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Could a Multigenerational Home Be the Right Fit for You?
During the pandemic, many of us reexamined the meaning of home for ourselves and our loved ones. Today, that can be seen in the recent rise in multigenerational households. According to Jessica Lautz, Deputy Chief Economist and Vice President of Economic Research at the National Association of Realtors (NAR):
“Multi-generational buying may be a home where families live in the same home with elderly parents, children who have boomeranged back home, or other extended family members. While this is not a new concept of living, it is one which has gained recent popularity.”
And citing data from Pew Research Center, the Wall Street Journal (WSJ) says:
“. . . multigenerational living has made a comeback in recent years, particularly after the 2008 financial crisis and during the pandemic.”
So, if buying a multigenerational home has crossed your mind, you aren’t alone. Depending on what stage of homeownership you’re in, there are different reasons it could be the right fit. The chart below shows responses to a recent survey from NAR about the reasons people have bought a multigenerational home:
Whether your motives are financial or focused on the people you’ll share your home with, a multigenerational home has distinct advantages. It can make homeownership more affordable, and it can help you best support your loved ones. As Lautz explains:
“Multi-generational home buying is a way for families to care for one another, support one another, and often buy a home that may have been previously out of reach. . . . The trend of multigenerational buying appears to be firmly established and one that could expand in the future.”
Bottom Line
If you’re ready to buy a house, consider the opportunities of a multigenerational home. Let’s connect so you can explore your options in our area.
Is It Really Better To Rent Than To Own a Home Right Now?
You may have seen reports in the news recently saying it’s better to rent right now than it is to own your home. But before you let that impact your decisions, you should understand what these claims are based on.
A lot of the time, these reports are assuming things that aren’t realistic for the average household. For example, the methodology behind one of those reports says that renting is the smarter financial option because of the opportunity to invest money elsewhere. It assumes renters take the money they’d spend on costs tied to buying a home and put it in an investment portfolio.
But here’s the thing – most people who rent aren’t making those investments. Ken Johnson, Co-Author of the BH&J National Price-to-Rent Index, explains:
“One of the difficulties with the rent and reinvest model is many people . . . simply rent and spend the difference. . . . That’s wealth destroying.”
The reason homeownership is one of the best investments you can make is the wealth it helps you build. That’s why there’s a significant difference between the net worth of the average homeowner and the average renter (see graph below):
So, before you renew your rental agreement, think about the opportunity to build wealth that homeownership provides.
Bottom Line
If you’re unsure whether to continue renting or to buy a home, let’s connect to help you make the best decision.
Equity Gains for Today’s Homeowners
Today’s homeowners are sitting on significant equity, even as home price appreciation has eased recently. If you’re a homeowner, your net worth got a boost over the past few years thanks to rising home prices. Here’s what it means for you, even as the market moderates.
How Equity Has Grown in Recent Years
Because of the imbalance between how many homes were for sale and the number of homebuyers in the market over the past few years, home prices appreciated substantially.
And while price appreciation has slowed this year, that doesn’t mean you’ve lost all the equity in your home. In fact, the latest Homeowner Equity Insights report from CoreLogic finds the average homeowner’s equity has grown by $34,300 over the past year alone.
And if you’ve been in your home longer than that, chances are you have even more equity than you realize.
While that’s the national number, if you want to know what happened in your area, look at the map below from the Federal Housing Finance Agency (FHFA). It shows on average how much home prices have risen over the past five years, which has been a major driver behind equity growth.
Why This Is So Important Right Now
While equity helps increase your overall net worth, it can also help you achieve other goals, like buying your next home. When you sell your current house, the equity you’ve built up comes back to you in the sale, and it may be just what you need to cover a large portion – if not all – of the down payment on your next home.
So, if you’ve been holding off on selling, it may be time to find out how much equity you have and how it can help fuel your next move.
Bottom Line
Homeownership is a long game, and if you’re planning to make a move, the equity you’ve gained over time can make a big impact. To find out just how much equity you have in your current home and how you can use it to fuel your next purchase, let’s connect.
An Expert Makes All the Difference When You Sell Your House
If you’re thinking of selling your house, it’s important to work with someone who understands how the market is changing and what it means for you. Here are five reasons working with a professional can ensure you’ll get the most out of your sale.
1. They’re Experts on Market Trends
With today’s housing market defined by change, it’s critical to work with someone who knows the latest information and how it impacts your goals. An expert real estate advisor knows about national trends and your local area too. More importantly, they’ll give insight to what all of this means for you, so they’ll be able to help you make a decision based on trustworthy, data-bound information.
2. A Local Professional Knows How To Set the Right Price for Your Home
Home price appreciation has moderated this year. If you sell your house on your own, you may be more likely to overshoot your asking price because you’re not as aware of where prices are today. Pricing your house too high can deter buyers or cause your house to sit on the market for longer.
Real estate professionals look at a variety of factors, like the condition of your home and any upgrades you’ve made, with an unbiased eye. They compare your house to recently sold homes in your area to find the best price for today’s market so your house sells quickly.
3. A Real Estate Advisor Helps Maximize Your Pool of Buyers
Since buyer demand has cooled this year, you’ll want to do what you can to help bring in more buyers. Real estate professionals have a wide range of tools at their disposal, such as social media followers, agency resources, and the Multiple Listing Service (MLS), to ensure your house gets in front of people looking to make a purchase. Investopedia explains why it’s risky to sell on your own without the network an agent provides:
“You don’t have relationships with clients, other agents, or a real estate agency to bring the largest pool of potential buyers to your home.”
Without access to your agent’s tools and marketing expertise, your buyer pool – and your home’s selling potential – is limited.
4. A Real Estate Expert Will Read – and Understand – the Fine Print
Today, more disclosures and regulations are mandatory when selling a house. That means the number of legal documents you’ll need to juggle is growing. The National Association of Realtors (NAR) puts it like this:
“There’s a lot of jargon involved in a real estate transaction; you want to work with a professional who can speak the language.”
5. A Local Professional Is a Skilled Negotiator
In today’s market, buyers are regaining some negotiation power. If you sell without an expert, you’ll be responsible for any back-and-forth. That means you’ll have to coordinate with:
- The buyer, who wants the best deal possible
- The buyer’s agent, who will use their expertise to advocate for the buyer
- The inspection company, which works for the buyer and will almost always find concerns with the house
- The appraiser, who assesses the property’s value to protect the lender
Instead of going toe-to-toe with these parties alone, lean on an expert. They’ll know what levers to pull, how to address everyone’s concerns, and when you may want to get a second opinion.
Bottom Line
Don’t go at it alone. If you’re planning to sell your house this spring, let’s connect so you have an expert by your side to guide you in today’s market.
What You Should Know About Rising Mortgage Rates
After steadily falling over the winter, mortgage rates have started to rise in recent weeks. This is concerning to some potential homebuyers as the combination of higher mortgage rates and higher prices have made homes less affordable. So, if you’re planning to purchase a home this year, you too may be wondering if now’s the right time to buy or if you should hold off on your search until rates come back down.
The recent uptick in rates has been driven by what’s happening with inflation. Joel Kan, Vice President and Deputy Chief Economist at the Mortgage Bankers Association (MBA), explains:
“Mortgage rates increased across the board last week, pushed higher by market expectations that inflation will persist, thus requiring the Federal Reserve to keep monetary policy restrictive for a longer time.”
The most recent weekly average 30-year fixed mortgage rate reported by Freddie Mac is 6.5%. It’s the third week in a row that rates have increased and puts them at the highest point they’ve been this year (see graph below):
Advice for Home Shoppers
If you’re thinking about pausing your home search because rates have started to go up again, you may want to reconsider. This could actually be an opportunity to buy the home you’ve been searching for. According to the MBA, mortgage applications declined by 13.3% in just one week, so it appears the rise in mortgage rates is leading some potential homebuyers to pull back on their search for a new home.
So, what does that mean for you? If you stay the course, you’ll likely face less competition among other buyers when you’re looking for a home. This is welcome relief in a market that has so few homes for sale.
Bottom Line
Over the last few weeks, mortgage rates have risen. But that doesn’t mean you should delay your plans to buy a home. In fact, it could mean the opposite if you want to take advantage of less buyer competition. Let’s connect today to explore the options in our local market.
One Major Benefit of Investing in a Home
One of the many reasons to buy a home is that it’s a major way to build wealth and gain financial stability. According to Freddie Mac:
“Building equity through your monthly principal payments and appreciation is a critical part of homeownership that can help you create financial stability.”
With spring approaching, now’s a great time to consider if buying a home makes sense for you. The best way to figure that out is to talk with a trusted real estate professional.
The Largest Part of Most Homeowners’ Net Worth Is Their Equity
You may be surprised to learn just how much of a homeowner’s net worth actually comes from owning their home. The National Association of Realtors (NAR) shares:
“Homeownership is the largest source of wealth among families, with the median value of a primary residence worth about ten times the median value of financial assets held by families. Housing wealth (home equity or net worth) gains are built up through price appreciation and by paying off the mortgage.”
In other words, home equity does more to build the average household’s wealth than anything else. And according to data from First American, this holds true across different income levels (see graph below):
Bottom Line
One of the biggest benefits of owning a home, regardless of your income level, is that it provides financial stability and an avenue to build wealth. Let’s connect today so you can start investing in homeownership.
How To Make Your Dream of Homeownership a Reality
According to a recent Harris Poll survey, 8 in 10 Americans say buying a home is a priority, and 28 million Americans actually plan to buy within the next 12 months. Homeownership provides many financial and nonfinancial benefits, so that interest is understandable.
However, it’s unlikely all 28 million Americans will accomplish that goal in the coming year. Experts project a total of around five million homes will be sold in 2023. Why is there such a big difference? It’s partly because there can be challenges to buying a home.
In the same survey, when asked, “Which of the following are preventing you from pursuing homeownership at this time?”:
- 34% answered, “I don’t have enough saved for a down payment”
- 30% answered, “My credit score”
If you’re aiming to buy a home, here’s what you need to know to accomplish that goal.
Save for Your Down Payment
Your down payment is a big chunk of what you pay up front for your home. For most home purchases, buyers put down some amount of cash up front (a down payment) and then take out a loan (a mortgage) to pay for the rest.
It’s a longstanding myth that you need to pay 20% of the purchase price for your down payment. In reality, 20% down isn’t always required. In fact, according to the National Association of Realtors (NAR), today’s median down payment is 14% for the average buyer and just 6% for a first-time buyer.
Regardless of how much money you can save for your down payment, know there’s help available. A local lender can show you options to help you get closer to your down payment goal. Plus, there are even loan types, like FHA loans, with down payments as low as 3.5% for some buyers, as well as options like VA loans and USDA loans with no down payment requirements for qualified applicants.
Beyond assistance programs and different loan types, here are a few other tips to help you as you save for your down payment:
- Remember to factor in closing costs. In addition to your down payment, closing costs are usually 2-5% of the home’s purchase price.
- Maintain your savings. Your down payment shouldn’t deplete all your savings. It’s important to still have some money set aside for homeownership expenses after you move in.
- Explore your options and lean on your trusted advisor for expert guidance. Do your research, ask questions, and look into the resources available for buyers like you.
Improve Your Credit Score
Your credit score is a number that indicates how financially reliable you are to lenders. A higher credit score usually means you’ll be able to borrow more money at a better interest rate. If your credit score is preventing you from getting an affordable mortgage, there are steps you can take to improve it. Here are two:
- Pay your bills on time. When you pay your bills on time, your credit score improves. When you’re late, it takes a hit. One way to make paying your bills on time easier? Set up automatic payments when and where you can.
- Mix it up. From auto loans, to credit cards, to mortgages – there are several different types of credit. And having a mix of them improves your credit score.
Bottom Line
If you want to purchase a home this year, let’s connect so we can start preparing.
A Smaller Home Could Be Your Best Option
Many people are reaching the point in their lives when they need to decide where they want to live when they retire. If you’re a homeowner approaching this stage, you have several options to explore. Jessica Lautz, Deputy Chief Economist and Vice President of Research at the National Association of Realtors (NAR), says:
“As we see the transition of the large Baby Boomer generation age into retirement, it will be interesting to see if they move in with their Millennial and Gen Z children or if they stay put in their own homes.”
Lautz lists two options: move into a multigenerational home with loved ones, or stay in your current house. Multigenerational living is rising in popularity, but it isn’t an option for everyone. And staying put may fit fewer and fewer of your needs. There’s a third option though, and for some, it’s the best one: downsizing.
When you sell your house and purchase a smaller one, it’s known as downsizing. Sometimes smaller homes are more suited to your changing needs, and moving means you can also land in your ideal location.
In addition to the personal benefits, downsizing might be more cost effective, too. The New York Times (NYT) shares:
“Many downsizers expect to improve their retirement income stream if their new home costs less than what their old house sells for. Lower utility costs, insurance and property taxes — as well as investment returns on the proceeds — can also improve the bottom line.”
Being in a strong financial position is one of the most important parts of retirement, and downsizing can make a big difference.
A key part of why downsizing is still cost effective today, even when mortgage rates are higher than they were a year ago, is the record-high level of equity homeowners have. Leveraging your equity when you downsize can lower or maybe even eliminate the mortgage payment on your next home.
So, not only is the upkeep of a smaller home likely more affordable, but leveraging your home equity could make a big difference too. Your local real estate advisor is the best resource to help you understand how much equity you may have in your current home and what options it can provide for your next move.
Bottom Line
If you’re a homeowner getting ready for retirement, part of that transition likely includes deciding where you’ll live. Let’s connect so you can understand your options and explore your downsizing opportunities.
The Two Big Issues the Housing Market’s Facing Right Now
The biggest challenge the housing market’s facing is how few homes there are for sale. Mark Fleming, Chief Economist at First American, explains the root causes of today’s low supply:
“Two dynamics are keeping existing-home inventory historically low – rate-locked existing homeowners and the fear of not finding something to buy.”
Let’s break down these two big issues in today’s housing market.
Rate-Locked Homeowners
According to the Federal Housing Finance Agency (FHFA), the average interest rate for current homeowners with mortgages is less than 4% (see graph below):
But today, the typical mortgage rate offered to buyers is over 6%. As a result, many homeowners are opting to stay put instead of moving to another home with a higher borrowing cost. This is a situation known as being rate locked.
When so many homeowners are rate locked and reluctant to sell, it’s a challenge for a housing market that needs more inventory. However, experts project mortgage rates will gradually fall this year, and that could mean more people will be willing to move as that happens.
The Fear of Not Finding Something To Buy
The other factor holding back potential sellers is the fear of not finding another home to buy if they move. Worrying about where they’ll go has left many on the sidelines as they wait for more homes to come to the market. That’s why, if you’re on the fence about selling, it’s important to consider all your options. That includes newly built homes, especially right now when builders are offering concessions like mortgage rate buydowns.
What Does This Mean for You?
These two issues are keeping the supply of homes for sale lower than pre-pandemic levels. But if you want to sell your house, today’s market is a sweet spot that can work to your advantage.
Be sure to work with a local real estate professional to explore the options you have right now, which could include leveraging your current home equity. According to ATTOM:
“. . . 48 percent of mortgaged residential properties in the United States were considered equity-rich in the fourth quarter, meaning that the combined estimated amount of loan balances secured by those properties was no more than 50 percent of their estimated market values.”
This could make a major difference when you move. Work with a local real estate expert to learn how putting your equity to work can keep the cost of your next home down.
Bottom Line
Rate-locked homeowners and the fear of not finding something to buy are keeping housing inventory low across the country. But as mortgage rates start to come down this year and homeowners explore all their options, we should expect more homes to come to the market.
Spring into Action: Boost Your Home’s Curb Appeal with Expert Guidance
To sell your home this spring, it may need more preparation than it would have a year or two ago. Today’s housing market has a different feel. There are more homes for sale than there were at this time last year, but inventory is still historically low. So, if a house has been sitting on the market for a while, that’s a sign it may not be hitting the mark for potential buyers. But here’s the thing. Right now, homes that are updated and priced at market value are still selling fast.
Today, homes with curb appeal that are presented well are still selling quickly, and sometimes over asking price. According to Danielle Hale, Chief Economist at realtor.com:
“In a market where costs are still high and buyers can be a little choosier, it makes sense they’re going to really zero in on the homes that are the most appealing.”
With the spring buying season just around the corner, now’s the time to start getting your house ready to sell. And the best way to determine where to spend your time and money is to work with a trusted real estate agent who can help you understand which improvements are most valuable in your local market.
Curb Appeal Wins
One way to prioritize updates that could bring a good return on your investment is to find smaller projects you can do yourself. Little updates that boost your curb appeal usually work well. Investopedia puts it this way:
“Curb-appeal projects make the property look good as soon as prospective buyers arrive. While these projects may not add a considerable amount of monetary value, they will help your home sell faster—and you can do a lot of the work yourself to save money and time.”
Small cosmetic updates, like refreshing some paint and power washing the exterior of your home, create a great first impression for buyers and help it stand out. Work with a real estate professional to find the low-cost projects you can tackle around your house that will appeal to buyers in your area.
Not All Updates Are Created Equal
When deciding what you need to do to your house before selling it, remember you’re making these repairs and updates for someone else. Prioritize projects that will help you sell faster or for more money over things that appeal to you as a homeowner.
The 2022 Remodeling Impact Report from the National Association of Realtors (NAR) highlights popular home improvements and what sort of return they bring for the investment (see graph below):
Remember to lean on your trusted real estate advisor for the best advice on the updates you should invest in. They’ll know what local buyers are looking for and have the latest insights of what your house needs to sell quickly this spring.
Bottom Line
As we approach the spring season, now’s the time to get your house ready to sell. Let’s connect today so you can find out which updates make the most sense.
