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Long & Foster’s Third Quarter 2022 Real Estate Market Update

It’s hard to believe that we’re more than three quarters into 2022 and will soon ring in a new year. After a few years of a hot real estate market, you may wonder what’s happening now – especially if you’re planning to buy or sell a home in the next few months.

In 2020 and 2021, low interest rates, remote working opportunities facilitated by the pandemic, and low housing inventory created the perfect storm of buyers flooding to the market to purchase a home. Homes were selling quickly and for more than asking price. Recently, though, interest rates have started to rise and that has caused the market to shift to a more normalized pace—like what we experienced in the years before the pandemic.

To give you more insights, our team at Long & Foster has prepared a short market update comparing the third quarter of 2022 with the same period the last few years across our footprint.

Fewer homes were sold in the third quarter of 2022 than prior years. The number of properties sold this year was down 17% compared to the same period last year, but it was close to the number of properties sold in 2019.

Those properties that did sell this past quarter were more expensive. While fewer homes sold, those that did had an average sale price that was 7% higher than during the same time in 2021.

And they sold in about the same amount of time. On average, homes were on the market 22 days before they went under contract—that’s one day more than last year’s average days on market, but many days fewer than before the pandemic.

We’re shifting to a more balanced real estate market, and it remains a great time to buy or sell a property. At Long & Foster, we’ve been through many market cycles and are here to help you achieve success no matter the market conditions.

It’s important to remember that real estate is hyperlocal and if you have any questions about the market in your neighborhood, call, text or email me. Likewise, if you or anyone you know is planning to buy or sell a home, I’m always available to help them with all of their real estate needs.

All the best to you for a happy November.

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.

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.

What’s the Return on Your Home Improvement Dollars?

Before selling your home, it’s hard to know what improvements you can do now that will add value to it – without spending a fortune. To help, each year Remodeling magazine releases their Cost vs. Value Report, which estimates the average cost of a project and the percentage of the investment that will be recouped if the home is sold within a year. Based on the 2022 report, here are the top four home improvement projects with the highest return at resale.

Garage Door Replacement: Traditionally ranked as one of the highest returns on your investment, the average cost is $4,041 and you’ll recover 93.3% of the cost.

Stone Veneer: Replacing the bottom third of your home with manufactured stone veneer costs an average of $11,066, and you’ll see a 91.4% return on your investment.

Minor Kitchen Remodel: Adding new cabinet doors and hardware, installing energy-efficient appliances and replacing countertops, your sink and faucet—all part of what’s considered a minor remodel—costs an average of $28,279 and returns 71.2% of its cost.

Siding Replacement: New fiber-cement siding that’s been factory primed and painted will cost $22, 093 for 1,250 square feet and will recoup 68.3% of the cost. Keep in mind, this is a national report, but if you click the link, you can find local numbers to see home improvements that provide the best return on investment in your area.

If you’re planning to put your home on the market, I’ll be happy to recommend any repairs or improvements you’ll need to make – just let me know how I can help.

Real Estate as a Hedge Against Inflation

With the recent stock market volatility, inflation and all that’s going on in the world, you may be looking for opportunities to diversify and protect your investment portfolio. Over the long term, real estate provides steady appreciation and is usually an excellent investment response to inflation. Savvy consumers are becoming increasingly interested in owning property to get the many benefits that help offset stock market volatility and inflation.

Even with the recent uptick of mortgage interest rates, real estate is still considered a safe haven to add to one’s investment mix. Here’s a look at several of the potential benefits of diversifying your portfolio into real estate.

Appreciation. While every market is different, home values have historically appreciated approximately 4% annually. Plus, as real estate is a leveraged investment, you enjoy appreciation on the total price of the home, not just the cash you put down to purchase it.

Tax benefits. Your tax advisor can help determine eligible tax deductions on an investment property, which generally include mortgage interest, property taxes, depreciation and operating costs, such as repairs and maintenance.

Tenant-paid mortgage. As your tenant pays rent, your mortgage balance is reduced, building equity in the property for a future sale or to borrow against and buy another property.

Cash flow. Depending on expenses, you can usually generate positive cash flow from the rent you charge.

If you’re thinking about investing in real estate, I can help evaluate investment properties that fit your financial goals. In addition, my Long & Foster partners in mortgage, title, insurance and property management are here to assist you every step of the way.

Wishing you and your family a great spring!

To Renovate or Not to Renovate Before You Sell

from Keeping Current Matters

When thinking about selling, homeowners often feel they need to get their house ready with some remodeling to make it more appealing to buyers. However, with so many buyers competing for available homes right now, renovations may not be as vital as they would be in a more normal market. Here are two things to keep in mind if you’re thinking of selling this season.

1. There aren’t enough homes for sale right now.
A normal market has a 6-month supply of houses for sale, but today’s housing inventory sits far below that benchmark. According to the National Association of Realtors (NAR), there’s only a 1.9-month supply of homes available today. As a result, buyer competition is high and homes are only on the market for about 21 days, during which time many receive multiple offers from hopeful buyers.

In a competitive market that’s moving so quickly, it makes sense to sell your house when buyers are scooping homes up as fast as they’re being listed. Spending costly time and money on renovations before you sell might just mean you’ll miss your key window of opportunity. While certain repairs on your house may be important, your best move right now is to work with a real estate advisor to determine which improvements are truly necessary, and which ones are not likely to be deal-breakers for buyers.

Today, many buyers are more willing to take on home improvement projects themselves in order to get the home they’re after, even if it means putting in a little extra work. Home Advisor explains:

“When it comes to the number of home improvement projects completed, Gen Z homeowners are leading the pack, completing an average of 3.5 projects. Millennials closely follow Gen Z, taking on an average of 3.3 projects, followed by Gen X at 2.8 projects. Boomers completed an average of 2 projects, and the Silent Generation completed the fewest projects, on average, at 1.8 per household. Compared to 2019, millennials are spending 60% more on home improvement and doing on average 30% more projects.”

In this market, it may be wise to let future homeowners remodel the bathroom or the kitchen to make design decisions that are best for their specific taste and lifestyle. As a seller, your dollars and time might be better spent working on small cosmetic updates, like refreshing some paint and power washing the exterior. Instead of over-investing in your home with upgrades that the buyers may change anyway, work with a real estate professional to determine the key projects that will maximize your listing, without overdoing it.

2. Focus on getting a good return on your investment.
When planning any bigger projects to tackle, you and your real estate agent will want to discuss the potential return on your investment and if those projects are worth the cost. Some homes do need a kitchen or bathroom renovation, roof repairs, or other major work, but definitely not all of them. You might be surprised by how well your house could fair in today’s sellers’ market. Hanley Wood states:

“The 2020 Cost vs. Value report shows a predictable increase in costs for all 22 remodeling projects but a consistent dip in the perceived value of those projects at the time of home sale, as estimated by real-estate professionals in more than 100 metro areas across the U.S. This results in a slight downturn on the return on investment for nearly all projects relative to the trends we saw in last year’s report.”

Ideally, homeowners getting ready to move should try to avoid over-investing in big renovations if they won’t make that money back when they sell their house. According to the 2020 State of Home Spending report from Home Advisor:

“The average household spending on home services rose to $13,138, an increase over last year’s survey results, where homeowners who did projects spent $9,081 on average in 2019.”

Before you renovate, contact The Butch Cazin Team to see if it’s the best course of action. You may find out that putting your house on the market as-is will help you sell quickly, and it may result in the best return on your investment. Every home is different, but a conversation with your agent is mission-critical to make sure you make the right moves when selling this season.

Bottom Line
We’re in a strong sellers’ market, and that means you have the leverage to sell your house on your terms. Give us a call today to determine if renovating is really the best way to spend your time and money before you sell.

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.

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!

Weekly Update: July 13, 2020

We’re halfway through the year and many are curious to know how the real estate market is measuring up to past years – especially with this year’s added challenges from the COVID-19 pandemic. While we expect some bumps in the road in the coming months, as of today, the market looks good.

Mortgage rates continue to decline. Last week mortgage rates dropped to an average of 3.03% for the 30-year-fixed rate. This new low has helped spur both home sales and refinances.

Consumer sentiment is moving in the right direction. Consumer sentiment is one of the most important metrics in determining the health of the real estate market. For June, consumer sentiment came in at 78.1, up from May’s low of 72.3.

Inventory remains low and people are still looking to buy. Active inventory was down 10% in the first week of July compared to the same week in 2019, while new listing volume was up by 22%. Showing activity of homes on the market was up 27.6%.

Median sale prices rose while homes sold faster. In most areas, median sale prices of homes were up slightly in June. The average number of days homes spent on the market fell by about 2 days.

The stock market is up. Rising numbers in the stock market can likely be attributed to good employment numbers from June as well as hopes for a vaccine for COVID-19. Last month brought another 4.8 million jobs, which was higher than predicted, and unemployment fell to 11.1%.

The bottom line is if you’re planning to sell, I recommend putting your house on the market before fall. There are many buyers out there who are ready and waiting for more inventory to come on the market, and presidential election years typically come with a slowdown in home sales in the weeks surrounding the election. Similarly, if you’re looking to buy, let me know. We can start your virtual house hunt today.

Let me know if you have additional questions. I’m happy to assist you with your real estate needs.

Weekly Update: June 26, 2020

As we approach the end of June, most states are gradually reopening businesses and pent-up demand for housing is driving a busier than usual summer. Buyers and sellers are cautiously re-entering the real estate market, and with their return, here are some trends we tracked this past week.

Mortgage rates. Compared to the previous week, mortgage rates were flat but remain at all-time lows, allowing buyers to purchase more home for their money.

Stock market. The Dow remained volatile, but it was down by week’s end, due to the rise in the number of reported coronavirus cases.

Unemployment claims. Although 1.48 million people applied for unemployment, there’s been a steady decline of claims for 12 consecutive weeks.

On the real estate side, year-over-year listings were flat, but new contracts increased by double-digits. Home showings were over 30% greater compared to the same week in 2019, demonstrating high consumer demand for housing.

Window of opportunity. Historically, national elections bring uncertainty that can lead to a slight lull in real estate the fall before that election. If you’re thinking about buying or selling a home, the time to do so is now.

As usual, the health and safety of our clients is our priority. Our virtual buying and selling programs continue to lead our customers on their journeys home. If you’d like to know more about how I can help you, virtually or in person, with your home-buying or selling needs, I’m ready to assist you.