One of the most common questions I get at this time of year is, “What’s going on in the market?” It’s not just potential buyers and sellers who are curious; homeowners always want reassurance their home’s value is going up. The good news is the American real estate market is strong and healthy. Home values are up, prices and sales are strong, and millennial, first-time buyers are eager to become homeowners.
We often use national real estate numbers to give us a clearer view of our local market. However, real estate is local, and while statistics and predictions help us understand the overall real estate market, our local market may be different. If you’re thinking of buying or selling, or just want to know how much your home is worth, give me a call!
What to Expect in the Real Estate Market in 2017
The American housing market is stronger than ever! Home values, prices and sales had their strongest numbers in 2016, a sure sign the market is healthy and strong. According to the Federal Housing Finance Agency (FHFA), property values have increased in 58 of the last 62 months. FHFA’s Home Price Index shows an increase of more than 35 percent nationally. Homeowners continue to build equity in their largest investment—their homes.
First-Time Buyers Are Back
Housing forecasts from the National Association of REALTORS (NAR), the Mortgage Bankers’ Association, Freddie Mac and Fannie Mae all predict existing-home sales will surpass 6 million in 2017, higher than anticipated sales for 2016. Who’s driving the surge? According to NAR, millennials who have put off buying a home are ready to buy. While they may have avoided buying a home due to student debt and limited employment, many are entering their 30s. This is a time when their attention turns to marriage, family and setting roots with homeownership. They’re predicted to be the driving force behind home and condominium sales from now until into 2020.
What does this mean to you? If you’re a millennial who’s been on the fence about buying, now is the time to act. Give me a call to answer your questions about the market and the buying process.
Renters Are Embracing Homeownership
Additionally, many renters who’ve resisted buying are starting home searches due to the economic weight of rising rents. This year’s home buyers seek to take advantage of comparatively low interest rates and, in most cases, static payments each month—an advantage of homeownership. Rental costs will only continue to rise. If you’re thinking of buying, now is an ideal time to do so.
What does this mean to you? Every month you pay rent, you lose the opportunity to build equity in a home of your own. Break free from the limits of renting and invest in your financial future. Come in the office, and I’ll discuss your options.
Home Prices Are on the Rise
According to NAR, the median existing-home price increased 6.0 percent year-over-year in October. Moreover, October was the 56th consecutive month of year-over-year increases. Prices are approaching the pre-recession peak.
What does this mean to you? Home prices, and subsequently home values, are increasing. If you’ve been waiting to list your home, now is a great time to do so. I’ll be happy to give you a comparative market assessment of your home and help you get your home in list-ready shape.
If You’re in the Market to Buy, Be Prepared to Act
Homes were on the market for the shortest amount of time recorded since 2009: 52 days. San Diego County ended the year with an average of only 33 days. The increase of qualified buyers in the market along with the increasing efficiency of the real estate process means homes are selling faster than ever. In many cases, buyers are engaging in bidding wars and paying over the list price to get the home of their dreams.
What does this mean to you? The home you have your eye on one day may be gone the next. In our fast moving market, be prepared to come to the table with a competitive bid.
Looking for a New Home?
New home construction will increase to an average of 1.5 million per year to 2024, according to a report from NAR. However, experts anticipate housing starts will only increase to 1.22 million in 2017, which is less than the 1.5 million new homes required to keep up with growing demand. This inventory shortage of new entry-level homes—typically purchased by first-time buyers—may drive up prices in some areas. Home builders have been focusing on multi-family construction for the last few years, but this type of construction has begun to level off providing hope that builders will once again focus on single-family home construction. However, stricter proposed immigration policies may impact new home construction and tighten inventory.
What does this mean to you? First-time and repeat home buyers agree—there are plenty of advantages of buying a new home. Whether you want a home customized to your family’s needs or you don’t want to bother with age-related maintenance, a new home has much to offer. Give me a call to discuss your options.
Affordability Pressures Are Increasing in Many Markets
Housing affordability in many of the nation’s largest cities has declined over the past few years, a trend that is expected to continue in 2017. However, there is hope. NAR created the Affordability Index to measure the affordability of homes across the United States. The Affordability Index assesses whether the typical family earning the median family income can qualify for a mortgage. This is for a typical home based on the prevailing mortgage interest rate on loans closed on existing homes from the Federal Housing Finance Board.
The NAR Affordability Index is 170.2 (composite) and 169.8 (fixed), meaning a family earning the median family income has 170.2 percent of the income necessary to buy a median-priced, single-family home. Nationally, the qualifying income is $41,616, but it varies by region. It’s highest in the West at $61,824.
What does this mean to you? If you’ve had your eye on a new home, but weren’t sure if you could afford it, you may be pleasantly surprised. There may be homes in San Diego County that meet your needs and budget. Give me a call today to discuss your home search.
3 Things to Do Now if You Plan to Buy This Year
- Get pre-approved for a mortgage. If you’re like most buyers who plan to finance part of the home purchase, getting pre-approved for a mortgage will allow you to put in an offer on a home and may give you an advantage over other buyers. The added bonus: you can see how much home you can afford and budget accordingly. This is the first step in my Buyer’s Tips which will help you move through the sometimes daunting process of purchasing a home. I also have a more detailed guide I can send you which explains the home buying process in detail.
- Start looking. While most buyers start their searches online, be sure to look at homes in neighborhoods you’d like to live in as well. Keep a notebook to write down what you like and dislike about each home you view in person or online. You can use my Buyer’s Questionnaire to help narrow down where to look and what to look for in your next home.
- Come to my office. The buying process can be tricky. I’d love to guide you through it. I can help you find a home that fits your needs and budget. Give me a call to make an appointment today!
3 Things to Do Now if You Plan to Sell This Year
- Make repairs. Most buyers want a home they can move into right away, without having to make extensive repairs. While the repairs may or may not add value, making them will give your home a competitive advantage over other similar homes on the market.
- Get a Comparative Market Analysis (CMA). A CMA not only gives you the current market value of your home, it’ll also show how your home compares to others in the area. This will help us price your home to sell in our market. Call me or go to my Home Valuation page for your free CMA!
- Start packing. Help your buyers see themselves in your home by packing up items you don’t use regularly and storing them in the garage, an attic or a storage space. This will make your home easier to stage as well as make it easier to move later on. For more tips on preparing your home for the market and having a successful sale, see my Sellers’ Tips.
Are You Thinking of Buying or Selling?
Whether you’d like to buy or sell a home this year, want to know how much your home is worth, or have general questions about our local market, give me a call! I’d love to discuss the market with you.