You'll Love Being a Homeowner
Thursday, February 8, 2024
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Pre-Approval is Very Important This Year
Thursday, February 8, 2024
Why Pre-Approval Is Even More Important This Year
On the road to becoming a homeowner? If so, you may have heard the term pre-approval get tossed around. Let’s break down what it is and why it’s important if you’re looking to buy a home in 2024.
What Pre-Approval Is
As part of the homebuying process, your lender will look at your finances to figure out what they’re willing to loan you. According to Investopedia, this includes things like your W-2, tax returns, credit score, bank statements, and more.
From there, they’ll give you a pre-approval letter to help you understand how much money you can borrow. Freddie Mac explains it like this:
“A pre-approval is an indication from your lender that they are willing to lend you a certain amount of money to buy your future home. . . . Keep in mind that the loan amount in the pre-approval letter is the lender’s maximum offer. Ultimately, you should only borrow an amount you are comfortable repaying.”
Now, that last piece is especially important. While home affordability is getting better, it’s still tight. So, getting a good idea of what you can borrow can help you really wrap your head around the financial side of things. It doesn’t mean you should borrow the full amount. It just tells you what you can borrow from that lender.
This sets you up to make an informed decision about your numbers. That way you’re able to tailor your home search to what you’re actually comfortable with budget-wise and can act fast when you find a home you love.
Why Pre-Approval Is So Important in 2024
If you want to buy a home this year, there’s another reason you’re going to want to be sure you’re working with a trusted lender to make this a priority.
While more homes are being listed for sale, the overall number of available homes is still below the norm. At the same time, the recent downward trend in mortgage rates compared to last year is bringing more buyers back into the market. That imbalance of more demand than supply creates a bit of a tug-of-war for you.
It means you’ll likely find you have more competition from other buyers as more and more people who were sitting on the sidelines when mortgage rates were higher decide to jump back in. But pre-approval can help with that too.
Pre-approval shows sellers you mean business because you’ve already undergone a credit and financial check. As Greg McBride, Chief Financial Analyst at Bankrate, says:
“Preapproval carries more weight because it means lenders have actually done more than a cursory review of your credit and your finances, but have instead reviewed your pay stubs, tax returns and bank statements. A preapproval means you’ve cleared the hurdles necessary to be approved for a mortgage up to a certain dollar amount.”
Sellers love that because that makes it more likely the sale will move forward without unexpected delays or issues. And if you may be competing with another buyer to land your dream home, why wouldn’t you do this to help stack the deck in your favor?
Bottom Line
If you’re looking to buy a home in 2024, know that getting pre-approved is going to be a key piece of the puzzle. With lower mortgage rates bringing more buyers back into the market, this can help you make a strong offer that stands out from the crowd.
Silver Tsunami May Change the 2024 Market
Thursday, February 1, 2024
Will a Silver Tsunami Change the 2024 Housing Market?
Have you ever heard the term “Silver Tsunami” and wondered what it's all about? If so, that might be because there’s been lot of talk about it online recently. Let's dive into what it is and why it won't drastically impact the housing market.
What Does Silver Tsunami Mean?
A recent article from HousingWire calls it:
“. . . a colloquialism referring to aging Americans changing their housing arrangements to accommodate aging . . .”
The thought is that as baby boomers grow older, a significant number will start downsizing their homes. Considering how large that generation is, if these moves happened in a big wave, it would affect the housing market by causing a significant uptick in the number of larger homes for sale. That influx of homes coming onto the market would impact the balance of supply and demand and more.
The concept makes sense in theory, but will it happen? And if so, when?
Why It Won’t Have a Huge Impact on the Housing Market in 2024
Experts say, so far, a silver tsunami hasn’t happened – and it probably won't anytime soon. According to that same article from HousingWire:
“. . . the silver tsunami’s transformative potential for the U.S. housing market has not yet materialized in any meaningful way, and few expect it to anytime soon.”
Here’s just one reason why. Many baby boomers don’t want to move. Data from the AARP shows over half of the surveyed adults ages 65 and up plan to stay put and age in place in their current home rather than move (see chart below):
Clearly, not every baby boomer is planning to sell or move – and even those who do won’t do it all at once. Instead, it will be more gradual, happening slowly over time. As Mark Fleming, Chief Economist at First American, says:
“Demographics are never a tsunami. The baby boomer generation is almost two decades of births. That means they're going to take about two decades to work their way through.”
Bottom Line
If you’re worried about a Silver Tsunami shaking up the housing market, don’t be. Any impact from baby boomers moving will be gradual over many years. Fleming sums it up best:
“Demographic trends, they don't tsunami. They trickle.”
Don’t Wait Until Spring To Sell Your House
Thursday, February 1, 2024
Don’t Wait Until Spring To Sell Your House
As you think about the year ahead, one of your big goals may be moving. But, how do you know when to make your move? While spring is usually the peak homebuying season, you don’t actually need to wait until spring to sell. Here's why.
1. Take Advantage of Lower Mortgage Rates
Last October, the 30-year fixed mortgage rates peaked at 7.79%. In January, they hit their lowest level since May. That means you may not feel as locked-in to your current mortgage rate right now. That downward trend in rates has made moving more affordable now than it was just a few months ago.
Another reason today’s rates make now a good time to sell? More buyers are jumping back into the market. Many had been waiting on the sidelines for rates to fall, but now that that’s happening, they’re eager and ready to buy. That means more demand for your house. According to Sam Khater, Chief Economist at Freddie Mac:
“Given this stabilization in rates, potential homebuyers with affordability concerns have jumped off the fence back into the market.”
2. Get Ahead of Your Competition
Right now, there are still more people looking to buy a home than there are houses for sale, which puts you in a great position. But keep in mind, with the recent uptick in new listings, we’re seeing more sellers may already be re-entering the market.
Listing your house now helps you beat your competition and makes sure your house will stand out. And if you work with an agent to price it right, it could sell fast and get multiple offers. U.S. News explains:
“When there is low housing inventory, sellers could get top dollar for their homes.”
3. Make the Most of Rising Home Prices
Experts forecast home prices will keep going up this year. What does that mean for you? If you're ready to sell your current house and plan to buy another one, it may be a good idea to think about moving now before prices go up more. That would give you the chance to buy your next home before it gets more expensive.
4. Leverage Your Equity
Homeowners today have tremendous amounts of equity. In fact, a recent report from CoreLogic says the average homeowner with a mortgage has more than $300,000 in equity.
If you've been waiting to sell because you were worried about home affordability, know your equity can really help with your next move. It might even cover a big part, or maybe all, of the down payment for your next home.
Bottom Line
If you're thinking about selling your house and moving to another one, let’s connect to get the process started now so you can get a leg up on your competition.
Will a Silver Tsunami Change the 2024 Housing Market?
Tuesday, January 30, 2024
Will a Silver Tsunami Change the 2024 Housing Market?
Have you ever heard the term “Silver Tsunami” and wondered what it's all about? If so, that might be because there’s been lot of talk about it online recently. Let's dive into what it is and why it won't drastically impact the housing market.
What Does Silver Tsunami Mean?
A recent article from HousingWire calls it:
“. . . a colloquialism referring to aging Americans changing their housing arrangements to accommodate aging . . .”
The thought is that as baby boomers grow older, a significant number will start downsizing their homes. Considering how large that generation is, if these moves happened in a big wave, it would affect the housing market by causing a significant uptick in the number of larger homes for sale. That influx of homes coming onto the market would impact the balance of supply and demand and more.
The concept makes sense in theory, but will it happen? And if so, when?
Why It Won’t Have a Huge Impact on the Housing Market in 2024
Experts say, so far, a silver tsunami hasn’t happened – and it probably won't anytime soon. According to that same article from HousingWire:
“. . . the silver tsunami’s transformative potential for the U.S. housing market has not yet materialized in any meaningful way, and few expect it to anytime soon.”
Here’s just one reason why. Many baby boomers don’t want to move. Data from the AARP shows over half of the surveyed adults ages 65 and up plan to stay put and age in place in their current home rather than move (see chart below):
Clearly, not every baby boomer is planning to sell or move – and even those who do won’t do it all at once. Instead, it will be more gradual, happening slowly over time. As Mark Fleming, Chief Economist at First American, says:
“Demographics are never a tsunami. The baby boomer generation is almost two decades of births. That means they're going to take about two decades to work their way through.”
Bottom Line
If you’re worried about a Silver Tsunami shaking up the housing market, don’t be. Any impact from baby boomers moving will be gradual over many years. Fleming sums it up best:
“Demographic trends, they don't tsunami. They trickle.”
Experts Project Home Prices Will Increase on Mt. Hood in 2024
Tuesday, January 23, 2024
Experts Project Home Prices Will Increase on Mt. Hood in 2024
Even though home prices are going up nationally, some people are still worried they might come down. In fact, a recent survey from Fannie Mae found that 24% of people think home prices will actually decline over the next 12 months. That means almost one out of every four people are dealing with that fear, and you might be, too.
To help ease that concern, here's what experts forecast will happen with prices this year.
Experts Project a Modest Increase
Check out the latest home price forecasts from eight different sources (see graph below):
The blue bar on the left means, on average, experts think home prices will go up over 2% by the end of this year – not down.
Prices aren’t likely to depreciate in 2024 because inventory is still tight and lower mortgage rates are leading to strong buyer demand. Those two factors will keep pushing prices up as the year goes on. As Selma Hepp, Chief Economist at CoreLogic, explains:
“With mortgage rates dropping, demand for homes in early 2024 is likely to be strong and will again put pressure on prices, similar to trends observed in early 2023 . . . Most markets will continue to reach new home price highs over the course of 2024.”
What Does This Mean for You?
Experts are saying home prices will go up this year, and that's good news if you're thinking about buying a home. When you become a homeowner, you want the value of your house to go up. That appreciation is what builds equity and makes homeownership such a good investment over time.
Beyond that, expected home price appreciation also means if you’re ready, willing, and able to buy, waiting just means it will cost more later.
Bottom Line
If you're worried home prices will come down, don’t be. Many experts believe they’ll actually go up this year. If you have questions or worries about what’s happening with prices in our area, let’s connect.
Key Terms Every Homebuyer Should Learn
Friday, January 19, 2024
Key Terms Every Homebuyer Should Learn
Some Highlights
- Buying a home is a big deal and can feel especially complicated if you don't know the terms used during the process.
- If you want to become a homeowner this year, it's a good idea to learn these key housing terms and understand how they relate to the current housing market. That will help you feel confident when you buy a home.
- Let’s connect so you can get expert help with any questions you have.
3 Key Factors Affecting Home Affordability
Thursday, January 18, 2024
3 Key Factors Affecting Home Affordability
Over the past year, a lot of people have been talking about housing affordability and how tight it’s gotten. But just recently, there’s been a little bit of relief on that front. Mortgage rates have gone down since their most recent peak in October. But there’s more to being able to afford a home than just mortgage rates.
To really understand home affordability, you need to look at the combination of three important factors: mortgage rates, home prices, and wages. Let’s dive into the latest data on each one to see why affordability is improving.
1. Mortgage Rates
Mortgage rates have come down in recent months. And looking forward, most experts expect them to decline further over the course of the year. Jiayi Xu, an economist at Realtor.com, explains:
“While there could be some fluctuations in the path forward … the general expectation is that mortgage rates will continue to trend downward, as long as the economy continues to see progress on inflation.”
And even a small change in mortgage rates can have a big impact on your purchasing power, making it easier for you to afford the home you want by reducing your monthly mortgage payment.
2. Home Prices
The second important factor is home prices. After going up at a relatively normal pace last year, they’re expected to continue rising moderately in 2024. That’s because even with inventory projected to grow slightly this year, there still aren’t enough homes for sale for all the people who want to buy them. According to Lisa Sturtevant, Chief Economist at Bright MLS:
“More inventory will be generally offset by more buyers in the market. As a result, it is expected that, overall, the median home price in the U.S. will grow modestly . . .”
That’s great news for you because it means prices aren’t likely to skyrocket like they did during the pandemic. But it also means it’ll probably cost you more to wait. So, if you’re ready, willing, and able to buy, and you can find the right home, purchasing before more buyers enter the market and prices rise further might be in your best interest.
3. Wages
Another positive factor in affordability right now is rising income. The graph below uses data from the Federal Reserve to show how wages have grown over time:
If you look at the blue dotted trendline, you can see the rate at which wages typically rise. But on the right side of the graph, wages are above the trend line today, meaning they’re going up at a higher rate than normal.
Higher wages improve affordability because they reduce the percentage of your income it takes to pay your mortgage. That’s because you don’t have to put as much of your paycheck toward your monthly housing cost.
What This Means for You
Home affordability depends on three things: mortgage rates, home prices, and wages. The good news is, they’re moving in a positive direction for buyers overall.
Bottom Line
If you're thinking about buying a home, it's important to know the main factors impacting affordability are improving. To get the latest updates on each, let's connect.
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