Why Today’s Housing Market Isn’t Headed for a Crash
67% of Americans say a housing market crash is imminent in the next three years. With all the talk in the media lately about shifts in the housing market, it makes sense why so many people feel this way. But there’s good news. Current data shows today’s market is nothing like it was before the housing crash in 2008.
Back Then, Mortgage Standards Were Less Strict
During the lead-up to the housing crisis, it was much easier to get a home loan than it is today. Banks were creating artificial demand by lowering lending standards and making it easy for just about anyone to qualify for a home loan or refinance an existing one.
As a result, lending institutions took on much greater risk in both the person and the mortgage products offered. That led to mass defaults, foreclosures, and falling prices. Today, things are different, and purchasers face much higher standards from mortgage companies.
The graph below uses data from the Mortgage Bankers Association (MBA) to help tell this story. In this index, the higher the number, the easier it is to get a mortgage. The lower the number, the harder it is.
This graph also shows just how different things are today compared to the spike in credit availability leading up to the crash. Tighter lending standards have helped prevent a situation that could lead to a wave of foreclosures like the last time.
Foreclosure Volume Has Declined a Lot Since the Crash
Another difference is the number of homeowners that were facing foreclosure when the housing bubble burst. Foreclosure activity has been lower since the crash, largely because buyers today are more qualified and less likely to default on their loans. The graph below uses data from ATTOM to show the difference between last time and now:
So even as foreclosures tick up, the total number is still very low. And on top of that, most experts don’t expect foreclosures to go up drastically like they did following the crash in 2008. Bill McBride, Founder of Calculated Risk, explains the impact a large increase in foreclosures had on home prices back then – and how that’s unlikely this time.
“The bottom line is there will be an increase in foreclosures over the next year (from record level lows), but there will not be a huge wave of distressed sales as happened following the housing bubble. The distressed sales during the housing bust led to cascading price declines, and that will not happen this time.”
The Supply of Homes for Sale Today Is More Limited
For historical context, there were too many homes for sale during the housing crisis (many of which were short sales and foreclosures), and that caused prices to fall dramatically. Supply has increased since the start of this year, but there’s still a shortage of inventory available overall, primarily due to years of underbuilding homes.
The graph below uses data from the National Association of Realtors (NAR) to show how the months’ supply of homes available now compares to the crash. Today, unsold inventory sits at just 2.7-months’ supply at the current sales pace, which is significantly lower than the last time. There just isn’t enough inventory on the market for home prices to come crashing down like they did last time, even though some overheated markets may experience slight declines.
If recent headlines have you worried we’re headed for another housing crash, the data above should help ease those fears. Expert insights and the most current data clearly show that today’s market is nothing like it was last time.
Remember, if you’re thinking of buying or selling in this uncertain market, you can always call me to discuss your concerns!
How much are closing costs for a seller in NJ?
Closing costs for a seller in New Jersey can vary depending on a number of factors, including the location of the property, the sale price of the home, and the terms of the sale.
In general, closing costs for a seller in New Jersey may include:
Realtor commissions: These are fees that are paid to the seller’s real estate agent for their services in marketing and selling the property. The commission is typically a percentage of the sale price of the home and is typically paid by the seller.
Transfer taxes: These are taxes that are paid to the county or state when the ownership of the property is transferred from the seller to the buyer. The amount of the transfer tax can vary depending on the location of the property.
Title insurance: This is insurance that protects the seller against any claims that may be made against the property’s title after the sale has been completed.
Closing or attorney fees: These are fees that are paid to the attorney for their services in preparing and reviewing the documents for the sale of the property.
Escrow fees: These are fees that are paid to the escrow company for holding the funds for the sale of the property until the closing has been completed.
It’s worth noting that the seller is typically responsible for paying these closing costs, although the buyer and seller may negotiate who is responsible for paying certain costs as part of the sales agreement. Your real estate agent and attorney can help you to understand the closing costs that you will be responsible for as a seller and can negotiate on your behalf to try to reduce them.
If you’d like to learn more, feel free to inbox me at http://www.ericasellsnj.com/contact
How Much Should A Buyer Expect to Pay in Closing Costs in NJ?
Closing costs are the fees that are associated with the purchase of a home and are typically paid by the buyer at the time of closing. Closing costs can vary depending on a number of factors, including the location of the property, the type of mortgage that is being obtained, and the lender that is providing the mortgage.
Sometimes buyers negotiate to have sellers cover their closing costs when they submit an offer. They do this to reduce the amount of cash they have to bring to closing.
In New Jersey, closing costs for a home purchase typically range from 2% to 5% of the purchase price of the home. For example, if you are purchasing a home for $300,000, you can expect to pay closing costs of between $6,000 and $15,000.
Some common closing costs that buyers may be responsible for in New Jersey include:
Origination fees: These are fees that are charged by the lender for processing the loan.
Points: Points are a form of prepaid interest that can be used to lower the interest rate on a mortgage.
Appraisal fee: This is a fee that is charged to have the property appraised to determine its value.
Title search and insurance: These are fees that are associated with conducting a search of the property’s title to ensure that it is free of any liens or encumbrances and obtaining insurance to protect the lender’s interest in the property.
Survey fee: This is a fee that is charged to have the property surveyed to confirm the property lines.
Recording fees: These are fees that are charged to record the transfer of ownership of the property with the county.
One common misconception for first time buyers is that they are responsible for paying their Realtor’s commission, or that by going through the listing agent, it would save money. The good news is, the seller pays the commission 99% of the time, and before the house can even be listed, the agreement must state if the seller would like their Realtor to cooperate with other Brokers and how much they are offering to a buyers agent and how much they are offering to the listing agent.
It’s worth noting that some of these closing costs may be negotiable, and it may be possible to have the seller pay some or all of them. Your real estate agent and attorney can help you to understand the closing costs that you will be responsible for and can negotiate on your behalf to try to reduce them.
For more information on closing costs, contact me at http://www.ericasellsnj.com
Will mortgage rates increase in 2023?
It is difficult to predict with certainty what will happen to mortgage rates in the future. Mortgage rates can be influenced by a number of factors, including the overall state of the economy, the level of inflation, and the policies of the Federal Reserve.
Mortgage rates have remained at historically low levels in recent years, but will likely continue to increase since they are still on the low side. It’s worth noting that even if mortgage rates do rise in the future, it is unlikely that they will return to the levels that were seen in the past. Interest rates were the lowest the economy had seen in 70 years, so seeing rates at 6% is more of the average we should expect.
“Date the rate, marry the price.”
Remember, you can always refinance if rates drop in the future! Another rule of thumb to keep in mind, when rates decrease, we see price and demand increase and when rates increase, prices and demand decrease. Take a look at this chart for a history on rates vs the 10 yr treasury & how they’ve moved in unison for the last 50 years. Rates are still below the historic average!
If you are considering purchasing a home, it’s a good idea to speak with a lender or a real estate agent to get a better understanding of current mortgage rates and what you can expect in the future. They can help you to determine whether now is a good time to buy and can provide you with more information about the factors that could influence mortgage rates in the future.
Remember I am just a phone call away if you have any questions or concerns about the housing market!
8 Questions Sellers Should Ask Brokers Before they Hire One!
Below are a list of questions any seller should ask real estate agents BEFORE they hire them. Yes, most sellers are primarily concerned about price and commission. But, this should not be the only criteria for selecting an agent to represent them and market their property!
The difference between a successful sale and a stressful one starts with selecting an agent you can trust.
Price and commission are important considerations. But, is that all?
1. What is your marketing strategy? What steps will you take so I receive the maximum market exposure, hence the maximum price?
2. Is now the best time to place my property on the market? Why? If not, when is it and why?
3. What is your valuation and pricing strategy for my home?
4 How will you protect me from losing all buyers in the multiple bids situation?
5. Please explain in detail the difference in the range and quality of services I should expect from you and your firm? And how is that different from a discount broker?
6. How will you protect me from the risks of sale not closing with buyers with mortgage contingency in the sales contract?
7. Why do you think you are the best person for this assignment?
8. Is there anything else I should be asking you? (ie. How many homes have you shown or sold in this neighborhood in the last year? What is your average days on market? How long do you think it will take to get under contract)
“Not all REALTORS are created equal!”
Think of the difference between sitting in first class, versus coach. Yes, one costs more, but you get superior quality service, attention you deserve, and the best experience. Don’t just hire the discount broker, or a new Realtor who likes to blow smoke. I promise you, I have seen this time and time again, it can cost you the sale! Their lack of negotiation skills will prevent you from receiving top dollar, and marketing your home will certainly not be with all the bells and whistles. If they are so quick to cut their commission, what makes you think they wouldn’t be quick to push you to agree to a lesser price on a low ball offer? Something to consider!
Feel free to save this for future reference! If you know anyone looking to buy or sell in Union, Morris, Essex, Passaic, Sussex, Somerset, Bergen & Hudson counties, please reach out to my team who can help! www.ericasellsnj.com/contact
First Time Buyers, Read This Before Purchasing Your Home
“I’m a first time buyer and I want to buy my first home. What should I do? “
Congratulations on your decision to buy your first home! Here are some steps to help you get started:
Determine your budget: Determine how much you can afford to spend on a home by considering your income, debts, and other financial obligations. You should also factor in the cost of closing, which includes fees such as loan origination fees, title fees, and appraisal fees.
Get pre-approved for a mortgage: Getting pre-approved for a mortgage will help you to determine how much you can borrow and will also make you a more competitive buyer when you start looking at homes.
Determine your needs and wants: Make a list of the features that are most important to you in a home, such as the number of bedrooms, location, and style of home. This will help you to narrow down your search.
Start looking at homes: Work with a real estate agent to start looking at homes that meet your needs and budget. Your agent can help you to schedule showings and can provide you with information about the local market.
Make an offer: Once you have found a home that you want to buy, work with your agent to make an offer. Your agent will help you to negotiate with the seller to come to an agreement on the price and terms of the sale.
Get a home inspection: Once your offer has been accepted, it’s a good idea to have a professional home inspector evaluate the condition of the home. This will help you to identify any problems that need to be addressed before you close on the home.
Close the sale: Once you have completed the home inspection and any necessary repairs, you will be ready to close on the sale. This will involve signing the necessary paperwork and transferring ownership of the property.
How To Sell My Home
Here are some steps to help you sell your house:
Determine the market value of your home: Start by calling a couple Realtors who sell in your area, and ask them to prepare a Comparative Market Analysis on your home. You can compare these opinions to help determine what you feel is the best strategy. It is important to educate yourself as well by researching the prices of similar homes in your area that have recently sold. Ask yourself if you would buy those homes at that price and what changes you’d make to appeal to you more. This is what buyers will be doing at your home when they tour it.
Make any necessary repairs: Fix any major problems with your home, such as leaky roofs or broken appliances. This will help to make your home more appealing to potential buyers. I personally help my clients with this stage of the process in order to help yield them the highest return on investment. I take the stress out of this through the Compass Concierge program. (more details on this to follow in a future blog post). Below is a great example of a recent renovation made on a bathroom that was in need of some modern updates. This change, along with a few others resulted in the seller receiving 60k more than they would have had they left it as it was.
Stage your home: Make your home look as attractive as possible to potential buyers. This may involve decluttering, cleaning, and making small repairs. You may also want to consider hiring a professional stager to help you prepare your home for sale.
Price your home appropriately: It’s important to price your home appropriately in order to attract potential buyers. If your home is overpriced, it may sit on the market for a long time, which could make it difficult to sell.
List your home for sale: Choose a real estate agent to help you list your home for sale. Your agent will be responsible for marketing your home and showing it to potential buyers. Should you decide to take on the daunting task of doing this on your own, follow along for a future post on how to sell my home FSBO (pros and cons).
Negotiate with potential buyers: Work with your agent to negotiate with potential buyers and come to an agreement on the price and terms of the sale.
Close the sale: Once you have accepted an offer, work with your agent and a closing attorney to complete the sale. This will involve signing the necessary paperwork and transferring ownership of the property.
In this quick evolving market, it is important that you hire someone who understands the importance of all of the above. Read along for my next blog on questions to ask your Realtor before hiring them.
Be sure to contact me with any questions by visiting my website:www.ericasellsnj.com
Erica Travis. Team leader for the Erica Travis Team is one of the founding Real Estate Teams at Compass in Morristown. With over 10 years of experience in the industry, and having sold over $100 million worth of real estate, she has developed an undeniably strong understanding on how to navigate the real estate market while representing buyers or sellers to ensure a successful outcome.
Her presence and confidence has propelled her into the rooms of some of the most historic and unique homes NJ has to offer! Erica has represented an array of clients including NY Jets players, Metrostar athletes, CEOs of major tech companies, multi-unit investors, developers, attorneys, and the list goes on! She is also a representative of one of the most exciting new developments to come to Morristown, Ridgedale Commons, the first condo building in town since 2010!
As of 2015, Erica has become the number one agent in Mount Tabor and in previous years was awarded the #1 selling and listing Realtor in Morristown. She is known for her home design expertise, and helping her clients maximize their ROI when prepping their homes for sale. See some before & afters here. The best news? The cost was paid for by my brokerage and repaid at closing using Compass Concierge services & I personally oversaw each and every renovation at no additional cost!
Erica’s client’s often say they felt like they’ve known her forever when working together. Your happiness is her priority! She has her clients to thank for her continued growth and their generous referrals!
If you or someone you know is thinking about buying or selling a home this year, I welcome the opportunity to speak to them via text, email or call! We look forward to hearing from you. http://www.ericasellsnj.com/contact