Some Highlights

• VA Loans can help make homeownership possible for those who have served our country.
• These loans offer great benefits for eligible individuals and can help them buy a VA-approved house or condo, build a new home, or make improvements to their house.
• Homeownership is the American Dream. One way we can honor and thank our veterans is to ensure they have the best information about the benefits of VA home loans.

For over 78 years, Veterans Affairs (VA) home loans have provided millions of veterans with the opportunity to purchase homes of their own. If you or a loved one have served, it’s important to understand this program and its benefits.

Here are some things you should know about VA loans before you start the homebuying process.

What Are VA Loans?

VA home loans provide a pathway to homeownership for those who have served our nation. The U.S. Department of Veterans Affairs describes the program like this:

“VA helps Servicemembers, Veterans, and eligible surviving spouses become homeowners. As part of our mission to serve you, we provide a home loan guaranty benefit and other housing-related programs to help you buy, build, repair, retain, or adapt a home for your own personal occupancy.”

Top Benefits of the VA Home Loan Program

In addition to helping eligible buyers achieve their homeownership dreams, VA loans have several other great benefits for buyers who qualify. According to the Department of Veteran Affairs:

• Qualified borrowers can often purchase a home with no down payment.
• Many other loans with down payments under 20% require Private Mortgage Insurance (PMI). VA Loans do not require PMI, which means veterans can save on their monthly housing costs.
• VA-Backed Loans often offer competitive terms and mortgage interest rates.

A recent article from Veterans United sums up just how impactful this loan option can be:

“For the vast majority of military borrowers, VA loans represent the most powerful lending program on the market. These flexible, $0-down payment mortgages have helped more than 24 million service members become homeowners since 1944.”

John Bell, Acting Executive Director of the Department of Veterans Affairs Loan Guaranty Service, also explains why this program is so powerful:

“It provides early ownership for many people that would not have that opportunity to begin with. Since there’s no down payment, it allows people to hold their wealth and it gives them the ability to have long term financial security by being able to own a house and let that equity grow.”

Bottom Line

Homeownership is the American Dream. Our veterans sacrifice so much in service of our nation, and one way we can honor and thank them is to ensure they have the best information about the benefits of VA home loans. Thank you for your service.

Now that the end of 2022 is within sight, you may be wondering what’s going to happen in the housing market next year and what that may mean if you’re thinking about buying a home. Here’s a look at the latest expert insights on both mortgage rates and home prices so you can make your best move possible.

Mortgage Rates Will Continue To Respond to Inflation

There’s no doubt mortgage rates have skyrocketed this year as the market responded to high inflation. The increases we’ve seen were fast and dramatic, and the average 30-year fixed mortgage rate even surpassed 7% at the end of last month. In fact, it’s the first time they’ve risen this high in over 20 years (see graph below):

In their latest quarterly report, Freddie Mac explains just how fast the climb in rates has been:

“Just one year ago, rates were under 3%. This means that while mortgage rates are not as high as they were in the 80’s, they have more than doubled in the past year. Mortgage rates have never doubled in a year before.”

Because we’re in unprecedented territory, it’s hard to say with certainty where mortgage rates will go from here. Projecting the future of mortgage rates is far from an exact science, but experts do agree that, moving forward, mortgage rates will continue to respond to inflation. If inflation stays high, mortgage rates likely will too.

Home Price Changes Will Vary by Market

As buyer demand has eased this year in response to those higher mortgage rates, home prices have moderated in many markets too. In terms of the forecast for next year, expert projections are mixed. The general consensus is home price appreciation will vary by local market, with more significant changes happening in overheated areas. As Mark Fleming, Chief Economist at First American, says:

“House price appreciation has slowed in all 50 markets we track, but the deceleration is generally more dramatic in areas that experienced the strongest peak appreciation rates.”

Basically, some areas may still see slight price growth while others may see slight price declines. It all depends on other factors at play in that local market, like the balance between supply and demand. This may be why experts are divided on their latest national forecasts (see graph below):

Bottom Line

If you want to know what’s happening with home prices or mortgage rates, let’s connect so you have the latest on what experts are saying and what that means for our area.

Buying a home is a powerful decision, and it remains a key part of the American Dream. In fact, the 2022 Consumer Insights Report from Mynd found the majority of people polled still view homeownership as a key life achievement. Let’s explore just a few of the reasons why so many Americans continue to value homeownership.

The Financial Benefits of Owning a Home

One possible reason homeownership is viewed so highly is because owning a home is a significant wealth-building tool, and it provides meaningful financial stability over renting by locking in your monthly housing payments for the length of your home loan. An article from Forbes explains:

“Understanding the potential benefits of homeownership helps individuals see the value of owning property instead of renting. . . . household wealth among homeowners is a whopping 1,469% higher on average compared to renters, excluding home equity, making the allure of homeownership even more enticing.”

Over time, owning a home not only helps boost your own net worth, but it also sets future generations up for success as you pass that wealth down. That may be why the Mynd report also says:

“Most Americans (78%) still associate homeownership with the ‘American dream.’ And nearly two-thirds of Americans (65%) see homeownership as a means of building intergenerational wealth.”

The Non-Financial Benefits of Homeownership

While the financial benefits of owning a home are important, becoming a homeowner impacts you on a social and emotional level, too. As Mark Fleming, Chief Economist for First American, says:

“. . . buying a home is not just a financial decision. It’s also a lifestyle decision.”

Your home provides feelings of achievement, responsibility, and more. 3by30 highlights the top 10 benefits homeowners enjoy. A few non-financial advantages include:

• Providing you with more freedom and control over your living space
• Giving you a greater sense of pride
• Helps with community engagement

What Does That Mean for You?

If your definition of the American Dream involves greater freedom and prosperity, then homeownership could play a major role in helping you achieve that dream. While it may feel challenging to buy a home today as mortgage rates and home prices rise, if the time is right for you, know that there are incredible benefits waiting for you at the end of your journey. You’ll have a place you can grow your wealth, call your own, and feel most comfortable.

Like the National Association of Realtors (NAR) says:

“. . . research has consistently shown that homeownership is also associated with multiple economic and social benefits to individual homeowners. Homeownership has always been an important way to build wealth.”

Bottom Line

Buying a home is a powerful decision and a key part of the long-term dream for many Americans. And if homeownership is part of your dreams this year, let’s connect to start the process today.

Every time there’s a news segment about the housing market, we hear about the affordability challenges buyers are facing today. Those headlines are focused on how much mortgage rates have climbed this year. And while it’s true rates have risen dramatically, it’s important to remember they aren’t the only factor in the affordability equation.

Here are three measures used to establish home affordability: home prices, mortgage rates, and wages. Let’s look closely at each one.

1. Mortgage Rates

This is the factor most people are focused on when they talk about homebuying conditions today. So far, current rates are almost four full percentage points higher than they were at the beginning of the year. As Len Kiefer, Deputy Chief Economist at Freddie Mac, explains:

“U.S. 30-year fixed mortgage rates have increased 3.83 percentage points since the end of last year. That’s the biggest year-to-date increase in rates in over 50 years.”

That increase in mortgage rates is impacting how much it costs to finance a home purchase, creating a challenge for many buyers that’s pricing some out of the market. While the current global uncertainty makes it difficult to project where mortgage rates will go in the future, experts do say that rates will likely remain high as long as inflation does.

2. Home Prices

The second factor at play is home prices. Home prices have made headlines over the past few years because they skyrocketed during the pandemic. Now, the most recent Home Price Index from S&P Case-Shiller shows home values continued to decelerate for a fifth consecutive month (shown in green in the graph below):

This deceleration is happening because higher mortgage rates are moderating demand, and as a result, easing the buyer competition and bidding wars that previously drove prices up.

What’s worth noting though, is how much higher home prices still are than they were before the pandemic (shown in blue in the graph above). Even now, we have a long way to go to get to more normal levels of home price appreciation, which is historically closer to 4%. When both mortgage rates and home prices are high, affordability and your purchasing power become a greater challenge.

But while prices are still elevated in many markets, some areas are seeing slight declines. It all depends on your local market. For insight into what’s happening in your area, reach out to a trusted real estate professional.

3. Wages

The one big, positive component in the affordability equation is the increase in American wages. The graph below uses data from the Bureau of Labor Statistics (BLS) to show how wages have grown over time. This year is no exception.

As the Bureau of Labor Statistics (BLS) reports:

“Median weekly earnings of the nation’s 120.2 million full-time wage and salary workers were $1,070 in the third quarter of 2022 (not seasonally adjusted), the U.S. Bureau of Labor Statistics reported…This was 6.9 percent higher than a year earlier…”

So, when you think about affordability, remember the full picture includes more than just mortgage rates. Home prices and wages need to be factored in as well. Because wages have been rising, they’re a big reason why serious buyers are still purchasing homes this year.

If you have questions or want to learn more, reach out to a trusted advisor who can explain how all of these variables work together and what’s happening in your area. As Leslie Rouda Smith, President of the National Association of Realtors (NAR), says:

“Buying or selling a home involves a series of requirements and variables, and it’s important to have someone in your corner from start to finish to make the process as smooth as possible… and objectivity to deliver trusted expertise to consumers in every U.S. ZIP code.”

Bottom Line

To learn more, let’s connect today and make sure you have a trusted lender so you’re able to make an informed decision if you’re planning to buy or sell a home right now.

Some Highlights

• If you’re questioning whether or not to buy a home this year due to today’s cooling market, consider the long-term financial benefits of homeownership.
• As a homeowner, equity increases your wealth. On average, nationwide, home prices appreciated by 2% since 1991.
• Homeownership wins in the long run. If you’re ready to buy a home, let’s connect today.

It turns out, millennials aren’t the renter generation after all. The 2022 Consumer Insights Report from Mynd says there’s a portion of millennial and Gen Z buyers who are pursuing homeownership as a way to build their wealth, but it may not be exactly the way previous generations have done it. The study explains how they’re breaking into the market:

“. . . younger generations of Americans are not buying into that dream in the same way that older generations have. A growing number of Americans are choosing to make their first real estate purchase as an investment property.”

Instead of buying a home and moving into it themselves, some young buyers are purchasing a home so they can use it as a rental. This tactic may be gaining popularity, at least in part, because of the affordability challenges brought about by today’s higher mortgage rates. The report above mentions how many people in this group are considering this approach. It says:

“Almost half of Millennials and Gen Z (43%) are considering buying an investment property compared to only 9% of Baby Boomers and 27% of Gen X.”

Why Younger Buyers Are Buying a Home To Use as a Rental

This strategy allows buyers to continue living in their current location, like the bustle of a city apartment or a neighborhood that they know and love, where they couldn’t afford to buy. But instead of giving up on the idea of owning a home, they buy a home in a more affordable area with the intention of renting it out.

In a way, they’re getting the best of both worlds. They live where they want, and they still own a home where they can afford it.

Their goal is to generate passive income and diversify their assets. It works like this: in addition to having a rental stream of income, the equity they build in their house will also help grow their net worth over time.

Bottom Line

If you’re thinking about buying a home as an investment strategy to build your wealth, let’s connect to explore your options and nearby areas that may have homes that fit what you’re looking for.

As you look ahead to the winter season, you’re likely making plans and thinking about what you want to achieve before the year ends. One of those key decision points could be whether or not you want to move this year. If the location or size of your current home no longer meets your needs, finding a house that better suits your lifestyle may be a top priority for you. But with today’s cooling housing market, is it really a good time to sell your house, or should you wait?

If you’re ready to make your decision, here are three reasons you may want to consider selling before the holidays.

1. Get One Step Ahead of Other Sellers

Typically, in the residential real estate market, homeowners are less likely to list their houses toward the end of the year. That’s because people get busy around the holidays and deprioritize selling their house until the start of the new year when their schedules and social calendars calm down.

Selling now, while other homeowners may hold off until after the holidays, can help your house stand out. Start the process with a real estate professional today so you can get your house on the market and get ahead of your competition.

2. Get in Front of Serious Buyers This Season

Even though housing supply has increased this year as buyer demand has moderated, it’s still low overall. That means there aren’t enough homes on the market today, especially as the millennial generation reaches their peak homebuying years. As Mark Fleming, Chief Economist at First American, says:

“While not the frenzy of 2021, the largest living generation, the Millennials, will continue to age into their prime home-buying years, creating a demographic tailwind for the housing market.”

Serious buyers will still be looking this winter and your house may be exactly what they’re searching for. If you work with an agent to list your house now, you’ll be able to get in front of the eager buyers who are hoping to make a move before the year ends.

3. Seize a Great Chance To Move Up

Don’t forget, today’s homeowners have record amounts of equity. According to CoreLogic, the average amount of equity per mortgage holder has climbed to almost $300,000. That’s an all-time high. That means the equity you have in your house right now could cover some, if not all, of a down payment on the home of your dreams.

And as you weigh the reasons to sell before winter, don’t lose sight of why you’re thinking about moving in the first place. Maybe it’s time to buy a house that’s in a better location for you, has the space you and your loved ones have been craving, or simply gives you that sense of home. A trusted real estate advisor can help you determine how much home equity you have and how you can use it to achieve your goal of making a move.

Bottom Line

If you’re thinking about selling your house so you can find a home that better suits your needs, don’t delay your plans. Let’s connect so you can accomplish your goals before winter.

While higher mortgage rates are creating affordability challenges for homebuyers this year, there is some good news for those people still looking to buy a home.

As the market has cooled this year, some of the intensity buyers faced during the peak frenzy of the pandemic has cooled too. Here are just a few trends that may benefit you when you go to buy a home today.

1. More Homes To Choose from

During the pandemic, housing supply hit a record low at the same time buyer demand skyrocketed. This combination made it difficult to find a home because there just weren’t enough to meet buyer demand. According to Calculated Risk, the supply of homes for sale increased by 39.5% for the week ending October 28 compared to the same week last year.

Even though it’s still a sellers’ market and supply is still lower than more normal levels, you have more to choose from in your home search. That makes finding your dream home a bit less difficult.

2. Bidding Wars Have Eased

One of the top stories in real estate over the past two years was the intensity and frequency of bidding wars. But today, things are different. With more options, you’ll likely see less competition from other buyers looking for homes. According to the National Association of Realtors (NAR), the average number of offers on recently sold homes has declined. This September, the average was 2.5 offers per sale. In contrast, last September, the average was 3.7 offers per sale.

If you tried to buy a house over the past two years, you probably experienced the bidding war frenzy firsthand and may have been outbid on several homes along the way. Now you have a chance to jump back into the market and enjoy searching for a home with less competition.

3. More Negotiation Power

And when you have less competition, you also have more negotiating power as a buyer. Over the last two years, more buyers were willing to skip important steps in the homebuying process, like the appraisal or inspection, to try to win a bidding war. But the latest data from the National Association of Realtors (NAR) shows the percentage of buyers waiving those contingencies is going down.

As a buyer, this is good news. The appraisal and the inspection give you important information about the value and condition of the home you’re buying. And if something turns up in the inspection, you have more power today to renegotiate with the seller.

A survey from realtor.com confirms more sellers are accepting offers that include contingencies today. According to that report, 95% of sellers said buyers requested a home inspection, and 67% negotiated with buyers on repairs as a result of the inspection findings.

Bottom Line

While buyers still face challenges today, they’re not necessarily the same ones you may have been up against just a year or so ago. If you were outbid or had trouble finding a home in the past, now may be the moment you’ve been waiting for. Let’s connect to start the homebuying process today.

If you’re planning to buy a home, knowing what to budget for and how to save may sound scary at first. But it doesn’t have to be. One way to take the fear out of budgeting is understanding some of the costs you might encounter.  And to do that, turn to trusted real estate professionals. They can help you plan your finances and prepare your budget.

Here are just a few costs experts say you can expect.

1. Down Payment

Saving for your down payment is likely top of mind as you set out to buy a home. But do you know how much you’ll need to save? While each situation is different, there’s a common misconception that putting 20% down toward your purchase is required. An article from the Mortgage Reports explains why that’s not always the case:

“The idea that you have to put 20% down on a house is a myth. . . . The right amount depends on your current savings and your home buying goals.”

To understand your options, partner with a trusted real estate professional to go over the various loan types, down payment assistance programs, and what each one requires.

2. Closing Costs

Make sure you also budget for closing costs, which are a collection of fees and payments made to the various people involved in your transaction. Bankrate explains:

“Closing costs are the fees you pay when finalizing a real estate transaction, whether you’re refinancing a mortgage or buying a new home. These costs can amount to 2 to 5 percent of the mortgage so it’s important to be financially prepared for this expense.”

The best way to understand what you’ll need at the closing table is to work with a trusted lender. They can provide you with answers to the questions you might have.

3. Earnest Money Deposit

If you want to cover all your bases, you can also consider saving for an earnest money deposit (EMD). An EMD is money you pay as a show of good faith when you make an offer on a house. According to realtor.com, it’s usually between 1% and 2% of the total home price.

This deposit works like a credit. It’s not an added expense – it’s paying a portion of your costs upfront. You’re using some of the money you already saved for your purchase to show the seller you’re committed and serious about their house. Realtor.com describes how it works as part of your sale:

“It tells the real estate seller you’re in earnest as a buyer, . . . . Assuming that all goes well and the buyer’s good-faith offer is accepted by the seller, the earnest money funds go toward the down payment and closing costs. In effect, earnest money is just paying more of the down payment and closing costs upfront.”

Keep in mind, an EMD isn’t required, and it doesn’t guarantee your offer will be accepted. It’s important to work with a real estate advisor to understand what’s best for your situation and any specific requirements in your area. They’ll help you determine what moves you should make in the homebuying process to have the greatest success.

Bottom Line

Budgeting for your home purchase doesn’t have to be scary. Let’s connect so you’ll have an expert on your side to answer any questions you have along the way.