Fact Check February - Don't Fall In Love With These 7 Narratives on Housing
It's weird out there today. And, there are a lot of thoughts and musings about what's happening in the market and what will happen in the coming year. As usual, FACTS matter - and in the mid-month report, we're bringing you all of the facts to bust the myths that exist out there about what's really going on. If you absorb nothing else from this email - the key takeaway is that interest rates can be had lower than market value and if you're a seller - focus on the price and condition of your home FIRST. But, don't just take my word for it, hear what our smart economists at the Cromford Report have to say about each segment, and as we approach market balance - let's have a solid plan in place whether your goal is to buy or sell; let's get the most value for you no matter what your goal. 🔽🔽🔽There is no online shortage of armchair quarterbacks when it comes to prognostications on the future of home values and affordability. However, there are narratives that some people, and journalists, stubbornly hold to that are simply outdated or incorrect. Many of them were true a few years ago but are no longer true today. Here are just a few: Myth #1 - Buyer demand is declining.This was true in 2022 and 2023, but is no longer true today. While mortgage rates have knocked many buyers out of the game, buyer demand is now stable and following last year’s trend with little reaction to rate fluctuations. Myth #2 - There is very little to buy under $300K.This was definitely true a few years ago, but not today. In February 2022, there were only 90 single family listings active for sale under $300,000 in Maricopa and Pinal County. Today there are 534, mostly in Pinal County. Condo and townhome inventory is even more abundant by comparison. In March 2022, there were only 156 active condo/th listings while today there are more than 1,200, all of which are in Maricopa County. Myth #3 - My income is too high to qualify for any homebuyer assistance programs.Some grant and downpayment assistance programs correlate to an area, not income. Many have income limits as high as $150,000/year and some don’t have income limits at all. Putting in the research and finding a qualified loan officer to explain these programs could save thousands of dollars. Myth #4 - I need to be a first-time homebuyer or renter to qualify for homebuyer assistance programs.In most cases, this is not true. They may say first-time home buyer, but if you haven’t owned a home in 3 years or more, you’re a first-time home buyer once again according to HUD’s definition. Also, if you’ve only ever owned a home with a spouse, have a child, and are now divorced, you are also a first-time home buyer. Or, if you’ve only ever owned a mobile home. These are just 3 of the 5 HUD definitions for first-time homebuyer. Myth #5 - Mortgage rates are too high, there’s nothing to be done about it.57% of January sales between $200,000-$600,000 involved seller-paid incentives, most went towards a temporary buydown of the mortgage rate, and many home builders are providing permanent rate buydowns. Other sellers have FHA or VA loans that are assumable with rates below 5%. In fact, about 10% of all active listings fit this criteria. Some buyer assistance programs even allow grant money to buy down mortgage rates. Again, a little research goes a long way in hacking the affordability issues caused by mortgage rates. Myth #6 - Housing is in a bubble and home prices are on the precipice of a crash.One could argue that Greater Phoenix already had a bubble and price crash in 2022 when prices rose to their peak by May and declined a whopping 12.3% from May to December that year, with short-term flip investors taking the brunt of the pain. Since then, prices bounced and stabilized with most price ranges seeing less than 2% appreciation year over year today. That is less than the current rate of inflation, and what is expected after nearly a year in a buyer-leaning market. While Greater Phoenix is officially in a buyer’s market, it’s very mild. Under these conditions, sale price measures are showing most non-luxury buyer negotiations at approximately 1.9% below the last list price. That’s a huge improvement over 2022 where sales prices were averaging 2.4% OVER list price. Prices are declining in some areas, but not all, and not by leaps and bounds. Current supply and demand indexes do not support massive declines in sales prices, but shaving 1-2% off lower list prices during negotiations is not out of the question. Sellers are not pushing the market with outrageous list prices. In fact, most are in line or even below last year in some price ranges.Myth #7- I'll sell my home "as-is" and price it aggressively with buyer incentives.This worked in the mild seller's market of 2023 and first part of 2024, but not now. In a buyer's market, it's okay to sell your home "as-is" so long as it "is" in excellent condition. The hierarchy of importance isn't price first, then buyer incentives, then condition. It's condition AND price, the importance of additional incentives depends on your area and price range. When everyone is offering low prices and buyer incentives, properties in good condition rise to the top.
Why Buying a Home Now Is Your Winning Play
If you’ve been sitting on the fence about whether to buy a home now or wait, you’re not alone. Many buyers hesitate, wondering if spring is the better time to make a move. But what if buying before the spring rush could give you the upper hand? With less competition, stronger negotiating power, and potentially lower prices, moving this winter might be the smartest decision you make. Bottom Line:Timing is everything in real estate, and getting ahead of the spring market could mean securing a better deal with fewer hurdles. If you're ready to make your move and outrun the competition, let’s connect and turn your homeownership goals into reality. Reach me at https://linktr.ee/brianeastwoodrealtor. It can be overwhelming, but I’m here to help.
Home Price Growth Is Moderating – Here’s Why That’s Good for You
Over the past few years, home prices skyrocketed. That’s been frustrating for buyers, leaving many wondering if they’d ever get a shot at owning a home. But here’s some welcome news: that whirlwind pace of home price growth is slowing down.Home Prices Are Rising at a Healthy PaceAt the national level, home prices are still going up, but at a much more moderate, normal pace. For example, in November, the year-over-year increase in home prices was just 3.8% nationally, according to Case-Shiller. That’s a far cry from the double-digit spikes that occurred in 2021 and 2022 (see graph below):This more normal home price growth might make buying a home feel more attainable for many buyers. You won’t face the same sticker shock or rapid price jumps that made it hard to plan your purchase just a few years ago.At the same time, steady growth means the home you buy today will likely appreciate in value over time.Prices Vary from Market to MarketWhile the national story is one of moderate price growth, it’s important to remember that all real estate is local. Some markets are seeing stronger growth, while others are cooling off or even seeing slight declines. As Selma Hepp, Chief Economist at CoreLogic, notes:“Regionally, variations persist, as some affordable areas – including smaller metros in the Midwest — remain in high demand and continue to see upward home price pressures.”Meanwhile, other regions saw slight month-over-month declines in November, according to Federal Housing Finance Agency (FHFA) data (see graph below):What does this mean for you? It’s crucial to understand what’s happening in your local market. A national average can’t tell the whole story. That’s where working with a local real estate agent can really help. They have the tools and expertise to give you the full picture of what’s happening in your area and how to plan for that in your move.Bottom LineHome prices are growing at a more manageable pace, and working with a local real estate agent can help you navigate the ups and downs of your specific market.How have changing home prices impacted your plans to buy? Let’s talk about it. Reach me at https://linktr.ee/brianeastwoodrealtor. It can be overwhelming, but I’m here to help.
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