Norada Real Estate Investments

Is it a Good Time to Buy a House or Should I Wait Until 2023-2024

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Should I Buy a House Now or Wait?

Check out the latest housing trends for the previous month if you're unsure whether it is a good time to buy a house or if should you wait until 2023. It’s becoming harder to buy a house as prices are up year over year, and mortgage rates are soaring in 2022. At the same time, consumer prices on everything are also on the rise making it even more difficult to save money to buy a house next year.

In an effort to tamp down inflation, the Federal Reserve is raising interest rates. The Fed hiked interest rates by three-quarters of a percentage point, following a similarly aggressive rate hike in June which was already weighing on housing, business investment, and consumer demand. The Fed has raised interest rates in less than four months which it took three years to do the previous time.

The cumulative effect of these sharp rate increases has cooled the housing market and caused the economy to slow, but has done little to lower inflation. Although Fed doesn't control mortgage rates it has a ripple effect on the mortgage industry. The recent rate hike will correspond with a rise in the prime rate and immediately send financing costs higher for many forms of consumer borrowing. On the flip side, higher interest rates also mean savers will earn more money on their deposits.

Don’t expect much relief in the form of lower rates in the coming months. Therefore, it certainly does not seem to be a good time to buy a house as rates have risen much more rapidly in 2022 than most industry analysts and economists had initially predicted. But when it comes to the possibility of significant savings, looking for the best mortgage offer provides an outstanding return on investment. Because it only takes a little more effort to browse around for the greatest mortgage rate, why not take advantage of it?

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Is it a Good Time to Buy a House or Should I Wait?

As of October 4, 2022, the average rate for the benchmark 30-year fixed mortgage is 6.85 percent (source: Bankrate). It is an increase of 13 basis points from a week ago. At the current average rate, you’ll pay a combined $654.59 in principal and interest for every $100,000 you borrow to buy a house. That’s up $15.93 from what it would have been last week.

The average 15-year fixed mortgage rate is 6.07 percent, up 21 basis points over the last week. At that rate, monthly payments on a 15-year fixed mortgage will be around $600 per $100,000 borrowed to buy a house. The larger monthly payment may be harder to fit into your budget than a 30-year mortgage payment, but it has huge advantages: You'll save several thousand dollars in interest and create equity much faster.

Let's compare the figures between now and eight months ago when the buyers financed their houses with a mortgage. On a $300,000 loan, a 30-year, fixed-rate mortgage at December’s rate of 3.11% would have meant a monthly payment of about $1,282 (Principal & interest).

  • Loan amount = $300,000
  • Total interest paid = $161,923
  • Total cost of loan = $461,923

Today’s rate of 6.85% brings the monthly payment to $1,965 (Principal & interest). That’s an extra $683 a month or $8,196 more a year and $246,398 more over the lifetime of the loan.

  • Loan amount = $300,000
  • Total interest paid = $408,321
  • Total cost of loan = $708,321

The Fannie Mae (FNMA/OTCQB) Economic and Strategic Research (ESR) Group revised downward its forecast for total home sales growth through 2023. They now project 2022 total year existing sales to decline 16.5 percent from 2021, followed by a further decline of 13.3 percent in 2023.

Their forecast for 2022 purchase volumes remains at $1.7 trillion, essentially unchanged from last month. The group now expects purchase volumes to fall about 1.5 percent in 2023 to just under $1.7 trillion, a downward revision of $17 billion from last month’s forecast, driven by downward revisions to their forecast for home sales.

The rise in rates is having the Fed’s desired effect on housing, as house price growth began to slow in June. They expect the slowdown in housing to continue through 2023 as affordability constraints mount for potential homebuyers, and considering, too, that refinance activity has been significantly curtailed by the rise in mortgage rates. The group continues to anticipate a strong deceleration in home price growth going forward due to the lagged effects of higher mortgage rates and the slowing economy weighing on purchase demand.

If the economy suffers a downturn, mortgage interest rates will very probably fall to about 4% or even lower. If it does, this could be a good time to put off buying a home and save some money, especially for first-time buyers. Fannie Mae forecasted at the start of the year that the average 30-year fixed mortgage rate will rise from 3.1% to 3.3% by the end of 2022.

The Mortgage Bankers Association was somewhat more optimistic about mortgage rates, projecting that the average rate will increase to 4% by the end of 2022. It is now evident that neither Fannie Mae's nor the Mortgage Bankers Association's predictions were even somewhat accurate.

The 30-year fixed mortgage rate, which hovered at 3% throughout 2021, is treading close to 7 percent, a steep increase from last year. It has almost doubled since last year. Some experts are forecasting that the 30-year, fixed-mortgage rate will vary from 5% to 7% by the end of 2022. According to Nadia Evangelou, director of Forecasting for the National Association of Realtors, rates may exceed 6 percent. They did momentarily before the Federal Reserve's June announcement of a rate rise, but have subsequently backed off.

The most likely scenario is that the Fed will continue to raise the fed funds rate to combat inflation and will continue to reduce its position in the market for mortgage-backed securities. The Federal Reserve is expected to continue its course of raising short-term interest rates and anticipate an additional 75 basis point hike at its September meeting, though markets are partially pricing in the possibility of a full 100 basis point increase.

As a buyer, you do not want to hear this because higher interest rates make home loans less affordable. Rising rates make homes more expensive for buyers, and, for prospective borrowers, steeper monthly mortgage payments. It will thereby reduce the demand for home purchases. The latest housing stats for August already point to an increasing inventory amidst moderating demand.

The mortgage credit availability again decreased in August as investors reduced their offerings of ARM and non-QM loan programs. With the overall origination volume expected to shrink in 2022, some lenders continue to streamline their operations by dropping certain loan programs to simplify their offerings, according to the Mortgage Bankers Association.

The MCAI fell by 0.5 percent to 108.3 in August. A decline in the MCAI indicates that lending standards are tightening, while increases in the index are indicative of loosening credit. The index was benchmarked to 100 in March 2012. The Conventional MCAI decreased by 1.0 percent, while the Government MCAI remained essentially unchanged. Of the component indices of the Conventional MCAI, the Jumbo MCAI decreased by 0.7 percent, and the Conforming MCAI fell by 1.2 percent.

The competition for housing results in fewer options, higher prices, and faster sales. In a seller's housing market, there are more interested buyers than available homes and that makes it a difficult time to buy a house, especially for first-time buyers. According to the NAR, the national median price for existing homes sold in August was $389,500, up 7.7% from the same month in 2021.

This is the longest streak of year-over-year growth ever recorded, spanning 126 months. However, it was the second month in a row that the median sales price retracted after reaching a record high of $413,800 in June, the usual seasonal trend of prices declining after peaking in the early summer.

Fannie Mae released a nationwide housing survey for August 2022 that reveals only 27 percent of respondents believe it is a good time to buy a house in 2022.

“The share of consumers expecting home prices to go down over the next year increased substantially in August. Accompanying this, HPSI respondents reported a significant decrease in home-selling sentiment,” said Doug Duncan, Fannie Mae Senior Vice President, and Chief Economist.

The Home Purchase Sentiment Index® (HPSI) decreased 0.8 points in August to 62.0, its sixth consecutive monthly decline, as high home prices and elevated mortgage rates continue to weigh on consumer sentiment, particularly home-selling sentiment. Month over month, consumers reported that home-selling conditions have worsened – although that component remains strongly positive on the net. Consumers also reported that homebuying conditions have improved, but 73% continue to report that it’s a “bad time to buy a house in 2022.”

Meanwhile, a greater share reported the expectation that mortgage rates will decline, even though a majority continue to believe that mortgage rates will go up over the next 12 months. Year over year, the full index is down 13.7 points.

Is 2022 a Good Time to Buy a House?

The percentage of respondents who say it is a good time to buy a home increased from 17% to 22%, while the percentage who say it is a bad time to buy decreased from 76% to 73%. As a result, the net share of those who say it is a good time to buy increased 8 percentage points month over month.

Is 2022 a Good Time to Sell a House?

The percentage of respondents who say it is a good time to sell a home decreased from 67% to 59%, while the percentage who say it’s a bad time to sell increased from 27% to 35%. As a result, the net share of those who say it is a good time to sell decreased 16 percentage points month over month.

Home Price & Mortgage Rate Expectations

The percentage of respondents who say home prices will go up in the next 12 months decreased from 39% to 33%, while the percentage who say home prices will go down increased from 30% to 33%. The share who think home prices will stay the same increased from 26% to 28%. As a result, the net share of Americans who say home prices will go up decreased 9 percentage points month over month.

The percentage of respondents who say mortgage rates will go down in the next 12 months increased from 6% to 11%, while the percentage who expect mortgage rates to go up decreased from 67% to 61%. The share who think mortgage rates will stay the same increased from 21% to 25%. As a result, the net share of Americans who say mortgage rates will go down over the next 12 months increased 11 percentage points month over month.

Is It a Good Time to Buy a House or Wait Until 2023?
Source: Fannie Mae

The HPSI is constructed from answers to six of 100 national housing survey questions that solicit consumers’ evaluations of housing market conditions and address topics that are related to their home purchase decisions.

Is it a Good Time to Buy a House for First-Time Buyers?

According to a recent Fannie Mae survey, many consumers are hesitant to buy a home in 2022. About 67% of survey respondents expect mortgage rates to increase, and there are rising concerns about job stability and escalating housing prices. Some homebuyers will find the current market conditions easier, while others will find them more difficult to buy a house. The current upward trend in home prices is likely to continue throughout the year, which could price out some prospective buyers.

However, it is anticipated that prices will rise at a slower rate than they did in 2021. The current lack of entry-level supply and the rapid increase in mortgage rates appear to be negatively impacting potential first-time homebuyers in particular, as evidenced by the larger proportion of younger respondents (aged 18 to 34 years old) who believe it is a bad time to buy a house. The advantage of the historically low mortgage rate environment of the previous year appears to have diminished for first-time homebuyers, and affordability is projected to become an even greater constraint for them in the future.

In August 2022, the first-time buyers were responsible for 29% of sales, consistent with July 2022 and August 2021. According to NAR, the annual share of first-time buyers was 34% in 2021. Individual investors or second-home buyers, who make up many cash sales, purchased 16% of homes in August, up from 14% in July and 15% in August 2021.

In 2022, rising mortgage rates are piling onto record-breaking home prices, locking even more potential buyers out of the red-hot housing market. Historically, rising interest rates cause more prospective buyers to delay purchases, and the recent increase in financing terms has already resulted in a decline in mortgage applications.

The prices are not going down in 2022. The various forecasts from experts show that 2022 will remain a moderate sellers' housing market, and home values may still increase by single-digit percentage points. While affordability concerns continue to grow, low mortgage rates, increased savings, and a strengthening job market all contribute to making homeownership more accessible to a wide number of prospective buyers.

Realtor.com’s September 2022 data shows that the housing market is continuing to moderate. Homes are selling more slowly than they did a year ago, house inventory growth has stalled, and listing price rise is moderating. However, homes are still selling faster than they were before the pandemic, and the price rise remains in double digits. This year, the last week of September was the greatest time to purchase a home, and while sellers are putting their homes on hold, buyers may anticipate less competition and somewhat lower pricing this fall.

In September, newly listed homes declined by 9.8% compared to the same time last year, a lower rate of decline compared to last month’s 13.0% year-over-year decrease, but far shy of levels seen earlier this year. In August, seller sentiment continued to decline. Fannie Mae’s Home Purchase Sentiment Index (HPSI) revealed that the net share of respondents saying now is a good time to sell decreased by 16 percentage points compared to the previous month and by 30 percentage points compared to last year.

Nationally, the inventory of homes actively for sale on a typical day in September increased by 26.9% over the past year. This amounted to 155,000 more homes actively for sale on a typical day in September compared to the previous year. The growth rate of inventory remained stable compared to last month’s growth rate of 26.9%.

  • In September 2022, the nationwide median listing price for active listings was $427,000, an increase of 13.9 percent year over year.
  • It was a deceleration from last month’s growth rate of 15.4% and down from a peak growth rate of 18.2% in June.
  • The share of homes having their price reduced grew from 11.0% last September to 19.5% this year.
  • In large metros, median listing prices grew by 10.2% compared to last year, on average.
  • Nationally, the typical home spent 50 days, 7 days more than last year but 18 days less than typical pre-pandemic levels.
  • The national inventory of active listings increased by 26.9% over last year.
  • The total inventory of unsold homes, including pending listings, increased by just 0.7% year-over-year due to a decline in pending inventory (-23.7%).
  • Sellers are less active than last year, as newly listed homes declined by 9.8% on a year-over-year basis.

Housing Markets that saw the largest year-over-year increase in listing prices in September 2022:

  • Miami, where the median listing price grew by +28.3%
  • Memphis, where the median listing price grew by +27.3%
  • Milwaukee, where the median listing price grew by +27%

Housing Markets that saw the greatest increase in their share of price reductions compared to last year:

  • Phoenix (+32.3 percentage points)
  • Austin (+27.4 percentage points)
  • Las Vegas (+20.0 percentage points)

Western metros saw the greatest increase in the share of price reductions (+15.6 percentage points), followed by southern metros (+10.7 percentage points).

Conclusion: The Best Time To Buy A Home Depends On You

Higher interest rates pose a challenge to existing homeowners looking to buy a new home at the same time as selling their current home. Existing homeowners may benefit from lower interest rates than those offered right now because they already have mortgages. Their monthly expenses could rise dramatically as a result of the purchase of a new property.

In other words, if you don't have a specific date in mind for when you want to buy a new property, you may be better off waiting till it does. Every potential buyer's best time to buy a property is different, and the greatest time to buy a house is not the same for everyone. It’s essential to consider your financial situation and understand how buying will impact your bottom line each month.

Sources:

  • https://www.realtor.com/research/june-2022-data/
  • https://www.bankrate.com/mortgages/todays-rates/
  • https://www.nar.realtor/research-and-statistics/housing-statistics/existing-home-sales
  • https://www.bankrate.com/mortgages/will-mortgage-rates-go-up-in-july-2022/
  • https://www.fanniemae.com/research-and-insights/surveys-indices/national-housing-survey
  • https://www.mba.org/news-and-research/research-and-economics/single-family-research/mortgage-credit-availability-index-x241340

Is Now a Good Time to Invest in Rental Property 2022

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Should You Buy a Rental Property in 2022?

Investing in a rental property means buying a property that can generate an income in the form of rent. There is no doubt that rental property investment can be a great way for beginners to generate positive cash flow every month. However, many people still find it challenging due to expenses typically associated with traditional real estate investments including property management and renovation works. In this article, we'll give you an overview of how rental property can easily be bought as a turnkey investment.

Home prices are skyrocketing, and mortgage rates are higher than they've been in well over a decade. That implies that many individuals just cannot afford to buy a home right now. If you acquire a rental property, you may take advantage of high rental demand and perhaps charge tenants a premium. Furthermore, some real estate investors have sufficient wealth to eliminate the need for a mortgage. Higher borrowing rates won't be a problem if that's the case.

The only downside is that if you buy a rental property today, you'll likely pay a premium, especially if you're competing with other purchasers. With a limited housing inventory, you may not locate a property that meets all your needs. Due to low inventory, you may have to venture beyond the desired radius of your preferred neighborhoods.

This might make it tougher to locate tenants who can afford your monthly rent. If you want to mortgage your rental property, you'll pay more now than a year ago. That's an extra fee. But it's also a good time to be a landlord since many people are eager to rent out their homes. If you can find a rental property at a reasonable price, you can definitely invest right now.

In contrast to the set monthly mortgage payment, rents grow over time. The national median rent jumped by a record-setting 17.5 percent in 2021, according to national rent data. Although rent growth has slowed in 2022, it is still accelerating relative to the years preceding the epidemic. During the first half of 2022, rents climbed by a total of 5.4%.

The annual increase in rent is an astounding 14.1%. With rising inflation afflicting the economy, it is probable that rents will continue to climb, which provides a compelling argument for investing in rental properties today in order to capitalize on the predicted growth in rents over the next decade.

Mortgage rates fell last week. While mortgage rates are still much higher than at the start of the year, they've fallen 0.50 percent since mid-June. Last week's economic figures showed sluggish growth and rising unemployment claims. As affordability issues rise and builder confidence declines, buyer competition in the home market eases.

Despite robust labor markets and rising inflation, investors are pricing greater recession risk into medium to long-term interest rates, assuming the Fed will have to stop raising rates. This reduces longer-term borrowing rates and boosts equities prices from earlier this year's lows. The Fed hiked the federal funds rate by 0.75 percent today, as expected. Investors will be looking for hawkish or dovish statements from the Fed this week to determine interest rate forecasts.

Rental Property Definition (Turnkey)

A rental property, also called ‘turnkey', is a real estate property that is fully rehabilitated, functional, and ready to use. It is usually managed by a third-party property management company whose aim is to make the real estate investing process as simple as possible for you as an investor so that all you have to do is to “turn the key”. This type of property is highly appreciated by new real estate investors who have little experience in rehabilitation, or even seasoned investors who simply prefer to have someone else do the analysis and renovation for them.

It is a well know fact get started in real estate investing can be very tricky and overwhelming. In recent years, the solution to this problem has emerged under the so-called turnkey rental properties. Why did investing in turnkey rental property become so popular? The answer is because, on top of all of the advantages it entails, investing in rental properties offers an ideal solution to investors' biggest problem: Headache. Turnkey rental properties allow investors to sit and enjoy their passive cash flows while someone else does all the hard property management work for them.

Is Rental Property A Good Investment Right Now?

investing in rental property in 2022

Should you invest in rental properties? Real Estate is a proven wealth-building vehicle. The most common form of real estate investing, the “buy and hold strategy” involves purchasing a property and renting it out for an extended period of time. Essentially, a “buy and hold investor” seeks to create wealth by renting the property out and either collecting monthly cash flow or simply holding the property until it can be sold for profit in the future.

Among the advantages of this strategy is that during the time that you hold the property and rent it out, the mortgage is paid down every month, decreasing your principal balance and increasing your equity in the rental property. Investing in rental properties can generate passive income, significant tax benefits (being an income property), and build equity from price appreciation over the years.

Real estate is the only investment vehicle that you can live in or rent to produce income. You can also derive large tax-free profits when you sell your investment property at a higher price than you paid for it. But, before investing in a rental property you must consider your investment priorities and temperament. How much time do you have to devote to rental property investing? Can you solve the problems on your own? You can also click on this link to know about the various risks in rental property investing.

You need to know how to estimate a rental income and learn about the other ways you can use to monetize a rental property. Make sure you understand all of the expenses associated with rental property investing. There is a lot more than just a mortgage to think about. It is important to understand the two different types of appreciation and how they can impact what type of property you want to buy and where to buy it. Appreciation in the rent and property value.

Rental Property Appreciation

Rental Properties Generate Passive Income

Investing in turnkey rental properties is a highly appealing approach to many investors who prefer “hands-off” property management of their properties, while still enjoying the return on their investment. In this case, the third-party property management company is responsible entirely for the management of your property which you don’t even have to see.

All that you need to see is your ROI flowing into your bank account each month. For example, if maintenance is needed, it will be the property management company that will receive the call, not you. They will also be collecting rent from the tenants and addressing their complaints.

Investing in rental properties has many advantages that may not be considered by first-time investors. The things mentioned above are not a cup of tea for every investor. Although it is important to learn all things, if you can't due to any reason, you can choose so-called Turnkey Rental Property Companies to help you out. The easiest way to get started in rental property investing is by buying rental properties from reputed Turnkey providers.

The Importance of Real Estate Education

The best investment you make is in your education. Real estate investing is not a “get rich quick” scheme. When it comes to your real estate education, a solid foundation is a key to a long-lasting business. As you analyze your deals, make sure to learn the trade and perfect it. You need to tune in to sources of real estate education so that you can continue building your knowledge base and avoid critical mistakes.

Books are fundamental in gaining an education in real estate and perhaps the most widespread learning method for investors. Real estate books are produced each year by the thousands, and every major bookstore in the world contains a whole section on real estate investing. With the advent of the internet, you can buy e-books on real estate education at cheaper rates than paper books.

You can subscribe to real estate blogs, which can be an amazing source of free information. Real estate podcasts are one of the newest innovations in the world of real estate investor education. You cannot fly solo. Building a large network is a vital part of being a real estate investor. You need to build a network in the real estate market that will help you to succeed.

Finding a mentor and learning from those who have come before you is one of the most important steps you can take in your real estate investing education. Concentrate first on establishing a relationship with seasoned investors who you would like to learn from. A mentor doesn't need to be a real estate mandate Donald Trump or Robert Kiyosaki.

A mentor can be the investor down the street who owns a half-dozen rentals and works a full-time job. You can join portals like BiggerPockets and learn from real investors who have built wealth specifically through rental property investment.

Rental Property Investment Can Be Simplified

Rental Property Investing

The first and foremost advantage of buying a rental property is that you get to simplify the process. Most of the investors interested in real estate are looking to generate a second income, not a second job. Doing it all by yourself takes a lot of your time, which otherwise can be saved by choosing a Turnkey rental property company that will do the heavy lifting for you.

Unless you have been investing in real estate for a long time, the odds are that turnkey operators have better rental property management experience than you do. They know how to deal with tenants and contractors, and they have a property management strategy that ensures routine rent collection and handling of any payment problems.

If you decide to buy a rental property on your own, you will have to do plenty of market research to decide on the best area to invest in. However, a good turnkey rental property company will know the sweet spots of the market by heart. They already know which markets are sustainable and good to invest in.

This experience takes plenty of time to build and having it will save you a lot of money as well as energy. These companies want to be in this business for the long term, so they make sure to sell the best rental properties to their clients. However, it is wise to hire your turnkey property consultant to cross-check their proposed ROI. You need to invest in markets where development is heading. The best rental properties are the ones that are well located and physically sound.

These companies can purchase properties such as REOs in bulk every month. They have good relationships with banks, close deals quickly with cash, and usually get better pricing than an individual investor. They also have their team for renovation work which will typically cost you less than hiring contractors on your own since they can buy materials in bulk.

To make sure your rental property is purchased and managed in the right way, you may have to have professionals such as contractors, brokers, loan officers, tax advisors, attorneys, appraisers, title/escrow agents, and accountants, which you may not be able to do on your own. Instead of it, turnkey providers already have ongoing relationships with all these professionals which saves your time and ensures your property is managed in the best way. They also have their contractors do the repair work. They can help you with financing as well.

How To Find Rental Properties For Sale Online?

Knowing where to find rental properties is an increasingly expensive challenge. Online databases are a great place to start your property search because they allow you to query and filter properties from all over the country based on specific qualities. Norada Real Estate Investments makes real estate investing easy. It helps you by finding your next rental property for sale with big data analysis supported by their investment experts.

We have exclusive off-market rental property deals in multiple markets in the United States. Sites like Trulia, Zillow, or Loopnet are good but there are some intricacies you need to know when searching on them. You need to find a diverse list of suburbs across the city and in different price brackets which have good transport, schools, lifestyle, high sales volume, and high percentage value growth.

If you are interested in buying rental properties and portfolios at this time, you can choose the Houston Housing Market. Houston has everything: the people, the diversity, the business climate, being world-renowned in energy, medicine, space, and manufacturing, and above all a booming real estate market.

Importance of Rental Investment Analysis

Once you have found a bunch of rental properties that you are interested in, it's time for analysis. Before buying the rental property, the real you should know if the property value in the market changes dramatically or not. There are several primary factors to consider, but cash flow and appreciation are the two most important variables in rental property investment.

Cash flow is simply the money left after all the bills have been paid, and appreciation is the equity gained as the property value increases. You need to crunch the numbers and figure out if it's a good investment. As an investor, you need to understand how to evaluate deals and opportunities. By far the most common mistake that we see new investors make with this strategy is buying bad deals because they simply don't understand property evaluation.

That's why analyzing nearby properties (comparables within a mile or two) is very important. Market “comps” determine the value of single-family homes. These comps or “comparables” are nearby properties with similar characteristics. They share variables like the floorplan, number of bedrooms and bathrooms, garage size, and amenities. A single-family investment home generally rises in value if a similar home is also rising in value and vice versa.

Other common problems include underestimating expenses, making bad decisions on tenant selection, and failing to manage properly. You need to learn how to figure out income, expenses, cash flow, and whether it's a good deal for you. You need to see what is tenancy type of the market. Is it a periodic tenancy or a fixed term of 6-12 months? A fixed-term rental property has a rent assessment at the end of every fixed term where rent typically goes up a percentage.

Know Your Area Before Purchasing a Rental Property

We recommend buying in an area that you are familiar with, at least for your first few properties as you get your feet wet. It could perhaps be your college town or your hometown. It helps to have some knowledge of the area. As a bonus, if you buy in an area that you visit anyway, your leisure travel can become at least partly tax-deductible because you will be adding a business component to those trips to check up on your property.

If you are not familiar with an area, try spending a few weekends in your target market over a period of months. Drive around in 2-3 zip codes you are interested in and talk to neighbors, local shop owners, property managers, etc. You'll need a network of local professionals to help you manage your property.

Understand Market Dynamics Before Purchasing a Rental Property

You need to think strategically when choosing and purchasing your rental property, and to work in line with both market trends and the general guidelines that dictate whether your investment is poised to succeed or not. Data and analyses can help you understand market dynamics such as — supply and demand, median home prices, median days on market, median rent prices, new construction, mortgage rates, and local economic indicators.

The most desirable rental markets for property investors aren't always in big cities. Investors prefer to buy property in growing markets having strong economic growth, low median housing prices, high rents, and low vacancy rates. You can also buy an out-of-state rental property without having to live in that state or handle the management.

This process also helps you as an investor to diversify your portfolio of rental properties. For example, if you live in New York City and cannot afford to buy a rental property, you can diversify your portfolio and still generate passive cash flows by buying rental properties in more affordable distant growth markets like Atlanta, Dallas, Memphis, or Indianapolis.

What is Buyer's Market?

In a buyer's market, there are more homes for sale than there are buyers in the marketplace, so the housing market is favorable to buyers. For real estate investors, buyer's markets are the perfect time to buy an investment property because the negotiating power is on their side and they can easily move on to the next potential deal if a seller won’t agree to their contract terms.

What is Seller's Market?

In a seller's market, more buyers are looking for homes than there are homes available. In other words, there are many interested buyers, but the real estate inventory is low. Since there are fewer homes available, sellers are at an advantage as they are more likely to receive multiple offers (above their asking price).

Financing Your Rental Property Investment

You need to assess your current financial position to get a realistic sense of your budget and timeline for making your first rental property investment. Make sure you're financially fit before investing in rental properties. Most successful real estate investors build their investment portfolio through saving money and then gradually buying properties over the years. Going for a mortgage can help you quickly build your portfolio of rental properties.

Instead of putting all your savings into one rental property, you can contact lenders and borrow from them and buy multiple rental properties. Typically investors need to put 20% of their money as a down payment and the rest of the amount is covered by the loan amount. The best returns on real estate rely upon the use of credit to obtain the leverage of using other people's money. Pay attention to your monthly budget and make sure you have adequate insurance coverage as well.

5 Markets To Invest in Rental Property Right Now

Single-family housing starts are expected to grow in 2022. On the whole, the market will remain seller-friendly, but buyers will still have relatively low mortgage rates and an eventually improving selection of homes for sale. We'll discuss 5 markets that are great for choosing your next rental property in 2022.

These markets also made the list of PWC's top 10 real estate markets for 2021. Since 2015 PWC has been publishing an annual report on “Emerging Trends in Real Estate®: US and Canada.” The report discusses the top 10 overall real estate prospects, powered by strong growth, homebuilding outlook, affordability, and job prospects.

Rental Property Investing in Raleigh, North Carolina

The Raleigh metropolitan area – the city and its surrounding suburbs – account for about one and a half million people. About a third of Americans rent their homes. In the Raleigh NC real estate market, the rate is 43%. This is partially due to the large student market, but it is also fueled by young people moving here for work. That explains why downtown Raleigh rents grew 9% in 2018. It also explains why you can rent out a studio for $900 a month and one-bedroom apartments for a thousand dollars a month.

The cumulative appreciation rate over the ten years has been 47.67%, which ranks in the top 30% nationwide. This equates to an annual average Raleigh house appreciation rate of 3.98%, according to NeighborhoodScout.com's data.

Recent forecasts and predictions for the Raleigh housing market suggest that home prices will continue rising in 2022. Raleigh home values have gone up 6.6% over the past year and Zillow predicts they will rise 9.8% in the next year. In the latest quarter, Raleigh's appreciation rate has been 1.78%, which annualizes to a rate of 7.32%.

  • Median Property Price: $307,349 (Zillow)
  • An Estimate of Median Property Price After 12 Months: $337,000
  • Average Rent: $1,258, up 2% YTY (RENTCafe)
  • Renter-occupied Households: 43%

Rental Property Investing in Durham, North Carolina

The Durham housing market has made considerable improvements since the housing bubble burst. Only two years after the market crash in 2008, Durham was considered one of the few favorable locations to invest in real estate. With strong population growth and a solid economy, the rental demand in Durham, North Carolina is continuously increasing.

Durham real estate typically performed stronger than the U.S. average due to the popularity of the Triangle area among new and out-of-state residents, as well as investors. Rents in downtown Durham grew by 10% or more in 2016 and 2017, though an influx of new apartments in the area helped it cool down to the single digits.

Rent for the average one-bedroom apartment in Durham hit $1100 a month in January 2019. This is a 7% increase over 2018 figures. Two-bedroom apartments increased by about 6% to $1350 a month. Single-family homes, of course, rent for much more.

Durham real estate appreciated 51.32% over the last ten years, which is an average annual home appreciation rate of 4.23%, putting Durham in the top 20% nationally for real estate appreciation. Recent forecasts and predictions for the Durham housing market suggest that home prices will continue rising in 2022. Durham home values have gone up 7.0% over the past year and Zillow predicts they will rise 9.7% in the next year. In the latest quarter, NeighborhoodScout's data show that house appreciation rates in Durham were at 0.71%, which equates to an annual appreciation rate of 2.86%.

  • Median Property Price: $269,287 (Zillow)
  • An Estimate of Median Property Price After 12 Months: $295,000
  • Average Rent: $1,201 (RENTCafe)
  • Renter-occupied Households: 43%

Rental Property Investing in Austin, Texas

Austin is second-ranked, with a positive outlook for all property sectors in general, specifically for multifamily and single-family housing. The local economy is strong with no shortage of available investment capital. Austin's high quality of life and a strong economy have the city once again leading the pack when it comes to population growth. New data from the U.S. Census Bureau shows Austin is fifth in the nation for the population increase in the past decade, with an increase of 177,079 people between April 1, 2010, and July 1, 2019.

The decade ending 2018 saw a 32.7% increase in population, and growth was 2.5% for the year ending July 2018. The Austin housing market has gained a lot of steam, with home values almost doubling since 2010. The Austin real estate market isn’t as big as Dallas, San Antonio, or Houston. Austin is only the fourth largest city in the state.

However, the Austin housing market is sizable – it is the eleventh largest city in the U.S. as of this writing, and it is the center of a large metro area. Austin has come up as another tech hub in the last 5 to 6 years. There are tons of high-paying tech jobs moved to Austin in the last couple of years. As Austin is a young city by many standards, Millennials will be the largest buying force in Austin in 2022, and this trend should continue in the coming years.

Austin real estate appreciated 97.02% over the last ten years, which is an average annual home appreciation rate of 7.02%, putting Austin in the top 10% nationally for real estate appreciation. Recent forecasts and predictions for the Austin housing market suggest that home prices will continue rising in 2022. Austin home values have gone up 12.8% over the past year and Zillow predicts they will rise 11.6% in the next year. Austin appreciation rates in the latest quarter were at 2.28%, which equates to an annual appreciation rate of 9.42%, according to NeighborhoodScout's data.

  • Median Property Price: $437,800 (Zillow)
  • An Estimate of Median Property Price After 12 Months: $488,000
  • Average Rent: $1,441 (RentJungle)
  • Renter-occupied Households: 48% (RENTCafe)

Rental Property Investing in Salt Lake City

Salt Lake City is witnessing a strong local economy. The next 5 to 10 years are expected to be an exciting time for tech in Salt Lake City —thanks to the tremendous growth of Silicon Slopes and Salt Lake City's business ecosystem. It has the winning combination of lower costs, great amenities, and top-ranked universities that provide the necessary workforce and incubators. 30% of the population is aged between 15 and 34.

Salt Lake City real estate appreciated 86.26% over the last ten years, which is an average annual home appreciation rate of 6.42%, putting Salt Lake City in the top 10% nationally for real estate appreciation. Recent forecasts and predictions for the Salt Lake City housing market suggest that home prices will continue rising in 2022.

Salt Lake City home values have gone up 11.2% over the past year and Zillow predicts they will rise 11.5% in the next year. Salt Lake City appreciation rates in the latest quarter were at 2.87%, which equates to an annual appreciation rate of 11.97%, according to NeighborhoodScout's data.

  • Median Property Price: $454,403 (Zillow)
  • An Estimate of Median Property Price After 12 Months: $506,000
  • Average Rent: $1,220 (RentJungle)
  • Renter-occupied Households: 48% (RENTCafe)

Rental Property Investing in Dallas, Texas

Dallas has a great outlook for the local property regarding industrial and single-family properties. The local economy and investor demand are also positive with good capital availability. The city is expected to have 87,000 new residents a year for the next 5 years and is projected to have a population aged 15-34 grow by 10.9%. The cost of doing business is 94% of the national average and the disposable income growth is 6.9%. The city also has strong healthcare and livability ranking. For a more in-depth review, click the link –  Dallas Real Estate Market.

Dallas real estate appreciated 74.33% over the last ten years, which is an average annual home appreciation rate of 5.71%, putting Dallas in the top 10% nationally for real estate appreciation. Recent forecasts and predictions for the Dallas housing market suggest that home prices will continue rising in 2022. Dallas home values have gone up 6.9% over the past year and Zillow predicts they will rise 11.1% in the next year.

In the latest quarter, NeighborhoodScout's data show that house appreciation rates in Dallas were at 1.12%, which equates to an annual appreciation rate of 4.55%.

  • Median Property Price: $237,200 (Zillow)
  • An Estimate of Median Property Price After 12 Months: $263,000
  • Average Rent: $1,228 (RentJungle)
  • Renter-occupied Households: 42% (RENTCafe)

The US housing market has been on fire this year with record-low mortgage rates and a sudden wave of relocations made possible by remote work. Meanwhile, home prices have pushed new boundaries as buyer demand continues to surge. As we enter into 2022, housing market experts predict sales to grow 7 percent and prices to rise another 5.7 percent. If you need to explore more markets for rental property investment, here's our new article on the best places to invest in real estate in 2022.

Summary

One of the most commonly stated reasons that people give for investing in real estate is that they are seeking out financial freedom. Investing in rental property is an alternate path for seeking financial freedom.  While active investors enjoy spending time on research and management, passive investors tend to have less time or simply do not prefer to be engaged in this tedious task; this is when turnkey rental properties become a great solution.

Rental properties are incredibly passive; they allow you to generate cash flows at distance, while other people who are specialized and professional do all the hard work for you. Whether you are a new investor, or a seasoned investor looking to diversify your portfolio or invest with no hassle, investing in rental properties is something you should not miss. Click on the link to know How To Buy Rental Properties With No Money Down.

Housing Market: Should You Buy a Turnkey Property or Fixer-Upper?

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The current housing market means you’ll likely pay top dollar for a home that’s considered turnkey — immediately ready for you to move in. Plus, the competition is steep. Perhaps those two reasons are why 52% of American homebuyers are looking for a starter home or a fixer-upper rather than a forever home, according to TD Bank‘s First-Time Homebuyer Pulse, which polled buyers planning to purchase in 2022. If you’re struggling with whether to keep combing the housing market for a move-in-ready home that fits your budget or to take your chances with a fixer-upper, here’s the expert insight you need.

Pros of Buying a Fixer-Upper

Buying a fixer-upper can provide you with advantages that a turnkey home doesn’t offer. Consider the following.

Cheaper Taxes

“Fixer-uppers can be a great way to get a deal on a property and save money on taxes,” said Jeremy Luebke, founder of WeLoveLand. “In many cases, fixer-uppers are sold for less than the market value because the seller is motivated to move the property quickly. This can be a great opportunity for bargain hunters. Additionally, fixer-uppers often come with significant tax breaks. The government offers tax breaks for people who rehabilitate or redevelop properties, so if you’re planning to do major work on your fixer-upper, you may be eligible for some significant tax deductions.”

Flip Potential

“The big advantage to taking the risk on a fixer-upper is the equity you build while improving the value of the property,” said Doug Greene, owner of Signature Properties. “This is the flip potential that exists, while in a turnkey home you are essentially buying the property at full price (i.e., market value).”

Potential for Creativity

“An advantage of purchasing a fixer-upper is the opportunity to put money into the features of your house that are most important to you,” said John Riedl of Easy Cash Offer Florida. “Do you want a modern kitchen? What about a luxurious soaking tub? If you are purchasing a property that is move-in ready, you can find yourself subject to the taste and interests of the past owner.”

Riedl also pointed out that fixer-uppers give you a lot of control over the renovation process by selecting paint colors, floor materials, contractors, and anything else you desire.

Cons of Buying a Fixer-Upper

Time, money and effort are all required when it comes to getting a fixer-upper where you want it to be. Here’s more on the potential disadvantages of going this route.

Renovation Costs

“The cost of labor and materials is near its highest price ever, and if you are hiring contractors to perform work on your home, unless you have a crew on standby, it could be months before the work is done,” said Tony Grech real estate investor and lending expert with Luxury Mortgage. “Just like there is a shortage of home inventory that has driven prices up, there is a shortage of qualified tradespeople as well as a shortage in raw materials due to supply chain issues that stretch back to the beginning of COVID. So you save $20,000 or $30,000 on the price of the home, but it costs you $60,000 to perform the work that you want.”

Effort

Beyond the costs in labor and materials, renovating a home comes with some other headaches and risks,” said Brian Davis, real estate investor and founder at Spark Rental. “You have to navigate the treacherous waters of permits, which involves not just filing fees and dealing with the permit office, but also hassling with inspectors.”

Ryan Fitzgerald, owner of UpHomes also said that renovating a fixer-upper requires a lot of effort. “Renovations are time-consuming and stressful so make sure you’re up for the challenge if you decide to get a fixer-upper,” he cautioned. “If you don’t want to deal with the construction, managing contractors, and living in a home that isn’t finished, a fixer-upper may not be the best choice for you.”

Live Richer Podcast: First-Time Homebuying During Inflation: Is It Worth It?

Pros of Buying a Turnkey Home

While a home that’s ready to move in will likely cost much more than a fixer-upper, there are some definite advantages that are worth considering.

No Renovation Costs

“When you purchase a turnkey home, the price you see is the price you pay,” said Luebke. “There are no additional costs for things like landscape or certain home upgrades. This can be a big advantage when budgeting for your new home. You know exactly how much money you need to bring to the table, and there are no unpleasant surprises down the road.”

Minimal Effort Required

If you’re looking to move in and start enjoying your new home as soon as possible, turnkey home is a perfect choice. “Turnkey homes require much lower effort because you can move right in and start enjoying the home after you unpack,” said Ryan Fitzgerald, owner of UpHomes.

Cons of Buying a Turnkey Home

However, buying a turnkey home also comes with a few drawbacks. It’s up to you to decide if they are worth it.

More Expensive Taxes Upfront

While you can get a lower property tax rate by buying a cheaper fixer-upper, that’s likely not the case with a turnkey home.

“If you opt for a turnkey home, the municipality will have likely already caught up to the new assessed value by the time you move in,” said Greene. “It’s usually the sale of the property that triggers a property reassessment in the system.”

Flip Potential Is Nonexistent

“Buying turnkey is certainly the way to go if you have no desire to make repairs to a home and want it move-in ready,” said Jeff Shipwash, CEO of Shipwash Properties LLC. “Unfortunately, in today’s market, turnkey properties are at a premium. This means you will more than likely have strong competition and will be paying top dollar for it. This results in buying with little to no equity to spare.”

And without any equity to spare, there is no flip potential.

Limited Opportunities for Creativity or Customization

“The home might not be exactly what you want,” said Luebke. “Since the home has already been built, you may be limited in terms of customizations or changes that you can make. The home might come equipped with most, if not all, of the features and amenities that you desire, but there is always the chance that something will not be quite to your liking. This can be frustrating if you have specific ideas about how you want your new home to look and function.”

>>This article originally appeared on GOBankingRates.com.<<

Mortgage Interest Rates Forecast 2022 & 2023

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Mortgage Interest Rates Forecast: Will Rates Go Down?

Mortgage rates have risen since the start of 2022, reflecting investors' concerns that the economy is heating up and that the Fed will cool it down and reign in inflation. U.S. Treasury bond rates, which mortgage rates follow, encountered two tough patches this year: in late February, when Russia invaded Ukraine, and in mid-May when investors worried about poor consumer spending. Bond yields and mortgage rates declined throughout these times.

Most mortgage-market analysts predict rates will be choppy over the next few months but will settle above where they are now—with the 30-year fixed-rate mortgage just around 5 percent—for the next year or two. The Fed raised interest rates by 75 points in June — the biggest increase since 1994.

Then it enacted its second consecutive 0.75 percentage point interest rate increase in July, taking its benchmark rate to a range of 2.25%-2.5%. Now, it is set for another 75-basis-point rate hike in the coming weeks due to the hot U.S. consumer price inflation data released for August. Before the data, the majority of economists anticipated that the Fed would slow the pace of rate hikes in November to a half-point increase, but now a 0.75-point increase is predicted.

<<<Also Read: How To Invest in Mortgage Estate Notes?>>>

Mortgage experts predict that mortgage rates will increase in the coming weeks. 78 percent of respondents to Bankrate's weekly poll believe interest rates will rise, 11 percent believe rates will fall, and 11 percent believe rates will remain the same. Inflation is still problematic, the Fed will continue to raise rates aggressively, and there is a growing supply of mortgage-backed bonds that must be absorbed as the Fed withdraws.

Before becoming less hawkish and considering a pause in rate hikes, Fed officials have stated that they want to see several month-to-month inflation rates annualize to less than 3%. Treasury yields have jumped across the curve, with the two-year rate soaring as much as 21 basis points to about 3.78%, the highest since October 2007. Yields on 30-year bonds rose about six basis points to 3.57%, a level last seen in 2014, and were trading below the rates offered by five-year notes.

Yields on benchmark 10-year notes climbed as much as 10 basis points to 3.46%, while the dollar rallied against its major peers and US stocks dived. The US consumer price index rose 0.1% in August after remaining unchanged in July, according to data released by the Labor Department on Tuesday. Prices increased 8.3% from one year ago, a slight deceleration is largely attributable to recent declines in gasoline prices.

The Fed's policies affect lenders' cost of money, not mortgage rates. Most lenders have factored in inflation-related cost hikes. Since December, costs have paralleled Fed moves. Mortgage rates sometimes rise before predicted lender cost rises to minimize sticker shock. Therefore, volatility in mortgage rates is expected. The recent Fed rate rise affects your finances. It will undoubtedly raise credit cards, home equity, and line of credit interest rates (HELOCs).

Rate rises generate increased rates on high-yield savings accounts and other savings instruments. Experts say the recent Fed rate hike shouldn't prompt homebuyers to hesitate or change their plans. Rate and conditions vary on a borrower's credit, loan type, and mortgage lender. ARMs and HELOCs are likewise related to the prime rate, but 15- and 30-year mortgage rates are fixed and tied to Treasury yields and the economy. Rates have practically doubled since the start of the year, reducing buyers' purchasing power.

In a few months, consumers will feel the Fed's rate hike. In one to two billing cycles, credit card and vehicle loan rates will certainly rise. Those with adjustable-rate mortgages or who want to get one soon should expect higher rates. Many Americans with variable-rate private student loans might see interest rates hike next month. Home prices, rentals, and inflation are all at historic highs. A recession is imminent, and more corporations are declaring layoffs to stave off a consumer spending slump.

People are contemplating big-ticket purchases because of employment uncertainties. Higher borrowing rates have impacted real estate demand. New and existing house sales declined in the first half of the year, while contract signings dropped sharply in the summer. As a result, many house sellers are seeing their properties linger on the market longer. Price cuts are a go-to for sellers. As fall and winter approach, we may anticipate home markets to rebalance and pick up speed.

Mortgage Rate Predictions 2022

Mortgage experts are divided over where rates are headed in the coming weeks. In response to Bankrate's weekly poll, 78 percent say rates are going up, and 11 percent say rates are going down. In September, the benchmark fixed rate for 30-year mortgages surpassed 6 percent for the first time since November 2008. As of now, mortgage rates are moving above 6 percent.

After rising sharply in the first few months of 2022, the 30-year fixed mortgage rate began to fluctuate in June, approaching 6 percent before stabilizing in the 5s. Federal Reserve policy has no direct effect on fixed mortgage rates, but for a time, the central bank's actions led to a decline in 10-year Treasury yields, which drive the movement of fixed mortgage rates. For September and beyond, analysts expect more rate volatility, with inflation one of many markers to watch.

If the predictions of leading experts are accurate, in September, mortgage interest rates will likely remain in the same region as they are now, fluctuating slightly. “The economy will slow faster than inflation, so more yo-yo action should be expected in September,” Bankrate chief financial analyst Greg McBride says. “The average 30-year fixed will be between 5.6 percent and 6.0 percent, with the average 15-year fixed rate in the 4.75 percent to 5.0 percent neighborhood.”

Mortgage Interest Rate Weekly Trends in 2022

3-Month Trend 30-Year Fixed Rates 15-Year Fixed Rates 10-Year Fixed Rates 5/1 ARM Rates
9/9/2022 6.08% 5.33% 5.46% 4.52%
9/2/2022 5.95% 5.18% 5.25% 4.42%
8/26/2022 5.92% 5.08% 5.17% 4.33%
8/19/2022 5.60% 4.89% 5.03% 4.22%
8/12/2022 5.46% 4.86% 4.90% 4.19%
8/5/2022 5.52% 4.74% 4.72% 4.18%
7/29/2022 5.57% 4.82% 4.80% 4.18%
7/22/2022 5.84% 5.00% 5.00% 4.26%
7/15/2022 5.73% 4.89% 4.84% 4.21%
7/8/2022 5.67% 4.87% 4.86% 4.27%
7/1/2022 5.83% 5.06% 5.04% 4.29%
6/24/2022 5.89% 5.10% 5.21% 4.26%
6/17/2022 5.91% 5.11% 5.18% 4.02%
6/10/2022 5.54% 4.75% 4.67% 3.91%
6/3/2022 5.46% 4.69% 4.57% 3.90%
5/27/2022 5.28% 4.60% 4.50% 3.91%
5/20/2022 5.48% 4.74% 4.74% 3.87%
5/13/2022 5.57% 4.81% 4.78% 3.85%

(Source: Bankrate.com)

The Fed is battling inflation. With the pandemic's waning influence, inflation at 40-year highs, and the Fed predicting four more rises, interest rates might continue to rise in 2022. An imminent recession has produced rate decreases and might cause more any week. Freddie Mac, the MBA, and other industry heavyweights disagree on whether 30-year mortgage rates will rise or level out by 2022.

Experts are forecasting that the 30-year, fixed-rate mortgage will vary from just above 5% to as high as 7% by the end of 2022. Here are some of the earlier mortgage interest rate predictions made for 2022.

  • Realtor.com Chief Economist Danielle Hale: “For mortgage rates, we’re likely to see upward pressure with much less intensity. Mortgage rates are currently near 5.5%, and I expect them to hover between 5.5% and 6% between now and the end of 2022.”
  • MBA Chief Economist Mike Fratantoni: Mortgage “rates may have already peaked and could stay between 5% and 5.5% through the remainder of 2022.”
  • National Association of Realtors (NAR) Chief Economist Lawrence Yun: “Mortgage rates bouncing along near 6% is certain for the remainder of the year. They could go up even close to 7%, especially if oil and gas supply further lags and pushes up the critical energy prices during the winter heating season.”
  • Zillow Vice President of Capital Markets Paul Thomas: “Mortgage rates are likely to be volatile in the near term as markets are pricing in the competing influences of high inflation and Federal Reserve rate hikes against increasing risks of economic slowdowns and a potential recession. Considering the current situation, we’re more likely to see higher rates by the end of the year than lower ones.”

Sources

  • https://www.bankrate.com/mortgages/rate-trends/
  • https://www.bankrate.com/mortgages/mortgage-rates/
  • https://www.realtor.com/research/freddie-mac-mortgage-rates-july-28-2022/
  • https://www.forbes.com/advisor/mortgages/mortgage-interest-rates-forecast/
  • https://themortgagereports.com/32667/mortgage-rates-forecast-fha-va-usda-conventional

Is It a Good Time to Sell a House or Should Wait Until 2023?

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Is now a good time to sell a home? It's a topic that many potential house sellers are pondering, especially following last year's rapid increase in home values. It might be tempting to delay the sale for an additional year or two but the majority of real estate experts think yes, this is a good time to sell your house. There are several causes for this, including persistent buyer demand and a lack of available homes. The mortgage rates are increasing in 2022 and show no indication of slowing in the near future.

Some first-time buyers may be compelled to leave the market if mortgage interest rates continue to rise. In other words, if you are considering whether to sell a house now or wait until 2023, it may be prudent to do so before interest rates close. The intense competition for housing results in fewer options, higher prices, and faster sales. In a seller's housing market, there are more interested buyers than available homes and that makes it a difficult time to buy a house, especially for first-time buyers.

According to the NAR, the national median price for existing homes sold in June was $416,000, up 13.4% from the same month in 2021. This is the longest streak of year-over-year growth ever recorded, spanning 124 months. Also, the price exceeded $400,000 for the second time. 88 percent of homes sold were on the market for less than one month and they typically remained on the market for 14 days, down from 16 days in May and 17 days in June 2021.

Fannie Mae released a nationwide housing survey in July 2022 that reveals that 68 percent of respondents believe it is a good time to sell a house. 

The percentage of respondents who say it is a good time to sell a home decreased from 76% to 68%, while the percentage who say it’s a bad time to sell increased from 19% to 26%. As a result, the net share of those who say it is a good time to sell decreased 15 percentage points month over month.

is it a good time to sell a house
Source: Fannie Mae

Realtor.com’s stats for the week ending August 6 show that homes are taking longer to sell than they did at this time last year for a second consecutive week. In July, houses sat for 35 days, 2 days quicker than in July 2021. As the housing market shifts, consumers and sellers utilizing statistics to analyze real estate purchases should examine the time period such figures depict.  The housing market is resetting in a buyer-friendly direction, but purchasers may still encounter financial issues.

The median house listing price was $449,000 in July, and weekly figures suggest a double-digit rise. Second quarter statistics indicated homeownership rates grew overall and for virtually every age and racial/ethnic group. A healthy labor market is boosting pay and allowing employees to negotiate remote or hybrid work arrangements, even as in-person employment becomes more frequent. With flexible work arrangements, house hunters might choose residences further from the office, in more cheap regions, or in a new, less expensive state to counteract cost-of-living hikes.

Is it a Good Time to Sell a House in 2022?

Should I Sell My House Now or Wait Until 2023?

Spring and summer are traditionally the greatest seasons of the year to sell a home. Aside from seasonality, several reasons may make selling your house a good move. The reasons are frequently based on financial calculations, cost of living costs, and other criteria, but there may be additional circumstances that make selling your property the best option. A lack of housing availability raises demand and pricing for available homes.

Furthermore, when the housing supply is limited, homes on the market sell significantly faster. In June, homes spent four fewer days on the market than a year before, and the difference fell to only two days in July. As of August 6, homes are only staying on the market for three days longer than this time last year. More slowdown is likely as the housing market resets as buyers and sellers adjust to increased mortgage rates. Because of this, people who want to sell their homes should do it now instead of waiting until 2023.

In the first week of August 2022, new listings, a measure of sellers placing their houses on the market, were again 8% lower than one year earlier. This week represents the fifth consecutive week of year-over-year reductions in the number of new listings, indicating that fewer homeowners are ready to offer their homes for sale in this market that is rebalancing.

Many of the indications we monitor indicate that the housing correction has already begun, and sellers appear to have gotten the message. If sellers hesitate to enter the market due to a diminishing perception that now is a good time to sell, the housing market might be slowed, and it could take longer for equilibrium to recover. With home equity at a historic high, homeowners on the fence about selling should realize that they are likely in a good position.

Active inventory rose 28% from a year prior. This week's rate of progress slowed due to fewer new listings. Today's homebuyers have more options than in previous years. Realtor.com's July 2022 housing report shows that active listings are still 15% and 45% below 2020 levels. More active inventory may be needed to restore equilibrium, but the present trend may be in danger if homeowner sentiments regarding selling worsen.

Bottom Line: Don't Wait Until 2023 to Sell Your House

With persistent supply constraints and high buyer demand, now is an excellent time to sell your house. And with borrowing rates on the rise, it may be preferable to sell sooner rather than later; if rates go substantially more, prospective buyers may abandon their property search. But carefully evaluate your motives for selling.

If you're merely attempting to time the market and don't have a concrete plan for after you sell your house, it may be prudent to wait. Typically, rising mortgage rates result in fewer purchasers and a narrower pool of buyers able to give the price you desire. It costs money to sell a home, so if you cannot optimize your price, you may prefer to wait until 2023.

Find a good broker to sell your house now. A skilled real estate agent's assistance may be vital, especially in a hot housing market. Take the time to explore many possibilities and ask friends and family members to recommend agents with whom they have had positive experiences. Getting solid real estate agent referrals from individuals you know is another excellent alternative, provided you know people who have recently purchased or sold a house in your neighborhood.

According to NAR’s most recent Profile of Home Buyers and Sellers, 90 percent of sellers worked with an agent, and it’s easy to see why. NAR data shows that the typical home sold with the help of a real estate agent in 2021 went for $318,000, while homes without an agent on board went for $260,000. Agents have access to the multiple listing service (MLS), which organizes listings for real estate professionals and web portals like Zillow. An agent can assist distinguish between serious buyers and those who are just looking. You can buy your next house without a real estate agent no matter how you sell your present one.

References:

  • https://www.fanniemae.com/
  • https://www.bankrate.com/real-estate/should-i-sell-my-house-now-or-wait/
  • https://www.realtor.com/research/weekly-housing-trends-view-data-week-aug-6-2022/

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