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3. Equity Is Growing The Homeowner Equity Report from CoreLogic notes that the average homeowner gained $17,000 in equity in just the last year. With equity growing so significantly, you can feel confident that homeownership is a sound investment in your future.

Homeowner Equity Gains over the Last Year

4. Home Prices Are Appreciating According to many leading experts, home prices are forecasted to continue appreciating this year. When home values appreciate, it’s another factor that increases your equity. According to Lawrence Yun, Chief Economist for the National Association of Realtors (NAR): “The housing market was a spectacular surprise in 2020—and the positive trend will continue this year. Home sales in 2021 are expected to rise by around 10%. Home prices will also climb, but I expect more moderate increases than we’ve seen, a break for first-time buyers. Mortgage rates will continue to be favorable, staying at or near historic lows of 3% on average. The labor market will strengthen, especially as vaccines become widely available and life moves toward normal.” Knowing home values are increasing while mortgage rates are so low should help you feel confident that buying a home this year is advantageous from a price perspective and a strong long-term investment. Bottom Line If you’re considering buying a home, this may be your moment, especially with today’s low mortgage rates. Let’s connect to assess your changing needs and set you up for success in the homebuying process. 4


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In the current real estate market, demand is real, not fabricated. Millennials, the largest generation in the country, have come of age to marry and have children, which are two major drivers for homeownership. The health crisis is also challenging every household to redefine the meaning of “home” and re-evaluate whether their current home meets that new definition. This desire to own, coupled with historically low mortgage rates, makes purchasing a home today a strong, sound financial decision. Therefore, today’s demand is very real. Remember, if supply is low and demand is high, prices naturally increase. 3. This time, households have plenty of equity. Again, during the housing boom, it wasn’t just purchasers who got caught up in the frenzy. Existing homeowners started using their homes like ATM machines. There was a wave of cashout refinances, which enabled homeowners to leverage the equity in their homes. From 2005 through 2007, Americans pulled out $824 billion dollars in equity. That left many homeowners with little or no equity in their homes at a critical time. As prices began to drop, some homeowners found themselves in a negative equity situation where the mortgage was higher than the value of their home. Many defaulted on their payments, which led to an avalanche of foreclosures. Today, the banks and the American people have shown they learned a valuable lesson from the housing crisis a little over a decade ago. Cash-out refinance volume over the last three years was less than a third of what it was compared to the 3 years leading up to the crash. This approach has created levels of equity never seen before. According to Census Bureau data, over 38% of owner-occupied housing units are owned ‘free and clear’ (without any mortgage). Also, ATTOM Data Solutions just released their fourth quarter 2020 U.S. Home Equity Report, which reveals: “17.8 million residential properties in the United States were considered equity-rich, meaning that the combined estimated amount of loans secured by those properties was 50 percent or less of their estimated market value…The count of equity-rich properties in the fourth quarter of 2020 represented 30.2 percent, or about one in three, of the 59 million mortgaged homes in the United States.” If we combine the 38% of homes that are owned free and clear with the 18.7% of all homes that have at least 50% equity (30.2% of the remaining 62% with a mortgage), we realize that 56.7% of all homes in this country have a minimum of 50% equity. That’s significantly better than the equity situation in 2008. Bottom Line This time, housing supply is at a historic low. Demand is real and rightly motivated. Even if prices were to drop, homeowners have enough equity to be able to weather a dip in home values. This is nothing like 2008. In fact, it’s the exact opposite. 8


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How will your monthly payment change based on this year’s lower mortgage rates? This table calculates the difference you would see in your monthly payment at a lower mortgage rate while applying home price appreciation as well:

Difference in Monthly Payment Time of Purchase

Mortgage Amount*

Interest Rate**

Monthly Mortgage Payment (Principal & Interest)

2020

$350,000

3.62%

$1,595.19

2021

$385,000

2.73%

$1,567.65

Difference in Payment:

You Save $27.54

*Using a 10% increase in home values for the past year, per CoreLogic **Freddie Mac Mortgage rates for January 2020 and 2021

That’s a savings of almost $28 per month, which equates to $336 annually or $10,080 over the life of the 30-year home loan. Bottom Line Even as home values continue to appreciate, it’s a great time to buy a home while mortgage rates are still very low.

10


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3. Be Ready to Move Quickly According to the Realtors Confidence Index, published monthly by the National Association of Realtors (NAR), the average property sale today receives over three offers and is on the market for just a few weeks. These are both results of today’s competitive market, showing how important it is to stay agile and vigilant in your search. As soon as you find the right home for your needs, be prepared to submit an offer as quickly as possible. 4. Make a Fair Offer It’s only natural to want the best deal you can get on a home. However, Freddie Mac also warns that submitting an offer that’s too low can lead sellers to doubt how serious you are as a buyer. Don’t submit an offer that will be tossed out as soon as it’s received. The expertise your agent brings to this part of the process will help you stay competitive: “Your agent will work with you to make an informed offer based on the market value of the home, the condition of the home and recent home sale prices in the area.” 5. Be a Flexible Negotiator After submitting an offer, the seller may accept it, reject it, or counter it with their own changes. In a competitive market, it’s important to stay nimble throughout the negotiation process. You can strengthen your position with an offer that includes flexible move-in dates, a higher price, or minimal contingencies (conditions you set that the seller must meet for the purchase to be finalized). Freddie Mac explains that there are, however, certain contingencies you don’t want to forego: “Resist the temptation to waive the inspection contingency, especially in a hot market or if the home is being sold ‘as-is’, which means the seller won’t pay for repairs. Without an inspection contingency, you could be stuck with a contract on a house you can’t afford to fix.” Bottom Line Today’s competitive landscape makes it more important than ever to make a strong offer on a home. Let’s connect to make sure you rise to the top along the way.

18


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CONTACT ME TO TALK MORE I'm sure you have questions and concerns about the real estate process. I'd love to talk with you about what you read here and help you on the path to buying your new home. My contact information is below and I look forward to hearing from you.

RE/MAX Real Estate Group Serving Northwestern Pennsylvania and New York info@ErieHomeFinder.com www.ErieHomeFinder.com West (814) 833-9801 East (814) 898-3558 North East (814) 725-5665

Profile for RE/MAX Erie

RE/MAX Real Estate Group Spring 2021 Buyers Guide  

Things to consider when buying a home this Spring!

RE/MAX Real Estate Group Spring 2021 Buyers Guide  

Things to consider when buying a home this Spring!

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