Massachusetts & Southern NH Real Estate Industry News

The prospect of purchasing a home is a significant life decision that comes with a host of considerations. Understanding your readiness for this step involves a careful evaluation of your financial position, future plans, and personal preferences. In this comprehensive guide, we will explore the fundamental factors that can help you determine if you're truly prepared to take the exciting leap into homeownership.

• Financial Preparedness: A Strong Foundation

One of the initial steps in gauging your readiness to buy a home involves a thorough assessment of your financial stability. This encompasses factors such as a secure and consistent source of income, a healthy credit score, and a reasonable debt-to-income ratio. These elements are not only pivotal in securing a mortgage but also indicative of your ability to manage the financial responsibilities that come with homeownership.

• Alignment with Long-Term Goals

A crucial question to ponder is whether your homeownership aspirations align with your long-term goals. Are you planning to establish roots in a particular area for the foreseeable future? Consider how buying a home fits into your broader life plans, including career prospects, family expansion, and lifestyle preferences. Ensuring that your investment aligns with your future trajectory is paramount.

• Budgeting Realities: Affordability and Beyond

Determining the extent to which homeownership fits into your budget is a vital step. This involves more than just affording the monthly mortgage payment; you must factor in property taxes, insurance, maintenance, and potential homeowners association (HOA) fees. A clear understanding of your financial commitments will empower you to make a well-informed decision that aligns with your fiscal capabilities.

• Navigating the Real Estate Landscape

A comprehensive understanding of the real estate market and the neighborhoods you're interested in is a key part of the decision-making process. Research recent property sales, market trends, and the general ambiance of different communities. Elements such as commute times, proximity to amenities, and the quality of local schools are all significant considerations, especially if your family circumstances are evolving.

• Embracing New Responsibilities

Transitioning from renting to owning involves a shift in responsibilities. As a homeowner, you'll need to handle maintenance, repairs, and perhaps even landscaping. Assess your comfort level with these tasks and consider whether you have the time and resources to manage them efficiently. While these responsibilities might seem daunting, they can also offer a sense of pride and accomplishment.

• Saving Wisely: Down Payment and Closing Costs

Accumulating funds for a down payment and covering closing costs are integral aspects of the home-buying process. Aiming for a substantial down payment—ideally around 20%—can offer benefits such as lower monthly payments and avoiding private mortgage insurance (PMI). Moreover, being financially prepared for closing costs ensures a smoother transition to homeownership without unexpected financial strains.

The decision to buy a home encompasses an array of factors that extend beyond the allure of owning property. This comprehensive guide has illuminated the key considerations that can help you assess your readiness for homeownership. By evaluating your financial stability, long-term goals, budgeting prowess, understanding of the market, willingness to embrace new responsibilities, and prudent savings habits, you can confidently determine whether the time is right to embark on this exciting journey. Remember, a well-informed decision today can lay the foundation for a prosperous and fulfilling future as a homeowner.

The real estate market is constantly evolving, shaped by a multitude of factors ranging from economic indicators to societal changes. As we find ourselves in the midst of 2023, homeowners, buyers, and investors are eager to gain insights into what the rest of the year might hold for the housing market. In this blog, we delve into the Housing Market Forecast for the rest of 2023, as presented in an insightful infographic provided by MyKCM. Let's explore the key trends, predictions, and potential implications for individuals involved in real estate.

Understanding the Current Landscape

Before delving into the forecast, let's take a quick glance at the current state of the housing market. Over the past few years, we've witnessed a dynamic interplay of supply and demand, changing mortgage rates, and shifting demographics. These factors have significantly impacted housing trends and patterns, setting the stage for the projections ahead.

The Housing Market Forecast

The provided infographic highlights several important trends and predictions for the housing market in the latter half of 2023. Here's a breakdown of some key points:

• Home Price Appreciation: The forecast suggests that home prices will continue to appreciate, albeit at a slightly slower pace compared to previous years. This is important information for both sellers and buyers to gauge their expectations realistically.

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• Mortgage Rates: While mortgage rates remain historically low, a gradual upward trend is anticipated for the rest of 2023. This implies that potential homebuyers should consider making decisions sooner rather than later to secure more favorable financing.

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• Inventory Levels: The housing market has been grappling with limited inventory, driving up competition among buyers. The forecast indicates a potential increase in housing inventory, offering some relief to those on the hunt for their dream homes.

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• Demographic Shifts: As the generational landscape evolves, the housing preferences of different age groups also change. Understanding these shifts can provide valuable insights for sellers and developers looking to tailor their offerings to specific demographics.

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• Socioeconomic Factors: Economic indicators, job growth, and consumer confidence play pivotal roles in shaping the housing market. The forecast underscores the importance of staying informed about these factors to make informed decisions.

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Implications and Strategies

Armed with the insights from the forecast, individuals in various real estate roles can formulate effective strategies:

• Sellers: With home prices expected to appreciate, sellers can set competitive yet realistic prices. Highlighting unique features of their properties and leveraging professional marketing techniques can help attract potential buyers.

• Buyers: For prospective buyers, the anticipation of slightly higher mortgage rates underscores the advantage of lending programs to lock in lower rates. The potential increase in inventory also offers more options, requiring careful research and consideration.

• Investors: Real estate investors should closely monitor market shifts and demographic trends to identify lucrative opportunities. Adapting investment strategies to align with evolving housing preferences can enhance the potential for returns.

• Developers: Builders and developers can use the forecast to tailor their projects to meet the changing demands of various age groups. Creating housing options that align with the preferences of the market can lead to more successful ventures.

The Housing Market Forecast for the rest of 2023 provides a comprehensive glimpse into the dynamic landscape that homeowners, buyers, and investors will navigate. By understanding the implications of trends such as home price appreciation, mortgage rate changes, inventory shifts, and demographic preferences, individuals can make informed decisions that align with their goals. Whether you're selling, buying, investing, or developing, staying attuned to the forecasted trends is a crucial step towards success in the ever-evolving real estate market.

In an ever-evolving financial landscape, investment opportunities constantly arise, vying for the attention of potential investors seeking long-term growth and security. Among the plethora of choices, real estate has consistently proven itself as a reliable and lucrative investment vehicle. A recent infographic, sourced from "Freddie Mac" sheds light on why real estate is the best investment option today. In this blog, we will explore the key insights from the infographic and delve into the reasons behind the enduring appeal of real estate as an investment.

1. Stability in Times of Volatility

The infographic highlights that real estate investment offers a sense of stability even during times of economic volatility. Unlike the unpredictable stock market, real estate tends to experience steadier growth over the long term. Property values may fluctuate in the short run, but history has shown that real estate generally appreciates steadily over time, providing investors with a cushion against economic uncertainties.

2. Diversification Benefits

Diversification is a critical component of any successful investment strategy, and real estate provides an excellent means of achieving it. Investors can diversify their portfolios by investing in different types of properties, such as residential, commercial, or industrial real estate. Additionally, properties in diverse locations can help spread risk and reduce the impact of regional economic downturns.

3. Passive Income Generation

One of the most attractive features of real estate investment is the potential for generating passive income through rental properties. By owning and renting out properties, investors can create a reliable and consistent income stream. Moreover, rental income tends to increase over time, making it an effective hedge against inflation.

4. Leverage Opportunities

Real estate offers unique leverage opportunities for investors, allowing them to control a substantial asset with a relatively small upfront investment. By using borrowed capital, or a mortgage, an investor can increase their buying power and potentially amplify their returns. This leverage, when utilized wisely, can significantly enhance the overall profitability of a real estate investment.

5. Tangible Asset with Inherent Value

Unlike other forms of investments, real estate represents a tangible asset with inherent value. Land and properties are physical assets that cannot vanish overnight due to market crashes or economic meltdowns. The land on which a property stands will always have value, providing a level of security that is not easily replicated in other investment avenues.

6. Tax Advantages

Real estate investment offers several tax advantages that can help reduce an investor's overall tax liability. Mortgage interest deductions, property tax deductions, and depreciation deductions are some of the tax benefits that real estate investors can leverage to optimize their tax position.

In conclusion, while real estate continues to shine as a top investment choice, teaming up with a reputable real estate agent amplifies the potential benefits and minimizes the risks associated with property investment. So, as you embark on your journey to secure your financial future through real estate, consider enlisting the expertise of a trusted real estate agent to make the most of this rewarding investment venture. Happy investing!

Concerns about a housing market crash have been circulating, but it's important to note that the current housing market differs significantly from the one we witnessed in 2008. One crucial distinction lies in the variation of lending standards today. Let's delve into the data to substantiate this claim.

The Mortgage Bankers Association (MBA) releases a monthly report known as the Mortgage Credit Availability Index (MCAI). The MCAI serves as a standardized quantitative measure focused exclusively on mortgage credit availability at a given point in time, according to the MBA's website.

Essentially, this index gauges the ease of obtaining a mortgage. The graph below illustrates the MCAI's trajectory since the initiation of data tracking in 2004, showcasing the evolution of lending standards over time. Here's how it functions:

• When lending standards are more lenient, obtaining a mortgage becomes easier, resulting in a higher index value (represented by the green line in the graph).
• Conversely, when lending standards are more stringent, securing a mortgage becomes more challenging, leading to a lower index value.

In 2004, the index hovered around 400. However, by 2006, it had surged to over 850. The situation today paints a contrasting picture. Following the housing crash, the index declined due to tighter lending standards, resulting in increased difficulty in obtaining a mortgage.

Loose lending standards played a significant role in the housing bubble that emerged. During the early 2000s, acquiring a home mortgage was relatively effortless. As Realtor.com explains,

"Plenty of mortgages were granted to individuals who falsified their incomes and employment records, making homeownership feasible for them."

The prominent peak in the aforementioned graph indicates that, preceding the housing crisis, credit was easily accessible, and loan requirements were far from stringent. Lenders were approving loans without thoroughly verifying borrowers' capacity to repay. Consequently, loans were granted to individuals with a higher risk of defaulting on their obligations.

The present lending landscape reflects a marked departure from the past. As Bankrate elucidates, lenders currently impose stringent standards on borrowers, and the majority of those obtaining mortgages possess excellent creditworthiness.

Observing the graph, it becomes apparent that after reaching its peak around the time of the housing crash, the index plummeted dramatically and has since remained low. In fact, the line depicting the index's trajectory is significantly below the standards observed even in 2004, and it continues to decline. Joel Kan, the MBA's VP and Deputy Chief Economist, provided an update in May:

"Mortgage credit availability decreased for the third consecutive month... With the decline in availability, the MCAI is now at its lowest level since January 2013."

The decreasing index indicates that lending standards have become much stricter, demonstrating a clear departure from the extreme lending practices that contributed to the previous crash.

In conclusion, the lead-up to the housing crash witnessed lax lending standards and insufficient evaluation of borrowers' repayment capabilities. In contrast, today's standards are more stringent, reducing risk for both lenders and borrowers. These distinctions highlight the fact that we are currently operating in a housing market markedly dissimilar from the previous episode.

The National Association of Realtors (NAR) is set to release its latest Existing Home Sales (EHS) report soon, which provides information on the sales volume and price trends for previously owned homes. However, this report is likely to show a decline in home prices, which might be confusing for those who have been following other sources claiming that home prices have hit rock bottom and are on the rise again.

The discrepancy in price trends can be attributed to the different methodologies used by various reports. NAR's report focuses on the median sales price, while other sources rely on repeat sales prices. Understanding these approaches is crucial in comprehending the varying conclusions they may draw.

The Center for Real Estate Studies at Wichita State University explains that the median sale price represents the middle value of homes sold, with half of the homes selling at higher prices and the other half at lower prices. For instance, if there is an increase in the number of lower-priced homes sold, the median sale price would decline because the "middle" home in the dataset is now a lower-priced one, even if the value of each individual home is increasing.

On the other hand, repeat sales approaches calculate changes in home prices based on sales of the same property over time. This method avoids the challenge of accounting for price differences in homes with varying characteristics.

The issue with relying solely on the median sales price is that it can lead to different conclusions compared to repeat sales reports, which generally indicate rising prices. Bill McBride, author of the Calculated Risk blog, points out that median prices are influenced by the composition of the sales mix, while repeat sales indexes like Case-Shiller and FHFA are likely better for measuring prices accurately.

To illustrate the discrepancy further, let's consider a simple example of median value. Imagine you have three coins in your pocket: one nickel and two dimes. If you arrange them in ascending order, the median value is 10 cents (the middle coin). However, if you have two nickels and one dime, the median value becomes five cents. Despite the change in median value, the worth of each individual coin remains the same.

This analogy demonstrates why relying solely on the median home price to gauge changes in home values may not provide an accurate picture. While most buyers consider home prices to determine if they fit their budgets, the majority of people purchase homes based on the monthly mortgage payment they can afford, rather than solely focusing on the house's price. When mortgage rates rise, individuals may need to opt for a less expensive home to maintain an affordable monthly housing expense. Consequently, a higher number of "less expensive" houses are sold, leading to a decline in the median price. However, this does not indicate a devaluation of individual homes.

Therefore, when media reports suggest falling prices in the upcoming release, it is crucial to remember the coin analogy. A change in the median price does not necessarily mean a decline in home prices overall. Instead, it reflects the influence of factors such as affordability and current mortgage rates on the mix of homes being sold.

In conclusion, gaining a more comprehensive understanding of home price trends and reports requires consulting with a local real estate professional. Their expertise and insights can provide valuable context and help navigate the nuances of different methodologies and data sources. By relying on expert guidance, individuals can make more informed decisions regarding home purchases and sales in a dynamic real estate market.

When analyzing real estate metrics over time, it can be challenging to draw accurate conclusions, particularly in a dynamic housing market. The presence of market variability can render comparisons less meaningful or accurate, making it essential to consider external factors that may have influenced the outcomes being examined. This article aims to shed light on the pitfalls of comparing current real estate trends to the extraordinary 'unicorn' years and emphasizes the importance of understanding the broader context.

The 'Unicorn' Years: A Definition

The term 'unicorn,' in this context, refers to something greatly desired yet difficult or impossible to find. In the real estate realm, it signifies the extraordinary conditions experienced during the last few years. The COVID-19 pandemic dramatically transformed the industry, leading to a surge in demand for properties featuring home offices and spacious backyards. Factors such as historically low mortgage rates and effective forbearance plans further fueled the market's exceptional performance.

Returning to Normalcy

As the market gradually normalizes, it becomes apparent that the 'unicorn' years were outliers rather than representative of the long-term trends. Comparing the present real estate landscape to those extraordinary periods lacks significance due to the following reasons:

Buyer Demand

While recent headlines may suggest a decline in buyer demand, statistics reveal a different story. Despite a decrease from the 'unicorn' years, the United States continues to witness over 10,000 daily home sales. By comparing current buyer activity to pre-pandemic years, such as 2017-2019, we can recognize that buyer demand remains robust (see graph below).

Home Prices

Attempting to compare today's home price increases to those witnessed during the 'unicorn' years would be misleading. Historical data from Freddie Mac shows that 2020 and 2021 experienced unprecedented appreciation. However, analyzing a graph displaying price trends during more typical years, such as 2017-2019, reveals a return to more normal growth patterns (see graph below).

Foreclosures

Recent headlines highlighting significant increases in foreclosure filings should be interpreted cautiously. Although the percentages may appear alarming, they reflect rises from historically low foreclosure rates. A graph sourced from ATTOM, a property data provider, demonstrates the impact of the foreclosure moratorium ending but also puts the numbers into perspective (see graph below).

Seeking Proper Perspective

In a year likely to be filled with unsettling headlines surrounding the housing market, it is crucial to avoid inappropriate comparisons to the 'unicorn' years. Engaging the services of a knowledgeable real estate professional can provide valuable guidance, enabling you to interpret data accurately and maintain perspective throughout your real estate endeavors.

Conclusion

Comparing real estate metrics requires a nuanced approach, particularly when attempting to draw parallels between the 'unicorn' years and the current market. The extraordinary conditions experienced during the pandemic created unique dynamics that have since normalized. Understanding the limitations of such comparisons empowers buyers, sellers, and industry professionals to make informed decisions and navigate the real estate landscape effectively. Remember, a real estate professional is an invaluable resource to help you contextualize market trends and interpret data accurately.

Mortgage rates have a profound influence on the real estate market and homeowners' financial well-being. Fluctuations in rates can significantly affect affordability, refinancing opportunities, and overall housing market trends. In this blog post, we will delve into the insights provided by an insightful infographic, shedding light on the impact of changing mortgage rates.

Understanding the Infographic: The infographic serves as a visual guide, illustrating how mortgage rates shape homeownership and financial decisions. Let's delve into the key takeaways highlighted in the infographic:

Affordability: Mortgage rates directly impact the affordability of homes. When rates decline, borrowing costs decrease, making homeownership more attainable for prospective buyers. Conversely, rising rates lead to higher monthly mortgage payments, potentially reducing affordability and limiting the pool of qualified buyers.

Refinancing Opportunities: Fluctuating mortgage rates also influence opportunities for homeowners to refinance their existing mortgages. When rates are low, refinancing becomes an enticing option, enabling homeowners to lower monthly payments, reduce long-term interest expenses, or access home equity for other financial goals.

Housing Market Activity: Changes in mortgage rates have a ripple effect on overall activity in the housing market. When rates are low, home sales tend to rise as more buyers enter the market, seeking favorable financing terms. Conversely, higher rates can dampen demand, resulting in slower sales and potentially impacting property values.

Adjustable-Rate Mortgages (ARMs): The infographic touches upon adjustable-rate mortgages (ARMs), which have interest rates that can fluctuate based on market conditions. Homeowners with ARMs should be aware that as rates rise, their monthly mortgage payments may increase, impacting budgeting and financial planning.

Conclusion: The infographic provides a concise visual representation of how changing mortgage rates influence the real estate market and homeownership. Whether you're a prospective buyer, a current homeowner, or a real estate professional, understanding the impact of mortgage rates on affordability, refinancing decisions, and housing market trends is crucial.

It's important to note that mortgage rates are influenced by various factors, including economic conditions, inflation, and government policies. Staying informed about current rates and seeking guidance from mortgage professionals can help you make well-informed decisions when it comes to buying a home or managing your existing mortgage.

As the market evolves, it's essential to regularly assess your financial situation and evaluate how changing mortgage rates may impact your homeownership goals. By staying informed and proactive, you can navigate the mortgage landscape with confidence.

Disclaimer: The information provided in this blog post is for informational purposes only and should not be considered financial or investment advice. Consult with a qualified professional for personalized guidance based on your specific circumstances.

The spring housing market has defied expectations this year, displaying remarkable levels of activity. Despite affordability hurdles and a limited inventory of available homes, buyer demand continues to grow stronger.

One key indicator of active buyers is the increase in showing traffic. The latest data from the ShowingTime Showing Index reveals that more individuals are actively touring homes compared to pre-pandemic levels (refer to the graph below). Although not reaching the buyer frenzy experienced in the past couple of years, the current showing traffic is not far behind. There is a significant number of interested buyers exploring available properties at present.

The question arises: Why are buyers so actively engaged, even with higher mortgage rates compared to last year?

Stronger-Than-Expected Job Market Growth Despite concerns about inflation, repeated hikes in the Federal Funds Rate by the Federal Reserve (Fed), and discussions of a potential recession, the job market continues to exhibit remarkable strength. Surprisingly, it appears to be getting even stronger (refer to the graph below).

Each month, the Bureau of Labor Statistics (BLS) releases data on new job additions to the U.S. job market. The graph above demonstrates that April saw an increase of 88,000 jobs compared to March, surpassing expert projections. This positive trend indicates significant growth in the job market.

Near-Record Low Unemployment Rate Contrary to expectations, the low unemployment rate witnessed in recent years has not raised inflation concerns mounted. In fact, the unemployment rate has reached a 50-year low of 3.4% (refer to the graph below).

With a substantial number of individuals stably employed and financially secure, many are seriously considering homeownership.

What Does This Mean for Sellers?
If you're planning to sell your house this year, the current market conditions with active buyers are highly advantageous. Your home will generate increased interest once it hits the market, particularly given the scarcity of available properties.

To embark on this journey, it is advisable to consult an experienced real estate agent. They will assist you in appropriately pricing your house, navigating offers, negotiating effectively, and minimizing stress and hassle.

Bottom Line There is a considerable pool of buyers actively searching for homes that meet their needs in the current market. This is primarily due to the strength of the job market and the financial stability of many individuals. To capitalize on this momentum and list your house, it is recommended to engage with a trusted real estate agent who can guide you through the process.

Get ready for the latest scoop on home prices as the National Association of Realtors (NAR) gears up to release its Existing Home Sales Report. But hold on tight, because this report might bring some confusion and even raise a few eyebrows. You see, NAR will be reporting the median sales price, while other home price indices focus on repeat sales prices. And guess what? They might tell two different tales.

So, why isn't the median home price the ultimate yardstick for measuring home value appreciation? According to the smart folks at the Center for Real Estate Studies at Wichita State University, it's all about the "composition" of homes that have been sold. You see, the median sale price represents the middle price of homes sold—half sold for more, half sold for less. It's a decent measure of the typical sale price, but not the best for tracking price appreciation. If there's been a recent surge in lower-priced homes selling, it could bring down the median sale price, even if each individual home is gaining value. Sneaky, huh?

Now, here's the thing. People don't buy homes based on their price tag alone; they consider their monthly mortgage payments. When mortgage rates shoot up, folks have to adjust their budget and aim for more affordable homes. That's why you're seeing a surge in "less-expensive" houses being sold, causing the median price to dip. But don't be fooled—this doesn't mean any single house has lost its value.

Even NAR, the organization reporting on median prices, knows there are limitations to this type of data. They openly admit that changes in the mix of sales can mess with the median price data. It's like trying to see the big picture through a distorted lens.

Let's break it down with a simple analogy: Imagine you have three coins in your pocket, lined up in order of value. If you've got one nickel and two dimes, the middle coin—the median value—is ten cents. But if you've got two nickels and one dime, the median value drops to five cents. Yet, here's the twist: each nickel is still worth five cents, and the dime is still worth ten cents. The value of the coins didn't change, right?

The same principle applies to the wild world of real estate. Actual home values are generally on the rise in most markets, despite what the median value reported tomorrow might say. So, if you're hungry for a real understanding of home price movements, don't hesitate to reach out to a local real estate pro who can give you the inside scoop. They'll help you navigate the twists and turns of the housing market with their expert knowledge. Happy house hunting, savvy homebuyer!

If you're considering selling your house, it's important to know that the number of homes for sale is currently low. This season, fewer sellers are listing their houses compared to previous years. Looking back at April since 2017, the only year with even fewer sellers was in 2020 when the pandemic disrupted the housing market. In a typical April, around 500,000 homes are added to the market, but this year saw less than 400,000.

One of the contributing factors to this trend is homeowners being reluctant to move when they have a lower mortgage rate on their current house compared to what they could get for their next house. This creates a "rate lock" situation. A recent survey from Realtor.com revealed that 56% of prospective sellers are waiting for rates to come down before listing their homes.

While this approach is suitable for some sellers, it opens up an opportunity for more eager sellers to enter the market now. If your current house no longer meets your needs and you're ready to move, take advantage of the limited competition. With fewer options available, your house can attract more attention, potentially leading to multiple offers, especially if priced correctly.

Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), explains that inventory levels are still historically low, resulting in multiple offers on many properties.

In conclusion, if you're ready to sell, act swiftly to beat the competition. By doing so, your house can stand out and attract multiple offers. Partnering with a real estate professional will help ensure a successful sale.