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2020 Outlook: Real Estate Market Forecast

We’re in the midst of the longest economic
expansion in U.S. history, and economists think there’s still room to grow. A
recent survey by the National Association for Business Economics found that
experts believe the U.S. economy will remain positive throughout 2020.[1]

Still, given that recessions are a natural
(and necessary) part of a business cycle, we know this period of growth will
inevitably end. So you may be wondering … how will an eventual recession impact
the real estate market?

Many Americans assume a recession would lead
to a decline in housing prices like we saw during the Great Recession of 2008.
But the real estate market crash we experienced wasn’t typical. In fact, the
last recession wasn’t typical at all. It was the worst economic downturn since
the Great Depression of the 1930s.

ATTOM Data Solutions analyzed real estate
prices during the last five recessions and found that, in the majority of
cases, home prices actually went up. Only twice (in 1990 and 2008) did prices
decline, and in 1990 it was by less than one percent.[2]

So what can historical precedent—combined with
today’s data—tell us about the future of real estate? Here’s where experts
predict the housing market is headed in 2020 and beyond.

HOME
PRICES WILL KEEP RISING

Economists predict U.S. housing prices will continue
to rise, regardless of a recession. In fact, property data firm CoreLogic
forecasts a faster rate of growth for home prices in 2020 than we saw in 2019,
with the biggest gains at the lower end of the market.[3]

Arch MI Chief Economist Ralph DeFranco expects
entry-level home prices to increase faster than incomes this year, making it
even more difficult for many first-time buyers to afford to enter the
market.[4]

“Low interest rates and a shortage of starter
homes will continue to push up prices,” predicts DeFranco. “This is especially
the case for lower price points, since builders have tended to focus on more
expensive, higher-profit houses and less on replenishing low inventories of
entry-level homes.”[4]

“Real estate is on firm ground with little
chance of price declines,” said National Association of Realtors Chief
Economist Lawrence Yun. “However, in order for the market to be healthier,
more supply is needed to assure home prices as well as rents do not
consistently outgrow income gains.”[5]

What
does it mean for you?
If you have the ability and
desire to buy a home now, don’t let a fear of recession or falling prices hold
you in limbo. Economists expect home values, as well as rent prices, to
continue rising. So you’ll likely pay more the longer you wait.

INVENTORY
CONSTRAINTS WILL CONTINUE

According to Redfin, Americans are staying in
their homes longer. In 2019, the average homeowner had resided in their home
for 13 years, up from just eight years in 2010. That means there are fewer
homes available today for those who want to buy.[6]

It’s possible that an increase in new
construction could offer some relief. The National Association of Realtors
(NAR) expects single-family housing starts to total one million this year, the
highest level since 2007. And NAR Chief Economist Lawrence Yun predicts the
average price of new construction will decline slightly as builders shift to
building smaller, more affordable homes.[7]

However, these efforts may not be enough to
meet current demand.“Despite improvements to new construction and
short waves of sellers, next year will once again fail to bring a solution to
the inventory shortage,” predicts Realtor.com Senior Economist George Ratiu.
“In 2020, we expect inventory to struggle to grow and could instead reach a
historic low level.”[8]

What
does it mean for you?
If you’re looking to buy a
starter home, be prepared to compete for the best listings. Start your search
early, and if you’re up against a deadline (like a new baby), build in plenty
of time to find the right home. We can help you assess your options, including
new construction and up-and-coming developments.

MORTGAGE
RATES WILL REMAIN LOW

Mortgage rates have declined more than a full
percentage point since November 2018, when they hit a recent peak of 4.94%.[9]The Mortgage Bankers Association predicts rates will remain low, at
around 3.7%, through mid-2021.[10]

While it may not seem significant, on a
$200,000 30-year fixed-rate mortgage, that lower rate means buyers could save
around $145 on their monthly payment and more than $52,000 over the life of
their mortgage. Lower mortgage rates make homeownership more accessible and
affordable for buyers.

Although economists expect mortgage rates to
stay low, they caution against waiting to act. Economic factors, shifts in
supply and demand, or unforeseen impacts of the November election could cause
rates to rise unexpectedly. “We recommend borrowers with long-term plans of
staying in their homes to lock in a low rate now because there’s no telling how
long these low rates will last,” warns Preetam Purohit, a capital markets
trader at Embrace Home Loans.[11]

What
does it mean for you?
If you’re looking to buy a home,
act soon to lock in a historically low mortgage rate. It will minimize your
monthly payment and could save you a bundle over the long term. And if you plan
to stay in your current home for a while, consider whether it makes sense to refinance
your mortgage at today’s lower rates.

MILLENNIALS
WILL DRIVE THE MARKET

Millennials are expected to account for more
than half of all mortgages this year, outnumbering Generation X and Baby
Boomers combined. It’s not surprising, considering their age and stage of life.
In 2020, the largest cohort of millennials will turn 30, and the oldest
millennials will turn 39.[8]

“Family changes tend to drive home-buying
decisions,” explains Realtor.com Chief Economist Danielle Hale.
“Millennials are going to be active in the housing market not just because
they’re just at the age when they’re thinking about becoming first-time home
buyers, but they’re also in the age range when they’re having kids.”[12]

Younger millennials flocked to urban centers
that offered easy access to work, shopping, and restaurants. But high prices,
lack of square footage, and subpar schools are driving millennials out to the
suburbs as they begin to marry and expand their families.

In response, a new model for suburban living
has emerged. “Hipsturbias,” or mixed-use communities that bring the
live/work/play concept to the suburbs, were recently named one of the top real
estate trends for 2020 by the Urban Land Institute.[4]

What does it mean for you? If
you’re a millennial who has been priced out of urban living or is looking for
more space for your growing family, a number of suburbs in our area have a lot
to offer. We can point you towards the communities that will best meet your
needs. And if you’re a homeowner with plans to sell, give us a call. We know
how to market your home to millennials … and can help you sell quickly for top
dollar by appealing to this leading market segment!

WE’RE
HERE TO GUIDE YOU

While national real estate numbers can provide
a “big picture” outlook, real estate is local. As local market experts, we can
guide you through the ins and outs of our market and the issues most likely to
impact sales and home values in your particular neighborhood.

If you’re considering buying or selling a home
in 2020, contact us now to schedule a free consultation. We’ll work with you to
develop an action plan to meet your real estate goals this year.

Sources:

Gifts and Gadgets for Every Room in the House

Are you searching for new and innovative gift ideas this holiday season? If so, check out my list of the hottest home technology offerings. I’ve selected a few of my favorites for every room in the house.

These smart systems and devices add comfort, convenience, and a “cool factor” that will delight your friends and family.  So think about who you know that loves the latest gadgets … or add a few of these to your own wish list!

ENTRYWAY

Ensure the safety of your loved ones with these smart security upgrades.

Smart Lighting

Ring, a company best known for its video doorbells, has added smart lights to its series of integrated devices. The Ring Smart Light System includes motion sensors, pathlights, spotlights, and even step lights, which can be turned on and off using voice commands when paired with an Amazon Alexa device. Users may opt to receive a notification when motion is detected on the premises, and—if integrated with Ring security cameras—access a live video stream for an added layer of security. Systems start at $69.99.

Video Doorbell

Video doorbells have become an increasingly popular security enhancement for homes, and for a good reason. Homeowners can detect activity at their front door while away, view visitors via video stream, and communicate without opening the door. Since Ring released its first smart doorbell in 2013, a number of competitors have entered the market. The Nest Hello Video Doorbell has some unique features—like facial recognition, package detection, and pre-recorded quick responses—that place it near the top of the pack. Retails for $229.

Smart Lock

Smart locks are a great way to ensure your friends and family are never left out in the cold, and the August Smart Lock Pro+ Connect is among the most highly rated. It’s one of the easiest models to install because it pairs with an existing deadbolt. The Smart Lock Pro enables a user to lock and unlock their door remotely with an app on their phone. And with the auto-lock/unlock feature, it can be set to
open automatically upon approach and relock after entry. Retails for $279.

LIVING ROOM

These fun and functional gifts are perfect for anyone who is big on style—but short on time.

Automated Planter

Caring for household plants is easier than ever with the latest advancements in technology. Perfect for frequent travelers or forgetful friends, the Dewplanter uses moisture in the air to water plants without manual intervention. Now nature lovers can enjoy the beauty and health benefits of houseplants without the hassle. Plus, for each unit sold, the company pledges to plant a tree somewhere it’s needed. Retails for $69.50.

Smart Art

Instead of buying your favorite art lover a single painting, why not give him or her 30,000? With the Meural Canvas, you can access an extensive collection of artwork from around the world to display digitally in your own home. Meural utilizes proprietary technology to deliver an anti-glare matte display that automatically adjusts to the lighting in the room. Personal artwork and photographs can be showcased, as well. Retails for $445 with annual membership.

Motorized Shades

Motorized window coverings aren’t new, but a lower price point and enhanced features have helped to boost their popularity.
The latest Motorized Shades from Somfy can be preprogrammed to raise or lower at certain times of day or controlled on-demand via a remote, smartphone app, or voice command when paired with Amazon Alexa or Google Home. They can also be set to operate automatically in response to the amount of sunlight or temperature of the room. Contact a dealer for pricing.

KITCHEN

These kitchen gadgets make life a little easier and a lot more enjoyable. They’re perfect for your busiest friends and family members!

Pressure Cooker

Have you jumped on the multi-cooker bandwagon yet? If so, you know how fast and simple these multifunctional appliances make meal preparation. The InstantPot Duo is a pressure cooker, sauté pan, steamer, slow cooker, rice cooker, food warmer, and yogurt maker all-in-one. It reduces cooking time and lowers energy consumption. Who wouldn’t love one of these versatile tools? With numerous cookbooks and blogs devoted to InstantPot recipes, the meal options are virtually endless. Retails for $99.95.

Cocktail Machine

Cocktail connoisseurs will appreciate the ease and convenience of the Bartesian Premium Cocktail Machine. Listed among “Oprah’s Favorite Things” for 019, the Bartesian mixes drinks with the touch of a button. Simply fill the canisters with base spirits, choose a cocktail capsule, and the machine does the rest. Now you can mix a margarita, whiskey sour, cosmopolitan, and other favorites as easily as you brew a cup of coffee. Retails for $349.

Smart Refrigerator

Kitchens are often called the “heart of the home,” and a new refrigerator from Samsung aims to be the hub. The Samsung Family Hub Refrigerator helps busy families stay organized. Grocery shopping becomes a breeze with built-in cameras that allow owners to peek inside their fridge from anywhere. The interactive touchscreen displays pictures, notes, and reminders for family members. And the integrated SmartThings app enables users to control smart devices and appliances from a central point. Base model starts at $3,099.

BEDROOM

Almost nothing beats a good night’s sleep. Help your loved ones wake up refreshed with these smart devices for the bedroom.

Baby Sleep Soother

As any parent knows, when your baby isn’t getting sleep, neither are you. Help everyone in the family catch some z’s with a Bubzi Co Soothing Owl. This cuddly creature plays lullabies while projecting a starry scene on the bedroom wall to calm young children and help them drift off to sleep. And for every purchase, Bubzi Co makes a donation to Postpartum Support International. Retails for $30.95.

Sunrise Alarm Clock

Know someone who hates getting up in the morning? Alarm clocks that utilize light instead of a noisy alarm can provide a more peaceful transition in and out of sleep. The Philips SmartSleep Connected Sleep and Wake-Up Light includes customizable sunrise and sunset simulation, guided breathing exercises, and sensors that track room conditions, like temperature, humidity, noise, and light. Retails for $199.95.

Smart Thermostat

Temperature fluctuations during the night can disrupt sleep. The Nest Learning Thermostat uses smart technology to track a user’s preferences and build a schedule around them. Homeowners can place one of its integrated sensors in their bedroom to maintain a consistent temperature throughout the night. And Nest thermostats cut energy consumption, so they’ll rest easier knowing they’re saving the planet and money on utility bills . Retails for $249.

BATHROOM

Bathrooms don’t have to be boring. Technology can add flair to the daily routine.

Waterproof Speaker

Music enthusiasts and podcast fans will enjoy streaming their favorites in the shower with a wireless waterproof speaker. The Ultimate Ears Wonderboom 2 is a mid-priced and versatile option that can go from the bath to the beach. It packs an impressive 13-hour battery life in a small, portable case that’s waterproof, dust-proof, and floatable. Retails for $99.99.

Digital Smart Scale

A scale isn’t an appropriate gift for everyone, but diet and fitness enthusiasts may appreciate the high-tech features available with the Withings Body+. It tracks weight, body water, and fat, muscle, and bone mass for up to eight users. It can also be set to display local weather and the previous day’s step count. Customized pregnancy and baby modes make this a suitable choice for a growing family, as well. Retails for $99.95.

Vanity TV Mirror

For a truly luxe bathroom addition, consider an integrated vanity television mirror. The Seura TV Mirror seamlessly incorporates video into a bathroom vanity. It’s vanishing glass technology makes it possible to view the television through a mirror. When turned off, the screen completely disappears. Add lighting or a custom frame to complete the look. Starts at $3,099 for a 19” display.

MY GIFT TO YOU

Are you considering a permanent technology upgrade for your own home? Give me a call first! Buyer expectations and preferences vary depending on price point, architectural style, and neighborhood. I can help you determine how the enhancement will impact the value of your home before you make the investment.

The Top 4 Deals Killers For Homebuyers

Falling in love is exhilarating. It can also be a bit scary, especially when a home has captured your heart. What if something goes wrong and you end up not spending the rest of your life with this stack of brick and mortar you’re lusting after?

No matter how careful you are, some deal killers are unavoidable. Others, however, are preventable, so pay heed if you hope to keep your deal alive.

1. Don’t Mess with Your Mortgage Preapproval

A common reason for a real estate deal to fall apart is that many homebuyers don’t fully understand the mortgage process. Sure, you may get a loan preapproval, but don’t think for one minute that this guarantees you will get the loan. It doesn’t.
Here’s what happens after you receive your preapproval letter and decide to move forward with the purchase. The lender will start your file, give you a list of paperwork required, order an appraisal and credit reports, verify your employment and income, and more.

The file is then sent to the processor who will review all of your information as well as the appraisal. He or she will then put together a package of all pertinent information to be sent to the underwriter.

The underwriter is the person who ultimately determines whether or not you are an acceptable credit risk. He or she will assess your ability to repay the loan, your credit, and the collateral used to secure the mortgage – in this case the collateral is the home. Then, just before funding the loan, the underwriter will perform what is known as a “soft pull” of your credit information to see if anything has changed.

This is the point where many borrowers run afoul. If you hope to keep your purchase alive, don’t do anything – from application to closing – that might change your financial picture and sabotage your final approval. This means no shopping on credit for appliances, furniture or anything else. Don’t switch jobs, fall behind on your bills, co-sign a loan for anyone, or in any way reduce the income stated on your application.

2. Read Homeowners Association Documents Carefully

When you purchase a home in a managed community governed by a homeowners association (HOA), you’ll be given a mountain of paperwork to read and approve. Because there may be deal killers included in the fine print, it’s important to get to this task immediately upon receipt of the documents.

Look for any information about liens against the property; current litigation against the HOA, the builder, or the developer; and any red flags in the HOA budget. Since these documents aren’t easy to read and understand, it is worth the money you’ll spend to have your attorney look them over and advise you of any potential deal killers lurking within.

While the aforementioned HOA problems could potentially derail the deal, it’s better to have it happen upfront rather than when you’re further along in the process.

3. Home Inspection Problems

All homes – even newly constructed ones – may have problems. Going into the process not fully understanding this can set you up for a failed real estate deal. Sure, you ideally want to find a home that was owned by Mr. or Mrs. Clean who conscientiously took care of it during their entire ownership, but those are few and far between, and seeking them out is unrealistic.

Set your sites on finding a home that has small, easy-to-fix problems, and don’t freak out if some are worse than others. In other words, when considering making an offer, laugh at the loose doorknob but negotiate when it comes to water damage or worse.

The nitpicky homebuyer, who plans on nickel and diming the homeowner into replacing missing switch plates and dripping faucets, is the picture of a deal-breaker-in-the-making. Sure, in a buyer’s market you may get away with minor demands. In a seller’s market, however, there is always a cleaner offer right behind yours.

4. Budgeting Blunders

The real estate industry does a bang-up job of reminding homebuyers that they’ll need a down payment – typically from 3 percent to 20 percent of the total loan amount – when they purchase a home. What they often fail to inform real estate consumers about are the loan’s closing costs – the money you will be required to pay before the house is yours. This is most likely because closing costs are a little harder to pin down. They vary wildly and depend on the type of loan, the amount of the down payment, and a host of other factors.

Unfortunately, this lack of information frequently causes real estate deals to disintegrate. To avoid this particular problem, pay attention to all communications from your lender.

First, you will receive a form called a Loan Estimate. Look this over carefully to ensure that everything your lender agreed to is included. Pay close attention to the “Calculating Cash to Close” section, which concludes with an estimated cost to close the loan. Remember, this is an estimate and the amount may go higher or lower in the end. Speak with the lender if you find any problems here, especially if it will be impossible for you to come up with this money.

Just before closing you will receive the “Closing Disclosure,” which is quite similar to the estimate, but these figures are final. Again, review the “Cash to Close” figure.

By and large, real estate deals conclude successfully. Typically, it all comes down to the experience of your agent. Choose wisely and you’ll avoid the common pitfalls that can derail transactions. For a smooth, low-stress real estate transaction, slow down, keep your expectations realistic and heed the advice of your real estate agent or attorney.