The Housing Market This Holiday Season

 As the holiday season begins the housing real estate market is seeing some changes. Mortgage rates are high peaking at around 7.23% as of late September. As the year comes to and end, here is what the housing market looks like.

There is a decrease in demand due to everyone focusing on the festivities during the holiday season. With the focus on the holidays, there are fewer new listings and fewer interested buyers looking. This can present a unique advantage if you are willing to work with the market during the holiday season.

If you want to list, your home could sell quicker during this time and if you are a buyer, there will not be as much competition. Buyers and sellers that are doing transactions during the holidays are very motivated. Often times this could be due to relocation for a new job, an unexpected growth in your family or a big life-changing event.

Investors are always on the clock even during the holidays. Investors know the slower months are a great time to snag a good deal. During the holiday season, sellers are very motivated. Since the market is slow, this is also a good time for a local real estate agent to connect with any local investors.

A digital age with virtual tours makes it easier to shop for a house during the holiday season. In fact, ever since the pandemic, virtual home tours have become the norm. Nowadays a buyer can tour a home 24/y in this digital age.

Negotiations and pricing adjustments are another benefit to holiday home buying. The decreased activity in the market, makes it a great time for those who decide to trudge on. The end of the year can be a great time for a financial transaction. There are benefits for taxes when you buy at the end of the year. It’s also notable that historically, interest rates tend to drop during the holiday season. While interest rate fluctuations are dependent on a variety of factors, the decrease in demand around this time can sometimes prompt lenders to offer more favorable terms to incentivize purchases.

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April Sees Drops in Mortgage Rates

 Freddie Mac released data showing that mortgage rates dropped for the fifth week in a row mid April. Homebuyers are out there taking advantage of the rates that are close to 6% and the slowdown in inflation. As of April 13, 2023 the 30-year fixed-rate mortgage was around 6.27% which is down from the week before at 6.28%. This is still not as good as the rates in April 2022 which were on average 5%.

“Incoming data suggest inflation remains well above the desired level but showing signs of deceleration. These trends, coupled with tight labor markets, are creating increased optimism among prospective homebuyers as the housing market hits its peak in the spring and summer,” says Freddie Mac’s chief economist, Sam Khater.

The economy is also seeing an ease off of inflation which also helps with mortgage rates. According to the March Consumer Price Index there is still wiggle room for what professionals concluded.

“On the one hand, the fact that inflation is still running at more than twice the target level, and core inflation – which includes goods and services, excluding volatile food and energy – saw an uptick to 5.6% in March, highlights that the Fed still has more to do and may need to lift short-term rates again at its early May meeting. On the other hand, overall inflation slowed more notably, and even core inflation on a month-to-month basis eased somewhat, a sign that the Fed’s tightening is having the desired effect. Even if the Fed needs to raise short-term rates a bit higher, we are very likely nearing the end of the tightening cycle,” explained Danielle Hale, from Realtor.com.

Those that were on the brink of buying are now jumping at the opportunity. There has been an influx in applications to purchase a home according to Bob Broeksmit, MBA President and CEO. As long as the mortgage rates hold or dip lower, the buyers will come.

“Despite the huge shifts in market momentum, home sellers can count on the usual seasonal trends tipping the scales a bit further in their favor while home shoppers should expect a fair amount of competition that should ease as we move later into the year,” Hale says.

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Questions to Ask Before Buying a Home

 Even if this is not your first time purchasing a home, you still need to stop and think before you buy. Make sure to think about your future financial and housing needs. Data from the National Association of Realtors reports that a homeowner stays in their home an average of eight years before moving on. Here are questions to think about before purchasing your first or next home.

1. What can I comfortably afford?

If you are working with a lender, they will pre-approve you for a specific loan amount. The amount will be determined by your credit score, income, assets, and debts. Remember to try and keep your total housing payment (including tax and insurance) under 28% of your gross monthly income.

2. Which loans do I qualify for?

There are many options out there when it comes to home loans and your lender will be able to sort out which loan is right for you. A conventional fixed-rate mortgage will have the same payment amount over the life of the loan, whereas an adjustable-rate mortgage (ARM) will have a variable rate that may go up or down after the initial fixed-rate period has ended. So with a 5/5 ARM , you will have a fixed rate for the first five years, then after that, your monthly payment will change.

3. How much will you need for your down payment?

Lenders love to see at least 20% of the purchase price as a downpayment so you do not have to pay PMI. Some loans such as a VA loan will allow low or no-down-payment but you will need to check with a lender to see if you qualify for a VA loan. Remember that the higher your down payment, the lower your monthly payments will be.

4. What’s PMI? Do I have to pay it?

PMI stands for private mortgage insurance and is required when your down payment is less than 20% of the home’s sale price. As stated earlier, VA loans and some other specialty options may not require a down payment.

5. What interest rate do I qualify for? How can I lower it?

Your interest rate impacts how much your monthly payments will be. The higher the interest rate, the higher your payment. Your credit score will also play a factor in determining your interest rate. A better credit score, the lower the interest rate.

6. What will my monthly payment be?

A lender can run numbers and let you give you a ballpark of what your monthly payment will be. Your payment depends on the purchase price, down payment amount and interest rate. There are also monthly mortgage payment calculators online that you can use to help you figure out your monthly payment.

7. What are closing costs?

Upfront closing costs consist of origination fees and discount points, appraisal, document preparation, title insurance and home inspection. As mentioned before, your lender can give you an estimate of your closing costs and an itemized list. There are also closing cost calculators out there which can help you with determining an estimated closing cost.

8. Is my interest rate guaranteed? When does that happen?

Interest rates are always going up or down and this can happen from the time you submit a loan application to the time you close. So if you do not want your rate to change, you can lock a rate in for a specific time period (usually 30 days).

9. Will the monthly payment include taxes and homeowners insurance?

As mentioned earlier, the majority of loans do include taxes and homeowners insurance in the monthly payment, but you can opt to pay these annually and leave them out of your loan. If you do have them added to your monthly payment, the money collected is held in escrow and your lender will pay the taxes and homeowners insurance at the end of the year.

10. How long will the closing process take?

When making an offer on a home, make sure to leave yourself enough time to get all your financing in order. This can take from 30 to 60 days to obtain a mortgage. A lender can usually help you determine how long it will take, especially when you get a pre approval letter from them.

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Pending Home Sales at the End of 2022

 December 2022 ended the year with an increase in pending home sales. This was the first increase seen in the housing market since May. Those in the industry believe that the mortgage rates were what enticed the buyers.

The pending sales index also went up 2.5% from November to December. The pending sales index is determined by signed contracts to buy a home which is different from existing home sales. The pending sales index is released by the National Association of Realtors (NAR). This is good news, but it is still down 33.8% from the same time in 2021.

“This recent low point in home sales activity is likely over,” said Lawrence Yun, NAR chief economist. “Mortgage rates are the dominant factor driving home sales, and recent declines in rates are clearly helping to stabilize the market.”

The Northeast was down 6.5% from November and the Midwest was down 0.3%. All other regions saw an increase with the West being the highest at 6.4%.

“The new normal for mortgage rates will likely be in the 5.5% to 6.5% range,” Yun predicted. “Job gains will steadily become important in driving local home-sales markets. The South, in particular, is set to outperform the rest of the country, thanks primarily to better job market conditions in this part of the country.”

Buyers are out there and are actively searching for a home. “Mortgage applications have been trending higher alongside lower rates, pending home sales are up, and builder confidence increased in January,” Kushi said. “Interested buyers are out there. From a financial perspective, the decision to buy a home comes down to a payment-to-paycheck calculation, and lower rates may help to reduce the mortgage payment while higher incomes can increase one’s monthly paycheck.”

There is still the challenge of affordability. “Though mortgage rates fell as low as 6.27% in December, down 0.8 percentage points from November’s high, home prices remained elevated, up 8.4% compared to the previous year,” she said.

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Is Selling Your Home Still a Smart Idea in the Current Market?

 A seller’s market means it is a great time for sellers but then once you sell you turn into a buyer. Buyers are having a hard time buying in the current market. If you are a seller and worry about becoming a buyer you shouldn’t. According to NerdWallet’s 2022 Home Buyer Report, 89% of current homeowners say that finding a new house and paying too much in the current market is prohibiting them from listing on the spot.

Current homeowners do still have an edge if they do decide to sell right now. If they make the most on the selling side, then they will have more money for purchasing a home. Remember inventory is low and there will more than likely be multiple offers on one home. According to the report close to 26 million Americans are planning on buying a home this year. Typically only 5 to 6 million homes are sold a year!

Today homes are not only being listed at much higher prices but also selling at or above the higher asking price. The report reveals that buyers paid 100% of the list price in 2021. The typical listing price went from an average of $270,000 in 2019 to $344,000 in 2021 according to the National Association of Realtors.

As a seller, you are also giving up less than before. In 2021 a typical seller did not offer any incentives for a buyer. You should list if you are willing to move to an area that is more affordable, will go back to renting for a time being, or you have what it takes to be a competitive buyer.

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Shades & Curtains Are on Trend for 2022

There are so many reasons why today's homeowner uses curtains and shades as their window treatments. One of the reasons why is because of how they function. Shades and curtains are great for their function as well as their looks. They are so popular because they are stylish and function smoothly.

What Is the Difference Between Shades and Blinds?

Many times homeowners a referring to the same thing when using both shades and blinds, but they are technically two different window treatments.

Shades hang from the top of the window to the bottom. They are a solid continuous surface that covers the whole window. They have to be completely raised to let the sunshine in or completely down for privacy. Shades are made out of fabrics, bamboo or woven woods, lightweight cellular material and sheer fabrics.

Blinds also hang from the windows but they are not solid like shades. They have either horizontal or vertical slats that can be opened or closed. Blinds are usually made of wood, faux wood, aluminum or PVC. Blinds can be completely closed and down for complete privacy, the vertical or horizontal slates tilted for semi-privacy or pulled up like a blind for a complete view outdoors.

What Types of Shades and Curtains Are In Style?

Today there are many popular styles of shades and curtains. The roller shade is a casual modern farmhouse look. They come in many colors, textures and patterns. The cellular or honeycomb shades give off a cool, calm and quiet vibe and are energy-efficient. These are great for families with young children or families with pets because there are many cordless lift options. Roman shades are classic and more traditional in look. They are made of luxurious fabrics. Another popular look is the bamboo/woven wood shades which give a natural custom look. Dual or zebra shades make a bold statement that adds texture and dimension to the window. There are also sheer shades that are not completely private but are great for giving the window an elegant look.

Shades that not only look good but are for certain functions are also there to choose from. Solar shades can help reduce the harmful UV rays that are let into your home. Exterior solar shades keep your home, patio or decks cool. They are weather resistant and also a solar shade. Many homes have skylight windows which are a great feature. To showcase them, there are skylight shades that are custom and sun-blocking. Another feature is an arched window. There are arched window shades that can be light filtering or blackout.

Drapery and curtains are also a popular way to dress up the windows. They can also come in sheer to blackout depending on how much shade you need. Curtains can be used by themselves or to dress up a window that already has blinds or shades.

How Often Do You Need to Replace Your Window Treatments?

Just like anything else, your window treatments go a long way if they are installed correctly and maintained often. There are some homeowners who will want to change them out often while others will want to keep them as long as they last.

Remember using window treatments are not only energy efficient but makes a window look beautiful as well. Follow the manufacturer's directions to preserve your window treatments. Also, dust and wipe the treatments down at least two times a year or more. If made of fabric lauder them or dry clean them a couple of times a year.

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