Wondering About Mortgage Rates & Home Prices?
Will Mortgage Rates Keep Rising?
The Federal Reserve is trying to lower inflation by increasing the federal fund rates and slow the economy. The Fed doesn’t set mortgage rates however their actions impact these rates. While inflation is high, we will see high mortgage rates. NAR Chief Economist, Lawrence Yun, says rates could continue to increase; adding that 7% looks to be the level the rest of this year and most of next year. He predicts within 2 yrs. the rate should return to 5.5%-6%.
Where are Home Prices Heading?
We continue to have more buyers than sellers in the market so it’s still a sellers’ market. The most recent NHAR report for October showed only a 1.7 month supply of homes to sell (a balanced market is 6 months). Some experts are calling for a little price appreciation next year and others project slight depreciation. Yun foresees zero or minor changes next year, with a swing in either direction. The overheated markets where prices shot up rapidly will see more of a shift in prices. In 2024 and beyond, the experts expect to see more normal appreciation (typically 3-4%) in the years ahead. Yun is predicting a 5% price jump in 2024. Pricing all depends on the local market and factors such as the balance between supply & demand. In NH thru Oct., prices are up 13.5% and homes sold 102.6% of the listing price.
If you are considering buying or selling, contact me for the best advice on making your next move.
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
Top 5 Loan Killers
If you plan on getting a mortgage or have already started the loan process, you need to be extra cautious with your finances. Here are the top 5 show stoppers you should avoid.
- Purchasing large ticket items. Don’t buy a new car or even furniture until after the loan closes. New payments will impact how much money you can borrow or can even prevent you from qualifying for a loan.
- Paying late on bills. One 30-day late payment can subtract 80 to 110 points from your credit score. Many lenders require at least 12 consecutive months of on-time payments
- Shuffling money around. Lenders scrutinize all your bank statements as part of the approval process. Any unusual deposits or withdrawals will require clear documentation of what they are. A large sum of money transferred into an account right before closing could be lethal.
- Job changes. Taking on a new job can present some hurdles as lenders like stable income that will likely continue. Changing job fields or starting your own business will be a red flag.
- Getting a new credit card. Even something as simple as getting a Kohl’s credit card will impact your credit score.
Give me a call if you want to work with a Realtor who can help you avoid the common pitfalls when buying your dream home.
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
A Recession Doesn’t Equal a Housing Crisis
Are you wondering how a recession affects the US housing market? Here are a few key points to help put some perspective on its impact.
- Interest rates go up at the beginning of a recession but are then lowered to stimulate the economy to move forward. Over the past 5 recessions, rates have fallen an avg. of 1.8% from the peak to the trough. Bear in mind interest rates will most likely rise until inflation peaks.
- Four out of the six times we were in a recession, home prices appreciated. They fell only twice – once marginally in the early 90’s and in 2008.
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- The number of offers received on a home has dropped from an avg. of 5.5 offers in April to 4.2 in June. Still well above the pre-pandemic norm but this shows a moderating of the market.
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- A month ago, 61% of offers were over asking and this has now softened to 55% over asking price on the avg. home sold. Not a huge decline but still a sign of the times.
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- There is a slowdown in the pace of sales. It is looking more like it did in 2018 and 2019, which by the way, were great years for real estate.
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- Active inventory is growing but there are still way more buyers than we have sellers. This will continue to put upward pressure on prices.
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Whether buying or selling, contact me to make an informed decision on planning your next move.
Donna Forest ~ donna@donnaforest.com ~ 603-731-5151
Real estate markets are local, and we have the real scoop on ours.
Is Now a Good Time to Buy?
Despite headlines about high interest rates, a recession, and some even saying there is a housing bubble, the reality is that it’s still a good time to buy a home. And below are the reasons why!
- The number of homes for sale are increasing. Danielle Hale, Chief Economist for realtor.com, said new listings were up 6% above one year ago.
- Buyer demand has moderated with the higher interest rates, which means buyers should face lower competition at a less frenzied pace.
- Experts are forecasting homes to continue to appreciate in price. None are saying prices will fall. The home price forecast for 2022 averages out to an increase of 8.5%. After 2022, the home prices are expected to increase 3-4% each year.
- Rents are rising faster than they have in years due to the high demand. Buyers with a mortgage can at least know the majority of their monthly housing costs will remain fixed going forward.
- Interest rates over the last few years were artificially low as the Feds tried to boost economic activity. The latest rates are still comparatively low when looking at them historically since 1971. An average 30-year, fixed mortgage rate of around 6% is still well below the historical average of nearly 8 percent.
There is no perfect advice as to when to buy a house. However, don’t base your actions on what you read in the headlines as waiting could cost you. It’s a personal decision based on your finances and goals. Contact me for expert guidance on buying your dream home.
Donna Forest ~ donna@donnaforest.com ~ 603-731-5151
Real estate markets are local, and we have the real scoop on ours.
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
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.
What is an Appraisal Gap?
An appraisal gap is when a lender ordered appraisal comes in lower than the contracted sales price. It happens in competitive markets such as ours where buyers typically need to bid over the asking price in order to be successful in purchasing a home. According to the NH Assoc. of Realtors latest data thru June, homes in NH are selling at 102.9% of the listing price. A low appraisal decreases the amount that can be borrowed and buyers are faced with how to make up this difference. For example, if a seller agrees to accept an offer of $410,000 on a home listed at $400,000 but it appraises for $390,000, there will be an appraisal gap of $20,000. There are a few options buyers can try to keep the sale together:
1) Make up the difference in cash (consider gift funds from family or borrowing against a 401K if short on cash)
2) Shift the down payment so you end up borrowing more money and putting less into the down payment - with lender approval
3) Appeal the appraisal if there is incorrect information or bad comps
4) Renegotiate with the seller.
Good agents will discuss the concept of low appraisals with buyers and sellers before offers are even made. Many offers with financing are written to say buyer will pay the difference between the appraised value and contract price up to a certain amount. Contact me to work with someone who will prepare you for the “what ifs” in this competitive market.
Donna Forest ~ donna@donnaforest.com ~ 603-731-5151
Teamwork from the team that works the hardest for both buyers and sellers!
Better Homes & Gardens Real Estate The Milestone Team
Every buyer wants to purchase at a great price and a low mortgage rate as that determines the monthly cost. Here’s how today’s buyers are being impacted:
Price – Based on a home price expectation survey released by Pulsenomics on June 10, more than 100 forecasters predict an 8.7% annual gain in home values for 2021. This rate is expected to slow to approx. 5% in 2022 and about 2.5% for the following year. In other words, if you are waiting for prices to go down, it could be a while.
Mortgage Rates – The average fixed 30 yr. rate is near 3% right now. The Mortgage Bankers Assoc. expects the 30-year fixed rate to reach 3.6% by the end of 2021. Greg McBride, chief financial analyst at Bankrate states “the tug of war over whether mortgage rates will move higher or lower from here largely revolves around inflation.” The latest Quarterly Forecast from Freddie Mac predicts the average 30-year fixed-rate mortgage to be 3.1% in 2021 and 3.7% in 2022.
Increases in prices and rates impact you; your housing expense will be more a year from now if you need a mortgage to purchase your home. My advice is to buy now - it could lead to substantial savings as even a small change in interest rates can have a big impact. Contact me if you would like expert advice on buying in today’s challenging market.
Donna Forest ~ donna@donnaforest.com ~ 603-731-5151
You’ll be moving in the right direction with Better Homes & Gardens Real Estate - The Milestone Team.