financial Archives - Fort Collins Homes

Forecast: 2022 Real Estate Market Will Be A Mixed Bag

From remote work trends impacting where people can live to affordability issues cropping up as home prices rise, the real estate markets in 2022 will have a fair share of new challenges and opportunities. According to the realtor.com® 2022 Housing Forecast, next year is set to be a mixed bag.

Housing trends to watch in 2022:
• While 2020-2021 brought a homebuying frenzy largely fueled by first-time millennial homebuyers, potential homeowners will face increased competition for at least the
next three years.
• Workplace flexibility and higher incomes may give employees the advantage in 2022 with more sellers looking to move because they no longer need to live near the office.
• The suburbs will become increasingly popular compared to big urban metros as home shoppers search for more space— a trend brought on by the pandemic. However, as
demand is expected to outpace new construction growth, buyers may have to sacrifice space due to affordability constraints.
• Hispanic homeownership is predicted to rise in 2022, driving housing demand and impacting the homeownership rate for years to come.

The takeaway:
“Whether the pandemic delayed plans or created new opportunities to make a move, Americans are poised for a whirlwind year of home-buying in 2022,” according to
realtor.com® Chief Economist Danielle Hale.

While buyer competition will remain fierce, more sellers will be entering the market. “We anticipate strong home sales growth at a more sustainable pace than in 2021,” explained Hale.

“Affordability will increasingly be a challenge as interest rates and prices rise, but remote work may expand search areas and enable younger buyers to find their first homes sooner than they might have otherwise,” added Hale.

With more than 45 million potential millennial buyers between the ages of 26-35, the market is expected to remain competitive.

George Ratiu, manager of Economic Research for realtor.com®, commented, “With most real estate markets expected to be competitive in 2022, it’s important to remember that you’re in the driver’s seat of your real estate journey.”

“The bottom line for buyers is to make sure you’re comfortable with your timeline and budget — and especially for younger buyers making this massive financial decision for
the first time. For sellers, take into account your local market conditions as well as the likely increase in the number of homes for sale, and price yours competitively.”

Give me a call to discuss your real estate opportunities in 2022!

Source: rismedia.com

The New American Homebuyer

Due to a persistent short supply of homes, low interest rates, and readily available credit, single-family homes continue to command multiple offers replete with various sweeteners, such as inspection waivers and provisions to cover any appraisal value shortage.

However, homeowners who list their homes at too high a price can still run up against issues of appraisals coming in too low and buyers recognizing the house is
overpriced.

With all these factors in play, what are the qualities, priorities, and needs of the modern American homebuyer?

The State of the Market
The critical importance of location still applies to the current market. Where homes are available, buyers want to be in good school districts and near shopping.

However, agents report that buyers are compromising on their wish list because they become desperate for finding a home due to the low inventory.

Part of that compromise means moving out from central cities and even nearby suburbs to more rural areas. Some local homebuyers are getting priced out of
the market because out of state buyers are relocating to their areas.

Sellers are looking for clean, noncontingent cash offers.

If Sellers accept a financed purchase, they also prefer conventional, fixed-rate financing. Borrowers who qualify for VA or FHA loans are often given less consideration.

The 30-year, fixed-rate mortgage is hands-down the most popular product among borrowers. With interest rates on conventional, fixed-rate loans as low as they are, there is little, if any, advantage for most borrowers to choose an adjustable-rate loan.

While many lenders have programs designed for first-time buyers, most of those programs involve low down payments, and sellers are looking for cash offers or financing with larger down payments.

Other financing options gaining popularity include the Fannie Mae HomeStyle Renovation mortgage, which provides funds for projects ranging from repairs and upgrades
to energy updates and landscaping.

Regardless of the type of mortgage, speed is of the essence.

Higher down payments, offering to cover any appraisal shortfalls, and no home sale contingency will improve the chances for getting an offer accepted.

Popular Amenities
Homes offering open floor plans, move-in-ready condition, and a good combination of living areas, backyards, and work from home spaces are selling faster and fetch the best prices.

Though some people are choosing to move out of cities, there are still plenty of buyers who want to stay in a municipality. They primarily want to move into a home that offers a new and better lifestyle including more of a yard and child-friendly home features.

Looking Ahead
With rates expected to move up only slightly, if at all, in the next year or so, and housing inventory expected to remain constrained, the seller’s market for homes should continue for at least the next year.

Give me a call to talk about the best time to buy or sell!
Source: www.themreport.com

Is There a Housing Market Slowdown?

The rate of home price growth may be showing signs of slowing, and the competition for homes may be easing somewhat.

“The market’s topping out,” according to Mark Zandi, Chief Economist at Moody’s Analytics. It’s “starting to show cracks. It feels like we’ve hit the apex, and we’re moving to the other side of it.”

But that doesn’t mean the housing market is heading for a bubble. Real estate economists have long said the current frenzy in the housing market is not reminiscent of
the housing bubble nearly a decade ago.

Nationally, median home asking prices are more than 12% higher than they were after the first half of 2020.

Total national housing inventory is down 42% year over year as of June, 2021. There is still a severe shortage of homes for sale and some buyers are getting priced out of
the market.

Economists are generally predicting an overall slowdown in prices and more moderation. Many potential home buyers are still eager to purchase so they can take
advantage of low mortgage rates.

In Colorado, a strong month for new listings in June helped give potential homebuyers a little hope and opportunity. However, the volume of sales and homes going under
contract continued to grow as well.

Statewide, new listings in June rose 20% to just over 12,000 homes. Offsetting those new listings, June also delivered 10,256 homes statewide under contract. Further
diluting the gains in new inventory, another 9,857 single-family properties closed statewide according to the latest data from the Colorado Association of REALTORS® (CAR).

Across Colorado, average sale prices continue to set record highs that are as much as 50% higher compared to early summer of 2020, and inventory remains lower than a year ago at that time. However, there are some signs that suggest a slowing in some areas.

Colorado agents report a slowdown in showings, a reduced number of offers being submitted by buyers, and some price reductions showing up for homes that have not sold.

This is typical market activity for July and into August so the real question of whether the market is changing will be determined in the fall.

In spite of the signs suggesting a quieting of the market, prices are not expected to come down.

Danielle Hale, realtor.com®’s chief economist, believes, “Buyers aren’t going to get a deal, but they might be competing with fewer offers.”

For now, buyers have an opportunity to take advantage of some price reductions and a slower pace, and still get into the market.

When the time is right, let’s talk about how you can navigate the current market and make your next move!

Sources: magazine.realtor, realtor.com, coloradorealtors.com

6 Tips for Buyers in a Seller’s Market

Inventory is bleak, but there are still ways you can find the right home.

The seller’s market is only getting stronger in 2021 as home prices continue to rise and inventories hit record lows across the country. While mortgage rates have inched up slightly, they remain low. Here are ways you can navigate the current seller’s market as a buyer.

1. Stay on top of your game.
Be clear about exactly what features you want in a home. There is no time to waste seeing homes that don’t fit the bill. Look at new
listings asap, and jump on opportunities as quickly as you can to stay competitive. Responsiveness and communication are key.
2. Have realistic expectations.
A lowinventory market is not a great time to wait for the perfect home to come along. Adjust your expectations about nonnegotiables. Paint colors can be changed, and additions can even be made in time, but things like location and lot size are permanent. Be prepared to accommodate the seller’s needs in many cases.
3. Avoid seeing houses at the top of your budget.
Inventory is low and competition is high. Homes are selling for more than list price, and bidding wars are common. If you’re already at the top of your budget and being asked to go even higher, it’s probably not a good use of your time to see homes at the maximum price range for which you are qualified. Consider homes at the lower or middle tier of your budget and leave room to bid a little higher than asking if necessary.
4. Consider alternative neighborhoods.
You may increase your buying opportunities by exploring neighborhoods that you may have not previously considered. Be open to seeing homes that fit your preferences but are located in areas that may not be your first choice.
5. What can you do to sweeten the deal?
Homes are frequently selling within a few days of being listed for sale, and multiple offers are common. When sellers are receiving multiple competitive offers in a short amount of time, anything you can do to help your offer stand out will put your offer ahead. Accommodating the seller’s specific needs and requests, and limiting contingencies, will improve your chances of having your offer accepted.

Life as we know it has changed, and for how long no one can be certain.

My service to you includes staying up to date on the latest market trends, predictions, data, and strategies. Give me a call to discuss your housing goals and how we can accomplish them together!

Source: Realtor magazine

Reverse Mortgages: Pros and Cons

A reverse mortgage allows homeowners age 62 and older to convert part of the equity in their home into cash without having to sell their home.

These loans aren’t a cure-all for retirement money problems, though. Consider these risks and benefits.

PRO: Supplemental retirement income
Some people are house-rich and cash-poor. Assuming borrowers can manage the expenses of owning a home, the reverse mortgage provides a way to liquefy a portion of the home equity to cover financial obligations. This could be helpful in the event of an unexpected job loss, health issues or limited savings. Reverse mortgages can also be a funding source to diversify investment portfolios, although loan fees add to the upfront costs.

PRO: Pay off an existing mortgage
With enough equity in the home, a reverse mortgage can be used to pay off the current mortgage, eliminating the monthly mortgage payment, and freeing up money for other
expenses.

PRO: Proceeds are tax-free
The IRS considers proceeds from a reverse mortgage to be a loan, not income, so you won’t pay taxes on it.

CON: Loan Costs
Obtaining a reverse mortgage includes loan fees, possibly mortgage insurance premiums, and interest charges, which are not tax-deductible.

CON: It’s not a good short-term option
Upfront costs for reverse mortgages are higher than other forms of borrowing, in part due to the federal mortgage insurance premiums. Alternative short-term financing options include credit cards, personal loans, and home equity loans.

CON: A default could result in losing the home
A default occurs when the borrower fails to meet the ongoing requirements of a loan, such as not paying property taxes or homeowners insurance, or failing to
certify that the home is their principal residence. This can lead to eviction and foreclosure, if unresolved.

CON: Heirs may not be able to keep the home
With a Home Equity Conversion Mortgage (HECM), which is insured by the US Federal Government, heirs have to pay either the full loan balance or 95% of the home’s appraised value, whichever is less. They can do this by paying cash, getting financing, selling the home or turning the home over to the lender to satisfy the debt.

Is a reverse mortgage worth it?
A reverse mortgage could be a good solution if:
• There is a long-term need for additional income, and benefits such as Medicare and Social Security have already been utilized.
• The need to use the equity in the home for income now outweighs the risk that family heirs may not be able to keep the home in the future.

Give one our agents a call to discuss other options such as moving to a less-expensive home, or to locate a reverse mortgage lender!

Source: NerdWallet