It’s tough out there! Frustration for Albuquerque home buyers
(Transcript Snippet): “Tego: This kind of the, the, the underlying conversation that we’re having in the real estate market right now, right now, which is frustration for home buyers. You know, there it’s, it’s really, it’s, it’s tough out there for, for home buyers right now. There’s very limited choices. There’s, you know, people are really wanting to get, get a home. They want to lock in these low interest rates. And so there’s a lot of frustration. And so w w we’re going to keep coming back to the, this right now, because this is really the, you know, top of mind for everybody right now. Tracy: Yeah. We talked about this a lot on last week show and what we want to say this week, again, is just hanging in there. There’s a lot of reasons to hang in there and just work towards getting that home, right? The interest rates won’t be this low, forever, and locking in that rate. Even if the price for the house seems a little higher, you’re still locking in a really good monthly payment. Right. Which isn’t going to happen if you’re a renter long-term benefits certainly outweigh the short-term wouldn’t you say? Tego: Yeah, I, I think you look at it’s tough. It’s frustrating. You’re, you know, maybe have, have had to make multiple offers. Maybe you’ve had to make some concessions that you really weren’t comfortable with making and being able to get a house you paid more than you think you wanted to, or whatever it is. Look at the long game, look at the long game and, and don’t give up, yeah. Lock, locking in the, those, again, the low interest rate and locking in you’re more than just a low interest rate. It’s locking in your cost of housing. You’ve now locked it in. If you’re making, you know, paying a mortgage, you’ve locked it in for a really long time. Versus if you’re renting, you know, it’s going to escalate every year, every year, every year, every year. Right. And so th th this is, you know, th there’s just so much going on there. And of course, that’s not even dimension the whole quality of life issues of, of owning a home versus, Tracy: Right, right, right. Which we’ve talked about all the quality of life. It seems Tego: Like we’ve beat this to death, but I know there’s a lot of fear out there around the market. And, oh, my gosh, home prices are up 25% in the last two years. And are we going to have a bubble? And, you know, am I doing the right thing? And, and I, I get all that. Those are all fair questions in this current market condition, because it is so frantic, right.
https://welcomehomeabq.com Tracy & Tego Venturi Venturi Realty Group Keller Williams 1119 Alameda Blvd NW Albuquerque, NM 87114 (505) 448-8888 info@welcomehomeabq.com
It’s tough out there! Frustration for Albuquerque home buyers
(Transcript Snippet): ” Tego:
This kind of the, the, the underlying conversation that we’re having in the real estate market right now, right now, which is frustration for home buyers. You know, there it’s, it’s really, it’s, it’s tough out there for, for home buyers right now. There’s very limited choices. There’s, you know, people are really wanting to get, get a home. They want to lock in these low interest rates. And so there’s a lot of frustration. And so w w we’re going to keep coming back to the, this right now, because this is really the, you know, top of mind for everybody right now.
Tracy:
Yeah. We talked about this a lot on last week show and what we want to say this week, again, is just hanging in there. There’s a lot of reasons to hang in there and just work towards getting that home, right? The interest rates won’t be this low, forever, and locking in that rate. Even if the price for the house seems a little higher, you’re still locking in a really good monthly payment. Right. Which isn’t going to happen if you’re a renter long-term benefits certainly outweigh the short-term wouldn’t you say?
Tego:
Yeah, I, I think you look at it’s tough. It’s frustrating. You’re, you know, maybe have, have had to make multiple offers. Maybe you’ve had to make some concessions that you really weren’t comfortable with making and being able to get a house you paid more than you think you wanted to, or whatever it is. Look at the long game, look at the long game and, and don’t give up, yeah. Lock, locking in the, those, again, the low interest rate and locking in you’re more than just a low interest rate. It’s locking in your cost of housing. You’ve now locked it in. If you’re making, you know, paying a mortgage, you’ve locked it in for a really long time. Versus if you’re renting, you know, it’s going to escalate every year, every year, every year, every year. Right. And so th th this is, you know, th there’s just so much going on there. And of course, that’s not even dimension the whole quality of life issues of, of owning a home versus,
Tracy:
Right, right, right. Which we’ve talked about all the quality of life. It seems
Tego:
Like we’ve beat this to death, but I know there’s a lot of fear out there around the market. And, oh, my gosh, home prices are up 25% in the last two years. And are we going to have a bubble? And, you know, am I doing the right thing? And, and I, I get all that. Those are all fair questions in this current market condition, because it is so frantic, right.
As we move into the latter half of the year, questions about what’s to come are top of mind for buyers and sellers. Near record-low mortgage rates coupled with rising home price appreciation kicked off a robust housing market in the first half of 2021, but what does the forecast tell us about what’s on the horizon?
Mortgage Rates Will Likely Increase, but Remain Low
Many experts are projecting a rise in interest rates. The latest Quarterly Forecast from Freddie Macstates:
“We forecast thatmortgage rates will continue to rise through the end of next year. We estimate the 30-year fixed mortgage rate will average 3.4% in the fourth quarter of 2021, rising to 3.8% in the fourth quarter of 2022.”
However, even as mortgage rates rise, the anticipated increase is expected to be modest at most, and still well below historical averages. Rates remaining low is good news for homebuyers who are looking to maximize their purchasing power. The same report from Freddie Mac goes on to say:
“While higher mortgage rates will help slow the pace of home sales and moderate house price growth, we expect overall housing market activity will remain robust. Our forecast has total home sales, the sum of new and existing home sales, at 7.1 million in 2021….”
Home Price Appreciation Will Continue, but Price Growth Will Likely Slow
Joe Seydl, Senior Markets Economist at J.P. Morgan, projects home prices to continue rising as well, indicating buyers interested in purchasing a home should do so sooner rather than later. Waiting for rates or home prices to fall may not be wise:
“Homebuyers—interest rates are still historically low, though they are inching up. Housing prices have spiked during the last six-to-nine months, but we don’t expect them to fall soon, and we believe they are more likely to keep rising. If you are looking to purchase a new home, conditions now may be better than 12 months hence.”
Other experts remain optimistic about home prices, too. The graph below highlights 2021 home price forecasts from multiple industry leaders:
Inventory Remains a Challenge, but There’s Reason To Be Optimistic
Home prices are rising, but they should moderate as more housing inventory comes to market. George Ratiu, Senior Economist at realtor.com, notes there are signs that we may see the current inventory challenges lessen, slowing the fast-paced home price appreciation and creating more choices for buyers:
“We have seen more new listings this year compared with 2020 in 11 of the last 13 weeks. The influx of new sellers over the last couple of months has been especially helpful in slowing price gains.”
New home starts are also showing signs of improvement, which further bolsters hopes of more options coming to market. Robert Dietz, Chief Economist at the National Association of Home Builders (NAHB), writes:
“As an indicator of the economic impact of housing, there are now 652,000 single-family homes under construction. This is 28% higher than a year ago.”
Finally, while it may not fundamentally change the market conditions we’re currently experiencing, another reason to be optimistic more homes might come to market: our improving economy. Mark Fleming, Chief Economist at First American,notes:
“A growing economy in the summer months has multiple implications for the housing market. Growing consumer confidence, a stronger labor market, and higher wages bode well for housing demand. While a growing economy and improving public health conditions may also spur hesitant existing owners to list their homes for sale, it’s unlikely to significantly ease the super sellers’ market conditions.”
Bottom Line
As we look at the forecast for prices, interest rates, inventory, and home sales, experts remain optimistic about what’s on the horizon for the second half of 2021. Let’s connect today to discuss how we can navigate the market together in the coming months.
In today’s real estate market, low inventory and high demand are driving up home prices. As many as 54% of homes are getting offers over the listing price, based on the latest Realtors Confidence Index from the National Association of Realtors (NAR). Shawn Telford, Chief Appraiser at CoreLogic, elaborates:
“The frequency of buyers being willing to pay more than the market data supports is increasing.”
While this is great news for today’s sellers, it can be tricky to navigate if the price of your contract doesn’t match up with the appraisal for the house. It’s called an appraisal gap, and it’s happening more in today’s market than the norm.
According to recent data from CoreLogic, 19% of homes had their appraised value come in below the contract price in April of this year. That’s more than double the percentage in each of the two previous Aprils.
The chart below uses the latest insights from NAR’s Realtors Confidence Index to showcase how often an issue with an appraisal slowed or stalled the momentum of a house sale in May of this year compared to May of last year.If an appraisal comes in below the contract price, the buyer’s lender won’t loan them more than the house’s appraised value. That means there’s going to be a gap between the amount of loan the buyer can secure and the contract price on the house.
In this situation, both the buyer and seller have a vested interest in making sure the sale moves forward with little to no delay. The seller will want to make sure the deal closes, and the buyer won’t want to risk losing the home. That’s why it’s common for sellers to ask the buyer to make up the difference themselves in today’s competitive market.
Bottom Line
Whether you’re buying or selling, let’s connect so you have an ally throughout the process to help you navigate the unexpected, including appraisal gaps.
Selling a house is a time-consuming process – especially if you decide to do it on your own, known as a For Sale By Owner (FSBO). From conducting market research to reviewing legal documents, handling negotiations, and more, it’s an involved and highly detailed process that requires a lot of expertise to navigate effectively. That’s one of the reasons why the percentage of people selling their own house has declined from 19% to 8% (See graph below):To help you understand just how much time and effort it takes to sell on your own, here’s a look at a few of the things you need to think about before putting that “For Sale” sign up in your yard.
1. Making a Good First Impression
While it may sound simple, there are a lot of proven best practices to consider when prepping a house for sale.
Do you need to take down your personal art?
What’s the right amount of landscaping to boost your curb appeal?
What wall colors are most appealing to buyers?
If you do this work on your own, you may invest capital and many hours into the wrong things. Your time is money – don’t waste it. An agent can help steer you in the right direction based on current market conditions to save you time and effort. Since we’re in a hot sellers’ market, you don’t want to delay listing your house by focusing on things that won’t change your bottom line. These market conditions may not last, so lean on an agent to capitalize on today’s low inventory while you can.
2. Pricing It Right
Real estate professionals have mission-critical information on what sells and how to maximize your profit. They’re experienced when it comes to looking at recent comparable homes that have sold in your area and understanding what price is right for your neighborhood. They use that data to price your house appropriately, maximizing your return.
In a FSBO, you’re operating without this expertise, so you’ll have to do your own homework on how to set a price that’s appropriate for your area and the condition of your home. Even with your own research, you may not find the most up-to-date information and could risk setting a price that’s inaccurate or unrealistic. If you price your house too high, you could turn buyers away before they’re even in the front door, or run into problems when it comes time for the appraisal.
3. Maximizing Your Buyer Pool (and Profit)
Contrary to popular belief, FSBOs may actually net less profit than sellers who use an agent. One of the factors that can drive profit up is effective exposure. Simply put, real estate professionals can get your house in front of more buyers via their social media followers, agency resources, and proven sales strategies. The more buyers that view a home, the more likely a bidding war becomes. According to the National Association of Realtors (NAR), the average house for sale today gets 5 offers. Using an agent to boost your exposure may help boost your sale price too.
4. Navigating Negotiations
When it comes to selling your house as a FSBO, you’ll have to handle all of the negotiations. Here are just a few of the people you’ll work with:
The buyer, who wants the best deal possible
The buyer’s agent, who will use their expertise to advocate for the buyer
The inspection company, which works for the buyer and will almost always find concerns with the house
The appraiser, who assesses the property’s value to protect the lender
As part of their training, agents are taught how to negotiate every aspect of the real estate transaction and how to mediate potential snags that may pop up. When appraisals come in low and in countless other situations, they know what levers to pull, how to address the buyer and seller emotions that come with it, and when to ask for second opinions. Navigating all of this on your own takes time –a lot of it.
5. Juggling Legal Documentation
Speaking of time, consider how much free time you have to review the fine print. Just in terms of documentation, more disclosures and regulations are now mandatory. That means the stack of legal documents you need to handle as the seller is growing. It can be hard to know and truly understand all the terms and requirements. Instead of going at it alone, use an agent as your shield and advisor to help you avoid potential legal missteps.
Bottom Line
Selling your house on your own is a lot of responsibility. It’s time consuming and requires an immense amount of effort and expertise. Before you decide to sell your house yourself, let’s discuss your options so we can make sure you get the most out of the sale.
