Home Price Appreciation Is Skyrocketing in 2021. What About 2022?

September 14th, 2021

Home Price Appreciation Is Skyrocketing in 2021. What About 2022? | MyKCM

One of the major story lines over the last year is how well the residential real estate market performed. One key metric in the spotlight is home price appreciation. According to the latest indices, home prices are skyrocketing this year.

Here are the latest percentages showing the year-over-year increase in home price appreciation:

The dramatic increases are seen at every price point and in all regions of the country.

Increases Are Across Every Price Point

According to the latest Home Price Index from CoreLogic, each price range is seeing at least a 19% increase year-over-year:Home Price Appreciation Is Skyrocketing in 2021. What About 2022? | MyKCM

Increases Are Across Every Region in the Country

Every region in the country is experiencing at least a 14.9% increase in home price appreciation, according to the Federal Housing Finance Agency (FHFA):Home Price Appreciation Is Skyrocketing in 2021. What About 2022? | MyKCM

Increases Are Across Each of the Top 20 Metros in the Country

According to the U.S. National Home Price Index from S&P Case-Shiller, every major metro is seeing at least a 13.3% growth in prices (see graph below):Home Price Appreciation Is Skyrocketing in 2021. What About 2022? | MyKCM

What About Price Appreciation in 2022?

Prices are the result of the balance between supply and demand. The demand for single-family homes has been strong over the last 18 months. The supply of houses available for sale was near historic lows. However, there’s some good news on the supply side. Realtor.com reports:

“432,000 new listings hit the national housing market in August, an increase of 18,000 over last year.”

There will, however, still be a shortage of supply compared to demand in 2022. CoreLogic reveals:

“Given the widespread demand and considering the number of standalone homes built during the past decade, the single-family market is estimated to be undersupplied by 4.35 million units by 2022.”

Yet, most forecasts call for home price appreciation to moderate in 2022. The Home Price Expectation Survey, a survey of over 100 economists, investment strategists, and housing market analysts, calls for a 5.12% appreciation level next year. Here are the 2022 home appreciation forecasts from the four other major entities:

  1. The National Association of Realtors (NAR): 4.4%
  2. The Mortgage Bankers Association (MBA): 8.4%
  3. Fannie Mae: 5.1%
  4. Freddie Mac: 5.3%

Price appreciation is expected to slow in 2022 when compared to the record highs of 2021. However, it is still expected to be greater than the annual average of 4.1% over the last 25 years.

Bottom Line

If you owned a home over the past year, you’ve seen your household wealth grow substantially, and you’ll see another nice boost in 2022. If you’re thinking of buying, consider buying now as prices are forecast to continue increasing through at least next year.

For Week Ending August 28, 2021

September 8th, 2021

Pending sales were down for a second straight month, falling 1.8% in July, according to the National Association of REALTORS®, as stiff competition for homes and high sales prices have discouraged some would-be buyers. Home prices have been soaring during the pandemic, with the S&P Corelogic Case-Shiller national home price index reporting that prices rose 18.6% nationally in June, the largest annual increase in the history of the index since 1987.

 

In the Twin Cities region, for the week ending August 28:

  • New Listings decreased 10.6% to 1,621
  • Pending Sales decreased 8.6% to 1,463
  • Inventory decreased 17.8% to 8,014

 

For the month of July:

  • Median Sales Price increased 11.9% to $350,000
  • Days on Market decreased 53.7% to 19
  • Percent of Original List Price Received increased 3.5% to 103.6%
  • Months Supply of Homes For Sale decreased 30.0% to 1.4

All data from NorthstarMLS. Provided by Minneapolis Area REALTORS®. Report © 2020 ShowingTime.

Reasons You Should Consider Selling This Fall

September 7th, 2021

 

Reasons You Should Consider Selling This Fall | MyKCM

If you’re trying to decide when to sell your house, there may not be a better time to list than right now. The ultimate sellers’ market we’re in today won’t last forever. If you’re thinking of making a move, here are four reasons to put your house up for sale sooner rather than later.

1. Your House Will Likely Sell Quickly

According to the Realtors Confidence Index released by the National Association of Realtors (NAR), homes continue to sell quickly – on average, they’re selling in just 17 days. As a seller, that’s great news for you.

Average days on market is a strong indicator of buyer demand. And if homes are selling quickly, buyers have to be more decisive and act fast to submit their offer before other buyers swoop in.

2. Buyers Are Willing To Compete for Your House

In addition to selling quickly, homes are receiving multiple offers. That same survey shows sellers are seeing an average of 4.5 offers, and they’re competitive ones. The graph below shows how the average number of offers right now compares to previous years:Reasons You Should Consider Selling This Fall | MyKCMBuyers today know bidding wars are a likely outcome, and they’re coming prepared with their best offer in hand. Receiving several offers on your house means you can select the one that makes the most sense for your situation and financial well-being.

3. When Supply Is Low, Your House Is in the Spotlight

One of the most significant challenges for motivated buyers is the current inventory of homes for sale. Though it’s improving, it remains at near-record lows. The chart below shows how today’s low inventory stacks up against recent years. The lighter the blue is in the chart, the lower the housing supply.Reasons You Should Consider Selling This Fall | MyKCMIf you’re looking to take advantage of buyer demand and get the most attention for your house, selling now before more listings come to the market might be your best option.

4. If You’re Thinking of Moving Up, Now May Be the Time

If your current home no longer meets your needs, it may be the perfect time to make a move. Today, homeowners are gaining a significant amount of wealth through growing equity. You can leverage that equity, plus current low mortgage rates, to power your move now. But these near-historic low rates won’t last forever.

Experts forecast interest rates will rise. In their forecast, Freddie Mac says:

“While we forecast rates to increase gradually later in the year, we don’t expect to see a rapid increase. At the end of the year, we forecast 30-year rates will be around 3.4%, rising to 3.8% by the fourth quarter of 2022.”

When rates rise, even modestly, it’ll impact your monthly payment and by extension your purchasing power.

Bottom Line

Don’t delay. The combination of housing supply challenges, low mortgage rates, and extremely motivated buyers gives sellers a unique opportunity this season. If you’re thinking about making a move, let’s chat about why it makes sense to list your house now.

The Difference in Net Worth Between Homeowners and Renters Is Widening

August 30th, 2021

The Difference in Net Worth Between Homeowners and Renters Is Widening | MyKCM

Becoming financially secure is an important goal for many people today, but some don’t realize just how much homeownership can help them achieve that dream. A recent report, The Journey Toward Financial Freedom, surveys Americans about their perspective on financial wellness and their goals. It shows there may be a significant misconception about the role owning a home plays in building wealth:

“Home ownership is one of the indicators Americans say is least connected to financial health.”

Two major personal wealth goals – homeownership and net worth – work hand-in-hand. Below are just a few reasons why, if you’re looking for financial security, homeownership should be a top priority.

Homeownership Is an Important Cornerstone of Building Wealth

Every three years, the Federal Reserve releases the Survey of Consumer Finances which highlights the difference in wealth between homeowners and renters. The graph below shows the findings across the previous surveys including the latest data (2019), and the results are staggering:The Difference in Net Worth Between Homeowners and Renters Is Widening | MyKCMAs the graph illustrates, the gap between homeowners and renters continues to widen. That’s because homeownership contributes massively to an individual’s overall net worth. Odeta Kushi, Deputy Chief Economist at First Americanhighlights this idea:

“. . . between 2016 and 2019, housing wealth was the single biggest contributor to the increase in net worth across all income groups . . . .”

When we look even closer at the most recent data from 2019, the average homeowner’s net worth is more than 40 times greater than that of the average renter (see graph below):The Difference in Net Worth Between Homeowners and Renters Is Widening | MyKCMThe gap exists in large part because homeowners build equity as their home appreciates in value and they pay off a portion of their mortgage each month. When you own your home, your monthly mortgage payment is, in essence, forced savings that come back to you when you sell your home or refinance. As a renter, you’ll never see a return on the money you pay out in rent every month.

If you’re ready to start building your net worth, the current real estate market offers several opportunities you should consider. For example, with today’s low mortgage rates, your purchasing power may be higher now than it has been in some time. That means there may be no better time than now to start working towards your homeownership goals – especially since rates are anticipated to rise in the coming months.

Bottom Line

Owning a home provides one of the strongest foundations for building individual wealth and lasting financial security. If you’re ready to start your path towards homeownership, let’s connect today.

What Do Experts Say About Today’s Mortgage Rates?

August 23rd, 2021

What Do Experts Say About Today’s Mortgage Rates?

What Do Experts Say About Today’s Mortgage Rates? | MyKCM

Mortgage rates are hovering near record lows, and that’s good news for today’s homebuyers. The graph below shows mortgage rates dating back to 2016 and where today falls by comparison.What Do Experts Say About Today’s Mortgage Rates? | MyKCMGenerally speaking, when rates are low, you can afford more home for your money. That’s why experts across the industry agree – today’s low rates present buyers with an incredible opportunity. Here’s what they have to say:

Sam Khater, Chief Economist at Freddie Macpoints out the historic nature of today’s rates:

“As the economy works to get back to its pre-pandemic self, and the fight against COVID-19 variants unfolds, owners and buyers continue to benefit from some of the lowest mortgage rates of all-time.”

Mark Fleming, Chief Economist at First Americantalks about how rates impact a buyer’s bottom line:

“Mortgage rates are generally the same across the country, so a decline in mortgage rates boosts affordability equally in each market.”

Danielle Hale, Chief Economist at realtor.com, also notes the significance of today’s low rates and urges buyers to carefully consider their timing:

Those who haven’t yet taken advantage of low rates to buy a home or refinance still have the opportunity to do so this summer.”

Hale goes on to say that buyers who don’t act soon could see higher rates in the coming months, negatively impacting their purchasing power:

“We expect mortgage rates to fluctuate near historic lows through the summer before beginning to climb this fall.”

And while mortgage rates are still low today, the data from Freddie Mac indicates rates are fluctuating ever so slightly right now, as they moved up one week before inching slightly back down in their latest release. It’s important to keep in mind the influence rates have on your monthly mortgage payment.

Even small increases can have a big impact on what you pay each month. Trust the experts. Today’s rates give you opportunity and flexibility in what you can afford. Don’t wait on the sidelines and hope for a better rate to come along; the rates we’re seeing today are worth capitalizing on.

Bottom Line

Mortgage rates hover near record lows today, but experts forecast they’ll rise in the coming months. Waiting could prove costly when that happens. Let’s connect today to discuss today’s rates and determine if now’s the time for you to buy.

Twin Cities Housing Market Update – for the week ending July 31, 2021

August 11th, 2021

The percentage of first-time home buyers fell to 31% in June, the lowest level in more than 3 decades, according to the National Association of REALTORS®. Cash offers, bidding wars, and soaring home prices are making it increasingly difficult for first-time buyers to compete in a market with record low inventory and declining housing affordability, even as 30-year mortgage rates dropped below 3 percent for the first time since February.

In the Twin Cities region, for the week ending July 31:

  • New Listings decreased 1.6% to 1,832
  • Pending Sales decreased 10.4% to 1,476
  • Inventory decreased 25.9% to 7,427 For the month of June:
  • Median Sales Price increased 14.8% to $350,000
  • Days on Market decreased 52.4% to 20
  • Percent of Original List Price Received increased 4.5% to 104.1%
  • Months Supply of Homes For Sale decreased 42.9% to 1.2

Mortgage Rates have Dropped again! Time to Refinance!

August 11th, 2021

Ready To Sell, but Don’t Know Where You’ll Go?

August 11th, 2021

Ready To Sell, but Don’t Know Where You’ll Go? [INFOGRAPHIC] | MyKCM
Some Highlights

  • If you’re thinking of selling your house but don’t know what you should buy, you have options.
  • Existing homes offer a wide variety of home styles, an established neighborhood, and lived-in charm. Meanwhile, new home construction lets you create your perfect home, cash in on energy efficiency, and minimize repairs.
  • Whether you’re looking for newly built or existing homes, both have their perks. If you’re ready to sell your house, let’s connect today to go over the perks of both existing and newly built homes to find out what’s right for you.

Sellers: Make Today’s Home Price Appreciation Work for You

August 4th, 2021

Sellers: Make Today’s Home Price Appreciation Work for You | MyKCM

Home prices continue to rise as we move through the summer, and that’s good news for sellers who are looking to maximize their home’s potential. If you’re on the fence about whether to list your house now or later, the question you should really ask is: will this price appreciation last?

Here’s what three leading industry experts have to say about what lies ahead:

Lawrence Yun, Chief Economist, National Association of Realtors (NAR):

“At a broad level, home prices are in no danger of a decline due to tight inventory conditions, but I do expect prices to appreciate at a slower pace by the end of the year.”

Selma Hepp, Deputy Chief Economist, CoreLogic:

“The imbalance between robust demand and dismal availability of for-sale homes has led to a continual bidding over asking prices, which reached record levels in recent months . . . . Nevertheless, with more new listings and new home construction, home price acceleration that has built momentum, and continues to reach new highs, will likely slow later this summer but remain in double digits.”

George Ratiu, Chief Economist, realtor.com:

Many sellers are going to take advantage of higher prices. This summer is going to signal the move to the next chapter, and this will very much be the year they’re going to put their home on the market.”

What It Means for You:

The experts agree that the summer months give sellers a great opportunity to capitalize on today’s home prices. And while prices aren’t expected to depreciate, the rise in prices is forecast to moderate over the next few years. That means selling your house today could set you up for a bigger win.

 

Listen to the experts. If you’re ready to make a move, let’s connect to discuss selling your house sooner rather than later so you can take advantage of today’s home price appreciation before it moderates.

4 Major Incentives To Sell This Summer

July 14th, 2021

4 Major Incentives To Sell This Summer | MyKCM

While the housing market forecast for the second half of the year remains positive, there may not be a better time to sell than right now. Here are four things to consider if you’re trying to decide if now’s the right time to make a move.

1. Your House Will Likely Sell Quickly

According to the most recent Realtors Confidence Index released by the National Association of Realtors (NAR), homes continue to sell quickly. The report notes homes are selling in an average of just 17 days.

Average days on market is a strong indicator of buyer competition, and homes selling quickly is a great sign for sellers. It’s one of several factors that indicate buyers are motivated to do what it takes to purchase the home of their dreams.

2. Buyers Are Willing To Compete for Your House

In addition to selling fast, homes are receiving multiple offers. NAR reports sellers are seeing an average of 5 offers, and these offers are competitive ones. Shawn Telford, Chief Appraiser at CoreLogicsaid in a recent interview:

The frequency of buyers being willing to pay more than the market data supports is increasing.

This confirms buyers are ready and willing to enter bidding wars for your home. Receiving several offers on your house means you can select the one that makes the most sense for your situation and financial well-being.

3. When Supply Is Low, Your House Is in the Spotlight

One of the most significant challenges for motivated buyers is the current inventory of homes for sale, which while improving, remains at near-record lows. As NAR details:

“Total housing inventory at the end of May amounted to 1.23 million units, up 7.0% from April’s inventory and down 20.6% from one year ago (1.55 million). Unsold inventory sits at a 2.5-month supply at the present sales pace, marginally up from April’s 2.4-month supply but down from 4.6-months in May 2020.”

There are signs, however, that more homes are coming to market. Odeta Kushi, Deputy Chief Economist at First Americannotes:

“It looks like existing inventory is starting to inch up, which is good news for a housing market parched for more supply.

If you’re looking to take advantage of buyer demand and get the most attention for your house, selling now before more listings come to the market might be your best option.

4. If You’re Thinking of Moving Up, Now May Be the Time

Over the past 12 months, homeowners have gained a significant amount of wealth through growing equity. In that same period, homeowners have also spent a considerable amount of time in their homes, and many have decided their house doesn’t meet their needs.

If you’re not happy with your current home, you can leverage that equity to power your move now. Your equity, plus current low mortgage rates, can help you maximize your purchasing power.

But these near-historic low rates won’t last forever. Experts forecast interest rates will increase in the coming months. Nadia Evangelou, Senior Economist and Director of Forecasting at NARsays:

“Nevertheless, as the economic outlook for the United States looks brighter for the rest of the year, mortgage rates are expected to rise in the following months.”

As interest rates rise, even modestly, it could influence buyer demand and your purchasing power. If you’ve been waiting for the best time to sell to fuel your move up, you likely won’t find more favorable conditions than those we’re seeing today.

 

With supply challenges, low mortgage rates, and extremely motivated buyers, sellers are well-positioned to take advantage of current market conditions right now. If you’re thinking about selling, let’s connect today to discuss why it makes sense to list your home sooner rather than later.