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: Norada: Mortgage Rates Predictions & Forecast 2023
The Highlights: The economic landscape is constantly changing. Just a week ago all eyes were on congress as they debated raising the debt ceiling. Thankfully they reached a deal since a default would have wreaked havoc on the economy and added significant risk to mortgage rates.
Since March of last year, the Fed has increased interest rates 9 times to combat price inflation, and now rates are now around 7.5%--back to where they were in late fall 2022 which brought buying and selling to an abrupt end.
What’s to come in 2023? This article predicts…
· Continued Low Inventory: The US housing market is currently short 6.5 million homes, making it challenging for would-be homebuyers to find affordable homes.
· Demand for Certain Homes: The share of first-time homebuyers is up compared to one year ago. which means sellers with starter homes may still see robust demand and retain some bargaining power.
· Rising Rates: Mortgage rates will continue to rise in 2023 as the Federal Reserve continues its battle to cool the US economy and combat stubborn inflation. This means that the housing market may continue to feel the effects of rising mortgage rates.
· Rate Relief: Mortgage rates are projected to fall next year. According to the Mortgage Bankers Association, mortgage rates will conclude in 2023 at roughly 5.4%.
My Take: Predictions should always be taken with a grain of salt since unforeseen circumstances can cause things to change on a dime! That said, I *do* think the worst of mortgage rate hikes are behind us, and I expect things to stabilize in the second half. A banking crisis and debt ceiling debate caused some volatility this spring, but inflation numbers are looking much better this summer, just based on the sheer fact that inflation is measured on a year-over-year basis and last June was at a 40-year high.
I think the focus will be on our slowing economy over the next 6 months or so, and I agree that rates will settle into the mid-high 5% range by year’s end.
I appreciate how this article laid out some of the benefits to being a home buyer/seller right now and they’re right! There are plenty of opportunities if you know the local market well and remember--time IN the market over timing the market!
Article: Keeping Current Matters: The Benefits of Selling Now, According to Experts
The Highlights: Wondering if NOW is the time to sell or if you should wait? Here’s what 4 industry experts say:
Lawrence Yun, Chief Economist at the National Association of Realtors (NAR):
“Inventory levels are still at historic lows. Consequently, multiple offers are returning on a good number of properties.”
Selma Hepp, Chief Economist at CoreLogic:
“We have not seen the traditional uptick in new listings from existing homeowners, so undersupply of housing will continue to heighten market competition and put pressure on prices in most regions. Some markets are already heating up considerably, but price premiums that we saw last spring and summer are unlikely.”
Clare Trapasso, Executive News Editor at Realtor.com:
“Well-priced, move-in ready homes with curb appeal in desirable areas are still receiving multiple offers and selling for over the asking price in many parts of the country . . .”
Jeff Tucker, Senior Economist at Zillow:
“. . . sellers who price and market their home competitively shouldn’t have a problem finding a buyer.”
My Take: This is all true—inventory is low, competition is high, and homes that are priced right are receiving multiple offers and getting top dollar. It’s a great time to be a seller! You have something people want, and that gives you leverage and an opportunity to get the MOST out of your investment.
That said, anyone who has eyes on the housing market right now knows this already. Most homeowners understand it’s a sellers’ market. The real question most homeowners have is where to go after they sell! Trade-up buyers in particular feel the pinch when they trade up in price at a significantly higher interest rate. This is a big reason inventory has remained crunched over the past year—sellers aren’t selling even if they *want* to because it’s ultimately too expensive.
I think as soon as interest rates dip below 6% we’ll see a flood of sellers. They won’t benefit from the current market conditions, but they *will* feel better about a larger selection of homes to choose from with a less expensive financing option.
The Article: Forbes: Real Estate Agents Reveal the Must-Have Amenities for Homebuyers in 2023
The Highlights: A home should reflect the lifestyle of the people who live in it, but there are some amenities that are universal! Living trends can come and go, but here’s what agents around the country say homebuyers are looking for this year:
1. Outdoor kitchen: Fueled in part by stay-at-home orders, the popularity of outdoor kitchens partially grew out of the necessity for open-air living. An outdoor kitchen makes entertaining easier and can be used in many locations 3 seasons a year!
2. Pools: Both indoor and outdoor pools are on the rise! Pool designs now include features like hidden grottos and sun shelves, saltwater, and plunge and jetstream pools for lap swimming.
3. Fitness Centers: Home gyms had something of a renaissance during Covid stay-home orders, but can make staying fit easy and convenient even after gyms have reopened.
4. Spa Amenities: Steam showers, soaking tubs, heated floors… homebuyers are paying a little extra attention to primary bathrooms and suites.
5. Proximity to Cultural Institutions: Whether it be near a concert hall, sprawling community park or popular restaurant, a prime location close to cultural sites is what makes a good home into a great one.
My Take: Most of these trends are for luxury homes, but many of them could easily translate to any price point! They’re all amazing features—who wouldn’t want a spa in their home!? But make sure to do your research if you’re looking to upgrade your home with one of these sought-after amenities.
Pools, for instance, can actually de-value a home in many areas of the country since many homeowners don’t want to tackle the maintenance they require. Also, as with any improvement project, make sure you don’t risk over-improving for the neighborhood. If you put in a top-of-the line outdoor kitchen, you may not see the return on investment if the neighborhood doesn’t support an add-on like that.
That said, anyone anywhere can be mindful of #5. Real estate has ALWAYS been location, location, location and this list proves it’s still true today!