Chicago Real Estate News

 

May 22, 2024

Whats next for home prices and interest rates

 

 

 

 

 

If you’re thinking of making a move this year, there are two housing market factors that are probably on your mind: home prices and mortgage rates. You’re wondering what’s going to happen next. And if it’s worth it to move now, or better to wait it out.

The only thing you can really do is make the best decision you can based on the latest information available. So, here’s what experts are saying about both prices and rates.

1. What’s Next for Home Prices?

One reliable place you can turn to for information on home price forecasts is the Home Price Expectations Survey from Fannie Mae – a survey of over one hundred economists, real estate experts, and investment and market strategists.

According to the most recent release, experts are projecting home prices will continue to rise at least through 2028 (see the graph below):

No Caption Received

While the percent of appreciation varies year-to-year, this survey says we’ll see prices rise (not fall) for at least the next 5 years, and at a much more normal pace.

What does that mean for your move? If you buy now, your home will likely grow in value and you should gain equity in the years ahead. But, based on these forecasts, if you wait and prices continue to climb, the price of a home will only be higher later on. 

2. When Will Mortgage Rates Come Down?

This is the million-dollar question in the industry. And there’s no easy way to answer it. That’s because there are a number of factors that are contributing to the volatile mortgage rate environment we’re in. Odeta Kushi, Deputy Chief Economist at First American, explains:

“Every month brings a new set of inflation and labor data that can influence the direction of mortgage rates. Ongoing inflation deceleration, a slowing economy and even geopolitical uncertainty can contribute to lower mortgage rates. On the other hand, data that signals upside risk to inflation may result in higher rates.”

What happens next will depend on where each of those factors goes from here. Experts are optimistic rates should still come down later this year, but acknowledge changing economic indicators will continue to have an impact. As a CNET article says:

“Though mortgage rates could still go down later in the year, housing market predictions change regularly in response to economic data, geopolitical events and more.”

So, if you’re ready, willing, and able to afford a home right now, partner with a trusted real estate advisor to weigh your options and decide what’s right for you. 

Bottom Line

Connect with a trusted real estate agent to make sure you have the latest information available on home prices and mortgage rate expectations. Together you’ll go over what the experts are saying so you can make an informed decision on your move.

 

May 15, 2024

Home prices rise in these top cities - Chicago

 

 

 

 

Thinking about buying a home or selling your current one to find a better fit? If so, you might be wondering what’s going on with home prices these days. Here’s the scoop.

The latest national data from Case-Shiller and the Federal Housing Finance Agency (FHFA) shows they’re going up (see graphs below):

No Caption Received

As you can see, home prices were rising for most of 2023. But over the course of December and January, they were virtually flat – which is pretty normal for that time of year.

But here’s what you need to know now. As of February, when the spring market kicked off, prices were on the rise again.

Home Prices Are Going Up in Most of America’s Top Cities

After seeing a jump in home prices nationally in February, you might be wondering if they’re going up in your area, too. While it depends on where you live, prices are rising in 18 of the top 20 cities Case-Shiller reports on in the monthly price index (see chart below):

No Caption Received

Most experts also think home prices will keep rising and end the year on a high note. Forbes explains why:

“Even as mortgage rates have reached their highest level since November, persistent demand coupled with limited housing supply are key drivers pushing home values upward.”

How This Impacts You

  • For Buyers: If you’re ready, willing, and able to buy a home, purchasing before prices go up even more might be a smart choice, since home values are expected to keep climbing.
  • For Sellers: Prices are going up because there still aren’t enough homes available for sale right now compared to today’s buyer demand. So, if you work with an agent to price your house right, you might receive multiple offers and sell quickly. 

Bottom Line

The data shows home prices are increasing nationally. Chat with a local real estate agent to see exactly what’s going on with prices in your neighborhood.

May 8, 2024

Summer Events 2024

 

 

 

 

 

SUMMER FUN AWAITS...
Summertime in the western suburbs is hard to beat. From live music and art festivals to parades and county fairs. There are plenty of ways to make the most of the beautiful weather.
Here's a 2024 event schedule to help you plan for the excitement ahead. As always, if you're thinking about making a move or looking for more information on your local real estate market, feel free to reach out anytime. Have a great summer!

 

 

 

 

 

May 1, 2024

Myths in real estate

 

 

 

 

 

Some Highlights

  • When it comes to the current housing market, there are some myths circling around right now.
  • Some of the more common ones are that it’s better to wait for mortgage rates to fall or prices to crash. But there are others about the supply of homes for sale and down payments. 
  • Lean on a real estate professional to help separate fact from fiction in today’s housing market.

KCM May 2024

April 24, 2024

How to keep track of mortgage rate trends

 

 

 

 

 

 

If you’re thinking about buying a home, chances are you’ve got mortgage rates on your mind. You’ve heard about how they impact how much you can afford in your monthly mortgage payment, and you want to make sure you’re factoring that in as you plan your move.

The problem is, with all the headlines in the news about rates lately, it can be a bit overwhelming to sort through. Here’s a quick rundown of what you really need to know.

The Latest on Mortgage Rates

Rates have been volatile – that means they’re bouncing around a bit. And, you may be wondering, why? The answer is complicated because rates are affected by so many factors.

Things like what’s happening in the broader economy and the job market, the current inflation rate, decisions made by the Federal Reserve, and a whole lot more have an impact. Lately, all of those factors have come into play, and it’s caused the volatility we’ve seen. As Odeta Kushi, Deputy Chief Economist at First American, explains:

“Ongoing inflation deceleration, a slowing economy and even geopolitical uncertainty can contribute to lower mortgage rates. On the other hand, data that signals upside risk to inflation may result in higher rates.”

Professionals Can Help Make Sense of it All

While you could drill down into each of those things to really understand how they impact mortgage rates, that would be a lot of work. And when you’re already busy planning a move, taking on that much reading and research may feel a little overwhelming. Instead of spending your time on that, lean on the pros.

They coach people through market conditions all the time. They’ll focus on giving you a quick summary of any broader trends up or down, what experts say lies ahead, and how all of that impacts you.

Take this chart as an example. It gives you an idea of how mortgage rates impact your monthly payment when you buy a home. Imagine being able to make a payment between $2,500 and $2,600 work for your budget (principal and interest only). The green part in the chart shows payments in that range or lower based on varying mortgage rates (see chart below):

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As you can see, even a small shift in rates can impact the loan amount you can afford if you want to stay within that target budget.

It’s tools and visuals like these that take everything that’s happening and show what it actually means for you. And only a pro has the knowledge and expertise needed to guide you through them.

You don’t need to be an expert on real estate or mortgage rates, you just need to have someone who is, by your side.

Bottom Line

Have questions about what’s going on in the housing market? Connect with a real estate professional to take what’s happening right now and figure out what it really means for you. 

April 17, 2024

Why are new homes are getting smaller

 

 

 

 

 

There’s no arguing it, affordability is still tight. And if you’re trying to buy a home, that may mean you need to look at smaller houses to find one that’s still in your budget. But there is a silver lining: builders are focused on building these smaller homes right now and they’re offering incentives. And that can help give you more options that fit the bill.

Newly Built Homes Are Trending Smaller

During the pandemic, homebuyers wanted (and could afford) larger homes – and builders delivered. They focused on homes that were bigger, so people had more space for things like working from home, having a home gym, bonus rooms for virtual school, and more.

But with the affordability challenges buyers are facing today, builders are increasingly shifting their attention to bringing smaller single-family homes to the market. The graph below uses data from the Census to show how this trend has evolved over the last few years:

a graph of a number of blue bars

So, why the shift to less square footage? It’s simple. Builders want to build what they know will sell. Basically, they focus on where the demand is strongest. And once mortgage rates started climbing and consumers felt the challenges of affordability creeping in, it became clear there was (and is) a very real need for smaller homes. As the National Association of Home Builders (NAHB) explains:

“After a brief increase during the post-covid building boom, home size is trending lower and will likely continue to do so as housing affordability remains constrained.”

A recent article in the Real Deal says this about how this helps buyers:

Even a slightly smaller home can be thousands of dollars cheaper — for both builders and buyers. . . In response to affordability challenges, major homebuilders are shifting priorities away from the big ticket homes and towards the cheaper set.”

What This Means for You

If you’re having a hard time finding something in your budget, it may help to look at smaller homes. And, if you consider new builds specifically, you may find a few other fringe benefits that can help on the affordability front – like price reductions or mortgage rate buy-downs. As NAHB says:

“More than one-third of builders cut home prices in 2023. NAHB expects builders to continue offering smaller homes and more affordable designs as housing affordability remains a barrier to homeownership.”

As Charlie Bilello, Chief Market Strategist, at Creative Planningexplains:

“Homebuilders are adapting to the lowest affordability on record by building smaller homes and offering more incentives/price cuts. The median square footage of a new single-family home in the US has moved down to its lowest level since 2010.”

If you explore these options, you’ll also get brand new everything, enjoy a house with fewer maintenance needs, and some of the latest features available. That’s worth looking into, right? 

Bottom Line

Builders building smaller homes can give you more affordable options at a time when you really need it. If you’re hoping to buy a home soon, partner with a local real estate agent to find out what’s available in your area.

 

April 2024 - KCM

April 10, 2024

Should I move with todays mortgage rates

 

 

 

 

 

When mortgage rates spiked up over the last few years, some homeowners put their plans to move on pause. Maybe you did too because you didn’t want to sell and take on a higher mortgage rate for your next home. But is that still the right strategy for you?

In today’s market, data shows more homeowners are getting used to where rates are and thinking it may be time to move. As Mark Zandi, Chief Economist at Moody’s Analyticsexplains:

“Listings are up a bit as life events and job changes are putting increasing pressure on locked-in homeowners to sell their homes. Homeowners may also be slowly coming to the realization that mortgage rates aren’t going back anywhere near the rate on their existing mortgage.

recent study from Bank of America sheds light on some of the things homeowners say would make them sell, even with rates where they are right now (see visual below):

a group of blue and white icons

What Would Motivate You To Move?

Now that you know why other people would move, take a minute to think about what would make a move worth it for you. Is it time to take a chance and go for your dream job, even though it’s not local? Are you looking for a neighborhood that has more to offer and a close-knit sense of community? Maybe you just need more space, you’re looking for your next great adventure, or you want a house that opens up rental opportunities to pad your income.

And here’s something else to consider. Mortgage rates are still expected to go down over the course of the year. And once that happens, there’s going to be a big rush of buyers jumping back into the market. While you could delay your plans until rates drop, you’ll only have more competition with those buyers if you do.

So, does that mean it’s worth it to move now, even with rates where they are? The answer is: that it depends.

You’ll want to consider today’s mortgage rates, where they’re expected to go from here, and what would prompt you to want to make a change as you decide on your next steps. An expert can help with that. 

Bottom Line

Other homeowners are getting used to rates and deciding to move. Talk to a local real estate agent to go over what matters most to you and if it’s time for you to jump back into the market too. 

April 3, 2024

Why Overpricing Your House Can Cost You

 

 

 

If you’re trying to sell your house, you may be looking at this spring season as the sweet spot – and you’re not wrong. We’re still in a seller’s market because there are so few homes for sale right now. And historically, this is the time of year when more buyers move, and competition ticks up. That makes this an exciting time to put up that for sale sign.

But while conditions are great for sellers like you, you’ll still want to be strategic when it comes time to set your asking price. That’s because pricing your house too high may actually cost you in the long run.

The Downside of Overpricing Your House

The asking price for your house sends a message to potential buyers. From the moment they see your listing, the price and the photos are what’s going to make the biggest first impression. And, if it’s priced too high, you may turn people away. As an article from U.S. News Real Estate says:

Even in a hot market where there are more buyers than houses available for sale, buyers aren’t going to pay attention to a home with an inflated asking price.”

That’s because no homebuyer wants to pay more than they have to, especially not today. Many are already feeling the pinch on their budget due to ongoing home price appreciation and today’s mortgage rates. And if they think your house is overpriced, they may write it off without even stepping foot in the front door, or simply won’t make an offer if they think it’s priced too high.

If that happens, it’s going to take longer to sell. And ideally you don’t want to have to think about doing a price drop to try to re-ignite interest in your house. Why? Some buyers will see the price cut as a red flag and wonder why the price was reduced, or they’ll think something is wrong with the house the longer it sits. As an article from Forbes explains:

“It’s not only the price of an overpriced home that turns buyers off. There’s also another negative component that kicks in. . . . if your listing just sits there and accumulates days on the market, it will not be a good look. . . . buyers won’t necessarily ask anyone what’s wrong with the home. They’ll just assume that something is indeed wrong, and will skip over the property and view more recent listings.”

Your Agent’s Role in Setting the Right Price

Instead, pricing it at or just below current market value from the start is a much better strategy. So how do you find that ideal asking price? You lean on the pros. Only an agent has the expertise needed to research and figure out the current market value for your home.

They’ll factor in the condition of your house, any upgrades you’ve made, and what other houses like yours are selling for in your area. And they’ll use all of that information to find that target number. The right price will bring in more buyers and make it more likely you’ll see multiple offers too. Plus, when homes are priced right, they still tend to sell quickly.

Bottom Line

Even though you want to bring in top dollar when you sell, setting the asking price too high may deter buyers and slow down the sales process.

Connect with a local real estate agent to find the right price for your house, so we can maximize your profit and still draw in eager buyers willing to make competitive offers.

By: KCM Crew

March 27, 2024

Why home prices will stay high

 

 

 

 

Rents and home prices skyrocketed during the pandemic-fueled housing boom, and they’re still high, but demand continues to remain strong.

“Unbelievable demand has sort of been the story of the last five to seven years,” Invitation Homes’ chief executive Dallas Tanner recently told CNBC, “and that’s due to really the villain being supply. We continue to talk about this lack of supply; we need somewhere between three and five million more housing units.”

The rental market began to soften toward the end of 2023 and into the beginning of 2024 because of an uptick in multifamily construction, but it seems to be more of a short-term phenomenon rather than something that would meaningfully bring rents down. As of last month, rents were 21% higher than they were before the pandemic, according to Rent.com.

There are varying estimates for the housing shortage, but by one estimate, we’re missing between two and seven million homes. That, coupled with strong demand, is keeping costs up—but to understand how we’ve reached this point, we have to go back several years, Tanner said.

“We had a decade of really cheap money in the housing market,” he said, “while we’ve had regulation at the local and state levels get trickier and trickier for people to be able to develop and build new products with ease. That combination is a perfect storm for housing prices to stay elevated for some period of time even while maybe we’ve been in a slower growth cycle.”

Essentially, for several years, interest rates were extremely low. That translated to lower-than-ever mortgage rates throughout the pandemic. Historically low mortgage rates, which equate to lower borrowing costs—and a newfound ability to work from wherever—fueled a housing boom. Home prices went up, and rents followed. But that’s not all: Building homes can be extremely difficult. California is basically ground zero for the nation’s housing crisis, and the reason it can’t build more homes comes down to local control and NIMBYs (not-in-my-backyard, anti-development residents).

So, constrained supply isn’t just pushing up rents. Home prices are almost 50% higher since the start of the pandemic, according to Capital Economics. And mortgage rates that reached just above 8% last year—and are still much higher than the historic lows from the pandemic—haven’t pushed home prices down. Instead, higher mortgage rates triggered the so-called lock-in effect, which has further tightened supply as homeowners hold onto their homes, refusing to sell. It’s largely why existing home sales fell to their lowest point in almost three decades last year.

“The consumer is having a hard time making a decision about buying something in a market that is undersupplied, quite frankly, by probably 40% or 50% more than we’d like to see it from a resale perspective,” Tanner said.

Invitation Homes is an institutional investor, and it has the second largest portfolio of single-family homes in the country—more than 84,000, according to its 10-K. Although in his interview with CNBC, Tanner said the company owns and operates over 100,000 homes across 16 major markets. Tanner mentioned Invitation Homes sold around 12,000 homes over the last five years, and said “we have an insatiable amount of demand for that product.”

His own business seems to be doing well. Invitation Homes’ revenue went up 8.6% last year to roughly $2.43 billion, partly due to an increase in the average monthly rent per occupied home, and an increase in occupancy. In his mind, there’s a reason why that is.

“I think there is sort of this missing segment for people that don’t necessarily want to be in an apartment, but are looking for a single-family home with a yard and a garage and better schools…while not having a down payment that is burdensome,” Tanner said, explaining the strength of the for-lease business.

Featured on Fortune.com

March 20, 2024

Does it make sense to buy a home right now

 

 

 

 

 

Thinking about buying a home? If so, you’re probably wondering: should I buy now or wait? Nobody can make that decision for you, but here’s some information that can help you decide.

What’s Next for Home Prices?

Each quarter, Fannie Mae and Pulsenomics publish the results of the Home Price Expectations Survey (HPES). It asks more than 100 experts—economists, real estate professionals, and investment and market strategists—what they think will happen with home prices.

In the latest survey, those experts say home prices are going to keep going up for the next five years (see graph below):

 a graph of green bars

Here’s what all the green on this chart should tell you. They’re not expecting any price declines. Instead, they’re saying we’ll see a 3-4% rise each year.

And even though home prices aren’t expected to climb by as much in 2025 as they are 2024, keep in mind these increases can really add up over time. It works like this. If these experts are right and your home’s value goes up by 3.78% this year, it’s set to grow another 3.36% next year. And another 3.87% the year after that.

What Does This Mean for You?

Knowing that prices are forecasted to keep going up should make you feel good about buying a home. That’s because it means your home is an asset that’s projected to grow in value in the years ahead.

If you’re not convinced yet, maybe these numbers will get your attention. They show how a typical home’s value could change over the next few years using expert projections from the HPES. Check out the graph below:

 a graph of growth in a chart

In this example, imagine you bought a home for $400,000 at the start of this year. Based on these projections, you could end up gaining over $83,000 in household wealth over the next five years as your home grows in value.

Of course, you could also wait – but if you do, buying a home is just going to end up costing you more. 

Bottom Line

If you're thinking it's time to get your own place, and you’re ready and able to do so, buying now might make sense. Your home is expected to keep getting more valuable as prices go up. Teaming up with a local real estate agent is a good first step to start looking for your next home today.

 

KCM - 3-20-2024