As we enter the summer months and work through the challenges associated with the current health crisis, many are wondering what impact the economic slowdown will have on home prices. Looking at the big picture, supply and demand will give us the clearest idea of what’s to come.
Making our way through the month of June and entering the second half of the year, we face an undersupply of homes on the market. Keep in mind, this undersupply is going to vary by location and by price point. According to the National Association of Realtors (NAR), across the country, we currently have a 4.1 months supply of homes on the market. Historically, 6 months of supply is considered a balanced market. Anything over 6 months is a buyer’s market, meaning prices will depreciate. Anything below 6 months is a seller’s market, where prices appreciate. The graph below shows inventory across the country since 2010 in months supply of homes for sale.Robert Dietz, Chief Economist for the National Home Builders Association (NAHB) says:
“As the economy begins a recovery later in 2020, we expect housing to play a leading role. Housing enters this recession underbuilt, not overbuilt. Estimates vary, but based on demographics and current vacancy rates, the U.S. may have a housing deficit of up to one million units.”
Given the undersupply of homes on the market today, there is upward pressure on prices. Looking at simple economics, when there is less of an item for sale and the demand is high, consumers are willing to pay more for that item. The undersupply is also prompting bidding wars, which can drive price points higher in the home sale process. According to a recent MarketWatch article:
“As buyers return to the market as the country rebounds from the pandemic, a limited inventory of homes for sale could fuel bidding wars and push prices higher.”
In addition, experts forecasting home prices have updated their projections given the impact of the pandemic. The major institutions expect home prices to appreciate through 2022. The chart below, updated as of earlier this week, notes these forecasts. As the year progresses, we may see these projections revised in a continued upward trend, given the lack of homes on the market. This could drive home prices even higher.
Many may think home prices will depreciate due to the economic slowdown from the coronavirus, but experts disagree. As we approach the second half of this year, we may actually see home prices rise even higher given the lack of homes for sale.
More than ever, our homes have become an integral part of our lives. Today they are much more than the houses we live in. They’re evolving into our workplaces, schools for our children, and safe havens that provide shelter, stability, and protection for our families through the evolving health crisis. Today, 65.3% of Americans are able to call their homes their own, a rate that has risen to its highest point in 8 years.
June is National Homeownership Month, and it’s a great time to reflect on the benefits of owning your own home. Below are some highlights and quotes recently shared by the National Association of Realtors (NAR). From non-financial to financial, and even including how owning a home benefits your local economy, these items may give you reason to think homeownership stretches well beyond a sound dollars and cents investment alone.
Owning a home brings families a sense of happiness, satisfaction, and pride.
- Pride of Ownership: It feels good to have a place that’s truly your own, especially since you can customize it to your liking. “The personal satisfaction and sense of accomplishment achieved through homeownership can enhance psychological health, happiness and well-being for homeowners and those around them.”
- Property Maintenance and Improvement: Your home is your stake in the community, and a way to give back by driving value into your neighborhood.
- Civic Participation: Homeownership creates stability, a sense of community, and increases civic engagement. It’s a way to add to the strength of your local area.
Buying a home is also an investment in your family’s financial future.
- Net Worth: Homeownership builds your family’s net worth. “The median family net worth for all homeowners ($231,400) increased by nearly 15% since 2013, while net worth ($5,000) actually declined by approximately 9% since 2013 for renter families.”
- Financial Security: Equity, appreciation, and predictable monthly housing expenses are huge financial benefits of homeownership. Homeownership is truly the best way to improve your long-term net worth.
Homeownership is even a local economic driver.
- Housing-Related Spending: An economic force throughout our nation, housing-related expenses accounted for more than one-sixth of the country’s economic activity over the past three decades.
- GDP Growth: Homeownership also helps drive GDP growth as the country aims to make an economic rebound. “Every 10% increase in total housing market wealth would translate to approximately $147 billion in additional consumer spending, or 0.8% of GDP, as well as billions of dollars in new federal tax revenue.”
- Entrepreneurship: Homeownership is even a form of forced savings that provides entrepreneurial opportunities as well. “Owning a home enables new entrepreneurs to obtain access to credit to start or expand a business and generate new jobs by using their home as collateral for small business loans.”
The benefits of homeownership are vast and go well beyond the surface level. Homeownership is truly a way to build financial freedom, find greater satisfaction and happiness, and make a substantial impact on your local economy. If owning a home is part of your dream, let’s connect today so you can begin the homebuying process.
Top Reasons to Own Your Home [INFOGRAPHIC]
- June is National Homeownership Month, and it’s a great time to consider the benefits of owning your own home.
- If you’re in a position to buy, homeownership might help you find the stability, community, and comfort you’ve been searching for this year.
- Let’s connect today to determine if homeownership is the right next step for you and your family.
With the U.S. economy on everyone’s minds right now, questions about the country’s financial outlook continue to come up daily. The one that seems to keep rising to the top is: when will the economy begin to recover? While no one knows exactly how a rebound will play out, expert economists around the country are becoming more aligned on when the recovery will begin.
According to the latest Wall Street Journal Economic Forecasting Survey, which polls more than 60 economists on a monthly basis, 85.3% believe a recovery will begin in the second half of 2020 (see graph below):There seems to be a growing consensus among these experts that the second half of this year will be the start of a turnaround in this country.
Chris Hyzy, Chief Investment Officer for Merrill notes:
“We fully expect the economy could begin to pick up in late June and July with a strong recovery in the fourth quarter.”
In addition, five of the major financial institutions are also forecasting positive GDP in the second half of the year. Today, four of the five expect a recovery to begin in the third quarter of 2020, and all five agree a recovery should start by the fourth quarter (see graph below):
The vast majority of economists, analysts, and financial institutions are in unison, indicating an economic recovery should begin in the second half of 2020. Agreement among these leading experts is stronger than ever.
With stay-at-home orders starting to gradually lift throughout parts of the country, data indicates homebuyers are jumping back into the market. After many families put their plans on hold due to the COVID-19 pandemic, what we once called the busy spring real estate season is shifting into the summer. In 2020, summer is the new spring for real estate.
Joel Kan, Economist at The Mortgage Bankers Association (MBA) notes:
“Applications for home purchases continue to recover from April’s sizable drop and have now increased for five consecutive weeks…Government purchase applications, which include FHA, VA, and USDA loans, are now 5 percent higher than a year ago, which is an encouraging turnaround after the weakness seen over the past two months.”
Additionally, according to Google Trends, which scores search terms online, searches for real estate increased from 68 points the week of March 15th to 92 points last week. As we can see, more potential homebuyers are looking for homes virtually.
What’s the Opportunity for Buyers?
Another reason buyers are coming back to the market, even with forced unemployment and stay-at-home orders, is historically low mortgage rates. Sam Khater, Chief Economist at Freddie Mac indicates:
“For the fourth consecutive week, the 30-year fixed-rate mortgage has been below 3.30 percent, giving potential buyers a good reason to continue shopping even amid the pandemic…As states reopen, we’re seeing purchase demand improve remarkably fast, now essentially flat relative to a year ago.”
With mortgage rates at such low levels and states gradually beginning to reopen, there’s more incentive than ever to buy a home this summer.
What’s the Opportunity for Sellers?
Finding a home to buy, however, is still a challenge, as this spring sellers removed many listings from the market. Though more people are now putting their houses up for sale this month as compared to last month, current inventory is still well below last year’s level.
According to last week’s Weekly Economic and Housing Market Update from realtor.com:
“Weekly Housing Inventory showed continued tightening. New Listings declined 28% compared with a year ago, as sellers grappled with uncertainty and hesitated bringing homes to market. Total Listings dropped 20% YoY, a faster rate than in prior weeks, leaving very few homes available for sale. As Time on Market was 15 days slower YoY, asking prices moved up 1.5% YoY.”
If you’re thinking of selling your house this summer, now may be your best opportunity. With so few homes on the market for buyers to purchase, this season may be the time for your house to stand out from the crowd. Trusted real estate professionals can help you list safely and effectively, keeping your family’s needs top of mind. Buyers are looking, and your house may be at the top of their list.
If you’re thinking of selling, many buyers may be eager to find a home just like yours. Let’s connect today to make sure you can get your house in on the action this summer.
Image Source: Canva
Thanks to COVID-19, the new reality is that many open houses and home tours are being conducted virtually. For prospective home buyers, this new territory brings an added element to prepare for in the home buying process. Some of the questions that should be asked in a virtual home tour parallel those of in-person tours, but others are unique to today’s virtual world.
Could you zoom in?
- Sometimes it can be difficult to get a true glimpse at what you want to see in a room. Asking the agent to zoom in on specific features is commonplace in virtual home tours, and they understand this is part of the viewer experience. Don’t hesitate to ask multiple times. Getting a better look at everything you want to see will help you feel like you’ve gotten the most out of your virtual tour.
How many square feet are in this room?
- Virtual tours can slightly distort space, making it tough to gauge the size. The room-to-room square footage is information the agent is sure to have handy. Since you can’t be there in person, it will help you piece together the virtual visuals with the sense of physical space that we’re all accustomed to feeling in the places we live.
What color is that?
- In the smartphone era, and computer era at large, we have come to understand that digital representations of color are not always true to the eye. Ask the agent to confirm specific colors so you can plan accordingly. Have a color swatch on hand or look the colors up online as you go through the tour.
When were the appliances last updated?
- The importance of this question rings true in past, present, and future. Knowing the state of the home’s appliances, and the likelihood and timing of when they will need replacement, is vital information for both assessing the move-in readiness of the home and understanding what costs might lie ahead.
Has the seller provided an inspection?
- This is another example of a critical question, whether your home tour is virtual or physical. If the seller has already done an inspection, ask the agent to lead you to any areas of concern based on the inspector’s findings. If there is anything that has not yet been addressed by the seller, have your agent ask what their plan is for making the necessary repairs/updates.
When is the offer review date?
- Understanding the seller’s timeline for reviewing and accepting offers will help guide your decision-making process and allow you to strategize based on the timeline.
Whether your home tour is physical or virtual, getting the information you need to make an informed decision remains paramount. Although there is no substitute for physically being in the home you are looking to buy, keeping these questions in mind will position you well as you progress through the home buying journey.
Yesterday was Mother’s Day so it was a day my children were supposed to shower me with gifts and love and tell me how rad I am. I like this day. 😁
It is also a day I send a funny card to my own mom who lives in California. I bought the card three weeks ago so that I would solidify my favorite kid status and be the first one to send a card to Mom. Unfortunately, I forgot to send it until Friday and my brother, David, will hang on to the favorite-kid award yet again. Dammit. Even Chip got his in on-time, but I am giving kudos to his wife for that one.
I was NOT showered with gifts yesterday, but truthfully, my kids tell me that my mom-skills rock often. I have an amazing relationship with both my teenage girls and I know I am blessed (not lucky…I have worked hard to create this relationship with them).
My oldest daughter wrote me a beautiful note about how she knows she can be difficult and she is lucky that I am her mom (she’s got that right!). My younger daughter was sick, so I took her to Urgent Care. See what a good mom I am?
I didn’t grow up dreaming about getting married and having a family. I think I figured it would eventually happen because that’s what we good Catholics do, but when I had trouble getting pregnant for about four years I thought, “Oh well, maybe we weren’t supposed to have kids.”
I love it more every year and I am really good at it. My hot hubby and I make a lot of jokes, are sarcastic, and it helps deal with the tougher moments of parenthood. I am not much of a drinker, to the chagrin of my parents and many friends, but a solid ten minutes in my dark closet taking deep breaths have also made me a better mom.
Although, I totally get the alcohol helping as well. Once, I was giving the girls a bath and I was so drained. I had a glass of wine and was buzzed in just a few minutes. Everything was great: you splashed water all over the bathroom and I have to clean it later? Who cares? You want to use the bubbles that make a ring that is hard to scrub off? Love it! I called my bestie to share my amazing thoughts and she just laughed at me. Apparently most parents drink.
Another great mom skill is flipping your kids off as they walk away and then high-fiving the hot hubby as if we showed them. Being immature is the KEY to great parenting. And a little fear:
“If you don’t turn that tv off now I am going to punch you in the face!”
“The show is over in five minutes, we’ll turn it off then.”
“I said now!”
“Who’s the boss?”
“You are, Mama.”
“Ok, five minutes.”
Hope you told or were told some mom how rad they were yesterday!
Oh, yea, and since this is my real estate website: market is heating up in so many Seattle areas. Sold a house in my neighborhood in 2 days with six offers. The slow down from last April is no longer slow…at least on the Eastside.
Here Comes the Sun. Walking on Sunshine. Sunshine of your Love. Good Day Sunshine. You Are My Sunshine.
So many songs about one of my favorite things in the world, and well deserved. Don’t we all feel better on a warm, sunny day? Even a cold, sunny day?
Yesterday my car’s outside thermometer read 90 degrees at one point. You have no idea how happy that makes me. Every time I feel the heat on my skin it puts a smile on my face. It feels calming, comforting, and of course, warming. AHHHH, it makes me say as I turn my face to the sky and open my arms out in a cross formation.
Even my dogs stay outside longer to sun bathe. And they squish themselves into a tiny square of sun that comes through the window in my room in the mornings.
Sun, you are so wonderful, but you are also so mean to our skin? How is that possible when it feels so nice? I guess we can say that about a lot of things like, why are chips so delicious but so bad for the heart (and thighs!)? But I love the sun and I try to get out in it when I can, and that is hard to do here in Seattle.
May is often a month full of teasers here. Mother’s Day is tomorrow and I remember most Mother’s Days have been sunny and warm, and then soon after, it drops 20 degrees and cloudy. They call this June Gloom. This May, we have had an amazing week of 70-80 degree weather. I changed out my clothes to Summer and put away the Winter-wear. No matter how cool June Gloom becomes, at this point, I refuse to wear winter colors and fabrics.
Hopefully, Mother Nature will be kind to us this year and keep the June Gloom to a minimum. If not, I have a planned trip to Puerto Vallarta in the Summer!
I just listed the coolest house in a beautiful setting. It happens to be in my neighborhood, and it really is a great place to live. The home backs up to a seasonal creek and the setting is perfect for relaxation.
Couldn’t you see yourself sitting on the back deck drinking your coffee in the morning or with friends BBQing on weekends? Just looking at this picture relaxes me.
There are so many great things about this house: the open kitchen area and entertaining space, a dog-loving yard, the fact it is a rambler (rare in these parts), and the energy in the home makes me happy. I have known the last two owners, and both families are happy, friendly people.
This is the place to be. Take a deep breath and just live here.
We immediately did an extensive remodel that added about 300 sf, took out walls, and added an upstairs porch. We repainted over the years, switched out furniture, and other small projects, but we realized we didn’t use the main family room barely at all. Originally, when we took out a wall between the kitchen and the family room, we thought we’d have that open concept everyone loved; except the family room was narrow and had doorways and fireplaces that screwed up the furniture placement. It wasn’t a comfy place to hang out until one day I realized I was running in and out of the living room where the tv is to watch a football game while cooking.
“Hot hubby, I would really like a tv in the family room so I can cook and watch football.” Hot hubby’s face lit up, he likes a project.
“Well, we can do that, but I think there needs to be a focal point above the fireplace with some planking and trim, and maybe some windows on each side to bring in light; oh, and some built-ins for storage; you know we’ll have to change the furniture for it to work…”
When he gets a project in his mind, I just say, “Ya, sounds great,” and let him at it. Oh my word, it was the best idea ever. Now this room is used constantly. It is possibly the favorite room in the house, and the living room is also still used a lot as well when people want to watch different shows, use the larger couch, or play the piano.
“Why didn’t we do this ages ago?!” I love that our entire house is actually being used all of the time now.
What can you do to a room that is never used? Can you change its function? Do you really use that formal dining room or do you need a den? The fancy living room far from the kitchen: do you ever sit in it other than at holidays? Could you turn the bonus room into a gym now that the kids are older? (We did.)
If you aren’t using your whole house, maybe it is just too big… SEGUE…and that is where I come in! How smooth was that? 😁