Market Info June 6, 2022

Buyers regaining some control as market shifts, supply grows

June 03, 2022
Buyers regaining some control as market shifts, supply grows: Redfin
The report, released Thursday, found more than one in five sellers dropped their asking price during May 2022, the highest rate since October 2019, as mortgage rates sit at over 5%

Buyers are regaining some control as the market shifts and supply grows, according to a new report.

The report, released Thursday by the online brokerage Redfin, found that more than one in five sellers dropped their asking price during May 2022, the highest rate since October 2019, as mortgage rates sit at over 5 percent, and an increasing share of buyers find themselves priced out of the market.

Redfin’s Homebuyer Demand Index — which uses requests for home tours and other homebuying services from Redfin agents to gauge buyer demand — declined 9 percent during May, as pending sales posted their largest annual decline since Spring 2020, and the number of homes for sale posted their smallest decline since the same period.

The data points to a market that is starting to cool off and shift slightly in the favor of homebuyers according to Redfin, but supply challenges are likely to persist and keep prices elevated.

“The sudden surge in mortgage rates led to a sudden and significant cooldown in the housing market in May,” Redfin Economics Research Lead Chen Zhao said in a statement. “However, mortgage rates are now stabilizing and homes remain in short supply, so while we do expect home-price growth rates to decline, we don’t expect prices to fall much at the national level. For homebuyers trying to determine the best timing this year, the main benefit of waiting is that there may be less competition as supply starts to build up.”

Selling June 2, 2022

Thinking of Selling Your Home Yourself? Think Again…

Thinking of Selling Your Home Yourself? Think Again…

Surveys show that many homeowners and homebuyers are not aware of the true value a REALTOR® provides during the course of a real estate transaction.

The National Association of Realtors found that homes sold through the Multi-Listing Service sold 20 days faster on average, and 20% of FSBO listings had to renew their listing on the MLS because they didn’t sell. … There’s a reason a real estate agent is a full-time job.

Most people hire a real estate agent to sell their home. In fact, 91% of Texans did so in 2020, according to research by the National Association of REALTORS®. If you are considering selling your home on your own, make sure you know what you are in for. The process can be complicated and the stakes high.

Here are just a few of the many reasons a REALTOR® is the best choice to help you sell your home:

Nobody Knows the Market Better Than a REALTOR®
REALTORS® are engaged every day in buying and selling real estate. They know what factors help a property sell quickly and for the highest price. They also understand what causes homes to languish on the market. A REALTOR® will help you make the best decisions to realize your goals.

A REALTOR® Can Help You Get Ready to Sell
Wondering what updates to tackle before putting your home on the market? Unsure how to price your property? What you decide could lead to tens of thousands of dollars in gains or losses. A REALTOR® brings a wealth of experience to help you optimize your sale in these and many other areas. You won’t have to figure out on your own what disclosures are required, which forms to use, and other important considerations.

REALTORS® Make the Whole Process Smoother
It’s exciting when your home goes under contract. But there’s a long road from accepting an offer to successfully closing a sale. A REALTOR® is your trusted resource to guide you the rest of way. A REALTOR® can also help you deal with surprises that pop up with appraisals, inspections, insurance, your loan, and dozens of other steps required to successfully sell your home.

Not All Agents are REALTORS®
Only REALTORS® pledge to follow a strict code of ethics and are expected to maintain a high level of real estate knowledge. When you are thinking of selling your home, talk to a REALTOR®.

 

Market Info June 2, 2022

Should Inflation Change Your Homebuying Plans?

Shared from My Home by Freddie Mac® 2/1/2022

Inflation has reached a 40-year high. What does that mean for you as you consider whether or not to buy a home in 2022?

You’ve likely noticed that life grew more expensive in 2021. A combination of government aid, demand for goods and bottlenecked supply chains has increased the cost of everyday items, including housing. This is known as inflation. When it occurs, it generally means your hard-earned dollars don’t stretch quite as far as they used to.

In 2021, inflation rose to a degree last seen in the 1980s. Some of the largest and most necessary living expenses cost 7.0% more at the end of 2021 than at the end of 2020. This included homes. In 2021, the median sales price for all houses sold in the United States reached $400,000 for the first time ever, up nearly $70,000 dollars from 2020.

The nation’s central bank, the Federal Reserve, aims to combat inflation by pulling money out of the economy and increasing interest rates.

Though the Federal Reserve has yet to act on this approach, mortgage interest rates have already risen in anticipation of the change. According to the results of Freddie Mac’s most recent Primary Mortgage Market Survey®, the interest rate for a 30-year fixed-rate mortgage averaged 3.55%, up from 2.73% at this time last year. We forecast that interest rates will average 3.6% in 2022 and 3.9% in 2023.

To summarize: Houses have never been more expensive and now rates are rising. So, should you hold off on buying a home?

The Case for Buying a Home Today

If you’re financially ready, now may be a great time to buy.

Not only will buying today help you begin to build equity, a fixed-rate mortgage can stabilize your monthly housing costs for the long-term even while other life expenses continue to rise — as was the case in 2021.

Housing costs increased in 2021 due to a combination of factors: inflation mixed with a high demand for housing (due to low rates and work-from-home arrangements) and a low housing supply.

The average home price, for instance, increased nearly 20% year-over-year. For those looking to buy this year, we forecast a moderately lower demand for homes, due to higher mortgage rates, and we expect house prices to cool somewhat.

Rents also increased in 2021, though not to the same degree as home prices. Rents increased 13.5% in 2021, but in our recently released 2022 Multifamily Outlook, we forecast modest growth in the cost of rent, at 3.6%, for 2022.

Although rents and home prices are likely to remain expensive, there are advantages to buying a home today if you’re ready. Rents typically increase between 3% and 5% each year, though your landlord or management company may charge more depending on the terms of your lease agreement. On the other hand, homeowners with fixed-rate loans will see little to no change to their monthly housing cost over the life of their loan. You can be confident in knowing that your mortgage payments won’t change much in the long term, even when life’s other costs do.

To determine the best loan type for your financial needs, speak with a lender.

 

Selling June 2, 2022

Reasons FSBO’s Fail & Why You Need a Realtor®

February 3, 2021, By FastExpert

Here is a great article why selling your home on your own (For Sale by Owner – FSBO) might not be the best option:

Reasons FSBO Home Sellers Fail

Not Understanding the Process
Selling a house is not as easy as selling a car. It’s an extensive process that demands a lot of knowledge, patience and time. You have to understand everything that goes on between deciding to sell your house and its payment finally arriving in your account.

First, you have to familiarize yourself with all the relevant legalities that go into preparing the contract for the sale of your house. This is crucial for home sellers without an agent. You will have to hire a real estate attorney for that or else you could get yourself into legal trouble quickly. If you choose to list your home FSBO, you should consult a real estate attorney before listing your house for sale.

If you are listing your home on your own, you are effectively the agent of your own house. Make sure to be sure to become a good one. There are plenty of acronyms and other terms to be aware of in the real estate industry.

Research everything, from the FSBO listing websites to the cost or repairs demanded by potential home buyers. Try to reach as many potential home buyers as you can using social media and your personal contacts. Figure out what makes a house desirable for a buyer and what are the deal-killers, and finally, be a patient negotiator.

Even the most savvy FSBO sellers won’t be experts in all things real estate. With all the research you can do on your own, you will still get your home sold faster and at a higher price with a quality real estate agent. The process will be easy for you and you can confidently avoid legal trouble from doing your own legal work incorrectly. 

Not Knowing the Value of Your Property
People who list their home on their own often make a huge mistake before they even get to show their home to potential buyers. 

Everyone is emotionally attached to their home. This makes it harder to objectively price the property and understand its value from the buyer’s point of view. Buyers will point out problems in your home that you don’t even consider noteworthy. And they will negotiate for a lower price. 

Pricing the house accurately is crucial. When an agent helps you price a house, they do it with a wealth of experience backing their numbers. They’ll account for the state of the real estate market and a variety of factors that will influence the value of your home and the time it takes to sell. 

If you are doing it yourself, you must research the current housing market trends. It helps to find the median price of a property in your neighborhood and prepare a realistic estimate of the necessary repairs.

This is something you will have to reevaluate after every potential client’s visit. It is also important to stay objective and not get emotional when buyers seem to undervalue your beloved home.

Know that in most cases, properties sold through a realtor sell for a much higher price than the ones sold by the owners. FSBO owners typically sell their home for less than 94% of the price they would have sold with a real estate agent, so the safer option is to hire a realtor to help you sell. 

Bad Marketing and Poor Home Showings 
Even though the FSBO sites are a great way to place your house in a listing, the number of potential buyers on those sites will be dramatically lower than an agent’s.

You can mitigate this problem by marketing to potential clients in other ways, like advertising open houses through your social media accounts. Even still, unless you have a prominent following on social media or want to pay for ads, this may not attract any people to view your home besides your friends and family. 

If you list your house on your own, you should always be ready to show your house. It would drastically shrink the list of potential home buyers if you are only available to show your house on weekends or after working hours. Because you already have a smaller list of potential buyers because of your FSBO listing, you can’t afford to miss any showings for potential buyers.

When you consider listing your house as FSBO, you will have to be positive, enthusiastic, and energetic when you show your house to strangers. It is typical that viewers will complain about the worn staircases, creaky doors, and other quirks about your house they find undesirable. 

If you work all day and must do showings right after, you must ask yourself, can you handle that after a hard day of work? 

For most people, it’s better to let a realtor field buyer’s complaints and market your home so that you can sleep easy and keep your free time free.

Bad Negotiating
The trickiest and most important part of selling a home is undoubtedly the final negotiations. 

Negotiating is a skill that many people feel they are intuitively good at, but a lot of people overestimate their ability to facilitate a good negotiation- especially when negotiating terms for a sale they aren’t well versed in…

Negotiating is a skill that takes practice and negotiating terms for a real estate sale takes practice and expertise. There are so many variables to take into account that it is nearly impossible for a lay person to have the skills or knowledge to do this well. 

Think about these examples:

How much lower than the listing price would you be willing to sell for?
Someone is willing to buy the house at your price, but is not willing to put in the earnest money (money someone puts down to show they are serious about buying), what would you do? 
If the buyer hands you a list of thousands of dollars’ worth of repairs as part of the contract, will you be able to re-negotiate the final price? 
Do you know what a rent-back agreement is and how much that is worth to you if the buyer isn’t open to the idea? 
Would you sell to someone who isn’t a pre-approved buyer? Would your price be different for a buyer who isn’t pre-approved?
If someone was willing to pay cash, how much would you be willing to sell for?
If your first buyer lowballs your offer and says, “Take it or leave it.” what would you do? 
If your home has been on the market for months and your only buyer gives you a lowball offer, what would you do? 
 

These final negotiations are the hardest part of closing the deal without an agent. Many properties for sale by owners either sit for months because the owners are unable to close the deals or end up selling the house at far too low a price because of inexperience in negotiating.

Conclusion
These are just a few problems that come with selling a house without an agent or a realtor. With diligence, patience, and proper research, you might get lucky and sell your house at the same price you would have with a realtor. 

 

 

Selling May 30, 2022

Will Solar Add Value to Your Home When You Sell?

Slapping solar panels on the roof may save homeowners some money on their electric bill, but will it also raise their home’s value when they sell it? 

Many homeowners consider adding solar panels for one (or a combination) of three reasons:

  1. They’re environmentally conscious.
  2. They’re looking to save money.
  3. They think it will add value to their home when they sell it.

Very few people will argue against it being an earth-friendly decision to make if that’s the motivation.

And, theoretically, they should save you money on electricity. But you should do some serious math before signing on the bottom line. They may cost you more to install and upkeep than the savings they will generate, depending upon how long you plan on staying in the home.

However, if you’re doing it with the notion that it’ll add value to your home when you sell, you may want to think twice before signing on the dotted line.

First of all, it’s difficult to quantify how much, if anything, solar panels add to the bottom line when you sell your house. But more importantly, they could limit your pool of buyers considerably for a few reasons:

  • Some buyers just aren’t into how they look on a house… You could argue that it’s awful for a buyer to judge them based upon aesthetics, but buyers turn their noses up at houses for even a paint color they don’t like which they could easily change.
  • It might cost them… If you leased the system, they could be on the hook for the remaining term of the lease, or have to sign a new lease with the company that installed and owns the system.
  • Maintaining them… It’s hard for buyers to fully know how much solar panels will cost to upkeep. Plus, they often wonder if it will have an impact on the roof and potential leaks. Even if it doesn’t, when they do have to replace a roof, they have to consider the added cost of dealing with removal and replacement of the panels.

But the reality is, there’s a good chance you’ll hear a solar salesperson tell you that it will add value to the home. Ask them for the data that backs up the claim, and make sure the data is specific to your area. In all likelihood, anything they can point to will be general and broad strokes. It would be highly unlikely that a solar salesperson would be able to accurately assess exactly how much value it would add to your home.

The Takeaway:

Perhaps someday every home will have solar power, but at this point that isn’t the case.
The demand and appeal for solar panels will vary depending upon where you live, the local market conditions overall, and the mindset of the buyers in your area.

So if you’re concerned about how much solar panels will add or detract from the value or saleability of your home, speak to your local real estate agent (ahem!) before committing to putting them on your house. Your agent can advise you on how well-received solar panels are by buyers in your area, and price range, and help you assess how much it will add to the value of your home, if anything.

Market Info May 30, 2022

Over 10 Years, Homeowners Obtained $240K in Equity

As prices climb, homeowners who’ve owned their homes for a while have seen a boost in appreciation.

Over the past decade, a homeowner who purchased a single-family existing home would have gained $229,400 in home equity if the home were sold at the median price in the fourth quarter of 2021, according to a new analysis by the National Association of REALTORS®, as reported on the association’s Economists’ Outlook blog.

In the past five years, home prices have notably climbed—rising at an annual pace of nearly 10%, NAR reports. A homeowner who purchased a typical home five years ago would have gained $125,300 from just price appreciation alone.

The Western region of the U.S. has had the most areas of the country where homeowners have built up the largest amount of home equity, led by San Jose-Sunnyvale-Santa Clara, Calif.; San Francisco-Oakland-Hayward, Calif.; Anaheim-Santa Ana-Irvine, Calif.; and urban Honolulu, Hawaii.

Uncategorized May 29, 2022

How HOA Laws are Changing in Texas

Schools May 25, 2022

Austin Area School Information

Here are some resources to search Austin Texas Schools:

NICHE Best School Districts in Texas

Central Texas School Guide

School Digger – Find a Great School anywhere in the US

 

More School information provided by Independence Title:

Austin Area School Guide

Greater Austin Area District Map

Private and Charter Schools in Greater Austin

More Private Schools

 

Market Info May 20, 2022

Fact Vs Fiction: The Truth About Today’s Housing Market

Here are some of the biggest misconceptions about today’s housing market and the facts.

#1: WE’RE IN A HOUSING BUBBLE

The Facts
While today’s housing market is anything but normal, it’s not because of the same circumstances surrounding the housing bubble of the early 2000s that caused the crash.

Back then, new construction single-family homes flooded the market, lending standards were incredibly loose, and many homeowners were cashing out their equity left and right.

Today’s market is nearly the exact opposite.

 

What You Need To Know About Selling in a Sellers' Market | Keeping Current Matters

 

 

 

 

 

 

 

 

 

 

 

Since the housing crash of 2008:

  • Lending standards have tightened
  • The market is under-supplied rather than over-supplied on inventory
  • Most homeowners are much more cautious with their equity

Plus, housing market experts are forecasting continued price appreciation this year, as demand continues to outweigh home supply.

#2: LOTS OF FORECLOSURES ARE COMING

The Facts

Stories about the volume of foreclosures are all over the news today. But the most important thing to remember is context is everything.

Yes, many homeowners were able to pause their mortgage payments during the forbearance program, and there was legitimate concern from many experts that it would result in a wave of foreclosures coming to the market.

However, the number of foreclosures we’re seeing today is nothing like the last time.

What You Actually Need To Know About the Number of Foreclosures in Today’s Housing Market | Keeping Current Matters

Here are some of the reasons why that’s happening:

  • Most homeowners have enough equity to sell their homes
  • There have been fewer foreclosures over the last two years
  • The current market can easily absorb the new listings

Today’s data shows that most homeowners are exiting their forbearance plan either fully caught up on payments or with a plan from the bank that restructured their loan in a way that allowed them to start making payments again.

For all of these reasons, experts don’t anticipate a wave of foreclosures that would negatively affect housing prices.

#3: HOUSING PRICES WILL DEPRECIATE

The Facts
This might be one you’ve heard a time or twenty.

Skyrocketing price appreciation has many sellers and buyers sitting on the fence. However, experts don’t project home prices to go down anytime soon. Instead, data from earlier in the year has already been adjusted to be higher than previously anticipated.

So, to answer this question… First American explains it like this:

“While house price growth is expected to moderate from the rapid pace of 2021, strong home buyer demand against a backdrop of historically tight inventory of homes for sale will likely keep appreciation positive in the coming year.”

Will Home Prices Fall This Year? Here’s What Experts Say | Keeping Current Matters

For both buyers and sellers, this means one thing: playing the waiting game is a risky business.

When it comes to sellers, the higher price appreciation over the last two years has been great for your home’s value. But if you will also be buying a home after selling, you shouldn’t wait for prices to fall.

In both cases, waiting will only cost more in the long run because climbing mortgage rates and rising home prices will have an impact on your next home purchase.

Market Info May 20, 2022

Why This Housing Market Is Not a Bubble Ready To Pop

Homeownership has become a major element in achieving the American Dream. A recent report from the National Association of Realtors (NAR) finds that over 86% of buyers agree homeownership is still the American Dream.

Prior to the 1950s, less than half of the country owned their own home. However, after World War II, many returning veterans used the benefits afforded by the GI Bill to purchase a home. Since then, the percentage of homeowners throughout the country has increased to the current rate of 65.5%. That strong desire for homeownership has kept home values appreciating ever since. The graph below tracks home price appreciation since the end of World War II:

The graph shows the only time home values dropped significantly was during the housing boom and bust of 2006-2008. If you look at how prices spiked prior to 2006, it looks a bit like the current spike in prices over the past two years. That may lead some people to be concerned we’re about to see a similar fall in home values as we did when the bubble burst. To help alleviate those worries, let’s look at what happened last time and what’s happening today.

What Caused the Housing Crash 15 Years Ago?

Back in 2006, foreclosures flooded the market. That drove down home values dramatically. The two main reasons for the flood of foreclosures were:

  1. Many purchasers were not truly qualified for the mortgage they obtained, which led to more homes turning into foreclosures.
  2. A number of homeowners cashed in the equity on their homes. When prices dropped, they found themselves in an underwater situation (where the home was worth less than the mortgage on the house). Many of these homeowners walked away from their homes, leading to more foreclosures. This lowered neighboring home values even more.

This cycle continued for years.

Why Today’s Real Estate Market Is Different

Here are two reasons today’s market is nothing like the one we experienced 15 years ago.

1. Today, Demand for Homeownership Is Real (Not Artificially Generated)

Running up to 2006, banks were creating artificial demand by lowering lending standards and making it easy for just about anyone to qualify for a home loan or refinance their current home. Today, purchasers and those refinancing a home face much higher standards from mortgage companies.

Data from the Urban Institute shows the amount of risk banks were willing to take on then as compared to now.

There’s always risk when a bank loans money. However, leading up to the housing crash 15 years ago, lending institutions took on much greater risks in both the person and the mortgage product offered. That led to mass defaults, foreclosures, and falling prices.

Today, the demand for homeownership is real. It’s generated by a re-evaluation of the importance of home due to a worldwide pandemic. Additionally, lending standards are much stricter in the current lending environment. Purchasers can afford the mortgage they’re taking on, so there’s little concern about possible defaults.

And if you’re worried about the number of people still in forbearance, you should know there’s no risk of that causing an upheaval in the housing market today. There won’t be a flood of foreclosures.

2. People Are Not Using Their Homes as ATMs Like They Did in the Early 2000s

As mentioned above, when prices were rapidly escalating in the early 2000s, many thought it would never end. They started to borrow against the equity in their homes to finance new cars, boats, and vacations. When prices started to fall, many of these homeowners were underwater, leading some to abandon their homes. This increased the number of foreclosures.

Homeowners didn’t forget the lessons of the crash as prices skyrocketed over the last few years. Black Knight reports that tappable equity (the amount of equity available for homeowners to access before hitting a maximum 80% loan-to-value ratio, or LTV) has more than doubled compared to 2006 ($4.6 trillion to $9.9 trillion).

The latest Homeowner Equity Insights report from CoreLogic reveals that the average homeowner gained $55,300 in home equity over the past year alone. Odeta Kushi, Deputy Chief Economist at First Americanreports:

“Homeowners in Q4 2021 had an average of $307,000 in equity – a historic high.”

ATTOM Data Services also reveals that 41.9% of all mortgaged homes have at least 50% equity. These homeowners will not face an underwater situation even if prices dip slightly. Today, homeowners are much more cautious.

Bottom Line

The major reason for the housing crash 15 years ago was a tsunami of foreclosures. With much stricter mortgage standards and a historic level of homeowner equity, the fear of massive foreclosures impacting today’s market is not realistic.