market watch | Lake Norman Real Estate

Homeowner’s Equity has Dramatically Increased

June 22, 2022 by Kristen House Leave a Comment

The red-hot housing market we’ve experienced recently has skyrocketed property values…therefore increasing homeowner’s equity.

What does it mean when homeowner’s equity goes up?

Home equity is the difference between what you owe on your mortgage and what your home is currently worth. The more you pay on your mortgage, the more your home’s equity increases. It represents your stake in the property versus the lender’s stake in the property. For most homeowners, over time you home equity will increase as you make mortgage payments.

It’s great to have equity in your home, increasing it will allow you to pay less interest on the loan over time, or even take out home equity loans. Access to these loans are great if you find yourself needing to do a big home improvement project or refinancing a loan when interest rates are low.

What happens to your equity when your home value increases?

Equity can increase over time as your home value increases. The increase may come from a home remodel or merely owning a home in an appreciating real estate market.

Over time, your equity increases as your home’s value increases. in recent times, we’ve seen equity rising as value increases because of the hot housing market. Home values have appreciated significantly during the recent seller’s market. Value can increase even more in areas with highly-sought after properties, or neighborhoods with appreciating value. For example the Charlotte housing market has seen appreciation as high as 25% in the past year (2021-2022) and is forecasted to still rise at a rate of 21% on the next year (2023).

How can I build home equity?

There are three main ways to increase your home’s equity:

Purchasing a home in an appreciating market
- We briefly discussed this point in the paragraph above, but this point should not be ignored. While we can’t exactly predict which markets will appreciate the most, it’s important to look into previous year’s housing index for a given area to evaluate just how much these markets have increased in values
Paying off more of your mortgage
- If equity is important to your home-owning goals, try to pay as much towards your down payment as possible. You’ll be required to borrow less money than if you offered a small down payment, this will give you instant home equity. You can also pay extra on your mortgage when you can, just beware of prepayment penalties.
Make home improvements
- The two home improvements that increase value the most are kitchen and bathroom remodels, but understand that not all improvements need to be huge, expensive ones. Keep curb appeal in mind- and while you’re at it read our post about how to increase your home’s curb appeal.

Homeowner’s equity increases in 2022

During the first quarter of 2022, home equity increased significantly. However, experts are predicting this trend will slow during the rest of the year. At the beginning of 2022, home owners had a national average if $178,000 in equity, making owners “equity rich”. If you’re looking to tap into you home’s equity in order to renovate, pay off high interest debt, or sell your home while value is high, don’t delay!

Buyer’s vs. Seller’s Market

June 13, 2022 by Kristen House Leave a Comment

Buyer’s vs. Seller’s Market

When should I sell my house? When should I buy a house? Should I wait for prices to go down? Do we wait for a seller’s market or buyer’s market? We’ve heard a lot of these questions in the past few years, so we decided to put our answers here, but readers beware: the best time to buy or sell is when you’re ready.

What is the difference between a buyer’s and seller’s market?

To make it simple: a seller’s market happens when there are more buyers than there are houses for sale. On the other hand, a buyer’s market occurs when there’s an excess of homes for sale and fewer buyers looking to scoop one up. Let’s do a slightly deeper dive:

Buyer’s Market:

In a buyer’s market, potential buyers will most likely spend a lot more time shopping around for home and weighing their options, as there is no need to be in a rush. There is plenty of inventory on the market and more options to consider. Home prices are usually stable, or even dropping as buyers have more leverage.

Seller’s Market:

In a seller’s market, the prices of homes will likely increase, as sellers can expect multiple offers or even bidding wars on their homes. The seller holds more negotiating power and the lack of inventory on the market can help them leverage the price.

Is a seller’s market a good thing?

A seller’s market is a great thing for sellers, but buyers…not so much. It isn’t a bad idea to buy a home during a seller’s market, as sometimes influencing factors can favor the buyers. However, since sellers can raise their prices due to the lack of inventory, buyers may not be able to afford the high prices. Buyers must also compete with each other for bidding on a home, and some may outbid others by a large margin to make sure they secure the home.

For sellers, a seller’s market is great! It is very likely that their home will sell very quickly, as there are more buyers than sellers. Sellers are also very likely to get top dollar for the sale of their home, and may receive multiple offers.

Is it better to wait for a buyer’s market?

Waiting out a seller’s market is a risky game to play. While it is true that inventory will rise and builders catch up with demand, it isn’t likely that home prices will fall significantly. If you’re truly eager to buy a home as soon as possible, don’t hold out hope that prices will drop as interest rates continue to increase. However, don’t let FOMO (fear of missing out) drive your desire to buy quickly if you’re truly not ready to buy a home. Just because the market is hot, doesn’t mean you need to play a role in it.

When it comes to the timing of buying a home, don’t follow the market. Follow your finances. If you’re credit score is lower than you’d like, or you don’t have a down payment saved, or if your debt-to-income ration is high? Wait it out. Your positioning is far more important to your homebuying experience than what the market is doing.

Read one of our recent posts: Is competition slowing?

Is Competition Finally Slowing?

June 3, 2022 by Kristen House Leave a Comment

The housing market has thrown a lot of curveballs at buyers and sellers alike in the past two years, but perhaps the tide is turning.

Reasons to believe the market is shifting

During the year 2020, active listings in the United States declined throughout the year. 2021 followed the same trend, with the number of active listings continuing to fall. In years before, the number of active listings tends to rise in the spring, and generally fall again into the winter months.

2022 is already proving to be totally different than previous years, as right now the number of active listings is going UP, rather than following trends in years past.

Here’s a handy graphic to illustrate what we’re talking about:

For a more comprehensive understanding of what’s happening here, visit Realtor.com’s article

On top of unusual listing activity, we are seeing a shift in demand as well.

“April buyer activity was rather unusual, since it typically matches March levels,” said ShowingTime Vice President and General Manager Michael Lane. “But this year, April traffic was slower across all markets, pointing to competition softening. It contrasts with last year’s dynamic, when demand reached a feverish peak in April.”

The ShowingTime Showing Index® measures showing traffic per residential property for sale
by agents and brokers utilizing ShowingTime solutions for property-access management.

By using this graphic we can see that the number of traffic per property fell by nearly 12%. Fewer buyers are interested than buyers in years past.

Check out a recent post: Is the Housing Market Correcting?

Is the Housing Market Correcting?

May 31, 2022 by Kristen House Leave a Comment

The housing market has been volatile in the past 2 years, with huge changes happening nearly overnight. On the bright side, everything that goes up must come down, and we are on the precipice of a housing marketing correction!

What is a Housing Bubble and Are We in One?

What is a housing bubble?

A housing bubble is a run-up in housing prices due to economic circumstances. Usually the factors that will cause a housing bubble will include demand, speculation, and overspending on property. The current housing market could be considered to be experiencing a bubble, but the reasons are slightly different than housing bubbles in the past.

Our current ‘bubble’ can be attributed to the COVID-19 pandemic, rising costs of building materials, and low interest rates for those looking to secure a mortgage. Additionally, investors buying up large quantities of property have influenced the behavior of our current market, decreasing inventory and driving up demand.

Luckily for prospective homebuyers, housing bubbles are temporary, and most real estate experts do not believe we are truly experiencing a housing bubble in 2022. For example, in 2008: hedge funds and banks were encouraging home ownership so fervently that rules and regulations were eased to get people into mortgages, unvetted borrowers lost their homes as they were allowed to borrow more than they could afford.

Are we truly seeing a housing bubble in NC? Read more here.

Will House Prices Drop In 2022?

There’s no denying that home prices have surged over the past few years, but are we coming to the end of that trend? Prices increased by 11% in 2020, 18.8% in 2021, and while we’re still gathering data about 2022, experts project that prices will have increased by nearly 11% by the end of 2022.

Based on that prediction, increases in home prices are expected to level out. Rising interest rates will significantly correct these rising prices.

While experts are forecasting more affordable housing over the next few years, it may be 2025 before we are able to experience that fully.

Is the Housing Market Due for Correction?

The housing market is a great example of why rising interest rates are not always a bad thing, in fact it could be the saving grace for homebuyers. Chief economist from Moody’s Financial Data Services, Mark Zandi, claims that we have moved from a housing boom into a housing correction. New home sales have fallen over 19% nationally, and nearly 20% of home listings have cut their initial asking price.

When the housing market peaks, which we have reason to believe it has, it will always be followed by a correction. The Fed has increased mortgage rates to combat inflation, which will very likely trigger a cooling off of the housing market. Read more about the housing market cooling off here.

We’re still technically in a seller’s market, so if you’re looking to sell your home- read this first!

Does Inflation Help Homeowners?

April 27, 2022 by Christy Walker Leave a Comment

Does Inflation Help Homeowners?

Does inflation affect home prices?

There is a true link between any good with a limited supply and inflation. This means that when there are fewer properties available prices will be more expensive than if there were a multitude of properties available.

Of course, there are several factors that will affect home prices, such as demand. One of the biggest factors that will increase demand is interest rates. When interest rates are low and home buying can be considered more affordable, the demand for available properties increases. However, if the supply of homes of constant but demand stay the same, prices of homes will increase.

Prospective home buyers in larger cities feel this effect more strongly, as there is usually less available properties.

Is home ownership good during inflation?

There are many benefits to owning a home during a volatile economy. Buying a home and locking in your financing can help stabilize what is probably your largest expense, housing. If you’re able to get a fixed rate for your mortgage, your housing expenses will be consistent for up to 15-30 years!

Even when housing prices and mortgage rates increase, buying a home can set you up for long-term stability and success-. Even if you buy today you’ll be protected from increasing costs in the future. During times of inflation, it’s imperative that you invest money into assets that will appreciate in value, rather than losing value over time. Most experts project that mortgage rates will continue to increase throughout 2022, so locking in rates as soon as possible has never been more important.

Inflation and real estate 2022

Experts are projecting that mortgage rates and prices will continue to rise throughout the end of 2022, so there’s never been a more opportune time to lock in your rate and find your dream home. Keep in mind that demand and bidding wars may increase as other home buyers attempt to get ahead of price increases.

Blog content from Investopedia, Keeping Current Matters & Market Watch

The #1 Reason To Sell Your House In 2022

March 4, 2022 by Christy Walker Leave a Comment

The #1 Reason to Sell Your House in 2022

Almost every industry is currently struggling with supply chain disruptions. This also applies to the current U.S. housing market, where buyer demand far exceeds housing supply.

Purchaser demand is very strong right now. The National Association of Realtors (NAR) just released their latest Existing Home Sales Report which reveals that sales surged in January. Existing home sales rose to a seasonally adjusted annual rate of 6.5 million – an increase of 6.7% from the prior month, with sales up in all regions. You may be asking yourself, should I sell my house in 2022? We say absolutely! However, there’s one big challenge.

Inventory Is At An All-Time Low

Because purchaser demand is so high, the market is running out of available homes for sale. The above-mentioned report states that the current months’ supply of inventory of homes for sale has fallen to 1.6 months. This prompts Lawrence Yun, Chief Economist at NAR, to say:

“The inventory of homes on the market remains woefully depleted, and in fact is currently at an all-time low.”

Earlier this month, realtor.com released their inventory data for January. It helps confirm this point. Here’s a graph comparing inventory levels for January over the last six years:

As the graph shows, new listings coming on the market have decreased over the last four years (shown in blue in the graph). The graph also reveals that carry-over inventory has plummeted in recent years. This is because listings are now sold so quickly, they don’t stay on the market long enough to carry over month-to-month (shown in green in the graph). In other words, homes are not staying on the market for months as they had prior to the pandemic. In the report mentioned above, NAR reveals that:

“Seventy-nine percent of homes sold in January 2022 were on the market for less than a month.”

Odeta Kushi, Deputy Chief Economist at First American, explains it like this:

“A higher velocity of sales (lower [Days on Market]) helps to explain a housing market characterized by both higher sales & lower inventory. Many resale transactions are happening so quickly that they ‘flow’ in & then out of the ‘stock’ between the fixed monthly measurement of inventory.”

Should I Sell My House in 2022?

Anyone thinking of putting their home on the market shouldn’t wait. A seller will always negotiate the best deal when demand is high and supply is limited. That’s exactly the situation in the real estate market today.

Later this year, inventory (and by extension, your competition) will increase as many homeowners are waiting to put their homes on the market in the spring and early summer.

In addition, Len Kiefer, Deputy Chief Economist at Freddie Mac, says:

“Housing starts start off 2022 strong, just edging out 2021 for most in January since 2006.”

As these newly built homes are completed, they will also become competition for your house. This gives you a tremendous opportunity right now. Don’t wait for that increase in competition in your area. If you want to sell in 2022 and are ready to start the process, today is the day to list your house.

Bottom Line

Reach out to us to get your house on the market at this optimal time to sell! 2022 should you your year to sell your house!

Blog Content By Keeping Current Matters – Originally Published 2/24/22