Establishing Values

Housing prices nationally on average have been falling, 12% from last year, that slide came amid increasing mortgage rates. Is the US housing market finally ready to slow down, or is it in trouble?  Peak prices hit last June.  Pricing on existing homes has slumped especially in the larger cities, San Diego, Phoenix, Denver, Portland Austin, some smaller markets seem to be leveling out also.  Nationally Moody's predicts more price drops- perhaps around 4% more. New home sales may drop as much as 20% depending on areas located.

Elevated home pricing and mortgage rates may hurt home prices significantly for several years. Affordability has been affected too- only 21% of prospective buyers can afford to purchase. 

 Over a five-year window of owning a home- you will see stabilization but remain mostly flat. Rising costs of materials, climate change restrictions, demand, affordability, costs associated with ownership all will influence the price of buying a home. Prices will take several years to reach 2022 peak. Interest rates become the crucial factor in the future housing market.

The appraisal takes about 10 days to complete, most licensed/certified appraisers aren't busy, but the underwriting requirements are often what make the appraisal costly. The house may sell in an 18 day average now, but the loan approval, lender's underwriting and the appraisal may take weeks. 

Now with a slowdown in refinance and purchasing of a home, the appraisal process begins to change too- as sales data increases the comparable of the neighborhoods change too.  The statistics of median price, cost per square foot, upgrades, amenities may begin to be adjusted downward too. You may have more time to consider exactly what you want to buy for a lower price. 

The markets have definitely changed, slowed and softened. Almost 60,000 sales fell through last October 2022, according to Redfin Brokerage.  Thats 17.9% of homes that were under contract now cancelled, 37% of small real estate firms couldn't pay rent in October according to Alinable, an online referral network. 

 Small homebuilding companies are suffering the greatest losses in homebuilding- as larger builders take 57% market share.  The existing market is very limited therefore the pricing power is STRONG.

This housing correction will take several months more to correct from high inflationary prices, covid catch up building delays, increased interest rates and less affordability for 

 buyers, and seller to understand the market changes. We are 8 months already into a slowdown correction- It has about a 4-month delay before the consumer feels it- look to  Spring of 2024 for a little more concern or downturn.  Then who knows- 

No one seems to really understand this market- it is different than the 2008 downturn, new loans are currently underwritten at 7.5%. Most homeowners don't want to trade up or give up the original 3% loan: they are staying put.

The Federal Reserve has taken a breaks in  2023, after raising 10 times from 2022-2023. 

Inflation is still above the targeted 2% that the Federal reserve would like to see in a healthy economy, so it most likely will raise the interest rates again. A slowing economy and the easing of inflation pressures are the requirements for lower mortgage rates. Fed's actions set the tone for overall mortgage rates. 

Home prices have declined for eight straight months, according to the Case-Shiller U.S. Home Index, with a slight exception in February.  However, in the long-term home prices and sales tend to be resilient to rising mortgage rates, that's because life events prompt home purchases. Over the years interest prices have been as high as 18% (1980), yet people still bought homes, so today the slowdown may be more of an overheated market returning to normalcy rather than a market crash.

Pro Tips for getting a mortgage

Look around for a broker who shops rates- conduct an online search.

Consider a HELOC, rather than refinancing, use your home equity (at 8% ) to tap into money for emergency or remodeling.

Be cautious about ARMs, (adjustable rate mortgages),  or assumable loans -check the adjustment time period or balloon payments.

Plan to stay in your home for several years if you can afford .

Did you know some appraisers are also brokers, and have additional education of 2000 hours, just to the qualified to appraise the property? Besides a college degree, and additional certifications or national appraisal institute education, appraisers have a lot of knowledge of local markets. Choose your appraiser carefully.

WHAT IS THE VALUE OF YOUR PROPERTY?  The APPRAISER  can help the buyer understand the   costs related to the property, and market fluctuations. Sometimes homeowners need  a specific type of  appraisal because of certain circumstances- banking requirements, lender  requirements, refinance ,bankruptcy, death requirements/  inheritance, expert testimonial, or insurance. Sellers may need an appraisal before selling to see the value of their home and understand market changes. The buyer can trust a certified appraiser's opinion over the internet value- which sometimes does NOT reflect our local market. Appraisers can help you understand comparable sale differences. You get what you pay for- Make sure you understand what you need. Call for a consultation or review , if you are not sure what you need. In these volatile market times  DON'T wave your appraisal. It is for YOUR protection as a buyer.

 Mortgage or No mortgage is the question of the day? As you reach retirement you may be considering this option. Here are some things to consider-Are rates low enough to give you a little extra income each month? It is advisable to refinance before you retire because the W-2 income making is easier to get approved. The economic climate causes several factors to change also:  influences such as, interest rates, availability of money, status of your job, retirement income pressures, and taxes. Do you want to make a payment during your retirement? Are you staying in your house and committed to continue with the costs of taxes, repairs and maintenance? What type of loan do you have? interest only? how many years are left to pay? Do you know your monthly budgets in case you DO have an emergency? What is your refinance break even cost to gain back the cost of the new loan? That alone  should help you make a good decision. 

 There is a lot to think about when buying a house. or refinancing-Interest rates have doubled in the last year and houses are in an inflationary period. Maybe wait it out or consult an appraiser.