The Helpful Home Owner Blog • November 14, 2023

Reasons To Sell Your House Before the New Year

by Jeff Fulchino

As the year winds down, you may have decided it’s time to make a move and put your house on the market. But should you sell now or wait until January? While it may be tempting to hold off until after the holidays, here are three reasons to make your move before the new year.

Get One Step Ahead of Other Sellers

Typically, in the residential real estate market, homeowners are less likely to list their houses toward the end of the year. That’s because people get busy around the holidays and sometimes deprioritize selling their house until the start of the new year when their schedules and social calendars calm down. But that gives you an opportunity to get one step ahead.

Selling now, while other homeowners may hold off until after the holidays, can help you get a leg up on your competition. Start the process with a real estate agent today so you can get your house on the market before your neighbors do.

Get Your House in Front of Eager Buyers

Even though the supply of homes for sale did grow compared to last year, it’s still low. That means there aren’t enough homes on the market today. While some buyers may also delay their plans to move until January, others will still need to move for personal reasons or because something in their life has changed.

Those buyers are still going to be active later this year and will be seriously motivated to make their move happen because they need to. Unfortunately, the challenge they’ll face is a shortage of available inventory to meet their needs. A recent article from Investopedia says:

“. . . if your house is up for sale in the winter and someone is looking at it, chances are that person is serious and ready to buy. Anyone shopping for a new home between Thanksgiving and New Year’s is likely going to be a serious buyer. Putting your home on the market at this time of year and attracting a serious buyer can often result in a quicker sale.”

Use Your Equity To Fuel Your Move

Keep in mind that homeowners today have record amounts of equity. According to CoreLogic, the average amount of equity per mortgage holder has climbed to almost $290,000. That means the equity you have in your house right now could cover some, if not all, of a down payment on the home of your dreams.

And as you weigh the reasons to sell before year-end, it’s important to remember the reasons that sparked your desire to move in the first place. Maybe it’s time for a new home in a location that suits you better, one that offers the perfect space for you and your loved ones, or maybe your needs have evolved over time. A local real estate agent can help you determine how much home equity you have and how you can use it to achieve your goal of making a move.

Bottom Line

Listing your home before the new year can offer unique benefits. Less competition, motivated buyers, and your equity gains can all play to your advantage. Reach out, and let’s achieve your goals before winter sets in.

The Helpful Home Buyer Blog • October 18, 2023

What Are the Real Reasons You Want To Move Right Now?

by Jeff Fulchino

If you’re considering selling your house right now, it’s likely because something in your life has changed. And while things like mortgage rates play a big role in your decision, you don’t want that to overshadow why you thought about making a move in the first place.

It’s true mortgage rates are higher right now, and that has an impact on affordability. As a result, some homeowners are deciding they’ll wait to sell because they don’t want to move and have a higher mortgage rate on their next home.

But your lifestyle and your changing needs matter, too. As a recent article from Realtor.com says:

“No matter what interest rates and home prices do next, sometimes homeowners just have to move—due to a new job, new baby, divorce, death, or some other major life change.”

Here are a few of the most common reasons people choose to sell today. You may find any one of these resonates with you and may be reason enough to move, even today.

Relocation

Some of the things that can motivate a move to a new area include changing jobs, a desire to be closer to friends and loved ones, wanting to live in your ideal location, or just looking for a change in scenery.

For example, if you just landed your dream job in another state, you may be thinking about selling your current home and moving for work.

Upgrading

Many homeowners decide to sell to move into a larger home. This is especially common when there’s a need for more room to entertain, a home office or gym, or additional bedrooms to accommodate a growing number of loved ones.

For example, if you’re living in a condo and your household is growing, it may be time to find a home that better fits those needs.

Downsizing

Homeowners may also decide to sell because someone’s moved out of the home recently and there’s now more space than needed. It could also be that they’ve recently retired or are ready for a change.

For example, you’ve just kicked off your retirement and you want to move somewhere warmer with less house to maintain. A different home may be better suited for your new lifestyle.

Change in Relationship Status

Divorce, separation, or marriage are other common reasons individuals sell.

For example, if you’ve recently separated, it may be difficult to still live under one roof. Selling and getting a place of your own may be a better option.

Health Concerns

If a homeowner faces mobility challenges or health issues that require specific living arrangements or modifications, they might sell their house to find one that works better for them.

For example, you may be looking to sell your house and use the proceeds to help pay for a unit in an assisted-living facility.

With higher mortgage rates and rising prices, there are some affordability challenges right now – but your needs and your lifestyle matter too. As a recent article from Bankrate says:

“Deciding whether it’s the right time to sell your home is a very personal choice. There are numerous important questions to consider, both financial and lifestyle-based, before putting your home on the market. . . . Your future plans and goals should be a significant part of the equation . . .”

Bottom Line

If you want to sell your house and find a new one that better fits your needs, let’s connect. That way, you’ll have someone to guide you through the process and help you find a home that works for you.

The Helpful Home Owner Blog • October 14, 2023

How Homeowner Net Worth Grows with Time

by Jeff Fulchino

Some Highlights

If you’re thinking about buying a home this year, be sure to consider the long-term financial advantages of homeownership, like home equity.
On average, people who bought homes 32 years ago have seen their home’s value nearly triple over that time.
If you’re wondering if buying a home is a good idea, remember rising home values could grow your net worth with time. When you’re ready to start your homebuying journey, let’s talk.

The Helpful Home Owner Blog • October 5, 2023

The Return of Normal Seasonality for Home Price Appreciation

by Jeff Fulchino

If you’re thinking of making a move, one of the biggest questions you have right now is probably: what’s happening with home prices? Despite what you may be hearing in the news, nationally, home prices aren’t falling. It’s just that price growth is beginning to normalize. Here’s the context you need to really understand that trend.

In the housing market, there are predictable ebbs and flows that happen each year. It’s called seasonality. Spring is the peak homebuying season when the market is most active. That activity is typically still strong in the summer but begins to wane as the cooler months approach. Home prices follow along with seasonality because prices appreciate most when something is in high demand.

That’s why there’s a reliable long-term home price trend. The graph below uses data from Case-Shiller to show typical monthly home price movement from 1973 through 2022 (not adjusted, so you can see the seasonality):

As the data shows, at the beginning of the year, home prices grow, but not as much as they do in the spring and summer markets. That’s because the market is less active in January and February since fewer people move in the cooler months. As the market transitions into the peak homebuying season in the spring, activity ramps up, and home prices go up a lot more in response. Then, as fall and winter approach, activity eases again. Price growth slows, but still typically appreciates.

After several unusual ‘unicorn’ years, today’s higher mortgage rates helped usher in the first signs of the return of seasonality. As Selma Hepp, Chief Economist at CoreLogic, explains:

“High mortgage rates have slowed additional price surges, with monthly increases returning to regular seasonal averages. In other words, home prices are still growing but are in line with historic seasonal expectations.”

Why This Is So Important to Understand

In the coming months, you’re going to see the media talk more about home prices. In their coverage, you’ll likely see industry terms like these:

Appreciation: when prices increase.
Deceleration of appreciation: when prices continue to appreciate, but at a slower or more moderate pace.
Depreciation: when prices decrease.

Don’t let the terminology confuse you or let any misleading headlines cause any unnecessary fear. The rapid pace of home price growth the market saw in recent years was unsustainable. It had to slow down at some point and that’s what we’re starting to see – deceleration of appreciation, not depreciation.

Remember, it’s normal to see home price growth slow down as the year goes on. And that definitely doesn’t mean home prices are falling. They’re just rising at a more moderate pace.

Bottom Line

While the headlines are generating fear and confusion on what’s happening with home prices, the truth is simple. Home price appreciation is returning to normal seasonality. If you have questions about what’s happening with prices in our local area, let’s connect.

The Helpful Home Owner Blog • September 18, 2023

Are More Homes Coming onto the Market?

by Jeff Fulchino

An important factor shaping today’s market is the number of homes for sale. And, if you’re considering whether or not to list your house, that’s one of the biggest advantages you have right now. When housing inventory is this low, your house will stand out, especially if it’s priced right.

But there are some early signs that more listings are coming. According to the latest data, new listings (homeowners who just put their house up for sale) are trending up. Here’s a look at why this is noteworthy and what it may mean for you.

More Homes Are Coming onto the Market than Usual

It’s well known that the busiest time in the housing market each year is the spring buying season. That’s why there’s a predictable increase in the volume of newly listed homes throughout the first half of the year. Sellers are anticipating this and ramping up for the months when buyers are most active. But, as the school year kicks off and as the holidays approach, the market cools. It’s what’s expected.

But here’s what’s surprising. Based on the latest data from Realtor.com, there’s an increase in the number of sellers listing their houses later this year than usual. A peak this late in the year isn’t typical. You can see both the normal seasonal trend and the unusual August in the graph below:As Realtor.com explains:

“While inventory continues to be in short supply, August witnessed an unusual uptick in newly listed homes compared to July, hopefully signaling a return in seller activity heading toward the fall season . . .”

While this is only one month of data, it’s unusual enough to note. It’s still too early to say for sure if this trend will continue, but it’s something you’ll want to stay ahead of if it does.

What This Means for You

If you’ve been putting off selling your house, now may be the sweet spot to make your move. That’s because, if this trend continues, you’ll have more competition the longer you wait. And if your neighbor puts their house up for sale too, it means you may have to share buyers’ attention with that other homeowner. If you sell now, you can beat your neighbors to the punch.

But, even with more homes coming onto the market, the market is still well below normal supply levels. And, that inventory deficit isn’t going to be reversed overnight. The graph below helps put this into context, so you can see the opportunity you still have now:

Bottom Line

Even though inventory is still low, you don’t want to wait for more competition to pop up in your neighborhood. You still have an incredible opportunity if you sell your house today. Let’s connect to explore the benefits of selling now before more homes come to the market.

The Helpful Home Buyer Blog • September 11, 2023

How Inflation Affects the Housing Market

by Jeff Fulchino

Have you ever wondered how inflation impacts the housing market? Believe it or not, they’re connected. Whenever there are changes to one, both are affected. Here’s a high-level overview of the connection between the two.

The Relationship Between Housing Inflation and Overall Inflation

Shelter inflation is the measure of price growth specific to housing. It comes from a survey of renters and homeowners that’s done by the Bureau of Labor Statistics (BLS). The survey asks renters how much they’re paying in rent, and homeowners how much they’d rent their homes for, if they weren’t living in them.

Much like overall inflation measures the cost of everyday items, shelter inflation measures the cost of housing. And for four consecutive months, based on that survey, shelter inflation has been coming down (see graph below):

Why does this matter? Well, shelter inflation makes up about one-third of overall inflation, as measured by the Consumer Price Index (CPI). So, when shelter inflation moves, it leads to noticeable moves in overall inflation. That means the recent dip in shelter inflation might be a sign that overall inflation could fall in the months ahead.

That moderation would be a welcome sight for the Federal Reserve (the Fed). They’ve been working to get inflation under control since early 2022. While they’ve made some headway (it peaked at 8.9% in the middle of last year), they’re still trying to get to their 2% goal (the latest report is 3.3%).

Inflation and the Federal Funds Rate

What’s the Fed been doing to lower inflation? They’ve been increasing the Federal Funds Rate. That interest rate influences how much it costs banks to borrow money from each other. When inflation climbed, the Fed responded by raising the Federal Funds Rate to keep the economy from overheating.

The graph below shows the relationship between the two. Each time inflation (shown in the blue line) starts to climb, the Fed raises the Federal Funds Rate (shown in the orange line) to try to get it back to their target of 2% (see below):

The circled portion of the graph shows the most recent spike in inflation, the Fed’s actions to raise the Federal Funds Rate to fight that, and the moderation of inflation that happened in response to that hike. As inflation gets closer to the Fed’s current 2% goal, they may not need to raise the Federal Funds Rate much further.

A Brighter Future for Mortgage Rates?

So, what does all of this mean for you? While the actions coming out of the Fed don’t determine mortgage rates, they do have an impact. As Mortgage Professional America (MPA) explains:

“. . . mortgage rates and inflation are connected, however indirectly. When inflation rises, mortgage rates rise to keep up with the value of the US dollar. When inflation drops, mortgage rates follow suit.”

While no one can predict the future for mortgage rates, it’s encouraging to see the signs of moderating inflation in the economy.

Bottom Line

Whether you’re looking to buy, sell, or just stay informed about the housing market, let’s connect.

The Helpful Home Buyer Blog • August 3, 2023

How Inflation Affects Mortgage Rates

by Jeff Fulchino

When you read about the housing market in the news, you might see something about a recent decision made by the Federal Reserve (the Fed). But how does this decision affect you and your plans to buy a home? Here’s what you need to know.

The Fed is trying hard to reduce inflation. And even though there’s been 12 straight months where inflation has cooled (see graph below), the most recent data shows it’s still higher than the Fed’s target of 2%:

While you may have been hoping the Fed would stop their hikes since they’re making progress on their goal of bringing down inflation, they don’t want to stop too soon, and risk inflation climbing back up as a result. Because of this, the Fed decided to increase the Federal Funds Rate again last week. As Jerome Powell, Chairman of the Fed, says:

“We remain committed to bringing inflation back to our 2 percent goal and to keeping longer-term inflation expectations well anchored.”

Greg McBride, Senior VP, and Chief Financial Analyst at Bankrate, explains how high inflation and a strong economy play into the Fed’s recent decision:

“Inflation remains stubbornly high. The economy has been remarkably resilient, the labor market is still robust, but that may be contributing to the stubbornly high inflation. So, Fed has to pump the brakes a bit more.”

Even though a Federal Fund Rate hike by the Fed doesn’t directly dictate what happens with mortgage rates, it does have an impact. As a recent article from Fortune says:

“The federal funds rate is an interest rate that banks charge other banks when they lend one another money . . . When inflation is running high, the Fed will increase rates to increase the cost of borrowing and slow down the economy. When it’s too low, they’ll lower rates to stimulate the economy and get things moving again.”

How All of This Affects You

In the simplest sense, when inflation is high, mortgage rates are also high. But, if the Fed succeeds in bringing down inflation, it could ultimately lead to lower mortgage rates, making it more affordable for you to buy a home.

This graph helps illustrate that point by showing that when inflation decreases, mortgage rates typically go down, too (see graph below):

As the data above shows, inflation (shown in the blue trend line) is slowly coming down and, based on historical trends, mortgage rates (shown in the green trend line) are likely to follow. McBride says this about the future of mortgage rates:

“With the backdrop of easing inflation pressures, we should see more consistent declines in mortgage rates as the year progresses, particularly if the economy and labor market slow noticeably.”

Bottom Line

What happens to mortgage rates depends on inflation. If inflation cools down, mortgage rates should go down too. Let’s talk so you can get expert advice on housing market changes and what they mean for you.

The Helpful Home Buyer Blog • July 13, 2023

Momentum Is Building for New Home Construction

by Jeff Fulchino

If you’re in the process of looking for a home today, especially here in Connecticut, you know the supply of homes for sale is low because you’re feeling the impact of having a limited pool of options. And, if your biggest hurdle right now is that you’re having trouble finding something you like, don’t forget that a newly built home is a great option.

As a recent article from the National Association of Realtors (NAR) says:

“Home buyers continue to be met with limited housing options during what’s typically the real estate market’s busiest season. . . . The current supply of existing homes is about half the level it was in 2019 . . . Meanwhile, the market for new construction is a bright spot.”

Here’s a look at a key metric that shows just how much new home construction is ramping up nationwide. It’s called new residential completions. Basically, completions are newly built homes that are finished and ready to move into.

The graph below uses data from the Census to show the trend of new-home completions over time, including the long-term average for the number of finished housing units (shown in black on the graph):

As you can see on the left (shown in orange), leading up to the housing crash, builders exceeded that average. The result was an oversupply of homes on the market, so home values declined. That was one of the factors that led to the housing crash back in 2008.

Since then, the level of new home construction has fallen off, and builders haven’t built enough homes to meet the historical average (shown in red). That underbuilding left the housing market with a multi-year inventory deficit. And, that deficit is part of what makes inventory so low right now.

But, here’s the good news. The green on the right shows that according to the latest report from the Census, builders are matching the long-term average right now. And that means they’re bringing more newly built homes to the market than they have in recent memory.

And residential starts and permits are also gaining momentum. Starts are homes where the construction has officially kicked off. Permits are homes where builders are planning to break ground soon. Since both are up, it’s a sign there are even more newly built homes coming soon.

What This Means for You

More newly built homes in various stages of the construction process means your pool of options just got bigger. If you’re looking to move right now and timing is important to you, reach out to a local real estate professional to explore the homes that were recently completed in your area. If construction is done on those homes, you should be able to move in quickly.

But, if you can wait a bit and the idea of customizing a home from the ground up appeals to you, ask that same agent about the homes in your area that are in the process of being built. If you buy a home that’s still in the works, you can help pick the features and finishings along the way. And when none of the homes you’ve looked at so far are to your liking, being able to tailor one to your taste may be your best option.

Either way, a trusted real estate agent is a crucial part of the process. They’ll know exactly what’s available in your area and can base their recommendations on your unique needs, desired neighborhoods, and more.

Bottom Line

So, if you’re having trouble finding a home you like while inventory is so low, it may be time to consider looking into new-home construction. If you’d like to start that conversation, let’s connect so you’re working with an expert on what’s available in our area.

The Helpful Home Buyer Blog • June 13, 2023

The Main Reason Mortgage Rates Are So High

by Jeff Fulchino

Today’s mortgage rates are top-of-mind for many homebuyers right now. As a result, if you’re thinking about buying for the first time or selling your current house to move into a home that better fits your needs, you may be asking yourself these two questions:

Why Are Mortgage Rates So High?
When Will Rates Go Back Down?

Here’s context you need to help answer those questions.

1. Why Are Mortgage Rates So High?

The 30-year fixed-rate mortgage is largely influenced by the supply and demand for mortgage-backed securities (MBS). According to Investopedia:

“Mortgage-backed securities (MBS) are investment products similar to bonds. Each MBS consists of a bundle of home loans and other real estate debt bought from the banks that issued them . . . The investor who buys a mortgage-backed security is essentially lending money to home buyers.”

Demand for MBS helps determine the spread between the 10-Year Treasury Yield and the 30-year fixed mortgage rate. Historically, the average spread between the two is 1.72 (see chart below):

Last Friday morning, the mortgage rate was 6.85%. That means the spread was 3.2%, which is almost 1.5% over the norm. If the spread was at its historical average, mortgage rates would be 5.37% (3.65% 10-Year Treasury Yield + 1.72 spread).

This large spread is very unusual. As George Ratiu, Chief Economist at Keeping Current Matters (KCM), explains:

“The only times the spread approached or exceeded 300 basis points were during periods of high inflation or economic volatility, like those seen in the early 1980s or the Great Financial Crisis of 2008-09.”

The graph below uses historical data to help illustrate this point by showing the few times the spread has increased to 300 basis points or more:

The graph shows how the spread has come down after each peak. The good news is, that means there’s room for mortgage rates to improve today.

So, what’s causing the larger spread and making mortgage rates so high today?

The demand for MBS is heavily influenced by the risks associated with investing in them. Today, that risk is impacted by broader market conditions like inflation and fear of a potential recession, the Fed’s interest rate hikes to try to bring down inflation, headlines that create unnecessarily negative narratives about home prices, and more.

Simply put: when there’s less risk, demand for MBS is high, so mortgage rates will be lower. On the other hand, if there’s more risk with MBS, demand for MBS will be low, and we’ll see higher mortgage rates as a result. Currently, demand for MBS is low, so mortgage rates are high.

2. When Will Rates Go Back Down?

Odeta Kushi, Deputy Chief Economist at First American, answers that question in a recent blog:

“It’s reasonable to assume that the spread and, therefore, mortgage rates will retreat in the second half of the year if the Fed takes its foot off the monetary tightening pedal and provides investors with more certainty. However, it’s unlikely that the spread will return to its historical average of 170 basis points, as some risks are here to stay.”

Bottom Line

The spread will shrink when the fear investors feel is eased. That’ll mean we should see mortgage rates moderate as the year goes on. However, when it comes to forecasting mortgage rates, no one can know for sure exactly what will happen.

The Helpful Home Buyer Blog • June 6, 2023

Real Estate Is Still Considered the Best Long-Term Investment

by Jeff Fulchino

With all the headlines circulating about home prices and rising mortgage rates, you may wonder if it still makes sense to invest in homeownership right now. A recent poll from Gallup shows the answer is yes. In fact, real estate was voted the best long-term investment for the 11^th consecutive year, consistently beating other investment types like gold, stocks, and bonds (see graph below):

If you’re thinking about purchasing a home, let this poll reassure you. Even with everything happening today, Americans recognize owning a home is a powerful financial decision.

Why Do Americans Still Feel So Positive About the Value of Investing in a Home?

Purchasing real estate has typically been a solid long-term strategy for building wealth in America. As Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), notes:

“. . . homeownership is a catalyst for building wealth for people from all walks of life. A monthly mortgage payment is often considered a forced savings account that helps homeowners build a net worth about 40 times higher than that of a renter.”

That’s because owning a home grows your net worth over time as your home appreciates in value and as you pay down your mortgage. And, since building that wealth takes time, it may make sense to start as soon as you can. If you wait to buy and keep renting, you’ll miss out on those monthly housing payments going toward your home equity.

Bottom Line

Buying a home is a powerful decision. So, it’s no wonder so many people view real estate as the best long-term investment. If you’re ready to start on your own journey toward homeownership, let’s connect today.