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How's The Market? What Lies Ahead...

by Lorna Calder

“How’s the Market?”
What’s Ahead for Real Estate

While no one can predict the future with certainty, most experts expect to see modest growth in the U.S. housing market for the remainder of this year and next. Inventory will remain tight, mortgage rates will continue to creep up, and affordability will remain a major issue in many parts of the country.

So what does that mean for home buyers and sellers? To answer that question, we take a closer look at some of the top indicators.

CONTINUED GROWTH IN HOUSING MARKET

There’s good news for homebuyers! In many markets across the country, prices have begun to stabilize after a period of rapid appreciation. Nationwide, home sales experienced a slight decline of 1.6 percent in the second quarter, primarily due to higher mortgage rates and housing prices combined with limited inventory.

However, buyers who have been waiting on the sidelines in anticipation of a big price drop may be disappointed. Demand remains strong across the sector and prices continue to rise. The Case-Shiller U.S. National Home Price Index reported a 6.2 percent annual gain in June, a healthy but sustainable rate of appreciation.1

In its latest Outlook Report, Freddie Mac forecasts continued growth in the housing market due to a strong economy and low unemployment rate, which dropped to 3.9 percent in July.

“The housing market hit some speed bumps this summer, with many prospective homebuyers slowed by not enough moderately-priced homes for sale and higher home prices and mortgage rates,” according to Sam Khater, Chief Economist at Freddie Mac. “The good news is, the economy and labor market are very healthy right now, and mortgage rates, after surging earlier this year, have stabilized in recent months. These factors should continue to create solid buyer demand, and ultimately an uptick in sales, in most parts of the country in the months ahead.”3

INVENTORY TO REMAIN TIGHT, NEW CONSTRUCTION MAY HELP

Experts predict that demand for housing will continue to outpace available supply, especially in the entry-level price range.

“Today, even as mortgage rates begin to increase and home sales decline in some markets, the most significant challenges facing the housing market stem from insufficient inventory accompanying unsustainable home-price increase,” said National Association of Realtors (NAR) Chief Economist Lawrence Yun in a recent release.

"The answer is to encourage builders to increase supply, and there is a good probability for solid home sales growth once the supply issue is addressed,” said Yun. Additional inventory will also help contain rapid home price growth and open up the market to prospective homebuyers who are consequently—and increasingly—being priced out. In the end, slower price growth is healthier price growth."4

With so much demand, why aren’t more builders bringing inventory to the market? According to the National Association of Home Builders, a crackdown on immigration and tariffs on imported lumber have made home construction more difficult and expensive. Those factors—combined with the rising cost of land and increased zoning requirements—have put a damper on the industry overall.5

Still, there’s evidence that a modest rise in the rate of new building projects may be on the way. Freddie Mac predicts new housing construction will increase slightly after a stall last quarter.2 And a recent report by Freedonia Focus Reports forecasts an annual increase in housing starts of 2.4 percent through 2022, led by an uptick in single-family homes.6 The boost in inventory should help drive sales growth and relieve some of the pent-up demand in tight markets.

While the current lack of inventory is generally preferred by sellers because it means less competition, a combination of high prices and rising interest rates has narrowed the pool of potential buyers who can afford to enter the market. Sellers should seek out real estate agents who utilize technologically-advanced marketing tactics to reach qualified buyers in their area.

AFFORDABILITY REACHES LOWEST LEVEL IN A DECADE

According to a recent report by Morgan Stanley, Americans are paying the most in monthly mortgage payments relative to their incomes since 2008.7 And prices aren’t expected to come down any time soon.

"We believe that the current supply and demand environment will continue to push home prices higher, just at a decelerating pace," said John Egan, Morgan Stanley’s Co-Head of U.S. Housing Strategy.

Fortunately, economists aren’t concerned about affordability levels triggering another housing crisis, as lending standards are much higher today than they were during the run-up before the recession. According to credit reporting agency TransUnion, the share of homeowners who made mortgage payments more than 60-days past due fell in the second quarter to 1.7 percent, the lowest level since the market crash.7

NAR Chief Economist Lawrence Yun agreed with this assessment in a recent statement. “Over the past 10 years, prudent policy reforms and consumer protections have strengthened lending standards and eliminated loose credit, as evidenced by the higher than normal credit scores of those who are able to obtain a mortgage and near record-low defaults and foreclosures, which contributed to the last recession.”4

MORTGAGE RATES EXPECTED TO CONTINUE RISING

The Federal Reserve has taken measures to help keep the housing market—and the overall economy—from overheating. It has raised interest rates twice this year so far, causing mortgage rates to surge in the first half of the year.

Economists predict that the rise in mortgage rates will continue at a more gradual rate through this year and next. The U.S. weekly average mortgage rate rose from 3.99 percent in the first week of January to as high as 4.66 percent in May. Freddy Mac forecasts an average rate of 4.6 percent for 2018 and 5.1 percent in 2019.2

The good news is, mortgage rates still remain near historic lows and a whopping 14 points below the recorded high of 18.63 percent in the early 1980s.8 Buyers who have been on the fence may want to act soon to lock in an affordable interest rate ... before rates climb higher.

"Some consumers may be thinking that because mortgage rates are higher than they were a year ago, maybe I should just wait until rates fall down again," said NAR’s Chief Economist Lawrence Yun in a recent speech. "Well, they will be waiting forever."9

WHAT DOES IT ALL MEAN FOR ME?

If you’ve been waiting to buy a home, you may want to act now. A shortage of available homes on the market means prices are likely to keep going up. And a lack of affordable rental inventory means rents are expected to rise, as well.

If you buy now, you will benefit from appreciating property values while locking in an historically-low interest rate on your mortgage. Waiting to buy could mean paying more for your home as prices increase and paying higher interest on your mortgage as rates continue to rise.

And if you’re in the market to sell your home, there’s no need to wait any longer. Prices have begun to stabilize, and rising interest rates could decrease the number of available buyers for your home. Act now to take advantage of this strong seller’s market.

LET’S GET MOVING

While national real estate numbers and predictions can provide a “big picture” outlook, real estate is local. As local market experts, we can guide you through the ins and outs of our market and the issues most likely to impact sales and home values in your particular neighborhood.

If you have specific questions or would like more information about where we see real estate headed in our area, let us know! We’re here to help you navigate this changing real estate landscape.

Sources:

  1. S&P Dow Jones Indices Press Release -
    https://www.spice-indices.com/idpfiles/spice-assets/resources/public/documents/766551_cshomeprice-release-0828.pdf?force_download=true
  2. Freddie Mac Outlook Report -
    http://www.freddiemac.com/research/forecast/20180827_strong_economic_growth.html
  3. DSNews -
    https://dsnews.com/daily-dose/08-28-2018/freddie-weighs-in-on-housing-market
  4. PR Newswire -
    https://www.prnewswire.com/news-releases/realtors-chief-economist-reflects-on-past-recession-whats-ahead-for-housing-300702632.html
  5. CNN Money -
    https://www.keyt.com/lifestyle/where-is-the-us-housing-market-headed-4-things-you-need-to-know/787471572
  6. PR Newswire -
    https://www.prnewswire.com/news-releases/us-housing-starts-to-rise-2-4-yearly-to-2022--300711989.html
  7. Business Insider -
    https://www.businessinsider.com/housing-affordability-slowing-market-sales-2018-8
  8. Value Penguin -
    https://www.valuepenguin.com/mortgages/historical-mortgage-rates
  9. Times Free Press -
    https://www.timesfreepress.com/news/business/aroundregion/story/2018/aug/14/despite-prospects-higher-mortgage-rateshousin/476979/

April 2014 Houston and National Housing Newsletter

by Lorna Calder

This month’s featured video discusses what financial obligations come with purchasing and owning a home. Some of the obligations to consider is the payment on your mortgage and interest, home owner's insurance, property taxes, utilities and more.

A Realtor will always negotiate on your behalf to get you the best price for your new home and help take care of all of the closing paperwork, and closing procedures. 

There is a lot to know about owning a home. Remember a Realtor is always your best source of knowledge for all of your real estate needs.

If you have not reviewed my monthly Housing Trends Newsletter - you could be missing out. Everywhere I go, people are asking me about the housing market conditions - it's on everyone's mind. Staying abreast of local and national market conditions and factors that can affect the future sale or purchase of your home can make the decision process less daunting. I always tell my clients that in order to make the best decision they need to have all the information they can upfront. My Housing Trends Newsletter is just one of the tools in my arsenal to make sure you keep informed.

The April 2014 Local and National Housing Trends has just been released. This month's newsletter is packed full of local and national housing market statistics and news you need to know to stay current with today's changing housing market.

This month's housing trends issue features:

Existing-Home Sales Remain Soft in March

Vacation Home Sales Surge in 2013, Investment Property Declines

9-Step Guide to Open Houses

8 Things to Avoid Before You Buy a Home

6 Most Cost-Effective Ways to Spend Your Tax Refund on Your Home

Will the Home Your Buying Have Good Resale Value?

What Contingency Should Your Home Purchase Offer Have?

You can view the newsletter here.

If you wish to receive FREE Housing Trends eNewsletter e-mailed to you monthly, click here to Subscribe.

If you are considering selling your house or buying a home and need more information, I am never too busy to help, please contact me for more information.

Tips for Home Buying in a Competitive Market

by Lorna Calder

Buying a home in today's competitive market can be tricky.

Low housing inventory in Houston, Kingwood, The Woodlands, Humble and Atascocita areas have created challenges for buyers trying to find the right house.  Buyers are facing multiple offers and losing out on houses to other buyers with better offers and terms that sellers find more advantageous. So with these challenges in place, how can a buyer get ahead of other buyers?

Home Buying in a Competitive Market

Remember the saying you only have one chance to make a good impression, never in the housing market has this been more true. When formulating your offer, remember to think like a seller, what terms would appeal to you? What would put you off a buyer? Buyers must consider all these factors when submitting their offer.

Lorna Calder is a top rated Broker Associate at RE/MAX Associates Northeast in Kingwood Texas. Currently ranked #7 at RE/MAX in Kingwood, Lorna continues to exceed her clients expectations.

January 2013 Houston and National Housing Market Trends

by Lorna Calder

This month's featured video discusses what your home is worth. It's simple. It is what someone is willing to pay for it. The challenge may come in determining what amount this may be. For an accurate estimate of what someone would be willing to pay for your home, you need to ask your realtor to conduct a Comparative Market Analysis or CMA. A thorough knowledge of the dynamics of property sales in the specific area is required to make judgments based on the data presented.

Your realtor will add or subtract value based on lot or acreage size, bedrooms, bathrooms, garage space etc. It will also look at financing differences that could have influenced the sales price. Keep in mind that a CMA is not an appraisal. A solid well researched CMA will allow you to list it for a price that will generate immediate interest.

There is a lot to know about owning a home. A Realtor is always your best source of information for all your real estate needs...

If you have not reviewed my monthly Housing Trends Newsletter - you could be missing out. Everywhere I go, people are asking me about the housing market conditions - it's on everyone's mind. Staying abreast of local and national market conditions and factors that can affect the future sale or purchase of your home can make the decision process less daunting. I always tell my clients that in order to make the best decision they need to have all the information they can upfront. My Housing Trends Newsletter is just one of the tools in my arsenal to make sure you keep informed.

The January 2013 Local and National Housing Trends has just been released. This month's newsletter is packed full of local and national housing market statistics and news you need to know to stay current with today's changing housing market.

This month's housing trends issue features:

9 Easy Mistakes Home Owners Make on Their Taxes

7 Tips to Keep Your Home Warm & Save Money

Radio Host Don Imus Lowers Price to Sell Magnificent Water Front Home

Downton Abbey is Given Energy Makeover

10 Things a Burglar Doesn't Want You to Know

You can view the newsletter here.

If you wish to receive FREE Housing Trends eNewsletter e-mailed to you monthly, click here to Subscribe.

If you are considering selling your house or buying a home and need more information, I am never too busy to help, please contact me for more information.

 

Top 10 Housing Predictions for 2012

by Lorna Calder

I stumbled upon this interesting video by Dave Liniger and decided to repost...

Dave Liniger, Co-founder and Chairman of RE/MAX shares what he views to be the Top 10 Housing Predictions for 2012 and provides what he thinks the real estate market will bring to 2012.... 

Top 10 Housing Predictions for 2012

Overall the forecast for 2012 is better, due in part to the pent up demand for housing creating by young buyers entering the housing market. This creates a tremendous opprtunity for investors, and those same people will help with the hosuing recovery.

  1. Interest rates will continue to be both historically and generationally low.
  2. Prices should remain stable the first half of the year with a possibility of some markets seeing a small decline. We should then see home prices start to rise in the latter half of the year.
  3. Increased home sales resulting in steady gains.
  4. Rising inventory, with foreclosures and distressed property making up a large percentage.
  5. Increase in distress property sales.
  6. Improved short sale and foreclosure process.
  7. Lower homeownership rates with an increase in rental rates.
  8. Investors will make up 25% of the market including foreign and domestic
  9. Increased reliance on REALTOR expertise due to the changing market
  10. Consumer friendly technologies will continue to be available and tech savvy REALTORS will continue to make use of these tools.

See the video below....

Top 10 Housing Predictions for 2012

Overall the forecast for 2012 is better, due in part to the pent up demand for housing creating by young buyers entering the housing market. This creates a tremendous opprtunity for investors, and those same people will help with the hosuing recovery.

  1. Interest rates will continue to be both historically and generationally low.
  2. Prices should remain stable the first half of the year with a possibility of some markets seeing a small decline. We should then see home prices start to rise in the latter half of the year.
  3. Increased home sales resulting in steady gains.
  4. Rising inventory, with foreclosures and distressed property making up a large percentage.
  5. Increase in distress property sales.
  6. Improved short sale and foreclosure process.
  7. Lower homeownership rates with an increase in rental rates.
  8. Investors will make up 25% of the market including foreign and domestic
  9. Increased reliance on REALTOR expertise due to the changing market
  10. Consumer friendly technologies will continue to be available and tech savvy REALTORS will continue to make use of these tools.

source: YouTube REMAXIntl Channel

Still on the Fence?

by Lorna Calder

There has never been a better time to buy a home.

First the selection of homes available to purchase in all price ranges is tremendous and with more homes on the market buyers naturally have a better selection. Many markets have experienced values above that are above prices. This translates to an increased supply resulting in prices that are below values in some areas.

One of the most compelling reasons to buy a home now is interest rates. They are the talk of the town and for good reason. We are experiencing generationally low interest rates that will not stick around as the economy recovers.

It is important for buyers to talk with their real estate consultant and mortgage lender about the cost savings of even a quarter point over the life of a mortgage loan.

Finally the tax advantage of homeownership with respect to the mortgage interest and property tax deductions should be considered compelling reasons to buy a home.

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