Home Prices Aren’t Declining, But Headlines Might Make You Think They Are
If you’ve seen the news lately about home sellers slashing prices, it’s a great example of how headlines do more to terrify than clarify. Here’s what’s really happening with prices.The bottom line is home prices are higher than they were a year ago at this time, and they’re expected to keep rising, just at a slower pace.But a recent article from Redfin notes,“Price Drops Hit Highest Level in 18 Months As High Rates Dampen Buyer Demand.”And that might make you think prices are declining.Now, while it’s true the latest report from Realtor.com also shows 16.6% of homes on the market had price reductions in May, which is up from 12.7% last May, that doesn’t mean overall home prices are falling.The key is knowing the difference between the asking price and the sold price.Understanding Asking Price vs. Sold PriceIn essence, the asking price, also known as a listing price, is the amount a seller hopes to get for their home when they list it. In reality, sellers can’t just put any price tag on their house and expect it to sell for top dollar. Today’s buyers are savvy customers, and when they aren’t willing to pay a premium for a home because their budgets are strained by higher mortgage rates, sellers need to adjust. And that’s what’s happening right now.Based on market factors and what offers that seller receives, that asking price can change. If a seller isn’t getting much foot traffic, you may see them revise the price and make an adjustment to reignite interest in the home – and sometimes that’s because they’ve overpriced it from the start. That’s where price reductions come in, and when you see “price drops” in a headline, it sounds like declining home prices.Mike Simonsen, CEO and Founder of Altos Research, says:“Not only is the share of homes with price cuts elevated compared to one year ago, but more price cuts are happening each week than last year.”On the other hand, the final sold price is the amount a buyer actually pays when the transaction is complete.Here’s the most important thing to note: Actual sold prices are still rising, and they’re expected to continue to do so at least over the next 5 years.What Does This Mean for Home Prices?So, while there's been an increase in price reductions recently, this doesn't mean overall home values are declining. Instead, it’s a sign that demand is moderating. And, as a result, sellers are adjusting their expectations to align with today's market reality.Even with more price reductions, home values are still growing on an annual basis, as they do nearly every year in the housing market. According to the Federal Housing Finance Agency (FHFA), home prices went up 6.6% over the last year (see below):This map shows how prices rose just about everywhere in the country, indicating the market is not in decline.So, while seller price reductions are often a leading indicator that prices may moderate in the months ahead, which experts have been saying for a while is expected to happen, they aren’t necessarily reason for alarm. The same article from Redfin also states:“. . .those metrics suggest sale-price growth could soften in the coming months as persistently high mortgage rates turn off homebuyers. For now, the median-home sale price is up 4.3% year over year to another record high. . .”And with inventory as tight as it is today, price moderation is much more likely in upcoming months than price declines.Why This Is Good News for Buyers and SellersFor buyers, more realistic asking prices mean a better chance of securing a home at a fair price. It also means you can enter the market with more confidence, knowing prices are stabilizing rather than continuing to skyrocket.For sellers, understanding the need to adjust your asking price can lead to faster sales and fewer price negotiations. Setting a realistic price from the start can attract more serious buyers and lead to smoother transactions. Bottom LineWhile the uptick in price reductions might seem troubling, it’s not a cause for concern. It reflects a market adjusting to new conditions. Home prices are continuing to grow, just at a more moderate pace. Connect with Aurhomes Group and Let's Talk Real Estate.
More Than a House: The Emotional Benefits of Homeownership
With all the headlines and talk about housing affordability, it can be tempting to get lost in the financial side of buying a home. That’s only natural as you think about the dollars and cents of it all. And while you ultimately need to be able to afford a home you buy, don’t lose sight of why homeownership was so important to you in the first place. That’s because buying a home is so much more than just a financial transaction. As the National Association of Realtors (NAR) says:“The benefits of purchasing and owning your place of residence are both financial and emotional – pride in homeownership and the feeling of security are huge intangible benefits.” Here’s a look at just a few of those more emotional or lifestyle perks, to help anchor you to why homeownership is one of your goals.A Sense of SatisfactionOwning a home is often associated with better mental health and well-being. That’s probably because buying a home is a big milestone. And the sense of satisfaction and pride that comes with achieving that goal just feels good. A recent article from the Mortgage Reports says:“By and large, homeownership brings more satisfaction than renting. . . Surveyees scored the overall happiness level of homeowners at 88% compared to 67% for renters.” More Stability for Your FamilyAnother thing that may make homeowners feel more satisfied is that they’re finally able to put down roots. Think about it. If you’re used to moving each time your lease renews and your rent climbs, staying put for a while would be nice not just for you, but for any loved ones that live with you.A home can provide more predictability and the chance to make long-term friends. That should reduce everyone’s stress too. As NAR explains:“Families also benefit from homeownership, with studies proving that parents are able to spend less time in a stressed state, therefore spending more time with their children. The ability for parents to feel stable has a huge impact on children’s behavioral issues, educational success, and future economic success.” A Stronger Feeling of CommunityAnd if you’re also looking for a sense of belonging for yourself, homeownership can help with that too. As FinHabits says:“Homeowners tend to be more involved in their local communities, leading to a stronger sense of belonging . . .” It makes sense. Your home connects you to your neighborhood and, by extension, your broader community. That’s because owning a home gives you a stake in that community’s future. So, becoming more involved and wanting to do what you can to help improve the area while making long-term relationships with neighbors is only natural.The Ability To Make the Space Your OwnAnd don’t forget, your home is a place that’s all yours. Unless you’ve got specific homeowner’s association requirements, you’re free to customize it however you see fit.So, if renting has been cramping your style, it’s time to express yourself and jump on the latest trends (if you want to). Whether that’s small home improvements or full-on renovations, your house can be exactly what you want and need it to be. And as your tastes and lifestyle change, so can your home. Picture coming home each day to a place that feels like you. That’s a feeling like no other. Bottom Line If you desire to experience a feeling of achievement and satisfaction in your living environment, at Aurhomes Group, let's discuss the necessary steps to help you bring this vision to life.
How Do Climate Risks Affect Your Next Home?
Climate change is impacting where people buy homes. As the experts at the National Association of Realtors (NAR) explain:“Sixty-three percent of people who have moved since the pandemic began say they believe climate change is—or will be—an issue in the place they currently live.”If you’re planning to move, climate change is something you might want to consider, no matter where you are. A recent study from Realtor.com helps put the growing impact climate change is having on real estate into perspective (see below):So, how can you be sure your investment is safe from the elements?For starters, work with a local real estate agent to understand the likelihood of your future home being exposed to hazards like wind, floods, and wildfires. Your agent will know the area and be able to tell you about the risks you’ll most likely face.Beyond that, there are two important factors to think about: the quality of the home you want to buy and the insurance you’ll need to protect it.A Home Built to LastIf you’re planning to be in your home for many years, you want to know it’s going to last. One way to think ahead is to work with your real estate agent to ensure the home you buy can withstand environmental hazards. They’re up to date on the most common building and remodeling techniques—like a secondary water barrier on the roof or noncombustible, fire-resistant exterior walls—used to protect homes from the effects of climate change.And if the home you’re interested in doesn’t have the features you’re looking for, they can help you determine what you may be able to negotiate in the contract or what work it might require in the future.Insurance To Protect ItOnce you’re confident the home you’re looking at is well built, the next step is finding out what it’s going to take to insure it. As Selma Hepp, Chief Economist at CoreLogic, says:“. . . homeowners are going to become increasingly more aware of risks of living in some areas as it becomes prohibitively expensive or very difficult to obtain hazard insurance.”In areas where climate risks are having a bigger impact, the right home insurance can make a big difference. And the price of that insurance is an important factor when thinking about your budget and the true cost of buying and protecting your home. Get an insurance quote early in the process because you may want to compare multiple quotes and it can take several weeks to get them.While this may feel like a lot to consider, don’t worry. An agent can help. Your real estate agent will be your go-to resource on the home-buying process, what to look for and consider, and how climate change may affect your next home. With the right planning and an agent's expert advice, you can make this happen. Homeownership is worth it. And with a great agent by your side, you can make sure the home you find is the right fit.Bottom LineClimate change is an important factor to think about when buying a home. After all, your home is a huge investment, and you want to be ready for anything that might affect it. Let’s chat so you can find the perfect home.
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