Realty Executives Midwest
If you’re looking to buy a home, the recent downward trend in mortgage rates is good news because it helps with affordability. But there’s another way this benefits you – it may inspire more homeowners to put their houses up for sale.
Over the past year, one factor that’s really limited the options for your move is how few homes were on the market. That’s because many homeowners chose to delay their plans to sell once mortgage rates went up. An article from Freddie Mac explains:
“The lack of housing supply was partly driven by the rate lock-in effect. . . . With higher rates, the incentive for existing homeowners to list their property and move to a new house has greatly diminished, leaving them rate locked.”
These homeowners decided to stay put and keep their current lower mortgage rate, rather than move and take on a higher one on their next home.
According to the latest data from Realtor.com, there were more homeowners putting their houses up for sale, known in the industry as new listings, in December 2023 compared to December 2022 (see graph below):
Here’s why this is so significant. Typically, activity in the housing market cools down in the later months of the year as some sellers choose to delay their moves until January rolls around.
This is the first time since 2020 that we’ve seen an uptick in new listings this time of year. This could be a signal that the rate lock-in effect is easing a bit in response to lower rates.
While there isn’t going to suddenly be an influx of options for your home search, it does mean more sellers may be deciding to list. According to a recent article from the Joint Center for Housing Studies (JCHS):
“A reduction in interest rates could alleviate the lock-in effect and help lift homeowner mobility. Indeed, interest rates have recently declined, falling by a full percentage point from October to November 2023 . . . Further decreases would reduce the barrier to moving and give homeowners looking to sell a newfound sense of urgency . . .”
And that means you may see more homes come onto the market to give you more fresh options to choose from.
As mortgage rates come down, more sellers may re-enter the market – that gives you an opportunity to find the home you’re looking for. Connect with a real estate agent so you’ve got a local expert on your side who’ll help you stay on top of the latest listings in our area.
Source: Keeping Current Matters
Realty Executives Midwest
1310 Plainfield Rd. Ste 2 | Darien, IL 60561
Office: 630-969-8880
E-Mail: experts@realtyexecutives.com
Buying a home is a powerful decision, and it remains at the heart of the American Dream. Unlike renting, owning a home means more than just having a place to live – it offers a sense of belonging, stability, and freedom. According to Nicole Bachaud, Senior Economist at Zillow:
“The American Dream is still owning a home. There’s a lot of pent-up demand for ownership; that isn’t going to go away.”
Let’s explore just a few of the reasons why so many Americans continue to value homeownership.
One possible reason homeownership is viewed so highly is because owning a home is a significant wealth-building tool. That may be why Jessica Lautz, Deputy Chief and VP of Research at the National Association of Realtors (NAR), says:
“Homeownership is the number one way to build wealth in America.”
Over time, owning a home not only helps boost your own net worth, but it also sets future generations up for success as you pass that wealth down. Habitat for Humanity explains:
“Overall, homeownership promotes wealth building by acting as a forced savings mechanism and through home value appreciation. Homeowners make monthly payments that increase their equity in their homes by paying down the principal balance of their mortgage. . . . In addition, owning a home promotes intergenerational homeownership and wealth building. Children of homeowners transition to homeownership earlier — lengthening the period over which they can accumulate wealth . . .”
It can also provide meaningful financial stability compared to renting. When you buy with a fixed-rate mortgage, you can lock in your monthly housing payments for the length of your home loan.
But, owning a home offers more than just financial benefits—it benefits you socially and emotionally too. Your home provides feelings of achievement, responsibility, and more. In a recent survey, Fannie Mae outlines just a few of these more emotionally-driven benefits, including:
“The top three were having control over what you do with your living space (94%) to having a sense of privacy and security (91%) and having a good place for your family or to raise your children (90%) . . .”
If your idea of the American Dream involves greater freedom, security, and prosperity, homeownership could be a key player in bringing that dream to life. And with mortgage rates now on a downward trend, it might be a good time for you to consider making a move.
If you’re ready and able to buy, know that there are incredible benefits waiting at the end of your journey. You’ll gain more than just a home – it’s a place to grow your wealth and call your very own. Like Ksenia Potapov, Economist at First American says:
“…homeownership remains an important driver of wealth accumulation and the largest source of total wealth among most households.”
Buying a home is a powerful decision and the cornerstone of the American Dream. If finding a place to call your own is part of your dream for this year, connect with a local real estate advisor to start the process today.
Source: Keeping Current Matters
Realty Executives Midwest
1310 Plainfield Rd. Ste 2 | Darien, IL 60561
Office: 630-969-8880
E-Mail: experts@realtyexecutives.com
It may surprise you, but some of the most spectacular home renovations are valueless in the eyes of buyers. What you might consider luxury, another might see as a waste of time, money, and space.
One of homeowners’ biggest home renovation mistakes is adding unnecessary features to their homes. Others make undesirable changes, turning off prospective buyers from putting in an offer. Whether you plan to live in your house a bit longer or plan to list it soon, you should protect your home’s value by avoiding these 10 renovations.
You may dream of a lavish primary bedroom but connecting two rooms for one larger one significantly reduces your home’s value. Potential buyers with children will want enough bedrooms for everyone to have their own, even if they are smaller.
Nowadays, families need extra bedrooms to accommodate parents and grandparents, too. Generations United says 1 in 4 Americans live in multigenerational households — a jump from 7% to 26% from 2011 to 2021.
You may have dabbled in home improvements, but anything more than a touch-up of paint or caulk is best left to the pros. Small mistakes can lead to disastrous effects that can be costly and dangerous. For example, even the slightest millimeter off using a fastener can result in uneven load distribution. Eventually, the pieces might loosen and come apart. At worst, it could cause injury.
DIY projects are certainly more budget-friendly than calling a professional, but prospective buyers will notice subpar work. These mistakes could lead to a decreased home value and expensive repairs.
Stepping down on soft, warm carpeting in the wintertime might feel nice under your feet, but homebuyers would much rather see wood flooring, particularly in the common living areas.
Carpets contain more than 91,000 colony-forming units — about 30.2 times more germs than refrigerator handles and 5.7 times more germs than toilet seats.
You can expect only a 25% to 40% return on investment (ROI) by replacing carpeting with more carpeting. Conversely, hardwood floors have a 70% to 80% ROI in the current market.
A swimming pool has one of the worst ROIs unless you live in a warmer climate or upscale neighborhood. Potential buyers have little enthusiasm for maintenance and operational costs.
Filtration may run about $725 to $1,525 without installation costs. Of course, you might also spend between $230 and $1,600 for upkeep and chemical treatments. Even if you decide not to maintain it yourself, you will need to pay someone to do it for you.
Homebuyers look for a well-kept home with easy, low-cost maintenance — especially younger, cost-conscious buyers. A swimming pool is less likely to deliver.
Converting your garage into extra living space may or may not increase your home value. The additional space is invaluable for some current homeowners and potential buyers, especially if another person is moving in.
However, many agree an attached garage is more valuable in urban areas. City dwellers park their cars in garages to avoid having to find street parking. Additionally, 85% of homeowners deem garages essential or desirable for storage.
Patterned floor tiles and backsplashes are a playful way to incorporate your design tastes. For instance, you can add Mediterranean flair behind the stovetop or lay an intriguing farmhouse pattern on your bathroom floor. However, the less personalization, the better.
Not every prospective buyer walking through your home will share your design preferences or vision. All they might foresee is the cost to demo and replace the upgrades you made, bringing down your home’s value.
Consider using a traditional white subway tile backsplash or something neutral in the bathroom. These plainer styles will always stay in style, regardless of market trends.
According to a 2023 Neighbor.com survey, 25% of people need or want more space in their homes. Perhaps more surprisingly, 1 in 4 homeowners outgrow their square footage in two years.
Eliminating storage throughout the house will reduce your home’s value. Avoid getting rid of closet space for whatever reason. Instead, optimizing closet space for better storage or converting a closet to a pantry is best.
You might view built-in aquariums as a luxury item in your home, or you may just like fish. Either way, a built-in aquarium is not a home upgrade you should consider.
Most potential buyers are uninterested in built-in aquariums for the upkeep and maintenance costs. It is also expensive to have it removed from the home. If you must have fish, opt for a standalone fish tank, which you can easily assemble and disassemble.
Adding a sunroom to your home might seem like a value-boosting luxury, but it has less ROI than you would think. The only way to potentially make back your money is to turn the space into a four-season room, which costs more.
A four-season sunroom is most expensive at $25,000 to $85,000, depending on its size, insulation, heating, and cooling. However, this type of sunroom adds square footage since it is usable year-round.
About 57% of homeowners will own smart home technology by 2025. Nowadays, smart televisions, thermostats, speakers, lighting, alarm systems and at-home personal assistants are staples in most households.
A McKinsey study also reports a whopping 50 billion devices will connect to the Internet of Things by 2025, amounting to another 79.4 zettabytes of information annually.
Technology is advancing quickly — perhaps too quickly for home integration. Home devices will likely become outdated shortly after you install them into your home. Therefore, it is best to avoid investing in built-in home automation. Instead, focus on integrating energy-efficient appliances and features to accrue savings.
Some home improvements are nice to have. However, if you are considering moving soon, you will want to upgrade your home with buyers in mind. Weigh the project costs against the potential ROI to decide if it is worth doing.
If you’re thinking about buying a home, pre-approval is a crucial part of the process you definitely don’t want to skip. So, before you start picturing yourself in your new living room or dining on your future all-season patio, be sure you’re working with a trusted lender to prioritize this essential step. Here’s why.
While home price growth is moderating and mortgage rates have been coming down in recent weeks, affordability is still tight. At the same time, there’s a limited number of homes for sale right now, and that means ongoing competition among hopeful buyers. But, if you’re strategic, there are ways to navigate these waters – and pre-approval is the game changer.
To understand why it’s such an important step, you need to know more about pre-approval. As part of the homebuying process, a lender looks at your finances to determine what they’re willing to loan you. From there, your lender will give you a pre-approval letter to help you understand how much money you can borrow. Freddie Mac explains it like this:
“A pre-approval is an indication from your lender that they are willing to lend you a certain amount of money to buy your future home. . . . Keep in mind that the loan amount in the pre-approval letter is the lender’s maximum offer. Ultimately, you should only borrow an amount you are comfortable repaying.”
Getting pre-approved starts to put you in the mindset of seeing the bigger financial picture, one step at a time. And the key is actually more than just getting a pre-approval letter from your lender. The combination of pre-approval and strategic budgeting is your golden ticket to understanding what you can actually afford. It saves you from painful heartaches down the road so you don’t fall in love with a house that might be out of reach.
But that’s just the beginning. Let’s face it, there are more people looking to buy than there are homes available for sale, and that creates competition among homebuyers. That means you could see yourself in a multiple-offer scenario when you get ready to make your move. But getting pre-approved for a mortgage can help you stand out from other buyers.
In today’s fast-moving housing market, having that pre-approval in your back pocket can be your secret weapon. When sellers see you’re pre-approved, it tells them you’re a strategic and serious buyer. In a world of multiple offers, that’s a big deal. As an article from the Wall Street Journal (WSJ) says:
“If you plan to use a mortgage for your home purchase, preapproval should be among the first steps in your search process. Not only can getting preapproved help you zero in on the right price range, but it can give you a leg up on other buyers, too.”
Pre-approval shows sellers you’re more than just a window shopper. You’re a buyer who’s already undergone a credit and financial check, making it more likely that the sale will move forward without unexpected delays or issues. Sellers love that because they see your offer as a reliable one. A win-win, right?
So, before you start mentally arranging furniture in your dream home, let’s connect to get your pre-approval set. It’ll save you time, stress, and a lot of headaches that could come up along the way without it. The reality is, the more prepared you are, the more likely you are to land the home you’re longing for.
Source: Keeping Current Matters
Realty Executives Midwest
1310 Plainfield Rd. Ste 2 | Darien, IL 60561
Office: 630-969-8880
E-Mail: experts@realtyexecutives.com
If you’re thinking about buying or selling a home soon, you probably want to know what you can expect from the housing market in 2024. In 2023, higher mortgage rates, confusion over home price headlines, and a lack of homes for sale created some challenges for buyers and sellers looking to make a move. But what’s on the horizon for the new year?
The good news is, many experts are optimistic we’ve turned a corner and are headed in a positive direction.
Recently, mortgage rates have started to come back down. This has offered hope to buyers dealing with affordability challenges. Mark Fleming, Chief Economist at First American, explains how they may continue to drop:
“Mortgage rates have already retreated from recent peaks near 8 percent and may fall further . . .”
Jessica Lautz, Deputy Chief Economist at the National Association of Realtors (NAR), says:
“For home buyers who are taking on a mortgage to purchase a home and have been wary of the autumn rise in mortgage rates, the market is turning more favorable, and there should be optimism entering 2024 for a better market.”
As rates ease, activity in the housing market should pick up because more buyers and sellers who had been holding off will jump back into action. If more sellers list, the supply of homes for sale will grow – a trend we’ve already started to see this year. Lisa Sturtevant, Chief Economist at Bright MLS, says:
“Supply will loosen up in 2024. Even homeowners who have been characterized as being ‘locked in’ to low rates will increasingly find that changing family and financial circumstances will lead to more moves and more new listings over the course of the year, particularly as rates move closer to 6.5%.”
And mortgage rates pulling back isn’t the only positive sign for affordability. Home price growth is expected to moderate too, as inventory improves but is still low overall. As the Home Price Expectation Survey (HPES) from Fannie Mae, a survey of over 100 economists, investment strategists, and housing market analysts, says:
“On average, the panel anticipates home price growth to clock in at 5.9% in 2023, to be followed by slower growth in 2024 and 2025 of 2.4 percent and 2.7 percent, respectively.”
To wrap it up, experts project 2024 will be a better year for the housing market. So, if you’re thinking about making a move next year, know that early signs show we’re turning a corner. As Mike Simonsen, President and Founder of Altos Research, puts it:
“We’re going into 2024 with slight home-price gains, somewhat easing inventory constraints, slightly increasing transaction volume . . . All in all, things are looking up for the U.S. housing market in 2024.”
Experts are optimistic about what 2024 holds for the housing market. If you’re looking to buy or sell a home in the new year, the best way to ensure you’re up to date on the latest forecasts is to partner with a trusted real estate agent.
Realty Executives agents are real estate experts. They have the education and expertise you need to navigate through the process of buying or selling a home. From listing at the right price to making the best offer, our Executives have witnessed the best - and most regrettable - decisions homeowners and homebuyers can make. Every day, they are immersed in every aspect of real estate that includes comparable home price analysis, property surveys, credit reports, open houses, HOA agreements, lenders, title companies, homeowners’ insurance, walk-throughs, terms of sale or purchase, repairs, concessions and closing documents. Let our accomplished Executives help navigate you through the process of buying or selling a home.
