Now’s the Time To Upgrade to Your Dream Home
If you’ve been wanting to sell your house and move up to a bigger or nicer home, you’re not alone. A recent Inman survey reveals the top motivator for today’s homebuyers is the desire for more space or an upgraded home (see graph below):But there’s also a good chance you, like many other people, have been holding off on that goal because of recent market challenges. It makes sense – when you’re planning an upgrade that could increase your monthly housing costs, affordability has a huge impact on when you make your move. But there’s good news: now’s actually a great time to make that move happen. Here’s why.You Have a Lot of Equity To LeverageOne of the key benefits in today’s market is the amount of equity you’ve likely built up in your current house over the years. Even with recent shifts in the housing market, national home prices have steadily grown, adding to the equity homeowners have today. Selma Hepp, Chief Economist at CoreLogic, explains it well:“Persistent home price growth has continued to fuel home equity gains for existing homeowners who now average about $315,000 in equity and almost $129,000 more than at the onset of the pandemic.”What does that mean for you? If you’ve been in your home for a few years, you’re probably sitting on a significant amount of equity. You can put that toward the down payment on your next home, helping keep the amount you borrow within a comfortable range.This can make upgrading more achievable than you might think. If you’re curious how much you’ve built up over the years, ask your real estate agent for a professional equity assessment.Mortgage Rates Have Fallen, Boosting Your Purchasing PowerAnd there’s another big reason why now’s a great time to make your move: mortgage rates are trending down. Lower rates can help make your future monthly payments more manageable, and they also increase your purchasing power. As Nadia Evangelou, Senior Economist and Director of Real Estate Research at the National Association of Realtors (NAR), points out:“When mortgage rates fall, the interest portion of monthly payments decreases, which lowers the total payment. This makes it easier for more borrowers to . . . qualify for mortgages that may have been unaffordable at higher rates.”That gives you more flexibility when shopping for homes and may allow you to afford a house at a price point that was previously out of reach. A trusted lender can work with you to figure out the best plan for your budget.Bottom LineIf you’re ready to sell your current home and find the bigger, nicer home you’ve been dreaming of, don’t wait. Your equity, paired with lower mortgage rates, puts you in a great position to make that move today.To make the best decisions and get the most out of your current market advantage, work with a trusted real estate professional who can guide you through every step of the homebuying process.
The Top 3 Reasons Affordability Is Improving
Some HighlightsAffordability is based on three key factors: mortgage rates, home prices, and wages.And today, it’s improving quickly as rates come down, prices level off, and wages climb. If you put your search on pause because it was too expensive to buy, connect with an agent to talk about why now may be the perfect time to jump back in.
Home Values Rise Even as Median Prices Fall
Recent headlines have been buzzing about the median asking price of homes dropping compared to last year, and that’s sparked plenty of confusion. And as a buyer or seller, it’s easy to assume that means prices are coming down. But here’s the catch: those numbers don’t tell the full story.Nationally, home values are actually rising, even if the median price is down a bit. Let’s break down what’s really happening so you can make sense of the market without getting caught up in the fear the headlines create.Homes on the Market Right Now Are SmallerThe biggest reason for the dip in median price is the size of homes being sold. The median price reflects the middle point of all the homes for sale at any given time. And that’ll be affected by the mix of homes on the market.To show you how this works, here’s a simple explanation of a median (see visual below). Let’s say you have three coins in your pocket, and you decide to line them up according to their value from low to high. If you have one nickel and two dimes, the median (the middle one) is 10 cents. If you have two nickels and one dime, the median is now five cents.In both cases, a nickel is still worth five cents and a dime is still worth 10 cents. The value of each coin didn’t change. The same is true for housing.Right now, there’s a greater number of smaller, less expensive homes on the market, and that’s bringing the overall median price down. But that doesn’t mean home values are declining.As Danielle Hale, Chief Economist at Realtor.com, explains:“The share of inventory of smaller and more affordable homes has grown, which helps hold down the median price even as per-square-foot prices grow further.”And here’s the data to prove it. Price Per Square Foot Is Still RisingOne of the best ways to measure home values is by looking at the price per square foot. That’s because it shows how much you're paying for the space inside the home.The median asking price doesn't take into account the size of different homes, so it may not always reflect the true value. And the latest national price per square foot data shows home values are still increasing, even though the median asking price has dropped (see graph below).As Ralph McLaughlin, Senior Economist at Realtor.com, explains:“When a change in the mix of inventory toward smaller homes is accounted for, the typical home listed this year has increased in asking price compared with last year.”This means that while smaller homes are affecting the median price, the average home’s value is still rising. According to the Federal Housing Finance Agency (FHFA):“Nationally, the U.S. housing market has experienced positive annual appreciation each quarter since the start of 2012.”So, while headlines may make it sound like prices are crashing, you don’t have to worry. With a closer look and more reliable data, you can see that prices are still climbing nationally.But it’s important to remember that home prices can vary by region. While national trends provide a big-picture view, local markets may be experiencing different conditions. A trusted agent is the best resource to explain what’s happening in your area.Bottom LineThe decrease in median price is not the same as a decrease in home values. The median asking price is down mostly due to the mix of smaller, less expensive homes on the market.The important thing to focus on is the price per square foot, which is a better indicator of overall market value—and those prices are still going up. If you have questions about what home prices are doing in your area, reach out to a local real estate agent who can provide insights on your specific market.
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