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What Do Supply and Demand Tell Us About Today’s Housing Market?
There’s a well-known economic theory – the law of supply and demand – that explains what’s happening with prices in the current real estate market. Put simply, when demand for an item is high, prices rise. When the supply of the item increases, prices fall. Of course, when demand is very high and supply is very low, prices can rise significantly.
Understanding the impact both supply and demand have can provide the answers to a few popular questions about today’s housing market:
- Why are prices rising?
- Where are prices headed?
- What does this mean for homebuyers?
Why Are Prices Rising?
According to the latest Home Price Insights report from CoreLogic, home prices have risen 18.1% since this time last year. But what’s driving the increase?
Recent buyer and seller activity data from the National Association of Realtors (NAR) helps answer that question. When we take NAR’s buyer activity data and compare it to the seller traffic during the same timeframe, we can see buyer demand continues to outpace seller activity by a wide margin. In other words, the demand for homes is significantly greater than the current supply that’s available to buy (see maps below):
This combination of low supply and high demand is what’s driving home prices up. Bill McBride, author of the Calculated Risk blog, puts it best, saying:
“By some measures, house prices seem high, but the recent price increases make sense from a supply and demand perspective.”
Where Are Prices Headed?
The supply of homes for sale will greatly affect where prices head over the coming months. Many experts forecast prices will continue to increase, but they’ll likely appreciate at a slower rate.
Buyers hoping to purchase the home of their dreams may see this as welcome news. In this case, perspective is important: a slight moderation of home prices does not mean prices will depreciate or fall. Price increases may occur at a slower pace, but experts still expect them to rise.
Five major entities that closely follow the real estate market forecast home prices will continue appreciating through 2022 (see graph below):
What Does This Mean for Homebuyers?
If you’re waiting to enter the market because you’re expecting prices to drop, you may end up paying more in the long run. Even if price increases occur at a slower rate next year, prices are still projected to rise. That means the home of your dreams will likely cost even more in 2022.
Bottom Line
The truth is, high demand and low supply are what’s driving up home prices in today’s housing market. And while prices may increase at a slower pace in the coming months, experts still expect them to rise. If you’re a potential homebuyer, connect with a trusted real estate advisor today to discuss what that could mean for you if you wait even longer to buy.
Information courtesy of Keeping Current Matters
HOW TO FIX 5 COMMON BATHROOM ISSUES
Homeownership has plenty of perks. You can make changes whenever you want, but that also means you are responsible for making any fixes that you want (or need)! Instead of calling the local handyman every time something small goes awry, you can try out these quick fixes for common bathroom issues that arise while saving yourself some money along the way.
1. Shifting Toilet Seat
Is your toilet seat wobbling every time you sit down? Sometimes, there are visible bolts to tighten, but that just doesn’t fix the issue. Many are unaware that you can actually purchase a toilet seat tightening kit. Most home improvement stores will carry an inexpensive kit, usually around $10. Rather than investing in a new toilet seat, you can save time and money by picking up a kit the next time you’re out.
2. Slippery Shower
There are two main options to remedy a slippery shower. If you have a geriatric family member, a shower chair may be the best option to provide security. These chairs can be as affordable as $20 and can offer peace of mind when it comes to the safety of your loved ones. If chairs aren’t for you, a non-slip bath mat will keep you from falling in the shower and cost as much as a few coffees.
3. Clogged Shower Head
Do you normally have great water pressure, but now your shower feels like a slow leak? Your shower head is likely clogged from a build up of minerals in your water. Instead of calling the plumber or heading to the store to buy toxic chemicals, you can use ingredients already in your home to fix your problem. All you need to do is fill a sandwich bag halfway full with white vinegar, submerge the shower head into the vinegar in the bag, and tie the bag to the piping and allow the head to soak overnight. When you remove the bag, you should wipe the head to remove any excess and then your shower should be back to normal pressure.
4. Slow Drain
Before calling a professional, consider trying a Zip-It tool. You can find one at your local hardware store for around $5, but you have to be willing to deal with a little bit of gunk. The tool is placed in the drain and pulls out whatever is clogging it, usually hair and soap. If you can get past that, you’ll save yourself the price of a plumber.
5. Leaking Water Valve
Instead of heading to the store for a replacement water supply valve, try tightening the packing nut on the valve. A quick video search online will show you which nut to tighten, and it will only take a few minutes. Now you’ve saved time and money!
While these are easy fixes to do yourself, selling your home isn’t nearly as easy to DIY. Call me today if you are ready to put your home on the market!
The Overlooked Financial Advantages of Homeownership
There are many clear financial benefits to owning a home: increasing equity, building net worth, growing appreciation, and more. If you’re a renter, it’s never too early to make a plan for how homeownership can propel you toward a stronger future. Here’s a dive into three often-overlooked financial benefits of homeownership and how preparing for them now can steer you in the direction of greater stability, savings, and predictability.
1. You Won’t Always Have a Monthly Housing Payment
According to a recent article by the National Association of Realtors (NAR):
“If you’ve been a lifelong renter, this may sound like a foreign concept, but believe it or not, one day you won’t have a monthly housing payment. Unlike renting, you will eventually pay off your mortgage and your monthly payments will be funding other (possibly more fun) things.”
As a homeowner, someday you can eliminate the monthly payment you make on your house. That’s a huge win and a big factor in how homeownership can drive stability and savings in your life. As soon as you buy a home, your monthly housing costs will begin to work for you as forced savings, coming in the form of equity. As you build equity and grow your net worth, you can continue to reinvest those savings into your future, maybe even by buying that next dream home. The possibilities are truly endless.
2. Homeownership Is a Tax Break
One thing people who have never owned a home don’t always think about are the tax advantages of homeownership. The same piece states:
“Both the interest and property tax portion of your mortgage is a tax deduction. As long as the balance of your mortgage is less than the total price of your home, the interest is 100% deductible on your tax return.”
Whether you’re living in your first home or your fifth, it’s a huge financial advantage to have some tax relief tied to the interest you pay each year. It’s one thing you definitely don’t get when you’re renting. Be sure to work with a tax professional to get the best possible benefits on your annual return.
3. Monthly Housing Costs Are Predictable
A third item noted in the article is how monthly costs become more predictable with homeownership:
“As a homeowner, your monthly costs are most likely based on a fixed-rate mortgage, which allows you to budget your finances over a long period of time, unlike the unpredictability of renting.”
With a mortgage, you can keep your monthly housing costs steady and predictable. Rental prices have been skyrocketing since 2012, and with today’s low mortgage rates, it’s a great time to get more for your money when purchasing a home. If you want to lock-in your monthly payment at a low rate and have a solid understanding of what you’re going to spend in your mortgage payment each month, buying a home may be your best bet.
Bottom Line
If you’re ready to start feeling the benefits of stability, savings, and predictability that come with owning a home, reach out to a local real estate professional to determine if buying a home sooner rather than later is right for you.
Sellers Frequently Asked Questions
Do I Really Need A Realtor® To Sell My Home?
One of the most common questions that sellers have when selling a home is if it’s worth it or not to hire a Realtor®. Now certainly I’m biased to this question, but there are way more reasons why it’s worth hiring a Realtor® rather than attempting to sell a home by owner.
The number one reason why hiring a Realtor® is worth it is because of the knowledge a top Realtor® will have of the local real estate market. By having a strong knowledge of the local market, a real estate agent knows the importance of properly pricing a home for sale. A home that is overpriced will be at a severe disadvantage when comparing to other homes for sale in an area and potentially may not sell.
What Marketing Strategies Will You Use to Sell My Home?
By now you should be able to tell the importance of correctly marketing a home for sale by reviewing the previous 3 common questions from home sellers. One of the most common questions from home sellers is in regard to the real estate marketing strategies Realtors® use to sell homes.
A home that is priced properly and given maximum exposure should sell in a very short amount of time and for top dollar. Some of the top real estate marketing strategies that top Realtors® are using to sell homes include;
- Print & traditional marketing such as post cards, TV, and newspaper ads:
- Online exposure
- Social media
- Content marketing
These are 4 of the most important marketing strategies that top agents are using and what a seller should expect from their agent.Real estate agents who are not using the Internet or not using social media as a channel to give their sellers homes exposure are potentially costing them money and wasted time.
How Do You Determine the Market Value (List Price) Of My Home?
Many home sellers ask how real estate agents determine the market value of a home.Rightfully so, this should be something sellers should inquire about.There are many resources available for sellers to find estimated values of their home online, but it’s important to take that information with a grain of salt.
Sellers need to understand how the market value of a home is determined.One of the best questions for a seller to ask a real estate agent about is how they plan on determining the price of their home.There are several methods that can be used to determine the market value of the home, with the most effective being the comparative market analysis (CMA) approach.
Other methods for determining market value include the price per square foot method and appraisal method. It’s important that when selling a home, a seller understands how their real estate agent is going to determine the market value of their home.
What Are the Costs Of Selling My Home?
Another common question from home sellers relates to the costs of selling a home. Many home sellers don’t realize there are costs to sell a home. Since a home sale is one of the biggest transactions someone will be involved in, it’s critical to know what all the costs involved are. Below are some of the most common costs of selling a home.
- Current state of real estate market (sellers’ market, buyers’ market, balanced market)
- Listing price
- Real estate marketing strategies used
- Number of inspection contingencies
- Buyers mortgage approval process
- Closing document review process
What Should I Do To Prepare My Home For The Market?
Home sellers who prepare their homes for the market, in most cases, will sell their home for more money and in a shorter amount of time. There are certain steps that should be followed to make sure a home is market ready. Not only is being market ready important there are also steps to ensure the home is “show ready.” There is only one chance to make a first impression with a buyer. There are many home selling checklists that are available for sellers to ensure their home is not only market ready but also show ready.
Should I Stage My Home or Sell It Empty?
Many home sellers wonder whether selling a home staged or empty makes a difference. There are certainly PROs and CONs to both. There are some buyers who cannot envision their own belongings in a home that is full of other people’s belongings while others prefer to see how a space is utilized. One of the biggest considerations when determining whether to sell a home staged or empty is the price it would cost to stage a home. If the cost to stage a home is thousands of dollars but the sale price would be thousands higher, it is likely worth staging a home. The answer to this question is not concrete and will depend on each seller’s situation. It’s important that sellers ask their real estate agent what they think and why in order to make an educated decision whether to sell their home staged or empty.
How Long Will It Take To Sell My Home?
Similar to the question about staging or selling a home empty, the length it takes to sell a home is not concrete.There are many factors that contribute to the amount of time it will take to sell a home. For those home sellers who are wondering how long it takes to sell a home, below are some of biggest contributing factors that impact the amount of time it takes from listing date to closing date.
- Current state of real estate market (sellers’ market, buyers’ market, balanced market)
- Listing price
- Real estate marketing strategies used
- Number of inspection contingencies
- Buyers mortgage approval process
- Closing document review process
What Should I Avoid When Selling My Home?
Home sellers who are concerned about what they need to avoid are taking the sale of their home very serious, and rightfully so. There are certain home selling blunders that some sellers make that can kill a home sale before it even gets going. It’s important to avoid home selling mistakes such as hiring the wrong agent, pricing a home too high, not accommodating showings, and being unrealistic with negotiations. By avoiding these items when selling a home, a seller exponentially increases the chance of a successful sale of their home.
PRIORITY TASKS FOR YOUR MOVE IN
Moving into a new home is an exciting time, and you’re probably daydreaming about decor and paint schemes and new furniture. But before you get into the fun stuff, there are some basics you should cover first.
Change the locks
Even if you’re promised that new locks have been installed in your home, you can never be too careful. It’s worth the money to have the peace of mind that comes with knowing that no one else has the keys to your home. Changing the locks can be a DIY project, or you can call in a locksmith for a little extra money.
Steam clean the carpets
It’s good to get a fresh start with your floors before you start decorating. The previous owners may have had pets, young children, or just some plain old clumsiness. Take the time to steam clean the carpets so that your floors are free of stains and allergens. It’s pretty easy and affordable to rent a steam cleaner—your local grocery store may have them available.
Call an exterminator
Prior to move-in, you probably haven’t spent enough time in the house to get a view of any pests that may be lurking. Call an exterminator to take care of any mice, insects, and other critters that may be hiding in your home.
Clean out the kitchen
If the previous occupants wanted to skip on some of their cleaning duties when they moved out, the kitchen is where they probably cut corners. Wipe down the inside of cabinets, clean out the refrigerator, clean the oven, and clean in the nooks and crannies underneath the appliances.
Getting the Highest Price in the Shortest Time
In order to get the highest price in the shortest time, you need to know how to market your home. The better you market your home, the more offers you will get. And the more offers you get, the more choices you have to get the price and terms you want.
The most important factor of marketing your home is pricing it right, our team can help you with that, find out your homes worth for free now. Your price should be adjusted to reflect the market and your property’s worth. The key is to get as many people as possible checking out your fairly priced property. If your property is not priced fairly, there will be no buyers because your price is set too high.
Another important factor is the condition of your home. Make sure that your home looks ready to be sold. Fix any defects (peeling or faded paint, cracks, stains, etc.) Condition alone can sometimes prompt fast buying decisions. Not only should you fix any defects, but consider upgrading your home by making major repairs and cosmetic improvements before selling. A nice looking home triggers the emotional response that can lead to a financial response.
Learn how to negotiate the best terms for all parties involved. Terms are another factor that may be adjusted to attract buyers. If you insist on getting your asking price, think of what you can offer to the buyers. For example, improvements you’ve made or even offering seller financing at a lower than market interest rate on a portion of the sale price. Convince them why they should be paying the price you have set.
Lastly, get the buzz out about your home. List your house with a hot agent that ensures your house is listed on the MLS and on the Internet. On your own, get the word out. It should always be visible to passersby that your house is for sale, whether it is through signs, local advertisements or you telling friends, family, and acquaintances.