Should I Buy a Home Right Now?

Should I Buy a Home Right Now? | MyKCM

If you’ve been thinking about buying a home, you likely have one question on the top of your mind: should I buy right now, or should I wait? While no one can answer that question for you, here’s some information that could help you make your decision.

The Future of Home Price Appreciation

Each quarter, Pulsenomics surveys a national panel of over 100 economists, real estate experts, and investment and market strategists to compile projections for the future of home price appreciation. The output is the Home Price Expectation Survey. In the latest release, it forecasts home prices will continue appreciating over the next five years (see graph below):

Should I Buy a Home Right Now? | MyKCM

As the graph shows, the rate of appreciation will moderate over the next few years as the market shifts away from the unsustainable pace it saw during the pandemic. After this year, experts project home price appreciation will continue, but at levels that are more typical for the market. As Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), says: 

“People should not anticipate another double-digit price appreciation. Those days are over. . . . We may return to more normal price appreciation of 4%, 5% a year.”

For you, that ongoing appreciation should give you peace of mind your investment in homeownership is worthwhile because you’re buying an asset that’s projected to grow in value in the years ahead.

What Does That Mean for You?

To give you an idea of how this could impact your net worth, here’s how a typical home could grow in value over the next few years using the expert price appreciation projections from the Pulsenomics survey mentioned above (see graph below):

Should I Buy a Home Right Now? | MyKCM

As the graph conveys, even at a more typical pace of appreciation, you still stand to make significant equity gains as your home grows in value. That’s what’s at stake if you delay your plans.

Bottom Line

If you’re ready to become a homeowner, know that buying today can set you up for long-term success as your asset’s value (and your own net worth) is projected to grow with the ongoing home price appreciation. Let’s connect to begin your homebuying process today.

Expert Housing Market Forecasts for the Second Half of the Year

Expert Housing Market Forecasts for the Second Half of the Year | MyKCM

The housing market is at a turning point, and if you’re thinking of buying or selling a home, that may leave you wondering: is it still a good time to buy a home? Should I make a move this year? To help answer those questions, let’s turn to the experts for projections on what the second half of the year holds for residential real estate.

Where Mortgage Rates Will Go Depends on Inflation

While one of the big questions on all buyers’ minds is where will mortgage rates go in the months ahead, no one has a crystal ball to know exactly what’ll happen in the future. What housing market experts know for sure is that the record-low mortgage rates during the pandemic were an outlier, not the norm.

This year, rates have climbed over 2% due to the Federal Reserve’s response to rising inflation. If inflation continues to rise, it’s likely that mortgage rates will respond. Greg McBride, Chief Financial Analyst at Bankrateexplains it well:

“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.”

Whether you’re buying your first home or selling your current house to make a move, today’s mortgage rate is an important factor to consider. When rates rise, they impact affordability and your purchasing power. That’s why it’s crucial to work with a team of professionals, so you have expert advice to help you make an informed decision about your best move.

The Supply of Homes for Sale Projected To Continue Increasing

This year, particularly this spring, the number of homes for sale has grown. That’s partly due to more homeowners listing their houses, but also because higher mortgage rates have helped ease the intensity of buyer demand. Moderating buyer demand slows down the pace of home sales, which in turn helps inventory rise.

Experts say that growth will continue. Recently, realtor.com updated their 2022 inventory forecast. In the latest release, they increased their projections for inventory gains dramatically, going from a 0.3% increase at the beginning of the year to a 15.0% jump by the end of 2022 (see graph below):

Expert Housing Market Forecasts for the Second Half of the Year | MyKCM

More homes to choose from is great news if you’re craving more options for your home search – just know that there isn’t a sudden surplus of inventory on the horizon. Housing supply is still low, so you’ll need to partner with an agent to stay on top of what’s available in your market and move fast when you find the one. It’s not going to be easy to find a home, but it certainly won’t be as difficult as it has been over the past two years.

Home Price Forecasts Call for Ongoing Appreciation

Due to the imbalance between the number of homes for sale and the number of buyers looking to make a purchase, 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.

Even though housing supply is increasing today, there are still more buyers than there are homes for sale, and that’s maintaining the upward pressure on home prices. That’s why experts are not calling for prices to decline, rather they’re forecasting they’ll continue to climb, just at a more moderate pace this year. On average, homes are projected to appreciate by about 8.5% in 2022 (see graph below):

Expert Housing Market Forecasts for the Second Half of the Year | MyKCM

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.

For current homeowners looking to sell, know your home’s value isn’t projected to fall, but waiting to make your purchase does mean your next home could cost more as home prices continue to appreciate. That’s why, 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. But rest assured, once you buy a home, that price appreciation will help grow the value of your investment.

Bottom Line

Whether you’re a homebuyer or seller, you need to know what’s happening in the housing market, so you can make the most informed decision possible. Let’s connect to discuss your goals and what lies ahead, so you can determine the best plan for your move.

The Drop in Mortgage Rates Brings Good News for Homebuyers

The Drop in Mortgage Rates Brings Good News for Homebuyers | MyKCM

Over the past few weeks, the average 30-year fixed mortgage rate from Freddie Mac fell by half a percent. The drop happened over concerns about a potential recession. And since mortgage rates have risen dramatically this year, homebuyers across the country should see this decline as welcome news.

Freddie Mac reports that the average 30-year rate was down to 5.30% from 5.81% two weeks prior (see graph below):

The Drop in Mortgage Rates Brings Good News for Homebuyers | MyKCM

But why is this recent dip such good news for homebuyers? As Nadia Evangelou, Senior Economist and Director of Forecasting at the National Association of Realtors (NAR), explains:

“According to Freddie Mac, the 30-year fixed mortgage rate dropped sharply by 40 basis points to 5.3 percent. . . . As a result, home buying is about 5 percent more affordable than a week ago. This translates to about $100 less every month on a mortgage payment.

That’s because when rates go up (as they have for the majority of this year), they impact how much you’ll pay in your monthly mortgage payment, which directly affects how much you can comfortably afford. The inverse is also true. A decrease in mortgage rates means an increase in your purchasing power.

The chart below shows how a half-point, or even a quarter-point, change in mortgage rates can impact your monthly payment:

The Drop in Mortgage Rates Brings Good News for Homebuyers | MyKCM

Bottom Line

If your home doesn’t meet your needs, this may be the opportunity you’ve been waiting for. Let’s connect to see how you can benefit from the current drop in mortgage rates.

What Does an Economic Slowdown Mean for the Housing Market?

What Does an Economic Slowdown Mean for the Housing Market? | MyKCM

According to a recent survey, more and more Americans are concerned about a possible recession. Those concerns were validated when the Federal Reserve met and confirmed they were strongly committed to bringing down inflation. And, in order to do so, they’d use their tools and influence to slow down the economy.

All of this brings up many fears and questions around how it might affect our lives, our jobs, and business overall. And one concern many Americans have is: how will this affect the housing market? We know how economic slowdowns have impacted home prices in the past, but how could this next slowdown affect real estate and the cost of financing a home?

According to Mortgage Specialists: 

Throughout history, during a recessionary period, interest rates go up at the beginning of the recession. But in order to come out of a recession, interest rates are lowered to stimulate the economy moving forward.”

Here’s the data to back that up. If you look back at each recession going all the way to the early 1980s, here’s what happened to mortgage rates during those times (see chart below):

What Does an Economic Slowdown Mean for the Housing Market? | MyKCM

As the chart shows, historically, each time the economy slowed down, mortgage rates decreased. Fortune.com helps explain the trend like this:

“Over the past five recessions, mortgage rates have fallen an average of 1.8 percentage points from the peak seen during the recession to the trough. And in many cases, they continued to fall after the fact as it takes some time to turn things around even when the recession is technically over.”

And while history doesn’t always repeat itself, we can learn from it. While an economic slowdown needs to happen to help taper inflation, it hasn’t always been a bad thing for the housing market. Typically, it has meant that the cost to finance a home has gone down, and that’s a good thing. 

Bottom Line

Concerns of a recession are rising. As the economy slows down, history tells us this would likely mean lower mortgage rates for those looking to refinance or buy a home. While no one knows exactly what the future holds, you can make the right decision for you by working with a trusted real estate professional to get expert advice on what’s happening in the housing market and what that means for your homeownership goals.

A Key Opportunity for Homebuyers

A Key Opportunity for Homebuyers | MyKCM

There’s no denying the housing market has delivered a fair share of challenges to homebuyers over the past two years. Two of the biggest hurdles homebuyers faced during the pandemic were the limited number of homes for sale and the intensity and frequency of bidding wars. But those two things have reached a turning point.

As you may have already heard, the number of homes for sale has increased this year, and even more so this spring. As Danielle Hale, Chief Economist for realtor.comexplains:

New listings–a measure of sellers putting homes up for sale–were up 6% above one year ago. Home sellers in many markets across the country continue to benefit from rising home prices and fast-selling homes. That’s prompted a growing number of homeowners to sell homes this year compared to last, giving home shoppers much needed options.”

This is encouraging news. More homes coming onto the market give you a greater chance of finding one that checks all your boxes.

Buyer Competition Moderating Helps Inventory Grow Even More

Mark Fleming, Chief Economist at First Americansays inventory growth is happening not just because there’s an increase in the number of listings coming onto the market, but also because buyer demand has moderated some in light of higher mortgage rates and other economic factors:

There has been a pickup in the inventory that we’ve seen recently, but it’s not from a big increase in new listings . . . but rather a slowdown in the pace of sales. And remember that months’ supply measures the inventory of sale relative to the pace of sales. Same inventory, fewer sales, means more months’ supply.”

Basically, the market is shifting away from the frenzy of buyer competition seen during the pandemic, and that’s helping available inventory grow. In their latest forecastrealtor.com also mentions the moderation of demand as a key factor and projects the inventory growth should continue:

As rising inflation and mortgage rates bring U.S. housing demand back from the 2021 frenzy, . . . inventory will grow double-digits over 2021 and offer buyers a better-than-expected chance to find a home.”

How This Impacts You

The combination of more homes coming onto the market and a slower pace of home sales means you’ll have more options to choose from as you search for your next home. That’s great news if you’ve been searching for a while with little to no luck. Just remember, there isn’t a sudden surplus of inventory, just more homes to choose from than even a few months ago. So, you’ll still want to be decisive and move fast when you find the right home for you.

And when you do, you may be faced with less competition from other buyers too. If you’ve been waiting to jump into the market because the intensity of the bidding wars was intimidating or if you’ve been outbid on several homes, this moderation could help make the homebuying process a bit smoother. It’s not that it’ll be easy or that bidding wars are a thing of the past – that’s not the case. But it won’t feel nearly as impossible.

Bottom Line

As the housing market begins its shift back toward pre-pandemic levels, you could have a unique opportunity in front of you. With moderating levels of buyer competition and more homes actively for sale, your home search may have gotten a bit less challenging. Let’s connect to begin the process today.

More Listings Are Coming onto the Market [INFOGRAPHIC]

More Listings Are Coming onto the Market [INFOGRAPHIC] | MyKCM

Some Highlights

  • Worried you won’t be able to find your next home after you sell? You should know data from realtor.com shows more listings are coming onto the market each month this year.
  • Having additional options can make the search for your next home easier. But inventory is still low overall, which means your house should still stand out when you sell.
  • If your biggest question is where you’ll go if you sell, take this as encouraging news. Let’s connect to start the process today.