 Four Expert Views on the 2021 Housing Market
The housing market was a shining star in 2020, fueling the economic turnaround throughout the country. As we look forward to 2021, can we expect real estate to continue showing such promise? Here’s what four experts have to say about the year ahead. Lawrence Yun, Chief Economist, National Association of Realtors (NAR)“In 2021, I think rates will be similar or modestly higher, maybe 3%...So, mortgage rates will continue to be historically favorable.” Danielle Hale, Chief Economist, realtor.com“We expect sales to grow 7 percent and prices to rise another 5.7 percent on top of 2020’s already high levels.” Robert Dietz, Senior Vice President and Chief Economist, National Association of Home Builders (NAHB)“With home builder confidence near record highs, we expect continued gains for single-family construction, albeit at a lower growth rate than in 2019. Some slowing of new home sales growth will occur due to the fact that a growing share of sales has come from homes that have not started construction. Nonetheless, buyer traffic will remain strong given favorable demographics, a shifting geography of housing demand to lower-density markets and historically low interest rates.” Mark Fleming, Chief Economist, First American “Mortgage rates are expected to remain low for the foreseeable future and millennials will continue forming households, keeping demand robust, even if income growth moderates. Despite the best intentions of home builders to provide more housing supply, the big short in housing supply will continue into 2021 and likely keep house price appreciation flying high.” Bottom Line Whether you’re ready to buy or sell a home in 2021, if you’re planning to take advantage of the market this winter, let’s connect to talk about the opportunities available in our local market.
0 Comments
Visit houselogic.com for more articles like this. © Copyright 2021 NATIONAL ASSOCIATION OF REALTORS®
Visit houselogic.com for more articles like this. © Copyright 2021 NATIONAL ASSOCIATION OF REALTORS®  The Importance of Home Equity in Building Wealth
Homeownership has always been the first rung on the ladder leading to household wealth. As Freddie Mac recently posted: “Homeownership has cemented its role as part of the American Dream, providing families with a place that is their own and an avenue for building wealth over time. This ‘wealth’ is built, in large part, through the creation of equity…Building equity through your monthly principal payments and appreciation is a critical part of homeownership that can help you create financial stability.” Home equity is the difference between the current market value of your house and the amount you currently owe on your mortgage. To estimate your equity, subtract your mortgage balance from the market value of your home. You can find what you owe on your mortgage by looking at your last monthly statement or by contacting your lender. If you need help determining the current market value of your home, contact a local real estate professional. Is homeownership truly a better path to wealth than renting?Some argue that renting eliminates the cost of property taxes and home repairs. Every potential renter must realize that all the expenses the landlord incurs (property taxes, repairs, insurance, etc.) are already baked into the rent payment – along with a profit margin. You don’t save money by renting. As proof of this, First American broke down the net worth of homeowners and renters by income categories. Here are their findings:Only one income category ($127-192K) has a higher net worth for renters over homeowners. Every other category shows that being a homeowner leads to greater accumulated wealth. According to the latest Homeowner Equity Insights Report from CoreLogic, the average homeowner gained $17,000 in equity in just the last year. Here’s a breakdown of the year-over-year equity gain by state: When can you cash in on your housing wealth?Your home equity is part of your total wealth as a homeowner. The two most common ways homeowners can leverage their wealth are:
Refinancing: You can refinance your current mortgage and take out some of the equity you have accumulated. With today’s historically low mortgage rates, you may be able to take out substantial cash and keep your monthly payment the same. Thankfully, homeowners today are doing this responsibly and not repeating the same mistakes made in 2006-2008 when some cashed out their entire equity to purchase luxury items like new cars, lavish vacations, etc. How can these options help homeowners?During these difficult times, many households are struggling with their housing expenses. Homeowners, because of their equity, have better alternatives. Odeta Kushi, Deputy Chief Economist at First American, recently explained that homeowners financially impacted by the pandemic will not necessarily be faced with foreclosure: “The foreclosure process is based on two steps. First, the homeowner suffers an adverse economic shock…leading to the homeowner becoming delinquent on their mortgage. However, delinquency by itself is not enough to send a mortgage into foreclosure. With enough equity, a homeowner has the option of selling their home, or tapping into their equity through a refinance, to help weather the economic shock.” What might the future bring?Most experts are calling for home prices to continue appreciating going forward. The Home Price Expectation Survey, a survey of a national panel of over one hundred economists, real estate experts, and investment & market strategists, indicates appreciation will continue for at least the next five years. Using their annual projections, the graph below shows the equity build-up a purchaser would potentially earn by buying a $300,000 home this January: Bottom LineHome equity, for most Americans, is the quickest way to build household wealth. That wealth gives homeowners more options during good times and in difficult situations.
Visit houselogic.com for more articles like this. © Copyright 2021 NATIONAL ASSOCIATION OF REALTORS®
Visit houselogic.com for more articles like this. © Copyright 2021 NATIONAL ASSOCIATION OF REALTORS®
A New Way to Shop for Homes in a Virtual World | MyKCM In a year when we’re learning to do so much remotely, homebuying is no exception. From going to work to attending school, grocery shopping, and even seeing our doctors online, digital practices have changed the way we live. This year, rather than delaying their home purchases, buyers – alongside their trusted real estate professionals – turned to the Internet to do more than just a typical home search. In some cases, they bought homes without even stepping foot inside. Jessica Lautz, Vice President of Demographics and Behavioral Insights at the National Association of Realtors (NAR), says: “People really didn’t buy houses sight-unseen, traditionally. It’s still not a huge number, but it has gone up, and we have definitely seen that trend accelerate.” According to NAR, throughout the coronavirus pandemic, one in every 20 homebuyers purchased a house sight-unseen. How Your Real Estate Agent Will Pave the Way Today, real estate professionals are using digital practices to help homebuyers and sellers walk through many steps in the process virtually. While following the regulations set forth by the CDC and all local guidelines, this year, agents quickly empowered buyers and sellers with virtual tours, 3D floor plans, high-quality photos, videos, online open houses, and more. For those who had homebuying and selling needs in 2020, trusted advisors made it possible in many markets. Here’s a graph showing some of the digital options buyers found most helpful in their searches this year, as noted by NAR in the 2020 Profile of Home Buyers and Sellers:A New Way to Shop for Homes in a Virtual World | MyKCMThe report also mentions that buyers this year generally searched for eight weeks. Throughout that search, they viewed a median of 9 homes, but not all of them were seen in-person. Yahoo Finance notes: “Buyers viewed five homes online and four homes in-person during the pandemic, compared to nine homes in-person in 2019, according to NAR. This was the first year NAR asked buyers to specify the number of homes toured virtually.” In true 2020 fashion, virtual practices helped buyers safely narrow down their top choices, so they didn’t have to unnecessarily walk into more homes than they needed to see throughout the process. Here’s the breakdown by region:A New Way to Shop for Homes in a Virtual World | MyKCMAt a time when health and safety are top priorities, current technology is making it possible for buyers and sellers to move their real estate plans forward at their own comfort levels, even through a worldwide pandemic. For many, this means buyers no longer have to physically tour every home they want to see, and sellers don’t need to open their doors over and over again throughout the process. Safety can come first, and trusted real estate professionals are here to help. Bottom Line If you’re ready to make a move, you may not have to press pause on your plans this season. Let’s connect to determine the safe and effective options to buy or sell a home in our area or wherever you’re looking to move.
Visit houselogic.com for more articles like this. © Copyright 2020 NATIONAL ASSOCIATION OF REALTORS®
Visit houselogic.com for more articles like this. © Copyright 2020 NATIONAL ASSOCIATION OF REALTORS®
Visit houselogic.com for more articles like this. © Copyright 2020 NATIONAL ASSOCIATION OF REALTORS®
Visit houselogic.com for more articles like this. © Copyright 2020 NATIONAL ASSOCIATION OF REALTORS®
Visit houselogic.com for more articles like this. © Copyright 2020 NATIONAL ASSOCIATION OF REALTORS®
Visit houselogic.com for more articles like this. © Copyright 2020 NATIONAL ASSOCIATION OF REALTORS®
Visit houselogic.com for more articles like this. © Copyright 2020 NATIONAL ASSOCIATION OF REALTORS®  Two Important Impacts of Home Equity
Equity continues to rise, helping American homeowners secure a much more stable financial future. According to the most recent data from CoreLogic, the average homeowner gained $9,800 in equity over the past year. In addition, experts project 2020 home prices to continue rising. With prices going up, equity gains will also keep accelerating. Black Knight just reported: “The annual percent change in the overall median existing single-family-home price has skyrocketed in the past several months, with recent numbers at three to five times higher than rates seen in the past several years.” Jeff Tucker, Senior Economist at Zillow, just qualified recent price increases as “jaw-dropping” and “within a hair's breadth of double-digit year-over-year appreciation.” Knowing equity will help enable many homeowners to better survive the economic distress caused by the ongoing pandemic, it’s important to break down two key homeowner benefits of increasing equity. 1. Equity Increases a Homeowner’s Options to Buy a New HomeAside from the financial damage of the last seven months, there has also been a tremendous emotional toll on many people. Shelter-in-place mandates, quarantine requirements, and virtual schooling have all made us re-evaluate the must-have requirements a home should deliver. Having equity in your current house gives you a better opportunity to move-up or build your perfect home from scratch. Mark Fleming, Chief Economist at First American, recently explained: “As homeowners gain equity in their homes, they are more likely to consider using that equity to purchase a larger or more attractive home – the wealth effect of rising equity.” If you need to make a move, the equity in your current home can help make that possible – right now. 2. Equity Enables Homeowners to Help Future GenerationsAn increase in home equity grows overall wealth, which can transfer to future generations. The Federal Reserve, in an addendum to their recent Survey of Consumer Finances, explains: “There are numerous ways families can transmit wealth and resources across generations. Families can directly transfer their wealth to the next generation in the form of a bequest. They can also provide the next generation with inter vivos transfers (gifts), for example, providing down payment support to enable a home purchase or a substantial wedding gift.” The Federal Reserve also explains another way wealth (including the additional net worth generated by an increase in home equity) can benefit future generations: “In addition to direct transfers or gifts, families can make investments in their children that indirectly increase their wealth. For example, families can invest in their children's educational success by paying for college or private schools, which can in turn increase their children's ability to accumulate wealth.” Bottom LineEquity can help a homeowner grow their confidence in a more stable financial future. It provides near-term move-up options and creates a positive impact for future generations. In many cases, the largest single investment a person has is their home. As that investment appreciates in value, financial options increase too.
Visit houselogic.com for more articles like this. © Copyright 2020 NATIONAL ASSOCIATION OF REALTORS®  Buyer Interest Is Growing among Younger Generations
The demand for homes this year is extraordinary as record-breaking numbers of hopeful buyers continue to shop for homes. In a normal year, the peak homebuying season comes to a close by early fall. However, 2020 is anything but a normal year, and the housing market is no exception. Lawrence Yun, Chief Economist for the National Association of Realtors (NAR), explains: “Home sales traditionally taper off toward the end of the year, but in September they surged beyond what we normally see during this season…I would attribute this jump to record-low interest rates and an abundance of buyers in the marketplace, including buyers of vacation homes given the greater flexibility to work from home.” What’s drawing so many buyers to the market?As Yun mentioned, record-low interest rates are key. Today’s rates are strengthening purchasing power for buyers, too. Sam Khater, Chief Economist at Freddie Mac, emphasizes: “Mortgage rates today are on average more than a full percentage point lower than rates over the last five years.” If you’re a homebuyer right now, there’s no question that you want to take advantage of this opportunity – and you’re not alone. Competition among buyers is definitely increasing as more buyers enter the market and mortgage interest rates remain so low. Who’s planning to buy a home right now?Today’s affordability is appealing to all generations and seems to be especially attractive to younger buyers who want to begin growing their wealth through homeownership. There’s a distinct increase this year in the percentage of those in younger generations searching for homes. The National Association of Home Builders (NAHB) notes: “Between the third quarters of 2019 and 2020, the share of Gen Z adults planning a home purchase rose three points to 14%. Millennials, however, are the generation most likely to be considering buying a home (22%).” Here’s a graph showing the year-over-year increase in homebuying interest by generation:According to Mark Fleming, Chief Economist for First American, millennials are reaching their prime home-buying years, a likely driver in this increase: “Record low mortgage rates and millennials continuing to age into their prime home-buying years has boosted demand, but a lack of housing supply remains a challenge.” What’s the biggest challenge for today’s buyers?Finding a home, however, as Fleming notes above, is clearly a challenge today. Yun also explains: “There is no shortage of hopeful, potential buyers, but inventory is historically low.” With so many buyers actively searching for homes this year and so few houses for sale, it’s more important than ever to work with a trusted real estate professional to navigate today’s market. From pre-approval to bidding wars and guidance on down payment assistance resources, having an agent by your side might make the difference in your ability to land your dream home. Bottom LineLet’s connect if you’re ready to buy a home. More buyers mean more competition, so you need an expert guide to help you stand out from the crowd. |
Let's ConnectWith the correct person by your side, the buying and selling process doesn't have to be full of stress, doubt and anxiety - it can actually be FUN! Contact Jacquelyn Duke today to learn more. Archives
March 2021
Categories
All
1Jacquelyn Duke, Realtor®
Licensed to Sell in the State of Iowa Jacquelyn@SellingCentralIowa.com (515) 240-7483 Re/Max Concepts 1360 SW Park Square Dr Ste 106 Ankeny, IA 50023 Disclaimer: The material on this site is solely for informational purposes. No warranties or representations have been made. 
|
RSS Feed