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Even with Rates Rising, Here’s Why it’s a Good Time to Buy Versus Rent

Choosing to become a homeowner is generally one of the biggest decisions of your life. It’s a financial and emotional decision that must be made based on your individual circumstances. But if sky-high rent increases have you leaning toward the security of owning your home, here’s why it’s a good time to buy.

What’s Happening in the Rental Market?

Rental costs have grown at their fastest pace in more than three decades. The national median cost of a monthly rental is now over $2,000 for the first time ever. Rent has increased over 30% in some of the major cities and are expected to continue to rise sharply into 2023.

Why it’s a Good Time to Buy

After several years of a hot seller’s market, conditions are shifting to a more balanced market.

Mortgage Rates Rise, But Still Historically Low. Although interest rates have risen to over 5%, they’re still at historic lows. Mortgage demand has dipped to its lowest in 22 years, causing far fewer buyers than we’ve seen recently, reducing competition for homes.

Price Adjustments. While 50% of the homes for sale in the Mid-Atlantic had a price adjustment at some point, you might still have to make a quick offer if the house you’re looking at is competitive.

More Homes for Sale. After years of not enough homes on the market, housing inventory is up almost 20%, creating buying opportunities.

Financial Benefits of Owning a Home

Hedge Against Inflation: Homeownership provides stability. With a fixed rate mortgage, your monthly payment can be locked in, which is especially important in today’s inflationary environment.

Pay Your Mortgage (Not Your Landlord’s Mortgage): As you pay your mortgage, its balance is reduced, building equity in the property.

Appreciation. While every market is different, home values have historically appreciated about 4% annually. Plus, you enjoy appreciation on the total price of the home, not just the cash you put down.

Tax benefits. Your tax advisor can help determine eligible tax deductions, which generally include mortgage interest and property taxes.

The net benefits of paying a mortgage often outweigh the monthly rent you’ll pay – and as a homeowner, you’ll have a valuable asset.

If you’re trying to decide whether to buy a home or continue renting, we can help you explore your options. Likewise, if you, your friends or family are buying or selling a home, don’t hesitate to reach out.

The Difference Between Today’s Shifting Market and the 2008 Housing Crisis

About 15 years ago, we experienced a housing crisis. Unfortunately, at that time, many Americans lost their homes and real estate investments. Although our current market is shifting, homeowners need not worry that history will repeat itself. The factors affecting today’s housing market are vastly different than they were in the mid to late 2000s.

The 2008 Housing Crisis – What Happened?

Relaxed lending standards caused high buyer demand but led to an inability to repay mortgage loans as many obtained loans that would not qualify under today’s lending standards. Homes fell into foreclosure when borrowers could no longer make their mortgage payments and with no equity in their homes, they were unable to sell.

The 2022 Market Shift – What’s Happening Now?

There are stricter lending guidelines in place and that, combined with low rates, high demand, and plenty of home equity (less than two percent of homes with mortgages have negative equity today), create opportunities for both buyers and sellers.

How The Two Are Different

The conditions surrounding the 2008 housing crisis limited the options for those who could no longer afford their mortgage payments. Today, the vast majority of sellers have the advantage of positive home equity, as well as low mortgage rates and high buyer demand.

If you, your friends or family are thinking about buying or selling a home, I am always available to help or answer any questions about current market conditions.

Enjoy August!

An Update on the Changing Real Estate Market

There’s been so much news lately relating to the economy and real estate. If you’re planning to buy or sell a home soon, you may be wondering what it means for you. The housing market, which received a boost from record low interest rates during the Covid-19 pandemic, has begun to shift.

The Arrival of a More Balanced Market

With mortgage interest rates and home prices on the rise, we expect the housing market will continue to cool from the surge in demand we’ve seen the last few years. As a bright spot for frustrated homebuyers, the number of homes on the market is expected to increase, bringing back a more balanced market.

For homeowners interested in selling, it’s still a great time to put your property on the market because the supply of homes available remains at record low levels. Even if sales decline from last year, the real estate market is on track for an overall good year.

To stay updated on what’s happening in your market, feel free to contact me. As always, if you, your friends, or your family are planning to buy or sell a home, I’m available to help guide you through the process.

Have a wonderful July.

MARKET UPDATE – SEPTEMBER 2021

As summer comes to a close, with school starting, and fall just around the corner, September brings a time of transition. If you’re thinking about selling your home, you may be hearing reports of inventory trickling back on the market in some locations and bidding wars appearing to be slightly less common.

Here’s some insight on why it’s still a great time to sell your home.

One Month Does Not Make a Market Trend

The operative word is trickle. Housing inventory has been declining for six years, so rather than comparing month-to-month data, we look at the industry over a 10-year span. Although inventory and days on market are trickling up in some markets and the number of multiple offers are trickling down, there are still multiple offers, low inventory, homes selling in less than 30 days, and for top dollar.

Buyers Re-entering the Market

Some buyers may have taken a summer break from looking for a home after losing five, six, seven, or more deals last spring. We believe buyers re-entering the market after Labor Day are likely to cause a buying surge in the fourth quarter of this year.

Significant Appreciation

Although median sale prices have increased by an average of more than 20% over the last year in our market, we don’t believe this level of appreciation will last forever. Affordability for buyers is still very attractive due to interest rates remaining under 3%, as they tend to buy monthly payment, rather than price.

Declutter, Stage, and Price Right

Homes receiving high and multiple offers over the past year were staged, decluttered, in good condition, and priced right – which are all still necessary in this market. Buyers used to have a vision for what they want the home to be after settlement. Now, the majority of consumers seem to want move-in ready. Many buyers don’t have the time or capital to invest in renovations and want to move in and start living.

If you’re planning to sell a home this Fall, it’s essential to have a knowledgeable real estate agent advise you on the best ways to prepare your home for sale to maximize your investment.

To find out your home’s value or for questions about this complex real estate market, please feel free to contact the Butch Cazin Team.

August 2021 Market Update

It’s a Seller’s Market – and Here’s Why it’s Also a Great Time to Buy.

Lately, many of the real estate headlines are about how it’s the best time in history to sell your home. While that’s true, here are a few good reasons why it’s also a great time to buy.

Interest rates are at all-time lows.

People buy payment; they don’t buy price. They don’t necessarily care how much a house costs, but they care about how much it will cost them per month. You are going to get more money lent to you now, with less to repay than you would when rates go up.

For example, a person with a $300,000 loan at today’s interest rates of 3% would pay $750 less per month in interest than they did in 2000 when interest rates were 8%. I can think of many other things to do with $750 per month than give it to the bank.

Benefits include tax breaks, building equity, and hedging inflation.

Many home buyers who have made their third, fourth or fifth offers on homes with no success may be getting discouraged, as they see home prices rising and are concerned they’re paying too much.

However, real estate values tend to run in ten-year cycles, with appreciation of 3% per year. Home values were cut in half during the 2008 financial crisis. Now, more than ten years later, they are ahead. Prices recover, equity is built, and real estate is an excellent hedge against inflation.

As a real estate professional, my job is to disarm and interpret the news for you so you might make informed decisions and help you navigate this competitive housing market to successfully fulfill your real estate goals.

If you’re planning to buy or sell a home or have questions about this real estate market, please feel free to contact The Butch Cazin Team. We look forward to helping you!

Market Update – June 2021

Selling a home in 2021 can be easy, but buying one is a whole different story. Low interest rates continue to be the driver in this robust housing market, creating increased buying power. On the other hand, the limited number of homes for sale and the high level of buyer demand has created a market tilted heavily in favor of sellers.

In this highly competitive market, what do you do if you want a smooth transition when selling and buying a home concurrently? It’s one of the least risky times to buy your next home before selling your current home. If you’re able to handle the payments on two homes for six months or so, then buy first and sell later.

For those that may not have the funds available to purchase a home while owning one, here are some options to consider.

Home of Choice Contingency. Written into the contract, this agreement protects the seller from having to sell their current home before finding their next home.

Rent Back Agreement. This post-closing occupancy agreement allows the seller to continue to live in the home for a fee or for free, typically up to 60 days, temporarily making the buyer the landlord.

Bridge Loan. A bridge loan enables you to borrow money to pay for the down payment on your next home based on the equity in your current home.

Home Equity Line of Credit. Tap into the equity of your current home by taking out a home equity loan before you put your home on the market to provide the funds needed to make your purchase first.

In this market, whether you’re buying or selling a home, I can help evaluate your options to decide which to do first and how to optimize both transactions.

My best to you and your family.

READY FOR TAX SEASON? HERE ARE A FEW HOUSING-RELATED TAX TIPS TO CONSIDER

READY FOR TAX SEASON? HERE ARE A FEW HOUSING-RELATED TAX TIPS TO CONSIDER
February 15, 2021
By Boomer Foster, President, General Brokerage and Gary A. Scott, President, General Brokerage.

It’s hard to believe it’s been nearly a year since the Covid-19 pandemic began and changed the way we live, work and play. Although tax filing deadlines were extended last year due to the pandemic, this year, the deadline is back to its usual April 15 date. As you prepare your 2020 taxes, here are a few housing-related items to keep in mind.

Home interest deductions.

Mortgages that closed before Dec. 14, 2017: A married couple filing jointly and single filers can deduct mortgage interest on a combined debt limit of $1 million.
Mortgages that closed after Dec. 14, 2017: For both primary residences and second home loans, mortgage interest can be deducted on a combined debt limit of $750,000.
Property tax deductions.

Taxpayers who itemize can only deduct up to $10,000 on a combination of state and local property, income and sales taxes. This applies to property taxes on your primary residence, a vacation home and undeveloped land.

Capital gains tax exclusions.

Married-joint filers can exclude up to $500,000 and single filers can exclude up to $250,000 when selling their primary home, provided they’ve lived there two of the past five years.

Those are just a few of the housing-related tax laws. Please consult your tax advisor for more information on how these and other tax deductions may apply to you.

Will the Housing Market Bloom This Spring?

Spring is almost here, and many are wondering what it will bring for the housing market. Even though the pandemic continues on, it’s certain to be very different from the spring we experienced at this time last year. Here’s what a few industry experts have to say about the housing market and how it will bloom this season.

Danielle Hale, Chief Economist, realtor.com:
“Despite early weakness, we expect to see new listings grow in March and April as they traditionally do heading into spring, and last year’s extraordinarily low new listings comparison point will mean year over year gains. One other potential bright spot for would-be homebuyers, new construction, which has risen at a year over year pace of 20% or more for the last few months, will provide additional for-sale inventory relief.”

Ali Wolf, Chief Economist, Zonda:
“Some people will feel comfortable listing their home during the first half of 2021. Others will want to wait until the vaccines are widely distributed. This suggests more inventory will be for sale in late 2021 and into the spring selling season in 2022.”

Freddie Mac:
“Since reaching a low point in January, mortgage rates have risen by more than 30 basis points… However, the rise in mortgage rates over the next couple of months is likely to be more muted in comparison to the last few weeks, and we expect a strong spring sales season.”

Mark Fleming, Chief Economist, First American:
“As the housing market heads into the spring home buying season, the ongoing supply and demand imbalance all but assures more house price growth…Many find it hard to believe, but housing is actually undervalued in most markets and the gap between house-buying power and sale prices indicates there’s room for further house price growth in the months to come.”

Bottom Line
The experts are very optimistic about the housing market right now. If you pressed pause on your real estate plans over the winter, reach out to The Butch Cazin Team to determine how you can re-engage in the homebuying process this spring.

-KeepingCurrentMatters.com

WHAT’S THE DIFFERENCE BETWEEN AN APPRAISAL AND A HOME INSPECTION

by KeepingCurrentMatters.com.

What’s the Difference between an Appraisal and a Home Inspection?

If you’re planning to buy a home, an appraisal is an important step in the process. It’s a professional evaluation of the market value of the home you’d like to buy. In most cases, an appraisal is ordered by the lender to confirm or verify the value of the home prior to lending a buyer money for the purchase. It’s also a different step in the process from a home inspection, which assesses the condition of the home before you finalize the transaction. Here’s the breakdown of each one and why they’re both important when buying a home.

Home Appraisal
The National Association of Realtors (NAR) explains:

“A home purchase is typically the largest investment someone will make. Protect yourself by getting your investment appraised! An appraiser will observe the property, analyze the data, and report their findings to their client. For the typical home purchase transaction, the lender usually orders the appraisal to assist in the lender’s decision to provide funds for a mortgage.”

When you apply for a mortgage, an unbiased appraisal (which is required by the lender) is the best way to confirm the value of the home based on the sale price. Regardless of what you’re willing to pay for a house, if you’ll be using a mortgage to fund your purchase, the appraisal will help make sure the bank doesn’t loan you more than what the home is worth.

This is especially critical in today’s sellers’ market where low inventory is driving an increase in bidding wars, which can push home prices upward. When sellers are in a strong position like this, they tend to believe they can set whatever price they want for their house under the assumption that competing buyers will be willing to pay more.

However, the lender will only allow the buyer to borrow based on the value of the home. This is what helps keep home prices in check. If there’s ever any confusion or discrepancy between the appraisal and the sale price, your trusted real estate professional will help you navigate any additional negotiations in the buying process.

Home Inspection
Here’s the key difference between an appraisal and an inspection. MSN explains:

“In simplest terms, a home appraisal determines the value of a home, while a home inspection determines the condition of a home.”

The home inspection is a way to determine the current state, safety, and condition of the home before you finalize the sale. If anything is questionable in the inspection process – like the age of the roof, the state of the HVAC system, or just about anything else – you as a buyer have the option to discuss and negotiate any potential issues or repairs with the seller before the transaction is final. Your real estate agent is a key expert to help you through this part of the process.

Bottom Line
The appraisal and the inspection are critical steps when buying a home, and you don’t need to manage them by yourself. Reach out to The Butch Cazin Team today so you have the expert guidance you need to navigate through the entire homebuying process.

MARKET UPDATE – DECEMBER 2020

While 2020 has been an incredibly challenging year, housing turned out as a bright spot. Despite the impact of the coronavirus pandemic, homeownership rates rose to 67.4% in the third quarter, up from 64.8% the same period in 2019.
The fundamentals are in place for a continued strong housing market in 2021, particularly with expectations that mortgage rates will remain around 3%. Here are a few more of our predictions for the year ahead.
Home prices will rise. The law of supply and demand will drive prices higher, with 5% to 6% increases predicted on average.
Affordability will remain mostly positive. Low mortgage rates will offset rising prices, increasing the number of households who can afford to buy a home.
Inventory challenges will continue. While builders are expected to construct homes at a faster pace in 2021, there’s still a gap between demand and supply for new and existing homes.
Increased teleworking will influence housing. People will continue to work from home, affecting where they’re shopping for homes and what they’re looking for in those properties.
Vacation home markets will stay hot. In 2020, homeowners with rising equity and investors with high stock market profits drove a spike in demand for homes in coastal markets, which will continue next year.
Technology remains critical. Virtual tours, remote closings and video conferencing kept real estate moving in 2020, and virtual buying and selling will continue to lead the way in 2021.
Whether you’re looking to buy, sell or invest in real estate in 2021, we can help. With our partners in mortgage, title, insurance and moving, our Long & Foster family has you covered for all your real estate needs. Happy Holidays!