Chicago Real Estate News

 

Feb. 28, 2024

How do changing mortgage rates impact you

 

 

 

 

 

Some Highlights

Feb. 21, 2024

Are you waiting for mortgage rates to drop this year

There’s a lot of confusion in the market about what’s happening with day-to-day movement in mortgage rates right now, but here’s what you really need to know: compared to the near 8% peak last fall, mortgage rates have trended down overall.

And if you’re looking to buy or sell a home, this is a big deal. While they’re going to continue to bounce around a bit based on various economic drivers (like inflation and reactions to the consumer price index, or CPI), don’t let the short-term volatility distract you. The experts agree the overarching downward trend should continue this year.

While we won’t see the record-low rates homebuyers got during the pandemic, some experts think we should see rates dip below 6% later this year. As Dean Baker, Senior Economist, Center for Economic Researchsays:

“They will almost certainly not fall to pandemic lows, although we may soon see rates under 6.0 percent, which would be low by pre-Great Recession standards.

And Baker isn’t the only one saying this is a possibility. The latest Fannie Mae projections also indicate we may see a rate below 6% by the end of this year (see the green box in the chart below):

 a screenshot of a graph

The chart shows mortgage rate projections for 2024 from Fannie Mae. It includes the one that came out in December, and compares it to the updated 2024 forecast they released just one month later. And if you look closely, you’ll notice the projections are on the way down.

It’s normal for experts to re-forecast as they watch current market trends and the broader economy, but what this shows is experts are feeling confident rates should continue to decline, if inflation cools.

What This Means for You

But remember, no one can say for sure what will happen (and by when) – and short-term volatility is to be expected. So, don’t let small fluctuations scare you. Focus on the bigger picture.

If you’ve found a home you love in today’s market – especially where finding a home that meets your budget and your needs can be a challenge – it’s probably not a good idea to try to time the market and wait until rates drop below 6%.

With rates already lower than they were last fall, you have an opportunity in front of you right now. That’s because even a small quarter point dip in rates gives your purchasing power a boost.

Bottom Line

If you wanted to move last year but were holding off hoping rates would fall, now may be the time to act. Connect with a real estate agent to get the ball rolling. 

 

Feb. 14, 2024

WHY SO MANY PEOPLE FALL IN LOVE WITH HOME OWNERSHIP

 

 

 

 

Chances are at some point in your life you’ve heard the phrase, home is where the heart is. There’s a reason that’s said so often. Becoming a homeowner is emotional.

So, if you’re trying to decide if you want to keep on renting or if you’re ready to buy a home this year, here’s why it’s so easy to fall in love with homeownership.

Customizing to Your Heart’s Desire

Your house should be a space that’s uniquely you. And, if you’re a renter, that can be hard to achieve. When you rent, the paint colors are usually the standard shade of white, you don’t have much control over the upgrades, and you’ve got to be careful how many holes you put in the walls. But when you’re a homeowner, you have a lot more freedom. As the National Association of Realtors (NAR) says:

“The home is yours. You can decorate any way you want and choose the types of upgrades and new amenities that appeal to your lifestyle.”

Whether you want to paint the walls a cheery bright color or go for a dark moody tone, you can match your interior to your vibe. Imagine how it would feel to come home at the end of the day and walk into a space that feels like you.

Greater Stability for the Ones You Love Most

One of the hardest things about renting is the uncertainty of what happens at the end of your lease. Does your payment go up so much that you have to move? What if your landlord decides to sell the property? It’s like you’re always waiting for the other shoe to drop. Jeff Ostrowski, a business journalist covering real estate and the economy, explains how homeownership can give you more peace of mind in a Money Geek article:

“Homeownership means you are the boss and have the biggest say in your lifestyle and family decisions. Suppose your kids are in public school and you don’t want to risk having them change schools because your landlord doesn’t renew your lease. Owning a home would remove much of the risk of having to move.”

A Feeling of Belonging

You may also find you feel much more at home in the community once you own a house. That’s because, when you buy a home, you’re staking a claim and saying, I’m a part of this community. You’ll have neighbors, block parties, and more. And that’ll give you the feeling of being a part of something bigger. As the International Housing Association explains:

“. . . homeowning households are more socially involved in community affairs than their renting counterparts. This is due to both the fact that homeowners expect to remain in the community for a longer period of time and that homeowners have an ownership stake in the neighborhood.”

The Emotional High of Achieving Your Dream

Becoming a homeowner is a journey – and it may have been a long road to get to the point where you’re ready to take the plunge. If you’re seriously considering leaving behind your rental and making this commitment, you should know the emotions that come with this owning a home are powerful. You’ll be able to walk up to your front door every day and have that sense of accomplishment welcome you home. 

Bottom Line

A home is a place that reflects who you are, a safe space for the ones you love the most, and a reflection of all you’ve accomplished. Connect with a local real estate professional if you’re ready to break up with your rental and buy a home.

Feb. 7, 2024

Houses Are Still Selling Fast

 

 

 

 

Have you been thinking about selling your house? If so, here’s some good news. While the housing market isn’t as frenzied as it was during the ‘unicorn’ years when houses were selling quicker than ever, they’re still selling faster than normal.

The graph below uses data from Realtor.com to tell the story of median days on the market for every January from 2017 all the way through the latest numbers available. For Realtor.com, days on the market means from the time a house is listed for sale until its closing date or the date it’s taken off the market. This metric can help give you an idea of just how quickly homes are selling compared to more normal years:

 

When you look at the most recent data (shown in green), it’s clear homes are selling faster than they usually would (shown in blue). In fact, the only years when houses sold even faster than they are right now were the abnormal ‘unicorn’ years (shown in pink). According to Realtor.com:

“Homes spent 69 days on the market, which is three days shorter than last year and more than two weeks shorter than before the COVID-19 pandemic.”

What Does This Mean for You?

Homes are selling faster than the norm for this time of year – and your house may sell quickly too. That’s because more people are looking to buy now that mortgage rates have come down, but there still aren’t enough homes to go around. Mike Simonsen, Founder of Altos Researchsays:

“. . . 2024 is starting stronger than last year. And demand is increasing each week.”

Bottom Line

If you’re wondering if it’s a good time to sell your home, the most recent data suggests it is. The housing market appears to be stronger than it usually is at this time of year. To get the latest updates on what’s happening in your local market, connect with a real estate agent.

Jan. 31, 2024

What impacts mortgage rates

 

 

 

If you’re looking to buy a home, you’ve probably been paying close attention to mortgage rates. Over the last couple of years, they hit record lows, rose dramatically, and are now dropping back down a bit. Ever wonder why?

 

The answer is complicated because there’s a lot that can influence mortgage rates. Here are just a few of the most impactful factors at play.

 

Inflation and the Federal Reserve

The Federal Reserve (Fed) doesn’t directly determine mortgage rates. But the Fed does move the Federal Funds Rate up or down in response to what’s happening with inflation, the economy, employment rates, and more. As that happens, mortgage rates tend to respond. Business Insider explains:

 

“The Federal Reserve slows inflation by raising the federal funds rate, which can indirectly impact mortgages. High inflation and investor expectations of more Fed rate hikes can push mortgage rates up. If investors believe the Fed may cut rates and inflation is decelerating, mortgage rates will typically trend down.”

 

Over the last couple of years, the Fed raised the Federal Fund Rate to try to fight inflation and, as that happened, mortgage rates jumped up, too. Fortunately, the expert outlook for inflation and mortgage rates is that both should become more favorable over the course of the year. As Danielle Hale, Chief Economist at Realtor.com, says:

 

“[M]ortgage rates will continue to ease in 2024 as inflation improves . . .”

 

There’s even talk the Fed may actually cut the Fed Funds Rate this year because inflation is cooling, even though it’s not yet back to their ideal target.

 

The 10-Year Treasury Yield

Additionally, mortgage companies look at the 10-Year Treasury Yield to decide how much interest to charge on home loans. If the yield goes up, mortgage rates usually go up, too. The opposite is also true. According to Investopedia:

 

“One frequently used government bond benchmark to which mortgage lenders often peg their interest rates is the 10-year Treasury bond yield.”

 

Historically, the spread between the 10-Year Treasury Yield and the 30-year fixed mortgage rate has been fairly consistent, but that’s not the case recently. That means, there’s room for mortgage rates to come down. So, keeping an eye on which way the treasury yield is trending can give experts an idea of where mortgage rates may head next.

 

Bottom Line

With the Fed meeting later this week, experts in the industry will be keeping a close watch to see what they decide and what impact it’ll have on the economy. To navigate any mortgage rate changes and their impact on your moving plans, it’s best to have a team of professionals on your side.

Jan. 25, 2024

MUST DO WHEN SELLING YOUR HOME

 

 

 

 

 

If one of the goals on your list is selling your house and making a move this year, you’re likely juggling a mix of excitement about what’s ahead and feeling a little sentimental about your current home.

A great way to balance those emotions and make sure you’re confident in your decision is to keep these three best practices in mind when you’re ready to sell.

1. Price Your Home Right

The housing market shifted in 2023 as mortgage rates rose and home price appreciation started to normalize once again. As a seller, you still need to recognize how important it is to price your house appropriately based on where the market is today. Hannah Jones, Economic Research Analyst for Realtor.comexplains:

“Sellers need to become familiar with their local market and work closely with a local agent to make sure their listing is attractive to buyers. Buyers feeling the pressure of affordability are likely to be pickier, so a well-priced, well-maintained home is the ticket to drumming up big demand.”

If you price your house too high, you run the risk of deterring buyers. And if you go too low, you’re leaving money on the table. An experienced real estate agent can help determine what your ideal asking price should be, so your house moves quickly and for top dollar.

2. Keep Your Emotions in Check

Today, homeowners are staying in their houses longer than they used to. According to the National Association of Realtors (NAR), since 1985, the average time a homeowner has owned their home has increased from 6 to 10 years (see graph below):

This is much more than what used to be the norm. The side effect, however, is when you stay in one place for so long, you may get even more emotionally attached to your space. If it’s the first home you bought or the house where your loved ones grew up, it very likely means something extra special to you. Every room has memories, and it’s hard to detach from the sentimental value.

For some homeowners, that makes it even tougher to separate the emotional value of the house from fair market price. That’s why you need a real estate professional to help you with the negotiations and the best pricing strategy along the way. Trust the professionals who have your best interests in mind.

3. Stage Your Home Properly

While you may love your decor and how you’ve customized your house over the years, not all buyers will feel the same way about your vibe. That’s why it’s so important to make sure you focus on your home’s first impression, so it appeals to as many buyers as possible.

Buyers want to be able to picture themselves in the home. They need to see themselves inside with their furniture and keepsakes – not your pictures and decorations. As Jessica Lautz, Deputy Chief Economist and Vice President of Research at NAR, says:

“Buyers want to easily envision themselves within a new home and home staging is a way to showcase the property in its best light.”

A real estate professional can help you with expertise on getting your house ready to sell.

Bottom Line

If you’re considering selling your house, reach out to a local real estate professional to help you navigate the process while prioritizing these must-do’s.

Jan. 17, 2024

Mortgage rates fall well below 7%

 

 

 

 

Homebuyers got an early holiday gift at the end of 2023 as mortgage rates reversed course, dropping more than a full percentage point and settling below 7% by mid-December. Before this drop, rates had hovered above 7% since August after peaking at around 8.00% in October.

 

A 30-year, fixed-rate loan at roughly 6.75% as of this writing is a welcome relief for homebuyers either in the market or waiting on the sidelines over the last few months. With lower rates, prospects will have greater buying power in the spring market than in recent months. A 6.75% rate on a $500,000 loan, for example, translates to about $350 per month in principal and interest payment savings compared to a 7.75 % loan.

Following the pandemic-driven homebuying and refinancing boom, 85% of US homeowners have mortgage rates below 5%. For many of these owners, even if they wanted to sell over the last 12 months, many were hesitant to take on a 7-8% mortgage – and that’s had a cooling effect on inventory. With rates declining, a sub-7% mortgage may be easier to swallow, and this could free up much needed inventory in 2024.

Another positive for the market is the new conforming loan limits that came into effect for 2024. The limits increased to $766,550 for standard loans and to $498,257 for FHA loans. For high-cost markets such as New York, California and Hawaii (but not Chicago), the limit increased to $1,149,825. These updated limits allow buyers to borrow more under conventional loan terms, avoiding the higher interest rates typically associated with jumbo loans.
“The drop in mortgage rates is hugely positive for homebuyers in 2024 after a challenging year in 2023,” explains Peter Boomer, president of Proper Rate, “It’s still a seller’s market, though, so homebuyers still need to do their homework.”

For homeowners who did take on a new mortgage in 2023, the new year will likely offer several opportunities to refinance into a lower rate and therefore a lower mortgage payment. Again, cutting a percentage point off your existing loan could save you hundreds or more each month.

“While experts predict rates will continue to decline, there’s no specific timeline and no guarantees,” says Boomer. “Eighteen months ago, people predicted rates would fall back into the 5% range by early 2023. We know how that worked out. If you find a home you like and can afford, go for it. You can always refinance if the experts get it right this time.”

 

@properties - January 2024

Jan. 9, 2024

What my purchasing power with declining mortgage rates

 

 

 

 

If you want to buy a home, it’s important to know how mortgage rates impact what you can afford and how much you’ll pay each month. Fortunately, rates for 30-year fixed mortgages have come down significantly since the end of October and are currently under 7%, according to Freddie Mac (see graph below):

 

This recent trend is great news for buyers. As a recent article from Bankrate says:

“The rate cool-off somewhat eases the housing affordability squeeze.”

And according to Edward Seiler, AVP of Housing Economics and Executive Director of the Research Institute for Housing America at the Mortgage Bankers Association (MBA):

“MBA expects that affordability conditions will continue to improve as mortgage rates decline . . .”

Here’s a bit more context on how this could help with your plans to buy a home.

How Mortgage Rates Affect Your Search for a Home

Understanding the connection between mortgage rates and your monthly home payment is crucial for your plans to become a homeowner. The chart below illustrates how your ability to afford a home changes when mortgage rates shift. Imagine your budget allows for a monthly payment between $2,400 and $2,500. The green part in the chart shows payments in that range or lower (see chart below):

 

As you can see, even small changes in rates can affect your budget and the loan amount you can afford.

Get Help from Reliable Experts To Understand Your Budget and Plan Ahead

When you’re looking to buy a home, it’s important to get guidance from a local real estate agent and a trusted lender. They can help you explore different mortgage options, understand what makes mortgage rates go up or down, and how those changes impact you.

By looking at the numbers and the latest data together, then adjusting your strategy based on today’s rates, you’ll be better prepared and ready to buy a home.

Bottom Line

If you’re looking to buy a home, you should know the recent downward trend in mortgage rates is good news for your move. Team up with a trusted real estate agent and lender to plan your next steps.

 

KCM -  January 2024 

Dec. 27, 2023

How to Improve your credit score

 

 

 

 

As the new year approaches, the idea of buying a home might be on your mind. It’s an exciting goal to set, and it’s never too early to start laying the groundwork. One crucial step to prepare for homeownership is building a solid credit score.

Lenders review your credit to assess your ability to make payments on time, pay back debts, and more. It’s also a factor that helps determine your mortgage rate. An article from CNBC explains:

“When it comes to mortgages, a higher credit score can save you thousands of dollars in the long run. This is because your credit score directly impacts your mortgage ratewhich determines the amount of interest you’ll pay over the life of the loan.”

This means your credit score may feel even more important to your homebuying plans right now since mortgage rates are a key factor in affordability, especially today.

According to the Federal Reserve Bank of New York, the median credit score in the U.S. for those taking out a mortgage is 770. But that doesn’t mean your credit score has to be perfectAn article from Business Insider explains generally how your FICO score range can make an impact:

“. . . you don’t need a perfect credit score to buy a house. . . . Aiming to get your credit score in the ‘Good’ range (670 to 739) would be a great start towards qualifying for a mortgage. But if you’re wanting to qualify for the lowest rates, try to get your score within the ‘Very Good’ range (740 to 799).”

Working with a trusted lender is the best way to get more information on how your credit score could factor into your home loan and the mortgage rate. As FICO says:

“While many lenders use credit scores like FICO Scores to help them make lending decisions, each lender has its own strategy, including the level of risk it finds acceptable. There is no single “cutoff score” used by all lenders and there are many additional factors that lenders may use to determine your actual interest rates.”

If you’re looking for ways to improve your score, Experian highlights some things you may want to focus on:

  • Your Payment History: Late payments can have a negative impact by dropping your score. Focus on making payments on time and paying any existing late charges quickly.
  • Your Debt Amount (relative to your credit limits): When it comes to your available credit amount, the less you’re using, the better. Focus on keeping this number as low as possible.
  • Credit Applications: If you’re looking to buy something, don’t apply for additional credit. When you apply for new credit, it could result in a hard inquiry on your credit that drops your score.

A lender will help you navigate the process from start to finish, from assessing which range your score falls in to telling you more about the specifics for each loan type.

Bottom Line

As you set your sights on buying a home in the upcoming year, a focus on boosting your credit score could help you get a better mortgage rate when the time comes. If you want to learn more, connect with a trusted lender.

 

KCM - December 2023

Dec. 20, 2023

Will mortgage rates continue their decline

 

 

 

 

When you read about the housing market, you’ll probably come across some information about inflation or recent decisions made by the Federal Reserve (the Fed). But how do those two things impact you and your homebuying plans? Here’s what you need to know.

The Federal Funds Rate Hikes Have Stalled

One of the Fed’s primary goals is to lower inflation. In order to do that, they started raising the Federal Funds Rate to slow down the economy. Even though this doesn’t directly dictate what happens with mortgage rates, it does have an impact.

Recently inflation has started to cool, a signal those increases worked and are bringing inflation back down. As a result, the Fed’s hikes have gotten smaller and less frequent. In fact, there haven’t been any increases since July (see graph below):

And not only has the Fed decided not to raise the Federal Funds Rate the last three times the committee met, they’ve signaled there may actually be rate cuts coming in 2024. According to the New York Times (NYT):

“Federal Reserve officials left interest rates unchanged in their final policy decision of 2023 and forecast that they will cut borrowing costs three times in the coming year, a sign that the central bank is shifting toward the next phase in its fight against rapid inflation.”

This indicates the Fed thinks the economy and inflation are improving. Why does that matter to you and your plans to buy a home? It could end up leading to lower mortgage rates and improved affordability.

Mortgage Rates Are Coming Down

Mortgage rates are influenced by a wide variety of factors, and inflation and the Fed’s actions (or as has been the case recently, inaction) play a big role. Now that the Fed has paused the increases, it looks more likely mortgage rates will continue their downward trend (see graph below):

 

Although mortgage rates may remain volatile, their recent trend combined with expert forecasts indicate they could continue to go down in 2024. That would improve affordability for buyers and make it easier for sellers to move since they won’t feel as locked-in to their current, low mortgage rate.

Bottom Line

The Fed’s decisions have an indirect impact on mortgage rates. By not raising the Federal Funds Rate, mortgage rates are likely to continue declining. Rely on a trustworthy real estate expert to give you expert advice about changes in the housing market and how they affect you.