Experts Project Mortgage Rates Will Continue To Rise in 2022

      Mortgage rates are one of several factors that impact how much you can afford if you’re buying a home. When rates are low, they help you get more house for your money. Within the last year, mortgage rates have hit the lowest point ever recorded, and they’ve hovered in the historic-low territory. But even over the past few weeks, rates have started to rise. This past week, the average 30-year fixed rate was 3.14%. What does this mean if you’re thinking about making a move? Waiting until next year will cost you more in the long run. Here’s a look at what several experts project for mortgage rates going into 2022. Freddie Mac: “The average 30-year fixed-rate mortgage (FRM) is expected to be 3.0 percent in 2021 and 3.5 percent in 2022.” Doug Duncan, Senior VP & Chief Economist, Fannie Mae: “Right now, we forecast mortgage rates to average 3.3 percent in 2022, which, though slightly higher than 2020 and 2021, by historical standards remains extremely low and supportive of mortgage demand and affordability.”  First American: “Consensus forecasts predict that mortgage rates will hit 3.2 percent by the end of the year, and 3.7 percent by the end of 2022.” If rates rise even a half-point percentage over the next year, it will impact what you pay each month over the life of your loan – and that can really add up. So, the reality is, as prices and mortgage rates rise, it will cost more to purchase a home. As you can see from the quotes above, industry experts project rates will rise in the months ahead. Here’s a table that compares other expert views and gives an average of those projections:Whether you’re thinking about buying your first home, moving up to your dream home, or downsizing because your needs have changed, purchasing before mortgage rates rise even higher will help you take advantage of today’s homebuying affordability. That could be just the game-changer you need to achieve your homeownership goals. Bottom Line If you’re thinking of buying or selling over the next year, it may be wise to make your move sooner rather than later – before mortgage rates climb higher.

What Does the Future Hold for Home Prices?

      If you’re looking to buy or sell a house, chances are you’ve heard talk about today’s rising home prices. And while this increase in home values is great news for sellers, you may be wondering what the future holds. Will prices continue to rise with time, or should you expect them to fall? To answer that question, let’s first understand a few terms you may be hearing right now. Appreciation is an increase in the value of an asset. Depreciation is a decrease in the value of an asset. Deceleration is when something happens at a slower pace. It’s important to note home prices have increased, or appreciated, for 114 straight months. To find out if that trend may continue, look to the experts. Pulsenomics surveyed over 100 economists, investment strategists, and housing market analysts asking for their five-year projections. In terms of what lies ahead, experts say the market may see some slight deceleration, but not depreciation. Here’s the forecast for the next few years:As the graph above shows, prices are expected to continue to rise, just not at the same pace we’ve seen over the last year. Over 100 experts agree, there is no expectation for price depreciation. As the arrows indicate, each number is an increase, which means prices will rise each year. Bill McBride, author of the blog Calculated Risk, also expects deceleration, but not depreciation: “My sense is the Case-Shiller National annual growth rate of 19.7% is probably close to a peak, and that year-over-year price increases will slow later this year.” Ivy Zelman of Zelman & Associates agrees, saying: “. . . home price appreciation is on the cusp of flipping to a decelerating trend.” A recent article from realtor.com indicates you should expect: “. . . annual price increases will slow to a more normal level, . . .” What Does This Deceleration Mean for You? What experts are projecting for the years ahead is more in line with the historical norm for appreciation. According to data from Black Knight, the average annual appreciation from 1995-2020 is 4.1%. As you can see from the chart above, the expert forecasts are closer to that pace, which means you should see appreciation at a level that’s aligned with a more normal year. If you’re a buyer, don’t expect a sudden or drastic drop in home prices – experts say it won’t happen. Instead, think about your homeownership goals and consider purchasing a home before prices rise further. If you’re a seller, the continued home price appreciation is good news for the value of your house. Work with an agent to list your house for the right price based on market conditions. Bottom Line Experts expect price deceleration, not price depreciation over the coming years. Let’s connect to talk through what’s happening in the housing market today, where things are headed, and what it means for you.

The Big Question: Should You Renovate or Move?

      The last 18 months changed what many buyers are looking for in a home. Recently, the American Institute of Architects released their AIA Home Design Trends Survey results for Q3 2021. The survey reveals the following: 70% of respondents want more outdoor living space 69% of respondents want a home office (48% wanted multiple offices) 46% of respondents want a multi-function room/flexible space 42% of respondents want an au pair/in-law suite 39% of respondents want an exercise room/yoga space If you’re a homeowner who wants to add any of the above, you have two options: renovate your current house or buy a home that already has the spaces you desire. The decision you make could be determined by factors like: A possible desire to relocate The difference in the cost of a renovation versus a purchase Finding an existing home or designing a new home that has exactly what you want (versus trying to restructure the layout of your current house) In either case, you’ll need access to capital: the funds for the renovation or the down payment your next home would require. The great news is that the money you need probably already exists in your current home in the form of equity. Home Equity Is Skyrocketing The record-setting increases in home prices over the last two years dramatically improved homeowners’ equity. The graph below uses data from CoreLogic to show the average home equity gain in the first quarter of the last nine years:Odeta Kushi, Deputy Chief Economist at First American, quantifies the amount of equity homeowners gained recently: “Remember U.S. households own nearly $35 trillion in owner-occupied real estate, just over $11 trillion in debt, and the remaining ~$24 trillion in equity. In inflation adjusted terms, homeowners in Q2 had an average of $280,000 in equity- a historic high.” As a homeowner, the money you need to purchase the perfect home or renovate your current house may be right at your fingertips. However, waiting to make your decision may increase the cost of tapping that equity. If you decide to renovate, you’ll need to refinance (or take out an equity loan) to access the equity. If you decide to move instead and use your equity as a down payment, you’ll still need to mortgage the remaining difference between the down payment and the cost of your next home. Mortgage rates are forecast to increase over the next year. Waiting to leverage your equity will probably mean you’ll pay more to do so. According to the latest data from the Federal Housing Finance Agency (FHFA), almost 57% of current mortgage holders have a mortgage rate of 4% or below. If you’re one of those homeowners, you can keep your mortgage rate under 4% by doing it now. If you’re one of the 43% of homeowners with a mortgage rate over 4%, you may be able to do a cash-out refinance or buy a more expensive home without significantly increasing your monthly payment. First Step: Determine the Amount of Equity in Your Home If you’re ready to either redesign your current house or find an existing or newly constructed home that has everything you want, the first thing you need to do is determine how much equity you have in your current home. To do that, you’ll need two things: The current mortgage balance on your home The current value of your home You can probably find the mortgage balance on your monthly mortgage statement. To find the current market value of your house, you can pay several hundreds of dollars for an appraisal, or you can contact a local real estate professional who will be able to present to you, at no charge, a professional equity assessment report. Bottom Line If the past 18 months have refocused your thoughts on what you want from your house, now may be the time to either renovate or make a move to the perfect home.  

Is It time To Move on to a New Home?

      If you’ve been in your home for longer than five years, you’re not alone. According to recent data from First American, homeowners are staying put much longer than historical averages (see graph below):As the graph shows, before 2008, homeowners sold their houses after an average of just five years. Today, that number has more than doubled to over 10 years. The housing industry refers to this as your tenure. To really explore tenure, it’s important to understand what drives people to make a move. An article from The Balance explores some of the primary reasons individuals choose to sell their houses. It says: “People who move for home-related reasons might need a larger home or a house that better fits their needs, . . . Financial reasons for moving include wanting a nicer home, moving to a newer home to avoid making repairs on the old one, or cashing in on existing equity.” If you’ve been in your home for longer than the norm, chances are you’re putting off addressing one, if not several, of the reasons other individuals choose to move. If this sounds like you, here are a few things to consider: If your needs have changed, it may be time to re-evaluate your home. As the past year has shown, our needs can change rapidly. That means the longer you’ve been in your home, the more likely it is your needs have evolved. The Balance notes several personal factors that could lead to your home no longer meeting your needs, including relationship and job changes. For example, many workers recently found out they’ll be working remotely indefinitely. If that’s the case for you, you may need more space for a dedicated home office. Other homeowners choose to sell because the number of people living under their roof changes. Now more than ever, we’re spending more and more time at home. As you do, consider if your home really delivers on what you need moving forward. It’s often financially beneficial to sell your house and move. One of the biggest benefits of homeownership is the equity your home builds over time. If you’ve been in your house for several years, you may not realize how much equity you have. According to the latest Homeowner Equity Report from CoreLogic, homeowners gained an average of $33,400 in equity over the past year. That equity, plus today’s low mortgage rates, can fuel a major upgrade when you sell your home and purchase a new one. Or, if you’re looking to downsize, your equity can help provide a larger down payment and lower your monthly payments over the life of your next loan. No matter what, there are significant financial benefits to selling in today’s market. Bottom Line If you’ve been in your home for 5-10 years or more, now might be the time to explore your options. Today’s low rates and your built-up equity could provide you with the opportunity to address your evolving needs. If you feel it’s time to sell, let’s connect.  Call me today! 303-929-3157