Market ‘Unpredictability’ Forces Zillow Offers to Fold

Home Sales Jump as Buyers Aim to Beat Rising Rates

October 21, 2021

Existing-home sales rebounded in September as buyers may have felt a sense of pressure as mortgage rates started to inch up. Existing-home sales rose by 7% in September compared to August. All major regions of the country posted increases last month, the National Association of REALTORS® reported Thursday.

“Some improvement in supply during prior months helped nudge up sales in September,” says Lawrence Yun, NAR’s chief economist. “Housing demand remains strong as buyers likely want to secure a home before mortgage rates increase even further next year.” The 30-year fixed-rate mortgage averaged 2.90% in September, but rates are rising.

Despite last month’s uptick, total existing-home sales—completed transactions that include single-family homes, townhomes, condos, and co-ops—were down by 2.3% in September compared to a year ago.

Home prices continue to rise as inventories remain constrained. Housing inventory is down 13% compared to a year ago. Unsold inventory is at a 2.4-month supply at the current sales pace, NAR reports.

But a turnaround could be coming. “As mortgage forbearance programs end, and as home builders ramp up production—despite the supply-chain material issues—we are likely to see more homes on the market as soon as 2022,” Yun says.

Here’s a closer look at NAR’s latest existing-home sales report:

Home prices: The median existing-home price for all housing types in September was $352,800, up 13.3% compared to a year ago. Prices rose in every region last month.

Days on the market: Eighty-six percent of homes sold in September were on the market for less than a month. Properties typically remained on the market for 17 days last month, down from 21 days a year ago.

First-time buyers: First-time buyers comprised 28% of sales in September, down from 31% in September 2020. “First-time buyers are hit particularly hard by the historically high home prices as they largely do not have the savings required to buy a home or equity to offset such a purchase,” Yun says.

All-cash sales: All-cash transactions made up 23% of transactions in September, up from 18% in September 2020. Individual investors or second-home buyers, who account for the bulk of cash sales, purchased 13% of homes in September, up from 12% in September 2020.

Distressed sales: Foreclosures and short sales represented less than 1% of sales in September, matching a year ago. Read more: NAR: No Need to Panic Over Foreclosure Spike

Regional Breakdown

Here’s how existing-home sales fared across the country in September:

  • Northeast: Existing-home sales increased by 5.5% last month, posting an annual rate of 770,000, an 8.3% increase compared to a year ago. Median price: $387,200, up 9.2% from a year ago.
  • Midwest: Existing-home sales increased by 5.1% to an annual rate of 1.44 million in September, a 2.7% drop from a year ago. Median price: $265,300, up 9.1% from a year ago.
  • South: Existing-home sales rose 8.6% in September, reaching an annual rate of 2.77 million, unchanged from a year ago. Median price: $307,500, a 14.8% rise from one year ago.
  • West: Existing-home sales increased by 6.5%, registering an annual rate of 1.31 million in September, down 3% compared to a year ago. Median price: $506,300, up 8.3% from September 2020.
A graphic showing the breakdown of existing-home sales for September of this year.

 

 

Homeowners Unsure Whether to Sell

October 19, 2021

Many homeowners are wrestling with the decision on whether to sell or not. After all, home appreciation has skyrocketed over the past year, and the temptation may be stronger than ever.

Homeowners usually sell their homes after 16 years, according to U.S. Census Bureau data. About 20.2 million homeowners have purchased their home in the last 10 to 19 years, which would mean many of them may be feeling that desire to move, notes the National Association of REALTORS® Economists’ Outlook blog.

“Although the market typically slows down in fall, there is still stiff competition among buyers, with multiple offers for each home due to low inventory,” writes Nadia Evangelou, NAR’s senior economist and director of forecasting, on the association’s blog. “As a result, sellers continue to have strong negotiating power as most of them are able to sell their home for higher than the asking price.”

Homebuying activity remains strong this fall, even if reports do indicate it has slowed somewhat from the ultra-busy summer. Buyer demand continues to outpace supply. Eighty-seven percent of homes sold in August were on the market for less than a month, according to NAR data.

Also, for home sellers who also have to buy, they can still take advantage of historically low mortgage rates. Rates are expected to rise over the next year. Last week, the 30-year fixed-rate mortgage averaged 3.05%, according to Freddie Mac.

Bidding wars are still occurring too. About four offers were received on each closed home sale in August, according to real estate professionals surveyed for the REALTOR® Confidence Index survey for August.

 

A map of the U.S. showing the average number of offers per state sellers received on sold homes.

 

Source: REALTORS® Confidence Index Survey, August 2021

A recent report on HomeLight says that certain homeowners especially should consider selling now, like those desiring to trade up and wanting to lock in a low mortgage rate; those who are looking to maximize retirement funds; and homeowners who have a current house that may need some work (seller’s markets tend to offer homeowners negotiation leverage in repairs).

Stacey Glenn, a real estate professional in Fort Myers, Fla., told HomeLight that it may cost home buyers about 10% to 20% more to purchase a home than a year ago, but buyers can still come out ahead in the long run, if they remain financially stable and stay in the house long enough for market appreciation.

On the other hand, HomeLight points out that homeowners may not want to sell if they recently refinanced their home; can’t afford current housing prices; or haven’t built up much equity yet.

4 ways to boost your credit score before the year is over

You may have certain financial goals for 2022, like buying a home or making renovations to your current one. To meet those goals, you may need to whip your credit score into better shape so you can do things like qualify for a mortgage or renovation loan. Here are some steps you can take to boost your credit in time for the new year.

1. Pay all of your bills on time

Your payment history is the single most important factor that goes into your credit score. Paying your bills on time could help your score improve, so keep tabs on your expenses and put yourself on a budget if you’re not following one already. That way, you’ll be less likely to miss bills due to a lack of money.

2. Knock out some credit card debt

You might assume that as long as you make your minimum credit card payments on time, your credit score will stay in good shape. But actually, carrying too high a balance across your credit cards could damage your score, even if you’re making those minimum payments on schedule.

If you have a lot of debt, try paying down some of your credit card balances as soon as you can. Consolidating your debts with a balance transfer could be a good move in this regard, though the tricky thing is that you will need decent credit to qualify for one. But if your score is still in reasonably good shape, it’s worth pursuing.

3. Get your timely rent payments reported

You may be surprised to learn that your rent payments won’t automatically show up on your credit report. But the reporting bureaus that create credit reports are willing to include that information if they receive it, and a series of timely rent payments could help your credit score improve.

You can use several services to get your rent included on your credit report. Some, like CreditMyRent, charge a fee. Others, like PayYourRent, won’t cost you money, but you’ll need a landlord who’s signed up to use it. It pays to talk to your landlord and work together to get your rent payments reported if you feel that will help your credit score improve.

4. Correct credit report errors

Credit report errors have soared during the pandemic. You may have a mistake on your credit report that’s working against you, like a delinquent debt you’ve already settled or an open account in your name that’s not actually yours. Reviewing your credit report and fixing errors could help your credit score improve.

Normally, you can access your credit report for free once a year from each major reporting bureau – Equifax, Experian, and TransUnion. Right now, though, credit reports are free on a weekly basis through April 2022, so you have plenty of opportunity to dig in.

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Maurie Backman
The Motley Fool

The Motley Fool is a USA TODAY content partner offering financial news, analysis and commentary designed to help people take control of their financial lives. Its content is produced independently of USA TODAY.

Seven Ways To Build Wealth And Gain Security Through Homeownership

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Seven Ways To Build Wealth And Gain Security Through Homeownership

Forbes Biz Council

Tara Hotchkis is a Luxury Real Estate Broker, Senior Estates Director @COMPASS Beverly Hills & the Founder & CEO of @LHspaces.

Should I purchase a home or sign another lease? Is now the right time to buy, or should I wait until next year? What would be the advantages of buying my next home? These are some of the feelings many of us experience and the questions clients often have regarding the home-buying process. I would answer them with the following seven ways to benefit from taking the plunge into homeownership.

1. Equity building: If you were to trade your monthly rent payment for a mortgage payment, each mortgage payment would build equity in your property. Every rent payment you make to your landlord, on the other hand, creates more wealth for your landlord. Why use your hard-earned money to make your landlord rich instead of building your wealth by investing your money in an asset you own?

2. Hedge against inflation: Are we in an economic upcycle or downturn? We are currently in an inflationary period where money today will be worth less tomorrow. Have you ever stumbled across an old property deed, maybe for your grandmother’s house, and read that only she paid $50,000 for it? Well, $50,000 was worth a lot more in 1960 than it is today. Investing your money in hard assets like real estate can help build your wealth and hedge your money against inflation.

3. Tax savings: Did you know that a homeowner can deduct the mortgage interest on a mortgage loan of up to $750,000? They can also deduct property taxes of up to $10,000 every year. Consult your CPA and ask them for a breakdown of how much money you could save by deducting the interest on your monthly mortgage payment and property taxes on your tax return.

4. Long-term appreciation: Have you ever looked at housing prices from 50 years ago and been shocked by how much they have increased in value? Across the United States, on average, home prices typically double in anywhere from 10 to 20 years. In some markets, home prices increase much more. Here in California, housing prices have increased 120% in the past decade. It’s never too early to buy property, and the sooner you do, the better your chances of securing substantial long-term gains.

5. Fixed monthly payments: As a renter, you have no control over rent increases. As a homeowner, you have the opportunity to obtain a 30-year fixed-rate mortgage loan, meaning you will be able to lock in your monthly mortgage payment for the term.

6. Privacy, control and security: Did you know that if you rent your home, your landlord has the right to enter your home as long as they give you notice? Your landlord is entitled to a key to your property. What if you would like to knock down a wall to bring in more light? You will have to obtain permission from your landlord. You should be able to bring a dog home to a property you pay for, right? Renters must seek permission for this from the landlord. And if your landlord decides to sell the property you’re renting, you could find yourself facing eviction.

Owning your home puts you in the driver’s seat. However, keep in mind that if you own property within a homeowners association, you may also have specific rules to abide by; remember to review your HOA’s bylaws and covenants, conditions and restrictions (CC&Rs) during escrow before removing your contingencies.

7. Take advantage of historically low interest rates: We have seen low rates for so long that the idea of rates increasing may be hard for us to fathom right now. Great credit may even help you secure a mortgage rate below 3%. To put this in perspective, when my parents purchased a home in the 1980s, it wasn’t uncommon to see mortgage rates hover around 18% — can you even imagine? In the early 2000s, when I purchased my first home, I secured a mortgage rate of 6.5% and thought I had scored a bargain. With mortgage rates currently at historic lows, now may be the right time to take advantage of an incredible opportunity.

Many analysts believe mortgage rates will increase toward the end of 2021, into 2022 and beyond. As interest rates rise, so will your monthly mortgage expenses. A 1% or 2% increase may not sound like a lot, but let me give you monthly payment examples of how that increase translates: A $1 million purchase price, with 20% down, will leave you with an $800,000 mortgage loan at 3% resulting in a monthly principal and interest payment of $3,373. If your interest rate increases to 4%, your new monthly principal and interest payment will be $3,819, an increase of $446 per month, and at 5%, you’re looking at paying $4,295 per month, an increase of $922 per month. So the same property could end up costing almost $1,000 more per month by just waiting and not locking in these historic low rates. Reach out to a mortgage professional today and ask them to run your numbers and provide you with a few scenarios to show you how much you could save.

Sona Merlin