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US Real Estate News for Global Investors　5-3-2023

Posted By Yoshi Takita on May 03, 2023 in Global Real Estate

Buyer Activity Is Up Despite Higher Mortgage Rates If you’re a homeowner thinking about making a move, you may wonder if it’s still a good time to sell your house. Here’s the good news. Even with higher mortgage rates, buyer traffic is actually picking up speed. Data from the latest ShowingTime Showing Index, which is a measure of buyers actively touring homes, helps paint the picture of how much buyer demand has increased in recent months (see graph below): As the graph shows, the first two months of 2023 saw a noticeable increase in buyer traffic. That’s likely because the limited number of homes for sale kept shoppers looking for homes even during colder months. To help tell the story of why the latest report is significant, let’s compare foot traffic this February with each February for the last six years (see graph below). It shows this was one of the best Februarys for buyer activity we’ve seen in recent memory. In the last six years, we saw the most February buyer traffic in 2021 and 2022 (shown in green above), but those years were highly unusual for the housing market. So, if we compare February 2023 with the more normal, pre-pandemic years, data shows this year still marks a clear rise in buyer activity. The uptick in buyer traffic is even more noteworthy considering the increase in mortgage rates this February. The Freddie Mac 30-year fixed mortgage rate rose from 6.09% during the week of February 2nd to 6.50% in the week of February 23rd. But even with higher rates, more buyers were looking for a home. Jeff Tucker, Senior Economist at Zillow, says the increased buyer activity could continue: “More buyers will keep coming out of the woodwork. We always see a seasonal uptick in home shoppers in March and April . . .” If you’re looking to sell your house, seeing buyers still active in the market this year should be encouraging. It’s a sign buyers are out there and could be looking for a home just like yours. Working with a real estate professional to list your house now will help you get your home in front of eager buyers today. Bottom Line Rising foot traffic is a bright spot for this year’s housing market and indicates that buyers are looking to purchase this year, even with higher mortgage rates. If you’re ready to sell your house, let’s connect.

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US Real Estate News for Global Investroers 5-2-2023

Posted By Yoshi Takita on May 02, 2023 in Global Real Estate

A Recession Doesn’t Equal a Housing Crisis Everywhere you look, people are talking about a potential recession. And if you’re planning to buy or sell a house, this may leave you wondering if your plans are still a wise move. To help ease your mind, experts are saying that if we do officially enter a recession, it’ll be mild and short. As the Federal Reserve explained in their March meeting: “. . . the staff’s projection at the time of the March meeting included a mild recession starting later this year, with a recovery over the subsequent two years.”  While a recession may be on the horizon, it won’t be one for the housing market record books like the crash in 2008. What we have to remember is that a recession doesn’t always lead to a housing crisis. To prove it, let’s look at the historical data of what happened in real estate during previous recessions. That way you know why you shouldn’t be afraid of what a recession could mean for the housing market today.   A Recession Doesn’t Mean Falling Home Prices  To show that home prices don’t fall every time there’s a recession, it helps to turn to historical data. As the graph below illustrates, looking at recessions going all the way back to 1980, home prices appreciated in four of the last six of them. So historically, when the economy slows down, it doesn’t mean home values will always fall. Most people remember the housing crisis in 2008 (the larger of the two red bars in the graph above) and think another recession will be a repeat of what happened to housing then. But today’s housing market isn’t about to crash because the fundamentals of the market are different than they were in 2008. Back then, one of the big reasons why prices fell was because there was a surplus of homes for sale at the same time distressed properties flooded the market. Today, the number of homes for sale is low, so while home prices may see slight declines in some areas and slight gains in others, a crash simply isn’t in the cards.  A Recession Means Falling Mortgage Rates What a recession really means for the housing market is falling mortgage rates. As the graph below shows, historically, each time the economy slowed down, mortgage rates decreased. Bankrate explains mortgage rates typically fall during an economic slowdown: “During a traditional recession, the Fed will usually lower interest rates. This creates an incentive for people to spend money and stimulate the economy. It also typically leads to more affordable mortgage rates, which leads to more opportunity for homebuyers.”  This year, mortgage rates have been quite volatile as they’ve responded to high inflation. The 30-year fixed mortgage rate has hovered between roughly 6-7%, and that’s impacted affordability for many potential homebuyers.  But, if there is a recession, history tells us mortgage rates may fall below that threshold, even though the days of 3% are behind us. Bottom Line You don’t need to fear what a recession means for the housing market. If we do have a recession, experts say it will be mild and short, and history shows it also means mortgage rates go down.

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US Real Estate News for Global Investroers 5-1-2023

Posted By Yoshi Takita on May 02, 2023 in Global Real Estate

Why Buying a Home Makes More Sense Than Renting Today Wondering if you should continue renting or if you should buy a home this year? If so, consider this. Rental affordability is still a challenge and has been for years. That’s because, historically, rents trend up over time. Data from the Census shows rents have been climbing pretty steadily since 1988.  And, data from the latest rental report from Realtor.com shows rents continue to grow today, even though it’s at a slower pace than we saw at the height of the pandemic: “In March 2023, the U.S. rental market experienced single-digit growth for the eighth month in a row . . . The median asking rent was $1,732, up by $15 from last month and down by $32 from the peak but is still $354 (25.7%) higher than the same time in 2019 (pre-pandemic).” With rents much higher now than they were in more normal, pre-pandemic years, owning your home may be a better option, especially if the long-term trend of rents increasing each year continues. In contrast, homeowners with a fixed-rate mortgage can lock in a monthly mortgage payment for the duration of their loan (typically 15-30 years).  Owning a Home Could Be More Affordable if You Need More Space The graph below uses national data on the median rental payment from Realtor.com and median mortgage payment from the National Association of Realtors (NAR) to compare the two options. As the graph shows, depending on how much space you need, it’s typically more affordable to own than to rent if you need two or more bedrooms: So, if you’re looking to live somewhere where you have two or more bedrooms to accommodate your household, give you more breathing room to spread out your belongings, or dedicate the extra space to practice your hobbies, it might make sense to consider homeownership. Homeownership Allows You To Start Building Equity In addition to shielding you from rising rents and being more affordable when you need more space, owning your home also allows you to start building your own equity, which in turn grows your net worth.  And, as home values typically rise over time and you pay off your mortgage, you build equity. That equity can set you up for success later on because you can use it to help fuel a move to an even bigger space down the line. That’s why, according to Zonda, the top reason millennial homeowners bought their home over the past year was to build their own equity instead of someone else’s. Bottom Line If you’re trying to decide whether to buy a home or continue renting, let’s connect to explore your options. With rents rising, it may make more sense to pursue your dream of homeownership.  

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US Real Estate News for Global Investroers 4-28-2023

Posted By Yoshi Takita on April 28, 2023 in Global Real Estate

Ways To Overcome Affordability Challenges in Today’s Housing Market [INFOGRAPHIC] Some Highlights With so few homes on the market right now, widening the scope of your search to include nearby areas could help you find more options in your budget. You can also work with a trusted lender to consider alternative financing options and search for down payment assistance. If you’ve been searching for a home but are concerned about rising costs, make sure you have a team of trusted real estate professionals for expert advice.

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US Real Estate News for Global Investroers 427-2023

Posted By Yoshi Takita on April 28, 2023 in Global Real Estate

Why Today's Foreclosure Numbers Are Nothing Like 2008 You’ve likely seen headlines about the number of foreclosures climbing in today’s housing market. That may leave you with a few questions, especially if you’re thinking about buying a house. Understanding what they really mean is mission-critical if you want to know the truth about what’s happening today. According to a recent report from ATTOM, a property data provider, foreclosure filings are up 6% compared to the previous quarter and 22% since one year ago. As media headlines call attention to this increase, reporting on just the number could actually generate worry and may even make you think twice about buying a home for fear that prices could crash. The reality is, while increasing, the data shows a foreclosure crisis is not where the market is headed.  Let’s look at the latest information with context so we can see how this compares to previous years. It Isn’t the Dramatic Increase Headlines Would Have You Believe In recent years, the number of foreclosures has been down to record lows. That’s because, in 2020 and 2021, the forbearance program and other relief options for homeowners helped millions of homeowners stay in their homes, allowing them to get back on their feet during a very challenging period. And with home values rising at the same time, many homeowners who may have found themselves facing foreclosure under other circumstances were able to leverage their equity and sell their houses rather than face foreclosure. Moving forward, equity will continue to be a factor that can help keep people from going into foreclosure. As the government’s moratorium came to an end, there was an expected rise in foreclosures. But just because foreclosures are up doesn’t mean the housing market is in trouble. As Clare Trapasso, Executive News Editor at Realtor.com, says: “There’s no reason to panic, at least not yet. Foreclosure filings began ticking up . . . after the federal foreclosure moratorium ended. The moratorium was enacted in the early days of COVID-19, when millions of Americans lost their jobs, to prevent a tsunami of homeowners losing their properties. So some of these proceedings would have taken place during the pandemic but got delayed due to the moratorium. This is a bit of a catch-up.” Basically, there’s not a sudden flood of foreclosures coming. Instead, some of the increase is due to the delayed activity explained above while more is from economic conditions. As Rob Barber, CEO of ATTOM, explains:                                        “This unfortunate trend can be attributed to a variety of factors, such as rising unemployment rates, foreclosure filings making their way through the pipeline after two years of government intervention, and other ongoing economic challenges. However, with many homeowners still having significant home equity, that may help in keeping increased levels of foreclosure activity at bay.” To further paint the picture of just how different the situation is now compared to the housing crash, take a look at the graph below. It shows foreclosure activity has been lower since the crash by looking at properties with a foreclosure filing going all the way back to 2005. While foreclosures are climbing, it’s clear foreclosure activity now is nothing like it was during the housing crisis. In addition to all of the factors mentioned above, that’s also largely because buyers today are more qualified and less likely to default on their loans.  Today, foreclosures are far below the record-high number that was reported when the housing market crashed. Bottom Line Right now, putting the data into context is more important than ever. While the housing market is experiencing an expected rise in foreclosures, it’s nowhere near the crisis levels seen when the housing bubble burst, and that won’t lead to a crash in home prices.

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US Real Estate News for Global Investors　4-26-2023

Posted By Yoshi Takita on April 26, 2023 in Global Real Estate

The Three Factors Affecting Home Affordability Today There’s been a lot of focus on higher mortgage rates and how they’re creating affordability challenges for today’s homebuyers. It’s true that rates climbed dramatically since the record-low we saw during the pandemic. But home affordability is based on more than just mortgage rates – it’s determined by a combination of mortgage rates, home prices, and wages. Considering how each one of these factors is changing gives you the full picture of home affordability today. Here’s the latest. 1. Mortgage Rates While mortgage rates are higher than they were a year ago, they’ve hovered primarily between 6% and 7% for nearly eight months now (see graph below): As the graph shows, mortgage rates have experienced some volatility during that time. And even a small change in mortgage rates impacts your purchasing power. That’s why it’s so important to lean on your team of real estate professionals for expert advice to stay up to date on what’s happening in the market. While it’s hard to project where mortgage rates will go from here, many experts agree they’ll likely continue to remain around 6%-7% in the immediate future.  2. Home Prices Over the past few years, home prices appreciated rapidly as the record-low mortgage rates we saw during the pandemic led to a surge in buyer demand. The heightened buyer demand happened while the supply of homes for sale was at record lows, and that imbalance put upward pressure on home prices. However, today’s higher mortgage rates have slowed down price appreciation. And, the truth is, home price appreciation varies by market. Some areas are seeing slight declines while others have prices that are climbing. As Selma Hepp, Chief Economist at CoreLogic, explains: “The divergence in home price changes across the U.S. reflects a tale of two housing markets. Declines in the West are due to the tech industry slowdown and a severe lack of affordability after decades of undersupply. The consistent gains in the Southeast and South reflect strong job markets, in-migration patterns and relative affordability due to new home construction.” To find out what’s happening with prices in your local market, reach out to a trusted real estate agent. 3. Wages The most positive factor in affordability right now is rising income. The graph below uses data from the Bureau of Labor Statistics (BLS) to show how wages have grown over time:  Higher wages improve affordability because they reduce the percentage of your income it takes to pay your mortgage since you don’t have to put as much of your paycheck toward your monthly housing cost. Home affordability comes down to a combination of rates, prices, and wages. If you have questions or want to learn more, reach out to a real estate professional who can explain what’s happening locally and how these factors work together. Bottom Line If you’re planning to buy a home, knowing the key factors that impact affordability is important so you can make an informed decision. To stay up to date on the latest on each, let’s connect today.

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US Real Estate News for Global Investors　4-24-2023

Posted By Yoshi Takita on April 24, 2023 in Global Real Estate

The Power of Pre-Approval If you’re buying a home this spring, today’s housing market can feel like a challenge. With so few homes on the market right now, plus higher mortgage rates, it’s essential to have a firm grasp on your homebuying budget. You’ll also need a sense of determination to find the right house and act quickly when you go to put in an offer. One thing you can do to help you prepare is to get pre-approved. To understand why it’s such an important step, you need to know what pre-approval is. As part of the process, a lender looks at your finances to determine what they’d be willing to loan you. From there, your lender will give you a pre-approval letter to help you understand how much money you can borrow. Freddie Mac explains it like this: “A pre-approval is an indication from your lender that they are willing to lend you a certain amount of money to buy your future home. . . . Keep in mind that the loan amount in the pre-approval letter is the lender’s maximum offer. Ultimately, you should only borrow an amount you are comfortable repaying.” Basically, pre-approval gives you critical information about the homebuying process that’ll help you understand how much you may be able to borrow so you have a stronger grasp of your options. And with higher mortgage rates impacting affordability for many buyers today, a solid understanding of your numbers is even more important. Pre-Approval Helps Show You’re a Serious Buyer That’s not the only thing pre-approval can do. Another added benefit is it can help a seller feel more confident in your offer because it shows you’re serious about buying their house. And, with sellers seeing a slight increase in the number of offers again this spring, making a strong offer when you find the perfect house is key. As a recent article from the Wall Street Journal (WSJ) says: “If you plan to use a mortgage for your home purchase, preapproval should be among the first steps in your search process. Not only can getting preapproved help you zero in on the right price range, but it can give you a leg up on other buyers, too.” Bottom Line Getting pre-approved is an important first step when you’re buying a home. It lets you know what you can borrow for your loan and shows sellers you’re serious. Connect with a local real estate professional and a trusted lender so you have the tools you need to purchase a home in today’s market.

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US Real Estate News for Global Investors　4-21-2023

Posted By Yoshi Takita on April 21, 2023 in Global Real Estate

Why You May Want an Energy-Efficient Home [INFOGRAPHIC] Some Highlights Since inflation is increasing the cost of goods and services, it may make sense to look for an energy-efficient home. Energy prices have increased over the last year, so look for energy-efficient features in your home search. If you’re looking to buy a home this year, let’s connect so you have a partner to help you consider which features are most important to you.

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US Real Estate News for Global Investors　4-20-2023

Posted By Yoshi Takita on April 20, 2023 in Global Real Estate

What’s the Difference Between a Home Inspection and an Appraisal? If you’re planning to buy a home, an inspection is an important step in the process. It assesses the condition of the home before you finalize the transaction. It’s also a different step in the process from an appraisal, which is 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. Here’s the breakdown of each one and why they’re both important when buying a home. Home Inspection Here’s the key difference between an inspection and an appraisal. Bankrate says: “In short, while an appraisal helps you understand a home’s value, inspections help you understand a home’s condition.” 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. 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. Bottom Line The inspection and the appraisal are critical steps when buying a home, and you don’t need to manage them by yourself. Let’s connect today so you have the expert guidance you need to navigate the entire homebuying process.

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US Real Estate News for Global Investors　4-19-2023

Posted By Yoshi Takita on April 20, 2023 in Global Real Estate

Falling out of Love with Your House? It May Be Time To Move. Owning a home means having a place that’s solely your own and provides the space, features, and location you and your loved ones need. But what happens when your needs change? If this hits home for you, it may be time to make a move. According to the latest Home Buyers and Sellers Generational Trends Report from the National Association of Realtors (NAR), the average person has lived in their current house for ten years. If you’ve been in your home for a while, think about how much in your life has changed since you moved in. Even if you thought it would be your forever home when you bought it, it doesn’t have to be. Work with a local real estate agent to explore all your options in today’s market before settling for your current home. That’s actually what a lot of homeowners are doing right now. A recent survey from Realtor.com finds that, of people who are considering selling in 2023, one in three are thinking about moving because their home no longer meets their needs. And according to the same report from NAR, that’s consistent with this year’s top reasons for selling, which include: Want to move closer to friends or family Moving due to retirement Home is too small or too large Change in family situation Job relocation If things in your life have changed, it may be time to make a move. And there’s good news: it’s still a great time to sell. Here’s why. We’re in a strong sellers’ market. That means homes listed at market value and in good condition are getting attention from buyers and selling quickly. Lean on your expert real estate advisor for the best advice on getting your house ready to sell. Your equity can power your next move. There’s a good chance you have a significant amount of equity right now thanks to record levels of price appreciation in recent years. When you sell, you can use that equity to help afford your next home. In fact, NAR’s report from above shows 38% of recent buyers used the money from the sale of their previous home to cover the down payment on their next one. Work with a local real estate agent to learn how much equity you have and what you can do with it in today’s housing market. Bottom Line If your home no longer meets your needs, consider selling it so you can find your dream home. Let’s connect so you can learn about your options.

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