What’s Going To Happen with Home Prices This Year?

After almost two years of double-digit increases, many experts thought home price appreciation would decelerate or happen at a slower pace in the last quarter of 2021. However, the latest Home Price Insights Report from CoreLogic indicates while prices may have plateaued, appreciation has definitely not slowed. Appreciation has remained steady at around 18% over the last five months.

In addition, the latest S&P Case-Shiller Price Index and the FHFA Price Index show a slight deceleration from the same time last year – it’s just not at the level that was expected. However, they also both indicate there’s continued strong price growth throughout the country. FHFA reports all nine regions of the country still experienced double-digit appreciation. The Case-Shiller 20-City Index reveals all 20 metros had double-digit appreciation.

Why Haven’t We Seen the Deeper Deceleration Many Expected?

Experts had projected the supply of housing inventory would increase in the last half of 2021 and buyer demand would decrease, as it historically does later in the year. Since all pricing is subject to supply and demand, it seemed that appreciation would wane under those conditions.

Buyer demand, however, did not slow as much as expected, and the number of listings available for sale dropped instead of improved.

Here are three reasons why the number of active listings didn’t increase as expected:

1. There hasn’t been a surge of foreclosures as the forbearance program comes to an end.

2. New construction slowed considerably because of supply chain challenges.

3. Many believed more sellers would put their houses on the market once the concerns about the pandemic began to ease. However, those concerns have not yet disappeared. A recent article published by com explains:

“Before the omicron variant of COVID-19 appeared on the scene, the 2021 housing market was rebounding healthily from previous waves of the pandemic and turned downright bullish as the end of the year approached. . . . And then the new omicron strain hit in November, followed by a December dip in new listings. Was this sudden drop due to omicron, or just the typical holiday season lull?”

No one knows for sure, but it does seem possible.

Bottom Line

Home price appreciation might slow (or decelerate) in 2022. However, based on supply and demand, you shouldn’t expect the deceleration to be swift or deep.

What to Expect of the Real Estate Market in 4th Quarter in Napa Valley

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September 2021 Statistics

In September we saw more inventory year over year and fewer homes sold. The average sold price is much higher than last year and the average number of days on market is lower. The absorption rate is still favorable for sellers but with the interest rates and more inventory, this could also be a great time to buy.

Even with the adjustments in inventory, it doesn't mean that there is a lot of inventory in your budget so if you do need a mortgage make sure to get preapproved and obtain a letter of proof of funds to include in your offer.

The absorption rate in September was 48% (6% lower than last month). As a reminder, typically rates below 15% indicate a buyer's market, and above 20% indicate a seller's market.

In September total homes for sale were up 7% (12 homes). The sold homes were down 28% (33 homes) and the pending was down 13.3% (13 homes). The average sold amount was up 55.3% ($587k on average)but the average dollar per square was down 0.5% ($3.5 on average). The average number of days on market was down 37.9% (32 days). 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 3.27%

15 Yr FRM 2.64%

FHA 30 Year Fixed 2.9%

Jumbo 30 Year Fixed 3.2%

5/1 ARM 3.13%

What Does Being in a Sellers’ Market Mean?

Whether or not you’ve been following the real estate industry lately, there’s a good chance you’ve heard we’re in a serious sellers’ market. But what does that really mean? And why are conditions today so good for people who want to list their house?

It starts with the number of houses available for sale. The latest Existing Home Sales Report from the National Association of Realtors (NAR) shows housing supply is still astonishingly low. Today, we have a 2.6-month supply of homes at the current sales pace. Historically, a 6-month supply is necessary for a ‘normal’ or ‘neutral’ market in which there are enough homes available for active buyers.

When the supply of houses for sale is as low as it is right now, it’s much harder for buyers to find homes to purchase. That creates increased competition among purchasers which leads to more bidding wars. And if buyers know they may be entering a bidding war, they’re going to do their best to submit a very attractive offer. As this happens, home prices rise, and sellers are in the best position to negotiate deals that meet their ideal terms.

Right now, there are many buyers who are ready, willing, and able to purchase a home. Low mortgage rates and the ongoing rise in remote work have prompted buyers to think differently about where they live – and they’re taking action. If you put your house on the market while supply is still low, it will likely get a lot of attention from competitive buyers.

Bottom Line

Today’s ultimate sellers’ market holds great opportunities for homeowners ready to make a move. Listing your house now will maximize your exposure to serious buyers who will actively compete against each other to purchase it. Connect with a local real estate professional to jumpstart the selling process.

Do I Sell and/or Buy a Home? - June 2021 Napa Valley Real Estate Analysis

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This Is Still The Time to Sell!

June Statistics

The absorption rate in June was 56% (flat to last month). As a reminder, typically rates below 15% indicate a buyer's market, and above 20% indicate a seller's market. While this is a seller's market, the interest rates are still low which makes it a great time to buy as well!

In June total homes for sale were down 21.7% (48 homes). The sold homes were up 83.9% (52 homes) but the pending was down 13.2% (16 homes). The average sold amount was up 88.9% ($909.5k on average)and the average dollar per square was up 32.5% ($206.75 on average). The average number of days on market was up 53.2% (33 days). 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 2.87%

15 Yr FRM 2.31%

FHA 30 Year Fixed 2.5%

Jumbo 30 Year Fixed 3.05%

5/1 ARM 2.55%

The Right Expert Will Guide You Through This Unprecedented Market

In a normal market, it’s good to have an experienced guide coaching you through the process of buying or selling a home. That person can advise you on important things like pricing your home correctly or the first steps to take when you’re ready to buy. However, the market we’re in today is far from normal. As a result, an expert isn’t just good to have by your side – an expert is essential.

Today’s housing market is full of extremes. Mortgage rates hovering near record-lows are driving high buyer demand. On the other hand, an absence of sellers is creating record-low housing inventory. This imbalance in supply and demand is leading to a skyrocketing rate of bidding wars and more houses selling over their asking price. This is driving home price appreciation and gains in home equity. These market conditions aren’t just extreme – they can be overwhelming. Having a trusted expert to coach you through the process of buying and selling a home gives you clarity, confidence, and success through each step.

Here are just a few of the ways a real estate expert is invaluable:

• Contracts – We help with the disclosures and contracts necessary in today’s heavily regulated environment.

• Experience – We’re well-versed in real estate and experienced with the entire sales process, including how it’s changed over the past year.

• Negotiations – We act as a buffer in negotiations with all parties throughout the entire transaction while advocating for your best interests.

• Education – We simply and effectively explain today’s market conditions and decipher what they mean for your individual goals.

• Pricing – We help you understand today’s real estate values when setting the price of your home or making an offer to purchase one.

A real estate agent can be your essential guide through this unprecedented market, but truth be told, not all agents are created equal. A true expert can carefully walk you through the whole real estate process, look out for your unique needs, and advise you on the best ways to achieve success. Finding the right agent should be your top priority when you’re ready to buy or sell a home.

So, how do you choose the right expert?

It starts with trust. You’ll have to be able to trust the advice your agent is going to give you, so make sure you’re connected to a true professional. An agent can’t give you perfect advice because it’s impossible to know exactly what’s going to happen at every turn – especially in this unique market. A true professional expert can, however, give you the best possible advice based on the information and situation at hand, helping you make the necessary adjustments and best decisions along the way. The right agent – the professional – will help you plan the steps to take for success, advocate for you throughout the process, and coach you on the essential knowledge you need to make confident decisions toward your goals. That’s exactly what you want and deserve.

Bottom Line

It’s crucial right now to work with a real estate expert who understands how the market is changing and what that means for home buyers and sellers. If you’re planning to make a move this year, contact a local real estate professional who can answer your questions, give you the best advice, and guide you along the way.

Debating on Selling or Buying a Home in Napa Valley? What You Need to Know is Here!

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This Is Still The Time to Sell!

December Statistics

The absorption rate in December was 33.8%. As a reminder, typically rates below 15% indicate a buyer's market and above 20% is a seller's market. While this is a seller's market, the interest rates are still low which makes it a great time to buy as well! Not knowing what may happen with the new president I would advise to take advantage of the rates now! If you are considering buying and will need a mortgage, I would highly recommend reaching out to a mortgage lender for prequalification. This way you will be prepared and have one up on other buyers.

In December total homes for sale was down 21.9% (43 homes) but the total sold was up 42.1% (32 homes). The number of pending sales was also up 28.3% (13 homes). The average sold amount was up 63.7% (up $602k on average) and the average dollar per square was up 63.8% (up $275 on average). The average days on market was up 29.3% (20 days). 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 2.87%

15 Yr FRM 2.40%

FHA 30 Year Fixed 2.35%

Jumbo 30 Year Fixed 3.35%

5/1 ARM 2.30%

Taking Advantage of Homebuying Affordability in Today's Market

Everyone is ready to buy a home at different times in their lives, and despite the health crisis, today is no exception. Understanding how affordability works and the main market factors that impact it may help those who are ready to buy a home narrow down their optimal window of time to make a purchase.

There are three main factors that go into determining how affordable homes are for buyers:

1. Mortgage Rates

2. Mortgage Payments as a Percentage of Income

3. Home Prices

The National Association of Realtors (NAR), produces a Housing Affordability Index, which takes these three factors into account and determines an overall affordability score for housing. According to NAR, the index:

“…measures whether or not a typical family earns enough income to qualify for a mortgage loan on a typical home at the national and regional levels based on the most recent price and income data.”

Their methodology states:

“To interpret the indices, a value of 100 means that a family with the median income has exactly enough income to qualify for a mortgage on a median-priced home. An index above 100 signifies that family earning the median income has more than enough income to qualify for a mortgage loan on a median-priced home, assuming a 20 percent down payment.”

So, the higher the index, the more affordable it is to purchase a home. Here’s a graph of the index going back to 1990:

The green bar represents today’s affordability. We can see that homes are more affordable now than they have been at any point since the housing crash when distressed properties (foreclosures and short sales) dominated the market. Those properties were sold at large discounts not seen before in the housing market.

Why are homes so affordable today?

Although there are three factors that drive the overall equation, the one that’s playing the largest part in today’s homebuying affordability is historically low mortgage rates. Based on this primary factor, we can see that it is more affordable to buy a home today than at any time in the last seven years.

If you’re considering purchasing your first home or moving up to the one you’ve always hoped for, it’s important to understand how affordability plays into the overall cost of your home. With that in mind, buying while mortgage rates are as low as they are now may save you quite a bit of money over the life of your home loan.

Bottom Line

If you feel ready to buy, purchasing a home this season may save you significantly over time based on historic affordability trends. Reach out to a local real estate professional today to determine if now is the right time for you to make your move.

Daily Mortgage Rate Survey

• 30YR : 2.92%

• 15YR : 2.61%

• FHA30YR : 2.50%

• Jumbo30YR : 3.92%

• 5/1ARM : 2.80%

A Historic Rebound for the Housing Market

Pending Home Sales increased by 44.3% in May, registering the highest month-over-month gain in the index since the National Association of Realtors (NAR) started tracking this metric in January 2001. So, what exactly are pending home sales, and why is this rebound so important?

According to NAR, the Pending Home Sales Index (PHS) is:

“A leading indicator of housing activity, measures housing contract activity, and is based on signed real estate contracts for existing single-family homes, condos, and co-ops. Because a home goes under contract a month or two before it is sold, the Pending Home Sales Index generally leads Existing-Home Sales by a month or two.”

In real estate, pending home sales is a key indicator in determining the strength of the housing market. As mentioned before, it measures how many existing homes went into contract in a specific month. When a buyer goes through the steps to purchase a home, the final one is the closing. On average, that happens about two months after the contract is signed, depending on how fast or slow the process takes in each state.

Why is this rebound important?

With the COVID-19 pandemic and a shutdown of the economy, we saw a steep two-month decline in the number of houses that went into contract. In May, however, that number increased dramatically (See graph below):

This jump means buyers are back in the market and purchasing homes right now. Lawrence Yun, Chief Economist at NAR mentioned:

“This has been a spectacular recovery for contract signings and goes to show the resiliency of American consumers and their evergreen desire for homeownership…This bounce back also speaks to how the housing sector could lead the way for a broader economic recovery.”

But in order to continue with this trend, we need more houses for sale on the market. Yun continues to say:

“More listings are continuously appearing as the economy reopens, helping with inventory choices…Still, more home construction is needed to counter the persistent underproduction of homes over the past decade.”

As we move through the year, we’ll see an increase in the number of houses being built. This will help combat a small portion of the inventory deficit. The lack of overall inventory, however, is still a challenge, and it is creating an opportunity for homeowners who are ready to sell. As the graph below shows, during the last 12 months, the supply of homes for sale has been decreasing year-over-year and is not keeping up with the demand from homebuyers.

Bottom Line

If you decided not to sell this spring due to the health crisis, maybe it’s time to jump back into the market while buyers are actively looking for homes. Reach out to a local real estate professional to determine your best move forward.

A Look at Home Sales Across the Country by Region

Existing-home sales have been fluctuating in recent months, but one clear trend is emerging: First-time home buyers are making a move into the housing market as low mortgage rates prove to be an enticing incentive.

Lawrence Yun, chief economist for the National Association of REALTORS®, says he’s encouraged by the upturn in first-time home buyers in NAR’s latest existing-home sales report. First-timers comprised 32% of sales last month, up from 29% a year ago, according to NAR. “It’s good to see first-time buyers slowly stepping into the market,” Yun says. “The rise in the homeownership rate among younger adults under 35 and minority households means an increasing number of Americans can build wealth by owning real estate. Still, in order to further expand opportunities, significantly more inventory and home construction are needed at the affordable price points.”

The national homeownership rate has been rising strongly among people younger than 35, increasing from 35.4% in early 2019 to 37.6% in late 2019, Yun adds. Across age groups, existing-home sales are off to a “strong start” at 5.46 million for 2020, Yun says. “The trend line for housing starts is increasing and showing steady improvement, which should ultimately lead to more home sales.”

However, overall sales in January dipped month over month due mostly to the Western region of the country. Overall, existing-home sales—which include completed transactions for single-family homes, townhomes, condos, and co-ops—fell 1.3% compared to December. Still, home sales are up annually for the second consecutive month, with the latest numbers showing a 9.6% gain year over year in January, NAR’s housing report shows.

Here’s a closer look at key indicators from NAR’s latest housing report:

• Home prices: The median existing-home price for all housing types in January was $266,300, up 6.8% from a year ago. Prices rose in every region last month. “Mortgage rates have helped with affordability, but it is supply conditions that are driving price growth,” Yun says.

• Inventories: The total housing inventory at the end of January was 1.42 million units, down 10.7% from a year ago. Housing inventories are at the lowest levels for January since 1999. Unsold inventory is at a 3.1-month supply at the current sales pace.

• Days on the market: Forty-two percent of homes sold in January were on the market for less than a month. Properties stayed on the market for a median of 43 days in January, down from 49 days a year ago.

• All-cash sales: All-cash sales accounted for 21% of transactions in January, down from 23% a year ago. Individual investors and second-home buyers account for the largest bulk of cash sales. They purchased 17% of homes in January, up slightly from 16% a year ago.

• Distressed sales: Foreclosures and short sales comprised just 2% of sales in January, down from a year ago.

Regional Sales Snapshot

• Midwest: sales rose 2.4% in the region, reaching an annual rate of 1.29 million, up 8.4% from a year ago. Median price: $200,000, up 5.4% from January 2019

• South: sales increased 0.4% to an annual rate of 2.38 million in January, up 11.7% from a year ago. Median price: $229,000—a 6.3% increase from a year ago

• West: sales decreased 9.4% in January to an annual rate of 10.6 million, still an 8.2% increase compared to a year ago. Median price: $393,800, up 5.2% from a year ago

• Northeast: sales saw no major movement in January compared to December, remaining at an annual rate of 730,000. That is up, however, 7.4% from a year ago. Median price: $312,100—up 11.5% from a year ago

Source:  National Association of REALTORS®