Should You Buy a Home with Inflation This High?

by | Jul 20, 2022 | Buyer Myths, Buyers, Pricing

Should You Buy a Home with Inflation This High? | MyKCM

While the Federal Reserve is working hard to bring down inflation, the latest data shows the inflation rate is still going up. You no doubt are feeling the pinch on your wallet at the gas pump or the grocery store, but that news may also leave you wondering: should I still buy a home right now?

Greg McBride, Chief Financial Analyst at Bankrate, explains how inflation is affecting the housing market:

“Inflation will have a strong influence on where mortgage rates go in the months ahead. . . . Whenever inflation finally starts to ease, so will mortgage rates — but even then, home prices are still subject to demand and very tight supply.”

No one knows how long it’ll take to bring down inflation, and that means the future trajectory of mortgage rates is also unclear. While that uncertainty isn’t comfortable, here’s why both inflation and mortgage rates are important for you and your homeownership plans.

When you buy a home, the mortgage rate and the price of the home matter. Higher mortgage rates impact how much you’ll pay for your monthly mortgage payment – and that directly affects how much you can comfortably afford. And while there’s no denying it’s more expensive to buy and finance a home this year than it was last year, it doesn’t mean you should pause your search. Here’s why.

Homeownership Is Historically a Great Hedge Against Inflation

In an inflationary economy, prices rise across the board. Historically, homeownership is a great hedge against those rising costs because you can lock in what’s likely your largest monthly payment (your mortgage) for the duration of your loan. That helps stabilize some of your monthly expenses. Not to mention, as home prices continue to appreciate, your home’s value will too. That’s why Mark Cussen, Financial Writer at Investopedia, says: 

“Real estate is one of the time-honored inflation hedges. It’s a tangible asset, and those tend to hold their value when inflation reigns, unlike paper assets. More specifically, as prices rise, so do property values.”

Also, no one is calling for homes to lose value. As Selma Hepp, Deputy Chief Economist at CoreLogic, says:

“The current home price growth rate is unsustainable, and higher mortgage rates coupled with more inventory will lead to slower home price growth but unlikely declines in home prices.”

In a nutshell, your home search doesn’t have to go on hold because of rising inflation or higher mortgage rates. There’s more to consider when it comes to why you want to buy a home. In addition to shielding yourself from the impact of inflation and growing your wealth through ongoing price appreciation, there are other reasons to buy a home right now like addressing your changing needs and so much more.

Bottom Line

Homeownership is one of the best decisions you can make in an inflationary economy. You get the benefit of the added security of owning your home in a time when experts are forecasting prices to continue to rise.

Should I Buy a Home Right Now?

by | Jul 13, 2022 | Buyers, First Time Home Buyers, Housing Market Updates, Move-up Buyers, Pricing

Should I Buy a Home Right Now? | MyKCM

If you’ve been thinking about buying a home, you likely have one question on the top of your mind: should I buy right now, or should I wait? While no one can answer that question for you, here’s some information that could help you make your decision.

The Future of Home Price Appreciation

Each quarter, Pulsenomics surveys a national panel of over 100 economists, real estate experts, and investment and market strategists to compile projections for the future of home price appreciation. The output is the Home Price Expectation Survey. In the latest release, it forecasts home prices will continue appreciating over the next five years (see graph below):

Should I Buy a Home Right Now? | MyKCM

As the graph shows, the rate of appreciation will moderate over the next few years as the market shifts away from the unsustainable pace it saw during the pandemic. After this year, experts project home price appreciation will continue, but at levels that are more typical for the market. As Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), says: 

“People should not anticipate another double-digit price appreciation. Those days are over. . . . We may return to more normal price appreciation of 4%, 5% a year.”

For you, that ongoing appreciation should give you peace of mind your investment in homeownership is worthwhile because you’re buying an asset that’s projected to grow in value in the years ahead.

What Does That Mean for You?

To give you an idea of how this could impact your net worth, here’s how a typical home could grow in value over the next few years using the expert price appreciation projections from the Pulsenomics survey mentioned above (see graph below):

Should I Buy a Home Right Now? | MyKCM

As the graph conveys, even at a more typical pace of appreciation, you still stand to make significant equity gains as your home grows in value. That’s what’s at stake if you delay your plans.

Bottom Line

If you’re ready to become a homeowner, know that buying today can set you up for long-term success as your asset’s value (and your own net worth) is projected to grow with the ongoing home price appreciation. Let’s connect to begin your homebuying process today.

Why an Agent Is Essential When Pricing Your House [INFOGRAPHIC]

by | Jun 24, 2022 | FSBO, Infographic, Pricing, Sellers, Selling Your Home

Why an Agent Is Essential When Pricing Your House [INFOGRAPHIC] | MyKCM

Some Highlights

  • When it comes to pricing your house, there’s a lot to consider. The only way to ensure you price it right is by partnering with a local real estate professional.
  • To find the best price, your agent balances current market demand, the values of homes in your neighborhood, where prices are headed, and your home’s condition.
  • Don’t pick just any price for your house. If you’re ready to sell, let’s connect to find the perfect price for your house.

Home Price Deceleration Doesn’t Mean Home Price Depreciation

by | Jun 16, 2022 | Buyers, Housing Market Updates, Pricing, Sellers, Selling Your Home

Home Price Deceleration Doesn’t Mean Home Price Depreciation | MyKCM

Experts in the real estate industry use a number of terms when they talk about what’s happening with home prices. And some of those words sound a bit similar but mean very different things. To help clarify what’s happening with home prices and where experts say they’re going, here’s a look at a few terms you may hear:

  • Appreciation is when home prices increase.
  • Depreciation is when home prices decrease.
  • Deceleration is when home prices continue to appreciate, but at a slower pace.

Where Home Prices Have Been in Recent Years

For starters, you’ve probably heard home prices have skyrocketed over the past two years, but homes were actually appreciating long before that. You might be surprised to learn that home prices have climbed for 122 consecutive months (see graph below):

Home Price Deceleration Doesn’t Mean Home Price Depreciation | MyKCM

As the graph shows, houses have gained value consistently over the past 10 consecutive years. But since 2020, the increase has been more dramatic as home price growth accelerated.

So why did home prices climb so much? It’s because there were more buyers than there were homes for sale. That imbalance put upward pressure on home prices because demand was high and supply was low.

Where Experts Say Home Prices Are Going

While this is helpful context, if you’re a buyer or seller in today’s market, you probably want to know what’s going to happen with home prices moving forward. Will they continue that same growth path or will home prices fall?

Experts are forecasting ongoing appreciation, just at a decelerated pace. In other words, prices will keep climbing, just not as fast as they have been. The graph below shows home price forecasts from seven industry leaders. None are calling for prices to fall (see graph below):

Home Price Deceleration Doesn’t Mean Home Price Depreciation | MyKCM

Mark Fleming, Chief Economist at First American, identifies a key reason why home prices won’t depreciate or drop:

“In today’s housing market, demand for homes continues to outpace supply, which is keeping the pressure on house prices, so don’t expect house prices to decline.”

And although housing supply is starting to tick up, it’s not enough to make home prices decline because there’s still a gap between the number of homes available for sale and the volume of buyers looking to make a purchase.

Terry Loebs, Founder of the research firm Pulsenomics, notes that most real estate experts and economists anticipate home prices will continue rising. As he puts it:

“With home values at record-high levels and a vast majority of experts projecting additional price increases this year and beyond, home prices and expectations remain buoyant.”

Bottom Line

Experts forecast price deceleration, not depreciation. That means home prices will continue to rise, just at a slower pace. Let’s connect so you can get the full picture of what’s happening with home prices in our local market and to discuss your buying and selling goals.

Why You Need an Expert To Determine the Right Price for Your House

by | Jun 6, 2022 | Pricing, Sellers, Selling Myths, Selling Your Home

Why You Need an Expert To Determine the Right Price for Your House | MyKCM

If your lifestyle has changed recently and you’re ready to make a move, taking advantage of today’s sellers’ market might be just the answer for your summer plans. With homes continuing to get multiple offers, this could be your moment to get the contract you’re looking for on your house if you’re ready to sell.

And here’s the thing – you need an expert on your side to ensure you make all the right moves when you do, especially when it comes to pricing your house. Even in this competitive market, you can’t stick just any price tag on your home and get the deal you want. A key piece of the puzzle is setting the right asking price so you can help buyers notice your home (and get excited about it) from the very first time they view the listing. That’s where a real estate professional comes in.

Why Pricing Your House Right Is Important

The price you set for your house sends a message to potential buyers. Price it too low and you might raise questions about your home’s condition or lead buyers to assume something is wrong with the property. Not to mention, if you undervalue your house, you could leave money on the table which decreases your future buying power.

On the other hand, price it too high, and you run the risk of deterring buyers. When that happens, you may have to do a price drop to try to re-ignite interest in your house when it sits on the market for a while. But be aware that a price drop can be seen as a red flag for some buyers who will wonder why the price was reduced and what that means about the home.

In other words, think of pricing your home as a target. Your goal is to aim directly for the center – not too high, not too low, but right at market value. Pricing your house fairly based on market conditions increases the chance you’ll have more buyers who are interested in purchasing it. That makes it more likely you’ll see multiple offers, too. And if a bidding war happens, you’ll likely get an even higher final sale price. Plus, when homes are priced right, they tend to sell quickly.

To get a look into the potential downsides of over or underpricing your house and the perks that come with pricing it at market value, see the chart below:

Why You Need an Expert To Determine the Right Price for Your House | MyKCM

Lean on a Professional’s Expertise

There are several factors that go into pricing your house, and balancing them is the key. That’s why it’s important to lean on an expert real estate advisor when you’re ready to move. A local real estate advisor is knowledgeable about:

  • The value of homes in your neighborhood
  • The current demand for houses in today’s market
  • The condition of your house and how it affects the value

A real estate professional will balance these factors to make sure the price of your house makes the best first impression and gives you the greatest return on your investment in the end.

Bottom Line

If you’re thinking about selling, pricing your house appropriately is key. Let’s connect to make sure your house is priced right for the local market, for your home’s condition, and to stand out from the competition.

Will Home Prices Fall This Year? Here’s What Experts Say.

by | May 10, 2022 | Buyers, Housing Market Updates, Move-up Buyers, Pricing, Sellers

Will Home Prices Fall This Year? Here’s What Experts Say | MyKCM

Many people are wondering: will home prices fall this year? Whether you’re a potential homebuyer, seller, or both, the answer to this question matters for you. Let’s break down what’s happening with home prices, where experts say they’re headed, and how this impacts your homeownership goals.

What’s Happening with Home Prices? 

Home prices have seen 121 consecutive months of year-over-year increases. CoreLogic says:

“Price appreciation averaged 15% for the full year of 2021, up from the 2020 full year average of 6%.”

So why are prices climbing so much? It’s because there are more buyers than there are homes for sale. This imbalance is expected to maintain that upward pressure on home prices because homes for sale are a hot commodity in today’s low-inventory housing market.

Where Do Experts Say Prices Will Go from Here?

Experts say the housing market isn’t set up for a price decline due to that ongoing imbalance between supply and demand. In the latest home price forecasts for 2022, they’re calling for ongoing appreciation throughout the year (see graph below):

Will Home Prices Fall This Year? Here’s What Experts Say | MyKCM

While the experts are forecasting more moderate price appreciation, the 2022 projections show price gains will remain strong throughout this year. First American explains it like this:

“While house price growth is expected to moderate from the rapid pace of 2021, strong home buyer demand against a backdrop of historically tight inventory of homes for sale will likely keep appreciation positive in the coming year.”

What Does That Mean for You?

The biggest takeaway is that none of the experts are projecting depreciation. If you’re a homeowner thinking about selling, the higher price appreciation over the last two years has been great for your home’s value, but it’s also something you should factor in when planning your next steps. If you’ll also be buying a home after selling your current house, you shouldn’t wait for prices to fall. Waiting will only cost you more in the long run because climbing mortgage rates and rising home prices will have an impact on your next home purchase. Freddie Mac says:

“If you’re thinking about waiting until next year and that maybe rates are higher, but you’ll get a deal on prices – well that’s risky. It may be more advantageous to purchase this year relative to waiting until 2023 at this time.”

Bottom Line

If you’re thinking of selling to move up, you shouldn’t wait for prices to fall. Experts say prices will continue to appreciate this year. That means, if you’re ready, buying your next home before prices climb further may make the most financial sense. Let’s connect to begin the process of selling your current home and looking for your next one before prices rise higher.