If you’re trying to decide if now’s the time to sell your house, here’s what you should know. The limited number of homes available right now gives you a big advantage. That’s because there are more buyers out there than there are homes for sale. And, with so few homes on the market, buyers will have fewer options, so you set yourself up to get the most eyes possible on your house.

Here’s what industry experts are saying about why selling now has its benefits:

Lawrence Yun, Chief Economist at the National Association of Realtors (NAR):

“Inventory levels are still at historic lows. Consequently, multiple offers are returning on a good number of properties.”

Selma Hepp, Chief Economist at CoreLogic:

“We have not seen the traditional uptick in new listings from existing homeowners, so undersupply of housing will continue to heighten market competition and put pressure on prices in most regions. Some markets are already heating up considerably, but price premiums that we saw last spring and summer are unlikely.”

Clare Trapasso, Executive News Editor at Realtor.com:

“Well-priced, move-in ready homes with curb appeal in desirable areas are still receiving multiple offers and selling for over the asking price in many parts of the country . . .”

Jeff Tucker, Senior Economist at Zillow:

“. . . sellers who price and market their home competitively shouldn’t have a problem finding a buyer.”

Bottom Line

If you’re thinking about selling your house, connect with a real estate advisor who can share the expert insights you need to make the best possible move today.

Keeping Current Matters - May 2023

Appraisals have always been an important part of the homebuying process but have often been considered more of a behind-the-scenes formality. Today, however, appraisals are a front-and-center issue.

A lender orders an appraisal during the mortgage approval to confirm that a home is worth the price on the contract. The appraiser creates a report that compares the subject property to other recently sold properties – or “comps.”

That’s easy enough when there’s an abundance of sales data, but the low number of homes for sale in many areas has resulted in a lack of recent comps. Fierce buyer competition has also driven prices higher meaning yesterday’s sales often closed at prices significantly lower than today’s.

So, whether you’re buying or selling, here are a few things you need to know about appraisals.

FOR SELLERS

Armed with Data: A good listing agent will be prepared heading into the appraisal process. We’ll know what comps an appraiser is most likely to use and be ready to furnish any off-market sales or very recent sales that can help make the case for a certain price.

Appraisal Gap Clause: If you’re selling in a low-supply/high-demand area, it’s a good idea to include this contract clause, which stipulates that a buyer will move forward with the purchase even if the home doesn’t appraise at full value.

Contract Terms: It’s important for a seller to look at contract terms beyond offer price, such as down payment amount. A higher down payment will generally cure most issues arising from a low appraisal.

FOR BUYERS

Play Your Hand: Low appraisals used to be an automatic invitation to renegotiate. In a highly competitive market, that strategy could backfire, so the onus may be on the buyer to find a workable solution.

Broker Cooperation: A buyer’s agent is welcome to share comps and information with the listing agent if they think it will help result in a successful appraisal.

LTV & PMI: Just because a home doesn’t appraise at the contract price doesn’t mean the bank won’t issue a loan or that the buyer must bring additional funds to the closing table. However, a low appraisal will increase the loan-to-value ratio of the mortgage. So a buyer putting down less than 20% may have to pay a higher private mortgage insurance (PMI) premium.

Appraisals are just one of the complexities common in today’s market. We’re here to offer expert guidance to make your homebuying or selling experience successful and stress-free. Reach out for more information or to discuss your real estate needs.

After a turbulent 2022, mortgage interest rates have been relatively stable this year, with the average 30-year fixed rate largely treading in a half-point range between 6.25% and 6.75%. And, while hyperbole is likely to dominate the headlines over the next few weeks with yet another debt ceiling standoff in Congress, the mortgage bankers at Proper Rate, @properties Christie’s International Real Estate’s affiliated mortgage lender, don’t see a whole lot of volatility in the long term.

That’s one takeaway from a recent conversation with Proper Rate’s VP of Sales, Dan Moran, who sat down with the editors of the At Home blog to field questions on rates and other topics. Read on for an (almost) mid-year mortgage update.

At Home: So, probably the first question you get wherever you go…what’s your outlook for mortgage rates for the rest of 2023?

Moran: We’re looking at rates to remain relatively flat for the rest of the year. The more optimistic viewpoint is that we’ll see the 30-year fixed get back down into the 5’s, and market expert, Barry Habib, recently said this could happen as soon as mid-July. The more conservative predictions are that we’ll be in the 6% range for most, if not all, of 2023.

At Home: Interest rates and low inventory levels are dominating the conversation around home sales this year. Which do you think has had a greater impact?

Moran: Rates shot up in 2022, and it paralyzed the market. But now a lot of buyers have adjusted – both financially and mentally/emotionally, and there’s a lot of demand out there. So, at this point, it feels like inventory is a bigger drag, but they are connected. There’s a lot of talk about homeowners with 3% mortgages, who don’t want to let go of that rate. That could be one factor contributing to lower inventory, but it’s not the only one – and probably not even the biggest one. Remember that inventory was low before rates went up.

At Home: Will we ever see rates come down to that 3% level again?

Moran: The short answer is I don’t think so. The slightly longer answer is I’d be concerned about the overall economy if we got to that level again, because the circumstances that would precipitate those rates wouldn’t be good for a lot of people.

At Home: You said the fact that a lot of homeowners are locked into super-low mortgage rates isn’t necessarily the biggest factor curbing sales activity. But what about the potential homebuyer who’s looking at trading out of a 3% mortgage into a 6% mortgage?

Moran: It’s been said a million times that 2020 and 2021 were not normal markets. Today, we’re in a more normal market. And you could even make the argument that we’re in a more normal mortgage rate environment, historically speaking. In a normal market, most people are going to move not because of a pandemic or because of an interest rate, but because their stage in life – new job, marriage, growing family, retirement, second home, etc. – dictates a move. If you’ve got a mortgage in the 3s or even the 2s, God bless you. But when life happens, most people are going to buy and sell real estate based on their needs.

I would also say don’t just focus on your interest rate. Look at the total cost of ownership. For example, if you’re downsizing from a large home, not only is the new home going to be less expensive, but so are the taxes, utilities, maintenance costs, etc. So, even if you’re trading a 3% rate for something in the 6’s, you could actually be lowering your costs. And, of course, you can always refinance. So don’t let rate hold you back.

At Home: Home prices have gone up a lot, so are you seeing more demand for jumbo mortgages*?

Moran: This is a topic that hasn’t gotten nearly enough attention – not jumbo mortgages, per se, but rather the huge increase in the conforming loan limit that has made jumbo loans much less of a factor, especially in a moderately priced market like Chicagoland. In the last two years, the conforming loan limit has increased to $726,200. Just a few years ago it was $417,000. This has given a lot more borrowers access to conforming loans, and that means a wider range of products, more streamlined underwriting and approvals, and generally just an easier path to obtaining a mortgage. If you think about all of the homes in our area that sell between roughly $500,000 and $1,000,000, it’s a huge impact and a huge positive for our market.

And as far as jumbo mortgages, we’re actually seeing 30-year rates that are slightly lower than conforming loans at the moment, so it’s not a bad time to be in that market.

At Home: Any other advice for borrowers in 2023?

Moran: Now more than ever, if you’re buying a home, talk to your lender about strategies for competing with multiple offers and cash offers. We’ve set up new programs specifically to deal with this situation because it is so prevalent in today’s market. We can really strengthen a buyer’s hand and give them a fighting chance to get the home of their dreams, even if they’re up against a cash buyer.

For more information about Proper Rate’s mortgage lending services, visit www.properrate.com, or talk to your @properties agent for a referral to an experienced loan officer.

*Jumbo mortgages are mortgages that exceed the conforming loan limit set by the Federal Housing Finance Association. The conforming loan limit for 2023 is $726,200 in most U.S. counties, including those in the Chicagoland area, and $1,089,300 in certain high-cost markets.

May 2023 - Pat Howard

There’s been some concern lately that the housing market is headed for a crash. And given some of the affordability challenges in the housing market, along with a lot of recession talk in the media, it’s easy enough to understand why that worry has come up.

But the data clearly shows today’s market is very different than it was before the housing crash in 2008. Rest assured, this isn’t a repeat of what happened back then. Here’s why.

It’s Harder To Get a Loan Now

It was much easier to get a home loan during the lead-up to the 2008 housing crisis than it is today. Back then, banks had different lending standards, making it easy for just about anyone to qualify for a home loan or refinance an existing one. As a result, lending institutions took on much greater risk in both the person and the mortgage products offered. That led to mass defaults, foreclosures, and falling prices.

Things are different today as purchasers face increasingly higher standards from mortgage companies. The graph below uses data from the Mortgage Bankers Association (MBA) to show this difference. The lower the number, the harder it is to get a mortgage. The higher the number, the easier it is.

Unemployment Recovered Faster This Time

While the pandemic caused unemployment to spike over the last couple of years, the jobless rate has already recovered back to pre-pandemic levels (see the blue line in the graph below). Things were different during the Great Recession as a large number of people stayed unemployed for a much longer period of time (see the red in the graph below):

Here’s how the quick job recovery this time helps the housing market. Because so many people are employed today, there’s less risk of homeowners facing hardship and defaulting on their loans. This helps put today’s housing market on stronger footing and reduces the risk of more foreclosures coming onto the market.

There Are Far Fewer Homes for Sale Today

There were also too many homes for sale during the housing crisis (many of which were short sales and foreclosures), and that caused prices to fall dramatically. Today, there’s a shortage of inventory available overall, primarily due to years of underbuilding homes.

The graph below uses data from the National Association of Realtors (NAR) and the Federal Reserve to show how the months’ supply of homes available now compares to the crash. Today, unsold inventory sits at just a 2.6-months’ supply. There just isn’t enough inventory on the market for home prices to come crashing down like they did in 2008.

Equity Levels Are Near Record Highs

That low inventory of homes for sale helped keep upward pressure on home prices over the course of the pandemic. As a result, homeowners today have near-record amounts of equity (see graph below):

And, that equity puts them in a much stronger position compared to the Great Recession. Molly Boesel, Principal Economist at CoreLogic, explains: 

“Most homeowners are well positioned to weather a shallow recession. More than a decade of home price increases has given homeowners record amounts of equity, which protects them from foreclosure should they fall behind on their mortgage payments.”

Bottom Line

The graphs above should ease any fears you may have that today’s housing market is headed for a crash. The most current data clearly shows that today’s market is nothing like it was last time.

KCM - May 2023

There’s been a lot of focus on higher mortgage rates and how they’re creating affordability challenges for today’s homebuyers. It’s true that rates climbed dramatically since the record-low we saw during the pandemic. But home affordability is based on more than just mortgage rates – it’s determined by a combination of mortgage rates, home prices, and wages.

Considering how each one of these factors is changing gives you the full picture of home affordability today. Here’s the latest.

1. Mortgage Rates

While mortgage rates are higher than they were a year ago, they’ve hovered primarily between 6% and 7% for nearly eight months now (see graph below):

As the graph shows, mortgage rates have experienced some volatility during that time. And even a small change in mortgage rates impacts your purchasing power. That’s why it’s so important to lean on your team of real estate professionals for expert advice to stay up to date on what’s happening in the market. While it’s hard to project where mortgage rates will go from here, many experts agree they’ll likely continue to remain around 6%-7% in the immediate future. 

2. Home Prices

Over the past few years, home prices appreciated rapidly as the record-low mortgage rates we saw during the pandemic led to a surge in buyer demand. The heightened buyer demand happened while the supply of homes for sale was at record lows, and that imbalance put upward pressure on home prices. However, today’s higher mortgage rates have slowed down price appreciation.

And, the truth is, home price appreciation varies by market. Some areas are seeing slight declines while others have prices that are climbing. As Selma Hepp, Chief Economist at CoreLogic, explains:

“The divergence in home price changes across the U.S. reflects a tale of two housing markets. Declines in the West are due to the tech industry slowdown and a severe lack of affordability after decades of undersupply. The consistent gains in the Southeast and South reflect strong job markets, in-migration patterns and relative affordability due to new home construction.”

To find out what’s happening with prices in your local market, reach out to a trusted real estate agent.

3. Wages

The most positive factor in affordability right now is rising income. The graph below uses data from the Bureau of Labor Statistics (BLS) to show how wages have grown over time: 

Higher wages improve affordability because they reduce the percentage of your income it takes to pay your mortgage since you don’t have to put as much of your paycheck toward your monthly housing cost.

Home affordability comes down to a combination of rates, prices, and wages. If you have questions or want to learn more, reach out to a real estate professional who can explain what’s happening locally and how these factors work together.

Bottom Line

If you’re planning to buy a home, knowing the key factors that impact affordability is important so you can make an informed decision. To stay up to date on the latest on each, connect with a trusted real estate professional today.

KCM May 2023

Prior to selling your home, much of the focus is placed on staging and decluttering the interior. While these things are certainly important, sellers should also keep in mind that the exterior of their property is a potential buyer’s first impression for both in-person and online showings. That means the landscaping, front porch, windows, and even the garage can’t be overlooked. Here are a few tips when it comes to getting your home’s exterior in tip-top shape:

Lawn Maintenance

A well-manicured lawn and trimmed shrubs are imperative before any showing or open house, as anything that is overgrown can indicate that other areas of the house have been neglected. Bushes and greens are meant to enhance your home, not cover it up. Prune any ivy or other greenery that might be creeping over windows or doors. Additionally, flowers are a quick and inexpensive way to brighten up your landscape and convey an inviting feel.

A Fresh Coat of Paint

Assess whether your home is in need of painting or just touch-ups here and there. Painting the entire exterior can be expensive but can go a long way to update the look of your home from the outside. To implement this on a smaller scale, consider painting only the trim, doors, and shutters of your home. Remember that neutral paint colors tend to appeal to the largest audience of potential buyers.

Up On the Rooftop

The gutters and roof are one of the first things a potential buyer will notice, and if they’re in ill-repair, it can signal financial headaches. Make sure all gutters have been cleaned and are in good condition. You’ll also want to trim any low-hanging tree branches that are too close to the roof line and rid the roof of any debris. Renting a power washer is not only helpful for deep cleaning a roof but can be used to spray off walkways and decks, further freshening up your outdoor space.

Outside Looking In

The benefits of clean windows will shine both outdoors and in, and it is a fairly easy way to spruce up your home. While there are plenty of competitively priced services, there are also products available that easily attach to a garden hose allowing you to take care of this project on your own. Also, be mindful of how window treatments appear from the outside. Uniformity in color is important, as well as the degree that your blinds, shutters, and curtains are open. This will ensure a neat, symmetrical look.

Garage, Shed, and Patio Upkeep

In the midst of cleaning closets and cupboards, don’t forget about the garage and other outdoor storage spaces. They should appear organized and uncluttered, with bikes, tools, and toys properly stored so buyers can see how many cars or gadgets the space allows. Finally, any patio furniture should be cleaned and displayed to highlight the functionality of the outdoor area.

Some Highlights

• The inspection is a major part of the home selling process.
• Many buyers used to waive inspections to be more competitive with their offer, but recently, inspections and repairs are becoming popular again.
• Connect with a trusted real estate agent so you have an expert on your side who can help you determine the repairs and updates your house needs before you sell.

KCM - April 2023

Have you been saving up to buy a home this year? If so, you know there are a variety of expenses involved – from your down payment to closing costs. But there’s good news – your tax refund can help you achieve your goals by paying for some of these expenses.

SmartAsset estimates the average American will receive a $1,798 tax refund this year. The map below provides a more detailed estimate by state:

According to Freddie Mac, there are multiple ways your refund check can help you as a homebuyer. If you’re getting a refund this year and thinking about buying a home, here are a few tips to keep:

• Saving for a down payment – One of the largest barriers to homeownership is saving for a down payment. You could reach your savings goal more quickly than expected by using your tax refund to help with your down payment.
• Paying for closing costs – You have to pay fees to your lender, real estate agent, and other parties involved in the homebuying transaction before you can officially take ownership of your home. You could direct your tax refund toward these closing costs.
• Lowering your interest rate – Your lender might give you the option to buy down your mortgage interest rate during the homebuying process. That means, you could pay upfront to have a lower interest rate on your fixed-rate mortgage.

The best way to prepare to buy a home is to work with a trusted real estate professional who understands the process. They’ll help you navigate the costs you may encounter as you begin your homebuying journey.

Bottom Line

Your tax refund can help you reach your goals of homeownership. Connect with a local real estate agent to discuss how you can start your journey today.

Some Highlights

• If you’re thinking about buying a home, be sure to plan for closing costs.
• Closing costs are typically 2% to 5% of the total purchase price of a home, and they can include things like government recording costs, appraisal fees, and more.
• Work with a local real estate expert who can answer your questions about the homebuying process.

I'm a beliver that there is NEVER a bad time to sellIf you’re thinking about selling this spring, it’s time to get moving – the best week to list your house is fast approaching.

Experts at realtor.com looked at seasonal trends from recent years (excluding 2020 as an uncharacteristic year due to the onset of the pandemic) and determined the ideal week to list a house this year:

“Home sellers on the fence waiting for that perfect moment to sell should start preparations, because the best time to list a home in 2023 is approaching quickly. The week of April 16-22 is expected to have the ideal balance of housing market conditions that favor home sellers, more so than any other week in the year.”

If you’ve been waiting for the best time to sell, this is your chance. But remember, before you put your house on the market, you’ve got to get it ready. And if you haven’t started that process yet, you’ll need to move quickly. Here’s what you should keep in mind.

Work with an Agent To Determine Which Updates To Make

Start by prioritizing which updates you’ll make. In February, realtor.com asked more than 1,200 recent or potential home sellers what updates they ended up making to their house before listing it (see graph below):

As you can see, the most common answers included landscaping and painting. Work with a trusted real estate agent to determine what projects make the most sense for your goals and local market.

If Possible, Plan To Have Your House Staged

Once you’ve made any necessary repairs and updates to your house, consider having it staged. According to the National Association of Realtors (NAR), 82% of buyers’ agents said staging a home made it easier for a buyer to visualize the property as a future home. Additionally, almost half of buyers’ agents said home staging had an effect on most buyers’ view of the home in general. Homes that are staged typically sell faster and for a higher price because they help potential buyers more easily picture their new life in the house.

Bottom Line

Are you ready to sell this spring? Contact a real estate agent to plan your next steps. You can start by making a checklist of what you think your house needs to get ready. Then, we can work together to prioritize your list and move forward together.

KCM - 2023