Buying Beats Renting in These Top Cities

Some HighlightsBased on a recent study, in 22 of the top 50 metros, the monthly mortgage payment is lower than the rent payment.Make sure you work with a pro who can help you crunch the numbers and see how your city stacks up. This may be your opportunity to forget renting for good. If you want to see which option makes the most sense in your area, connect with a local agent.

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Two Reasons Why the Housing Market Won’t Crash

You may have heard chatter recently about the economy and talk about a possible recession. It's no surprise that kind of noise gets some people worried about a housing market crash. Maybe you’re one of them. But here’s the good news – there’s no need to panic. The housing market is not set up for a crash right now.Real estate journalist Michele Lerner says:“A housing market crash happens when home values plummet due to a lack of demand for homes or an oversupply.”With that definition in mind, here are two reasons why this just isn’t on the horizon.1. Demand for Homes Is Higher than SupplyOne of the biggest reasons the housing market crashed back in 2008 was an oversupply of homes. Today, though, it’s a very different story. It’s a general rule of thumb that a market where supply and demand are balanced has a six-month supply of homes. A higher number means supply outpaces demand, and a lower number means demand outpaces supply. The graph below uses data from NAR to put today’s situation into context:The graph compares housing supply during three different periods of time. The red bar shows there were 13 months of supply before the 2008 crisis, which was far too much. The gray bar shows a balanced market with six months of supply, for context. And the blue bar shows there are only 4.2 months of supply today.Put simply, there are more people who want to buy homes than there are homes available to buy right now. So, demand is greater than supply. When that happens, home prices stay steady or rise – the opposite of a housing market crash. It’s important to note that inventory levels differ from market to market. Some areas may be more balanced, while a few could have a slight oversupply, which can impact prices locally. However, most markets continue to experience a shortage of homes.Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), says:“We simply don’t have enough inventory. Will some markets see a price decline? Yes. [But] with the supply not being there, the repeat of a 30 percent price decline is highly, highly unlikely.”2. Unemployment Is Still LowWhen people are unemployed, they’re more likely to have trouble making their mortgage payments and may be forced to sell or face foreclosure. That was a big problem during the 2008 financial crisis. Today, the employment situation is much more stable (see graph below):Again, this graph shows three different periods of time, but this one is the unemployment rate. The red bar represents the 2008 financial crisis when unemployment was very high at 8.3%. The gray bar shows the 75-year average of 5.7%. And the blue bar shows the unemployment rate today, and it’s much lower at just 4.1%.Right now, people are working, earning an income, and making their mortgage payments. That’s one reason why the wave of foreclosures that happened in 2008 isn’t going to happen again this time. Plus, since so many people are employed right now, many are actually in a position to buy a home, and this demand keeps upward pressure on prices.Today’s Housing Market Is Stronger than in 2008While it’s understandable to be concerned when you hear talk of a recession and economic uncertainty, but know this: the housing market is in a much better place than it was in 2008. According to Rick Sharga, Founder and CEO at CJ Patrick Company:“Literally everything is different about today’s housing market dynamics than the conditions that led to the housing crisis.”Demand for homes still outpaces supply, and unemployment remains low. And these are two key factors that will help prevent the housing market from crashing any time soon.Bottom LineThe housing market is in a much better place than it was in 2008, but it’s important to remember that real estate is very local. So, it’s always a good idea to stay informed about your specific market. If you have any questions or want to discuss how these factors are playing out in your area, reach out to a local real estate agent.

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Now’s the Time To Upgrade to Your Dream Home

If you’ve been wanting to sell your house and move up to a bigger or nicer home, you’re not alone. A recent Inman survey reveals the top motivator for today’s homebuyers is the desire for more space or an upgraded home (see graph below):But there’s also a good chance you, like many other people, have been holding off on that goal because of recent market challenges. It makes sense – when you’re planning an upgrade that could increase your monthly housing costs, affordability has a huge impact on when you make your move. But there’s good news: now’s actually a great time to make that move happen. Here’s why.You Have a Lot of Equity To LeverageOne of the key benefits in today’s market is the amount of equity you’ve likely built up in your current house over the years. Even with recent shifts in the housing market, national home prices have steadily grown, adding to the equity homeowners have today. Selma Hepp, Chief Economist at CoreLogic, explains it well:“Persistent home price growth has continued to fuel home equity gains for existing homeowners who now average about $315,000 in equity and almost $129,000 more than at the onset of the pandemic.”What does that mean for you? If you’ve been in your home for a few years, you’re probably sitting on a significant amount of equity. You can put that toward the down payment on your next home, helping keep the amount you borrow within a comfortable range.This can make upgrading more achievable than you might think. If you’re curious how much you’ve built up over the years, ask your real estate agent for a professional equity assessment.Mortgage Rates Have Fallen, Boosting Your Purchasing PowerAnd there’s another big reason why now’s a great time to make your move: mortgage rates are trending down. Lower rates can help make your future monthly payments more manageable, and they also increase your purchasing power. As Nadia Evangelou, Senior Economist and Director of Real Estate Research at the National Association of Realtors (NAR), points out:“When mortgage rates fall, the interest portion of monthly payments decreases, which lowers the total payment. This makes it easier for more borrowers to . . . qualify for mortgages that may have been unaffordable at higher rates.”That gives you more flexibility when shopping for homes and may allow you to afford a house at a price point that was previously out of reach. A trusted lender can work with you to figure out the best plan for your budget.Bottom LineIf you’re ready to sell your current home and find the bigger, nicer home you’ve been dreaming of, don’t wait. Your equity, paired with lower mortgage rates, puts you in a great position to make that move today.To make the best decisions and get the most out of your current market advantage, work with a trusted real estate professional who can guide you through every step of the homebuying process.

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