Tami Savage, Realtor

Your Key to a New Lifestyle

This Isn’t a Bubble. It’s Simply Lack of Supply.

By Tami Savage

Are we in a housing bubble? According to NAR Chief Economist Lawrence Yun, this "...is not a bubble. It is simply lack of supply." Source: Axios

Some Highlights

  • In a recent article, Lawrence Yun, Chief Economist for the National Association of Realtors (NAR), discussed the state of today’s housing market.
  • When addressing whether or not today’s high buyer competition and rising home prices are evidence of a housing bubble, Yun said that this “is not a bubble. It is simply lack of supply.”
  • Today’s housing market is healthy, and rising prices are driven by real buyer demand. Let’s connect to talk about the best ways to navigate such an energetic market.

Don’t Be Fooled by Remarkable Real Estate Headlines

By Tami Savage

Don’t Be Fooled by Remarkable Real Estate Headlines

Don’t be impressed by the headlines reporting year-over-year housing numbers for the next several months (data covering March, April, May, and June). The data will most likely show eye-popping one-year increases.

While the year-over-year jumps will certainly be striking, consumers should take these numbers with a grain of salt, as the situation highlights a short-term quirk in the reporting of this data. Essentially, the increases will reflect a combination of two things: sharply lower housing numbers during last year’s virus-related market collapse and the subsequent strong rebound. This will result in what will appear to be unbelievable growth.

Let’s use single-family home sales as an example:

Single-Family sales will show unbelievable increases compared to March, April, May, and June of Last Year. Seasonally adjusted annual rate in millions. Last spring’s buying market was anything but typical. Instead of sales increasing, they fell sharply as a result of stay-at-home orders that virtually shut the real estate industry down. Source: NAR

As the graph reveals, last spring’s buying market was anything but typical. Instead of sales increasing, they fell sharply as a result of stay-at-home orders that virtually shut the real estate industry down.

This spring’s real estate market will bounce back with more normal seasonal sales increases. The percentage increase in sales will be astronomical – not because sales have skyrocketed, but instead because they will be compared to last year’s low numbers.

Bottom Line

There are likely to be some sensational headlines about real estate over the coming months. However, don’t be fooled. The actual story is that the real estate market is finally back to normal.

Planning to Move? You Can Still Secure a Low Mortgage Rate on Your Next Home

By Tami Savage

Planning to Move? You Can Still Secure a Low Mortgage Rate on Your Next Home

This year, mortgage rates have started to slowly climb above recent record-breaking lows. Many homeowners planning to move may feel like they’ve missed the chance to score a great rate on their next mortgage. In reality, there’s still time to secure a rate far below the historic norm. Here’s why.

After creeping up for seven consecutive weeks, average mortgage rates have dropped more recently (See graph below). With rates taking a slight dip over the past two weeks at the same time the inventory of houses for sale is so low, homeowners today are sitting in the optimal seat to sell. What’s the advantage of selling your house now? Securing a low mortgage rate on your next home.

Mortgage Rates based on Freddic Mac 30-Year Fixed Rate was on the rise in Febrary but has started to decline again in April. Source: Freddie Mac

To take advantage of today’s real estate market, experts are encouraging homeowners to act now before interest rates climb. Danielle Hale, Chief Economist at realtor.com, explains:

“…mortgage rates slid for a second week … but we don’t expect rates to stay at this level for too long.”

Hale continues to say:

“For sellers, getting in early optimizes odds of a quick sale at a good price before there’s too much competition, but that means acting now … In this environment, sellers probably really can’t go wrong, and that’s especially true in the nation’s hottest housing markets where homes are selling quickly and getting the greatest number of viewers online.”

Most experts agree that rates will continue to trend upward. Sam Khater, Chief Economist at Freddie Mac, states:

“Despite the pause in mortgage rates recently, we expect them to increase modestly for the remainder of this year.”

In addition, Freddie Mac recently released their Quarterly Forecast, which notes:

“We forecast that mortgage rates will continue to rise through the end of next year. We estimate the 30-year fixed mortgage rate will average 3.4% in the fourth quarter of 2021, rising to 3.8% in the fourth quarter of 2022.” (See graph below):

Mortgage Rates based on Freddie Mac 30-Year Fixed Rate is projecting the increase to continue to rise in 2022. Source: Freddie Mac

While buyers everywhere want to secure the lowest rate possible, it’s important to remember that today’s rates are still much lower than the historic norm. Odeta Kushi, Deputy Chief Economist at First American, emphasizes:

“While mortgage rates have trended up in recent months, they are still historically low, so relative to one year ago, housing actually is still more affordable and that’s really thanks to this low mortgage rate environment we find ourselves in.”

Bottom Line

If you’re thinking of moving, don’t miss the opportunity to score a great rate on your next home mortgage. Let’s connect today so you can get your house ready to sell and find your dream home while mortgage rates are still low.

82,338 Great Reasons to Buy a Home Today

By Tami Savage

82,338 Great Reasons to Buy a Home Today

The financial benefits of buying a home as compared to renting one are always up for debate. However, one element of the equation is often ignored – the ability to build wealth as a homeowner.

Most experts are calling for home prices to continue appreciating over the next several years. The most recent Home Price Expectation Survey, a survey of over one hundred economists, real estate experts, and investment and market strategists, expects home appreciation to increase as follows:

  • 2021: 6%
  • 2022: 4.5%
  • 2023: 4%
  • 2024: 3.6%
  • 2025: 3.5%

Using their annual projections, the graph below shows the equity build-up a purchaser could earn, using a $350,000 home as an example:

$82,338 potential growth in household wealth over the next five years based solely on increased home equity if you purchased a $350k home in January 2021. Source: Home Price Expectation Survey 2021 Q1

A homeowner could increase their net worth by over $80,000 in five years. That’s an average of $16,000 annually. That number should be in any equation determining the financial benefits of owning a home compared to renting.

Bottom Line

Homeowners are going to make a substantial amount of money in home equity over the next five years. If you’re ready to buy a home, let’s connect so you can enjoy this great benefit as well.

How Much Time Do You Need To Save for a Down Payment?

By Tami Savage

How Much Time Do You Need To Save for a Down Payment?

One of the biggest hurdles homebuyers face is saving for a down payment. As you’re budgeting and planning for your home purchase, you’ll want to understand how much you’ll need to put down and how long it will take you to get there. The process may actually move faster than you think.

Using data from the U.S. Department of Housing and Urban Development (HUD) and Apartment List, we can estimate how long it might take someone earning the median income and paying the median rent to save up for a down payment on a median-priced home. Since saving for a down payment can be a great time to practice budgeting for housing costs, this estimate also uses the concept that a household should not pay more than 28% of their total income on monthly housing expenses.

According to the data, the national average for the time it would take to save for a 10% down payment is right around two and a half years (2.53). Residents in Iowa can save for a down payment the fastest, doing so in just over one year (1.31). The map below illustrates this time (in years) for each state:

Years to save a 10% down payment. U.S. is 2.53 Years. Source: Keeping Current Matters

What if you only need to save 3%?

What if you’re able to take advantage of one of the 3% down payment programs available? It’s a common misconception that you need a 20% down payment to buy a home, but there are actually more affordable options and down payment assistance programs available, especially for first-time buyers. The reality is, saving for a 3% down payment may not take several years. In fact, it could take less than a year in most states, as shown in the map below:

Years to save a 3% Down Payment. U.s. is .76 Years. Source: Keeping Current Matters

Bottom Line

Wherever you are in the process of saving for a down payment, you may be closer to your dream home than you think. Let’s connect to explore the down payment options available in our area and how they support your plans.

Are Forbearances Going to Cause a Market Crash? (April 2021 Housing Market Update)

By Tami Savage

Transcript:

Are forbearances going to cause a market crash?

Hi, I'm Tami Savage with eXp Realty.

As of February 14th, it looks like we're in pretty good shape based on the information from The Mortgage Bankers Association.

84% of people who entered into forbearance are either out of forbearance or working through it to set up repayment plans.

Of that 84%, 50.8% have paid off their mortgage. 33.6% have worked out a repayment plan, which leaves us with 15.6% that are still in trouble.

It's important to understand what's happening with forbearances.

Since May, the numbers have continued to go down.

And as of April 12th, 4.66% of all mortgages are still in forbearance.

We keep hearing all this information in the news about how we're going to crash because the number of forbearances is so high.

But if you look at the real facts, that just isn't true.

In fact, in 2021 the experts are forecasting on average an increase of 5.9% appreciation in home prices for 2021.

Americans' seem to be concerned because of the scary headlines saying the market is going to crash due to home prices increasing so quickly.

However, if we compare the average price in home appreciation from 2002 to 2005 leading up to the 2008 crash, the average annual appreciation was 10.3%.

If you look at now, from 2017 to 2020 the average annual appreciation for home prices is only 6.3% which is drastically less.

It's a very different situation today than back in 2008.

And it's easy to listen to the news, but it seems there is a lot of hype and negativity around what is happening
which is just not based on the actual facts.

I'm Tami Savage with eXp Realty, Your Key to a New Lifestyle.

I'd love to help so don't hesitate to reach out.

Thank you for watching, and make it a great day.

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