Important change coming to luxury market
Plus, check out these record home price numbers
How to avoid surprises
When we’re watching a movie or a TV drama, we love a good surprise. But when we’re at work, surprises are far down the list of what we want to see. And that’s definitely the case for our clients. They want the buying and selling process to be as smooth, and uneventful, as possible.
That’s why it’s so crucial to set clear expectations up front. When we take on a new client or listing, we always make sure to keep the lines of communication open. Our clients want to know how and when we’re doing everything, and we tell them. That way, they know exactly what to expect, and we’re always on the same page.
We encourage you to keep this in mind as you ramp your activity to close out this year. No matter how busy you get, nothing is more important than communicating closely with your clients.
Now, to nobody’s surprise, here’s another informative edition of The Blueprint!
- James and David
Forecasts for the rest of the year
Fannie Mae, the Mortgage Bankers Association, and the National Association of Realtors have released their forecasts for the rest of the year. Based on averages of all the forecasts, here’s what they project by the end of Q4:
Home prices will rise by 0.7% nationwide YOY
Mortgage rates will settle around 6.27%
5 million homes will be sold
We have no doubt that home prices will appreciate on a yearly basis by the end of 2023. What interests us most, however, is the mortgage rate forecast. The MBA projects that rates will fall to 5.90% by the end of the year. We believe that it is overly optimistic. We expect rates to settle anywhere between 6.0%-6.5%. Even with inflation falling, we will need to start acclimating our clients to this new normal. We don’t see mortgage rates falling to the levels they reached during the pandemic years… at least, not anytime soon.
Major markets are seeing all-time high home prices
Home prices in major markets are seeing all-time highs. That's the key takeaway from Black Knight’s latest update of its Home Price Index (HPI) which showed record highs for 30 of the 50 largest markets analyzed in June. Here’s what it reports:
Nearly every major market saw month-over-month growth on both a seasonally adjusted (SA) and unadjusted basis
Prices have now reached new peaks in 30 of the 50 largest markets, with several northeastern metros currently 5-8% above 2022 highs
Annual growth is strongest among Midwest and Northeast markets
Home price growth has also pushed homeowner equity levels back to within 3% of 2022 peaks
The number of mortgage holders nationwide who currently owe more than their home is worth is below 2019 levels
This is excellent news for current homeowners. They are sitting on an asset that is only gaining value, and their equity is rising too. Unfortunately, the incredibly low mortgages many snagged during the pandemic years will likely convince many of these owners to stay put. That said, the increase in home values could make it easier for those inclined to move, even with mortgage rates still high. We will simply have to wait and see how homeowners react over the next three years
The end of anonymous luxury home purchases
The U.S. Treasury Department will, at the end of this month, propose a rule that will end anonymous luxury-home purchases. The rule change, according to Reuters, is designed to close a loophole that currently allows corrupt oligarchs, terrorists, and other criminals to hide their money in real estate. Between 2015-2020, criminals laudered up to $2.3 billion in U.S. real estate.
The long-awaited rule is expected to require real estate professionals such as title insurers to report the identities of the beneficial owners of companies buying real estate in cash to the Treasury's Financial Crimes Enforcement Network (FinCEN).
We welcome this development. This rule change has been in the works for a long time and we’re glad it’s finally being put into practice. We love real estate and the system we have in the U.S., and it pains us to see it abused by criminals. We believe in honesty and transparency. We only wish it had happened sooner.
The news that just missed the cut
Advice from James and David to win the day
Navigating the complexities of buying a home that’s under construction can be a bit overwhelming. But it has to be done in today’s market. This is where a skilled real estate agent can make all the difference. Here are three approaches agents should use to stand out:
Know the area and how it might change – Expert agents are well-versed in the emerging communities and upcoming developments that could influence a buyer’s decision. It’s important to consider how the neighborhood and the surrounding area might evolve before making a home purchase. For example, are there any plans to construct a highway through the woods behind a prospective backyard? Are there any new shopping areas being developed? Agents with this knowledge can help sway a buyer’s decision.
Assist with customization and upgrades – One of the benefits of opting for new home construction is the opportunity to customize your home to suit your preferences. Agents will guide buyers through that process and share advice on the upgrades that are most likely to add long-term value to the home. This will ensure that buyers get the greatest return on their investment down the road.
Understand builder contracts and negotiations – Builder contracts can be complex and differ from traditional home purchase agreements. Agents can help navigate these contracts to make sure buyers fully understand the terms and conditions. They’re also skilled negotiators who can advocate on your behalf, potentially securing better deals, upgrades, or incentives for you throughout the process.
These are just three of the many valuable services agents provide. To learn more, read this.
Just in Case
Keep the latest industry data in your back pocket with today’s mortgage rates:
Source: Rocket Mortgage
That’s a wrap on this edition of The Blueprint!
Remember: each day is a gift and a new opportunity to lead the life you want and to become the person you want to be. The mistakes and missteps you’ve made in the past don’t define you. Live as intentionally as you can and be ruthlessly focused on the goals you’ve set out to achieve. You can do it!
Thanks for reading, and we’ll see you back here on Tuesday!
- James and David