Sellers Archives - Fort Collins Homes

What’s Ahead For Real Estate in 2022?

The housing market is at a turning point, and if you’re thinking of buying or selling a home, you may have questions.

Is it still a good time to buy a home?
Should I make a move this year?
How does the remainder of 2022 look for residential real estate?

Mortgage Rates Are Subject To Inflation
While buyers question where mortgage rates will go in the months ahead, there is no crystal ball to foretell what will happen. What housing market experts know for sure is that the record-low mortgage rates during the pandemic were an outlier, not the norm.

In 2022, rates have climbed over 2% due to the Federal Reserve’s response to rising inflation. Greg McBride, Chief Financial Analyst at Bankrate, explains:

“Until inflation peaks, mortgage rates won’t either. Without improvement on the inflation front, we don’t know where the interest rate ceiling will be.”

The Supply of Homes for Sale Is Projected To Increase
This year, particularly during the spring, the number of homes for sale in the US increased. That’s partly due to more homeowners listing their houses, but also because higher
mortgage rates helped reduce buyer demand. As buyer demand moderates, inventories rise.

Experts say that growth will continue. Recently, realtor.com increased their 2022 projections for inventory gains dramatically from a 0.3% increase at the beginning of the year
to a 15.0% jump by the end of the year.

While an increase in home selection is great news, there is no sudden surplus of inventory on the horizon. Housing supply is still low. Finding a home will still be a challenge, but not as difficult as it has been over the past two years.

Home Price Appreciation Will Continue
Due to the imbalance between the number of homes for sale and the number of buyers, the pandemic led to record-breaking increases in home prices. According to CoreLogic, homes appreciated by 15% in 2021, and they’ve continued to rise this year.

Selma Hepp, Deputy Chief Economist at CoreLogic, explains why the housing market will see deceleration, but not depreciation, in prices:

“The current home price growth rate is unsustainable, and higher mortgage rates coupled with more inventory will lead to slower home price growth but unlikely declines in home prices.”

If you’re thinking about buying your first home or you’re ready to make a move, it may make sense to do so now before prices climb higher.

Contact me and let’s work together to determine the best plan for your move.

Source: KeepingCurrentMatters

Homeownership Builds Wealth

Homeownership is the largest source of wealth among families, with the median value of their primary residence worth about ten times the median value of their
financial assets. Home equity is gained through price appreciation and by paying off the mortgage through principal payments.

Over the past 10 years, at the national level, a homeowner who purchased a single-family existing home would have gained $229,400 in home equity if the
home were sold at the median sales price of $360,700 in the 4th quarter of 2021. Home prices rose at a strong annual pace of 8.8% during this period.

Home prices have increased even more steeply over the past five years, at an annual pace of 9.7%. A homeowner who purchased a typical home five years ago would have gained $125,300 from just price appreciation alone.

Large Home Equity Gains Not Likely Impacted By Rising Mortgage Rates
With mortgage rates rising, there is concern that demand and prices will fall. NAR expects home prices to continue rising, although at a slower pace of nearly 10% by
the end of 2022 and about 5% for 2023.

Home prices are not likely to fall as they did during the Great Recession because there is no incentive for home sellers to sell their homes at a loss.

The level of adjustable-rate mortgages is low, with ARMs accounting for less than 10% of mortgage applications since 2008 compared to as high as 35%
during 2004-2005.

Supply conditions are still very tight, with the inventory of homes for sale equivalent to 2.2 months as of April 2022.

Home construction costs are also still rising, up 18% yearover-year as of April, according to the U.S. Census Bureau’s construction price index.

However, even if home prices were to fall, it will take a massive dip in prices to wipe out home equity gains.

When you’re ready to buy or sell, call me to discuss the best offer for your next home or the list price on your present home.

Source: nar.realtor

The Future of Home Values

Many consumers are wondering what will happen with home values over the next few years. Some are concerned that the recent run-up in home prices will lead to a situation similar to the housing crash 15 years ago.

However, experts say the market is totally different today. They believe that price appreciation needs to slow, but continued price growth is supported by market fundamentals: limited supply, lower rates, and demographic demand. Because credit quality is better, debt to income is lower, and equity is plentiful, a crash in prices is believed to be unlikely.

While price appreciation will slow from the double-digit levels the market has seen over the last two years, experts believe home values will not depreciate.

A recent survey of over 100 economists, real estate experts, and investment and market strategists suggests home prices will continue appreciating over the next
five years.

Those responding to the survey believe home price appreciation will still be relatively high this year and then return to more normal levels over the next four years.

What Does This Mean For You As A Buyer?
With a limited supply of homes available for sale, and both prices and mortgage rates increasing, it can be a challenging market to navigate as a buyer. Buying a home sooner rather than later does have its benefits. If you wait to buy, you’ll pay more in the future.

If you buy now, you’ll be in the position to make future value increases work for you. Rising home prices will help build your home’s value and your own household wealth through home equity.

Bottom Line
If you’re trying to decide whether to buy now or wait, the key is knowing what’s expected to happen with home prices. If you want to get started, connect with me today.

Source: keepingcurrentmatters.com

Prepare For The Busy Housing Market

Homebuyers continue to face an uphill battle in the current homebuying season.

Home values skyrocketed by nearly 20% in 2021, according to the recent data by the S&P Case-Shiller national index of home prices.

While housing prices aren’t expected to drop this year, some experts believe home values will increase at roughly half the rate (single-digit increases) of the peak in 2021.
Here’s what to expect from the market in coming months and what you can do about it.

Preparing to Sell
The good news for sellers is that buyers looking for homes are still expected to outnumber the homes for sale. Overall, home prices are expected to continue to increase, but demand can vary from one neighborhood to the next.

If you plan to complete any maintenance or major upgrades before listing your home, start that process as
soon as possible. You’ll need more time to obtain materials and find trade professionals to do the work.

While market activity still favors sellers, there could be a reduction in bidding war activity, depending on the local market. In Northern Colorado, bidding wars continue
to be common across price ranges.

Preparing to Buy
Mortgage rate increases are forecast to continue. In early April, 2022, rates were about 1% higher compared to April, 2021. Determine how this affects your buying power and
adjust your target price range accordingly.

Know your home buying budget so you’re clear about what you’re willing to spend for a property that meets your needs.

Save for your down payment, closing costs, and unexpected repairs and maintenance.

First time buyers looking for more affordable homes will continue to face strong competition from a large demographic of buyers in search of their first home.

Given that specific types of homes will have more demand, be as flexible as possible with the type of home you want to buy.

A larger percentage of the workforce has the opportunity to work from home, which may fuel competition in housing markets typically known to be more affordable, such as smaller cities and suburbs of cities. Be open and flexible about where you want to buy.

Due to the strong seller’s market, buyers need to be patient. It’s important to buy when the time is right for you. Buying a home should make sense for your personal and financial situation. Don’t make a panic-driven buying decision and end up with a home purchase that causes regret.

You may not find your dream home today, but a home that works for you right now can be a stepping stone to another home down the road.

Contact me to discuss your plans for selling your current home or buying your next home!

Source: Nextadvisor

Becoming A Real Estate Investor In 2022

If you’ve considered becoming a real estate investor, let’s look at ways to invest and what’s needed to be successful.

Cash-flowing property

Buying income-producing property with stable cash flow is the most popular way to invest in real estate.

Buy-and-hold

While positive cash flow is important, buying and holding over the long-term can reap the rewards of potential windfalls years or even decades from today.

Fix-and-flip

These properties typically need repairs and updating. The fix-and flip strategy requires buying low, accurately estimating the cost of repairs, managing
completion of the work needed, and then selling the property for more than the amount invested. This can be easier said than done.

Wholesaling

Real estate wholesalers find highly motivated sellers in distress, accurately estimate the repair cost and fair market value of the home, then assign the contract to another investor in exchange for a fixed profit.

Crowdfunding and Real Estate

Investment Trusts (REITs) Real estate crowdfunds collect small amounts of money from a large number of investors to purchase and manage large and complex income
producing properties. Shares in publicly traded REITs can be found on the major stock exchanges. Investors receive a small pro-rata share of the quarterly cash flow and profit when the property is sold.

Investors need a knowledge and understanding of these market factors:

• Fair market property values and trends.
• Market rents to gauge income potential and cash-flow.
• Understand that money is made in real estate when the property is bought, not when it’s sold.

Investing in real estate can require more cash than expected, so having access to working capital is critical.

Plan on investing at least 20% down for a rental property. Set up a separate account for repairs and maintenance. Consider the loss of cash flow created by tenant vacancies.

Learn the local real estate rules and laws to avoid potential problems and litigation.

• Eviction processes vary from place to place and may limit your rights as a landlord.
• Conducting background checks helps avoid renting to problem tenants.
• Rental security deposits and prepayments may have amounts capped by local landlord-tenant laws.
• Insurance coverage for rental property should include general liability coverage that protects you against claims from the tenant or the tenant’s guests.

Becoming a real estate investor also involves:

• Finding the right property that makes sense! This can take a lot of time and effort, and it’s harder than it appears on HGTV.
• Developing a track record of proven success in order to raise investment capital using other people’s money.
• Developing a list of go-to vendors and service providers. Many are booked well in advance and have established relationships with industry professionals.
• Following Fair Housing laws. This can easily turn into a full-time job. Successful real estate investors often hire professional property managers who specialize in the local market.

Are you ready to become a real estate investor? Call me and let’s discuss how you can get started!

Source: roofstock.com
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