Will a Silver Tsunami Change the 2024 Housing Market?
Have you ever heard the term “Silver Tsunami” and wondered what it's all about? If so, that might be because there’s been lot of talk about it online recently. Let's dive into what it is and why it won't drastically impact the housing market. What Does Silver Tsunami Mean? A recent article from HousingWire calls it: “. . . a colloquialism referring to aging Americans changing their housing arrangements to accommodate aging . . .” The thought is that as baby boomers grow older, a significant number will start downsizing their homes. Considering how large that generation is, if these moves happened in a big wave, it would affect the housing market by causing a significant uptick in the number of larger homes for sale. That influx of homes coming onto the market would impact the balance of supply and demand and more. The concept makes sense in theory, but will it happen? And if so, when? Why It Won’t Have a Huge Impact on the Housing Market in 2024 Experts say, so far, a silver tsunami hasn’t happened – and it probably won't anytime soon. According to that same article from HousingWire: “. . . the silver tsunami’s transformative potential for the U.S. housing market has not yet materialized in any meaningful way, and few expect it to anytime soon.” Here’s just one reason why. Many baby boomers don’t want to move. Data from the AARP shows over half of the surveyed adults ages 65 and up plan to stay put and age in place in their current home rather than move (see chart below): Clearly, not every baby boomer is planning to sell or move – and even those who do won’t do it all at once. Instead, it will be more gradual, happening slowly over time. As Mark Fleming, Chief Economist at First American, says: “Demographics are never a tsunami. The baby boomer generation is almost two decades of births. That means they're going to take about two decades to work their way through.” Bottom Line If you’re worried about a Silver Tsunami shaking up the housing market, don’t be. Any impact from baby boomers moving will be gradual over many years. Fleming sums it up best: “Demographic trends, they don't tsunami. They trickle.”
Navigating the Home Buying Journey: Key Steps to Ensure a Smooth Transaction
Buying a home is one of the most significant and exciting investments you'll make in your lifetime. However, the process can be complex and daunting for first-time buyers. To ensure a smooth and successful home-buying experience, it's crucial to understand and navigate each step carefully. In this blog, we'll explore the key milestones in the home-buying journey, from the initial offer to the closing table. Earnest Money Deposit (EMD): *The EMD is a good faith deposit that demonstrates your serious intent to purchase the property. *Typically ranging from 1% to 3% of the home's purchase price, the EMD is held in an escrow account until the deal is finalized. *If the sale goes through, the EMD is applied toward your down payment or closing costs. Financing: *Secure pre-approval for a mortgage before house hunting to understand your budget and strengthen your offer. *Compare loan options, interest rates, and terms offered by different lenders to find the best fit for your financial situation. *Keep an eye on your credit score, as it plays a crucial role in determining your mortgage eligibility and interest rates. Down Payment: *Save for a down payment, which is a percentage of the home's purchase price. *Traditional down payments range from 3% to 20%, depending on the loan type. Veterans may qualify for zero-down VA loans. *A larger down payment can lead to lower monthly mortgage payments and better loan terms. Appraisal: *Lenders typically require a home appraisal to ensure the property's value matches the agreed-upon purchase price. *If the appraisal comes in lower than expected, negotiations may be necessary to bridge the gap between the appraised value and the sale price. Home Inspection: *Hire a qualified home inspector to assess the property's condition and identify potential issues. *Use the inspection report to negotiate repairs with the seller or adjust the purchase price accordingly. *A thorough inspection helps you make an informed decision and avoid unexpected costs after closing. HOA Docs (Homeowners Association Documents): *If the property is part of a homeowners association, review the HOA documents carefully. *Understand the rules, regulations, fees, and any potential restrictions that may impact your homeownership experience. Title Insurance: *Title insurance protects you from any issues with the property's title, such as liens, encumbrances, or legal disputes. *A title search is conducted to ensure the property has a clear title before issuing the insurance policy. Closing Costs: Prepare for various closing costs, including lender fees, attorney fees, title insurance, and property taxes. Review the Closing Disclosure document to understand the final costs and ensure they align with the Loan Estimate provided by the lender. In conclusion, buying a home involves a series of critical steps that demand careful consideration and attention to detail. By understanding and navigating each stage of the process, you can increase the likelihood of a successful and satisfying home purchase. Seek guidance from experienced professionals, stay informed, and be proactive to make your home-buying journey a rewarding experience.
Are More Homeowners Selling as Mortgage Rates Come Down?
If you’re looking to buy a home, the recent downward trend in mortgage rates is good news because it helps with affordability. But there’s another way this benefits you – it may inspire more homeowners to put their houses up for sale. The Mortgage Rate Lock-In Effect Over the past year, one factor that’s really limited the options for your move is how few homes were on the market. That’s because many homeowners chose to delay their plans to sell once mortgage rates went up. An article from Freddie Mac explains: “The lack of housing supply was partly driven by the rate lock-in effect. . . . With higher rates, the incentive for existing homeowners to list their property and move to a new house has greatly diminished, leaving them rate locked.” These homeowners decided to stay put and keep their current lower mortgage rate, rather than move and take on a higher one on their next home. Early Signs Show Those Homeowners Are Ready To Move Again According to the latest data from Realtor.com, there were more homeowners putting their houses up for sale, known in the industry as new listings, in December 2023 compared to December 2022 (see graph below): Here's why this is so significant. Typically, activity in the housing market cools down in the later months of the year as some sellers choose to delay their moves until January rolls around. This is the first time since 2020 that we’ve seen an uptick in new listings this time of year. This could be a signal that the rate lock-in effect is easing a bit in response to lower rates. What This Means for You While there isn’t going to suddenly be an influx of options for your home search, it does mean more sellers may be deciding to list. According to a recent article from the Joint Center for Housing Studies (JCHS): “A reduction in interest rates could alleviate the lock-in effect and help lift homeowner mobility. Indeed, interest rates have recently declined, falling by a full percentage point from October to November 2023 . . . Further decreases would reduce the barrier to moving and give homeowners looking to sell a newfound sense of urgency . . .” And that means you may see more homes come onto the market to give you more fresh options to choose from. Bottom Line As mortgage rates come down, more sellers may re-enter the market – that gives you an opportunity to find the home you’re looking for. Let’s connect so you’ve got a local expert on your side who’ll help you stay on top of the latest listings in our area.
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