Is the Real Estate Market Slowing Down, or Is This a Housing Bubble?

The talk of a housing bubble in the coming year seems to be at a fever pitch as rising mortgage rates continue to slow down an overheated real estate market. Over the past two years, home prices have appreciated at an unsustainable pace causing many to ask: are things just slowing down, or is a crash coming?

To answer this question, there are two things we want to understand. The first is the reality of the shift in today’s housing market. And the second is what experts are saying about home prices in the coming year.

The Reality of the Shift in Today’s Housing Market

The reality is we’re seeing an inflection point in housing supply and demand. According to realtor.com, active listings have increased more than 26% over last year, while showings from the latest ShowingTime Showing Index have decreased almost 17% from last year (see graph below). This is an inflection point for housing because, over the past two years, we’ve seen a massive amount of demand (showings) and not enough homes available for sale for the number of people that wanted to buy. That caused the market frenzy.

Today, supply and demand look very different, and the market is slowing down from the pace we’ve seen.

What Experts Are Saying About Home Prices in the Coming Year

Right now, most experts are forecasting home price appreciation in 2023, but at a much slower pace than the last two years. The average of the six forecasters below is for national home prices to appreciate by 2.5% in the coming year. Only one of the six is calling for home price depreciation.

When we look at the shift taking place along with what experts are saying, we can conclude the national real estate market is slowing down but is not a bubble getting ready to burst. This isn’t to say that a few overheated markets won’t experience home price depreciation, but there isn’t a case to be made for a national housing bubble.

Bottom Line

The real estate market is slowing down, and that’s causing many to fear we’re in a housing bubble. What we’ve experienced in the housing market over the past two years were historic levels of demand and constrained supply. That led to homes going up in value at a record pace. While some overheated markets may experience price depreciation in the short term, according to experts, the national real estate market will appreciate in the coming year.

March Real Estate Statistics and Analysis

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This recession is not because of the economy, this recession is because of a virus. Buying and selling of real estate is still occurring and has not affected the appreciation of homes. Please talk to your Realtor to find out more about your specific market and what the rules and regulations are for showing properties. That being said, I do believe that once we return to the "new normal," there will be a boom in certain markets. The new luxury is the luxury of space. A number of individuals who can leave the city and work remotely will consider moving to more rural areas (i.e. leave San Francisco and move to the Napa Valley and/or Sonoma). We will see as the months pass if my hypothesis comes to fruition.

If you are considering selling, please keep in mind there are ways of putting your house on the market without turning on the days on market calculator at this time. There are also new virtual ways of selling homes to minimize the foot traffic through your home and make the buyers feel more comfortable if they want to view the home in person.

If you are considering buying and will need a mortgage, I would highly recommend reaching out to a mortgage lender for pre-qualification. This way you will be prepared and have one up on other buyers.

Inventory was slightly lower this March (down 14% or 33 homes) while the total sold was up 7.5% (4 homes) but the number of pending sales was down 26% (20 homes) which offsets last month which was up by 20 homes. The average sold amount was up 16.3% ($175k) and the average dollar per square foot was up 17.1% ($88). To get a better understanding of the right time to buy/sell, click here for a breakout by town.

Today's Rates (please check with your lender as these change regularly):

30 Yr FRM 3.38%

15 Yr FRM 3.18%

FHA 30 Year Fixed 3.38%

Jumbo 30 Year Fixed 4.40%

5/1 Year ARM 4.08%

What If I Need to Sell My Home Now? What Can I Do?

Every day that passes, people have a need to buy and sell homes. That doesn’t stop during the current pandemic. If you’ve had a major life change recently, whether with your job or your family situation, you may be in a position where you need to sell your home – and fast. While you probably feel like timing with the current pandemic isn’t on your side, making a move is still possible. Rest assured, with technology at your side and fewer sellers on the market in most areas, you can list your house and make it happen safely and effectively, especially when following the current COVID-19 guidelines set forth by the National Association of Realtors (NAR) and the Centers for Disease Control and Prevention (CDC).

You may have a new baby, a new employment situation, a parent who moved in with you, you just built a home that’s finally ready to move into, or some other major part of your life that has changed in recent weeks. Buyers have those needs too, so rest assured that someone is likely looking for a home just like yours.

According to the NAR Flash Survey: Economic Pulse taken April 5 – 6, real estate agents indicate, not surprisingly, that there’s a noticeable decline in current homebuyer interest. That said, 10% of agents said in the same survey that they saw no change or even an increase in buyer activity. So, while buyer interest is low compared to normal spring markets, there are still buyers in the market. Don’t forget, you only need one buyer – the right one for your home.

Here’s the other thing – people are spending a lot of time on the Internet right now, given the stay-at-home orders implemented across the country. Buyers are actively looking at homes for sale online. Some of them are reaching out to real estate professionals for virtual tours and getting ready to make offers too. Homes are being sold in many markets.

There Is Less Competition Right Now

The same survey indicates that 56% of NAR members said sellers are removing their homes from the market right now. This can definitely work in your favor. If other sellers are removing their listings, your home has a better chance of rising to the top of a buyer’s search list and being seen. Keep in mind, listings will pick up again soon, as 57% of the respondents note that sellers are only planning to delay the process by a couple of months. If you need to sell right now, don’t wait for the competition to get back into the market again.

This year, delayed listings from the typically busy spring season will push into the summer months, so more competition will be coming to the market as the pandemic passes. Getting ahead of that wave now might be your biggest opportunity.

Your Trusted Real Estate Advisor Can Help

Real estate agents are working hard every single day under untraditional circumstances, utilizing technology to help both buyers and sellers who need to continue with their plans. We’re using virtual tours to show homes currently on the market, staying connected with the buyers and sellers through video chats, and leveraging resources to complete transactions electronically. We’re making sure the families we support remain safe and can keep their real estate needs on track, especially as life is changing so rapidly.

Bottom Line

Homes are still being bought and sold in the midst of this pandemic. If you need to sell your house and would like to know the current status in your local market, contact a local real estate professional to create a safe and effective plan that works for you and your family.

March 2020 Real Estate News Updates

February Real Estate News and Updates

Mortgage Rates May Be Pressured Higher As Virus Fears Ebb

Mortgage rates were very slightly higher today after being modestly lower over the weekend, but in general, remain very close to the lowest levels in more than 3 years.  They weren't too much higher than current levels even before the coronavirus outbreak took center stage, but the virus definitely deserves credit for the extra downward momentum in recent weeks.  Given that Chinese equities markets are already indicating the financial market psyche has shifted, it may only be a matter of time before US bond markets (which dictate mortgage rates) follow suit. 

That's not to say that bonds must follow stocks.  If that were the case, we wouldn't see bond yields close to all-time lows while stocks are at all-time highs.  Rather, it's simply a comment on the fact that Chinese equities serve as a good barometer for how quickly markets are getting over their coronavirus concerns.  If we assume that bond yields (aka rates) are only as low as they are because of coronavirus, any additional recovery in Chinese equities would likely coincide with upward pressure for interest rates.

Loan Originator Perspective

Bond yields were largely unchanged Tuesday, with no meaningful economic data or new Wuhan virus drama motivating markets.  My pricing mirrored Monday's.  We're going to need some serious motivation for rates to drop significantly from here, I am playing it safe and locking loans closing within 45 days. - Ted Rood, Senior Originator

Today's Most Prevalent Rates For Top Tier Scenarios 

• 30YR FIXED - 3.375 - 3.5%

• FHA/VA -3.25%

• 15 YEAR FIXED - 3.125-3.25% 

• 5 YEAR ARMS -  3.25-3.75% depending on the lender

Ongoing Lock/Float Considerations 

• 2019 was the best year for mortgage rates since 2011.  Big, long-lasting improvements such as this one are increasingly susceptible to bounces/corrections 
  

• Fed policy and the US/China trade war have been key players (and more recently, the coronavirus outbreak).  Major updates on either front could cause a volatile reaction in rates.  
  

• The Fed and the bond market (which dictates rates) will be watching economic data closely, both at home and abroad, as well as updates on other factors like trade and viral epidemics. The stronger the data the more rates could rise, while weaker data will lead to new long-term lows.  

• Rates discussed refer to the most frequently-quoted, conforming, conventional 30yr fixed rate for top tier borrowers among average to well-priced lenders.  The rates generally assume little-to-no origination or discount except as noted when applicable.  Rates appearing on this page are "effective rates" that take day-to-day changes in upfront costs into consideration.

BY: MATTHEW GRAHAM

December 2019 Real Estate News & Updates

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Thank you,

Kate Spadarotto

National Senior Citizens Day: Seniors are on the Move in the Real Estate Market

Did you know August 21st is National Senior Citizens Day? According to the United States Census, we honor senior citizens today because,

 “Throughout our history, older people have achieved much for our families, our communities, and our country. That remains true today and gives us ample reason…to reserve a special day in honor of the senior citizens who mean so much to our land.”

To give proper recognition, we’re going to look at some senior-related data in the housing industry.

According to the Population Reference Bureau,

“The number of Americans ages 65 and older is projected to nearly double from 52 million in 2018 to 95 million by 2060, and the 65-and-older age group’s share of the total population will rise from 16 percent to 23 percent.”

Seniors Believe in Homeownership

In a recent report, Freddie Mac compared the homeownership rates of two groups of seniors: the Good Times Cohort (born from 1931-1941) and the Previous Generations (born in the 1930s). The data shows an increase in the homeownership rate for the Good Times Cohort because seniors are now aging in place, living longer, and maintaining a high quality of life into their later years.

This, however, does not mean all seniors are staying in place. Some are actively buying and selling homes. In the 2019 Home Buyers and Sellers Generational Trends Report, the National Association of Realtors® (NAR) showed the percentage of seniors buying and selling:

Here are some highlights from NAR’s report:

• Buyers ages 54 to 63 had higher median household incomes and were more likely to be married couples.

• 12% of buyers ages 54 to 63 are first-time homebuyers, 5% (64 to 72), and 4% (73 to 93).

• Buyers ages 54 to 63 purchased because of an interest in being closer to friends and families, job relocation, and the desire to own a home of their own.

• Sellers 54 years and older often downsized and purchased a smaller, less expensive home than the one they sold.

• Sellers ages 64 to 72 lived in their homes for 21 years or more.

Bottom Line

According to NAR’s report, 58% of buyers ages 64 to 72 said they need help from an agent to find the right home. The transition from a current home to a new one is significant to undertake, especially for anyone who has lived in the same house for many years. If you’re a senior thinking about the process, work with a local real estate professional who can help you make the move as smoothly as possible.