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Think Twice Before Waiting for Lower Home Prices

Monday, April 17, 2023
by Christie Cannon

Think Twice Before Waiting for Lower Home Prices



 

As the housing market continues to change, you may be wondering where it’ll go from here. One factor you’re probably thinking about is home prices, which have come down a bit since they peaked last June. And you’ve likely heard something in the news or on social media about a price crash on the horizon. As a result, you may be holding off on buying a home until prices drop significantly. But that’s not the best strategy.

A recent survey from Zonda shows 53% of millennials are still renting right now because they’re waiting for home prices to come down. But here’s the thing: the most recent data shows that home prices appear to have bottomed out and are now on the rise again. Selma Hepp, Chief Economist at CoreLogic, reports:

“U.S. home prices rose by 0.8% in February . . . indicating that prices in most markets have already bottomed out.”

And the latest data from Black Knight shows the same shift. The graph below compares home price trends in November to those in February:

So, should you keep waiting to buy a home until prices come down? If you factor in what the experts are saying, you probably shouldn’t. The data shows prices are increasing in much of the country, not decreasing. And the latest data from the Home Price Expectation Survey indicates that experts project home prices will rise steadily and return to more normal levels of appreciation after 2023. The best way to understand what home values are doing in your area is to work with a local real estate professional who can give you the latest insights and expert advice.

Bottom Line

If you’re waiting to buy a home until prices come down, you may want to reconsider. Let’s connect to make sure you understand what’s happening in our local housing market.

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Why Today’s Housing Market Isn’t Headed for a Crash

Monday, February 13, 2023
by Christie Cannon

Why Today’s Housing Market Isn’t Headed for a Crash

Why Today’s Housing Market Isn’t Headed for a Crash | MyKCM
 

67% of Americans say a housing market crash is imminent in the next three years. With all the talk in the media lately about shifts in the housing market, it makes sense why so many people feel this way. But there’s good news. Current data shows today’s market is nothing like it was before the housing crash in 2008.

Back Then, Mortgage Standards Were Less Strict

During the lead-up to the housing crisis, it was much easier to get a home loan than it is today. Banks were creating artificial demand by lowering lending standards and making it easy for just about anyone to qualify for a home loan or refinance an existing one.

As a result, lending institutions took on much greater risk in both the person and the mortgage products offered. That led to mass defaults, foreclosures, and falling prices. Today, things are different, and purchasers face much higher standards from mortgage companies.

The graph below uses data from the Mortgage Bankers Association (MBA) to help tell this story. In this index, the higher the number, the easier it is to get a mortgage. The lower the number, the harder it is.

This graph also shows just how different things are today compared to the spike in credit availability leading up to the crash. Tighter lending standards have helped prevent a situation that could lead to a wave of foreclosures like the last time.

Foreclosure Volume Has Declined a Lot Since the Crash

Another difference is the number of homeowners that were facing foreclosure when the housing bubble burst. Foreclosure activity has been lower since the crash, largely because buyers today are more qualified and less likely to default on their loans. The graph below uses data from ATTOM to show the difference between last time and now:

So even as foreclosures tick up, the total number is still very low. And on top of that, most experts don’t expect foreclosures to go up drastically like they did following the crash in 2008. Bill McBride, Founder of Calculated Risk, explains the impact a large increase in foreclosures had on home prices back then – and how that’s unlikely this time.

“The bottom line is there will be an increase in foreclosures over the next year (from record level lows), but there will not be a huge wave of distressed sales as happened following the housing bubble. The distressed sales during the housing bust led to cascading price declines, and that will not happen this time.”

The Supply of Homes for Sale Today Is More Limited

For historical context, there were too many homes for sale during the housing crisis (many of which were short sales and foreclosures), and that caused prices to fall dramatically. Supply has increased since the start of this year, but there’s still a shortage of inventory available overall, primarily due to years of underbuilding homes.

The graph below uses data from the National Association of Realtors (NAR) to show how the months’ supply of homes available now compares to the crash. Today, unsold inventory sits at just 2.7-months’ supply at the current sales pace, which is significantly lower than the last time. There just isn’t enough inventory on the market for home prices to come crashing down like they did last time, even though some overheated markets may experience slight declines.

Bottom Line

If recent headlines have you worried we’re headed for another housing crash, the data above should help ease those fears. Expert insights and the most current data clearly show that today’s market is nothing like it was last time.

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US housing market fuels bidding wars, driving prices higher

Monday, March 14, 2022
by Christie Cannon

Article provided by:  Alex Veiga of Yahoo News

LOS ANGELES (AP) — Would-be homeowners are increasingly opting to pay sellers more than their asking price in hopes of edging out rival buyers as heightened competition for few homes on the market fuels bidding wars.

About 52% of U.S. homes sold in January fetched more than their list price, up from 40.2% a year earlier, according to data from Redfin, a national real estate brokerage.

It was the greatest share of homes sold above asking price ever recorded by Redfin, in data going back to February 2012.

The trend is apparent in some of the nation’s most expensive housing markets. Some 63.2% of homes sold in Los Angeles in January went for more than advertised. In Seattle that jumped to 65.9%.

 

These bidding wars are pushing home prices higher. The median home price jumped 15.4% in January from a year earlier to $350,300, according to the National Association of Realtors.

“The housing market was in a frenzy in the beginning of 2022, with buyers competing for a limited supply of homes and sellers reaping the rewards of bid-up prices,” said Taylor Marr, Redfin’s deputy chief economist.

Homebuyers face a difficult task navigating the housing market, with the number of homes for sale at record lows, prices rising sharply and average mortgage rates running higher than they were a year ago, and expected to climb further this year.

The dynamic has made it more likely that a home for sale will receive multiple offers. In January, 70% of offers put in by Redfin agents on behalf of clients were on homes that received bids from multiple would-be buyers, the brokerage said.

And increasingly, many buyers are going well above a home’s listing price to beat the competition.

Some 5,897 homes in 50 of the biggest U.S. metropolitan areas by population have sold this year for at least $100,000 above their listed price, more than double a year ago, according to a report by Redfin this week. In its analysis, the firm looked at sales data from Jan. 1 through Feb. 15.

California is home to six out of the top 10 metropolitan areas where homes are selling for $100,000 or more above the list price. Los Angeles led the way, with 718 homes selling for at least a six-figure bump over the asking price, more than any other major metropolitan area and up from 273 a year ago, Redfin said.

Oakland (580), San Jose (490) and Seattle (488) were the next on that list, followed by Anaheim (365), San Francisco (335), San Diego (323), Boston (158), Denver (125) and New York (109).

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DFW Makes TOP 10 Hidden Real Estate Gems

Monday, January 3, 2022
by Christie Cannon

 DFW Makes TOP 10 Hidden Real Estate Gems = That means these metro areas are likely to experience stronger price increases compared with other markets in 2022. 

Article provided by: Swapna Venugopal Ramaswamy, USA TODAY | Yahoo.com

 
 

Go south, young people. Or at least invest in the Southern states.

Most of the top 10 affordable real estate markets that underperformed but have strong underlying fundamentals are in the South, according to a report by the National Association of Realtors (NAR). That means these metro areas are likely to experience stronger price increases compared with other markets in 2022.

NAR examined factors such as wage and job growth; percentage of people 25 to 44; and net domestic migration to create the list. Another metric was affordability of homes compared with the median income of the area.

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DFW Makes TOP 10 Hidden Real Estate Gems

Monday, January 3, 2022
by Christie Cannon

 DFW Makes TOP 10 Hidden Real Estate Gems = That means these metro areas are likely to experience stronger price increases compared with other markets in 2022. 

Article provided by: Swapna Venugopal Ramaswamy, USA TODAY | Yahoo.com

 
 

Go south, young people. Or at least invest in the Southern states.

Most of the top 10 affordable real estate markets that underperformed but have strong underlying fundamentals are in the South, according to a report by the National Association of Realtors (NAR). That means these metro areas are likely to experience stronger price increases compared with other markets in 2022.

NAR examined factors such as wage and job growth; percentage of people 25 to 44; and net domestic migration to create the list. Another metric was affordability of homes compared with the median income of the area.

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DFW Makes TOP 10 Hidden Real Estate Gems

Monday, January 3, 2022
by Christie Cannon

 DFW Makes TOP 10 Hidden Real Estate Gems = That means these metro areas are likely to experience stronger price increases compared with other markets in 2022. 

Article provided by: Swapna Venugopal Ramaswamy, USA TODAY | Yahoo.com

 
 

Go south, young people. Or at least invest in the Southern states.

Most of the top 10 affordable real estate markets that underperformed but have strong underlying fundamentals are in the South, according to a report by the National Association of Realtors (NAR). That means these metro areas are likely to experience stronger price increases compared with other markets in 2022.

NAR examined factors such as wage and job growth; percentage of people 25 to 44; and net domestic migration to create the list. Another metric was affordability of homes compared with the median income of the area.

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Home Builders Ramp Up Construction Based on Demand

Tuesday, July 6, 2021
by Christie Cannon

Home Builders Ramp Up Construction Based on Demand

Home Builders Ramp Up Construction Based on Demand | MyKCM
 

If you’re thinking of buying a home, there really is no time like the present. With today’s low mortgage rates, you have a great opportunity to get more home for your money. The challenge is inventory. Like you, many buyers want to capitalize on these market conditions, and it’s leading to more buyer competition and bidding wars.

If you’re having a hard time finding a home to buy, it may be time to talk to your trusted real estate advisor about a newly built home. Early indicators show new-home construction is beginning to ramp up. While new homes alone won’t be able to fix all of the inventory challenges, this does mean you’ll soon have more options as you search for a home. As a buyer, a newly built home may be exactly what you’re looking for – it’s brand new, and with builder customization options, it’s uniquely yours from the ground up.

Here’s what industry experts are saying about new homes coming to market:

Nadia Evangelou, Senior Economist and Director of Forecasting at the National Association of Realtors (NAR), says recent research could indicate upward momentum when it comes to new home construction. Evangelou refers to the volume of new homes where construction began during a set period, known in the industry as housing starts.

According to that research, housing starts reached their highest level since 2006 in March of this year – an encouraging sign for the industry. While they dipped slightly in April, Evangelou reiterates that the level of housing construction is heading in a positive direction compared to recent years:

“…we are currently building 24% more homes than we typically have built in April in the last couple of decades. Thus, housing construction is trending upward with housing starts likely to reach 1.6 million for all of 2021 and rise further to 1.7 million in 2022.”

As new data pours in, it further confirms this trend. According to the latest Monthly New Residential Construction report from the U.S. Census Bureau, housing starts increased even more in May, which continues the ongoing upward trend (see graph below) and indicates that ground is being broken on even more new homes.Home Builders Ramp Up Construction Based on Demand | MyKCMRobert Dietz, Chief Economist and Senior Vice President of Economics and Housing Policy for the National Association of Home Builders (NAHB), singles out another encouraging sign:

“It is also worth noting that the number of single-family homes permitted but not started construction continued to increase in May, rising to 142,000 units.”

This insight that there’s also an uptick in single-family homes permitted serves as an additional sign that more new homes lie ahead. It’s important to realize that the construction doesn’t have to start on these homes before you may be able to purchase one. According to the Monthly New Residential Sales report from the U.S. Census Bureau, many new homes are selling before construction even begins (see graph below):Home Builders Ramp Up Construction Based on Demand | MyKCMThese signs are all good news for housing inventory. And as the recent challenges of rising lumber prices and dwindling lumber supply begin to improve, builders will be able to increase their production even more in the months ahead.

Bottom Line

While the inventory challenges we’re facing today won’t be solved overnight, the increase in new-home construction means your house may have more competition in the market. Let’s connect to talk about finding your dream home and the newly built homes available in our area.

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Home Price Appreciation Is as Simple as Supply and Demand

Monday, June 14, 2021
by Christie Cannon

Home Price Appreciation Is as Simple as Supply and Demand

Home Price Appreciation Is as Simple as Supply and Demand | MyKCM
 

Home price appreciation continues to accelerate. Today, prices are driven by the simple concept of supply and demand. Pricing of any item is determined by how many items are available compared to how many people want to buy that item. As a result, the strong year-over-year home price appreciation is simple to explain. The demand for housing is up while the supply of homes for sale hovers at historic lows.

Let’s use three maps to show how this theory continues to affect the residential real estate market.

Map #1 – State-by-state price appreciation reported by the Federal Housing Finance Agency (FHFA) for the first quarter of 2021 compared to the first quarter of 2020:Home Price Appreciation Is as Simple as Supply and Demand | MyKCMAs the map shows, certain states (colored in red) have appreciated well above the national average of 12.6%.

Map #2 – The change in state-by-state inventory levels year-over-year reported by realtor.com:Home Price Appreciation Is as Simple as Supply and Demand | MyKCMComparing the two maps shows a correlation between change in listing inventory and price appreciation in many states. The best examples are Idaho, Utah, and Arizona. Though the correlation is not as easy to see in every state, the overall picture is one of causation.

The reason prices continue to accelerate is that housing inventory is still at all-time lows while demand remains high. However, this may be changing.

Is there relief around the corner?

The report by realtor.com also shows the monthly change in inventory for each state.

Map #3 – State-by-state changes in inventory levels month-over-month reported by realtor.com:Home Price Appreciation Is as Simple as Supply and Demand | MyKCMAs the map indicates, 39 of the 50 states (plus the District of Columbia) saw increases in inventory over the last month. This may be evidence that homeowners who have been afraid to let buyers in their homes during the pandemic are now putting their houses on the market.

We’ll know for certain as we move through the rest of the year.

Bottom Line

Some are concerned by the rapid price appreciation we’ve experienced over the last year. The maps above show that the increases were warranted based on great demand and limited supply. Going forward, if the number of homes for sale better aligns with demand, price appreciation will moderate to more historical levels.

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In Today’s Market, Listing Prices Are Like an Auction’s Reserve Price

Wednesday, June 9, 2021
by Christie Cannon

In Today’s Market, Listing Prices Are Like an Auction’s Reserve Price

In Today’s Market, Listing Prices Are Like an Auction’s Reserve Price | MyKCM
 

For generations, the process of buying and selling a home never really changed. A homeowner would try to estimate the market value of their house, then tack on a little extra to give themselves some negotiating room. That figure would become the listing price. Buyers would then try to determine how much less than the full price they could offer and still get the home. As a result, the listing price was generally the ceiling of the negotiation. The actual sales price would almost always be somewhat lower than what was listed. It was unthinkable to pay more than what the seller was asking.

Today is different.

The record-low supply of homes for sale coupled with very strong buyer demand is leading to a rise in bidding wars on many homes. Because of this, homes today often sell for more than the list price. In some cases, they sell for a lot more.

According to Lawrence Yun, Chief Economist at the National Association of Realtors (NAR):

“For every listing there are 5.1 offers. Half of the homes are being sold above list price.”

You may need to change the way you look at the asking price of a home.

In this market, you likely can’t shop for a home with the former approach of negotiating to a lower price.

Due to the low supply of houses for sale, many homes are now being offered in an auction-like atmosphere in which the highest bidder wins the home. In an actual auction, the seller of an item agrees to take the highest bid, and many sellers set a reserve price on the item they’re selling. A reserve price is the minimum amount a seller will accept as the winning bid.

When navigating a competitive housing market, think of the list price of the house as the reserve price at an auction. It’s the minimum the seller will accept in many cases. Today, the asking price is often becoming the floor of the negotiation rather than the ceiling. Therefore, if you really love a home, know that it may ultimately sell for more than the sellers are asking. So, as you’re navigating the homebuying process, make sure you know your budget, know what you can afford, and work with a trusted advisor who can help you make all the right moves as you buy a home.

Bottom Line

Someone who’s more familiar with the housing market of the past than that of today may think it’s foolish to offer more for a home than the listing price. However, frequent and competitive bidding wars are creating an auction-like atmosphere in many real estate transactions right now. Let’s connect today so you have a trusted real estate professional on your side to provide the best advice on how to make a competitive offer on a home.

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Sellers Are Ready To Enter the Housing Market

Monday, May 24, 2021
by Christie Cannon

Sellers Are Ready To Enter the Housing Market

Sellers Are Ready To Enter the Housing Market | MyKCM
 

One of the biggest questions in real estate today is, “When will sellers return to the housing market?” An ongoing shortage of home supply has created a hyper-competitive environment for hopeful buyers, leading to the ultimate sellers’ market. However, as the economy continues to improve and more people get vaccinated, more sellers may finally be in sight.

The Home Purchase Sentiment Index (HPSI) by Fannie Mae recently noted the percentage of consumer respondents who say it’s a good time to sell a home increased from 61% to 67%. Doug Duncan, Senior Vice President and Chief Economist at Fannie Mae, indicates:

“Consumer positivity regarding home-selling conditions nearly matched its all-time high.” (See graph below):

Sellers Are Ready To Enter the Housing Market | MyKCMFannie Mae isn’t the only expert group noticing a rise in the percentage of people thinking about selling. George Ratiu, Senior Economist at realtor.com, shares:

“The results of a realtor.com survey . . . showed that one-in-ten homeowners plans to sell this year, with 63 percent of those, looking to list in the next 6 months. Just as encouragingly, close to two-thirds of sellers plan to sell their homes at prices under $350,000, which would offer a tremendous boost to affordable housing for first-time buyers.”

Bottom Line

If you’re considering selling your house, don’t wait for more competition to pop up in your neighborhood. Let’s connect today to explore the benefits of selling your house now before more homes come to the market.

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Christie Cannon
Keller Williams Realty
5933 Preston Road #300
Frisco TX 75034
972-215-7747
Fax: 972-215-7748
Send an Email
Keller Williams Frisco - The Christie Cannon Team - http://www.christiecannon.com

 

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