TODAY'S REAL ESTATE MARKET: 4 KEY TRENDS
One thing is clear as we move into the second half of the year: the current real estate market is one for the record books. The exact mix of conditions we have today creates opportunities for both buyers and sellers. Here’s a look at four key components that are shaping this unprecedented market. A Shortage of Homes for Sale The number of homes available for sale fell to an all-time low earlier this year. However, inventory levels are starting to trend up in recent months. Buyers who crave more options, this is actually good news. But even though we’re experiencing small gains in the number of available homes for sale, inventory remains a challenge in most states. That’s why it’s still a sellers’ market, giving homeowners immense leverage when they decide to make a move. Buyer Competition and Bidding Wars Today’s ongoing low supply, coupled with high demand, creates a market characterized by high buyer competition and bidding wars. Buyers are going above and beyond to make sure their offer stands out from the crowd by offering over the asking price, all cash, or waiving some contingencies. The number of offers on the average house for sale broke records this year – and that’s great news for sellers. For buyers, the best way to put a compelling offer together is by working with a local and trusted real estate advisor. That agent can act as your trusted advisor on what terms are best for you and what’s most appealing to the seller. Home Price Appreciation The competition among buyers is driving prices up. Over the past year, we’ve seen home price appreciation rise across the country. Rising home values are a big part of why real estate remains one of the top sought-after investments for Americans. For potential sellers, it also means it’s a great time to list your house to maximize the return on your investment. A Rise in Home Values and Equity The equity in a home doesn’t just grow when a homeowner pays their mortgage – it also grows as the home’s value appreciates. Thanks to the jump in price appreciation, homeowners across the country are seeing record-breaking gains in home equity. That’s a major perk for households to leverage. Homeowners can use that equity to accomplish major life goals or move into their dream homes. If you’re thinking about buying or selling, there’s no time like the present. Let’s connect to talk about how you can take advantage of the conditions we’re seeing today to meet your homeownership goals.
3 Major Reasons: This Isn't a Housing Bubble
Home prices continuing to deliver double-digit increases however some are concerned we’re in a housing bubble like the one in 2006. Let's take a closer look at the market data that indicates that this is nothing like 2006. Here are the 3 Major Reasons 1. The housing market isn’t driven by risky mortgage loans. Nearly everyone could qualify for a loan back in 2006. The Mortgage Credit Availability Index (MCAI) from the Mortgage Bankers’ Association is an indicator of the availability of mortgage money. The higher the index, the easier it is to obtain a mortgage. The MCAI more than doubled from 2004 (378) to 2006 (869). Today, the index stands at 130. As an example of the difference between today and 2006, let’s look at the volume of mortgages that originated when a buyer had less than a 620 credit score. 2. Homeowners aren’t using their homes as ATMs this time. As prices skyrocketed, people were refinancing their homes and pulling out large sums of cash during the housing bubble. As prices began to fall, that caused many to spiral into a negative equity situation (where their mortgage was higher than the value of the house). Today, homeowners are letting their equity build. Tappable equity is the amount available for homeowners to access before hitting a maximum 80% combined loan-to-value ratio (thus still leaving them with at least 20% equity). In 2006, that number was $4.6 billion. Today, that number stands at over $8 billion. Yet, the percentage of cash-out refinances (where the homeowner takes out at least 5% more than their original mortgage amount) is half of what it was in 2006. 3. It’s simply a matter of supply and demand this time. FOMO (the Fear Of Missing Out) dominated the housing market leading up to the 2006 housing bubble and drove up buyer demand. Back then, housing supply more than kept up as many homeowners put their houses on the market, as evidenced by the over seven months’ supply of existing housing inventory available for sale in 2006. Today, that number is barely two months. Builders also overbuilt during the bubble but pulled back significantly over the next decade. Today, there are simply not enough homes to keep up with current demand.
Are You Thinking About Selling Your House Soon?
It’s difficult to know when is the best time to sell, or how to get the most money for your house, but you don’t need to go through the process alone. You may be wondering if prices are projected to rise or fall…or how much competition you may be facing in your market. The FREE eGuide below will answer many of your questions and likely bring up a few things you haven’t even thought about yet. Download Our Free Guide Let us help you make it easy! Download your free guide today! If you would like to schedule a FREE consultation to go over the questions you may have, book your appointment at MeetingswithSteve.com
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