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Is the Housing Market Correcting on Mt. Hood?

Saturday, June 18, 2022
by Liz Warren

Is the Housing Market Correcting on Mt. Hood?

Is the Housing Market Correcting? | MyKCM
 

If you're following the news, all of the headlines about conditions in the current housing market may leave you with more questions than answers. Is the boom over? Is the market crashing or correcting? Here’s what you need to know.

The housing market is moderating compared to the last two years, but what everyone needs to remember is that the past two years were record-breaking in nearly every way. Record-low mortgage rates and millennials reaching peak homebuying years led to an influx of buyer demand. At the same time, there weren’t enough homes available to purchase thanks to many years of underbuilding and sellers who held off on listing their homes due to the health crisis.

This combination led to record-high demand and record-low supply, and that wasn’t going to be sustainable for the long term. The latest data shows early signs of a shift back to the market pace seen in the years leading up to the pandemic – not a crash nor a correction. As realtor.com says:

“The housing market is at a turning point. . . . We’re starting to see signs of a new direction, . . .”

Home Showings Then and Now

The ShowingTime Showing Index tracks the traffic of home showings according to agents and brokers. It’s a good indication of buyer demand. Here’s a look at that data going back to 2019 (see graph below):

Is the Housing Market Correcting? | MyKCM

The 2019 numbers give a good baseline of pre-pandemic demand (shown in gray). As the graph indicates, home showings skyrocketed during the pandemic (shown in blue). And while current buyer demand has begun to moderate slightly based on the latest data (shown in green), showings are still above 2019 levels.

And since 2019 was such a strong year for the housing market, this helps show that the market isn’t crashing – it’s just at a turning point that’s moving back toward more pre-pandemic levels.

Existing Home Sales Then and Now

Headlines are also talking about how existing home sales are declining, but perspective matters. Here’s a look at existing home sales going all the way back to 2019 using data from the National Association of Realtors (NAR) (see graph below):

Is the Housing Market Correcting? | MyKCM

Again, a similar story emerges. The pandemic numbers (shown in blue) beat the more typical year of 2019 home sales (shown in gray). And according to the latest projections for 2022 (shown in green), the market is on pace to close this year with more home sales than 2019 as well.

It’s important to compare today not to the abnormal pandemic years, but to the most recent normal year to show the current housing market is still strong. First American sums it up like this:

“. . . today’s housing market looks a lot like the 2019 housing market, which was the strongest housing market in a decade at the time.”

Bottom Line

If recent headlines are generating any concerns, look at a more typical year for perspective. The current market is not a crash or correction. It’s just a turning point toward more typical, pre-pandemic levels. Let’s connect if you have any questions about our local market and what it means for you when you buy or sell this year.

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What Does a Recession Mean for the Mt. Hood Real Estate Market?

Saturday, June 18, 2022
by Liz Warren

          

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Wildfire Tips for Mt. Hood

Saturday, June 11, 2022
by Liz Warren

If you're looking for some good Mt. Hood Wildfire tips, this is a great site to visit and review for preparation:

Wildfire Tips for Mt. Hood

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Why Home Loans Today Aren’t What They Were in the Past

Wednesday, June 1, 2022
by Liz Warren

Why Home Loans Today Aren’t What They Were in the Past

Why Home Loans Today Aren’t What They Were in the Past | MyKCM
 

In today’s housing market, many are beginning to wonder if we’re returning to the riskier lending habits and borrowing options that led to the housing crash 15 years ago. Let’s ease those concerns.

Several times a year, the Mortgage Bankers Association (MBA) releases an index titled the Mortgage Credit Availability Index (MCAI). According to their website:

“The MCAI provides the only standardized quantitative index that is solely focused on mortgage credit. The MCAI is . . . a summary measure which indicates the availability of mortgage credit at a point in time.”

Basically, the index determines how easy it is to get a mortgage. The higher the index, the more available mortgage credit becomes. Here’s a graph of the MCAI dating back to 2004, when the data first became available:

Why Home Loans Today Aren’t What They Were in the Past | MyKCMAs the graph shows, the index stood at about 400 in 2004. Mortgage credit became more available as the housing market heated up, and then the index passed 850 in 2006. When the real estate market crashed, so did the MCAI as mortgage money became almost impossible to secure. Thankfully, lending standards have eased somewhat since then, but the index is still low. In April, the index was at 121, which is about one-seventh of what it was in 2006.

Why Did the Index Get out of Control During the Housing Bubble?

The main reason was the availability of loans with extremely weak lending standards. To keep up with demand in 2006, many mortgage lenders offered loans that put little emphasis on the eligibility of the borrower. Lenders were approving loans without always going through a verification process to confirm if the borrower would likely be able to repay the loan.

An example of the relaxed lending standards leading up to the housing crash is the FICO® credit score associated with a loan. What’s a FICO® score? The website myFICO explains:

“A credit score tells lenders about your creditworthiness (how likely you are to pay back a loan based on your credit history). It is calculated using the information in your credit reports. FICO® Scores are the standard for credit scores—used by 90% of top lenders.”

During the housing boom, many mortgages were written for borrowers with a FICO score under 620. While there are still some loan programs that allow for a 620 score, today’s lending standards are much tighter. Lending institutions overall are much more attentive about measuring risk when approving loans. According to the latest Household Debt and Credit Report from the New York Federal Reserve, the median credit score on all mortgage loans originated in the first quarter of 2022 was 776.

The graph below shows the billions of dollars in mortgage money given annually to borrowers with a credit score under 620.

Why Home Loans Today Aren’t What They Were in the Past | MyKCMIn 2006, buyers with a score under 620 received $376 billion dollars in loans. In 2021, that number was only $80 billion, and it’s only $20 billion in the first quarter of 2022.

Bottom Line

In 2006, lending standards were much more relaxed with little evaluation done to measure a borrower’s potential to repay their loan. Today, standards are tighter, and the risk is reduced for both lenders and borrowers. These are two very different housing markets, and today is nothing like the last time.

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What's the Future of the Mt. Hood Real Estate Market?

Tuesday, May 31, 2022
by Liz Warren

What Does the Rest of the Year Hold for the Housing Market?

What Does the Rest of the Year Hold for the Housing Market? | MyKCM
 

If you’re thinking of buying or selling a house, you’re at an exciting decision point. And anytime you make a big decision like that, one thing you should always consider is timing. So, what does the rest of the year hold for the housing market? Here’s what experts have to say.

The Number of Homes Available for Sale Is Likely To Grow

There are early signs housing inventory is starting to grow and experts say that should continue in the months ahead. According to Danielle Hale, Chief Economist at realtor.com:

“The gap between this year’s homes for sale and last year’s is one-fifth the size that it was at the beginning of the year. The catch up is likely to continue, . . . This growth will mean more options for shoppers than they’ve had in a while, even though inventory continues to lag pre-pandemic normal.”

  • As a buyer, having more options is welcome news. Just remember, housing supply is still low, so be ready to act fast and put in your best offer up front.
  • As a seller, your house may soon face more competition when other sellers list their homes. But the good news is, if you’re also buying your next home, having more options to choose from should make that move-up process easier.

Mortgage Rates Will Likely Continue To Respond to Inflationary Pressures

Experts also agree inflation should continue to drive up mortgage rates, albeit more moderately. Odeta Kushi, Deputy Chief Economist at First American, says:

“… ongoing inflationary pressure remains likely to push mortgage rates even higher in the months to come.”  

  • As a buyer, work with trusted real estate professionals, including your lender, so you can learn how rising mortgage rate environments impact your purchasing power. It may make sense to buy now before it costs more to do so, if you’re ready.
  • As a seller, rising mortgage rates are motivating some homeowners to make a move up sooner rather than later. If you’re planning to buy your next home, talk to a trusted real estate advisor to decide how to time your move.

Home Prices Are Projected To Continue To Climb

Home prices are forecast to keep appreciating because there are still fewer homes for sale than there are buyers in the market. That said, experts agree the pace of that appreciation should moderate – but home prices won’t fall. Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), explains:

“Prices throughout the country have surged for the better part of two years, including in the first quarter of 2022. . . Given the extremely low inventory, we're unlikely to see price declines, but appreciation should slow in the coming months.” 

  • As a buyer, continued home price appreciation means it’ll cost you more to buy the longer you wait. But it also gives you peace of mind that, once you do buy a home, it will likely grow in value. That makes it historically a good investment and a strong hedge against inflation.
  • As a seller, price appreciation is great news for the value of your home. Again, lean on a professional to strike the right balance of the best conditions possible for both selling your house and buying your next one.

Bottom Line

Whether you’re a homebuyer or seller, you need to know what’s happening in the housing market, so you can make the most informed decision possible. Let’s connect to discuss your goals and what lies ahead, so you can pick your best time to make a move.

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Don’t Let Rising Inflation Delay Your Homeownership Plans

Friday, May 20, 2022
by Liz Warren

 

Don’t Let Rising Inflation Delay Your Homeownership Plans INFOGRAPHIC] | MyKCM
 

Some Highlights

  • If recent headlines about rising inflation are making you wonder if it’s still a good time to buy, here’s what experts have to say.
  • Housing is an asset that typically grows in value. Plus, your mortgage helps stabilize your monthly housing costs, and buying protects you from rising rents.
  • Experts say owning a home is historically a good hedge against inflation. Let’s connect if you’re ready to start the homebuying process today.
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Craftsman Style Zig Zag Riverfront Cabin

Thursday, May 19, 2022
by Liz Warren

Caution, dream cabin just hit the market!

This is one of the larger cabins in the Mt. Hood National Forest on the Zig Zag River. Lots of craftsman touches and plenty of room for friends and family. Open great room with log accents. Floor to ceiling windows with lots of natural light. Three bedrooms, one bath with over 1400 square feet. Outstanding location on the Zig Zag River! Enjoy the outdoors on your huge deck!  $510,000

Zig Zag Riverfront Cabin With Soaring Fireplace

Mt. Hood Waterfront Cabin near Government Camp          Zig Zag River on Mt. Hood

Soaring Ceiling in this Craftsman Style Zig Zag Riverfront Cabin near Mt. Hood

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What's On the Horizon for the Mt. Hood Real Estate Market in the Second Half of 2022

Thursday, May 19, 2022
by Liz Warren

        

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The One Thing Every Homeowner Needs To Know About a Recession

Thursday, May 19, 2022
by Liz Warren

The One Thing Every Homeowner Needs To Know About a Recession

The One Thing Every Homeowner Needs To Know About a Recession | MyKCM
 

A recession does not equal a housing crisis. That’s the one thing that every homeowner today needs to know. Everywhere you look, experts are warning we could be heading toward a recession, and if true, an economic slowdown doesn’t mean homes will lose value.

The National Bureau of Economic Research (NBER) defines a recession this way:

“A recession is a significant decline in economic activity spread across the economy, normally visible in production, employment, and other indicators. A recession begins when the economy reaches a peak of economic activity and ends when the economy reaches its trough. Between trough and peak, the economy is in an expansion.”

To help show that home prices don’t fall every time there’s a recession, take a look at the historical data. There have been six recessions in this country over the past four decades. As the graph below shows, looking at the recessions going all the way back to the 1980s, home prices appreciated four times and depreciated only two times. So, historically, there’s proof that when the economy slows down, it doesn’t mean home values will fall or depreciate.

The One Thing Every Homeowner Needs To Know About a Recession | MyKCM

The first occasion on the graph when home values depreciated was in the early 1990s when home prices dropped by less than 2%. It happened again during the housing crisis in 2008 when home values declined by almost 20%. Most people vividly remember the housing crisis in 2008 and think if we were to fall into a recession that we’d repeat what happened then. But this housing market isn’t a bubble that’s about to burst. The fundamentals are very different today than they were in 2008. So, we shouldn’t assume we’re heading down the same path.

Bottom Line

We’re not in a recession in this country, but if one is coming, it doesn’t mean homes will lose value. History proves a recession doesn’t equal a housing crisis.

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National Wildfire Awareness Month

Thursday, May 12, 2022
by Liz Warren

Although it's hard to believe as we sit under storm clouds and record breaking rain we are approaching our fire season on Mt. Hood. After power shut downs from past fires locals are way more prepared for what will come our way. I don't know any one who doesn't own a generator. This article from Fox 12 details new rules for power shut down notifications during wildfires. 

Here are tips directly from the FEMA website:

The United States Fire Administration promotes simple ways to prevent a fire from affecting your home and community, including:

  • Reduce amount of flammable materials and brush that can burn around your home by removing pine needles, dry leaves or other highly flammable materials.
  • Protect your roof: Trim branches that overhang your home and remove any leaves, needles, and sticks from your roof and gutters. 
  • Move wood piles and small propane tanks away from your (and your neighbor’s) home, 30 feet or more is best.
  • Embers from a burning fire can get under an unprotected porch or through vents. To prevent this, install a wire mesh screen with openings no larger than 1/8th inch.  

Be prepared in case you need to evacuate:

  • Keep important documents in a fireproof safe, on a USB drive, or store password protected documents online.
  • Check your home insurance to make sure your policy protects your current home value and includes wildfires.
  • Give yourself time and evacuate early if possible. If you can’t leave, designate a room that can be closed off from outside air in case air conditions become hazardous.
  • Make your household emergency plan and go-kit.  When making plans, don’t forget the needs of pets.  Make sure that you know more than one way out of your neighborhood.
  • Sign up to receive emergency alerts and notices for your community.
  • Ready.gov offers vital safety tips on what to do before, during, and after a wildfire.

Another important thing to consider is buying flood insurance. After a wildfire, flood risk increases due to the inability of charred vegetation and soil to absorb water. Rainstorms after a wildfire lead to increased runoff down slopes and into channels, streams, and rivers.  Flooding after fire can be fast, severe, and include mudflows as runoff picks up debris, ash, and sediment from the burn scar. Flood insurance can protect property owners from catastrophic financial impacts of flooding following a wildfire.

Wildfires can develop and spread quickly, leaving little time to get somewhere safe. Know what to do to keep yourself, your family, and your pets safe and take steps now to protect your future.

Last updated March 17, 2021

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Displaying blog entries 301-310 of 756

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