buyers

Renting vs. Buying: The Net Worth Gap You Need To See

 
 

Trying to decide between renting or buying a home?

One key factor that could help you choose is just how much homeownership can grow your net worth.

Every three years, the Federal Reserve Board shares a report called the Survey of Consumer Finances (SCF). It shows how much wealth homeowners and renters have – and the difference is significant.

On average, a homeowner’s net worth is nearly 40 times higher than a renter’s. Check out the graph below to see the difference for yourself:

 
 

Why Homeowner Wealth Is So High

In the previous version of that report, the average homeowner’s net worth was about $255,000, while the average renter’s was just $6,300. That’s still a big gap. But in the most recent update, the spread got even bigger as homeowner wealth grew even more (see graph below):

 
 

As the SCF report says:

“. . . the 2019-2022 growth in median net worth was the largest three-year increase over the history of the modern SCF, more than double the next-largest one on record.”

One big reason why homeowner wealth shot up is home equity.

Equity is the difference between your home’s value and what you owe on your mortgage. You gain equity by paying down your mortgage and when your home’s value goes up.

Over the past few years, home prices have gone up a lot. That’s because there weren’t enough available homes for all the people who wanted one. This supply-demand imbalance pushed home prices up – and that translated into faster equity gains and even more net worth for homeowners.

If you’re still torn between whether to rent or buy, here’s what you should know. While inventory has grown this year, in most places, there’s still not enough to go around. That’s why expert forecasts show prices are expected to go up again next year nationally. It’ll just be at a more moderate pace.

While that’s not the sky-high appreciation we saw during the pandemic, it still means potential equity gains for you if you buy now. As Ksenia Potapov, Economist at First American, explains:

“Despite the risk of volatility in the housing market, homeownership remains an important driver of wealth accumulation and the largest source of total wealth among most households.”

But prices and inventory are going to vary by area. So, lean on a local real estate agent. They’ll be able to give you the local trends and speak to the other financial and lifestyle benefits that come with owning a home. That crucial information will help you decide the best move for you right now. As Bankrate explains:

“Deciding between renting and buying a home isn’t just about cost — the decision also involves long-term financial strategies and personal circumstances. If you’re on the fence about which is right for you, it may be helpful to speak with a local real estate agent who knows your market well. An experienced agent can help you weigh your options and make a more informed decision.

Bottom Line

If you’re not sure if you should rent or buy, keep in mind that if you can make the numbers work, owning a home can really grow your wealth over time.

And if homeownership feels out of reach, connect with a local real estate agent and lender. They can help you explore programs that may make buying possible.

Read more at KeepingCurrentMatters.com

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If there is a home that you would like more information about, if you are considering selling a property, or if you have questions about the housing market in your neighborhood, please reach out. We’re here to help.

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Why Buying Now May Be Worth It in the Long Run

 
 

Should you buy a home now or should you wait?

That’s a question a lot of people have these days. And while what’s right for you is going to depend on a lot of different factors, here’s something you’ll want to consider as you make your decision.

As soon as you buy, you’ll start gaining equity. And you’d be surprised how quickly that can add up – even with more moderate home price appreciation.

Each quarter, Fannie Mae releases the Home Price Expectations Survey. It asks over one hundred economists, real estate experts, and investment and market strategists what they forecast for home prices over the next five years. In the latest release, experts project prices will continue to rise nationally through at least 2028 (see the graph below):

 
 

While home prices are going to vary from one local area to the next, this shows they’re expected to keep going up nationally. The size of the increase varies from year-to-year, but the important takeaway is that prices are forecast to rise every single year – just at a moderate pace.

And while rising home prices may not sound great right now, once you own a home, that growth will be a big bonus for you. Here’s a look at what you stand to gain equity-wise once you buy. The graph below uses a typical home’s value and those HPES projections to show how much equity is at stake:

 
 

If you bought a $450,000 home at the beginning of this year, based on that starting value and the expert forecasts from the HPES, you could gain more than $90,000 in household wealth over the next five years. That’s significant.

So, if you’re ready and able to buy, and growing your wealth is important to you, you’ve got an opportunity in front of you. And now that mortgage rates have fallen, it may be time to consider making a move.

To talk more about your options and what makes sense, lean on a pro. They’ll be able to tell you what home prices are doing in your area and what that means for your move (and your future equity). The Mortgage Reports says:

“Given the intricacies of the current market, it’s more important than ever to stay informed and up to date about housing market conditions. Whether you’re looking to buy or sell in the remaining months of 2024, having a professional guide you through the process can make all the difference.” 

Bottom Line

The decision to buy now or wait is a very personal one, but it’s valuable to have an expert’s perspective. They won’t push you, but they will explain things you may not have considered, like the equity that’s at stake.

If you want help weighing your options and thinking through how the current market factors in, connect with a local real estate agent.

Read more at KeepingCurrentMatters.com

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If there is a home that you would like more information about, if you are considering selling a property, or if you have questions about the housing market in your neighborhood, please reach out. We’re here to help.

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The Most Common Questions Buyers Ask Real Estate Brokers

 
 

Beginning the search for a new home can be stressful.

The more you feel in control of the process, the more confident you will be as you begin the journey. As a real estate professional who has spent thousands of hours with clients, I get asked a lot of questions.

Here are some of the ones I hear most frequently. In nearly every case, there is some nuance to the answer, since no specific situation is exactly the same. Use this as a starting point to understand the process, and I hope it will answer some of your questions, too.

How Many Homes Will I Look at Before I Find 'the One?'

I like to compare this to finding the perfect wedding gown. You may find your dream dress on the first try, or it may take several visits to multiple places to find the right one. This is the same as looking for homes. You may fall in love immediately or look at 10 or more properties for months before you find the one.

Another factor to consider is your current living situation. Is your lease for your rental about to end, and therefore you need a new home right away? On the other hand, if you have no immediate timeline and would like to just dip your toes in the process, then you may look a little longer to find the perfect dream home. Taking more time or less time to find the right home doesn’t mean that you won’t achieve the same result.

Sometimes this answer is more tied to the inventory on the market at the time that you are looking at homes than anything else. A home might come up at the beginning of the process that checks all your boxes, and sometimes you have to wait for the right home. However, don’t wait if you find the one, and trust me, you will know it.

How Should I Prepare for Buying a Home?

Get preapproved for a mortgage so you are able to move forward quickly. You will have to include your preapproval when submitting your offer. Aside from letting the seller know you will be approved for a loan, it also signals to them that you are serious and have done your homework.

Make a list of your top priorities, as well as those that you’d like but aren’t dealbreakers. The “must haves” will help you narrow down your search, and some of the other items on your list might end up being more or less important to you as you become more educated during your search. Remember, you will not get every single item on your wish list. At every price point, you will have to make compromises.

Once I Find the Home I Want, What is the Timeline to Closing?

Again, there are factors to consider when answering this:

With financing, it usually takes between 30 and 60 days from contract to closing, especially if you’re already preapproved for a mortgage.

Without financing, it’s possible to close in 30 days or less if the seller is also willing to move quickly. Of course, the seller may have mitigating circumstances that could speed up or slow down the process, which is beyond your control.

How Much Would a Renovation Cost if I Buy a Home?

Many aspects come into play when determining this (gut renovation vs. small section or surface upgrade, location, timeframe, etc.). Your broker should have a team of professionals who can arrange to meet with you in the potential home to discuss the project and give you a ballpark estimate (you aren’t obligated to use that contractor). Knowing whether you are looking at a $200,000 upgrade or a $1 million renovation will impact your bidding price.

What’s the Neighborhood Like?

If you’re working with a local broker, they should be able to give you a list of local information (grocery stores, coffee shops, tailors, etc.). Keep in mind that a broker is prohibited from discussing the local schools with you, according to the Fair Housing Act. They can, however, direct you to information sources to help you find out everything you need to know. If you decide you really like a home, your broker should take you around the neighborhood and point out places of interest. They might even be able to connect you with former clients who live nearby.

Is This a Good Price?

One of your broker’s jobs is to review “comparables” – similarly sized homes in the area (or building for apartments) to see what the sale price has been recently. That is always a good baseline to determine whether the asking price is fair. Of course, you need to compare apples to apples – as pricing is not only determined by size but also by condition, acreage (for homes), amenities (for buildings), and more. A large home in poor condition can sell for less than a smaller home in mint condition. It is your broker’s job to evaluate all the variables, as well as the current state of the market.

What Should I Bid? Above the Asking Price, Below or Meet It?

Again, there are multiple factors to consider. After your broker reviews the comparables, they should find out as much as possible from the seller’s broker to find out if there’s been a lot of traffic or not. This is another reason why having a well-connected broker with good relationships in the industry is important. They can try to find out if there have already been offers. If your broker can find out the circumstances of the sale (moving for a new job, downsizing after becoming empty-nesters, or needing a bigger home due to an expanding family), this may provide some color on how much you should bid since it helps determine how quickly the seller needs to move. If they are crunched for time, they may accept a lower offer.

Your broker will also have a sense of the current market. If it’s a hot market and properties are moving quickly, they will encourage an offer matching or exceeding the asking price. In a slower market, they may advise you to underbid and see what happens. If a home has been sitting for a long time, the seller might accept an offer below the asking price.

Some Good Questions You Might Not Think About

Here are some questions I would recommend asking, although they are not the ones I get asked most frequently. These are also important factors to consider:

  • What’s included in the sale?

  • What are the closing costs?

  • How old are the appliances/major systems (such as HVAC, furnace, hot water tank, etc.)?

The More You Know, the Better 

These are all really great questions that you SHOULD be asking when you are purchasing a home. The more you know, the more you will feel confident in making such a large purchase. It is important that you use a local real estate agent that you trust and is patient in answering your questions thoroughly.

Read more at RealEstate.USNews.com

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If there is a home that you would like more information about, if you are considering selling a property, or if you have questions about the housing market in your neighborhood, please reach out. We’re here to help.

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What To Expect if You Buy or Sell a Home This June

 
 

June is a busy month in the housing market because a lot of people buy and sell this time of year.

So, if you’ve got a move on your mind and you’re looking to make it happen this month, here’s a snapshot of what you need to know to make sure you’re ready.

If You’re Buying This June

A lot of homebuyers with children like to move after one school year ends and before the next one begins. That’s one reason why late spring into summer is a popular time for homes to change hands. And whether that’s a motivator for you or not, it’s important to realize more buyers are going to be looking right now – and that means you’ll want to be ready for a bit more competition. But there is a silver lining to a move this time of year. This is also when more sellers will list – so you should find you have more options. As an article from Bankrate says:

Late spring and early summer are the busiest and most competitive time of year for the real estate market. There’s usually more inventory listed for sale than other times of year . . . This is a double-edged sword for a buyer, as you will be met with more opportunities but [also] much more competition.”

During this busy season, it’s extra important to work with a trusted real estate agent. Your agent will help you stay on top of the latest listings, share expertise on how to make a strong offer in a competitive market, and give you insight into things like what the home is actually worth so you can make an informed decision when you buy. As Forbes says:

Approaching the market confidently, armed with good information and grounded expectations will take you far. Don’t let the hustle of the market convince you to buy something that’s not in your budget, or not right for your lifestyle.”

If You’re Selling This June

Because there are more buyers this time of year, you’re in a great spot as a seller. Many of those buyers are highly motivated to make their move happen before the next school year kicks off – so they’ll likely put in strong offers to try to make that possible. That means, if your house shows well and is listed at market value, you could see your house sell faster or for a higher price. According to the National Association of Realtors (NAR):

“Warmer weather and the end of the school year encourage more people to buy and sell, respectively. Buyers are looking to move and settle before the new school year begins, contributing to increased competition and, consequently, higher prices.”

You want to be sure you’ve got a great agent on your side to help you with the contingencies on those offers and any negotiations that take place so you can pick the best offer. Make sure you go over closing dates with your agent. Buyers trying to time their move with the school year may need to delay a bit or move faster. This can depend on the school calendar where you live. As U.S. News Real Estate explains:

“ . . if your house goes under contract in early summer, the buyer may ask for a delay in closing or move-in until the school year finishes or their current home has sold. Alternatively, a buyer later in summer may be looking to close quickly and move in under a month. Remain flexible to keep the deal running smoothly, and your buyer may be willing to throw in concessions, like covering some of your closing costs or overlooking the old roof.”

Bottom Line

If you’re looking to make a move this June, chat with a real estate agent so you know what to expect and how to plan for current market conditions.

Read more at KeepingCurrentMatters.com

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If there is a home that you would like more information about, if you are considering selling a property, or if you have questions about the housing market in your neighborhood, please reach out. We’re here to help.

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Don’t Give Up, Buyers: Real Estate Today Is Still a Seller’s Market, but Moving Toward Balance

 
 

Not a day seems to go by without a housing market headline breaking down a new set of real estate data: Mortgage rates soar above 7%! Home prices drop! Housing stock hits a four-year high!

Homebuyers and sellers might get whiplash trying to figure out what it means for them.

But, it is possible to figure out who is in the driver’s seat in the real estate market. Sometimes, it’s the seller. Once in a blue moon, buyers will be in control or the market is balanced. And, believe it or not—often neither buyers nor sellers are in control. When the latter happens, it’s called a “nobody market,” a “limbo market,” or even “purgatory.”

The current market indicates that it’s sellers who hold the advantage, although by a slim margin.

“The market is still leaning toward a seller’s market, but has gained balance since the red-hot [COVID-19] pandemic,” says Realtor.com® senior economic research analyst Hannah Jones.

Buyer vs. seller: What determines the market?

The data that decides who holds pole position in the market generally hinges on the total supply of homes and the demand for them.

A glut of listing pages offering loads of well-priced homes for sale indicate a buyer’s market. A housing market with old or scant housing stock means sellers have the leverage.

If there is more than a five-month supply of homes available, it’s a seller’s market. A five- to seven-month supply of homes indicates that it is a balanced market. Anything more than a seven-month supply of homes means it’s a buyer’s market.

As of April, housing supply data showed that new- and existing-home sales and overall housing stock levels were at a four-month mark. That’s the highest they have been in March since 2019.

While that’s good news for buyers, the total housing supply was still down a whopping 35.9% in April compared with what typical levels were from 2017 to 2019.

“New-home inventory is benefiting overall home supply, pushing the market toward more balance,” says Jones. “However, it is important to note that only about 1 in every 5 new homes for sale is completed. This means that though the data suggests considerable new-home supply, many of these homes are not move-in ready.”

When was the last buyer’s market?

Do you remember when the first “Avengers” movie came out and the year London hosted the Olympics? That was the year buyers held an advantage.

“The last … buyer’s market was in early 2012,” says Jones. Back then, housing stock was a little over a seven-month supply, meaning it’s been 12 years since supply outweighed demand.

But right now, Realtor.com Chief Economist Danielle Hale says the market is moving “toward balance” with more than a five-month supply of homes, a market not seen since early 2019.

Why this seller’s market is complicated

Though it is better to be a seller than a buyer in today’s market, it is also challenging to be a seller.

“Most sellers hold a mortgage with a lower rate than today’s rate, so selling would mean not only potentially purchasing into a higher-priced market, but also taking on a higher-rate mortgage,” says Jones. “So, though today’s market conditions are more favorable for sellers, it is challenging whether on the buy or sell side.”

Sellers, like buyers, also face higher listing prices. In April, home prices hit a median of $430,000.

High home prices and mortgage rates mean sellers have to seriously weigh the pros and cons of selling a home “despite being on the more favorable side of the transaction as a seller,” as Jones puts it.

Why the housing market can feel like ‘purgatory’

So why is the housing market so confusing to both sellers and buyers alike right now?

There’s a “conflict between raw data and the way buyers and sellers likely feel about the market,” Hale says.

She compares the economic data versus the recent consumer confidence numbers.

“Although people are spending and the economy is growing and unemployment is low, people don’t feel great about the economy,” she adds.

Read more at Realtor.com

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If there is a home that you would like more information about, if you are considering selling a property, or if you have questions about the housing market in your neighborhood, please reach out. We’re here to help.

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