Housing market subdued

Subdued. That’s how Fannie Mae’s chief economist describes consumer sentiment toward the housing market, as recorded in the enterprise’s latest Home Purchase Sentiment Index (HPSI).

To which I respond…. “Oh, really? I hadn’t noticed.”

For those of us in the real estate industry, it is pretty obvious the market is subdued. I get it. Home prices are high and not substantially coming down (if at all depending on your market area). Also rates remain stubbornly high compared to the past few years. It is easy to see how the market got subdued.

While the index increased in January for the third-consecutive month, it remained well below its pre-pandemic high.

One thing to note about this index, it looks at past actions/sentiment. The recent reading from early March included data collected in January. Meaning, the data is five weeks old at its time of release.

Something changed in late February and March. My phone began ringing more often. My clients are making offers on homes with multiple offers. A more “real time” analysis seems to show the market gaining some momentum. Perhaps rates jump over 7% again (they’ve tested 7% twice in the past several months, and both times moved back below 7% rather quickly) or another bank crashes and people get really nervous. It’s quite an interesting time out there!

Even with all of this happening, the Spring market is here. More people are out looking, and competition for the limited number of homes out there is beginning to increase. I’ll be interested to see the HSPI numbers later this year once we have the figures for March and April.

For those of you looking to purchase a home in the state of Georgia, contact me today! I can get you ready to make an offer in just a few minutes, and work toward getting your loan pre-underwritten to make your offer stronger in an increasingly crowded market.

Home prices stabilizing

I started the year saying now is a great time to buy a home. For the month of February, I’ll include a series of posts expanding on this thought process. We’ll touch on affordability, housing prices, and the shortage of homes.

Let’s start with affordability. Zillow, Seattle, said U.S. home values are easing down, starting to provide relief for potential home buyers facing affordability challenges. Zillow reported the typical U.S. home fell to $357,733 in November, and is now down 0.5% from the peak peak last year.

Add on the fact mortgages rates improved to end 2022/start 2023, monthly costs for home ownership went down for the first time since July, and for only the second time in the past 19 months.  

We are not at a point of home prices dropping (more on this in the next post). But for the first time in several years, we aren’t seeing double digit appreciation.

Zillow Senior Economist Jeff Tucker said November’s news is a positive sign that affordability may at least stabilize in 2023, helping households budget and plan for housing decisions in the months and years ahead. Tucker said, “The two big questions are whether mortgage rates will continue to decline, and whether that will be enough to bring buyers back in time for the spring selling season. In the meantime, those on the prowl for a house will benefit from motivated sellers, unusual bargains and a welcome lack of competition.”

As I said to start the year, the articles saying 2023 is a bad time to purchase a home aren’t talking about the lack of competition. The quote from Zillow’s Senior Economist is spot on for those who are looking, and they are seeing contingencies, sellers doing repairs on homes, and seller concessions.

Beginning to think 2023 may be a good time to buy a home? If you are buying in the state of Georgia, contact me today! I can get you pre-approved quickly and have you out making offers in no time!

Positive News for Homeowners

With all the recent negative economic news – high inflation, Fed rate increases, stock market declines, etc. – I really need some positive economic news. There’s nothing like good news to shift your perspective, at least temporarily, right? So, here’s some bit of good news…

ATTOM Data Solutions recently released its second-quarter US Home Equity and Underwater Report. The report showed that 48.1% of US mortgaged homes were considered “equity-rich.” This shows an increase from 44.9% in 2022 Q1 and from 34.4% one year ago.

The definition of an “equity-rich” home is one where the current loan to value ratio is 50% or lower. Home equity is the difference between the home’s value and the existing liens on the home. So if a home is worth $400,000 and the current mortgage balance is $200,000, the owner has $200,000 of equity and is considered “equity-rich.”

This report marked the ninth straight quarterly rise in equity-rich homes. Other good news is that only 2.9% of mortgaged homes are now considered seriously underwater, which means that the value of the loans linked to the home exceeds the home’s value by 25% or more.

An ATTOM executive stated the obvious, “After 124 consecutive months of home price increases, it’s no surprise that the percentage of equity-rich homes is the highest we have ever seen.”

What does that mean for future home values? Thus far, home values are holding up even though the pace of home sales is decreasing. Due to higher interest rates and home prices, homebuyer demand has decreased, and lower demand should put a downward impact on prices. However, we still have a lower than normal supply of available homes to purchase. This means that supply and demand impacts have been offsetting and keeping home values flat. To this point, we have not seen a significant drop in home values.

Even with higher mortgage rates, people are still buying homes. Do you know someone who wants to buy a house in Georgia? Tell them that some finance experts are saying home prices will not decrease soon. They might as well buy now and earn some appreciation on their home investment. I can help buyers in Georgia get a competitive interest rate in this market, and I can help them win the contract in this sellers’ market. Tell the home buyer you know to call me at 770-634-0992.