Will Home Values Appreciate or Depreciate in 2020?

With the housing market staggered to some degree by the health crisis the country is currently facing, some potential purchasers are questioning whether home values will be impacted. The price of any item is determined by supply as well as the market’s demand for that item.

Each month the National Association of Realtors (NAR) surveys “over 50,000 real estate practitioners about their expectations for home sales, prices and market conditions” for the REALTORS Confidence Index.

Their latest edition sheds some light on the relationship between seller traffic (supply) and buyer traffic (demand) during this pandemic.

Buyer Demand

The map below was created after asking the question: “How would you rate buyer traffic in your area?”The darker the blue, the stronger the demand for homes is in that area. The survey shows that in 34 of the 50 U.S. states, buyer demand is now ‘strong’ and 16 of the 50 states have a ‘stable’ demand.

Seller Supply 

The index also asks: “How would you rate seller traffic in your area?”As the map above indicates, 46 states and Washington, D.C. reported ‘weak’ seller traffic, 3 states reported ‘stable’ seller traffic, and 1 state reported ‘strong’ seller traffic. This means there are far fewer homes on the market than what is needed to satisfy the needs of buyers looking for homes right now.

With demand still stronger than supply, home values should not depreciate.

What are the experts saying?

Here are the thoughts of three industry experts on the subject:

Ivy Zelman:

“We note that inventory as a percent of households sits at the lowest level ever, something we believe will limit the overall degree of home price pressure through the year.”

Mark Fleming, Chief Economist, First American:

“Housing supply remains at historically low levels, so house price growth is likely to slow, but it’s not likely to go negative.”

Freddie Mac:

“Two forces prevent a collapse in house prices. First, as we indicated in our earlier research report, U.S. housing markets face a large supply deficit. Second, population growth and pent up household formations provide a tailwind to housing demand.”

Bottom Line

Looking at these maps and listening to the experts, it seems that prices will remain stable throughout 2020. If you’re thinking about listing your home, let’s connect to discuss how you can capitalize on the somewhat surprising demand in the market now.

Why Home Equity Is a Bright Spark in the Housing Market

Given how we have seen more unemployment claims than ever before over the past several weeks, fear is spreading widely. Some good news, however, shows that more than 4 million initial unemployment filers have likely already found a new job, especially as industries such as health care, food and grocery stores, retail, delivery, and more increase their employment opportunities. Breaking down what unemployment means for homeownership, and understanding the significant equity Americans hold today, are important parts of seeing the picture clearly when sorting through this uncertainty.

One of the biggest questions right now is whether this historic unemployment rate will initiate a new surge of foreclosures in the market. It’s a very real fear. Despite the staggering number of claims, there are actually many reasons why we won’t see a significant number of foreclosures like we did during the housing crash twelve years ago. The amount of equity homeowners have today is a leading differentiator in the current market.

Today, according to John Burns Consulting, 58.7% of homes in the U.S. have at least 60% equity. That number is drastically different than it was in 2008 when the housing bubble burst. The last recession was painful, and when prices dipped, many found themselves owing more on their mortgage than what their homes were worth. Homeowners simply walked away at that point. Now, 42.1% of all homes in this country are mortgage-free, meaning they’re owned free and clear. Those homes are not at risk for foreclosure (see graph below): In addition, CoreLogic notes the average equity mortgaged homes have today is $177,000. That’s a significant amount that homeowners won’t be stepping away from, even in today’s economy (see chart below):In essence, the amount of equity homeowners have today positions them to be in a much better place than they were in 2008.

Bottom Line 

The fear and uncertainty we feel right now are very real, and this is not going to be easy. We can, however, see strength in our current market through homeowner equity that has not been there in the past. That may be a bright spark to help us make it through.

Despite COVID-19, sales prices are up 13% year-over-year.  Buyers continue to reach out to me to look at properties with a sense of urgency and I continue to meet with sellers looking to sell now, during the pandemic, and those waiting until after.

My hope for you is that you continue to feel well and that you are making it through this incredibly challenging time as well as possible. Please reach out to me if I can be of any help whatsoever. Click on the link for the full RI real estate market report for March.

https://indd.adobe.com/view/cf555f1d-bf05-435a-b13f-9f0d8dbd6d3e?utm_campaign=website&utm_source=sendgrid.com&utm_medium=email

Be well,

Sarah
Mott & Chace Sotheby’s International Realty

2019 Circle of Sales Excellence Silver Award Recipient

sarah.huard@mottandchace.com

http://www.sarahhuard.com

401 255 2578

Thrilled to be listing a meticulous and incredibly welcoming home in my neighborhood in Barrington, RI. Located at 24 Wildflower Road, this uplifting home features 4 bedrooms with a fifth office/bedroom, two living rooms and an expansive great room with skylights and cathedral ceiling. Situated on a corner lot, this home boasts a polished interior with ample and vibrant first-floor living space. With its finished basement, ideal corner lot with Smith’s Cove views and walk to town and walk to water convenience, this Rumstick gem is one to see!  Listed at $619,900 by MCSIR.   Click on the following link for a 360 Tour!

https://www.seetheproperty.com/story/featured/53573

I hope this finds you as well as can be expected during this uncertain time. My wish for you is that you and your loved ones remain healthy and well. I do believe the silver lining in all of this will be a heightened sense of appreciation for that which we took for granted “pre- Covid19”. I adopted a mindset of “every day is a gift” years ago after fighting through years of medical battles. It truly changed my outlook on life and for that, I am eternally grateful.  This too shall pass and in the interim, I am being proactive and cautious as I continue daily real estate work on behalf of my clients. I sent the following email to my clients, who will soon be listing their homes, to highlight the extensive steps I’m taking to ensure smooth, successful and SAFE transactions.

1. All listings will have video; Zillow 3D, my personal video and virtual tours /360 tours via my photographer. 

2. I will be doing tours of your home via Facebook Live and Instagram Live, narrated by just me and streamed onto social platforms.  I will also create video tours and upload them to YouTube and then send to Facebook and my Instagram feed; so that way people can view them at any time.

3. Showings- I will use FaceTime for buyers who can’t come into the house.  Prior to all showings, I will wipe down all doors/handles etc as well as post showing. I will open up cabinets and doors so buyers are not touching anything. Agent, if present, will remain 6 feet away. 

4. Offers and all contracts are already done electronically. Lenders, lawyers and municipalities are coordinating to make transactions as safe and virtual as possible.

 5. I am keeping up to date on all modifications to prior practices which now are changing due to Covid19 such as the smoke inspections, how deeds are recorded etc.  I have been talking with my attorney often about the verbiage needed in the P and S  to protect my clients from extensions possibly needed due to the virus. 

 I am watching the market like a hawk to get a sense of which homes are moving, which aren’t, where the buyers are looking etc. 

All of these steps are being done every day to ensure a successful sale during this challenging time. Bottom line is that I have your back and am here for whatever you need or will need and I have an incredible team to turn to if and when we encounter any hurdles.”

Please know that I am here for you now and always, to talk with you or to simply just listen.

Much like the strong foundation of a well-built home, our market is so far weathering all that is being thrown at us remarkably well.  Click on the link below for the latest market info for February.

https://magazine.realtor/daily-news/2020/03/20/strong-february-sales-point-to-market-s-sound-foundation?AdobeAnalytics=ed_rid%3D4644263%26om_mid%3D2216%7CRealtorMagNews_2020_03_20%26om_nytpe%3DREALTOR%20MAG%20NEWS

BE Well and stay strong. We will get through this!

It was a very strong month for the market across the board here in RI for January. My activity level can attest to it! The inventory is slowly increasing and the number of buyers looking to buy in RI continues to escalate. I do daily searches in the dozens for clients looking to move to and within RI.  Sale prices have increased a whopping 17 % and the number of pending sales increased 66%,  indicating how many buyers are looking and willing to pull the trigger and purchase here in RI. Multiple offer scenarios and bidding wars are now commonplace due in large part to the low inventory.  Please take a look at the detailed report below and reach out to me if you are interested in buying or selling in RI. I am also licensed in MA and happy to help you there as well.

https://indd.adobe.com/view/c4473a86-7e5e-4243-8815-cdea675f7e73?utm_campaign=website&utm_source=sendgrid.com&utm_medium=email

It’s a term my beloved dad loves to use to express enthusiasm and one I saw used in Realtor Magazine to reflect the current “mood” of many buyers across the US right now. To say many are “bullish on moving” is a great use of this much-loved expression!

Based on results from a recent NAR homeownership survey, 63% of buyers are feeling that now is a great time to buy. Moreover, 74% of sellers surveyed feel that now is a great time to sell. The universal tone of optimism clearly is resonating in the real estate market as we launch into 2020.

Low mortgage rates and a belief that the economy is improving are key players in the recent igniting of the real estate market. I’m witnessing it here daily with a phone that won’t stop ringing and daily home searches in the dozens being done for clients ready to buy. A recent post I published revealed that the supposed spring market is starting earlier and earlier with each passing year with many in fact beginning their home viewings ( in person, not online!) now, in January!!! This is a trend not only happening in RI but nationwide.

Another trigger for the rise in buyer activity is the length of homeownership. Up until not long ago, the average homeownership was 7 years. It then shifted to 13 years. Well, those homeowners are now ready to bite the bullet. While it’s a great time for first-time homeowners to buy its also a great time to buy for those looking to finally downsize. In fact, older adults, born between 1925 and 1945 .appear the MOST eager to buy at a whopping 73% while baby boomers, born between 1955-1975, are the second most “ready” subset of buyers to make a purchase. While many feel home prices will continue to rise, low mortgage rates, a strong economy, lower unemployment and a rising inventory are creating an active and robust real estate market here in RI and nationwide; especially in the western half of the US. Whether you are looking to downsize, buy your first home and/or sell your home you’ve lived in “forever”, this RI Realtor would be delighted to be of assistance. In fact, she’s “bullish” on advocating for her clients and on RI real estate!