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A recent survey by Lending Tree tapped into behaviors of over 1,000 prospective buyers. The results indicated 53% of all homebuyers are more likely to buy a home in the next year, even amid the current health crisis. The survey further revealed why, naming several reasons buyers are more likely to move this year (see graph below):
Let’s break down why these are a few of the key factors motivating buyers to actively engage in the home search process, and the corresponding wins for sellers as well.

1. Low Mortgage Rates

The biggest reason potential homebuyers indicated they’re eager to purchase this year is due to current mortgage rates, which are hovering near all-time lows. Today’s low rates are making it more affordable than ever to buy a home, which is a huge incentive for purchasers. In fact, 67% of respondents in the Lending Tree survey want to take advantage of low mortgage rates. This is no surprise when comparing historic mortgage rates by decade (see below):Sam Khater, Chief Economist at Freddie Mac recently said:

“As the economy is slowly rebounding, all signs continue to point to a solid recovery in home sales activity heading into the summer as prospective buyers jump back into the market. Low mortgage rates are a key factor in this recovery.”

2. Reduced Spending

Some people have also been able to save a little extra money over the past few months while sheltering in place. One of the upsides of staying home recently is that many have been able to work remotely and minimize extra spending on things like commuting expenses, social events, and more. For those who fall into this category, they may have a bit more saved up for down payments and closing costs, making purchasing a home more feasible today.

3. Re-Evaluating Their Space

Spending time at home has also given buyers a chance to really evaluate their living space, whether renting or as a current homeowner. With time available to craft a wish list of what they really need in their next home, from more square footage to a more spacious neighborhood, they’re ready to make it happen.

What does this mean for buyers and sellers?

With these three factors in play, the demand for housing will keep growing this year, especially over the summer as more communities continue their phased approach to reopening. Buyers can take advantage of additional savings and low mortgage rates. And if you’re thinking of selling, know that your home may be in high demand as buyer interest grows and the number of homes for sale continues to dwindle. This may be your moment to list your house and make a move into a new space as well.

Bottom Line

If you’re ready to buy or sell – or maybe both – let’s connect to put your plans in motion. With low mortgage rates leading the way, it’s a great time to take advantage of your position in today’s market.

Source: KCM

Every year, Gallup conducts a survey of Americans to determine their choice for the best long-term investment. Respondents are asked to select real estate, stocks/mutual funds, gold, savings accounts/CDs, or bonds.

For the seventh year in a row, real estate has come out on top as the best long-term investment. Gallup explained:

“Real estate remains the most favored investment to Americans, as has been the case since 2013, when the housing market was on the rebound. More than a third of Americans have named real estate as the top investment since 2016.”

This year’s results indicated 35% of Americans chose real estate, followed by stocks at 21%. The full results covering the last decade are shown in the chart below:

Bottom Line

The belief of the American people in the stability of housing as a long-term investment remains strong, even through the many challenges our economy faces today.

Source: KCM

Some Highlights

• The health crisis slowed the market this spring, so buyers are jumping back into the market to make their moves this summer.
• Check these 10 items off your to-do list so your house is ready to sell while buying is hot!
• Let’s connect today to prepare your house for the sizzling summer market.

Source: KCM

As the health crisis started making its way throughout our country earlier this spring, sellers have been cautious about putting their homes on the market. This hesitation stemmed primarily from fear of the spread of the coronavirus, and understandably so. This abundant caution has greatly impacted the number of homes for sale and slowed the pace of a typically busy spring real estate season. Mark Fleming, Chief Economist at First American notes:

“As more homeowners are reluctant to list their homes for sale amid the pandemic, the supply of homes available to potential home buyers continues to dwindle.”

With many states beginning a phased approach to reopening, virtual best practices and health and safety guidelines for the industry are in place to increase the comfort level of buyers and sellers. What we see today, though, is that sellers are still making a very calculated return to the market. In their latest Weekly Housing Trends Report, realtor.com indicates:

“New listings: On the slow path to recovery. Nationwide the size of declines held mostly steady this week, dropping 23 percent over last year, a slight increase over last week but still an improvement over the 30 percent declines in the first half of May.”

Although we’re starting to inch our way toward more homes for sale throughout the country, the number of homes on the market is still well below the demand from buyers. In the same report, Javier Vivas, Director of Economic Research for realtor.com shares:

“Sellers have yet to come back in full force, limiting the availability of homes for sale. Total active listings are declining from a year ago at a faster rate than observed in previous weeks, and this trend could worsen as buyers regain confidence and come back to the market before sellers.”

Lawrence Yun, Chief Economist at the National Association of Realtors (NAR) seems to agree:

“In the coming months, buying activity will rise as states reopen and more consumers feel comfortable about homebuying in the midst of the social distancing measures.”

What we can see today is that homebuyers are more confident than the sellers, and they’re ready to make up for lost time from the traditional spring market. Summer is gearing up to be the 2020 buying season, so including your house in the mix may be your best opportunity to sell yet. Interest in your house may be higher than you think with so few sellers on the market today. As Vivas says:

“More properties will have to enter the market in June to bring the number of options for buyers back to normal levels for this time of the year, nationwide and in all large markets.”

Bottom Line

If you’re ready to sell your house this summer, let’s connect today. Buyers are interested and they may be looking for a house just like yours.

Source: KCM

On Monday, the National Bureau of Economic Research (NBER) announced that the U.S. economy is officially in a recession. This did not come as a surprise to many, as the Bureau defines a recession this way:

“A recession is a significant decline in economic activity spread across the economy, normally visible in production, employment, and other indicators. A recession begins when the economy reaches a peak of economic activity and ends when the economy reaches its trough. Between trough and peak, the economy is in an expansion.”

Everyone realizes that the pandemic shut down the country earlier this year, causing a “significant decline in economic activity.”

Though not surprising, headlines announcing the country is in a recession will cause consumers to remember the devastating impact the last recession had on the housing market just over a decade ago.

The real estate market, however, is in a totally different position than it was then. As Mark Fleming, Chief Economist at First American, explained:

“Many still bear scars from the Great Recession and may expect the housing market to follow a similar trajectory in response to the coronavirus outbreak. But, there are distinct differences that indicate the housing market may follow a much different path. While housing led the recession in 2008-2009, this time it may be poised to bring us out of it.”

Four major differences in today’s real estate market are:

1. Families have large sums of equity in their homes
2. We have a shortage of housing inventory, not an overabundance
3. Irresponsible lending no longer exists
4. Home price appreciation is not out of control

We must also realize that a recession does not mean a housing crash is will follow.  In three of the four previous recessions prior to 2008, home values increased. In the other one, home prices depreciated by only 1.9%.

Bottom Line

Yes, we are now officially in a recession. However, unlike 2008, this time the housing industry is in much better shape to weather the storm.

Source: KCM

With more U.S. states reopening for business this summer, and as people start to return to work, we can expect the economy to begin improving. Most expert forecasts indicate this economic recovery will start to happen in the second half of this year. As we get back to work and the financial landscape of the country begins to turn around, many experts also agree that real estate has the potential to lead the way in the recovery process.

According to Ivy Zelman of Zelman & Associates:

 “Housing will fare better than expected during this severe downturn.”

In addition, CNBC notes:

“Mortgage demand from home buyers shows unexpectedly strong and quick recovery…The quick recovery has surprised most forecasters.”

Robert Dietz, Chief Economist and Senior Vice President for Economics and Housing Policy of the National Association of Home Builders (NAHB) says:

“Overall, the data lend evidence to the NAHB forecast that housing will be a leading sector in an eventual economic recovery.”

One of the big reasons why housing has the potential to be such a driving force is the significant impact it has on the local economy. This impact is particularly strong when a newly constructed home is built and sold. According to a recent study by the National Association of Realtors (NAR), the average new home sale has a total economic impact of $88,416. As outlined in the graphic below, this is a combination of income generated from real estate industries, expenditures, and new home construction.With so many unknowns today, especially in the wake of a worldwide pandemic, one known factor is the bright spark the housing market can play in local and national recovery. Buying and selling a home goes well beyond personal growth and satisfaction – it supports our economy as a whole.

Bottom Line

According to experts, the economy will begin to recover in the second half of this year. With real estate as a driver, that recovery may start sooner than we think.

Source: KCM

Last Friday, the U.S. Bureau of Labor Statistics released their May Employment Situation Summary. Leading up to the release, most experts predicted the unemployment rate would jump up to approximately 20% from the 14.7% rate announced last month.

The experts were shocked.

The Wall Street Journal put it this way:

“The May U.S. jobless rate fell to 13.3% and employers added 2.5 million jobs, blowing Wall Street expectations out of the water: Economists had forecast a loss of 8.3 million jobs and a 19.5% unemployment rate.”

In addition, CNBC revealed:

“The May gain was by far the biggest one-month jobs surge in U.S. history since at least 1939.”

Here are some of the job gains by sector:

• Food Service and Bartenders – 1,400,000
• Construction – 464,000
• Education and Health Services – 424,000
• Retail – 368,000
• Other Services – 272,000
• Manufacturing – 225,000
• Professional Services – 127,000

There’s still a long way to go before the economy fully recovers, as 21 million Americans remain unemployed. That number is down, however, from 23 million just last month. And, of the 21 million in the current report, 73% feel their layoff is temporary. This aligns with a recent Federal Reserve Bank report that showed employers felt 75% of the job losses are temporary layoffs and furloughs.

The Employment Situation Summary was definitely a pleasant surprise, and evidence that the country’s economic turnaround is underway. The data also offers a labor-market snapshot from mid-May, when the government conducted its monthly survey of households and businesses. Many states did not open for business until the second half of May. This bodes well for next month’s jobs report.

Bottom Line

We cannot rejoice over a report that reveals millions of American families are still without work. We can, however, feel relieved that we are headed in the right direction, and much more quickly than most anticipated.

Source: KCM

Some Highlights

• National Homeownership Month is a great time to reflect on how we can each promote stronger community growth.
• Homeownership helps families build financial freedom, find greater happiness and satisfaction, and make a positive impact on our local communities.
• Let’s connect today if homeownership is part of your future plans.

Source: KCM

Tomorrow morning the Bureau of Labor Statistics will release the latest Employment Situation Summary, which will include the most current unemployment rate. It will be a horrific number. Many analysts believe unemployment could be greater than 20%. These numbers represent families across the nation that are not sure when (or if) they will return to work. The emotional impact on these households is devastating.

There are, however, some small rays of light shining through on this issue. Here are three:

1. The actual number of unemployed is less than many are reporting

The number of people unemployed is sometimes over-exaggerated. It seems that every newscaster talks about the 40+ million people “currently” unemployed. It is true that, over the last ten weeks, over 40.7 million people have applied for unemployment. It is also true, however, that many of those people have already returned to work or gotten a new job. The actual number of people currently unemployed is 21.1 million. This is still a horrible number, but about half of what is often being reported.

2. Of those still unemployed, most are temporary layoffs

Last month’s unemployment report showed that 90% of those unemployed believe their status is temporary. Friday’s report will probably show a decline in that percentage as the original number was somewhat optimistic. However, a recent survey by the Federal Reserve Bank showed that employers believe over 75% of job losses are temporary layoffs and furloughs. This means 3 out of 4 people should be returning to work as the economy continues to recover.

3. Those on unemployment are receiving assistance

According to a recent study from the Becker Friedman Institute for Economics at the University of Chicago, 68% of those who are eligible for unemployment insurance receive benefits that exceed lost earnings, with 20% receiving benefits at least twice as large as their lost earnings.

Bottom Line

Tomorrow’s report will be difficult to digest. However, as the nation continues to reopen, many of those families who are impacted will be able to return to work.

Source: KCM

The travel industry is one of the major sectors that’s been hit extremely hard by the COVID-19 pandemic. Today, it’s hard to know how long it will take for summer travelers to be back in action and for the industry to fully recover. Homeowners who rent their secondary properties on their own or through programs like Airbnb, which has over 660,000 listings in the U.S. alone, have been impacted in this challenging time. Some of these homeowners are considering selling their vacation homes, and understandably so.

A recent CNN article indicated:

“With global travel screeching to a halt during the pandemic, a number of Airbnb hosts are planning to sell their properties…These desperate moves come as hosts face the possibility of losing thousands of dollars a month in canceled bookings while bills, maintenance costs, and mortgage payments pile up.”

If you’re one of the property owners in this position, you too may be feeling the pain of decreased travel, especially as we prepare for the typical busy summer vacation season. A recent survey notes that 48% of Americans have already canceled summer travel plans due to the current health crisis. In addition, 36% indicated they don’t have vacation plans, and only 16% said they did not cancel their summer travel.

The same survey also asked, “How long will you wait before traveling again?” Not surprisingly, only 29% of respondents are planning to travel within the next 6 months. That means 71% are putting their plans on hold for at least 6 months, or are still unsure about future travel. That can continue to add to the significant income loss that many property renters felt this spring.If you’re considering selling your rental property, know that there are two key factors indicating that selling your vacation home now may be your best move as a homeowner.

1. Inventory Shortage

The inventory of overall homes for sale is well below the demand from potential buyers, so many eyes may be searching for a home like yours. According to the National Association of Realtors (NAR), total housing inventory, meaning homes available to purchase, is down 19.7% from one year ago (see graph below):Inventory across the country continues to be a challenge, with only a 4.1-month supply of listings available at the current sales pace. For a balanced market, where there are enough homes available for interested buyers to purchase, that number would need to bump up to a 6-month supply. This means we don’t have enough inventory for the number of buyers looking for homes, so selling in this scenario is ideal. Buyers are looking now, and some vacation homes make a great primary residence or second home for those eager to escape from more populated urban areas.

2. Home Prices

The lack of inventory is also keeping homes from depreciating in value. Today, prices are holding strong and experts forecast home price appreciation to continue throughout this year. Selling your home while prices are holding steady is a sound business move. You’ll likely have equity you’ve earned working for you as well. If your home has been vacant for the past few months, the forced savings you have built in your equity may help balance out possible rental income loss due to the slowdown in the travel industry.

Bottom Line

We don’t know exactly when heightened summer travel will return or what it will look like when it does. If you’re considering selling your vacation home, let’s connect today to determine your options in the current market.

Source: KCM