon Valley Bank Fallout Collapse the Housing Market?
The Highlights: This is a great article that highlights the differences between the current financial struggles and those that occurred in 2008.
Read the article for all the ins and outs, because I risk of oversimplifying here, but in 2008 one of the biggest factors that led to the global financial crisis was that banks were lending money to people and companies they shouldn’t have.
Today, that’s just not the case. What banks face today is that their assets are secure, but their investments in mortgage-backed securities are currently trading a significantly lower prices and a fundamental component of bond investments like these is that the investors receive their capital back at the end of the term.
My Take: Every investment comes with some level of risk...even housing! But, the housing industry has proven over the course of decades that holding real estate over time pays off eventually, generally appreciating at a rate of 2%-4% each year.
In the immediate future, with interest rates continuing to rise and home prices leveling off, it’s likely that the housing market will struggle to provide real meaningful short-term gains. BUT! Housing for the typical homeowner isn’t a short-term game. While interest rates are high right now, they won’t stay that way forever.
Homeowners/buyers, take heart. Just because the housing market has slowed doesn’t mean we’re on the verge of collapse.
The Article: CNBC: Fed hikes rates by a quarter percentage point, indicates increases are near an end
The Highlights: This week The Federal Reserve enacted a quarter percentage point interest rate increase, its 9th increase since March of last year.
While the road to returning inflation to a 2% year-over-year gain remains long, Chairman Jerome Powell did express caution about the recent banking crisis and indicated that hikes might be nearing an end with only one more increase this year—a departure from what he had said in prior meetings where he alluded to “ongoing increases” to tamp inflation.
My Take: I would love to see these rate hikes come to an end for obvious reasons—don’t we all? The projections made on the “dot plot” from Fed officials with their projections were a bit all over the map, but it was encouraging to see that by 2025 there’s an expected 1.2 point decrease in interest rates.
I think dropping into the 5% range changes the landscape for sure. I think this will motivate current homeowners who have very inexpensive mortgages to move since the discrepancy of where they are now to what they’d be trading into isn’t as great. Right now, with rates in the mid-high 6% range, that leap is just too great.
Cash buyers and downsizers aren’t deterred right now, but the rate drop will open the housing market to trade-up and first-time homebuyers again which will be good to see.
The Article: Zillow: 84% of first-time home sellers have regrets
The Highlights: Timing is everything in real estate, and that’s true whether you’re a home buyer or seller. A recent survey by Zillow revealed that home sellers have some big regrets when it came to selling their home. Their top regrets?
1. Pricing incorrectly
2. Ignoring curb appeal
3. Bad timing
4. Skimping on repairs
My Take: Pricing strategy is the MOST important strategy when it comes to getting the most money for your home. Sellers, you have the leverage early on in the process, and the longer the house sits on the market, the more power you lose. Take that leverage and use it to hopefully get two interested parties who bid each other up and justify their interest in your home. The buyer goes from scared to overpaying to wanting to WIN--but it all starts with the correct price.
Additionally, curb appeal is hands down the most important thing you can do to maximize your investment when time to sell (often landscaping projects get around 200%-400% ROI). A beautiful attention-grabbing exterior shot and a welcoming first impression will help your home stand out.
Consult with a professional realtor who can advise you on how to get the most for your home, and in the meantime, check out my Instagram Reels which give lots of advice so you can have a regret-free transaction.