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Sales in February 2023 were up 14.5% month over month and still down 22.6% year over year according to the NAR Housing Snapshot.   The median sales price dipped 0.2% to $363,000 and there are 2.6 months supply of homes on the market compared to 1.7 months a year ago. "Inventory levels are still at historic lows, and consequently, multiple offers are returning on a good number of properties." According to Lawrence Yun, Chief Economist for the National Association of REALTORS�. It is still important to have a strategy for potentially competing with other buyers on the house you want to buy.   The plan should include several available provisions and options, so that at the time of drafting the sales offer, you can consider exactly what to include based on the situation. Unless a person is paying cash, you need to be pre-approved by a trusted mortgage professional long before you start looking at homes.   Include the written pre-approval letter along with the offer

The housing market in 2021 and part of 2022 was anything but normal.   Mortgage rates were at all time lows and may never reach those levels again.   Double-digit appreciation drove prices to new heights.   Low inventories fueled by high buyer demand made multiple offers a normal expectation. As we look at the market snapshots provided by MLS in the various markets across the U.S., it appears that things may be returning to normal, but not necessarily in all areas.   While there are more homes on the market now than a year ago, there are less sales due primarily to the doubling of mortgage rates in 2022. Time on the market is lengthening but that can be explained by the removal of approximately 15 million homebuyers who now have affordability issues.   When the market shifted, sellers expectations for what they thought their home is worth are not keeping pace with current conditions. Some sellers who didn't put their home on the market in 2021 and 2022 for whatever r

Like with any professional, there are tools and techniques available to help with particular situations.   They might be more popular at certain times and might even be put aside or forgotten at others. For real estate professionals, one of those is the backup offer.   In a situation where there are multiple offers, the seller can accept any offer for whatever reasons are important to them, leaving the makers of the other offers disappointed.   There is always some uncertainty that the buyers on a contract will close accordingly.   To hedge on that possibility, the seller may choose to make a counteroffer to one or more of the other offers to be a backup should the primary contract not close. From a buyer's perspective, the purpose of a backup offer is to be next in line to have the chance to purchase the property should the first contract fall through. The benefit is that you'll be next in line to purchase the home without having to submit another offer and possi

If you've ever been in a Monopoly game after most of the properties have been purchased and developed, it can be a relief to land on Free Parking, knowing the dice must rotate to the next player giving you a respite from paying rent.   Like the game, in real life, it would be nice to avoid paying rent and even better to have people paying you rent for property you own. Winning in the game of Monopoly is all about investing.   If you travel around the board, trying to buy the ultimate property and pass Go to get another $200, you're missing the opportunity to purchase good properties along the way that could lead to upgrading into your dream home. Starting early to buy your first home gives a buyer a chance to acquire a property with a minimum down payment, and inevitably, have a lower payment than paying rent for a similar home.   As the home appreciates and the loan amortizes, the equity grows.   Within a few years of average appreciation, the down payment can do

The biggest shock to homebuyers is the soaring mortgage rates of 2022 that doubled in one year resulting in approximately 15 million mortgage ready buyers displaced from the market due to affordability issues. As of February 23, 2023, the 30-year fixed rate mortgage was at 6.5%.   While that is twice as high as it was on January 6, 2022, it is still lower than the 7.75% average rate since April 2, 1971, according to the Freddie Mac Primary Mortgage Market Survey. When rates increase at a rapid pace like this, it takes time for the public to adjust and begin to accept it as the new normal. Prior to the housing bust that led to the Great Recession, the normal for mortgage rates was in the 6% range and existing home sales were over 6.5 million for three years.   From 2007 to 2014, home sales were closer to 5 million with 2008-2011 at just above 4 million annually. From January 17, 2008 to March 5, 2020, mortgage rates averaged 4.32%.   In this 12-year period, buyers exper

Locking your interest rate protects you from increases due to market conditions.   Locking early safeguards your budgeted payment.   By locking the rate, if the market goes up, you get the lower rate; if it goes down after the lock, you may be able to pay a fee and lower the rate. Knowing when to take the lock is determined by which direction you think the market is going.   If you think rates are going up, lock in early.   If you think rates are going down, ride the rate to within a few days of closing. Some lenders may allow a borrower to lock a rate after pre-approval but is more common to not offer a lock until there is a signed contract on a home.   Even with a pre-approval, it could easily take 30 days or more to close a transaction and the rates can move a lot in that period. There may be a fee charged to lock a rate which is determined by the lender.  Generally, the longer the time for the rate lock, the higher the fee. There is a lock period established by the l

Sellers, who last year, were not willing to make any concessions, are much more likely to do so this year due to the softening of the market because of inflation and higher mortgage rates affecting affordability for buyers. Concessions can take place in different forms.   A seller could offer to pay the buyer's closing costs or pay points for the buyer to get an FHA or VA loan.   Another option would be to pay for a 2/1 buydown that would lower the buyer's payments in the first two years of the mortgage. Buydowns can be temporary or permanent and are achieved by pre-paying the interest at the time of closing.   Typically, the seller will do this as an inducement to the buyer.   While individual lenders set the price for permanent buydowns, a common rule-of-thumb would be two points, or two percent of the mortgage amount, to buydown the rate 0.5% for the life of the mortgage. A more common type of buydown is a 2/1 where the payment is calculated at 2% lower than th

The TCJA of 2019 dramatically increased the standard deduction so that many homeowners benefit from taking that rather than itemizing their deductions.   Taking the standard deduction may result in a larger deduction even if you have no expenses that qualify for claiming itemized deductions. Another thing reinforcing taking the standard deduction was low rates at the time and the interest plus property taxes were less than the standard deduction. In 2022, mortgage rates more than doubled, so, anyone who purchased a home or refinanced at the higher rates might benefit from itemizing rather than taking the standard deduction.   The takeaway in this article is to compare both methods each year to see which way provides the larger deduction. For 2022, the standard deduction for married couples filing jointly is $25,900, for single filers and married individuals filing separately is $12,950, and for heads of households is $19,400.   There are increased amount for seniors over 6

If you are a prospective homebuyer, things have changed in the past year.   Most notably, mortgage rates have more than doubled which has created an affordability gap that has taken approximately 15 million buyers out of the market. Inventories are growing but it isn't because more people are deciding to sell their homes; it is because it is taking longer to sell properties because less people are qualified.   Current housing inventory is a little more than a quarter of what it was in 2008. Buyers are wondering when the market will return to normal, as if mortgage rates at three and four percent should be commonplace.   The average mortgage rate between April 1971 and November 2022 is 7.76%. Predictions for mortgage rates in the third quarter 2023 range from 4.5% for Fannie Mae, 5.0% for Mortgage Bankers Association, and 5.2% for Freddie Mac. Traditionally, over the past 35 years, there is a 175-200 basis point difference between the 10-year Treasury and the 30-year

If you're on the sidelines to buy a home, there are things you can do to be ready when you do get back in the game. Improve your credit score to qualify for the best mortgage rate available which are reserved for those with the highest scores.   Get a copy of your current credit reports from all three of the main credit bureaus: Equifax, TransUnion, and Experian.   You can get them at AnnualCreditReport.com without paying for them. While you won't see a credit score on these reports, you will see a history of your available credit accounts.   According to the Federal Trad Commission, one in five people have at least one error on one of their credit reports which can lower your score or increase the cost or likelihood of receiving new credit.   Identify and correct these mistakes.   Explain in writing the error in the report and include copies of documents that support your dispute.   Both the credit bureau and the business that supplied the information must co

The seller wants the most for their home and the buyer wants to pay the least possible.   From the very beginning of the homebuying process, there are adversarial positions between the principals.   If you happen to be in a multi-offer situation, it just complicates things further. Then, there are the emotions that tend to cloud the decision making on both sides of the transaction.   Sellers have lived in the home for years, possibly, with cherished family experiences and maybe, having put considerable effort and money into capital improvements. On the buyer side, they may have lost out on several homes due to competing offers and now, this year, interest rates have doubled, and the discretionary funds required to pay for a home could be causing cuts in their budget in other areas. A year ago, buyers were waiving contingencies for financing, appraisals, inspections, and other things just to be competitive.   Today, to make the home more affordable with the higher mortgage

As the expression goes, "if I could turn back time", maybe you'd would do some things differently.  If you're wanting to buy a home, the regret may come from not getting a mortgage when rates were half of what they are today.  There may not be a way to literally "turn back time" but you may still be able to get a mortgage with last years' rates. Let's say a home was sold in the fall of 2021 for $350,000 with a 3% FHA loan.  Today, winter of 2023, the home is on the market for sale at $400,000.  There are buyers who have $40,000 for a down payment, who like the home, and want to purchase it. At today's mortgage rate of 6.42%, the $360,000, 30-year mortgage payment would be $2,2565.54 for the principal and interest.  They have been looking for a year and in the past 12 months, the mortgage rates have doubled which will stretch their finances along with all the other inflationary pressures. Their incredibly savvy agent has learned that

The dilemma facing would-be buyers today is to wait until things settle down or move ahead in this unsettling economic environment.   More specifically, the question should be, what are you waiting to settle down: mortgage rates, or prices or both? Mortgage rates haven't been this high since 2002, so it could be considered plausible that the high rates are temporary.   That leads to the question of how long before they do start coming down.   If we look back further, the average 30-year fixed-rate mortgage, dating back to April 1971 is 7.81%, so the current rate is lower than the 50-year average. The other variable is waiting for prices to come down.   That one is probably not as likely to happen.   We have seen some softening of prices for homes on the market which is due to a decline in sales based on affordability and the resulting increase in inventory.   Sales reached a seasonally adjusted annual rate of 4.09 million in November which is down 35.4% from one year