Home Selling Updates • August 19, 2024

How Mortgage Rate Changes Impact Your Homebuying Power

by Myriam Cruz

Are you thinking about buying or selling a home? You’ve probably got mortgage rates on your mind. And rightfully so, since these rates directly influence how much you can pay monthly for your mortgage, which is essential for your financial planning. Here’s what you need to know.

What’s Happening with Mortgage Rates?
Mortgage rates have been trending down lately. While that’s good news for your homebuying plans, it’s important to remember that rates can be unpredictable due to many factors.

Aspects like the economy, job market, inflation, and decisions made by the Federal Reserve play a significant role. So, even though rates are dropping, they can still fluctuate a bit in response to new economic data. As Odeta Kushi, Deputy Chief Economist at First American, says:

“The ongoing deceleration in inflation, coupled with the Federal Reserve’s recent indication of potential rate cuts [in 2024], suggests an environment supportive of modest declines in mortgage rates. Barring any unforeseen circumstances and resurgence in inflation, lower mortgage rates could be on the horizon, but the journey towards them might be slow and bumpy.”

How Do These Changes Affect You?
When mortgage rates change, it directly affects how much you pay each month for your home loan. Even a small change in the rate can make a big difference in your monthly bill.

Take a look at the chart below to see how different mortgage rates impact your monthly payment based on various loan amounts. Imagine you can pay $2,600 per month for your mortgage. The green part in the chart shows payments in that range or lower, based on varying mortgage rates (see chart below):

Understanding the Impact of Mortgage Rates on Your Payments Grasping how mortgage rates affect your monthly payments is essential for making informed decisions in the homebuying process.

How to Stay Updated on Mortgage Rates Real estate agents possess the knowledge and tools to help you stay informed about current rates and their implications. With expert insights and visual aids, they can illustrate how rate fluctuations influence your purchasing power.

You don’t need to become a mortgage expert; what you need is a trusted professional to guide you through the market complexities. A knowledgeable partner will help you understand the trends and assist you on your journey to buying or selling a home.

Bottom Line If you have questions about the housing market, let’s connect. I’ll help you navigate the landscape so you can make confident, well-informed decisions.

Home Selling Updates • July 31, 2024

Don’t Make These Costly Mistakes: What Sellers Need to Know Right Now

by Myriam Cruz

Myriam Cruz - Top Listing Agent

Navigating the Housing Market in Hunterdon and Somerset Counties: Avoid These Common Seller Mistakes

The housing market in Hunterdon and Somerset Counties is in a period of adjustment. With rising mortgage rates slowing buyer activity and an increase in the number of homes for sale, it’s crucial to stay informed about the current market dynamics.

If you’re selling your home and not working with a local agent, you might miss key insights into this shifting landscape. Failing to adapt your strategy can lead to expensive mistakes. Here’s a look at some common pitfalls in our area and how partnering with a local real estate expert can help you avoid them.

Overpricing Your Home

In Hunterdon and Somerset Counties, many sellers are setting their asking prices too high, leading to an increase in price reductions. An unrealistic price can deter serious buyers, cause appraisal issues, and result in your home lingering on the market. The National Association of Realtors (NAR) highlights:

“Some sellers are pricing their homes higher than ever just because they can, but this may drive away serious buyers and result in unapproved appraisals…”

To avoid this, work with a knowledgeable agent who understands local market trends, recent sales, and the condition of your home. They will help you set a competitive price that attracts buyers and can lead to multiple offers and a quicker sale.

Ignoring Minor Repairs

In our local market, skipping on minor repairs might seem like a time-saver, but it can turn off potential buyers. Visible issues, even small ones, can lead to lower offers or demands for concessions. According to Money Talks News:

“Home shoppers like to turn on lights, flush toilets and run the water. If these basic things don’t work, they may assume you’ve skipped other maintenance. Homes that appear neglected aren’t likely to fetch top price.”

Before listing your home, consult with your agent for a thorough walk-through. They’ll point out necessary fixes and improvements to ensure your home is appealing to buyers.

Taking Offers Personally

With high home prices and mortgage rates affecting buyer affordability, you might receive offers lower than you expect, especially if your home isn’t staged or marketed effectively. It’s important not to take these offers personally. Ramsey Solutions advises:

“Remember, a buyer’s offer is not a reflection of their opinion of your home or your housekeeping abilities. The sale of your home is strictly a business transaction…”

Work with your agent to navigate offers and counteroffers objectively, focusing on negotiations rather than emotional responses.

Being Inflexible with Negotiations

In our competitive market, the increased supply of homes means buyers have more negotiating power. You might encounter requests for inspections, repairs, or assistance with closing costs. U.S. News Real Estate explains:

“If you’ve received an offer for your house that isn’t quite what you’d hoped it would be, expect to negotiate… the only way to come to a successful deal is to make sure the buyer also feels like he or she benefits…”

A local agent will help you assess these requests based on your goals, budget, and timeline, guiding you through negotiations to reach a mutually beneficial agreement.

Going Without a Real Estate Agent

From pricing and marketing to negotiating and closing, having a real estate agent by your side is invaluable. For each mistake mentioned, an experienced local agent can provide the expertise needed to avoid pitfalls and enhance your selling experience. The biggest mistake of all? Trying to sell without one.

Agents in Hunterdon and Somerset Counties have a deep understanding of the local market, helping you streamline the process, attract more buyers, and achieve a higher sale price.

Bottom Line

To avoid these common mistakes and ensure a successful sale, connect with a local real estate expert who knows the ins and outs of the Hunterdon and Somerset housing market. Let’s work together to get you the results you want!

Home Buyer's Tips • May 6, 2024

Real Estate Update | May 2, 2024 Real Estate Update is a roundup of recent news and data relevant to the real estate business.

by Myriam Cruz

Mortgage rate, home sales and prices are all on the rise; the U.S. economy added over 300,000 jobs in March, exceeding expectations; and housing starts have fallen due to interest rate and financing concerns. All this and more in this month’s Real Estate Update.

Mortgage rates, home sales and prices are all on the rise

Mortgage rates are up, with the average 30-year fixed mortgage rate reaching 7.17% by the end of April 2024. Despite this increase, experts anticipate rates to gradually recede throughout the year. The National Association of Realtors (NAR) predicts that rates will end the year at 6.5%, while Fannie Mae expects them to be around 6.4%. However, these rates are still higher than the initial forecast of 6.1% made earlier in the year.

The pressure from elevated mortgage rates may impact homebuying activity, but it hasn’t yet reflected in official data. Pending home sales increased by 3.4% in March, according to NAR. Although conditions for buying a home may be slightly tougher due to higher rates, the median existing-home sale price is expected to rise by 1.8% to $396,800. Despite the challenges, home sales are projected to increase in 2024, reaching an estimated 4.46 million existing-home sales.

Lawrence Yun, NAR’s chief economist, believes that sales will continue to rise due to increasing population, increased inventory from home construction and life-change events.

Full story at Barron’s

The U.S. economy added 303,000 jobs in March, exceeding expectations

In March 2024, the U.S. economy saw a significant boost with the addition of 303,000 jobs, surpassing the average monthly gain from the previous year and outperforming economists’ expectations. The unemployment rate remained stable at 3.8%, marginally lower than February’s 3.9% and still under the full employment threshold of 4%. Despite the strong job market, the Federal Reserve is unlikely to cut interest rates before July, suggesting that mortgage rates will remain high for an extended period.

The job growth was particularly strong in the health care, government, and construction sectors, with notable increases of 72,000, 71,000, and 39,000 jobs respectively. Average hourly earnings rose by 0.3% to $34.69, and were 4.1% higher than the previous year, exceeding the latest inflation rate of 3.2%. The housing market remains robust, but the high mortgage rates, which have been above 6.5% for nearly a year, are causing some potential homebuyers to delay their purchases in anticipation of rate cuts later in the year.

Full story at HousingWire

Housing starts fall on interest rate, financing concerns

In March, housing starts in the U.S. fell by 14.7% to a seasonally adjusted annual rate of 1.32 million units, according to the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. This decrease was due to higher than expected interest rates and the latest inflation readings showing no improvement. Builders also faced higher supply-side costs and tighter lending conditions. The March reading of 1.32 million starts is the number of housing units builders would begin if development kept this pace for the next 12 months. Within this overall number, single-family starts decreased 12.4% to a 1.02 million seasonally adjusted annual rate, but are up 21.2% compared to a year ago.

The multifamily sector, which includes apartment buildings and condos, decreased 21.7% to an annualized 299,000 pace for 2+ unit construction in March. On a year-over-year basis, multifamily construction is down 44.3%. Meanwhile, there are now 689,000 single-family homes and 957,000 apartment units under construction, which are 2.7% and 1.5% lower than a year ago, respectively. Total housing units now under construction are 2.0% lower than a year ago.

While apartment construction starts are down, the number of completed units entering the market is rising due to prior elevated construction levels. The pace of completions for apartments in buildings with five or more units is up 27.4% for the first quarter of 2024 compared to the first quarter of 2023. This will place some downward pressure on rent growth.

Full story at NAHB Eye on Housing

Disclaimer: this is a compilation of industry news from trade media and industry groups, it does not share any forward-looking predictions or projections.

Home Selling Updates • April 4, 2024

Anticipating a Significant Shift in the Real Estate Landscape: Updates in Home Buying and Selling on the Horizon

by Myriam Cruz

As we stand on the cusp of a significant shift in the real estate landscape, it’s evident that we’re entering a new chapter in home buying and selling. A resolution in a federal antitrust case is poised to disrupt the traditional method of compensating for home sales—a method that has prevailed for decades. Anticipated to come into effect soon, this settlement heralds potential cost reductions in the buying and selling process, as it is projected that real estate agents will collectively see billions less in sales commissions annually.

Under the outgoing system, which is slated for phase-out by July, sellers traditionally agreed to cover 5% to 6% of the final sale price as a real estate commission, with their agent subsequently splitting this commission with the buyer’s representative. This structure not only carried a hefty price tag—significantly higher than the norm in many other countries—but also placed the entire financial burden on the seller.

However, it’s important to recognize that buyers indirectly footed a significant portion of these commission costs. Although buyers weren’t directly responsible for commission payments as part of closing costs, these expenses were effectively factored into home prices, serving as a means for sellers to recoup their outlays.

Under the impending changes, sellers will exclusively compensate their own agent. While the use of multiple listing services (MLS) remains crucial for ensuring broad exposure for a property—requiring representation through a real estate agent or broker—sellers can anticipate substantial savings as commissions will no longer be shared with a buyer’s agent. For instance, in regions where the standard commission rate was 6%, with half shared with the buyer’s agent, sellers might now expect to pay only 3% for their agent’s services. In robust seller’s markets, this shift offers sellers the opportunity to maximize their net proceeds. Conversely, in softer markets, it may facilitate more competitive pricing strategies, as sellers are not burdened by substantial commission expenses.

Conversely, the implications for buyers are more nuanced. With sellers no longer covering the cost of buyer representation, buyers must now assume responsibility for their agents’ fees. Alternatively, buyers can opt to forego representation and negotiate directly with the seller and the seller’s agent. However, this poses potential risks, particularly for first-time buyers who may benefit significantly from the guidance and expertise of a seasoned agent throughout the complex home-buying process. Considering the financial strains already faced by first-time buyers in accumulating down payments and covering closing costs, the additional prospect of paying a 2%-3% fee to an agent adds further pressure.

The repercussions of these changes remain uncertain, and it’s prudent to exercise patience as the industry assimilates this monumental shift. While the current timeline aims for the conclusion of the old commission system by July, the complexities surrounding the settlement of a federal antitrust suit may lead to extensions. Additionally, we can anticipate the emergence of innovative approaches to buyer and seller representation in response to these developments.

Ultimately, the demise of the traditional commission structure should pave the way for enhanced transparency in the real estate market, where both buyers and sellers have a clearer understanding of negotiable fees. It is my belief that this transition will foster a marketplace characterized by greater upfront disclosure from agents and brokers regarding fee structures.

For now, let us observe how the U.S. residential home market adapts to the conclusion of the seller-pays-all commission model. Rest assured, I will continue to provide updates as the situation evolves.

Home Selling Updates • March 19, 2024

Homeowners Today Have Options To Avoid Foreclosure

by Myriam Cruz

Amidst the latest data, experts reassure that the specter of a large-scale foreclosure crisis akin to the 2008 debacle remains distant. Though recent headlines hint at a slight rise in foreclosure filings, the broader perspective indicates we’re still operating well below the thresholds typical of a standard housing market year. BlackKnight’s report underscores this sentiment, noting:

“The likelihood of any significant surge in foreclosure activity in the near future remains low, with initiation rates still nearly 40% lower than pre-pandemic levels.”

This is indeed encouraging news, suggesting that the number of homeowners vulnerable to foreclosure is notably reduced compared to the norm.

However, there remains a minority facing the looming possibility of foreclosure due to unforeseen hardships, a reality that can strike irrespective of market conditions.

For those finding themselves in such a predicament, there are avenues to explore that might avert the foreclosure process. Bankrate’s insights offer some practical strategies:

1. Forbearance Programs: Homeowners with loans from Fannie Mae or Freddie Mac may qualify for such initiatives.
2. Loan Modification: Lenders might be open to adjusting loan terms to ease monthly payments.
3. Repayment Plans:

Lenders could arrange deferrals or payment plans for those struggling to meet obligations.

Moreover, homeowners should consider their equity position, which could offer a lifeline. In today’s real estate climate, many homeowners possess significantly more equity in their homes than they realize, owing to robust home price appreciation in recent years. This means that the value of their homes may have increased substantially, while their mortgage payments have concurrently reduced the loan balance. Freddie Mac elaborates on this advantage:

“If your equity is substantial, you can utilize the proceeds from selling your home to settle your outstanding mortgage debt, encompassing any missed payments or other secured debts.”

To gauge the extent of one’s equity, consulting a local real estate agent is advisable. They can provide an estimate of the home’s potential sale value based on recent comparable sales in the area, potentially paving the way to a sale that could forestall foreclosure.

In summary, for homeowners grappling with financial hardship, seeking guidance from real estate professionals is paramount. Whether exploring available options or contemplating a home sale to evade foreclosure, expert advice can be invaluable in navigating this challenging terrain.

Home Selling Updates • February 24, 2024

Exploring the Anticipated Trends in the Upcoming Spring Real Estate Market

by Myriam Cruz

In the dynamic world of real estate, navigating the landscape can be both thrilling and challenging. Whether you’re a first-time homebuyer or a seasoned investor, understanding the intricacies of the market is crucial for making informed decisions. This comprehensive guide aims to provide valuable insights, tips, and strategies to empower individuals embarking on their real estate journey.

Chapter 1: Understanding Your Goals

Before diving into the real estate market, it’s essential to define your goals. Are you looking for a dream home, an investment property, or a fixer-upper project? Understanding your objectives will guide your decision-making process and help you narrow down your options.

Chapter 2: Financial Preparedness

Real estate transactions involve significant financial commitments. Assess your financial readiness by determining your budget, securing pre-approval for a mortgage, and accounting for additional costs like property taxes, maintenance, and insurance. Being financially prepared sets the foundation for a successful real estate venture.

Chapter 3: Researching the Market

Stay ahead of market trends by conducting thorough research. Analyze property values, neighborhood dynamics, and potential growth areas. Consider working with a knowledgeable real estate agent who can provide valuable insights and assist you in making informed decisions.

Chapter 4: Working with Professionals

Collaborating with real estate professionals can streamline the buying or investing process. Engage with experienced real estate agents, mortgage brokers, and legal experts to navigate the complexities of transactions. Their expertise can be invaluable in ensuring a smooth and successful real estate experience.

Chapter 5: Exploring Financing Options

Explore various financing options to find the one that best suits your needs. From traditional mortgages to creative financing solutions, understanding the pros and cons of each can empower you to make well-informed choices. Consider consulting with a financial advisor to tailor a strategy that aligns with your goals.

Chapter 6: The Art of Negotiation

Negotiation is a fundamental skill in real estate. Whether you’re negotiating the purchase price, closing costs, or repair credits, understanding the art of negotiation can significantly impact the outcome of your transaction. Learn effective communication strategies and be prepared to stand firm on your priorities.

Chapter 7: Due Diligence and Inspections

Prior to finalizing any real estate transaction, conduct thorough due diligence. Inspections are crucial for identifying potential issues with the property. From structural concerns to hidden defects, a meticulous inspection process can save you from costly surprises down the road.

Chapter 8: Closing the Deal

The closing process is the culmination of your real estate journey. Familiarize yourself with the necessary paperwork, timelines, and legal obligations involved in closing a deal. Work closely with your real estate agent and legal counsel to ensure a smooth and successful closing.

Navigating the real estate landscape requires a combination of preparation, research, and strategic decision-making. By understanding your goals, staying financially prepared, and collaborating with experienced professionals, you can embark on a successful real estate journey. Whether you’re searching for your dream home or seeking lucrative investment opportunities, this comprehensive guide equips you with the knowledge and tools to make informed decisions in the ever-evolving world of real estate.

How Mortgage Rate Changes Impact Your Homebuying Power

Don’t Make These Costly Mistakes: What Sellers Need to Know Right Now

Real Estate Update | May 2, 2024 Real Estate Update is a roundup of recent news and data relevant to the real estate business.

Mortgage rates, home sales and prices are all on the rise

The U.S. economy added 303,000 jobs in March, exceeding expectations

Housing starts fall on interest rate, financing concerns

Anticipating a Significant Shift in the Real Estate Landscape: Updates in Home Buying and Selling on the Horizon

Homeowners Today Have Options To Avoid Foreclosure

Exploring the Anticipated Trends in the Upcoming Spring Real Estate Market

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