divider

Archive



What Do Experts Predict for the 2021 Housing Market?

/ 0 Comments

As the new year rolled in, many have reflected on a year of unexpected and historic events and how they impacted many aspects of the lives of Americans.  The real estate market had its share of ups and downs as Americans adjusted to new realities of shutdowns, spending more time at home, and mortgage rates that continue to remain exceptionally low.  It leaves many real estate professionals and American homeowners and would-be home owners trying to predict what 2021 could possibly have in store for them.

In a piece published by Norada Real Estate Investments, written by Marco Santarelli, many questions for the future of the market in 2021 are posed and explanations and predictions are provided.  The article addresses questions Americans might have about a potential affordability crisis, if the value of homes will continue to rise, what the trends in new home construction might be and whether or not a housing market crash is predicted in 2021.

Santarelli indicates, “While we still face economic and health challenges ahead, it is no doubt that the nation will continue to recover from this pandemic and an improving economy will continue to prop up the housing market competition. Industry experts believe the housing market will remain strong and is set to break more records in 2021.”  He describes how it continues to be a seller’s market and a continued rise in home prices could lead to affordability issues.

To add, some experts, such as Zillow Economic Research, predict that home values will, in fact, continue to increase.  Some predictions call for a 3.6% increase over the next three months and appreciate of home value by up to 10% through the end of 2021. 

As the demands for houses continues to outpace the availability, new home construction attempts to fill the gap.  However, according to the article, “Land and material availability and a persistent skilled labor shortage will continue to place upward pressure on construction costs resulting in limited housing supply.”

Read the entire article for more predictions for 2021.

Learn More
separator


How Have Home Prices Fared Amidst the 2020 Economy?

/ 0 Comments

2020 has been a year full of the unexpected and has been unpredictable, to say the least.  The economic effects of the pandemic have been staggering; businesses have had to close or make modifications that result in lost income, many Americans are collecting unemployment due to COVID-19 related layoffs.  In this type of economic climate, it would be expected that the housing market and home prices would suffer as well.

Nevertheless, 2020 has brought drastic increases in home prices.  According to an article published in Realtor Magazine, ” . Existing-home prices for all housing types jumped 15.5% year over year in October to $313,000, according to the National Association of REALTORS®.”  In fact, this year’s home appreciation rate is the fastest appreciation rate the housing market has seen in 6 years.

The home value gains are seen across the United States.  New York saw some of the lowest gains, being up 2.6% over the past year.  However, areas in other parts of the Northwest, such as Maine, saw home values appreciate almost 15%.  Western states are seeing values increase around 12 and 13 percent compared to last year.

Read the entire article.

Learn More
separator


Is Now the Time to Lock in a Low Mortgage Rate?

/ 0 Comments

2020 is wrapping up and it has been quite a year, to say the least.  With just a few weeks left in this year, Americans anticipate many upcoming changes from political to medical.  However, some may wonder what to expect from the mortgage and real estate markets.

According to an article published by Realtor Magazine, “Mortgage rates have hit new record lows 13 times this year, the latest in November”.  Its predicted that the rates will hover near a record low of 2.9% throughout December.  Further, some economy experts expect these low rates to continue into 2021, perhaps with slight increases, with a possible 3.10% 30 year mortgage by the end of the first quarter of 2021. 

However, not all agree with those 2021 predictions.  The article details other predictions, “Fannie Mae predicts the 30-year fixed-rate mortgage will average about 2.8% through the end of next year. The Mortgage Bankers Association predicts a 2.9% average in December and a 3.3% average for 2021. Freddie Mac predicts an average of 3% over the next 13 months.”

Nevertheless, the available mortgage rates have, throughout 2020, and will continue to boost the real estate activity.  The low rates are opening opportunities of home buying to many more, with a much more affordable monthly payment.  Additionally, homeowners are able to refinance into these lower rates and save money on their existing monthly payments.

Nadia Evangelou, senior economist and director of forecasting for the National Association of REALTORS®, advises home buyers should lock in the low mortgage rates now if they can.”

Read the entire article.

Learn More
separator


How Might Biden’s Presidency Impact the Mortgage Industry?

/ 0 Comments

Now that the 2020 election has seemingly come to a close, many Americans are anticipating what the housing and mortgage industry may look like with Biden as president.  Throughout his presidential campaign, Biden pledged to make some changes so that Americans will have “access to housing that is affordable, stable, safe and healthy, accessible, energy efficient and resilient,” according to his campaign website.   In a Housing Wire article reporters James Kleinmann and Tim Glaze detail some of the possible changes that may be proposed by Biden.

To begin, Biden is looking to introduce a tax credit of close to $15,000 for first time home buyers.  The purpose of the tax credit would be to help first time home buyers, specifically younger Americans as well as Black and Hispanic Americans. Although, according to the article, “Industry observers … weren’t optimistic that Biden would have the legislative muscle to get the full initiative through, unless Democrats also take the Senate.”

Biden also promised to put more regulation in place for agencies such as Consumer Financial Protection Bureau, where it is anticipated he will select a new leader of the agency.  Its expected he would also look to continue the conservatorship of GSEs.  According to Tim Rood, head of government & industry relations for Situs AMC, “If Biden wins, he is going to look to use Fannie and Freddie as instruments of public policy to help close the homeownership gap, the wealth gap, cap people’s payments on both rental and occupied housing, support the construction of 1.5 million to 2 million affordable housing units.”

Nevertheless, the results of the 2020 general election seem to point toward a split government, with a Republic-led Senate and Biden, a Democrat, as President.  This balance is predicted to work in favor of the mortgage and real estate industry. The Republican led Senate may be able to push back on some of the tax policies, which could impact the investment and cost of owning a home, Biden has promised to introduce.

The undisputed belief among industry experts is that rates will continue to remain at the historically low rates for the next few years as the economy continues to stabilize.

Read the entire article.

Photo Credit: Jon Tyson

Learn More
separator


How Long Will the COVID-19 Real Estate Boom Last?

/ 0 Comments

The pandemic has impacted Americans in a variety of ways.  To say the real estate market, in many parts of the U.S., has changed in unexpected ways would be an understatement.  The demand for homes far outnumbers the supply in many areas of our country.   

According to an article published by CNBC.com,  reporter Kevin Stankiewicz finds, “Existing home sales increased 9.4% in September, surpassing expectations, and the median purchase price rose nearly 15% year over year, according to data released earlier Thursday by the National Association of Realtors.”

Consumers are enticed by low interest rates and, those who can afford and are able to, are moving out of major metropolitan areas to suburban areas or even to second homes in vacation areas, where they might be able to work remotely. 

Although buyers continue to search for homes and rush to put an offer in when they find the perfect home, the number of homes for sale has tightened up.  Nevertheless, it is anticipated that after the election, more sellers may decide to put their homes on the market.  One professional, Glen Kelman of Redfin, is quoted in the article, “I think the sellers are just looking long term at the economy and still feeling some anxiety. Many of them are going to put their homes on the market in January and February.”

While many realize the type of demand for homes that has been occurring since the summer of 2020 cannot last forever, its is expected to continue into the new year as more and more Americans find ways and reasons to relocate.    

Read the entire article.

Learn More
separator


First Time Home Buyers Face Many Real Estate Challenges

/ 0 Comments

First time home buyers who decided that 2020 would be the year they would leap into home ownership were met with a variety of challenges, economically, personally and emotionally.  Obviously, the pandemic has had effects that are wide-reaching; the real estate market has not been immune.

In an article published in the Chicago Sun Times, the effects of COVID-19 on the real estate market are detailed.  To begin, as fears of becoming ill with the coronavirus spread, home inventory dropped as homeowners feared having strangers in their homes for showings.  In fact, the inventory dropped 20% in June in comparison to June 2019. 

Nevertheless, there were still many Americans searching for homes and with mortgage rates falling, many more prospective home buyers began to enter the home search as well.  With the influx of buyers searching the low inventory of homes, buyers found themselves in competition with other buyers; homes were purchased quickly and sometimes secured offers above their asking price.

This type of real estate market can be intimidating and frustrating for anyone trying to purchase a home.  However, the impact on first time home buyers has been significant.  The price of homes has risen faster than incomes, making more and more homes unaffordable for these prospective home owners.

To help prepare mentally and financially for the bumpy road that may lay ahead for these first time home buyers, article details some important tips and reminders for first time home buyers and their agents. 

These buyers should expect some disappointment in the home buying process and be aware that they might not be successful in purchasing a home immediately.  However, it they stay the course, most likely, the results will eventually be in their favor.

To avoid the emotional pitfalls of home buying, buyers should know up-front how much they are willing to spend on a specific home.  This will allow them to walk away before over paying or letting a deal fall through over a few hundred dollars.

An important step to take to prepare for the home purchasing process is to get pre-approved for the loan.  Knowing a buyer is pre-approved can help a seller feel more confident about the buyer’s ability to complete the purchase and can give the buyer a leg up on competition.

If the current state of the real estate market is too overwhelming and homes are beyond a buyer’s financial reach, the last bit of advice is to consider waiting.  Perhaps the market conditions will change in the next few months and a buyer can secure some additional funds for a down payment to put down on that perfect home.

Read the entire article.

Learn More
separator


What Went Wrong with the CARES Act?

/ 0 Comments

In response to COVID-19 related economic struggles many Americans are facing, Congress passed the CARES Act.  One benefit to Americans that was to come from this $2 trillion act that was made law in March 2020, was a ban on evictions on many rental units in the United States.  Effective until the end of July, federally financed properties, such as rental units backed by Fannie Mae and Freddie Mac, landlords were restricted from evicting their tenants.

One glaring issue with the act, according to an article published by CNBC.com is, ” the law failed to protect many struggling tenants during the pandemic because there was little effort to ensure that landlords followed it.”  The act does not detail any penalty for violating it, so it, in some cases, has been treated as more of a “guideline”.   Landlords across the country have moved forward with evicting their tenants, many of which did not realize they were protected by the CAREs Act and did not hire legal representation to assist them with challenging the eviction. 

The effects are devastating.   As one example, in Iowa, he article indicates “Data provided to CNBC by Iowa Legal Aid shows that during one week in July in Polk County, where Des Moines is located, 40% of the families forced to leave their homes were through evictions that violated either the state or CARES Act moratorium. “

President Trump signed an executive order shortly have the CARES Act expired, yet many experts in the housing advocate field indicate that it provides protection to even fewer renters and still does not provide guidance to ensure its enforced.

Read the entire article.

Photo Credit: Morning Brew

Learn More
separator


The Fed’s Policy Change May Keep Rates Lower for Longer than Expected

/ 0 Comments

The Federal Reserve is changing its policy with regards to how it quickly it responds to inflation.  Historically, once inflation reached increased by about 2%, the Feds would raise interest rates.  Now, in an effort to support the economy, the central bank is pushing the threshold of inflation beyond the 2% target.

This change, according to an article published by CNBC.com, is a way for the Fed to encourage spending by allowing Americans to continue to borrow money at low rates.  According to professor of Finance and Economics, Laura Veldkamp, “This is meant as a stimulus, as a way of getting people to spend more.”   

By allowing rates to stay lower for a longer period of time, many lenders can pass the low rates on to their consumers.  For example, credit card rates have fallen to 16% on average, personal loans are reporting rates as low as 12.07% and HELOCs have rates below 5%.

As reported in the article, the downside to the change in policy is the effect increased inflation will have on long term bond prices.  The chief financial advisor for Bank Rate, Greg McBride states that these longer term bonds will be more prone to large price declines.  Yet, ““With low inflation the Fed’s focus now, that’s a concern for another day…”

Read the entire article.

Learn More
separator


How are Small Businesses Weathering the Pandemic?

/ 0 Comments

Many Americans’ lives have been affected by the pandemic, perhaps medically and emotionally but its also reached their social, academic and professional lives.  Those who have seen some of the most financial impact are small business owners.  Many had to close their doors for a period of time due to local restrictions; even after being able to open, business operations had to be significantly changed.   When small business owners were polled back in April 2020, only about 35% of the owners of small businesses were confident they would still be in business in the next year.

According to an article published by CNBC.com, reported by Lori Ioannou, more and more small business owners are feeling more optimistic.  In a more recent poll, 64% of these small business owners felt that they can remain in business, and in fact, many felt they might also be able to increase revenue.  The article goes on to provide details about what factors are allowing these business owners to feel they have the tools to succeed.

The government programs such as Paycheck Protection Program (PPP) and economic injury disaster loans have, as Ionnau states, “given some businesses a life preserver to ride out the economic uncertainty. And the loans have given owners time to pivot and reinvent their business models so they survive the new normal.”  For example, some businesses have begun utilizing technology more readily by being more active online, creating new products as well as growing their direct-to-customer business model.

Consumers have also rallied to support local businesses by choosing to buy locally.  For example, local restaurants have expresses gratitude to patrons who have ordered curbside or take-out food more frequently than in the past and increasing the amount of their tips to show both financial and emotional support.

As time goes on, some businesses will see that closing their doors might be inevitable and some businesses will thrive and succeed due to creative business practices or just by nature of their business and the product. 

Read the entire article.

Photo Credit Tim Mossholder

Learn More
separator


Amid the Pandemic, Mortgage Rates Set Records

/ 0 Comments

As residents of the U.S. sort through the many updates on the progress of containing the outbreak of COVID-19 cases, anxiously await news for a vaccine and patiently waiting to find out when life will return to some sense of normal, the U.S. economy fluctuates with the positive and not so encouraging updates.  Most recently, the news of the economic uncertainty due to the pandemic has impacted mortgage rates, yet again.

According to an article published by CNN, mortgage rates recently dropped below 3% for a 30 year mortgage.  This drop marked a 50 year record low for mortgage rates.  As a result, many home buyers, and those that were sitting on the fence debating purchasing a home, have decided that there’s no time like the present to make the move.  The demand for homes has increased, especially since the lower rates has allowed more prospective home buyers to afford homes that might have been just beyond their reach just a few short weeks ago.

However, just as the daily news cycle is filled with promise coupled with concerning medical and economic updates, the good news about rates is wrapped with a warning of what may be on the horizon.  Since the rise in coronavirus cases seems to be surging again, more job layoffs and even job losses could be inevitable.  Obviously, as unemployment rises, home buyers can be hesitant, if not unable, to purchase a home.

As the article quotes Danielle Hale, chief economist for Realtor.com, things could look up soon, “On the upside, signs of progress toward a coronavirus vaccine give hope that there’s a path to a new normal where health concerns don’t dominate decision making.”  We all hope that comes sooner rather than later.

Read the entire article.

Learn More
separator