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Today’s Wealth Creation Opportunity in Housing

hard cash on a briefcase

Articulating the financial opportunity that exists in homeownership is more important than ever. Especially as media misinformation continues to spread doom and gloom about the housing market – and endlessly predicting crashing home prices…incorrectly, of course.

Cart with cash and house

The reality is that national home price gains continue…and in fact have reached new record highs, even in the face of high mortgage rates and rising inventory!

Home Prices

The Case-Shiller Home Price Index, which is considered the “gold standard” for appreciation, showed home prices nationwide rose 0.3% from April to May after seasonal adjustment, breaking the previous month’s all-time high.

The 0.3% gain is the seasonally adjusted number, which considers the typically stronger appreciation seen during this time of the year. The non-seasonally adjusted figure showed that home values rose 0.9% in May alone.

Home values in May were also 5.9% higher than a year earlier, following a 6.3% annual gain in April.

Case Shiller Home Price Index

The deceleration in the annual reading was due to a larger home price appreciation figure from May 2023, which was removed from the rolling 12-month calculation when the figure for May 2024 was added.

S&P DJI’s Head of Commodities, Brian D. Luke, explained, “While annual gains have decelerated recently, this may have more to do with 2023 than 2024, as recent performance remains encouraging. Our home price index has appreciated 4.1% year-to-date, the fastest start in two years.”

Should Buyers Wait?

Luke also addressed the crucial question many prospective buyers have wondered about: Should I wait for rates to move lower before buying a home?

He noted that all 20 cities in their composite index have observed annual gains for the last six months as “the waiting game for the possibility of favorable changes in lending rates continues to be costly for potential buyers as home prices march forward.”

black handled key on key hole

And Case-Shiller was not alone in their reporting, as home price gains have also been seen in the other major indexes across the country. CoreLogic’s Home Price Index showed that prices rose 0.6% in May after rising 1.1% in April and 1.2% in March, confirming it’s been a strong season for home values nationwide.

Prices are also 4.9% higher when compared to May of last year.

In addition, ICE (formerly known as Black Knight) reported that national home values rose 0.3% in May after seasonal adjustment, with their index showing that prices are 4.6% higher than a year ago.

The Federal Housing Finance Agency’s House Price Index, which measures home price appreciation on single-family homes with conforming loan amounts, also showed that home prices were flat in May and are up 5.7% year over year.

In Conclusion

The bottom line is that housing still proves to be one of the best investments for wealth creation. And it’s not too late for people to start building wealth through homeownership.

As the famous Chinese Proverb says, “The best time to plant a tree was 20 years ago. The second best time to plant a tree is today.”

Reach out to me for more information, as I’d be happy to strategize with you to see how can best take advantage of today’s real estate opportunities!

The Lending Coach

The blog postings on this site represent the positions, strategies or opinions of the author and do not necessarily represent the positions, strategies or opinions of Guild Mortgage Company or its affiliates. Each loan is subject to underwriter final approval. All information, loan programs, interest rates, terms and conditions are subject to change without notice. Always consult an accountant or tax advisor for full eligibility requirements on tax deductions.

Missed Opportunities by Trying to Time the Market | Don’t Wait!

person looking at watch

Those who have been waiting for mortgage rates to come down have missed a huge financial opportunity.

Home prices rose 6% in 2022, 6% in 2023 and 4% so far year-to-date in 2024. 

person holding white ipad on brown wooden table

That means over the last 30 months home prices have risen on average 17% compounded. 

Using a median home price of $350K 30 months ago – if you waited for rates to improve, you would have missed a $60,000 wealth creation opportunity. 

But don’t let those statistics discourage you.  Now’s a very good time to purchase, as appreciation gains look likely for the near future!

What the Experts Are Saying

Wood roof and coins

Case-Shiller’s lead analyst, Brian Luke said “while annual gains have decelerated recently, this may have more to do with 2023 than 2024, as recent performance remains encouraging.  Our home price index has appreciated 4.1% year-to-date, the fasted start in 2 years”

He goes on to talk about the cost of waiting, saying “the waiting game for the possibility of favorable changes in lending rates continues to be costly for potential buyers as home prices march forward.”

Mortgage Rates

Mortgage rates are near 12-month lows – as inflation seems to be coming down and the unemployment rate has moved higher. 

Both of these are potential recession indicators, meaning that the Federal Reserve may cut the Federal Funds rate shortly. You can find out more here…

Pricing Pressure Ahead?

person standing on arrow

As rates move lower, more buyers will become eligible to purchase. In fact, the National Association of Realtors states that for every 1% decline in mortgage rates, 5 million more people can be eligible to buy.

Even if a small fraction of these eligible buyers decides to move forward, it will likely pressure prices higher and shrink the number of available home choices even further. More on that here…

The Bottom Line

Home price appreciation remains strong, despite higher mortgage rates and slightly increasing inventory. 

Home values continue to set new all-time highs, and housing still proves to be one of the best investments out there.  If you’ve been thinking about purchasing, now is a good time to do it!

Do reach out to me and we can strategize about your next purchase or refinance!

The Lending Coach

The blog postings on this site represent the positions, strategies or opinions of the author and do not necessarily represent the positions, strategies or opinions of Guild Mortgage Company or its affiliates. Each loan is subject to underwriter final approval. All information, loan programs, interest rates, terms and conditions are subject to change without notice. Always consult an accountant or tax advisor for full eligibility requirements on tax deductions.

Special Round-Table Podcast | The State of Today’s Real Estate Market

Mosaic Podcast logo

I was invited to join a panel of industry experts and discuss the state of today’s real estate market.

We discuss the industry challenges, mortgage rates, and have some thoughts about what might happen in the future, as well.

Here’s the link:

Do check it out, as I think you will gain a few insights and enjoy it!

Lending Coach Title Bar

The blog postings on this site represent the positions, strategies or opinions of the author and do not necessarily represent the positions, strategies or opinions of Guild Mortgage Company or its affiliates. Each loan is subject to underwriter final approval. All information, loan programs, interest rates, terms and conditions are subject to change without notice. Always consult an accountant or tax advisor for full eligibility requirements on tax deductions

February Mortgage Rate Projections – Things Are Getting Better

Block home in hands

Mortgage Rates have improved considerably from their peak in the high 7% range.

Cash graphic

Their trajectory this year will be highly influenced by the path of inflation and the Federal Reserve’s actions.

After hiking rates at one of the fastest paces we have ever seen in history to help reduce very high inflation, the market is anticipating that the Fed will begin cutting rates and slow the reduction of their balance sheet.

These actions should help lower mortgage rates.

Inflation Watch

One of the most important items the Fed is watching is their preferred measure of inflation, Core Personal Consumption Expenditures (PCE), which will need to move confidently towards their 2% target.

Looking through binoculars

The most recent inflation reading shows that Core inflation is at 2.9%, which is still above the Fed’s target. 

But the recent 6-month pace is trending at 1.85% on an annual basis and shows that inflation is heading where the Fed wants, it will likely just take some time.

The market is expecting that the Fed should start cutting rates at their May 1 meeting.  If this translates to lower mortgage rates, the additional home buying interest would most likely support home prices rising further.

Home Prices and Mortgage Rates

Housing prices in the US were surprisingly resilient last year in the face of a jump in mortgage rates. Most experts see anywhere between 6% to 7% home price appreciation in 2023 when those final numbers are announced.

Blocks and coins

Now, with the prospect of interest rate cuts on the horizon, home prices are expected to climb more than previously anticipated, according to Goldman Sachs Research.

Rates have dropped to their lowest level since June 2022 recently and are now hovering in the mid-6 percent range. The decline in rates has opened up demand, which experts say is elevating prices, partly because of the low inventory of homes available for buyers.

In simple terms, lower mortgage rates will lead to more expensive homes in the future – and waiting to purchase will more than likely cost buyers more money.

If you’d like to find out more and discuss strategy moving into 2024, don’t hesitate to reach out to me!

Lending Coach Title Bar

The blog postings on this site represent the positions, strategies or opinions of the author and do not necessarily represent the positions, strategies or opinions of Guild Mortgage Company or its affiliates. Each loan is subject to underwriter final approval. All information, loan programs, interest rates, terms and conditions are subject to change without notice. Always consult an accountant or tax advisor for full eligibility requirements on tax deductions.

Quick and Inexpensive Ways to Increase the Value of Your Home

Painting supplies

Enhancing the value of your home doesn’t always require a hefty budget.

Painting a room

There are numerous cost-effective measures that can significantly improve your property’s appeal and worth. One of the simplest and most impactful changes is a fresh coat of paint.

Paint

A well-chosen color scheme, for example, can breathe new life into your home, making it look more modern and well-maintained.

Paint can change a formerly dingy room into something exciting.

Additionally, painting is a task that can often be tackled as a DIY project, further reducing costs.

Enhancing Curb Appeal

Curb appeal plays a big role in a home’s perceived value, and even some simple landscaping can go a long way.

Sprnkler

Planting flowers, trimming bushes, and maintaining a neat lawn (or hard-scape in the desert) are relatively inexpensive ways to enhance the exterior look.

Even creating a welcoming entryway by adding a new doormat or adding potted plants can also make a positive first impression on potential buyers.

Kitchens and Bathrooms

Inexpensive kitchen and bathroom upgrades can also boost your home’s value.

Sink

Rather than a complete renovation, consider small changes like updating cabinet hardware, replacing older faucets, or installing a new backsplash. These changes can give these high-traffic areas a fresh and modern look without breaking the bank.

Additionally, upgrading lighting fixtures throughout the house is a cost-effective way to improve both functionality and aesthetics.

Organizing Your Home

De-cluttering and organizing your living spaces can make a big impact on the perceived value of your home.

Work area

Minimalism is key right now, and removing excess furniture and personal items can make rooms appear larger and more inviting. Additionally, consider inexpensive storage solutions, such as baskets or shelves, to keep spaces organized and clutter-free.

Energy-efficient upgrades not only enhance your home’s appeal but also contribute to long-term savings. Installing a programmable thermostat, for example, and sealing drafts can improve energy efficiency.

By the way, many utility companies offer incentives or rebates for energy-efficient upgrades, making these improvements even more cost-effective.

Fixture Upgrades

Installing door latch

Finally, consider small-scale upgrades that add a touch of luxury to your home. Upgrading doorknobs, cabinet handles, or light switch plates to more modern or stylish options can make a noticeable difference.

Additionally, adding a mirror or two strategically placed in rooms can create the illusion of more space and reflect natural light, making your home feel brighter and more open.

In Conclusion

Improving the value of your home doesn’t have to be a costly endeavor.  With thoughtful planning and strategic choices, simple and inexpensive upgrades can enhance both the aesthetic appeal and functionality of your property.

By focusing on areas that make a significant impact, such as painting, landscaping, small kitchen and bathroom upgrades, organization, energy efficiency, and fixture upgrades, you can improve your home’s value without breaking the bank!

Lending Coach Title Bar

The blog postings on this site represent the positions, strategies or opinions of the author and do not necessarily represent the positions, strategies or opinions of Guild Mortgage Company or its affiliates. Each loan is subject to underwriter final approval. All information, loan programs, interest rates, terms and conditions are subject to change without notice. Always consult an accountant or tax advisor for full eligibility requirements on tax deductions.

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