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Recap of 2024 Buyers, Sellers & the Real Estate Market
2024 was a very challenging year for real estate. The market was frozen, we had low inventory, high prices & high interest rates.
However, the 2nd half of this year began to turn around, although slightly. We saw a little more inventory & interest rates began to loosen.
Where people were “locked” into their existing, low interest rates on the home that they owned, they now have life changes, like retirement, divorce, children being added to or leaving the family, job changes, all of which contribute to home inventory loosening, because people have to move.
Think about it. One year ago we had 8 percent mortgage interest rate. But why didn’t the rates go down when the federal reserve cut the rate?
Well, the Federal Reserve does not control mortgage rates. What was affected by their cut was the rates on your credit cards & the interest you pay, as well as the rates paid on your savings, on what you earn.
We anticipate mortgage interest rates declining slightly next year, maybe to 6 percent. Unfortunately, we also see home prices at the beginning of 2025 staying at the same level or increasing. If you’re considering a move, a purchase or an investment, now may be the time! Contact Karen Daugerdas, Coldwell Banker Real Estate Broker, Pricing Strategy Advisor, Short Sale/Foreclosure Resource, Accredited Buyers’ Representative & Seniors’ Real Estate Specialist for market information & a complimentary home evaluation at 847.494.1102.
Navigating the Uncertain Fall Real Estate Market
The real estate market can often feel like a rollercoaster ride, with its ups & downs creating uncertainty for both buyers & sellers. If you’re feeling anxious about the current market conditions, you’re not alone. Many are grappling with questions about whether it’s the right time to buy or sell.
First of all, we need to understand the factors contributing to the current uncertainty in the real estate market:
- Interest Rates: Fluctuating interest rates can significantly impact mortgage affordability for buyers & the overall market dynamics. As rates rise, monthly payments increase, which can deter potential buyers & slow down sales.
- Economic Indicators: Inflation, job growth, the election & consumer confidence all play a role in shaping the real estate market. A strong job market can lead to increased demand for housing, while economic downturns can have the opposite effect.
- Supply & Demand: Inventory levels & buyer demand can vary widely by location, affecting pricing & competition. In some areas, a lack of available homes can drive prices up, while in others, an oversupply can lead to price reductions.
- Market Sentiment: Public perception of the market can influence buyer & seller behavior. If people believe the market is declining, they may hesitate to buy or sell, further contributing to market stagnation.
Common Fears for Buyers & Sellers
- Fear of Overpaying: Buyers worry about purchasing a home at a peak price, especially in a volatile market. This fear can lead to hesitation & missed opportunities.
- Fear of Selling Low: Sellers may be concerned about selling their property for less than its value, especially if they need to move quickly. This fear can result in homes being kept off the market longer than necessary.
- Fear of Missing Out: Both buyers & sellers may feel pressured to make decisions quickly, fearing they’ll miss out on opportunities. This can lead to rushed decisions that may not align with their long-term goals.
- Fear of Market Timing: Many buyers & sellers worry about timing the market perfectly. The truth is, no one can predict market fluctuations with certainty, & waiting for the “perfect” moment can lead to missed opportunities.
Tips for Buyers
- Do Your Research: Stay informed about local market trends. Look at recent sales in your desired area to gauge fair pricing. Your agent can provide valuable insights.
- Get Pre-Approved: Securing a mortgage pre-approval can give you a competitive edge & help you understand your budget. It shows sellers you’re a serious buyer & can expedite the purchasing process.
- Be Patient: Don’t rush into a purchase. Take your time to find a home that meets your needs & feels right for you. Consider making a list of must-haves versus nice-to-haves to help narrow your search.
- Consider Long-Term Value: Focus on properties that have the potential for appreciation over time, rather than just short-term gains. Look for homes in desirable neighborhoods with good schools, amenities, & future development plans.
- Explore Alternative Financing Options: If traditional financing seems daunting, consider exploring alternative options like FHA loans, VA loans, or even down payment assistance programs that may be available in your area.
Tips for Sellers
- Price Strategically: Work with your knowledgeable real estate agent to set a competitive price based on current market conditions & comparable sales. Overpricing can lead to extended time on the market, while underpricing can leave money on the table.
- Enhance Curb Appeal: Invest in minor renovations or staging to make your home more attractive to potential buyers. Simple improvements like landscaping, fresh paint, & decluttering can make a significant difference.
- Be Flexible: Consider flexible terms, such as closing dates, including appliances or offering a Home Warranty to make your property more appealing. Being open to negotiations can help you stand out in a competitive market.
- Market Effectively: What is your agent’s marketing plan? Make certain your agent utilizes digital marketing strategies to reach a broader audience, including social media & virtual tours. High-quality photos & engaging descriptions can attract more potential buyers.
- Prepare for Inspections: Be proactive by addressing any potential issues before listing your home. Conducting a pre-inspection can help you identify & fix problems that could deter buyers.
The Importance of Working with a Professional
In uncertain times, having a trusted real estate agent like Karen Daugerdas can make all the difference. She can provide valuable insights, help you navigate negotiations, & ensure you’re making informed decisions. Reach out to her at 847.494.1102 or karen.daugerdas@cbrealty.com with any questions.
Lower Mortgage Interest Rates Can Increase Home Buying Power
Buying a home is one of the most significant financial decisions many people make in their lives. Whether you’re a first-time homebuyer or looking to upgrade, one of the most critical factors influencing your purchasing power is the mortgage interest rate. When mortgage interest rates drop, it can substantially increase your ability to buy a home. Let’s break down how lower mortgage interest rates can enhance your buying power and what it means for you as a potential homeowner.
1. Lower Monthly Payments
One of the most immediate benefits of a lower mortgage interest rate is the reduction in monthly payments. The interest rate on your mortgage determines how much extra you’ll pay each month in addition to the principal loan amount. When the rate is lower, a larger portion of your monthly payment goes toward paying off the loan’s principal, and less goes toward interest. This means you can either save on monthly expenses or afford a larger mortgage while keeping your payment at a manageable level.
Example:
Let’s say you’re looking to buy a home priced at $400,000. With a 30-year fixed-rate mortgage at a 5% interest rate, your monthly mortgage payment would be approximately $2,147 (excluding taxes and insurance). However, if the rate drops to 3%, your monthly payment falls to about $1,686—a savings of over $460 per month! That’s significant and can free up cash for other expenses or savings.
2. Increase in Purchasing Power
Lower interest rates don’t just reduce your monthly payments—they also increase your overall buying power. Essentially, with a lower interest rate, you can afford a more expensive home without increasing your monthly mortgage payment. For example, if you could afford a $400,000 home at a 5% interest rate, you might be able to afford a home closer to $470,000 at a 3% rate with the same monthly payment. This could mean getting more space, moving to a more desirable neighborhood, or even securing features you thought were out of reach.
Example:
If you’re approved for a $2,000 monthly mortgage payment at a 5% interest rate, you’d be able to afford a home around $375,000. But if the rate drops to 3%, that same $2,000 monthly payment could stretch to cover a $470,000 home. A lower interest rate has essentially given you more financial flexibility.
3. Pay Off Your Loan Faster
For those focused on building equity and paying off their homes more quickly, lower interest rates provide an opportunity to shorten your loan term without drastically increasing your monthly payment. You could potentially switch from a 30-year mortgage to a 15-year mortgage and pay off your home much faster. Even though your monthly payments may increase slightly with a shorter loan term, lower interest rates minimize the cost difference and allow you to build equity more rapidly.
Example:
With a $300,000 mortgage at 5% over 30 years, your monthly payment is about $1,610. If rates drop to 3% and you refinance to a 15-year mortgage, your new payment might be around $2,071. While the payment increases slightly, you would save tens of thousands of dollars in interest over the life of the loan and pay off your home in half the time.
4. Afford More Home in a Competitive Market
In a competitive housing market, buyers often face bidding wars, and lower interest rates can be a game-changer in those scenarios. With increased buying power, you can stay competitive by bidding higher while keeping your mortgage affordable. This flexibility can help you stand out in a crowded market where homes are selling quickly, and price is often the deciding factor.
5. More Financial Security and Flexibility
Lower interest rates don’t just affect your mortgage—they can have a broader impact on your overall financial health. By reducing your housing expenses, lower interest rates free up money that can be used for other financial goals like saving for retirement, investing, or creating an emergency fund. This additional financial cushion can provide peace of mind, knowing that you’re not stretching your budget too thin.
Conclusion
The lowering of mortgage interest rates offers a tremendous opportunity to increase your buying power. By reducing monthly payments, allowing you to afford a more expensive home, and potentially shortening your loan term, lower rates can dramatically improve your financial position as a homebuyer. Whether you’re entering the housing market for the first time or considering a move, it’s essential to keep an eye on interest rates, as they can be the key to unlocking a better home within your budget.
If you’re thinking about buying a home or refinancing, now might be the perfect time to take advantage of low interest rates and increase your buying power.
Have real estate questions? I have answers! Call Karen Daugerdas, Coldwell Banker Real Estate Broker, Pricing Advisor, Senior’s Specialist & Accredited Buyer’s Representative at 847.494.1102.
The Costly Mistake of Overpricing Your Home: What You Need to Know
What is one of the worst mistakes you can make as a seller? Overpricing your home. While it might seem like a good strategy to start high and leave room for negotiation, this approach can actually lead to your home sitting on the market for an extended period of time without any offers. When this happens, you may be forced to drop the asking price to reignite interest. Your listing becomes “stale” and buyer’s inclination is to ask “What’s wrong with the house?”.
According to recent data from Realtor.com, an increasing number of homeowners are realizing the consequences of overpricing and are resorting to price reductions. If you’re considering selling your home, it’s essential to avoid this costly pitfall.
The Key to Proper Pricing: Trust an Expert
The best way to ensure your home is priced correctly is to work with a trusted real estate agent. For instance, Karen Daugerdas, a seasoned REALTOR® and accredited Pricing Strategy Advisor, uses multiple sources and her extensive market knowledge to help determine the right price for your home. With her guidance, you can avoid the common mistakes that often lead to unnecessary price cuts.
Understanding the Market
One of the most important factors in setting the right price is understanding the current market conditions. The housing market has changed significantly since the pandemic, with a notable moderation in home prices. Setting your asking price based on outdated market data could result in your home being overpriced, leading to a lack of buyer interest.
Avoiding Common Pricing Mistakes
Another common mistake sellers make is pricing their homes based on the amount they want to make from the sale, rather than the property’s actual market value. You might see homes in your neighborhood selling for top dollar and assume yours will do the same. However, it’s crucial to consider factors such as size, condition, and unique features. For instance, a home with a deck and a large backyard or a finished basement is likely to command a higher price than a similar home without these features.
A qualified agent like Karen Daugerdas will conduct a comprehensive comparative market analysis (CMA) to ensure your home is priced appropriately compared to similar properties. This analysis helps provide an accurate picture of what buyers are willing to pay for homes like yours.
The Dangers of Overpricing
Some sellers believe that setting a higher price gives them more room to negotiate. However, this strategy can backfire. A price that seems too high can deter potential buyers from even considering your home. Instead of creating room for negotiation, you might be driving buyers away. The initial burst of interest when a home is first listed is crucial, and overpricing can cause you to miss this peak period.
The Bottom Line
Overpricing your home can have serious consequences, including longer time on the market and the need for price reductions that can diminish your profit. By trusting an experienced real estate agent, you can gain an objective perspective, benefit from in-depth market knowledge, and employ a strategic approach to pricing your home correctly from the start.
If you have questions or need expert advice on selling your home, don’t hesitate to reach out to Karen Daugerdas, REALTOR®, Pricing Strategy Advisor®, and Accredited Buyer’s Representative® at 847.494.1102. She’s here to help you make the most of your home sale.
Embracing the End of Summer: A Guide to Decluttering
As the warm days of summer gradually begin to fade, many of us find ourselves reflecting on the season’s activities and the state of our homes. Summer often brings an influx of items—beach gear, outdoor toys, vacation souvenirs—that can clutter our living spaces. As the season winds down, it’s the perfect time to consider decluttering and streamlining our homes for a simpler, more organized lifestyle. Here’s a guide to help you embrace this end-of-summer task with ease and efficiency.
- Evaluate Your Space and Possessions
Start by taking a thorough inventory of your living space. Identify areas that feel cluttered or disorganized. Ask yourself:
- What items did you not use this summer?
- Which belongings no longer serve a purpose or bring you joy?
- Are there seasonal items that can be stored away until next year?
By critically assessing your possessions, you can make informed decisions about what to keep, donate, sell, or discard.
- Seasonal Wardrobe Swap
As the weather changes, so should your wardrobe. Go through your summer clothes and decide what will stay for next year and what can be donated or sold. Store summer-specific items in labeled bins or vacuum-sealed bags to save space. Simultaneously, bring out your fall and winter clothing, ensuring they are clean and ready to wear.
- Declutter Outdoor Spaces
Outdoor spaces often accumulate a variety of seasonal items. Pool toys, gardening tools, and patio furniture may have taken over your yard or garage. Sort through these items, clean and store those you plan to use next year, and get rid of anything broken or no longer needed.
- Simplify Your Kitchen
Summer often means more casual dining, barbecues, and outdoor eating, which can lead to an accumulation of extra kitchen items. Evaluate your kitchen tools, gadgets, and pantry. Donate non-perishable food items you didn’t use and consider simplifying your kitchen setup to make meal prep more efficient.
- Digitize Memories
Summer is a time for making memories, and you likely have a plethora of photos and videos from your adventures. Consider digitizing your memories. Create digital photo albums or cloud storage for your pictures, freeing up physical space and ensuring your memories are safely backed up.
- Host a Garage Sale
One person’s clutter is another person’s treasure. Hosting a garage sale is a great way to pass on items you no longer need while making a little extra cash. It’s also an excellent opportunity to connect with neighbors and community members.
- Adopt a Minimalist Mindset
Decluttering isn’t just about getting rid of things; it’s about adopting a mindset of simplicity and intentionality. Consider the benefits of a minimalist lifestyle, such as reduced stress, more time, and greater financial freedom. Aim to keep only what you truly need and love.
- Create a Maintenance Plan
Finally, create a maintenance plan to keep your home organized. Set aside time each season to reevaluate your possessions and make necessary adjustments. Regular maintenance prevents clutter from accumulating and keeps your living space functional and serene.
If you have any additional question on decluttering or real estate, don’t hesitate to contact me at karen.daugerdas@cbrealty.com, 847.494.1102.
Why the Housing Market Won’t Crash Like 2008
Many remember the housing crash of 2008, that impacted the lives of countless people. Many now live with the worry that something like that could happen again. But according to Business Insider, although many believe the housing market is at risk of crashing, the economists who study housing market conditions overwhelmingly do not expect a crash in 2024 or beyond.
Here’s why experts are so confident. For the market (and home prices) to crash, there would have to be too many houses for sale, but the data doesn’t show that’s happening. Right now, there’s an undersupply, not an oversupply like the last time – and that’s true even with the inventory growth we’ve seen this year. The housing supply comes from three main sources:
- Homeowners deciding to sell their houses (existing homes)
- New home construction (newly built homes)
- Distressed properties (foreclosures or short sales)
If we look at these three main sources of inventory, it’s clear this isn’t like 2008.
Existing Homes Inventory
Although the supply of existing (previously owned) homes is up compared to this time last year, it’s still low overall. And while this varies by local market, nationally, the current months’ supply is well below the norm and even further below what we saw during the crash.
To illustrate, consider the months’ supply of homes for sale, which measures how long it would take to sell all the current homes on the market given the current sales pace. A balanced market typically has about a 6-month supply. During the 2008 crash, this number soared well above that, indicating a glut of homes for sale. Today, however, this figure remains well below the 6-month threshold. For example, recent data shows that the months’ supply of homes for sale is around 2.5 to 3 months, which is significantly lower than during the crash period.
If you look at the latest data compared to 2008, we only have about a third of that available inventory today. There just aren’t enough homes available to make values drop. To have a repeat of 2008, there’d need to be a lot more people selling their houses with very few buyers, and that’s not the case right now.
Newly Built Homes
People are also talking a lot about what’s going on with newly built houses these days, and that might make you wonder if homebuilders are overdoing it. Even though new homes make up a larger percentage of the total inventory than the norm, there’s no need for alarm. Here’s why.
Data from the Census shows the number of new houses built over the last 52 years. The overbuilding that happened in the lead-up to the crash is evident. In the early 2000s, builders were constructing homes at a breakneck pace, leading to an oversupply by the time the crash hit. However, since the crash, builders have been much more conservative. The post-crash era saw a significant drop in new construction as builders were wary of repeating past mistakes. For example, from 2009 to 2019, the annual number of new homes built was well below the long-term average.
Builders have been underbuilding consistently since then. There’s just too much of a gap to make up. Builders aren’t overbuilding today, they’re catching up. A recent article from Bankrate says that builders remember the crash all too well, and they’ve been cautious about their pace of construction. The result is an ongoing shortage of homes for sale. Even with the recent increase in construction activity, the pace is still measured and controlled, aimed at meeting demand rather than exceeding it.
Distressed Properties
The last place inventory can come from is distressed properties, including short sales and foreclosures. During the housing crisis, there was a flood of foreclosures due to lending standards that allowed many people to get a home loan they couldn’t truly afford.
In the lead-up to the 2008 crash, lending practices were notoriously lax. Subprime mortgages were prevalent, and many borrowers received loans they were not financially equipped to handle. This led to a surge in defaults and foreclosures when the market turned.
Today, lending standards are much tighter, resulting in more qualified buyers and far fewer foreclosures. The Dodd-Frank Act, enacted in response to the crisis, imposed stricter regulations on mortgage lending, ensuring that borrowers are more thoroughly vetted. As a result, the quality of loans has improved significantly. For instance, the average credit score of mortgage borrowers today is much higher than it was during the mid-2000s.
As lending standards got tighter and buyers became more qualified, the number of foreclosures started to go down. And in 2020 and 2021, the combination of a moratorium on foreclosures and the forbearance program helped prevent a repeat of the wave of foreclosures we saw when the market crashed.
While you may see headlines that foreclosure volume is ticking up – remember, that’s only compared to recent years when very few foreclosures happened. We’re still below the normal level we’d see in a typical year. For example, while foreclosure filings have increased compared to the historically low levels during the pandemic, they remain below the average levels seen in the years preceding the pandemic.
Inventory levels aren’t anywhere near where they’d need to be for prices to drop significantly and the housing market to crash. As Forbes explains, “As already-high home prices continue trending upward, you may be concerned that we’re in a bubble ready to pop. However, the likelihood of a housing market crash—a rapid drop in unsustainably high home prices due to waning demand—remains low for 2024.”
Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), reinforces this view: “We will not have a repeat of the 2008–2012 housing market crash. There are no risky subprime mortgages that could implode, nor the combination of a massive oversupply and overproduction of homes.”
The conditions that led to the 2008 crash simply do not exist today. The housing market, while facing its own set of challenges, is not on the brink of a similar crisis. With a controlled pace of new home construction, tighter lending standards, and a lower overall inventory of homes for sale, the market is fundamentally more stable and resilient. So, while it’s always wise to stay informed and cautious, there’s little reason to fear a repeat of the housing crash of 2008.
If you have real estate questions, I have answers! Karen Daugerdas, Coldwell Banker REALTOR®, 847.494.1102, karen.daugerdas@cbrealty.com
Navigating Today’s Real Estate Market: A Buyer’s Guide
In today’s real estate landscape, buyers face a unique set of challenges. From soaring interest rates to escalating home prices and a notable shortage of available properties, the journey to homeownership can feel like navigating a complex maze. However, with the right approach and guidance, you can successfully navigate these obstacles and secure your dream home. Let’s delve into some key strategies to consider in today’s market.
- Partner with a Real Estate Expert
One of the most crucial steps you can take as a buyer in this market is to enlist the guidance of a seasoned real estate professional, such as myself. An experienced agent, especially with my additional training as a Buyer’s Representative and a Pricing Strategy Advisor, can offer invaluable insights, market knowledge, and negotiation skills to help you make informed decisions and navigate the complexities of the buying process. By relying on my expertise, you can avoid common pitfalls and streamline the journey to homeownership.
- Obtain Mortgage Pre-Approval
Before diving into the house-hunting process, it’s essential to secure a mortgage pre-approval. This step not only provides clarity on the financial side of home buying but also demonstrates to sellers that you are serious and financially capable. With a pre-approval in hand, you can confidently explore properties within your budget and avoid wasted time on homes that may be out of reach.
- Manage Expectations and Prioritize Needs
While every buyer has a vision of their ideal home, it’s essential that you remain flexible and realistic in today’s competitive market. It’s equally important to identify non-negotiables, nice-to-haves, and areas where compromise is possible. With inventory shortages driving up competition, you may need to adjust expectations and prioritize needs to find a suitable property within your budget.
- Avoid Overextending Financially
In the excitement of finding the perfect home, it can be tempting to stretch the budget to secure the property you desire. However, overextending financially can lead to long-term financial strain and potential risk of foreclosure. You need to carefully assess your financial situation, considering not only the mortgage payments but also additional expenses such as taxes, insurance, maintenance, and other financial obligations. Consulting with a real estate agent and mortgage lender can provide clarity on affordability and help you make informed decisions.
- Leverage Professional Guidance
Perhaps the most crucial piece of advice for buyers in today’s market is to lean on professional guidance throughout the home buying process. From navigating paperwork and negotiations to managing inspections and closing procedures, a skilled real estate agent can alleviate stress, save time, and ensure a smooth transaction from start to finish. With my expertise and support, you can navigate the complexities of the market with confidence and achieve your goal of home ownership.
For additional information or advice on your journey to home ownership, contact me at karen.daugerdas@cbrealty.com or call 847.494.1102.
Quitclaim Deed vs. Warranty Deed. What’s the Difference?
Should you have a Quitclaim Deed or Warranty Deed when it comes to your property? What is the difference? While both quitclaim deeds and warranty deeds can be used to transfer property from one person to another, there are differences, risks, and benefits to each, according to Burnett Title.
Quitclaim deeds release an owner’s personal interest in the property without guaranteeing the validity of the title or that there are no liens against it. Quitclaim deeds include less guarantees by the grantor. They are typically used when property is being transferred between family members, for example, and/or when no funds are being exchanged. The risk, of course is that the grantee accepts the property without a guarantee of clear title.
Warranty deeds include a guarantee by the grantor that the grantor has legal title to the property and that there are no claims against it. Warranty deeds are more complex and require more research, since the title must be verified. But they offer the grantee firm assurance that the property is owned free and clear, with no encumbrances against it.
Every state is different and transfer of property is different. Every grantee should consider their needs when they are taking ownership of a property.
From a Burnett Title article by Barbara Pronin
Karen Daugerdas, Coldwell Banker REALTOR ®, 847.494.1102.
Home Equity Loan vs. HELOC: Choosing Your Path
Selling Your Home As-Is: What Does It Really Mean?
In real estate, there is a term called “As Is”, which frequently strikes fear in the heart of buyers. But what exactly does it mean, not only for the buyer, but for the seller as well? Let’s take a look at the option to sell your home, basically, in it’s current condition, and what that means.
When a seller decides to list their homes As Is, it typically means selling it without doing any repairs or updates, even if some repairs are warranted. The seller does not have to guarantee that everything is in good repair or working order. Sometimes this is done because the seller is a family member who may not even have lived in the home or know of underlying conditions. Sometimes, the seller simply does not have the time or the funds to correct any deficiencies.
What this means for buyers is that they are taking on the responsibility of repairs, and the cost of those repairs after the purchase. If they find even more issues after Closing on the property, they are obligated to correct them.
But wait – this doesn’t mean that the seller is off the hook entirely. They still must follow federal and state disclosure standard that mandate the sellers disclose specific information about the property, including the use of lead paint and other potential risks of which they are aware.
An As Is property isn’t always a run-down home with holes in the roof and broken sidewalks. Sellers may choose this classification because of needing to get out of debt, time and other financial constraints, the inability to complete repairs, needing a quick sale or a variety of other reasons.
It can also be a very strategic move in the current real estate market. As Is properties attract investors or buyers who don’t mind putting some “sweat equity” into improving a home, making it a win for both sides.
For buyers, homework is essential, including conducting professional inspections and assessments to uncover any hidden issues that could impact the property’s value or livability. While the prospect of buying this type of home can be intimidating, it can also provide a great payoff for those willing to put in the effort.
The key point is to be informed of all the ramifications of selling or buying an As Is home. For more information or to receive a copy of my Resource List, contact me at Karen Daugerdas, Coldwell Banker Real Estate, karen.daugerdas@cbrealty.com, 847.494.1102.
