What to Know About the Market
With mortgage rates inching up and prices still climbing, there is a shift from the “anything goes” housing market we saw the last two years. Here are some takeaways from what I’ve recently been reading.
The market is not about to crash. It appears to be a turning point towards more typical pre-pandemic levels. Mark Fleming, chief economist at First American says “. . . today’s housing market looks a lot like the 2019 housing market, which was the strongest housing market in a decade at the time.”
- Demand for housing exceeds the current supply. The US has underbuilt single family housing by 4.3 million units since 2000. Households are forming faster than builders can create new housing. This deficit is predicted to continue over the next 10 plus years. This will continue to drive prices up.
- The rate of appreciation is expected to slow – but not drop. The expectation is in a year from now, prices will be higher than they are currently.
- Lenders are vetting buyers more stringently, unlike the last housing bubble. Over 70% of mortgage dollars are to buyers with 760+ credit scores, compared to pre-2008, when that number was under 25%.
- If you don’t plan to be in your home for more than 5 yrs. or so, buyers should consider a 5-yr. adjustable rate mortgage, which has a lower interest rate than a 30-yr. fixed.
The market is shifting. Whether buying or selling, contact me to help you navigate these changes.
Donna Forest ~ donna@donnaforest.com ~ 603-731-5151
Are Multiple Offers Still the Norm?
Despite rising mortgage rates, multiple offers are still prevalent according to the March Realtors Confidence Index Survey. In this survey, Realtors reported an average of nearly 5 offers on each home that sold in March. Home buying demand is still outpacing supply. The shortage of homes for sale will continue to make this a competitive market for buyers. Gay Cororaton, research economist at the Nat’l Assoc. of Realtors, writes “…properties typically stayed on the market for a shorter time compared to one year ago, at 17 days on the market. Eighty-seven percent of listings were on the market for less than one month.” In NH thru March 2022, homes typically stayed on the market for 34 days.
How tight is the inventory? At the end of March there were 950,000 homes on the market, equivalent to a 2 months supply. A normal market is about 6 months - meaning the inventory of homes on the market should be at 2.9 million. Doing simple math, there is a shortage of about 2 million homes for sale in the US. Due to this tight supply, the Nat’l Assoc. of Realtors expects prices to continue to appreciate by about 5% by year-end. If you are looking to buy or sell, contact me to help you navigate the complexities of this market!
Donna Forest ~ donna@donnaforest.com ~ 603-731-5151
What is Your Home Worth?
In this unique sellers’ market, it seems like you can put any crazy number on a house and it will sell. In reality, determining market value is still crucial if you are serious about selling. Overpriced properties take longer to sell and sell for less than if priced correctly from the start. Below are the common approaches for determining value.
- Automated Valuation – Companies like Zillow calculate value using software based on mathematical modeling. While convenient, it is not accurate. It misses important price influences such as property condition and location (e.g., it can’t see your brand new kitchen or if on a busy street).
- Appraisal – An in-depth analysis by a licensed appraiser and is typically used in the loan process. Right now bidding wars are driving sales prices up higher than other recent sales. Since appraisals rely heavily on past comparable sales, this lagging data can make it difficult to capture the current market.
- Market Analysis - Prepared by a realtor to provide a probable listing price. Using similar active and recently sold properties and factoring in the many characteristics that impact value.
Of note, assessed value is for tax purposes and may not reflect fair market value. Also, there is no correlation between the cost of building vs. how much your house is worth. Want to know your home’s value? Contact me - 28 yrs. in the business and still keeping current. Put my knowledge to work for you!
Donna Forest ~ donna@donnaforest.com ~ 603-731-5151
Are Home Prices Still Going Up?
Given the war in Ukraine, rising mortgage rates, COVID, inflation at 7.9%, etc., you might be wondering if home prices will still be increasing or if we are in a housing bubble that might burst at any moment. We are definitely NOT in a housing bubble. It is simply the law of supply and demand at work where there are more buyers than houses for sale. The lack of inventory means buyers will be forced to bid up prices if they hope to land a home. In NH, new listings are down 17% thru Feb., the volume of sales is down 17.7% and the median sales price at $400,000 is up 14% compared to the first two months in 2021. Back in Dec., economists were predicting home prices to rise at a more moderate rate between 5% and 6%. Zillow is now predicting prices to be up 17.3% at year end. While it’s difficult to really say how much increase there will ultimately be, the forecast is definitely upwards as spring is shaping up to be one of the hottest markets yet. Home ownership builds wealth – a homeowner’s net worth is 40x greater than that of a renter. It also is one of the best investments against inflation. Whether a first-time buyer or looking to sell to buy a home that better suits your needs, waiting will cost you. Contact me to find out what steps you should be taking now.
Donna Forest 603.731.5151~donna@donnaforest.com
Don’t Wait Until Spring to Sell!
If you are thinking of selling and waiting for spring, you might want to re-think your timing. Yes, historically 40% of home sales occurred between April and July. However, we still are not in a normal year and the number of homes on the market is extremely low. Here are 5 reasons to list now versus wait for spring
- Buyers are out looking in full force and ready to buy. Multiple offers are the norm which means prices are up.
- The average homeowner gained $56,700 in equity over the past 12 months according to CoreLogic. This may be just what you need to cover a down payment on your next purchase.
- Fewer homes for sale translates to less competition - you can negotiate for the best price and terms now.
- Mortgage rates, while rising, are still far below what they’ve been in recent decades. Lock in a low interest rate now as experts are projecting rates will continue to rise.
- If you’re selling to move into a bigger home or downsize, prices are expected to go up in 2022. Move now and beat the higher interest rate and price climb.
If you are wondering if now is a good time to list your house and want to know more about the next steps, contact me to learn how you can take advantage of the current market conditions.
Contact Donna Forest, Donna@DonnaForest.com, 603.731.5151
I recently watched a presentation by acclaimed economist Elliot Eisenberg titled Economy 2022 Growing & Slowing. He was extremely informative and I thought it is worth sharing just a few of the interesting points he mentioned.
- The housing shortage is due in large part to years of insufficient building. This will not be changing any time soon as builders face a lack of workers, a lack of affordable land to buy, and a scarcity in building materials. The cost of supplies are so high builders are not building entry level homes.
- The labor shortage is due to multiple factors – more than 3 million excess retirements - above the normal pre-pandemic retirement rate, the lack of daycare means one parent is staying home and not working, immigration has fallen, over 600,000 people left their current jobs to start their own business and more than 700,000 people have died of COVID.
- About 70% of the home sales in NH this year were purchased by people who already live in NH. Approx. 20% of the buyers were from MA and the remaining 10% of buyers were from other states/countries.
There are many factors and issues affecting the housing market. Whether buying or selling, contact me to work with someone who keeps up-to-date with the latest news and its impacts on you.
Contact Donna Forest: 603-526-4116; www.DonnaForest.com; Donna@DonnaForest.com
You’ll be moving in the right direction with Better Homes & Gardens Real Estate - The Milestone Team
The Finer Points
In the emotional swirl of negotiating on a home, it’s easy to overlook some of the finer points of the contract. Below are some thoughts to keep in mind during this process.
- While most sales close on time, the closing date is more of a target date. Time is of the essence doesn’t apply here. As long as both parties are making good faith efforts to close, there is no breach of contract.
- Buyers can move into the home right after closing and typically do a walk-thru inspection 24 hrs. prior to closing. This means sellers should be completely moved out prior to the day of closing.
- There is an insurance clause in the contract stating sellers need to keep the home insured including replacement cost coverage until closing.
- Firewood and wood pellets are considered fuel and buyers are expected to reimburse sellers for what is left. Best to address this upfront in the offer with regards to quantity and price.
- TV brackets, bookshelves that look built-in, and Nest thermostats for example, can become points of contention. Again, addressing these items in the contract is prudent.
Contact me if you are looking for an experienced realtor to help you navigate your real estate transaction!
Donna Forest ~ donna@donnaforest.com ~ 603-731-5151
Real estate markets are local, and we have the real scoop on ours.
With the sizzle of summer, it’s easy to think of owning (or at least renting!) a vacation home this year. In fact, recreational home buyers came out full force in the 2nd half of 2020 thru April 2021 in search of that lakefront home or cabin in the woods. The National Assoc. of Realtors (NAR) just released The Vacation Home Counties 2021 Report analyzing how the pandemic impacted this demand and not surprisingly, vacation home sales jumped 57% year-over-year during Jan-April 2021. “Vacation homes are a hot commodity at the moment,” says Lawrence Yun, NAR’s chief economist. “With many businesses and employers still extending an option to work remotely to workers, vacation housing, and second homes will remain a popular choice among buyers.” We saw it in our area this spring with bidding wars on the smaller ponds like Chalk Pond resulting in prices over $600,000. While our market seems to have settled down from the earlier months of frenzied buying, the second home market is expected to remain strong given the low supply and high demand. Thinking of buying or selling that second home? Contact me and put my 21 years of local expertise to work for you.
Donna Forest ~ donna@donnaforest.com ~ 613-731-5151
Home prices in NH as well as the US continue to climb upwards as we still are experiencing a shortage of houses for sale. Multiple offers are driving the median sales price of a home in NH to a high of $375,000 (YTD thru May) while the median sales price for the US is $350,000. The average days on market is 34 days and the selling prices are 102% of the asking price. Looking at our local market, in the 3 towns of Newbury, New London & Sunapee combined, there were a total of 53 homes sold thru May 2021, 56 sold in 2020 and 65 sold in 2019. The median selling price is $495,000 thru May compared to last year at $341,250. The average days on market is 24 days and last year was 91 days.
Lawrence Yun, chief economist for the National Assoc. of Realtors predicts by year end that we will see “less multiple offers, less hurried decisions, less frenzy” as he expects more inventory to come on the market. He anticipates bidding wars would no longer be prevalent by 2022. On the other hand, many articles I’ve read predict it will be years before the housing shortage catches up with demand. My advice – it’s hard to time the market so you should buy or sell when it’s right for you. Contact me to learn more about how the market could impact your plans in this challenging environment!
Donna Forest ~ donna@donnaforest.com ~ 603-731-5151
In such a hot market, sellers may tend to think, "Hey, the house will sell regardless of how it looks!", and so nothing gets done to prep it for sale. While this may be the easy road to take and yes, it will most likely sell despite the lack of preparation, sellers are leaving money on the table. A house is usually one of the biggest assets someone will have. A staged home will generate more buyer interest and therefore more offers. Multiple offers tend to mean the seller will get over the asking price. Over 95% of buyers are searching online and if you don’t have great photos, your property will be bypassed in seconds. Professional photos, videos, and virtual tours have become even more important since the beginning of the pandemic. Sellers should have an honest conversation with their agent on how to best prepare their home for sale. With some time and effort, you will end up putting thousands of dollars more in your pocket. Contact me to work with someone who cares about getting you the most out of your sale.
Donna Forest ~ 603-731-5151 ~ donna@donnaforest.com