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People still want to own their own homes. In fact, the Census says that the number of people who own their own homes in the U.S. is going up. The graph below shows the homeownership rate over the last year to show how it has gone up:
More than half of the people in the U.S. live in a home they own, and that number is growing over time.
If you're thinking about buying a home this year, here are a few reasons why so many people think it's a good idea.
Why do more and more people buy their own homes?
There are many good things about owning your own home. One important reason is that homeownership can help protect you from rising costs, especially when inflation is high like it is now. Chief Economist at the National Association of Realtors (NAR) Lawrence Yun explains:
"When inflation was around 10% in the 1970s, home prices went up at about the same rate. Inflation makes things harder for renters because rents tend to go up at the same rate as inflation, while fixed-rate mortgage payments stay the same for homeowners.
When you buy a home with a fixed-rate mortgage, you can lock in your housing payment, which is probably your biggest monthly expense, for the life of the loan, which is usually between 15 and 30 years.
That gives you a fixed monthly housing cost, which can help you in the short term. Over time, as the value of your home goes up and you make your monthly mortgage payment, you'll also build equity.
And as your equity grows, your net worth will grow as well. In fact, the most recent NAR data shows that the median net worth of a homeowner's household is about $300,000, while the median net worth of a renter's household is only about $8,000. This means that the net worth of a homeowner is almost 40 times that of a renter.
The number of homeowners in the U.S. is going up. If you're ready to buy the home of your dreams, let's talk so you can get started right away.
The housing market is moderating from its two-year frenzy. What does that signify if you're selling a home?
Experts think home values will continue to rise in most markets, albeit at a slower pace due to rising mortgage rates. This means more homes are for sale. How you price your home matters more than ever in this change.
The Housing Market Today
Due to strong demand and insufficient supply, dealers might raise prices during the pandemic. This year, things are changing, and so should your pricing strategy.
Less buyer demand means this market is different than during the pandemic. If you don't...
Why Market Value Matters
Price conveys a message to purchasers. Too high a price may dissuade customers.
If your house sits on the market for a time, you may need to cut the price. Some purchasers may ask what a price drop means for the home or if it's still expensive. Realtor.com highlights the impact of sellers not adjusting to the market:
The share of postings with a price cut roughly doubled from a year ago but remains below pre-pandemic levels.
Price it appropriately from the start to avoid having to lower it. A realtor knows the perfect asking price. To get the proper price, they balance area home values, market trends, buyer demand, your home's condition, and more.
Pricing your home fairly depending on market conditions will attract more purchasers. This leads to better offers and a faster sale.
Why you should sell now
It's still a sellers' market, so plan appropriately and consult with an agent to put your price at market value. Lawrence Yun, NAR Chief Economist:
"Right-priced properties sell quickly, whereas overpriced homes repel purchasers."
Altos Research founder and CEO Mike Simonsen said, "We see demand for properly priced homes."
Today's real estate market favors well-priced homes. Let's talk so you can price your home based on current market conditions to optimize sales and decrease bother in a changing market.
Some consumers assume a housing bubble exists due of media coverage. You may worry what will happen as the home market transforms. Concerns that it could repeat 2008 are natural. Good news: There's data to show why this time is different.
There's a housing shortage, not a surplus.
Normal real estate market needs six months of inventory. Oversupply leads prices to fall. Anything less will cause price increases.
Too many homes for sale (many short sales and foreclosures) during the housing crisis caused prices to fall. Supply is expanding, but inventory is low.
The NAR graph below compares this time to the crash. At the present sales pace, unsold inventory lasts only 3 months.
Underbuilding contributes to low inventory. When you combine it with millennials' growing homebuying demand, home prices continue to rise. Experts predict property prices won't decrease this time due to limited availability and buyer desire.
The crash relaxed mortgage standards.
Before the housing crisis, home loans were easy to get. The graph below shows Mortgage Bankers Association MCAI data (MBA). Higher scores make mortgage approval easier.
Up until 2006, banks created false demand by lowering lending requirements and making it easier to get a mortgage or refinancing. Back then, lenders took on more risk with both borrowers and mortgage products. Mass defaults, foreclosures, and price drops followed.
Today, mortgage providers have stricter requirements for buyers. First American's chief economist says:
Increasing economic instability and monetary policy tightening have tightened credit criteria.
Today's stricter requirements help prevent another wave of foreclosures.
The foreclosure volume is down from the crash.
After the housing bubble broke, many homeowners faced foreclosure. Since the crisis, foreclosures have declined since buyers are better qualified and less likely to default. ATTOM Data Solutions helped create the graph below.
Also, today's homeowners have plenty of equity. Some homeowners used their homes as ATMs before the housing bubble. Once equity accumulated, many withdrew it. When property values fell, some homeowners had negative equity, meaning they owed more on their mortgage than their home was worth. Some households elected to walk away from their houses, which led to a wave of distressed property listings (foreclosures and short sales) that sold at significant discounts and decreased the value of other homes in the region.
Today's rising prices have boosted homeowners' equity. Black Knight:
In the past year, mortgage holders accumulated $2.8 trillion in tappable equity, a 34% rise that equals more than $207,000 per borrower.
With $207,000 in home equity, homeowners are in a new position.
If you're scared we're making the same mistakes as before, the graphs should help. Data and professional insights demonstrate why this is different.
Homebuying is a big decision. This is true for first-time buyers and sellers. If you're intending to buy a property, you may have heard about the changing market and wonder what it means for you.
While mortgage rates are higher and property prices are rising, you shouldn't put your plans on hold because of the market. Instead, examine why you want to move and how significant they are. Here are two reasons people buy homes today.
Moving.com analyzed migration patterns to learn why people migrated. Both indoors and outdoors, more room was needed.
Home outgrowth isn't new. If you want a big yard, additional gathering space, or extra storage or bedrooms, you may need to move.
Wanting to be closer to family
United Van Lines polls clients annually to learn why they relocate. Nearly 32% of people moved to be closer to family.
Pods, another moving and storage provider, cites this as a major reason people relocate. Flexible work alternatives have enabled many homeowners move closer to their loved ones.
People move because of altering priorities. Many organizations have adopted permanent remote working arrangements, allowing employees to roam freely across the country.
If you can move due to remote job, retirement, or another reason, you can be closer to loved ones. Being close for caregiving and social events may be what you need.
One of these factors may motivate you to move. Mortgage rates and home prices will definitely influence your decision, but it's also crucial to make sure your home suits your needs. Compound Capital Advisors' Charlie Bilello says:
Your home should offer more than financial rewards.
Moving has numerous causes. Whatever the reason, if your housing needs have altered, let's talk.
Some Key Points
This year, experts say, there are more homes for sale than last year, which can have a big effect on your move.
If you want to buy, the market today may have just what you've been waiting for: more choices. With more homes on the market, you have more chances to find the home of your dreams.
Let's talk so you can get the most up-to-date information on homes for sale in our area.
As fewer buyers come into the market, home sellers in Houston are cutting their asking prices. This is another sign that the housing market is cooling.
Recent information from two major real estate agencies shows that more people in Houston are lowering the prices they want for their homes. Redfin, a residential brokerage, says that prices were cut on more than a third (38%) of the homes for sale in the Houston area in June. Redfin says that about 25% of homes in Houston had price drops a year ago.
On the other hand, Zillow's numbers are more conservative. They say that 16.8% of Houston homes for sale had their prices cut in June, which is up about 5.6 percentage points from the same month last year.
Even though the numbers are different, they show that home sellers may be starting to lose the advantage they had during the pandemic.
"Home sellers are dealing with a market that is changing quickly," said Redfin Senior Economist Sheharyar Bokhari in a statement. "This is especially true in areas where they're used to seeing their neighbors' homes get multiple offers and sell for more than the asking price." "Potential buyers in popular places to move are putting their plans on hold because mortgage rates are going up and there could be a recession. Sellers are changing their expectations as they realize they might not get the same price as their neighbor did two months ago.
A small town north of Houston is getting a 400-acre luxury home development.
Houston home sellers, on the other hand, don't seem to be under as much pressure to lower their prices as sellers in other major metros, where a rush of people moving because of the pandemic may have led to bigger real estate gains earlier in the pandemic.
According to Redfin, Boise was one of the most popular places for people to move because of a pandemic. As a result, the average home price there jumped to $550,000 in May, which was more than a 60% increase from two years earlier. Based on Redfin's analysis, 61.5 percent of homes for sale in Boise had their prices cut in June, which was the most of any city in the country.
According to the Redfin analysis, more than 25% of sellers in about three quarters of the country's biggest cities lowered their asking prices.
In Texas, home sellers are seeing the biggest price drops in Austin, where a lot of people moved because of the pandemic and drove up real estate prices quickly. Redfin says that the prices of about 41.6% of the homes for sale in Austin dropped in June, compared to only 14.9% at the same time last year. In June, the prices of about 37.5% of the homes for sale in Dallas and San Antonio dropped, which was a little less than in Houston.
Even though the market isn't as crazy as it used to be, prices are still going up, albeit at a slower rate. Most metro areas in Texas are still getting a lot of out-of-state buyers because homes are still relatively affordable. In California, for example, a typical home sells for more than $1.5 million in many of the state's biggest cities.
The Houston Association of Realtors says that the average price of a home in Houston in June was $436,000. On Redfin's list of the top cities where people wanted to move, San Antonio was ninth, Dallas was tenth, and Houston was eleventh.
Redfin's Deputy Chief Economist Taylor Marr said, "These factors, along with the fact that more companies are giving employees the permanent option to work from home, are making more buyers think about homes in other parts of the country." "Someone who couldn't buy a home in Los Angeles without going over their budget might be able to in Phoenix or San Antonio."
Marr could have also said something about Houston. In the second quarter, the top places where Redfin users who didn't already live in Houston were looking to move from were Los Angeles, New York City, and the Bay Area.
In the Houston area, more than 145 Costco stores' worth of industrial space is being built. This makes Houston the No. 2 market in the Southwest for warehouses and distribution centers that are still being built.
The Community Property Executive put out information that showed about 21.2 million square feet of industrial space was being built in Greater Houston. According to the report, this number is equal to 3.9% of the total stock, which has grown to 547.8 million square feet. In other words, all of that space is the same as more than 145 Costcos.
In particular, almost 4.9 million square feet of industrial space became available in the first half of 2022. Even though the survey says it's hard to predict how much will be finished by the end of the year, the volumes of the previous years have been similar and may end up being higher than this year's: 19.6 million square feet of industrial space, or 3.8 percent of the total stock, was delivered in 2021, and 19.7 million square feet, or 3.9 percent of the total stock, was added in 2020.
The report mentions two important industrial changes in the area. Article, an online furniture store based in Canada, and TGS Cedar Port Industrial Park in Baytown share a 507,000-square-foot warehouse. At more than 15,000 acres, Cedar Port is the largest industrial park in the U.S. that is planned and served by rail and barge.
In other parts of Texas, Dallas-Fort Worth is at the top of the list and the country, with almost 60,6 million square feet of industrial space being built as of late June. That's a little more than 7 percent of the more than 840 million square feet of industrial space already in the area. Based on the numbers, that's about the same as 324 average Walmart supercenters.
Austin, with 8.3 million people, El Paso, with more than 5.7 million people, and San Antonio are also big cities (almost 4 million).
In a recent REPORT, commercial real estate services company Cushman & Wakefield says, "The COVID-19 pandemic brought new challenges to the industrial market, such as port congestion, material shortages, and skyrocketing commodity prices. However, the market has and will continue to do well."View More
If you placed a halt on your home hunt because you weren't sure where you'd go, it may be time to return. Because the market is shifting, there are more homes for sale. That means you may locate a property that meets your needs. Some options:
Existing homes provide lived-in charm.
According to the National Association of Realtors (NAR), the existing house supply has risen since the beginning of the year. The graph below shows increased inventory due to more properties entering the market and slower sales.
If you want a home with lived-in appeal, supply is rising, which is good news.
Danielle Hale, Chief Economist at realtor.com, explains why more homeowners are listing their houses today.
“Home sellers in many markets profit from rising prices and speedy sales. This year, more homeowners are selling than previous, offering buyers more options. This year, more properties are for sale than previous.
Existing homes provide several perks. Older homes have a unique charm that's hard to replicate. Existing homes are frequently in established neighborhoods with mature landscaping that boosts seclusion and aesthetic appeal.
Timing also matters. With an existing home, you can move in when you and the sellers agree, unlike with a new home. Remember this if you need to move soon.
While more sellers are listing, supply remains low. You'll have more alternatives when searching for your future house, but be prepared for a quick market.
Buying a new home means everything is new.
Census data shows more new homes for sale. It comprises under-construction, near-completion, and finished homes. As the graph below shows, there are more new homes for sale this year.
When creating a new home, you can tailor it to your lifestyle. That could include energy-efficient solutions or design aspects. New appliances, windows, roofing, etc. These can cut your energy expenditures, which can mount up over time.
Newer homes are also lower-maintenance. When you have a new home, you won't have as many small repairs, like leaking faucets, to do. With new construction, warranty options may protect your investment for the first several years.
Buying a new house may require a long wait before moving in. Robert Dietz, NAHB's Chief Economist and Senior Vice President for Economics and Housing Policy, explains:
New single-family homes have a 7.7-month supply. Only 8.3% of new homes are ready to move in. 25.9% haven't started construction or are in progress.
You should discuss this with a trusted real estate advisor before making a decision. They'll weigh the advantages and downsides of new and existing homes to help you decide.
With more homes for sale, you have options no matter your preferences. If you have questions or need help deciding, let's talk.
Some Key Points
Before you decide whether to rent or buy a home, you should think about all the good things that come with owning one.
When you buy a home, you can keep your housing costs stable, own something tangible, and increase your net worth as you build equity. When you rent, your housing costs will go up, you won't get a return on your money, and you won't be able to save as much.
Let's talk today if you want to find out more about the benefits of owning your own home.