Homebuyers Are Still More Active Than Usual

July 31, 2023/in Uncategorized/by Brian Bemo

Even though the housing market is no longer experiencing the frenzy that was so characteristic of the last couple of years, it doesn’t mean today’s market is at a standstill. In actuality, buyer traffic is still strong today.

The ShowingTime Showing Index is a measure of how much buyers are touring homes. The graph below uses that index to illustrate buyer activity trends over time to help put today into the proper perspective.

It shows there’s seasonality in real estate. If you look at the last normal years in the market (shown in gray), there was a consistent pattern as buyer activity peaked in the first half of each year (during the peak homebuying season in the spring) and slowed as each year came to a close.

When the pandemic hit in March of 2020, that trend was disrupted as the market responded to the resulting uncertainty (shown in blue in the middle). From there, we entered the ‘unicorn’ years of housing (shown in pink). This is when mortgage rates were record-low and buyer demand was sky high. Similar seasonal trends still existed even during that time, just at much higher levels.

Now, let’s look at 2023. Traffic is down from the previous month and it’s also lower than the peaks we saw in the ‘unicorn’ years. But what’s happening isn’t a steep drop off in demand – it’s a slow return toward more normal seasonality. As the ShowingTime report explains:

“Showing traffic declined about 10% in May . . . This follows a typical seasonal pattern – disrupted by the pandemic but now beginning to return . . .”

And, to highlight this isn’t a drastic decline, let’s zoom in. Here’s a graph using just the May data for the last five years. It shows just how strong buyer demand still is.

What Does That Mean for You?

Buyers are still out there touring homes. They’re more active than they were in May 2022 (when sticker shock over higher mortgage rates started to set in) and certainly more than they were in the last normal years. So, remember, buyer activity is still strong. And it could actually be even stronger if it wasn’t constrained by the limited supply of homes for sale. According to U.S. News:

“Housing markets have cooled slightly, but demand hasn’t disappeared, and in many places remains strong largely due to the shortage of homes on the market.”

Bottom Line

Don’t lose sight of just how active the market still is today. If your house isn’t on the market, it’s not getting in front of all those buyers who are looking to make a purchase right now. Let’s connect to start the process.

Owning Your Home Helps You Build Wealth

July 20, 2023/in Uncategorized/by Brian Bemo

You may have heard some people say it’s better to rent than buy a home right now. But, even today, there are lots of good reasons to become a homeowner. One of them is that owning a home is typically viewed as a good long-term investment that helps your net worth grow over time.

Homeownership Builds Wealth Regardless of Income Level

You may be surprised to learn homeowners across various income levels have a much higher net worth than renters who make the same amount. Data from First American helps illustrate this point (see graph below):

What makes wealth so much higher for homeowners? A recent article from Realtor.com says:

“Homeownership has long been tied to building wealth—and for good reason. Instead of throwing rent money out the window each month, owning a home allows you to build home equity. And over time, equity can turn your mortgage debt into a sizeable asset.”

Basically, the wealth you accumulate when you own a home has a lot to do with equity. As a homeowner, equity is built up as you pay down your loan and as home prices appreciate over time. Mark Fleming, Chief Economist at First American, explains how this same benefit isn’t true for renters in a recent podcast:

“Renters as non-homeowners gain no wealth benefit as home prices rise. That wealth actually accrues to the landlord.”

Before you decide to sign another rental agreement, now is a good time to think about whether it would be better for you to buy a home instead. The best way to figure out what makes sense for you is to have a conversation with a real estate expert you trust. That professional can talk you through the benefits that come with owning to determine if that’s the right next step for you.

Bottom Line

If you’re not sure whether to keep renting or to buy a home, know that owning a home, no matter how much money you make, can help build your wealth. Let’s connect now to get started on the path to homeownership.

How Remote Work Expands Your Homebuying Horizons

July 16, 2023/in Uncategorized/by Brian Bemo

Even as some companies transition back into the office, remote work remains a popular choice for many professionals. So, if you currently enjoy working from home or hope to be able to soon, you’re not alone. According to a recent survey, most working professionals want to work either fully remote or hybrid (see below):

This trend is good news if you’re looking to buy a home because a remote or hybrid work setup can help you overcome some of today’s affordability and housing inventory challenges.

More Work Flexibility Equals More Home Options

Remote or hybrid work opens up a world of opportunities. That’s because it allows you to broaden your search for your next home since you’re no longer limited to living close to your workplace. With the freedom to work from anywhere, you can explore more affordable areas that may be located farther away from bustling city centers or your office. This flexibility can be a game changer while higher mortgage rates are making it difficult for some homebuyers to afford a home.

An article from the New York Times (NYT) highlights how remote work can greatly assist you in overcoming that challenge:

“. . . take advantage of the opportunity remote work has presented to move to more affordable communities (either farther out in the suburbs, or in another part of the country).”

And, since the supply of homes for sale is still so low, another key challenge for you today may be finding something with all of the features you want and need. Because remote work allows you to broaden your search radius to include additional areas, you may actually have less trouble finding a home with the features you want the most because you’ll have a bigger pool of options to pick from.

Working remotely gives you the flexibility to find an affordable home with the features you want. In other words, you have a better chance of getting what you need without blowing your budget.

Bottom Line

Working remotely not only gives you more flexibility in your job but also presents a great chance to broaden your search for a home. Since you’re not limited to a specific location, you have the opportunity to explore more options. Let’s get in touch to discuss how this can expand your choices and help you find the perfect home.

May 2023 Market Update

July 13, 2023/in Uncategorized/by Brian Bemo

Note: Data below from May, 2023 is the most recent from the National Association of Realtors.

Existing-home sales marginally increased in May, according to the National Association of REALTORS®. Sales were mixed among the four major U.S. regions, with the South and West posting improvements and the Northeast and Midwest experiencing pullbacks. All four regions experienced year-over-year sales declines.

Total existing home sales – completed transactions that include single-family homes, townhomes, condominiums and co-ops – rose 0.2% from April to a seasonally adjusted annual rate of 4.30 million in May. Year-over-year, sales dropped 20.4% (down from 5.40 million in May 2022).

NAR May 2023 Existing Home Sales Report Infographic "Mortgage rates heavily influence the direction of home sales," said NAR Chief Economist Lawrence Yun. "Relatively steady rates have led to several consecutive months of consistent home sales."

Total housing inventory registered at the end of May was 1.08 million units, up 3.8% from April but down 6.1% from one year ago (1.15 million). Unsold inventory sits at a 3.0-month supply at the current sales pace, up from 2.9 months in April and 2.6 months in May 2022.

"Available inventory strongly impacts home sales, too," Yun added. "Newly constructed homes are selling at a pace reminiscent of pre-pandemic times because of abundant inventory in that sector. However, existing-home sales activity is down sizably due to the current supply being roughly half the level of 2019."

The median existing-home price for all housing types in May was $396,100, a decline of 3.1% from May 2022 ($408,600). Prices grew in the Northeast and Midwest but fell in the South and West.

Properties typically remained on the market for 18 days in May, down from 22 days in April but up from 16 days in May 2022. Seventy-four percent of homes sold in May were on the market for less than a month.

First-time buyers were responsible for 28% of sales in May, down from 29% in April but up from 27% in May 2022. NAR’s 2022 Profile of Home Buyers and Sellers – released in November 2022 – found that the annual share of first-time buyers was 26%, the lowest since NAR began tracking the data.

All-cash sales accounted for 25% of transactions in May, down from 28% in April and identical to one year ago.

Individual investors or second-home buyers, who make up many cash sales, purchased 15% of homes in May, down from 17% in April and 16% the previous year.

According to Freddie Mac, the 30-year fixed-rate mortgage averaged 6.69% as of June 15. That's down from 6.71% the previous week but up from 5.78% one year ago.

Regional Breakdown

Existing-home sales in the Northeast declined 2.0% from April to an annual rate of 500,000 in May, down 25.4% from May 2022. The median price in the Northeast was $439,000, up 2.5% from one year ago.

In the Midwest, existing-home sales faded 2.9% from one month ago to an annual rate of 990,000 in May, decreasing 20.8% from the previous year. The median price in the Midwest was $298,000, up 1.1% from May 2022.

Existing-home sales in the South expanded 1.5% from April to an annual rate of 2.02 million in May, sliding 16.5% from the prior year. The median price in the South was $361,400, down 2.7% from May 2022.

In the West, existing-home sales rose 2.6% from the previous month to an annual rate of 790,000 in May, down 25.5% from one year ago. The median price in the West was $596,500, down 5.7% from May 2022.

Today’s Housing Inventory Is a Sweet Spot for Sellers

July 8, 2023/in Uncategorized/by Brian Bemo

One of the biggest challenges in the housing market right now is how few homes there are for sale compared to the number of people who want to buy them. To help emphasize just how limited housing inventory still is, let’s take a look at the latest information on active listings, or homes for sale in a given month, as it compares to more normal levels.

According to a recent report from Realtor.com:

“On average, active inventory in June was 50.6% below pre-pandemic 2017–2019 levels.”

The graph below helps illustrate this point. It uses historical data to provide a more concrete look at how much the numbers are still lagging behind the level of inventory typical of a more normal market (see graph below):

It’s worth noting that 2020-2022 are not included in this graph. That’s because they were truly abnormal years for the housing market. To make the comparison fair, those have been omitted so they don’t distort the data.

When you compare the orange bars for 2023 with the last normal years for the housing market (2017-2019), you can see the count of active listings is still far below the norm.

What Does This Mean for You?

If you’re thinking about selling your house, that low inventory is why this is a great time to do so. Buyers have fewer choices now than they did in more normal years, and that’s continuing to impact some key statistics in the housing market. For example, sellers will be happy to see the following data from the latest Confidence Index from the National Association of Realtors (NAR):

The percent of homes that sold in less than a month ticked up slightly to 74%.
The median days on market went down to 18 days, showing homes are still selling fast when priced right.
The average number of offers on recently sold homes went up to 3.3 offers.

Bottom Line

When supply is so low, your house is going to be in the spotlight. That’s why sellers are seeing their homes sell a little faster and get more offers right now. If you’ve thought about selling, now’s the time to make a move. Let’s connect to get the process started.