The real estate market has, for the most part, been on a steady incline for the past 5-7 years, in terms of home values. Homeowners have been comfortably seeing the value of their house increase at a fairly consistent rate, recovering from the major decreases in value they saw about 10 years ago.
However, according to data released by Black Knight, the upward trend may be coming to an end, or at least slowing down some. According to an article published by Housing Wire, “Home values fell 0.2% in November, down $580 for the month and marking the first time the market has seen a consecutive three-month decline since early 2012. Now, the average home is down $1,361 in value since August 2018.”
Although the growth rate varies across the United States, overall home values are still higher than they were in 2017 in 99 of the 100 markets. So, many homeowners may still be breathing easy knowing that, over a larger span of time, the value of their home is moving in the right direction.
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Just few weeks into this new year and the U.S. already seen some pretty significant events that have, for some investors and consumers, created a lack of confidence in the stability of our economy. An ongoing government shut down, global trade issues and some stock market dips: it should be no surprise potential home buyers may to take pause before jumping into a big investment.
Yet, many experts remain relatively optimistic about how 2019 will fare as far as the real estate and mortgage markets are concerned. In an article published by the Washington Post, journalist Kathy Orton states, “In their forecasts for 2019, real estate experts anticipate the housing market slowing down, but not stalling, with prices and mortgage rates moderating.”
Orton reports the chief economist of NAR, Lawerence Yun believes, ““The forecast for home sales will be very boring — meaning stable.” Although home prices are predicted to rise, it will be at a slower pace than home owners have seen in recent years.
Realtor.com expects mortgage rates to reach 5.5 by the end of 2019 and overall, expects to see just 2.2 percent growth in home prices. Zillow echoes the other experts, with an expected 5.8 percent mortgage rate and a housing price increase of just 3.79.
The Mortgage Bankers Associations believes 2019 will perform better than other experts have predicted. MBA economists Michael Fratantoni and Joel Kan stated, “Even with the anticipated cool down in economic growth, we expect that housing demand will remain strong, mortgage rates will stabilize, wage growth will increase and home price growth will moderate, providing favorable conditions for growth in the home purchase market.”
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Many American home owners have been relieved to see the real estate market, and their home value, rebound from the real estate collapse which began more than ten years ago. At the height of the real estate market crash, many homeowners found that their homes were worth less than they owed on the home. In a recent report from Zillow, the percentage of homeowners “underwater” on their mortgage has finally fallen below ten percent, the first time the number has been this low since the collapse.
However, according to an article published in the Chicago Tribune, by Darcel Rockett, Chicago homeowners may not be feeling the same market rebound. In fact, Rockett states, “According to Zillow’s 2017 Q4 Negative Equity report, the city has the most homes with negative equity of all the metro areas in the country.” A little over 15% of Chicago metro homeowners are underwater on their mortgage. More alarming, about 20% of these homeowners with negative equity owe two times as much as their home value.
Homeowners are faced with limited options when they owe more than their house is worth. They can wait out the market until their home value returns to a value that matches what they owe. However, some homeowners may choose to cut their losses and sell their homes at the current value. Fournier Law Firm can assist homeowners with the process of a short sale. Contact us at 630-792-1000 or email@example.com
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Low housing inventory coupled with low interest rates has helped encourage home owners to finally consider putting their home on the market. There are many considerations to take into account before listing a home. Being able to determine what home selling advice is based on fact versus myth is vital for a successful and profitable transaction. An article published in U.S. News and World Report, written by Teresa Mears, helps homeowners navigate the process by debunking some of the rumors and myths.
One home selling myth is that home owners should list the home at a price above what they actually expect to get for the home. According to Mears, “That’s because shoppers and their real estate agents often don’t even look at homes that are priced above market value.” Even if a homeowner lowers the price after a few weeks, the fact that it sat on the market for 3 weeks or more makes prospective buyers suspicious about issues with the home.
Sellers might often be tempted to sell a house on their own, without the use of a real estate professional, in order to save money. The value real estate professionals add to the process comes in the form of marketing to buyers and their agents, negotiating the sales price and sales contract and helping navigate any issues that come up after the inspection. When you hire and pay a real estate professional, you are able to take advantage of their experience and expertise from previous sales transactions.
Additional myths touched on include which home renovations home owners can expect to see a return on investment, and which renovations should not be done just to sell a home, whether open houses benefit the home owner and what your expectation for future market prices should be. Read the entire article.
Many read and listened to news reports at the end of 2017 detailing the new tax laws signed by President Trump. There were many people and news outlets scrambling to understand the changes that were introduced. Of course, there was much speculation about the impact of the changes.
Recently, CNN published an article detailing how the new tax laws will slowly begin to impact the value of homes across the United States. In the article, written by Kathryn Vasel, some specific effects are detailed.
For one, the new tax law reduced the amount of interest on mortgage debt eligible for deductions from $1 million to $750, 000. Vasel explains that many buyers in the market for high-end, high priced homes might be more likely to negotiate a lower price in order to compensate for the smaller tax break. Purchasing homes might also be less attractive to buyers because they aren’t able to deduct as much of their real estate taxes. The tax law reduced the cap to $10,000; in many high-cost markets, home owners pay significantly more than $10, 000 in property taxes.
The financial impact of the tax cuts might result in increased interest rates and, subsequently mortgage rates. An increase in mortgage rates could keep some buyers out of the market and force home sellers to reduce prices in order to attract buyers.
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One of the most important decisions a home owner who has decided to sell their home can make is what the list price of the home should be. Emotions, financial strains, and decisions based on inaccurate or misunderstood information can lead to a disappointing and frustrating sales process.
In an article published by Realtor.com, Cathie Ericson helps debunk home pricing myths that might have home sellers hung up on their list price. Reviewing these myths and understanding the truth about the pricing, listing and hopefully selling a home will help sellers start out on the right foot.
One myth sellers may believe that if a home is overpriced, it can just be lowered later without any negative effects. As Ericson points out, lowering a price is not a quick and easy fix. Many house hunters notice when a home has been on the market for a while and know when there have been numerous price reductions. As she states, “… buyers presume that something must be wrong with it. As such, they might still steer clear, or offer even less than the price you’re now asking.”
When deciding on a listing price, sellers may be turned off by the idea of pricing their home too low, assuming they will not make as much money in the sale. However, low priced homes might just attract more buyers and the increased interest in the home might result in a bidding war.
The article details the truth behind other myths such as recouping 100% of the cost of home renovations, the real estate agent’s stake in the pricing strategy and the whether all home owners make money on the sale of their home. Read the entire article.
Each year home owners receive a new property tax bill and have the opportunity to see what value their county assessor’s office has assigned to their property. The property value on tax bills should be an accurate representation of the home’s true market value. However, residents of Cook County, according to the Chicago Tribune, are not receiving accurate property values. Sadly, inaccurate valuations are negatively impacting many home owners in lower income communities. Worse yet, it seems as though wealthy home owners are benefiting from their properties being undervalued by the assessor’s office.
After analyzing millions of property tax records over a period of 12 tax cycles, the Chicago Tribune determined, “Residential assessments have been so far off the mark for so many years that the credibility of the entire property tax system is in doubt.” Despite his announcement in 2015 that his office would be using new technology and models to improve the accuracy of property valuations, Cook County Assessor Joseph Berrios continued to utilize old computer models were still until at least 2015.
A detailed breakdown of the property values, according to their geographic locations, shows that homeowners in some of Cook County’s most affluent neighborhoods are receiving tax bills based on properties that are undervalued by 10 percent or more. “Meanwhile, home owners in poorer areas of Cook County have properties significantly overvalued by the county. As a result, people living in poorer areas tended to pay more in taxes as a percentage of their home’s value than residents in more affluent communities,” says Jason Grotto from the Chicago Tribune.
Want to fight your valuation and reduce your real estate tax bill? Contact our office for a free review of your property.
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This summer is the perfect time to consider purchasing a home. An article published by RealtorMag details three reasons buyers should not delay a home purchase any longer.
To start, home prices are not expected to remain steady at current prices, let alone dip below current values. In fact, home values have been increasing over the past twelve months and are expected to appreciate over the next five years at a rate of at least 3.2 percent a year.
Furthermore, mortgage rates are still hovering close to the record low, last week averaging 3.41 percent for a 30-year fixed rate mortgage. However, it is predicted that these rates will rise soon. In fact, it is expected that mortgage rates will rise an entire percentage point by next summer.
As a result, households currently renting instead of owning should consider moving forward with a home purchase. As documented in a Harvard housing study, renting does not make financial sense for most households. Renters miss out on not only the tax breaks that come with home ownership, but instead of paying down on their own investment, they are helping landlords pay off their investment plus a rate of return.
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Foreclosures on homes in many U.S. cities lead to investors purchasing these “distressed” homes at deeply discounted prices. Consequently, the value of the other homes in these cities declined as well.
However, some good news has been released about this sector of the real estate market. According to an article published in DSNews.com by Brian Honea, there has recently been a decline in the number of distressed homes for sale. More specifically, as of May 2016, the number of distressed homes for sale decreased by 4 percent over the year. The lower inventory of foreclosed, REO and short sale homes has helped increase the demand for homes and, subsequently, increased the home values in those areas.
Honea quotes CoreLogic Chief Economist Frank Nothaft, “Overall, the homes-for-sale inventory remains relatively lean, while demand to buy homes has increased because of an improving labor market, more optimistic levels of consumer confidence, and continuing low mortgage rates.”
To learn more, read the entire article.
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