Are We Headed For A Housing Crash? Is The Market Heading Into A Housing Bubble?

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Experts Say Home Prices Will Continue to Appreciate

Experts Say Home Prices Will Continue to Appreciate | MyKCM

It’s clear that consumers are concerned about how quickly home values are rising. Many people fear the speed of appreciation may lead to a crash in prices later this year. In fact, Google reports that the search for “When is the housing market going to crash?” has actually spiked 2450% over the past month.

In addition, Jim Dalrymple II of Inman News notes:

“One of the most noteworthy things that came up in Inman’s conversations with agents was that every single one said they’ve had conversations with clients about whether or not the market is heading into a bubble.”

To alleviate some of these concerns, let’s look at what several financial analysts are saying about the current residential real estate market. Within the last thirty days, four of the major financial services giants came to the same conclusion: the housing market is strong, and price appreciation will continue. Here are their statements on the issue:

Goldman Sachs’ Research Note on Housing:

“Strong demand for housing looks sustainable. Even before the pandemic, demographic tailwinds and historically-low mortgage rates had pushed demand to high levels. … consumer surveys indicate that household buying intentions are now the highest in 20 years. … As a result, the model projects double-digit price gains both this year and next.”

Joe Seydl, Senior Markets Economist, J.P.Morgan:

“Homebuyers—interest rates are still historically low, though they are inching up. Housing prices have spiked during the last six-to-nine months, but we don’t expect them to fall soon, and we believe they are more likely to keep rising. If you are looking to purchase a new home, conditions now may be better than 12 months hence.”

Morgan Stanley, Thoughts on the Market Podcast:

“Unlike 15 years ago, the euphoria in today’s home prices comes down to the simple logic of supply and demand. And we at Morgan Stanley conclude that this time the sector is on a sustainably, sturdy foundation . . . . This robust demand and highly challenged supply, along with tight mortgage lending standards, may continue to bode well for home prices. Higher interest rates and post pandemic moves could likely slow the pace of appreciation, but the upward trajectory remains very much on course.”

Merrill Lynch’s Capital Market Outlook:

“There are reasons to believe that this is likely to be an unusually long and strong housing expansion. Demand is very strong because the biggest demographic cohort in history is moving through the household-formation and peak home-buying stages of its life cycle. Coronavirus-related preference changes have also sharply boosted home buying demand. At the same time, supply is unusually tight, with available homes for sale at record-low levels. Double-digit price gains are rationing the supply.”

Bottom Line

If you’re concerned about making the decision to buy or sell right now, let’s connect to discuss what’s happening in our local market.

What’s Driving The Sellers Advantage? An Opportunity For Homeowners Who Are Ready To Move This Season.

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3 Graphs Showing Why You Should Sell Your House Now

3 Graphs Showing Why You Should Sell Your House Now | MyKCM

There’s no doubt that 2021 is the year of the seller when it comes to the housing market. If you’re a homeowner thinking of moving to better suit your changing needs, now is the perfect time to do so. Low mortgage rates are in your favor when you’re ready to purchase your dream home, and high buyer demand may give you the leverage you need to negotiate the best contract terms on the sale of your house. Here’s a look at what’s driving this sellers’ advantage and why there’s so much opportunity for homeowners who are ready to move this season.

1. Historically Low Inventory

The National Association of Realtors (NAR) explains:

 “Total housing inventory at the end of March amounted to 1.07 million units, up 3.9% from February’s inventory . . . Unsold inventory sits at a 2.1-month supply at the current sales pace, marginally up from February’s 2.0-month supply and down from the 3.3-month supply recorded in March 2020.”

3 Graphs Showing Why You Should Sell Your House Now | MyKCM

Even with a slight rise in the number of houses for sale this spring, inventory remains near an all-time low (See graph below):High buyer interest is creating a major imbalance between supply and demand, but as the small uptick in inventory shows, sellers are beginning to reenter the market. Selling your house now enables you to take advantage of buyer demand and get the most attention for your house – before more listings come to the market later this year.

2. Frequent Bidding Wars

3 Graphs Showing Why You Should Sell Your House Now | MyKCM

As a result of the supply and demand imbalance, homebuyers are entering bidding wars at an accelerating rate. NAR reports the average number of bids received on the most recently closed sales is 4.8 offers. This number has doubled since the first quarter of 2020 (See graph below):As buyers face increasingly tough competition while searching for homes to purchase, they’re more likely to be flexible and generous in their negotiations. This gives a seller the opportunity to choose the best buyer for their needs and be selective about things like time to close, contingencies, renovations, and more. Working with your trusted agent is the best way to determine how to navigate the negotiation process when selling your house.

3. Days on the Market

In today’s market, sellers aren’t waiting very long to find a buyer for their house, either. NAR reports:

“Properties typically remained on the market for 18 days in March, down from 20 days in February and from 29 days in March 2020. 83% of the homes sold in March 2021 were on the market for less than a month.” (See graph below):

3 Graphs Showing Why You Should Sell Your House Now | MyKCM

NAR Chief Economist Lawrence Yun explains:

“The sales for March would have been measurably higher, had there been more inventory…Days-on-market are swift, multiple offers are prevalent, and buyer confidence is rising.”

Bottom Line

If you’re thinking about moving, these three graphs clearly show that it’s a great time to sell your house. Let’s connect today so you can learn more about the opportunities in our local area.

Millennials In The Lead for Home Purchases, More Than Half Of All Home Purchase Applications

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According to the CoreLogic Loan Application Database[1], prior to 2020, while millennial home purchase applications comprised less than half of all purchase applications, their share grew from 33% in 2014 to 47% in 2019, rising about 2 to 4 percentage points per year. This annual increase is consistent with the cohort of millennials reaching 33 years of age, the peak homebuying age.

But in 2020, the share of millennials in the homebuying market soared 7 percentage points in 2020, reaching 54% of all purchase applications (Figure 1). And while half of the increase is consistent with the natural growth rate seen since 2014, the additional half of the 2020 jump was likely driven by the pandemic. In other words, the increase was accelerated by record low mortgage interest rate and flexibility to work remotely.

Figure 2 shows U.S. population distribution by age, highlighting the largest demographic cohort reaching the peak age of FTHB on the left axis. The right axis of the chart, displayed by the green line, represents first-time home-purchase loan applications per 1,000 persons in 2020.

Younger millennials below 30 have yet to enter homeownership, so demand from millennials is likely to remain strong over the coming years. At the same time, more older millennials are likely to transition to repeat homebuyers. The share of millennial repeat buyer home-purchase applications was already 35% in 2020, just 4 percentage points lower than Gen X’ share.

Real Estate Core Values Are Celebrated In April | Fair Housing

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This year, we celebrate the 53rd anniversary of the Fair Housing Act. This landmark law was signed into law on April 11, 1968, by President Lyndon B. Johnson.

The Fair Housing Act prohibits housing discrimination because of race, color, religion, national origin, sex, disability, and family status. The Act furthers the beliefs advocated by Dr. Martin Luther King Jr. and the other heroes of the Civil Rights Movement. For more information about your fair housing rights.

Neighborhood Expert Or Expert in Residential Real Estate

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I understand that some neighborhoods are unique, thus the value of an expert would apply. But doesn’t it make sense to want an expert in the successful execution of real estate sales not just an expert in one neighborhood.

Here are a few things to consider:

  • One of the most valued characteristics of an agent should be the ability to interpret the market and to be able to position their sellers in the most favorable position to sell each home or property for the most amount of money given market trends.

  • An agent who understands the larger market can speak to why their seller’s neighborhood might be a better fit for buyers over other areas.

  • Marketing consists of location, condition, a property’s pricing and how all three are presented to the public.

  • Buyers are not thinking “Is the listing agent a neighborhood expert?” They are scrolling through myriad listings and know when a listing is in line with area comps. When they find one, they take a look at the photographs to make a decision whether to actually look at the property.

Crazy Market Or Not, The Same Fundamentals Of Selling Real Estate Apply

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The sale of S506 serves as another testament that selling with a plan in place is the best way too close for the most money within the specific markets current days on market.

It took just over a month from my first meeting with the owner, to customize a plan detailing how to make the unit market ready, complete the pre-listing items identified, list the property on the MLS, hold an Open House and ratify an offer. Success takes a team effort and effective, constant communications. My clients did an awesome job. Congratulations!

Days On Market: 5, average for the building 28

Inventory Alert | Just Listed In Chevy Chase, MD

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8101 COnnecticut Ave Unit S506 Chevy Chase, MD 20815 | Sunday March 28th 1-3PM
2 bedroom | 2 Bath | Plus Den | 1644 sqft
Listed at $685,000

Click HERE for more information or contact Laurel directly @ 301.500.6281

The Need For More Inventory Has Never Been More Apparent

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Based on compiled data from more than six million property showings scheduled across the country, Home Buyer Demand jumps 98.4% in the West as traffic grows again nationwide.

  • March 24, 2021 – Dwindling inventory was again met with an outpouring of buyer demand throughout the country in February as an unprecedented 75 markets reported double-digit growth, according to the ShowingTime Showing Index®
  • Nationwide, buyer traffic jumped 49.5 percent, continuing a trend of national year-over-year growth in buyer demand that began in May 2020.
  • “In March and April, year-over-year comparisons will be less meaningful as the onset of COVID-19 in 2020 drove showing traffic down in those two months, but on a month-to-month basis we’re still likely to see further seasonal increases in demand, taking us further into this unprecedented direction. We expect that this will correlate with continued broad increases in prices.”
read full ShowingTime article

SOLD | Serving the DMV | Inside the Beltway

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8101 CONNECTICUT AVE, Chevy Chase MD 20815 | #LaurelsListing

One of the better,  if not the best value, inside the Beltway. 8101 Connecticut Ave Condo real estate sales were relatively slow compared to other years. Owners no doubt, like a lot of other sellers, took a wait-and-see approach. How long could the disruption caused by Covid really be? However, for owners that decided to forge ahead and sell their properties, it proved lucrative. So far in 2021, average days on market is 2, down from 7 in 2020. Grossing 104.14% of the list price, up from 98.32% in 2020. 

Great way to start the new year. 
I am currently having conversations with owners who no longer can or want to wait it out. 
Looks and feels like there will be more inventory at 8101 this year. 
What is for sale right now? Please call, text or email me for more information.

Have You Ever Seen a Housing Market Like This?

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Have You Ever Seen a Housing Market Like This? | MyKCM

The year 2020 will certainly be one to remember, with new realities and norms that changed the way we live. This year’s real estate market is certainly no exception to that shift, with historic highlights continuing to break records and challenge what many thought possible in the housing market. Here’s a look at four key areas that are fundamentally defining the market this year.

Housing Market Recovery

The economy was intentionally put on pause this spring in response to the COVID-19 health crisis. Many aspects of the common real estate transaction were placed on hold at the same time. Thankfully, technology and innovation helped the industry power forward, and business gradually ramped back up as shelter-in-place orders were lifted.

The result? Total transformation of the market from rock-bottom lows to exceptional highs. Today, the housing recovery is being called truly remarkable by many experts and is far exceeding expectations. From pending home sales to purchase applications, buyers are back in business and homes are selling – fast.

Have You Ever Seen a Housing Market Like This? | MyKCM

According to the Housing Market Recovery Index by realtor.com, the market has surpassed pre-pandemic levels, and has regained the strength we remember from February of this year (See graph below):

Record-Breaking Mortgage Rates

Historically low mortgage rates are another 2020 game-changer. Today’s low rate is one of the big motivating factors bringing buyers back into the market. The average rate reached an all-time low on multiple occasions this year, and it continues to hover in record-low territory.

When rates are this low, buyers have a huge opportunity to get more for their money when purchasing a home, something many are eager to find while continuing to spend more time than expected at home this year, and likely beyond.

Continued Home Price Appreciation

One of the key drivers of home price appreciation this year is historically low inventory. Inventory was low going into the pandemic, and it is still sitting well below the level needed for a normal market. Although sellers are slowly making their way back into the game, buyers are scooping up homes faster than they’re coming up for sale.

This is a classic supply and demand scenario, forcing home prices to rise. Selling something when there is a higher demand for what is available naturally bumps up the price. If you’re ready to sell your house today, this may be the optimal time to make your move. As Bill Banfield, EVP of Capital Markets at Quicken Loans, notes:

“The pandemic has not stopped the consistent home price growth we have witnessed in recent years.” 

Increasing Affordability

Even as home prices continue to rise, affordability is working in favor of today’s homebuyers. According to many experts, rates this low are off-setting rising home prices, which increases buyer purchasing power – an opportunity not to be missed, especially if your family’s needs have changed. If you now need space for a home office, gym, virtual classroom, and more, it may be time to reconsider your current house.

According to Mortgage News Daily:

“Those shopping for a home can afford 10 percent more home than they could have one year ago while keeping their monthly payment unchanged. This translates into nearly $32,000 more buying power.”

Bottom Line

With mortgage rates hitting historic lows, home prices appreciating, affordability rising, and the market recovering like no other, 2020 has been quite a year for real estate – perhaps one we’ve never seen before and may never see again. Let’s connect today if you’re ready to take advantage of this year’s record-breaking opportunities.