Buying and owning your home can make a big difference in your life by bringing you joy and a sense of belonging. And with June being National Homeownership Month, it’s the perfect time to think about all the benefits homeownership provides. 

Of course, there are financial reasons to buy a house, but it’s important to consider the non-financial benefits that make a home more than just where you live.

Here are three ways owning your home can give you a sense of accomplishment, happiness, and pride.

You May Feel Happier and More Fulfilled 

Owning a home is associated with better mental health and well-being. Gary Acosta, CEO and Co-Founder at the National Association of Hispanic Real Estate Professionals (NAHREP), explains:

“Studies have shown the emotional and psychological benefits that homeownership has on a person’s health and self-esteem . . .”

Similarly, Habitat for Humanity says:

“Residential stability among homeowners is related to improved life satisfaction, . . . along with better physical and mental health.”

So, according to the experts, owning a home can improve your psychological wellness by making you feel happier and more accomplished.

You Can Engage in Your Neighborhood and Grow Your Sense of Community

Your home connects you to your community. Homeowners tend to stay in their homes longer than renters, and that can help you feel more connected to your community because you have more time to build meaningful relationships. And, as Acosta says, when people stay in the same area for a longer period of time, it can lead to them being more involved:

“Homeowners also tend to be more active in their local communities . . .”

After all, it makes sense that someone would want to help improve the area they’re going to be living in for a while.

You Can Customize and Improve Your Living Space

Your home is a place that’s all yours. When you own it, unless there are specific homeowner’s association requirements, you’re free to customize it however you see fit. Whether that’s small home improvements or full-on renovations, your house can be exactly what you want and need it to be. As your tastes and lifestyle change, so can your home. As Investopedia tells us:

“One often-cited benefit of homeownership is the knowledge that you own your little corner of the world. You can customize your house, remodel, paint, and decorate without the need to get permission from a landlord.”

Renting can limit your ability to personalize your living space, and even if you do make changes, you may have to undo them before your lease ends. The ability homeownership gives you to customize and improve where you live creates a greater sense of ownership, pride, and connection with your home.

Bottom Line

Owning your home can change your life in a way that gives you greater satisfaction and happiness. Let’s connect today if you’re ready to explore homeownership and all it has to offer.

The National Association of Realtors (NAR) will release its latest Existing Home Sales Report tomorrow. The information it contains on home prices may cause some confusion and could even generate some troubling headlines. This all stems from the fact that NAR will report the median sales price, while other home price indices report repeat sales prices. The vast majority of the repeat sales indices show prices are starting to appreciate again. But the median price reported on Thursday may tell a different story. 

Here’s why using the median home price as a gauge of what’s happening with home values isn’t ideal right now. According to the Center for Real Estate Studies at Wichita State University:

“The median sale price measures the ‘middle’ price of homes that sold, meaning that half of the homes sold for a higher price and half sold for less. While this is a good measure of the typical sale price, it is not very useful for measuring home price appreciation because it is affected by the ‘composition’ of homes that have sold.

For example, if more lower-priced homes have sold recently, the median sale price would decline (because the “middle” home is now a lower-priced home), even if the value of each individual home is rising.”

People buy homes based on their monthly mortgage payment, not the price of the house. When mortgage rates go up, they have to buy a less expensive home to keep the monthly expense affordable. More ‘less-expensive’ houses are selling right now, and that’s causing the median price to decline. But that doesn’t mean any single house lost value. 

Even NAR, an organization that reports on median prices, acknowledges there are limitations to what this type of data can show you. NAR explains:

“Changes in the composition of sales can distort median price data.”

For clarification, here’s a simple explanation of median value:

• You have three coins in your pocket. Line them up in ascending value (lowest to highest).
• If you have one nickel and two dimes, the median value of the coins (the middle one) in your pocket is ten cents.
• If you have two nickels and one dime, the median value of the coins in your pocket is now five cents.
• In both cases, a nickel is still worth five cents and a dime is still worth ten cents. The value of each coin didn’t change.

The same thing applies to today’s real estate market.

Actual home values are going up in most markets. The median value reported tomorrow might tell a different story. For a more in-depth understanding of home price movements, let’s connect.

As the housing market continues to change, you may be wondering where it’ll go from here. One factor you’re probably thinking about is home prices, which have come down a bit since they peaked last June. And you’ve likely heard something in the news or on social media about a price crash on the horizon. As a result, you may be holding off on buying a home until prices drop significantly. But that’s not the best strategy.

A recent survey from Zonda shows 53% of millennials are still renting right now because they’re waiting for home prices to come down. But here’s the thing: the most recent data shows that home prices appear to have bottomed out and are now on the rise again. Selma Hepp, Chief Economist at CoreLogic, reports:

“U.S. home prices rose by 0.8% in February . . . indicating that prices in most markets have already bottomed out.”

And the latest data from Black Knight shows the same shift. The graph below compares home price trends in November to those in February:

So, should you keep waiting to buy a home until prices come down? If you factor in what the experts are saying, you probably shouldn’t. The data shows prices are increasing in much of the country, not decreasing. And the latest data from the Home Price Expectation Survey indicates that experts project home prices will rise steadily and return to more normal levels of appreciation after 2023. The best way to understand what home values are doing in your area is to work with a local real estate professional who can give you the latest insights and expert advice.

Bottom Line

If you’re waiting to buy a home until prices come down, you may want to reconsider. Let’s connect to make sure you understand what’s happening in our local housing market.

Many people are reaching the point in their lives when they need to decide where they want to live when they retire. If you’re a homeowner approaching this stage, you have several options to explore. Jessica Lautz, Deputy Chief Economist and Vice President of Research at the National Association of Realtors (NAR), says:

“As we see the transition of the large Baby Boomer generation age into retirement, it will be interesting to see if they move in with their Millennial and Gen Z children or if they stay put in their own homes.”

Lautz lists two options: move into a multigenerational home with loved ones, or stay in your current house. Multigenerational living is rising in popularity, but it isn’t an option for everyone. And staying put may fit fewer and fewer of your needs. There’s a third option though, and for some, it’s the best one: downsizing.

When you sell your house and purchase a smaller one, it’s known as downsizing. Sometimes smaller homes are more suited to your changing needs, and moving means you can also land in your ideal location.

In addition to the personal benefits, downsizing might be more cost effective, too. The New York Times (NYT) shares:

“Many downsizers expect to improve their retirement income stream if their new home costs less than what their old house sells for. Lower utility costs, insurance and property taxes — as well as investment returns on the proceeds — can also improve the bottom line.”

Being in a strong financial position is one of the most important parts of retirement, and downsizing can make a big difference.

A key part of why downsizing is still cost effective today, even when mortgage rates are higher than they were a year ago, is the record-high level of equity homeowners have. Leveraging your equity when you downsize can lower or maybe even eliminate the mortgage payment on your next home.

So, not only is the upkeep of a smaller home likely more affordable, but leveraging your home equity could make a big difference too. Your local real estate advisor is the best resource to help you understand how much equity you may have in your current home and what options it can provide for your next move.

Bottom Line

If you’re a homeowner getting ready for retirement, part of that transition likely includes deciding where you’ll live. Work with a trusted advisor to understand your options and explore your downsizing opportunities.

Before you buy a home, it’s important to plan ahead. While most buyers consider how much they need to save for a down payment, many are surprised by the closing costs they have to pay. To ensure you aren’t caught off guard when it’s time to close on your home, you need to understand what closing costs are and how much you should budget for.

What Are Closing Costs?

People are sometimes surprised by closing costs because they don’t know what they are. According to Bankrate:

“Closing costs are the fees and expenses you must pay before becoming the legal owner of a house, condo or townhome . . . Closing costs vary depending on the purchase price of the home and how it’s being financed . . .”

In other words, your closing costs are a collection of fees and payments involved with your transaction. According to Freddie Mac, while they can vary by location and situation, closing costs typically include:

• Government recording costs
• Appraisal fees
• Credit report fees
• Lender origination fees
• Title services
• Tax service fees
• Survey fees
• Attorney fees
• Underwriting Fees

How Much Will You Need To Budget for Closing Costs?

Understanding what closing costs include is important, but knowing what you’ll need to budget to cover them is critical, too. According to the Freddie Mac article mentioned above, the costs to close are typically between 2% and 5% of the total purchase price of your home. With that in mind, here’s how you can get an idea of what you’ll need to cover your closing costs.

Let’s say you find a home you want to purchase for the median price of $366,900. Based on the 2-5% Freddie Mac estimate, your closing fees could be between roughly $7,500 and $18,500.

Keep in mind, if you’re in the market for a home above or below this price range, your closing costs will be higher or lower.

What’s the Best Way To Make Sure You’re Prepared at Closing Time?

Freddie Mac provides great advice for homebuyers, saying:

“As you start your homebuying journey, take the time to get a sense of all costs involved – from your down payment to closing costs.”

Work with a team of trusted real estate professionals to understand exactly how much you’ll need to budget for closing costs. An agent can help connect you with a lender, and together your expert team can answer any questions you might have.

Bottom Line

It’s important to plan for the fees and payments you’ll be responsible for at closing. Let’s connect so I can help you feel confident throughout the process.

Did the frequency and intensity of bidding wars over the past two years make you put your home search on hold? If so, you should know the hyper competitive market has cooled this year as buyer demand has moderated and housing supply has grown. Those two factors combined mean you may see less competition from other buyers.

And with less competition comes more opportunity. Here are two trends that may be the news you need to reenter the market.

1. The Return of Contingencies

Over the last two years, more buyers were willing to skip important steps in the homebuying process, like the appraisal or the inspection, in hopes of gaining an advantage in a bidding war.  But now, things are different.

The latest data from the National Association of Realtors (NAR) shows the percentage of buyers waiving their home inspection or appraisal is down. And a recent article from realtor.com points out more sellers are accepting contingencies:

“A year ago, sellers were calling all the shots and buyers were launching legendary bidding wars, waiving contingencies, and paying for homes in cash. But now, the shoe is on the other foot, and 92% of home sellers are accepting some buyer-friendly terms (frequently related to home inspections, financing, or appraisals), . . .”

This doesn’t mean we’re in a buyers’ market now, but it does mean you have a bit more leverage when it comes time to negotiate with a seller. The days of feeling like you may need to waive contingencies or pay drastically over asking price to get your offer considered may be coming to a close.

2. Sellers Are More Willing To Help with Closing Costs

Before the pandemic, it was a common negotiation tactic for sellers to cover some of the buyer’s closing costs to sweeten the deal. This didn’t happen as much during the peak buyer frenzy over the past two years.

Today, data suggests this is making a comeback. A realtor.com survey shows 32% of sellers paid some or all of their buyer’s closing costs. This may be a negotiation tool you’ll see as you go to purchase a home. Just keep in mind, limits on closing cost credits are set by your lender and can vary by state and loan type. Work closely with your loan advisor to understand how much a seller can contribute to closing costs in your area.

Despite the extremely competitive housing market of the past several years, today’s data suggests negotiations are starting to come back to the table. To find out how the market is shifting in our area, let’s connect today.