Posts Tagged ‘pre-approval’

Housing market subdued

March 14, 2023

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 appreciation to decline

December 6, 2022

We definitely will not see double digit home apprecation in 2023. We could see a slight decline.

Reports from Fitch Ratings and Veros Real Estate Solutions forecast sharp declines in home price appreciation over the next year. Fitch expects overvaluation to moderate by the end of this year, with the declining trend in home prices.

“Home price correction exhibits strong locality,” the report said. “Price growth is still concentrated on the East Coast, while home prices on the West Coast started to dip, and this trend has begun to spread in the Midwest. Unbalanced housing inventory and the uneven relationship of house prices and rents across the country are the primary drivers behind the diverging trends.”

As previously mentioned in this blog, what is happening in the metro Atlanta area may not follow the same nationwide trends. Thur far, this is the case. Home prices out west have fallen since the late spring/early summer while keeping steady in metro Atlanta.

One thing keeping the Atlanta metro area different (so far) is constraints on the housing supply. There are still not enough homes on the market; meaning, supply and demand is keeping homes from falling. Even with all of this, the VeroFORECAST of 300 U.S. markets anticipates home prices will appreciate on average just 1.5% for the next 12 months (including metro Atlanta)

With rents still rising, now is a great time to buy. Yes, mortgage rates are higher, but finding the right home is still challenging. Find your home now (with less competition to get it) and look to take advantage of a dip in mortgages rates the next time rates fall to lower your payment. It is easy to refinance… much harder to find the perfect home.

Ready to own a home in Georgia? If yes, contact me today (see my banner above for contact info). We can get started in just a few minutes and get you pre-approved for the offer on your new home!

Housing prices should level off

June 21, 2022

Housing affordability has become a key concern in the real estate market, amid rising mortgage rates and double-digit annual house appreciation. The average monthly payment is 50% higher than a year ago! Those rising costs are sidelining more aspiring home buyers.

Signs are surfacing that the housing market could be slowing, and that could put less pressure on home prices. For the fourth consecutive month, sales of new homes dropped, reaching their lowest level since the pandemic. Existing-home sales also decreased in April, falling for the third consecutive month and down nearly 6% compared to a year ago, according to National Association of REALTORS® data.

These trends should offer some hope for buyers. The drop in sales should equate to less competition for buyers who are eager to buy yet keep getting beat out on offers. We may also see the trend of remote work continue – for instance, relocating to an area offering homes that meet their needs without breaking their budgets. 

Yes, rates are higher. Yet for those who need to move and couldn’t get under contract due to intense competition, the current trends do offer hope of a calming market (in terms of the number of buyers and home values slowing down).

Buying a condo in 2022

March 8, 2022

My colleague Rodney Shaffer began his posts this year detailing the changes in buying a condo due to all the loan guideline updates issued by Fannie Mae and Freddie Mac. These updates stem from the tragedy in Florida with the collapse of the high rise condominium. I will not rehash all of the details in this post as Rodney covered it in great detail (Part 1 and Part 2).

I want to focus on real world impact of the changes. How is buying a condo in 2022 different than previous years? It’s a mixed bag thus far.

Our office closed several condos so far in the first quarter. We closed several on time, and a few late due to the time it takes for condo questionnaires to be completed by condo associations. The new Condo Addendum adds all sorts of “fun” to the equation. The addendum can be viewed at this link.

Some condo homeowner associations have their records and details in order. Others do not. Some have gone through recent structural reports, and again, others have not. Complexes who are organized and on top of things have not had issues in closings. Those who are not, closings are being delayed (sometimes by weeks at a time).

And I completely get it. The addendum referenced above could result in a lot of liability for condo homeowner associations. They want to make sure all is in order before answering the addendum fully. Many are seeking legal counsel, getting engineering reports completed, and more. Makes total sense for them to be doing these things, and wanting to delay completing the addendum until the association is comfortable answering the questions.

The potential problem is delaying closing by delaying completing the new documentation.

I believe as we get further into the year, this will get smoother. Associations are seeing this stuff for the first time in early 2022. Delays were expected. My recommendation to buyers looking to purchase a condo is to not waive the financing contingency to protect their earnest money. When buying a condo, the complex AND buyer must be approved. While I can pre-underwrite a client’s credit/income/assets/etc., I can’t do that with condo complexes themselves.

To fully protect yourself when buying a condo, make sure to keep the financing contingency as part of the offer. OR at least be aware what it fully means waiving the financing contingency when buying a condo.

These changes are only in place for condominium purchases. None of this applies when buying a town home or single family home.

Looking to buy a condo (or any type of home) in the state of Georgia? Contact me today! I can get you ready to purchase a home in no time, and if buying a condo, cover all of the new ins-and-outs of the process.

Purchase process normalizing (maybe)

February 23, 2022

A survey from National Association of REALTORS® shows fewer buyers are willing to waive any (or all) contingencies when purchasing a home. This is a really good thing as buyers should not feel pressure to overpay to purchase a home (waiving an appraisal contingency) or buying a home without the seller addressing issues with the property (waiving due diligence).

From July 2021 to December 2021, a noticeable decrease occurred in the number of buyers waiving due diligence (down about a third from the July peak), waiving appraisal contingencies (down over a quarter from the July peak), and the decrease also showed up in the number of buyers choosing to waive financing contingencies, home sale contingencies, and even title contingencies.

I love surveys, data, and especially numbers (obvious as I play with numbers for a living!). One drawback to surveys is they are always looking backwards. Yes, the trend was on the decline. Yet it may be on the way back up.

  • in December and early January all my buyer’s contracts contained all of the major contingencies (due diligence, appraisal and financing).
  • As we’ve moved into February, all of my buyers have waived at least one of those three, and several have waived more than one.

Why the shift? With fewer buyers out toward the end of the year, sellers received fewer offers. This allowed buyers to make less aggressive offers. As the Spring market is heating up, we may be seeing a shift back to waiving one (or more) contingencies to make an offer stand out among the crowd.

As discussed often this month, it is a challenging market right now for buyers.

One of the easiest contingencies to waive (without major risk) is the financing contingency. By going through a TBD Underwrite, you’ll be able to make an offer knowing your financing is already approved by an underwriter. This way the seller knows your offer is vetted, and we only need the appraisal, clear title, and the ability to insure the home in order to close.

If you are buying a home in the state of Georgia, contact me today. I can help get you going on a TBD underwrite to allow your offer to stand out from the crowd.

More people staying put

February 15, 2022

Last year I discussed seniors holding onto their homes longer than previous generations. It seems this trend moved into Generation X too.

According to AARP’s newly released Home and Community Preferences Survey, seventy-seven percent of adults 50 and older say they want to remain in their current homes over the long term. Some respondents said they already live in a home that allows them to age in place, such as with a bathroom on the main level or a room on the first floor that could be used as a bedroom. Then a third of participants said they would need to modify their current home so they or a loved one could live there.

Those who do not want to remain in their home are looking for something that is better to age into and requires less maintenance.

Meaning, a majority of people already feel they are in a home they can age into over the coming years (decades) and have no plans to sell their home. This lack of downsizing is hurting the market in terms of the number of homes listed. Those 50 and over are making plans to stay in place more than moving into retirement communities, assisted living, or downsizing to a condo… fewer single family homes are coming back on the market for resale.

Let’s go builders! We need some new homes on the market to help with the inventory crunch!

As I conclude this February series on preparing for the Spring market, obviously, it is still a competitive market. Now is a good time to get ready to purchase a home. If you are buying in the state of Georgia, contact me today. In a few minutes, I can have you prequalified and working toward getting your loan pre-underwritten approved.

Fewer bidding wars

February 8, 2022

There is a drop in the number of homes receiving multiple offers. Redfin reported 60.3% of home offers written by Redfin agents faced competition, unchanged from September but down from a pandemic peak of 74.5% in April.

The numbers declined further as we entered the winter season. I’ve had clients go under contract on homes which had been sitting on the market for a month or more with no other offers being made.

One thing to keep in mind is Redfin’s report is nationwide. In local areas, it could be very different from one city to another. For example, I would expect the metro Atlanta market to be on the higher end of the trend with competitive situations – just not as bad as 2021.

Redfin also reported home prices hit a record-high $359,975 in the four-week period ending November 21, up 14% year over year. The unseasonable surge in home prices appears to be drawing in more sellers, as the number of homes listed for sale was down less than 3% from 2020, and up 11% from 2019. “Rising rents and rising prices on everything from gas to groceries may be motivating more people to buy homes now,” according to Redfin Chief Economist Daryl Fairweather. “Buying a home is a type of hedge against inflation, especially with mortgage rates still near historic lows.”

In a competitive market, now is a good time to get ready to purchase a home. If you are buying in the state of Georgia, contact me today. In a few minutes, I can have you prequalified and working toward getting your loan pre-underwritten approved.

2022 Housing Market

February 1, 2022

It’s a new year…. we so looked forward to 2021 being better than 2020 (it didn’t seem to be in a lot of ways), so here is hoping 2022 will be better!

For the month of February, I am starting a series for the Spring Market so buyers and sellers have a general idea of what they are getting into this year. Home sales and home prices likely will moderate from recent highs in the new year, and buyers may have better opportunities in 2022, but the fact remains the housing market will be competitive.

“Americans are poised for a whirlwind year of home buying in 2022,” says Danielle Hale,®’s chief economist. “With more sellers expected to enter the market as buyer competition remains fierce, we anticipate strong home sales growth. Affordability will increasingly be a challenge as interest rates and prices rise.”® released its 2022 housing forecast, including noting some of the following trends expected for the new year:

  1. Suburbs are still the place to be: The pandemic continues to modify what Americans look for in a home. One in five homeowners looking to sell and move no longer need to live near their office.
  2. Millennials are eager to finally move: Forty-five million millennials are in a “homebuyer sweet spot,”® says. That many of them will fall within the prime first-time homebuying age range of 26 to 35 in 2022.
  3. Affordability challenges remain: Home prices, rents, and mortgage rates are all expected to be on the rise in 2022. The 30-year fixed-rate mortgage is expected to average between 3.5% to 3.6% by the end of 2022. Home prices likely will increase at a “gentler pace” over the next several months as mortgage rates increase.
  4. More homes come on the market:® predicts a 6.6% increase in housing inventory in 2022, a welcome sign to buyers who have complained of few listings over the past year. An increasing share of homeowners this fall reported planning to sell a home over the next 12 months,® says.
  5. More supply will also come from new housing construction, which is already underway, as well as the conclusion of the mortgage forbearance program that will likely cause a number of homeowners to sell.

Here is hoping with more homes hitting the market, buyers will begin to see an easing to the fierce competition.

The best way to make an offer more competitive is to have a pre-underwritten loan file when making the offer. I talk about this ad nauseam on The Mortgage Blog and for good reason. When I can tell a listing agent not only have I reviewed my clients pay stubs, bank statements, tax returns, etc., so has an underwriter and they are approved pending an acceptable appraisal, clear title, and proof of home insurance. It really does help.

If you are buying in the state of Georgia, contact me today. In a few minutes, I can have you prequalified and working toward getting your loan pre-underwritten approved.

Tapering begins again

January 4, 2022

Part of the stimulus plan by the Federal Reserve during the Covid caused Recession was purchasing bonds. This was a repeat effort by the Feds just like they did during the Great Recession. Just as they stopped this effort several years ago, they started the process of ending bond buying again.

The process began in November 2021. The Fed was purchasing $120 Billion monthly in bonds ($80 Billion in Treasuries and $40 Billion in mortgage backed securities). It was reduced to $105 Billion (a $70 & $35 breakdown) in November and down to $90 Billion ($60 & $30) in December. This trend will continue until the Fed is completely out of the bond buying business.

What can we expect from Tapering? The main impact for readers of this blog – mortgage rates will rise. Rates were predicted to end 2021 in the low 3s for a 30 year fixed rate loan (they did) and move into the upper 3s by the end of 2022.

How will this impact home loans?

  • expect a sharp drop in the number of refinances in 2022
  • we may see a cooling of the housing market in terms of purchase volume, but not necessarily a cooling in housing prices

What will keep prices steady for home sales? For one, sellers who do not need to move may simply take their home off of the market if they cannot get a high price for their home. The bigger story here is the sheer number buyers still looking to purchase a home. Many would-be buyers stopped looking in 2021. With many still wanting to purchase a home, along with Millennials in their prime home-buying years, and an improving economy, signs remain positive for the housing market itself.

While we may be in a new year (hello 2022!), this year should still be another’s seller’s market (although possibly not as severe as 2021).

It is still a competitive market. With the numbers of homes expected to be sold this winter higher than normal, now is a good time to get ready to purchase a home. If you are buying in the state of Georgia, contact me today. In a few minutes, I can have you prequalified and working toward getting your loan pre-underwritten approved.

A little less competition

October 12, 2021

As discussed over the past few weeks…

The newest trend in the easing market is less competition. A recent Redfin study showed a 15% decrease in homes receiving multiple offers. Meaning, there are fewer bidding wars taking place. While any reduction is nice, this is still a far cry from a balanced market.

How is this playing out locally? I’ve had a few clients go under contract in the past few weeks. They had been looking since the early spring and were able to get under contract now as more homes are available with fewer buyers in the market. The fourth quarter is generally a great time to look for homes as many potential buyers decide to put off their home search until the next spring and settle in for the holidays.

Now is a great time to buy, and those who are looking should continue to do so. Fortune published an article on a recent study by Zillow stating home appreciation could still be in the double digits in 2022. This past year the appreciation increase is close to 20%, and they forecast an 11% appreciation rate nationwide for homes in 2022.

While inventory slightly improves and there are currently fewer buyers, a price correction does not appear to be imminent.

If you are looking to purchase in the state of Georgia, contact me today. I can get you prequalified in minutes and ready for a pre-approval in no time.