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Each quarter, Fannie Mae releases the Home Price Expectations Survey, which asks over a hundred experts economists, real estate professionals, and market strategists what they predict for home prices over the next five years. Their latest forecast shows that prices are expected to keep rising through at least 2028 (see the graph below):

While home prices will vary depending on where you live, this shows that, on a national level, they’re projected to go up every year. The increase might not be as dramatic as it’s been in the past, but the key takeaway here is that they’re still going up, just at a more moderate pace.

Now, while rising prices might seem frustrating, once you own a home, that growth works in your favor. To put it in perspective, here’s a look at how much equity you could gain if you buy now. Using the forecast from the HPES and a typical home’s value, you can see the potential wealth you could build:

For example, if you bought a $450,000 home at the start of this year, based on expert predictions, you could build more than $90,000 in equity over the next five years. That’s a huge boost to your household wealth!

So, if you’re ready and able to buy, and building long-term wealth matters to you, this could be an opportunity worth considering. Now that mortgage rates have come down a bit, it might be the right time to make a move.

If you’re unsure about what’s best for your situation, we’re here to help! Reach out to schedule a complimentary buyer consultation, and we can talk through your options and what makes sense for you in today’s market.

BY KCM CREW | SEPTEMBER 25, 2024

As a buyer, you might be concerned about overpaying, and if you’re thinking about selling, you could be worried about not getting the price you’re aiming for.

Here’s a simple breakdown to help make sense of the current housing market and give you a clearer picture of what’s really happening with prices—whether you’re thinking of buying or selling.

Home Price Growth Is Slowing, but Prices Aren’t Dropping Nationwide

Across the country, home prices are still rising, but the pace of that growth is starting to slow down. In other words, while prices aren’t increasing as quickly as they did in the past few years, they’re still going up. The data from Case-Shiller makes the shift from 2023 to 2024 pretty clear:

But don’t worry—just because you’re hearing about a “cooling” market doesn’t mean home prices are dropping. In fact, all the data shows continued growth, just not at the breakneck speed we saw when prices were skyrocketing a few years ago.

What’s Next for Home Prices? It’s All About Supply and Demand

If you’re wondering where prices might go from here, it really comes down to supply and demand—and that’s going to vary based on where you live.

Nationally, the number of homes for sale is slowly increasing, but there still aren’t enough to meet the demand from buyers. That’s keeping prices elevated, though the increase has slowed down. As Danielle Hale, Chief Economist at Realtor.com, puts it:

“Today’s low but quickly improving for-sale inventory has ushered in more market balance than would otherwise be expected. This should help home prices maintain a slower pace of growth.”

Here’s another factor to keep in mind: Experts expect mortgage rates to continue declining, which could bring more buyers back into the market in the coming months. If that happens and demand increases, prices could tick up again.

We’re Here to Help Answer Your Questions

While national trends give a big-picture view, real estate is always about your local market. What’s happening in your neighborhood could be totally different depending on the supply and demand in your area.

If you’re thinking of buying or selling, or just curious about what your home might be worth, we’re here to help! Reach out to schedule a complimentary buyer consultation, and we’ll guide you through the latest market trends to make sure you’re ready for your next step.

BY KCM CREW | SEPTEMBER 11, 2024

If you’ve been thinking about selling your house and moving up to a bigger or more upgraded home, you’re not alone. According to a recent survey by Inman, the top motivator for today’s homebuyers is the desire for more space or a nicer home (see graph below):

However, like many others, you may have been holding off on making that move due to recent market challenges. It’s understandable—affordability plays a huge role when you’re planning to upgrade, especially if it might mean higher monthly housing costs. But here’s the good news: Now might actually be a great time to take that step. Let’s break down why.

1. You Have a Lot of Equity to Leverage

One of the biggest advantages in today’s market is the amount of equity you’ve likely built up in your current home. Despite shifts in the housing market, home prices have risen steadily over the years, allowing homeowners to build significant equity. Selma Hepp, Chief Economist at CoreLogic, explains:

 

“Persistent home price growth has continued to fuel home equity gains for existing homeowners who now average about $315,000 in equity and almost $129,000 more than at the onset of the pandemic.”

What does that mean for you? If you’ve owned your home for a few years, you may have a substantial amount of equity that can be used toward the down payment on your next home. This could help keep your new mortgage more affordable and make upgrading more feasible than you might think. If you’re curious about how much equity you’ve gained, reach out to your real estate agent for a professional equity assessment.

2. Mortgage Rates Have Fallen, Boosting Your Purchasing Power

Another reason why now could be a smart time to move: mortgage rates have recently declined. Lower rates can help reduce your future monthly payments and give you more purchasing power. As Nadia Evangelou, Senior Economist and Director of Real Estate Research at the National Association of Realtors (NAR), notes:

“When mortgage rates fall, the interest portion of monthly payments decreases, which lowers the total payment. This makes it easier for more borrowers to . . . qualify for mortgages that may have been unaffordable at higher rates.”

With rates trending downward, you have more flexibility when looking at homes and may be able to afford a property that was previously out of your budget. Working with a trusted lender can help you figure out the best mortgage plan for your financial situation.

Bottom Line

If you’ve been dreaming of upgrading to a bigger or nicer home, now might be the ideal time to make it happen. Your accumulated equity, combined with lower mortgage rates, puts you in a great position to achieve your homeownership goals.

To make the most informed decisions and take advantage of today’s market, reach out to schedule a complimentary consultation. We’re here to guide you through every step of the process and help you find the home that fits your dreams and budget.

October 7, 2024/by KCM CREW

You may have heard some chatter about the economy and even talk of a potential recession. Understandably, that kind of news can get people worried about a housing market crash. If you’re one of those concerned, here’s the good news—there’s no need to panic. The housing market is not set up for a crash right now.

Real estate journalist Michele Lerner puts it simply:

“A housing market crash happens when home values plummet due to a lack of demand for homes or an oversupply.”

With that definition in mind, let’s explore two key reasons why a housing market crash isn’t on the horizon.

1. Demand for Homes Is Higher than Supply

One of the main reasons the housing market crashed in 2008 was an oversupply of homes. But today’s story is very different.

A balanced housing market typically has around six months’ worth of supply. More than that means supply is outpacing demand, which can lead to falling prices. Less than that means demand is stronger than supply, which supports price stability or growth. Check out the graph below that uses data from the National Association of Realtors (NAR) to show where things stand now:

The red bar shows there were 13 months of housing supply before the 2008 crash—far too much inventory. In contrast, the blue bar shows we’re currently at just 4.2 months of supply, well below a balanced market. Simply put, there are more buyers than available homes right now. When demand is higher than supply, home prices tend to stay stable or rise, which is the opposite of what happens during a crash.

Of course, inventory levels can vary by region, and some areas might be more balanced than others. But in general, most markets across the country are still facing a shortage of homes. Lawrence Yun, Chief Economist at NAR, explains:

“We simply don’t have enough inventory. Will some markets see a price decline? Yes. [But] with the supply not being there, the repeat of a 30 percent price decline is highly, highly unlikely.”

2. Unemployment Is Still Low

Unemployment plays a major role in the health of the housing market. When unemployment is high, more people struggle to make their mortgage payments, leading to foreclosures and forced sales. That was a big problem during the 2008 crisis. Today, however, the employment situation is much more stable. Let’s look at another graph that compares unemployment rates:

The red bar shows that during the 2008 financial crisis, unemployment soared to 8.3%. In contrast, today’s unemployment rate (blue bar) is just 4.1%, well below the long-term average of 5.7% (gray bar). With so many people employed, homeowners are in a much better position to make their mortgage payments, which reduces the risk of widespread foreclosures.

Not only are people holding onto their homes, but many are also in a position to buy, which keeps demand—and home prices—strong.

Today’s Housing Market Is Stronger than in 2008

It’s normal to feel concerned when you hear talk of a recession or economic uncertainty, but rest assured, today’s housing market is in much better shape than it was in 2008. As Rick Sharga, Founder and CEO of CJ Patrick Company, says:

“Literally everything is different about today’s housing market dynamics than the conditions that led to the housing crisis.”

From higher demand than supply to low unemployment, these factors are working together to keep the housing market steady and prevent a crash.

Bottom Line

The housing market is in a far stronger position than it was in 2008. However, remember that real estate is local, and conditions can vary from one area to another.

If you have questions about your specific market or want to know how these factors are playing out in your area, don’t hesitate to reach out. We’re here to help and provide you with a personalized, complimentary consultation.

October 9, 2024/by KCM CREW

Trying to decide between renting or buying a home? One key factor to consider is how much homeownership can grow your net worth. The difference may surprise you.

Every three years, the Federal Reserve Board releases the Survey of Consumer Finances (SCF), which highlights the wealth gap between homeowners and renters. Spoiler alert: homeowners consistently come out ahead.

The Numbers Speak for Themselves

On average, a homeowner’s net worth is nearly 40 times higher than a renter’s. In the previous SCF report, homeowners had an average net worth of $255,000 compared to just $6,300 for renters. Fast forward to today, and the gap has widened even further as homeowners continue to see their wealth grow.

Here’s what the SCF says about this remarkable change:

“. . . the 2019-2022 growth in median net worth was the largest three-year increase over the history of the modern SCF, more than double the next-largest one on record.”

Why Homeowners Build Wealth

One major driver of homeowner wealth is equity, which is the difference between your home’s value and what you owe on your mortgage. Equity grows in two ways:

1. Paying Down Your Mortgage: Each payment reduces your debt and increases the portion of the home you truly own.
2. Rising Home Values: When property values increase, your home equity grows even faster.

Over the last few years, rising home prices have significantly boosted equity for homeowners. That growth came from a supply-demand imbalance, where there weren’t enough homes available to meet buyer demand.

Even as the housing market shifts, inventory in most areas remains tight, and experts forecast that home prices will continue to rise at a more moderate pace in the coming years. This trend means there’s still potential for equity gains if you buy a home now.

As Ksenia Potapov, Economist at First American, explains:

“Despite the risk of volatility in the housing market, homeownership remains an important driver of wealth accumulation and the largest source of total wealth among most households.”

Should You Rent or Buy?

The choice between renting and buying isn’t just about monthly costs—it’s about long-term financial strategy and your personal circumstances. Homeownership has the potential to grow your wealth over time, but it’s not a one-size-fits-all decision.

If you’re unsure what’s best for you, lean on a trusted real estate agent. They’ll help you understand local trends, inventory levels, and price forecasts. And if affordability feels like a hurdle, don’t count yourself out just yet. Many programs exist to help make homeownership more accessible, and a knowledgeable agent or lender can guide you through your options.

Bottom Line

If you’re weighing the decision to rent or buy, keep in mind the significant wealth-building opportunities that come with homeownership.

Have questions or want to explore your options? Reach out today to schedule a complimentary consultation. We’ll help you evaluate what works best for your financial goals and personal situation!

November 7, 2024/by KCM CREW