DID YOU KNOW? There is a stress hormone called CORTISOL that is concentrated in your tears. You literally cry out your stress... (Thanks to Linda Feinstein from COMPASS in Hinsdale for sharing!)
DID YOU KNOW? Regardless of advances in the world's ability to collect data, the World Uncertainty Index, which has been measuring economic uncertainty in 143 countries since 1996, had a reading of 371.24, the highest in the history of this index. It was 130.41 in the last quarter of 2015. (World Uncertainty Index)
DID YOU KNOW? Two-thirds of investors believed that geopolitics, rather than fundamentals, were driving equity markets. (UBS)
"There is often a disconnect between what people are worrying about and what the data is actually showing." - David Bailin, Chief Investment Officer, Citi Private Bank
DID YOU KNOW? The concept of ownership, once at the center point of luxury consumption, has evolved from owning luxury to experiencing luxury ownership. Consignment stores, rental or subscription models are not completely new but their sharp rise supported by technology is highlighting some key questions around this phenomenon once seen by luxury houses as weakening their brand value and fuelling the counterfeit market. (Altiant)
DID YOU KNOW? How do those worth $30-million-plus allocate their assets? According to a recent Knight Frank survey of 620 private bankers and wealth advisors who between them manage US$3.3 trillion of private client wealth, 27% goes to investment property, 23% to equities, 17% to bonds and fixed income, 11% cash/currencies, 8% private equity, 5% collectibles and 3,5% to precious metals.
It’s hard to listen to today’s news without hearing about the uncertainty surrounding global markets, the spread of the coronavirus, and tensions in the Middle East, just to name a few. These concerns have caused some to question their investment plans going forward. As an example, in Vanguard’s Global Outlook for 2020, the fund explains,
“Slowing global growth and elevated uncertainty create a fragile backdrop for markets in 2020 and beyond.”
Is there a silver lining to this cloud of doubt?
Some worry this could cause concern for the U.S. housing market. The uncertainty, however, may actually mean good news for real estate.
Mark Fleming, Chief Economist at First American, discussed the situation in a recent report,
“Global events and uncertainty…impact the U.S. economy, and more specifically, the U.S. housing market…U.S. bonds, backed by the full faith and credit of the U.S. government, are widely considered the safest investments in the world. When global investors sense increased uncertainty, there is a ‘flight to safety’ in U.S. Treasury bonds, which causes their price to go up, and their yield to go down.”
Last week, in a HousingWire article, Kathleen Howley reaffirmed Fleming’s point,
“The death toll from the coronavirus already has passed Severe Acute Respiratory Syndrome, or SARS, that bruised the world’s economy in 2003…That’s making investors around the world anxious, and when they get anxious, they tend to sell off stocks and seek the safe haven of U.S. bonds. An increase in competition for bonds means investors, including the people who buy mortgage-backed bonds, have to take lower yields. That translates into lower mortgage rates.”
The yield from treasury bonds is the rate investors receive when they purchase the bond. Historically, when the treasury rate moves up or down, the 30-year mortgage rate follows. Here’s a powerful graph showing the relationship between the two over the last 48 years:
How might concerns about global challenges impact the housing market in 2020? Fleming explains,
“Even a small change in the 10-year Treasury due to increased uncertainty, let’s say a slight drop to 1.6 percent, would imply a 30-year, fixed mortgage rate as low as 3.3 percent. Assuming no change in household income, that would mean a house-buying power gain of $21,000, a five percent increase.”
For a multitude of reasons, 2020 could be a challenging year. It seems, however, real estate will do just fine. As Fleming concluded in his report:
“Amid uncertainty, the house-buying power of U.S. consumers can benefit significantly.”
If one of the questions you’re asking yourself today is, “Should I sell my house this year?” the current Housing Opportunities and Market Experience (HOME) Survey from the National Association of Realtors® (NAR) should boost your confidence as it relates to the current selling sentiment in the housing market. Even with all the information overload in the media circling around talk of a possible recession, the upcoming 2020 election, and more, Americans feel good about selling a house now. That’s some news to get excited about!
In the case of those with a yearly salary of $100,000 or more, the results jumped even higher, coming in at an 82% positive sentiment.
When the study divided the outcomes by region, the results still consistently showed Americans feeling good about selling:
- Northeast: 71% positive
- Midwest: 76% positive
- South: 72% positive
- West: 81% positive
As you can see, many believe that, despite everything going on in the world, it is still a good time to sell a home.
According to NAR, the unsold inventory available today “sits at a 3.0-month supply at the current sales pace,” which is down from a 3.7-month supply in November. The current inventory is half of what we need for a normal or neutral housing market, which should have a 6.0-month supply of unsold inventory. This is good news for sellers, as Lawrence Yun, Chief Economist at NAR, says:
“Home sellers are positioned well, but prospective buyers aren’t as fortunate. Low inventory remains a problem, with first-time buyers affected the most.”
If you’re ready to list your home, you can feel good about the current sentiment in the market. Let’s get together today to determine the best next step when it comes to selling your house this year.
- If you’re thinking of buying a home, plan ahead and stay on the right track, starting with pre-approval.
- Being proactive about the homebuying process will help set you up for success in each step.
- Make sure to work with a trusted real estate professional along the way, to help guide you through the homebuying steps specific to your area.
DID YOU KNOW? Metro areas with populations of 100,000 or more represent 85% of the U.S. population.
DID YOU KNOW? An additional 371,000 new rental units are expected to hit the U.S. market in 2020, a 50% percent increase over the number of new units completed in 2019. Developers want you to rent instead of buying. If rentals are supposed to combat the unaffordability of the housing market one has to wonder why 80% of these rentals are LUXURY rentals. (WSJ)
DID YOU KNOW? A new bill is circulating in Washington would ease some new restrictions on the EB-5 program, which governs visas that grant permanent U.S. residency to foreigners who invest in qualifying real-estate projects and other businesses that create jobs in the U.S. (WSJ)
DID YOU KNOW? Package theft is at an all-time high, with 1.7 million packages stolen or lost every day in the U.S., according to researchers at Rensselaer Polytechnic Institute. Maybe the best building/home amenity is secured package drop-off? Amazon has installed secure locker locations in 900 U.S. cities and now offers Amazon Key, which allows customers to give remote access to delivery drivers so they can leave packages inside the home, garage or car trunk.
DID YOU KNOW? Greenwich, Connecticut, one of the wealthiest areas of the USA, 50 minutes from Midtown Manhattan, saw an 11% sales volume decline in 2019. Only 13% of all sales were above $4 million. The average sales price was $2.4 million, dispelling the myth that all homes in Greenwich are for billionaires alone! Off-market sales accounted for 9% of all transactions.
DID YOU KNOW? New York, Miami, Houston, and Chicago have the highest percentage of mortgages 30 days past due for the ten largest metro areas. (Corelogic)
DID YOU KNOW? A new report from Experian found that the average FICO Score in the U.S. reached an all-time high in 2019 of 703, up from 701 a year earlier and 14 points higher than back in 2010. Altogether, 59% of Americans have a FICO Score of 700 or higher, the largest percentage ever at that threshold.
DID YOU KNOW? New York was identified as the 8th most affordable large city in the USA in a report evaluating the TOP 20 largest city economies in the USA: Miami, Detroit, Phoenix, Los Angeles, and Atlanta were the TOP 5. While New Yorkers spend a significant portion of their incomes on housing and transportation, the city’s low transportation costs help offset high housing costs. Transportation costs in New York City are the least expensive among the peer cities analyzed, with the median household spending $832 a month, or 14.4% of total income on transportation. (Citizens Budget Commission)
By the end of last year, many homeowners found themselves with more equity than they realized, and at the same time, their wages were increasing. When those two factors unite, it can spark homeowners to think about making a move to a larger or more expensive home in the luxury space. That said, now is a perfect opportunity to take a look at the forecast for the 2020 luxury market.
Three Things to Think About in the 2020 Luxury Housing Market
“There’s a good link between luxury real estate prices and [economic] growth.”
Available inventory is a key element that can impact home prices. In the upper range, the inventory is greater in comparison to the entry-level market, making moving up to a luxury home a growing reality for many buyers right now.
2. Activity in the Market
With more buying opportunities at the higher end, we should start to see an increase in activity. The same article states,
“Affluent homebuyers will start to come out of the woodwork as they find rising luxury rents less appealing and sellers get even more negotiable on price.”
Buyers looking in the luxury market are taking the opportunity to negotiate on price in a segment where there are more choices, too. According to the Luxury Market Report, homes sold for an average of 96.94% of the list price in December.
Buyers are also getting more for their money with greater purchasing power due to the current low-interest rates.
3. Buyers Are Coming Back
Keep in mind, buyers are often sellers too, especially those looking to move up. Homeowners with an entry-level home can take advantage of the inventory shortage at the lower end of the market, thus driving higher sales prices for their current homes. Combined with growing equity in the homes they’re listing, it’s a great time for those who are ready to make a luxury move.
The extra equity and greater purchasing power are bringing many buyers back to the market. The same article mentioned that,
“We’ve already seen buyers who’ve been on the sidelines for two years tread back into the market.”
If you’re considering entering the luxury market, 2020 is shaping up to be a great year for those who are ready to make that move. Let’s get together to set your real estate plan for the year.
Below are five compelling reasons to list your house this winter.
1. Demand Is Strong
The latest Buyer Traffic Report from the National Association of Realtors (NAR) shows that buyer demand remains strong throughout the vast majority of the country. These buyers are ready, willing, and able to purchase, and are in the market right now. More often than not, in many areas of the country, multiple buyers are competing with each other to buy the same home.
Take advantage of the buyer activity currently in the market.
2. There Is Less Competition Now
Inventory is still under the 6-month supply needed for a normal housing market. This means in the majority of the country, there are not enough homes for sale to satisfy the number of buyers in the market.
Historically, a homeowner would stay an average of six years in his or her home. Since 2011, that number has hovered between nine and ten years. There is a pent-up desire for many homeowners to move as they were unable to sell over the last few years due to a negative equity situation. As home values continue to appreciate, more and more homeowners will be given the freedom to move.
Many homeowners were reluctant to list their homes over the last couple of years, for fear they would not find a home to move into. That is all changing now as more homes come to the market at the higher end. The choices buyers have will continue to increase. Don’t wait until additional inventory comes to market before you decide to sell.
3. Buyers Are Serious at This Time of Year
Traditionally, homeowners think about spring as a great time to list their homes, when more buyer traffic may be out there actively searching. In the winter, however, the buyers who are seeking a home – whether for relocation or otherwise – are serious ones. They’re ready to make offers and they’re eager to move, often quickly. Your house may be exactly what they’re looking for, so listing when other potential sellers are holding off may be your best opportunity to shine.
4. There Will Never Be a Better Time to Move Up
If your next move will be into the premium or luxury market, now is the time to move up. There is currently ample inventory for sale at higher price ranges. This means if you’re planning on selling a starter or trade-up home and moving into your dream home, you’ll be able to do that now. Demand for your entry-level home is high, and inventory in the luxury or premium market is too.
According to CoreLogic, prices are projected to appreciate by 5.6% over the next year. If you are moving to a higher-priced home, it will wind up costing you more in raw dollars (both in down payment and in your mortgage) if you wait.
5. It’s Time to Move On With Your Life
Look at the reason you decided to sell in the first place and determine whether it’s worth waiting. Is money more important than being with family? Are you ready to go on with your life the way you think you should?
Only you know the answers to these questions. You have the power to take control of the situation by putting your home on the market this winter. Perhaps the time has come for you and your family to move on and start living the life you desire.
That is what is truly important.
The information contained, and the opinions expressed, in this article are not intended to be construed as investment advice. Keeping Current Matters, Inc. does not guarantee or warrant the accuracy or completeness of the information or opinions contained herein. Nothing herein should be construed as investment advice. You should always conduct your own research and due diligence and obtain professional advice before making any investment decision. Keeping Current Matters, Inc. will not be liable for any loss or damage caused by your reliance on the information or opinions contained herein
There are great advantages to owning a home, yet many people continue to rent. The financial benefits are just some of the reasons why homeownership has been a part of the long-standing American dream.
Realtor.com reported that:
“Buying remains the more attractive option in the long term – that remains the American dream, and it’s true in many markets where renting has become really the shortsighted option…as people get more savings in their pockets, buying becomes the better option.”
Why is owning a home financially better than renting?
Here are the top 5 financial benefits of homeownership:
- Homeownership is a form of forced savings.
- Homeownership provides tax savings.
- Homeownership allows you to lock in your monthly housing cost.
- Buying a home is less expensive than renting.
- No other investment lets you live inside of it.
Studies have also shown that a homeowner’s net worth is 44x greater than that of a renter.
A family that purchased a median-priced home at the start of 2019 would build more than
$37,750 in family wealth over the next five years with projected price appreciation alone.
Some argue that renting eliminates the cost of taxes and home repairs, but every potential renter must realize that all the expenses the landlord incurs are already baked into the rent payment – along with a profit margin!
Owning a home has many social and financial benefits that cannot be achieved by renting. Let’s connect to determine if buying a home is your best move.
The information contained, and the opinions expressed, in this article are not intended to be construed as investment advice. Keeping Current Matters, Inc. does not guarantee or warrant the accuracy or completeness of the information or opinions contained herein. Nothing herein should be construed as investment advice. You should always conduct your own research and due diligence and obtain professional advice before making any investment decision. Keeping Current Matters, Inc. will not be liable for any loss or damage caused by your reliance on the information or opinions contained herein.
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