Home Prices Aren’t Declining, But Headlines Might Make You Think They Are

If you’ve seen the news lately about home sellers slashing prices, it’s a great example of how headlines do more to terrify than clarify. Here’s what’s really happening with prices. The bottom line is home prices are higher than they were a year ago at this time, and they’re expected to keep rising, just at a slower pace. But a recent article from Redfin notes, “Price Drops Hit Highest Level in 18 Months As High Rates Dampen Buyer Demand.” And that might make you think prices are declining. Now, while it’s true the latest report from Realtor.com also shows 16.6% of homes on the market had price reductions in May, which is up from 12.7% last May, that doesn’t mean overall home prices are falling. The key is knowing the difference between the asking price and the sold price. Understanding Asking Price vs. Sold Price In essence, the asking price, also known as a listing price, is the amount a seller hopes to get for their home when they list it. In reality, sellers can’t just put any price tag on their house and expect it to sell for top dollar. Today’s buyers are savvy customers, and when they aren’t willing to pay a premium for a home because their budgets are strained by higher mortgage rates, sellers need to adjust. And that’s what’s happening right now. Based on market factors and what offers that seller receives, that asking price can change. If a seller isn’t getting much foot traffic, you may see them revise the price and make an adjustment to reignite interest in the home – and sometimes that’s because they’ve overpriced it from the start. That’s where price reductions come in, and when you see “price drops” in a headline, it sounds like declining home prices. Mike Simonsen, CEO and Founder of Altos Research, says: “Not only is the share of homes with price cuts elevated compared to one year ago, but more price cuts are happening each week than last year.” On the other hand, the final sold price is the amount a buyer actually pays when the transaction is complete. Here’s the most important thing to note: Actual sold prices are still rising, and they’re expected to continue to do so at least over the next 5 years. What Does This Mean for Home Prices? So, while there's been an increase in price reductions recently, this doesn't mean overall home values are declining. Instead, it’s a sign that demand is moderating. And, as a result, sellers are adjusting their expectations to align with today's market reality. Even with more price reductions, home values are still growing on an annual basis, as they do nearly every year in the housing market. According to the Federal Housing Finance Agency (FHFA), home prices went up 6.6% over the last year (see below): No Caption Received This map shows how prices rose just about everywhere in the country, indicating the market is not in decline. So, while seller price reductions are often a leading indicator that prices may moderate in the months ahead, which experts have been saying for a while is expected to happen, they aren’t necessarily reason for alarm. The same article from Redfin also states: “. . .those metrics suggest sale-price growth could soften in the coming months as persistently high mortgage rates turn off homebuyers. For now, the median-home sale price is up 4.3% year over year to another record high. . .” And with inventory as tight as it is today, price moderation is much more likely in upcoming months than price declines. Why This Is Good News for Buyers and Sellers For buyers, more realistic asking prices mean a better chance of securing a home at a fair price. It also means you can enter the market with more confidence, knowing prices are stabilizing rather than continuing to skyrocket. For sellers, understanding the need to adjust your asking price can lead to faster sales and fewer price negotiations. Setting a realistic price from the start can attract more serious buyers and lead to smoother transactions. Bottom Line While the uptick in price reductions might seem troubling, it’s not a cause for concern. It reflects a market adjusting to new conditions. Home prices are continuing to grow, just at a more moderate pace. Call Rajeev Vashist at (703)927-0606. Buying a Home Selling a Home

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What To Expect if You Buy or Sell a Home This June

\ June is a busy month in the housing market because a lot of people buy and sell this time of year. So, if you’ve got a move on your mind and you’re looking to make it happen this month, here’s a snapshot of what you need to know to make sure you’re ready. If You’re Buying This June A lot of homebuyers with children like to move after one school year ends and before the next one begins. That’s one reason why late spring into summer is a popular time for homes to change hands. And whether that’s a motivator for you or not, it’s important to realize more buyers are going to be looking right now – and that means you’ll want to be ready for a bit more competition. But there is a silver lining to a move this time of year. This is also when more sellers will list – so you should find you have more options. As an article from Bankrate says: “Late spring and early summer are the busiest and most competitive time of year for the real estate market. There’s usually more inventory listed for sale than other times of year . . . This is a double-edged sword for a buyer, as you will be met with more opportunities but [also] much more competition.” During this busy season, it’s extra important to work with a trusted real estate agent. Your agent will help you stay on top of the latest listings, share expertise on how to make a strong offer in a competitive market, and give you insight into things like what the home is actually worth so you can make an informed decision when you buy. As Forbes says: “Approaching the market confidently, armed with good information and grounded expectations will take you far. Don't let the hustle of the market convince you to buy something that’s not in your budget, or not right for your lifestyle.” If You’re Selling This June Because there are more buyers this time of year, you’re in a great spot as a seller. Many of those buyers are highly motivated to make their move happen before the next school year kicks off – so they’ll likely put in strong offers to try to make that possible. That means, if your house shows well and is listed at market value, you could see your house sell faster or for a higher price. According to the National Association of Realtors (NAR): “Warmer weather and the end of the school year encourage more people to buy and sell, respectively. Buyers are looking to move and settle before the new school year begins, contributing to increased competition and, consequently, higher prices.” You want to be sure you’ve got a great agent on your side to help you with the contingencies on those offers and any negotiations that take place so you can pick the best offer. Make sure you go over closing dates with your agent. Buyers trying to time their move with the school year may need to delay a bit or move faster. This can depend on the school calendar where you live. As U.S. News Real Estate explains: “ . . if your house goes under contract in early summer, the buyer may ask for a delay in closing or move-in until the school year finishes or their current home has sold. Alternatively, a buyer later in summer may be looking to close quickly and move in under a month. Remain flexible to keep the deal running smoothly, and your buyer may be willing to throw in concessions, like covering some of your closing costs or overlooking the old roof.” Bottom Line If you’re looking to make a move this June, let’s chat so you know what to expect. We’ll come up with a plan that factors in current market conditions, but still works for you.

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What’s Next for Home Prices and Mortgage Rates?

If you’re thinking of making a move this year, there are two housing market factors that are probably on your mind: home prices and mortgage rates. You’re wondering what’s going to happen next. And if it’s worth it to move now, or better to wait it out. The only thing you can really do is make the best decision you can based on the latest information available. So, here’s what experts are saying about both prices and rates. 1. What’s Next for Home Prices? One reliable place you can turn to for information on home price forecasts is the Home Price Expectations Survey from Fannie Mae – a survey of over one hundred economists, real estate experts, and investment and market strategists. According to the most recent release, experts are projecting home prices will continue to rise at least through 2028 (see the graph below): While the percent of appreciation varies year-to-year, this survey says we’ll see prices rise (not fall) for at least the next 5 years, and at a much more normal pace. What does that mean for your move? If you buy now, your home will likely grow in value and you should gain equity in the years ahead. But, based on these forecasts, if you wait and prices continue to climb, the price of a home will only be higher later on. 2. When Will Mortgage Rates Come Down? This is the million-dollar question in the industry. And there’s no easy way to answer it. That’s because there are a number of factors that are contributing to the volatile mortgage rate environment we’re in. Odeta Kushi, Deputy Chief Economist at First American, explains: “Every month brings a new set of inflation and labor data that can influence the direction of mortgage rates. Ongoing inflation deceleration, a slowing economy and even geopolitical uncertainty can contribute to lower mortgage rates. On the other hand, data that signals upside risk to inflation may result in higher rates.” What happens next will depend on where each of those factors goes from here. Experts are optimistic rates should still come down later this year, but acknowledge changing economic indicators will continue to have an impact. As a CNET article says: “Though mortgage rates could still go down later in the year, housing market predictions change regularly in response to economic data, geopolitical events and more.” So, if you’re ready, willing, and able to afford a home right now, partner with a trusted real estate advisor to weigh your options and decide what’s right for you. Bottom Line Let’s connect to make sure you have the latest information available on home prices and mortgage rate expectations. Together we’ll go over what the experts are saying so you can make an informed decision on your move. Call Rajeev Vashist at (703)927-0606 Buying a Home Selling a Home 

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