The year 2020 will be remembered as one of the most challenging times of our lives. A worldwide pandemic, a recession causing historic unemployment, and a level of social unrest perhaps never seen before have all changed the way we live. Only the real estate market seems to be unaffected, as a new forecast projects there may be more homes purchased this year than last year.
As we come to the end of this tumultuous year, we’re preparing for perhaps the most contentious presidential election of the century. Today, it’s important to look at the impact past presidential election years have had on the real estate market.
Is there a drop-off in home sales during a presidential election year?
BTIG, a research and analysis company, looked at new home sales from 1963 through 2019 in their report titled One House, Two House, Red House, Blue House. They noted that in non-presidential years, there is a -9.8% decrease in November compared to October. This is the normal seasonality of the market, with a slowdown in activity that’s usually seen in fall and winter.
However, it also revealed that in presidential election years, the typical drop increases to -15%. The report explains why:
“This may indicate that potential homebuyers may become more cautious in the face of national election uncertainty.”
Are those sales lost forever?
No. BTIG determined:
“This caution is temporary, and ultimately results in deferred sales, as the economy, jobs, interest rates and consumer confidence all have far more meaningful roles in the home purchase decision than a Presidential election result in the months that follow.”
In a separate study done by Meyers Research & Zonda, Ali Wolf, Chief Economist, agrees that those purchases are just delayed until after the election:
“History suggests that the slowdown is largely concentrated in the month of November. In fact, the year after a presidential election is the best of the four-year cycle. This suggests that demand for new housing is not lost because of election uncertainty, rather it gets pushed out to the following year.”
Will it matter who is elected?
To some degree, but not in the overall number of home sales. As mentioned above, consumer confidence plays a significant role in a family’s desire to buy a home. How may consumer confidence impact the housing market post-election? The BTIG report covered that as well:
“A change in administration might benefit trailing blue county housing dynamics. The re-election of President Trump could continue to propel red county outperformance.”
Again, overall sales should not be impacted in a significant way.
If mortgage rates remain near all-time lows, the economy continues to recover, and unemployment continues to decrease, the real estate market should remain strong up to and past the election.
Homebuying has been on the rise over the past few months, with record-breaking sales powering through the market in June, July and August. Buyers are actively purchasing homes, and the momentum is continuing into the fall. It is, however, becoming harder for buyers to find homes to purchase. If you’ve been thinking about selling your house, the coming weeks might just be the timing you’ve been waiting for.
According to the Pending Home Sales Report from the National Association of Realtors (NAR):
“Pending home sales in July achieved another month of positive contract activity, marking three consecutive months of growth.
The Pending Home Sales Index (PHSI), a forward-looking indicator of home sales based on contract signings, rose 5.9% to 122.1 in July. Year-over-year, contract signings rose 15.5%. An index of 100 is equal to the level of contract activity in 2001.”
This means that for the past several months, buyers have signed an increasing number of contracts to purchase homes – well above where the market was at this time last year. Lawrence Yun, Chief Economist at NAR notes:
“We are witnessing a true V-shaped sales recovery as homebuyers continue their strong return to the housing market…Home sellers are seeing their homes go under contract in record time, with nine new contracts for every 10 new listings.”
Below is a graph that shows the impressive recovery of homes sales compared to previous years. The deep blue v marks the slowdown from this spring that turned into an exponential jump in sales that followed through the summer, skyrocketing above years past (see graph to right):
What Does This Mean for Sellers?
If you were thinking about putting your house on the market in the spring, but decided to wait due to the health crisis, it may be time to make your move. Buyers are in the market right now. With so few homes available to purchase, homeowners today are experiencing more bidding wars, creating an optimal time to sell.
Is This Trend Going to Continue?
As CNBC notes, there are no signs of slowing buyer demand this fall:
“The usual summer slowdown in the housing market is not happening this year. Buyers continue to show strong demand, spurred by the new stay-at-home world of the coronavirus and by record low mortgage rates.”
Danielle Hale, Chief Economist at realtor.com, concurred:
“In a typical year in the housing market, buyer interest begins to wane before seller interest causing the usual seasonal slowdown as we move into the fall. Due to a delayed spring season and low mortgage rates, we could see buyer interest extend longer than usual into the typically quieter fall. Whether this means more home sales will depend on whether sellers participate or decide to stay on the sidelines.”
As Hale mentioned, homeowners who are willing to sell their houses right now will play a big role in whether the trend continues. The market needs more homes to satisfy ongoing buyer demand. Maybe it’s time to leverage your equity and move up while eager home shoppers are ready to purchase a house just like yours.
If your current home doesn’t meet your family’s changing needs, let’s connect to help you sell your house and make the move you’ve been waiting for all year.
Reno, Nevada, also known as “The Biggest Little City in the World,” has recently been crowned #1 Best Small City in America by Resonance Consultancy! Resonance ranks American cities (principal cities of metropolitan areas with populations of more than 100,000) by using a combination of statistical performance and qualitative evaluations by locals and visitors in 23 areas grouped into six core categories. Principal cities are defined as the largest city in each metropolitan statistical area:
It’s no surprise Reno is at the top of the list. With substantial job growth and economic strength, companies and individuals are converging on Reno to take advantage of tax benefits and a desirable lifestyle. Learn more about why Reno tops this prestigious list at http://bit.ly/Resonance2020Best.
With the strength of the current housing market growing every day and more Americans returning to work, a faster-than-expected recovery in the housing sector is already well underway. Regardless, many are still asking the question: will we see a wave of foreclosures as a result of the current crisis? Thankfully, research shows the number of foreclosures is expected to be much lower than what this country experienced during the last recession. Here’s why.
According to Black Knight Inc., the number of those in active forbearance has been leveling-off over the past month (see graph):
Black Knight Inc. also notes, of the original 4,208,000 families granted forbearance, only 2,588,000 of these homeowners got an extension. Many homeowners have once again started to pay their mortgages, paid off their homes, or never went delinquent on their payments in the first place. They may have applied for forbearance out of precaution, but never fully acted on it (see graph):
The housing market, and homeowners, therefore, are in a much better position than many may think. Much of that has to do with the fact that today’s homeowners have more equity than most realize. According to John Burns Consulting, over 42% of homes are owned free and clear, meaning they are not tied to a mortgage. Of the remaining 58%, the average homeowner has $177,000 in equity. That number is keeping many homeowners afloat today and giving them options to avoid foreclosure.
While ATTOM Data Solutions indicates that there is a potential for the number of foreclosures to increase throughout the country, it’s important to understand why they won’t rock the housing market this time around:
“The United States faces a possible foreclosure surge over the coming months that could more than double the number of households threatened with eviction for not paying their mortgages.”
That number may sound massive, but it is actually much smaller than it seems at first glance. Today’s actual quarterly active foreclosure number is 74,860. That’s over 7.5x lower than the number of foreclosures the country saw at the peak of the housing crash in 2009. When looking at the graph below, it’s clear that even if the number of quarterly foreclosures today doubles, as ATTOM Data Solutions indicates is a possibility (not a given), they will only reach what historically-speaking is a normalized range, far below what up-ended the housing market roughly 10 years ago. Equity is growing, jobs are returning, and the economy is slowly recovering, so the perfect storm for a wave of foreclosures is not realistically in the housing market forecast. As Odeta Kushi, Deputy Chief Economist for First American notes:
“Alone, economic hardship and a lack of equity are each necessary, but not sufficient to trigger a foreclosure. It is only when both conditions exist that a foreclosure becomes a likely outcome.”
While our hearts are with anyone who may end up in foreclosure as a result of this crisis, we do know that today’s homeowners have more options than they did 10 years ago. For some, it may mean selling their house and downsizing with that equity, which is a far better outcome than foreclosure.
Homeowners today have many options to avoid foreclosure, and equity is surely helping to keep many afloat. Even if today’s rate of foreclosures doubles, it will still only hit a mark that is more in line with a historically normalized range, a very good sign for homeowners and the housing market.
Today, home prices are appreciating. When we hear prices are going up, it’s normal to think a home will cost more as the trend continues. The way the housing market is positioned today, however, low mortgage rates are actually making homes more affordable, even as prices rise. Here’s why.
According to the Mortgage Monitor Report from Black Knight:
“While home prices have risen for 97 consecutive months, July’s record-low mortgage rates have made purchasing the average-priced home the most affordable it’s been since 2016.”
How is that possible?
Black Knight continues to explain:
“As of mid-July, it required 19.8% of the median monthly income to make the mortgage payment on the average-priced home purchase, assuming a 20% down payment and a 30-year mortgage. That was more than 5% below the average of 25% from 1995-2003.
This means it currently requires a $1,071 monthly payment to purchase the average-priced home, which is down 6% from the same time last year, despite the average home increasing in value by more than $12,000 during that same time period.
In fact, buying power is now up 10% year-over-year, meaning the average home buyer can afford nearly $32,000 more home than they could at the same time last year, while keeping their monthly payment the same.”
This is great news for the many buyers who were unable to purchase last year, or earlier in the spring due to the slowdown from the pandemic. By waiting a little longer, they can now afford 10% more home than they could have a year ago while keeping their monthly mortgage payment unchanged.
With mortgage rates hitting all-time lows eight times this year, it’s now less expensive to borrow money, making homes significantly more affordable over the lifetime of your loan. Mark Fleming, Chief Economist at First American, shares what low mortgage rates mean for affordability:
“In July, house-buying power got a big boost as the 30-year, fixed mortgage rate made history by moving below three percent. That drop in the mortgage rate from 3.23 percent in May to 2.98 percent in July increased house-buying power by nearly $15,000.”
The graph to the right shows the last time homes were affordable by state.
Arkansas, Iowa, Kentucky, Louisiana, Maryland, and West Virginia – homes have not been this affordable in more than 25 years.
If you’re thinking of making a move, now is a great time to take advantage of the affordability that comes with such low mortgage rates. Whether you’re thinking of purchasing your first home or moving into a new one and securing a significantly lower mortgage rate than you may have on your current house, let’s connect today to determine your next steps in the process.
The pandemic has caused consumers to re-examine the components that make up the “perfect home.” Many families are no longer comfortable with the locations and layouts of their existing homes. The allure of city life (more congested) seems to be giving way to either suburban or rural life (less congested). The fascination with an open floor plan seems to be fading as people are finding a need for more privacy while working from home.
Recently, news.com released a report that revealed how buyers’ views of listings are leaning heavily to more suburban and rural properties. Here are the year-over-year percentage increases in views per property type:
- Urban – 7%
- Suburban – 13%
- Rural – 16%
In the report, Javier Vivas, Director of Economic Research for realtor.com, gives these numbers some context:
“This migration to the suburbs is not a new trend, but it has become more pronounced. After several months of shelter-in-place orders, the desire to have more space and the potential for more people to work remotely are likely two of the factors contributing to the popularity of the burbs.”
Realtor Magazine also just reported that the desire to move is strongest in our city markets:
“Nearly 30% of respondents living in a high-density urban area say that the pandemic is prompting them to want to move by the end of the year…This is more than double the rate of those living in rural parts of the country, where residents are much more likely to stay put rather than to relocate.”
New Construction Also Seeing a Surge in Views
Since the pandemic has altered how consumers think about floor plans, builders are anticipating how future homes will change. In a recent press release by Zillow, it was explained that:
- Builders believe as people spend more time at home during the pandemic, buyers are realizing which features of their homes are working and not working.
- Homebuilders predict open-concept floor plans will be a thing of the past, as people now value more walls, doors, and overall privacy.
- New construction, which offers the chance to personalize home features, saw its listing page views grow by 73% over last May.
The Virus is Even Impacting the Luxury Second-Home Market
“Stay at home orders and social distancing have put a new value on the extra space. We’re seeing this in the luxury market as well, which could mean there is renewed interest from high-end buyers to find a second-home that is within driving distance from their primary residence.
Much like the suburbs are gaining favor with home shoppers, second home markets are seeing increased interest from luxury buyers…Views of luxury properties accelerated 56% in The Hamptons, 28% in Palm Springs and 24% in Greenwich compared to January trends.”
It appears that a percentage of people are preparing to leave many American cities. Some of these moves will be permanent, while others will be temporary (such as a getaway to a second home). In either case, many consumers are on the move. Real estate professionals are ready and willing to help in any way they can.
There are numerous reasons why owning a home is beneficial. We’ve quickly summed up the Top 8 Reasons to Own Your Home and here they are…
- Privacy. Creating space that is solely your own means no landlord visits. It’s not your landlord’s house… It’s yours, so nobody should be stopping by to “check in on things.”
- Accomplishment. Buying your own home is a reflection of your efforts and successes. Give yourself a pat on the back and be proud of what you acquire.
- Family. Purchasing and living in a home that is dedicated to your family brings them together and is your special place to make lasting memories.
- Community. Owning your home ties to you the community and neighborhood, giving you a sense of belonging (if you so desire).
- Comfort. Having a place to call your own allows you to surround yourself with enhanced experiences… Construct a home gym, design a hobby room, create a killer home office and enjoy!
- Stability. Investing in and controlling your future direction and security could prove to be beneficial in the long-run.
- Personal Expression. Painting rooms your favorite colors and hanging art are just a couple benefits to putting your own style into your abode.
- Financial Investment. Investing in the real estate puts you in a position to grow your assets and wealth.
- June is National Homeownership Month, and it’s a great time to consider the benefits of owning your own home.
- If you’re in a position to buy, homeownership might help you find the stability, community, and comfort you’ve been searching for this year.
- Let’s connect today to determine if homeownership is the right next step for you and your family.
In the wake of COVID-19, many who live in more populated city limits today are beginning to rethink their current location. Being in close proximity to everything from the grocery store to local entertainment is definitely a perk, especially if you can also walk to some of these hot spots and have a short commute to work. The trade-off, however, is that highly populated cities can lack access to open space, a yard, and other desirable features. When it comes to social distancing, as we’ve experienced recently, the newest trend seems to be around re-evaluating a once-desired city lifestyle and trading it for suburban or rural living. George Ratiu, Senior Economist at Realtor.com notes:
“With the re-opening of the economy scheduled to be cautious, the impact on consumer preferences will likely shift buying behavior…consumers are already looking for larger homes, bigger yards, access to the outdoors and more separation from neighbors. As we move into the recovery stage, these preferences will play an important role in the type of homes consumers will want to buy. They will also play a role in the coming discussions on zoning and urban planning. While higher density has been a hallmark of urban development over the past decade, the pandemic may lead to a re-thinking of space allocation.”
The Harris Poll recently surveyed 2,000 Americans, and 39% of the respondents who live in urban areas indicated the COVID-19 crisis has caused them to consider moving to a less populated area.
Today, moving outside the city limits is also more feasible than ever, especially as Americans have quickly become more accustomed to, and more accepting of, remote work. The number of people working from home has also spiked considerably, even before the pandemic came into play this year.
If you have a home in the suburbs or a rural area, you may see an increasing number of buyers looking for a property like yours. If you’re thinking of buying and don’t mind a commute to work in exchange for a little elbow room, you may want to consider looking at homes for sale outside the city. Let’s connect today to discuss the options available in our area.
When the number of buyers in the housing market outnumbers the number of homes for sale, it’s called a “seller’s market.” The advantage tips toward the seller when the home is priced at or near market value, and as low inventory heats up, so too does the competition among those searching for a place to call their own. This can create multiple offer scenarios and bidding wars, making it tough for buyers to land their dream homes, unless they are coming in a with a big wad of cash. When financing your home purchase, here are three reasons why pre-approval should be your first step in the buying process:
- Gain A Competitive Advantage. Low inventory, like we have today, means homebuyers need every advantage they can get to make a strong impression and close the deal. One of the best ways to get one step ahead of other buyers is to get pre-approved for a mortgage before you make an offer. For one, it shows the sellers you’re serious about buying a home, which is always a plus in your corner. In addition, having pre-approval from a LOCAL lender that the we know and trust, and that the listing agent recognizes, may give you a huge advantage over the competition. Sellers and their Realtors tend to look more favorably on experienced lenders we know over online “quickie” loans.
- Accelerate the Home Buying Process. Pre-approval can also speed up the home buying process, so you can move faster when you’re ready to make an offer. In a competitive arena like we have today, being ready to put your best foot forward when the time comes may be the leg-up you need to cross the finish line first and land the home of your dreams.
- Know What You Are Qualified to Borrow. When you have provided all of the essential information to get pre-approved by a local lender, you also have a better sense of your budget, what you can afford, and ultimately how much you’re eligible to borrow for your mortgage. Ultimately, you’re less apt to have your heart set on a home that may be out of your reach.
If you are preparing to purchase a home in the near future, we are happy to refer you with a highly skilled and knowledgeable loan officer to get you moving in the right direction. The loan officer will pre-approve you based on the following criteria, also know as “The 4 C’s”:
- Capacity: Your current and future ability to make your payments
- Capital or Cash Reserves: The money, savings, and investments you have that can be sold quickly for cash
- Collateral: The home, or type of home, that you would like to purchase
- Credit: Your history of paying bills and other debts on time
While there are still many additional steps you’ll need to take in the home buying process, it’s clear why pre-approval is always the best place to begin. It’s your chance to gain the competitive edge you may need if you’re serious about owning a home. Let’s get together today to make sure you’re on the fastest path to homeownership. Call me at 775-233-0682 to get started.
If you’re planning to sell your home in the near future, and want to sell it as quickly as possible at the highest price possible, we strongly recommend following these 3 Most Important Steps:
1. Make Repairs/Maintain: Examine every inch of your house and look for things that need to be repaired or replaced. You may go as far as hiring a home inspector to provide a full report so you have no surprises during escrow. Below are some of the most common repairs made when selling your house. Here is a list of some of the most common items needing attention prior to selling:
- Ripped/tore/bend screens. Repair/replace as needed.
- Sticky glass slider tracks and window tracks/frames. Lube them &/or replace parts or whole door.
- Cracked light switches. Replace.
- Leaking faucets. Repair/replace.
- Leaking bathtub drains. Repair/replace.
- Dirty air filters. Change them.
- Broken or removed smoke detectors. Replace.
- Failed caulking and/or grout in shower/bath. Remove and re-caulk.
- Failed caulking on windows. Check inside and out and seal as needed.
- Broken vacuum seals on windows, they have moisture between the panes. Call glass company to take a look and replace.
- Cracked/chipped shower pan and/or bathtub. Repair (recommend Miracle Method in Reno)
- Light fixtures that have failed. Repair/replace.
- Water in the crawl space. Determine where it is coming from, eliminate it from entering, dry out and vent properly. If necessary, install a gutters on the house, and improve grading or install French drain. Under some circumstances, installing a sump pump may be necessary.
- Failed or missing vapor barrier. Install new vapor barrier.
- Earth/dirt-to-wood contact… Eliminate contact.
- Replace doorbell
- Old door handle/lock. May want to replace to freshen the first impression.
- Failing paint where needed. Prep and paint, especially the front door/door frame & facia and window trim.
- Holes and cracks in stucco. Seal and paint with Elastomeric material.
2. Clean It: Make your house sparkle! Whether you do it yourself or hire a cleaning service, this is a must! It is best to take care of this BEFORE listing and showing your home. Then, when you are about to close escrow, it will be easier to just do the final touches. Don’t neglect the following:
- Window Tracks and Frames
- Window coverings
- Walls (rub out scuffs with a Mr. Clean Magic Eraser or My Barkeeper’s Friend)
- Doors and door frames (Mr. Clean Magic Eraser)
- Baseboards (Mr. Clean Magic Eraser or My Barkeeper’s Friend)
- Corners of walls and ceilings (spider webs)
- Light Fixtures
- Toilets, mirrors, tubs, showers, counters
- Inside and outside of all cabinets, cupboards and drawers (use Murphy’s Oil or The Method Almond Oil from Target)
- Inside and outside all appliances (oven, stove, microwave, dishwasher, refrigerator, trash compactor… all appliances that will be visible during showings)
- Under sinks
- Garage (sweep it out, eliminate belongings you don’t need, and organize)
3. Stage and Prep for Photography and Showings: If your home is already vacant, we can bring in a range of staging pieces, from full furniture sets to essential decorative accessories. When occupying the home while you are selling, decluttering, organizing and moving belongings around may be recommended. This process is one of my areas of expertise, and one of the most important steps prior to professional photography by Matt Waclo Photography. Professional photography is included in my listing services and is critical for making the best first impression possible.
For guidance regarding these essential steps for selling your home, please feel free to contact me directly at 775-233-0682 or email me at email@example.com.