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Today’s Biggest Housing Market Myths

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Have you ever heard the phrase: don’t believe everything you hear?

That’s especially true if you’re thinking about buying or selling a home in today’s housing market. There’s a lot of misinformation out there. And right now, making sure you have someone you can go to for trustworthy information is extra important.

If you partner with a real estate agent, they can clear up some common misconceptions and reassure you by backing them up with research-driven facts. Here are just a few misconceptions they can help disprove.

1. I’ll Get a Better Deal Once Prices Crash

If you’ve heard home prices are going to come crashing down, it’s time to look at what’s actually happening. While prices vary by local market, there’s a lot of data out there from numerous sources that shows a crash is not going to happen. Back in 2008, there was a dramatic oversupply of homes that led to prices crashing. Across the board, there’s an undersupply of homes for sale today. That makes this market a whole different scenario (see chart below):

 
 

So, if you think waiting will score you a deal, know that data shows there’s not a crash on the horizon, and waiting isn’t going to pay off the way you’d hoped.

2. I Won’t Be Able To Find Anything To Buy

If this nagging fear about finding the right home if you move is still holding you back, you probably haven’t talked with an expert real estate agent lately. Throughout the year, the supply of homes for sale has grown. Data from Realtor.com helps put this into context. While there are still fewer homes on the market than in a more normal year like 2019, inventory is still above where it was at this time last year (see graph below):

 
 

So, if you’re remembering all that media coverage about record-low supply during the pandemic, you can rest a bit easier. While the market isn’t back to normal just yet, inventory is moving in a healthier direction. And that means as your options improve, you can let go of this now outdated myth because finding a home to buy won’t feel quite so impossible anymore.

3. I Have To Wait Until I Have Enough for a 20% Down Payment

Many people still believe you need a 20% down payment to buy a home. To show just how widespread this myth is, Fannie Mae says:

“Approximately 90% of consumers overstate or don’t know the minimum required down payment for a typical mortgage.”

And if you look at the data from the National Association of Realtors (NAR), you can see the typical homeowner isn’t putting down as much as you might expect (see graph below):

 
 

First-time homebuyers are typically only putting down 6%. That’s far less than the 20% so many people think they need. And if you’re looking at that graph and you’re more focused on how the number for repeat buyers is closer to 20%, here’s what you need to realize. That’s only because they have so much equity built up in their current house that can be used to make a larger down payment for their next move.

This goes to show you don’t have to put 20% down, unless it’s specified by your loan type or lender. Many people put down a lot less. Not to mention, depending on the type of home loan you get, you may only need to put 3.5% or even 0% down. So, if you’re buying your first home, you likely don’t need nearly as much for your down payment as you may think.

An Agent’s Role in Fighting Misconceptions

If you put your move on pause because you heard one or more of these myths yourself, it’s time to talk to a trusted agent. An expert agent has more data and the facts, just like this, to reassure you and help break through any misconceptions that may be holding you back.

Bottom Line

If you have questions about what you’re hearing or reading, connect with a real estate agent. You deserve to have someone you can trust to get the facts.

Read more at KeepingCurrentMatters.com

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The Number One Mistake Sellers Are Making: Overpricing Their House

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In today’s housing market, many sellers are making a critical mistake: overpricing their houses.

This common error can lead to a home sitting on the market for a long time without any offers. And when that happens, the homeowner may have to drop their asking price to try to re-ignite buyer interest.

Data from Realtor.com shows the number of homeowners realizing this mistake and doing a price reduction is climbing (see graph below):

 
 

If you’re thinking about making a move yourself, here’s what you need to know. The best way to avoid making a costly mistake is to work with a trusted real estate agent to find the right price. Here’s a look at what’s at stake if you don’t.

Not Paying Attention To Current Market Conditions

Understanding current market conditions is key to accurate pricing. You don’t want to set your asking price based on what happened during the pandemic. The market has moderated a lot since then, so it’s far better to align your price with today’s reality.

Real estate agents stay updated on market trends and how they impact the pricing strategy for your house.

Pricing It Based on What You Want To Make (Not What It’s Worth)

Another misstep is pricing it based on what you want to make on the sale, and not necessarily current market value. You may see other homes in your neighborhood selling for top dollar and assume yours can do the same. But you may not be considering differences in size, condition, and features. For example, maybe that other house is waterfront or has a finished basement. To sum it up, Bankrate explains:

“How do you find that sweet spot of pricing for profit but not overpricing? The expertise of your agent can be truly valuable here. A knowledgeable agent will understand fair market value in your area, how much your house is worth and how much you might reasonably expect to get for it in the current market.”

An agent will do a comparative market analysis (CMA) to make sure your house is compared with truly similar properties to get an accurate look at how it should be priced.

Pricing High to Leave Room for Negotiation

Another common, yet misguided strategy is to price your house high on purpose, so you have more room to negotiate down during the sale. But this can backfire. A price that seems too high often deters potential buyers from even considering the home. So rather than leaving room for negotiation, what you’ll actually be doing is turning buyers away. U.S. News Real Estate explains:

“You want to sell your house for top dollar, but be realistic about the value of the property and how buyers will see it. If you’ve overpriced your home, chances are you’ll eventually need to lower the number, but the peak period of activity that a new listing experiences is already gone.”

An agent can help you set a fair price that attracts buyers and encourages more competitive offers.

Bottom Line

Overpricing your home can have serious consequences. A knowledgeable real estate agent brings an objective perspective, in-depth market knowledge, and a strategic approach to pricing.

Connect with a local real estate professional to avoid making a pricing mistake that’ll cost you.

Read more at KeepingCurrentMatters.com

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As Featured in West + Main Home Magazine: Reviving Retro

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West + Main Agent Jenelle Brewer’s clients Matt Gaye and Maddie Allen-Sandoz

“It was the epitome of ‘starter house’”
— Jenelle Brewer

West + Main clients Matt Gaye and Maddie Allen-Sandoz bought this simple, early 80s ranch house just over 2 years ago with the help of agent Jenelle Brewer.

"It was the epitome of 'starter house', said Jenelle. “Totally livable, but pretty ugly! But...it was on a large corner lot near an area of town that has been getting improved upon over this same time period, super close to the Old Mill in Bend, Oregon and walkable to several breweries, too."

Q: What inspired your project?

A: After tying the knot in Philadelphia, we (Matt and Maddie) embarked on a 6-month cross-country road trip, searching for our next home. Bend, OR wasn't initially on our radar, but a friend's recommendation and our visit to this scenic town with a vibrant community won us over.

Q: How much did you invest in the renovation?

A: We purchased the house for $400,000 and have invested $150,000, plus our own sweat equity. Additional projects, including landscaping and bathrooms, are estimated to cost another $100,000.

Q: Any favorite vendors or shops you'd recommend?

A: Maddie's father, Scott Sandoz, a master craftsman, played a pivotal role. Good Wood from Portland provided reclaimed hardwoods for siding and flooring, while Willis Bigelow, a local artist, crafted unique furnishings. Seth Meeves of Raintree Plumbing helped with a sustainable greywater system. We're also sourcing artwork from local artists and furniture from Bend Upstyle and Gathered Wares.

We're thrilled with the result! While some adjustments were made, like changing cabinet colors and relocating the wood stove, they enhanced the final outcome. Our favorite aspects include the built-in sofa and shelves, the open layout of the kitchen and living room, and the cozy ambiance created by thoughtful design choices. Overall, the transformation exceeded our expectations.

 

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Homebuyers Gear Up for a Mortgage Rate Drop This Fall: What To Know as the Housing Market Shifts

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Homebuyers who are gearing up to shop for a house this fall might wonder whether the mortgage rate gods will smile in their favor.

They’re right to ponder: Last October, rates hit a 23-year high of 7.79% for a 30-year fixed home loan, according to Freddie Mac.

Since then, rates have plunged to 6.47% for the week ending Aug. 8, the lowest they’ve been in over a year before ticking up slightly. The Realtor.com® 2024 midyear forecast predicts rates will dip further to 6.3% by year’s end.

Homebuyers should be happy to hear this, but the question remains: What will happen once mortgage rates continue to fall? And what else might shift in the housing market in ways buyers might not see coming—in terms of home prices, the number of homes for sale, and beyond?

Here’s what homebuyers can expect, and how they can prepare to make the most of this opportunity once lower rates hit.

Mortgage rates will likely decline gradually

Though mortgage rates have fallen since their peak in October 2023, they’re still way above the 2022 lows of around 3%.

In other words, the roller-coaster ride isn’t over.

“The drop has occurred largely as a result of encouraging signs that inflation is easing and that the Federal Reserve will be cutting the federal funds target rate sooner rather than later,” says Charlie Dougherty, director and senior economist at Wells Fargo.

The Fed had been raising interest rates since early 2022 to bring down inflation. In July, it signaled it would be cutting rates this fall in response to cooling inflation. Mortgage rates often move in the same direction as the Fed’s rates—so when the Fed lowers its rates, mortgage rates are likely to drop, too.

“We are going to see Fed rate cuts before the end of 2024, and they’re going to be bigger than we expected at the outset of the year,” says Realtor.com® Chief Economist Danielle Hale.

But homebuyers shouldn’t expect a radical overnight change.

“Roughly 86% of outstanding mortgages have a rate of 6% or below, meaning rates will need to continue to trend lower to see a fully reenergized housing market,” says Hannah Jones, senior economic research analyst at Realtor.com.

Homes may not become more affordable

Potential homebuyers who’ve been hanging out on the sidelines, waiting for median home prices to drop alongside interest rates, may want to brace themselves: Prices are rising—as of now.

Indeed, the Realtor.com economic research team expects list prices to rise 4.6% by the end of the year. And falling mortgage rates just might be to blame.

“If lower mortgage rates spark more buyer demand than inventory can keep up with, then prices may climb once again, eliminating the impact of lower rates,” says Jones.

“Lower financing costs will likely boost demand by pulling affordability-crunched buyers off of the sidelines,” adds Dougherty.

In fact, for every 1% drop in mortgage rates, there are 5 million more households that qualify for homeownership, according to Seth Bellas, a Grand Rapids, MI–based branch manager for Churchill Mortgage.

What this means is that not only will more buyers start searching for homes, but many might also resort to offering over the asking price.

“Waived appraisals and shortened inspection timelines are also likely to make a comeback,” says Bryson Taggart, senior agent partnership manager for Opendoor. “The good news for buyers is that their power will increase, and they’ll be able to afford more house—they just might need to work harder for it.”

Homebuyers may have to put in more offers

On that note, if at first you don’t succeed, don’t give up.

“Once you’re up against the competition, don’t get discouraged. It can take multiple offers on a home before getting accepted,” says Taggart. “In 2020, I had a client who put in 16 offers before they were accepted. It was a tough journey, but their persistence landed them the home of their dreams.”

Buyers can prepare for the possibility of heightened competition by homing in on their preferences and budget, adds Jones.

Taggart says his best advice is to make sure to include closing costs and down payments in those parameters, and be realistic about what you can afford.

Lower rates could help unleash more homes on the market

Anyone who’s searched for a home over the past couple of years knows pickings have been slim. But one outcome of lower rates is the possibility of new housing stock—which has been steadily rising for months now.

Though overall housing inventory remains below pre-COVID-19 pandemic levels in much of the U.S., there are more homes for sale than the same time last year. Realtor.com forecasts that housing stock will eventually climb by 14.5% annually in 2024.

“Lower rates and more for-sale inventory spell opportunities for buyers,” says Jones. “The summer is typically the busiest time of year in housing, but this fall may see an extra boost from shifting housing conditions.”

Pre-approved mortgage applications will start ‘waking up’

The best thing home shoppers can do is get pre-approved for a mortgage so they’re in a position to act on that perfect house the minute it hits the market.

“Planning ahead and getting one’s buying power firmed up early will give a potential homebuyer a leg up on those that are just thinking of preparing themselves,” says Tan Tunador, a vice president and senior loan officer for Atlantic Coast Mortgage.

“A young couple reached out last week asking what they needed to do to get pre-approved, and when I looked them up, their initial application was October 2021. But when they had applied in 2021, they quickly gave up due to rates and the low inventory,” says Tunador. “Recent positive news about mortgages brought them back into the market, and they were happy that we could use their original application.”

Tunador helped them freshen up their original application with a new credit report and updated income and asset documents. Now, they’re ready to go with a new pre-approval letter.

Note: How fast a buyer needs to act all comes down to location.

“Still-competitive Midwest and Northeast markets may require swift action, while markets such as Austin, TX, that are flush with inventory may allow more time for deliberation,” says Jones. “It is important to keep a pulse on the market to ensure you can submit a competitive offer and take advantage of falling rates.”

Buyers will trade high rates for a more challenging market

Once rates start to drop, it’s going to be a trade-off for homebuyers: rates versus competition.

“One of the most basic principles of economics is that when supply is limited and demand is heightened, the price of the goods increases,” says Taggart. “For buyers, we can anticipate increased competition that will drive up the prices of homes and make the homebuying process more stressful and difficult.”

In other words, homebuyers will find themselves essentially trading the frustration of having a higher mortgage rate for the frustration of competing in a more challenging market.

Potential buyers might once again be forced to consider risky moves like waiving a home inspection, adding an appraisal guarantee, and/or overbidding significantly to win a bid.

If you see a home you love, don’t wait

“The key is to act strategically in this evolving market,” says Cassandra Happe, an analyst for WalletHub. “Buyers should consider locking in deals at potentially lower prices now.”

“With the inventory of homes for sale still relatively low, finding the right home might still be the biggest challenge,” says Hale. “For that reason, if a shopper finds a home that fits their needs and is in budget, then it makes sense to move forward.”

Read more at Realtor.com

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These Kitchen and Bathroom Renovations Will Add the Most Value to Your Home

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Faced with the daunting unknowns and potential complications of large-scale renovations, many people immediately turn away from buying a fixer-upper.

In fact, a recent study by Frontdoor reports that offers for fixer-uppers halved from 2022 to 2023. But the high risk can come with a high reward. Frontdoor found that on average, those who take the leap of renovating a fixer-upper earn a 27.5% return on their investment. And that’s on top of the personal benefits gained from designing a home to your taste. 

Of course, without the appropriate planning and strategy, budgets tend to spiral out of control and many find out the hard way that some renovations don't pay off. To find out which home improvements are really worth your time and money, Frontdoor’s data team used information from Zillow, such as square footage and price (in conjunction with Kukun’s home remodeling cost estimator) to determine the most profitable home renovations. The vast majority of these turned out to be in the kitchen and in the bathroom—two rooms that can be key to increasing the value of your home. Keep reading to find out which renovations came out on top.

Most Valuable Kitchen Renovations

Cabinets

The kitchen is the heart of any home, so it’s no surprise that kitchen cabinets make a big impression on a prospective buyer. Whether you reface existing cabinets or install new semi-custom ones, the average increase in property value from this renovation alone is 3.63%, which comes out to around $7,510. This is by far the most profitable home renovation for fixer uppers, according to Frontdoor's findings. 

Appliances

Replacing mid-market branded appliances with higher-end alternatives creates a more luxurious and efficient kitchen with little effort. Buying new appliances for your fixer upper is set to increase your market value by 2.35%, or $4,922. 

Counters

Counters serve an important functional purpose, and they're also often a focal point of a kitchen. According to Frontdoor, switching your counters to granite, quartz, marble, or porcelain materials can increase the price of your home by 1.81%.  

Faucet and Sink

Again, switching out mid-market sinks with higher end options can have a significant impact on the appearance and, therefore, the price of your home. This type of renovation on average increases the home's value by 1.12%. 

Lighting

After making a bunch of renovations, why not give them a spotlight with installing new ceiling lights over the counters or sink? Adding these types of lighting could give you a 1% boost on selling price. 

Backsplash

Similar to your counters, the backsplash of your kitchen is an eye-catching detail that needs some attention. Adding a granite, quartz, marble, or porcelain backsplash can add .42% value onto your property.

Most Valuable Bathroom Renovations

Shower and Tub Surround Panels

Though bathroom renovations typically add less value than those in the kitchen, they can still add a four figure sum. Shower and tub surround panels will contribute the most to bathroom renovations, with an increase of .92% or $2,300. 

Faucet, Sink, and Toilet

Replacing an average faucet, sink, and toilet with a higher end option transforms the appeal and comfort of your bathroom, adding .61% value and potentially saving you from an old-pipe-induced plumbing disaster. 

Cabinets

Whether you're redoing your original cabinets with higher end materials or installing completely new ones, upgrading your bathroom cabinets can add .45% to its value. New cabinets are also an easy way to change up the aesthetic of your bathroom by introducing wood or color.

Read more at RealSimple.com

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