Can Newly Built Homes Really Be Less Expensive?
Even though affordability is improving, buying a home can still feel tough right now. But here’s some good news: builders are focusing their efforts on building smaller homes, and they’re offering key incentives to buyers. And both of these things can be a big help if you're worried about finding a home that’s right for your budget. Builders Are Building Smaller Homes During the pandemic, homebuyers were looking for larger homes—and many could afford them. Builders responded to that demand and created bigger spaces to help people with things like working from home, setting up home gyms, and having extra rooms for virtual school. Now, with affordability as tight as it is, builders are turning their focus to smaller single-family homes. Data from the Census shows how significant this trend toward smaller new homes has been over the last couple of years (see graph below): But why would builders want to build smaller homes right now? At the end of the day, builders are going to focus on building homes that meet current market demand – because they want to build what they know will sell. And the number one thing homebuyers are looking for right now is better affordability. Since smaller homes typically come with smaller price tags, both buyers and builders have shifted their focus to homes with less square footage. The National Association of Home Builders (NAHB) reports: “. . . home buyers are looking for homes around 2,070 square feet, compared to 2,260 20 years ago.” And according to Orphe Divounguy, Senior Economist at Zillow: “Not only are cash-strapped buyers continually seeking out lower-cost options, but developers are changing what type and size of home they're producing to try and meet that need." How a Newly Built Home Can Help You Achieve Your Homebuying Goals So, if you’re having a hard time finding something in your budget, it may be time to look at brand-new homes that have a smaller footprint. When you do, you may get a few other fringe benefits that can help on the affordability front – like price reductions or mortgage rate buy-downs. According to the most recent data from Zonda, more than half of builders are offering incentives, some of which are mortgage rate buydowns. And those perks could help lower your future monthly housing payment too. John Burns, CEO of John Burns Research & Consulting, shares: “The monthly payment matters more than anything else and builders have responded with smaller, more efficient homes.” Not to mention, with new home construction, you’ll also get brand new everything, have fewer maintenance needs, and get some of the latest features available. That’s worth looking into, right? Bottom Line With builders focusing on smaller homes, you may have more budget-friendly options when it matters most. If you're thinking about buying a home soon, let’s connect and see what’s available where you want to live.
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Why Working with a Real Estate Professional Is Crucial Right Now
Why Working with a Real Estate Professional Is Crucial Right Now Navigating the housing market can be tricky, especially these days. That's why having an experienced guide when buying or selling a home is so important. The market isn't exactly straightforward right now, and working with a real estate expert can offer insights and advice that make all the difference. While today’s market conditions might seem confusing or overwhelming, you don't have to handle them alone. With a trusted expert leading you through every step, you can navigate the process with the clarity and confidence you deserve. Here are just a few of the ways a real estate expert is invaluable: Contracts – Agents help with the disclosures and contracts necessary in today’s heavily regulated environment. Experience – In today’s market, experience is crucial. Real estate professionals know the entire sales process, including how it’s changing right now. Negotiations – Your real estate advisor acts as a buffer in negotiations with all parties, and advocates for your best interests throughout the entire transaction. Industry Expertise– Knowledge is power in today’s market, and your advisor will simply and effectively explain processes, market conditions, and key terms, translating what they mean for you along the way along the way. Pricing – A real estate professional understands current real estate values when setting the price of your home or helping you make an offer to purchase one. Pricing matters more than ever right now, so having expert advice will help ensure you’re set up for success. A real estate agent is a crucial guide through this challenging market, but not all agents are created equal. A true expert can carefully walk you through the whole real estate process, look out for your unique needs, and advise you on the best ways to achieve success. Finding an expert real estate advisor – not just any agent – should be your top priority if you want to buy or sell a home. As Bankrate says: "Real estate is very localized, and you want someone who’s extremely knowledgeable about the market in your specific area. You should also look for someone with a successful track record of negotiating and closing deals, preferably for homes similar to the kind you want to buy." What’s the Key To Choosing the Right Expert? Like any relationship, it starts with trust. You’ll want to know you can depend on that person to always put you and your best interests first. That means hiring a true professional. As Business Insider explains: “As long as you've properly vetted the agents you're considering and ensured they have the necessary expertise, it's ok to go with your gut when making your final decision on which real estate agent you want to work with. You're going to be working closely with this person, so it's important to choose an agent you're comfortable with." Bottom Line It’s critical to have an expert on your side who’s well-versed in navigating today’s housing market dynamics. If you’re planning to buy or sell a home this year, let’s connect so you have a real estate professional to give you the best advice and guide you along the way.
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Why So Many New Builds? Here’s the Scoop
Homebuilders Aren’t Overbuilding, They’re Catching Up You may have heard that there are more brand-new homes available right now than the norm. Today, about one in three homes on the market are newly built. And if you’re wondering what that means for the housing market and for your own move, here’s what you need to know. Why This Isn’t Like 2008 People remember what happened to the housing market back in 2008. And one of the factors that contributed to that crash was that there were too many homes for sale. While only part of the oversupply back then came from builders, the lasting impact is that some people still feel uneasy when they hear new home construction has ramped up. Even though the supply of new homes has grown this year, the data shows there’s no need to worry. Builders aren’t overbuilding, they’re just catching up. The graph below uses data from the Census to show the number of new houses built over the last 52 years. Following the crash in 2008, there was a long period of underbuilding (shown in red). And it wasn’t until recently that we finally met the long-term average for how many homes are built in a typical year. This shows, that even with the increase in new builds we’ve seen lately, there won’t suddenly be an oversupply of homes for sale. There’s too much of a gap to make up after over a decade of underbuilding. And if you’re still worried builders are overdoing it, here’s something else that should be reassuring. New Home Construction May Be at Its Peak for the Year The latest data from the Census on housing starts (homes where builders just broke ground) and permits (homes where builders can start development soon) shows builders are slowing down their pace right now. Why is that? They’re responding to still high mortgage rates and how those are impacting buyer demand. Basically, they’re pulling back appropriately in response to what’s happening in the market. As an article from HousingWire explains: “Even with a massive housing shortage across the nation, homebuilders are completing their pipelines and not seeking as many permits to construct new single-family houses.” Builders remember what happened when they overbuilt in the crash, and they’re looking to avoid a repeat of that. So, they’re being mindful and pulling back a bit. You May Have More Options Now Versus Later If you’re considering a newly built home, here’s how this impacts you. With builders seeking fewer permits and not breaking ground on as many new homes, we may be at the peak of new home construction for the year. This doesn’t mean new home construction is screeching to a stop – just that the pace is slowing down now, and that’ll impact what comes to market later this year. As Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), says: “Given the recent declines in housing starts, home completions will steadily show declines in about six months.” So, if you’re ready and able to buy now, you may find you’ll have more newly built options to choose from now versus later on. This may be enough reason to kick off your search. Just be sure to work with a local real estate agent you know and trust throughout the process. An agent will have valuable insight into builder reputations and other key factors specific to your market. And if there isn’t much new construction near you, they’ll be able to point you toward a nearby area where there is. Bottom Line While it’s true new home construction is a bigger segment of the market than the norm, that’s not a bad thing. Builders aren’t overbuilding, and they’re responding to market signals to avoid repeating the mistakes that were made in 2008. If you want to buy now while new home options may be at their peak, let’s connect.
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Your Equity Could Make a Move Possible
Your Equity Could Make a Move Possible Many homeowners looking to sell feel like they’re stuck between a rock and a hard place right now. Today’s mortgage rates are higher than the one they currently have on their home, and that’s making it harder to want to sell and make a move. Maybe you’re in the same boat. But what if there was a way to offset these higher borrowing costs? There is. And the money you need probably already exists in your current home in the form of equity. What Is Equity? Think of equity as a simple math equation. Freddie Mac explains: “. . . your home’s equity is the difference between how much your home is worth and how much you owe on your mortgage.” Your equity grows as you pay down your loan over time and as home prices climb. And thanks to the rapid home price appreciation we saw in recent years, you probably have a whole lot more of it than you realize. The latest from the Census and ATTOM shows more than two out of three homeowners have either completely paid off their mortgages (shown in green in the chart below) or have at least 50% equity (shown in blue in the chart below): That means the majority of homeowners have a game-changing amount of equity right now. How Your Equity Can Help Fuel Your Move After you sell your house, that equity can help you move without worrying as much about today’s mortgage rates. As Danielle Hale, Chief Economist for Realtor.com says: “A consideration today's homeowners should review is what their home equity picture looks like. With the typical home listing price up 40% from just five years ago, many home sellers are sitting on a healthy equity cushion. This means they are likely to walk away from a home sale with proceeds that they can use to offset the amount of borrowing needed for their next home purchase.” To give you some examples, here are a few ways you can use equity to buy your next home: Be an all-cash buyer: If you’ve been living in your current home for a long time, you might have enough equity to buy your next home without having to take out a loan. If that’s the case, you won’t need to borrow any money or worry about mortgage rates. Make a larger down payment: Your equity could also be used toward your next down payment. It might even be enough to let you put a larger amount down, so you won’t have to borrow as much at today’s rates. The First Step: Determine How Much Equity You Have in Your Home Want to find out how much equity you have? To do that, you’ll need two things: The current mortgage balance on your home The current value of your home You can probably find the mortgage balance on your monthly mortgage statement. To understand the current market value of your house, you can pay hundreds of dollars for an appraisal, or you can contact a local real estate agent who will be able to present to you, at no charge, a professional equity assessment report (PEAR). Once you’ve connected with a trusted local agent and run the numbers, you’re one step closer to making a move you may not have thought was realistic – all thanks to your equity. Bottom Line If you want to find out how much equity you have and talk more about how it can make your next move possible, let’s connect.
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