Las Vegas & Henderson Housing Market Update | Quarter 3, 2024
Las Vegas & Henderson Housing Market Update | Quarter 3, 2024 | Graham Team Real Estate Two Things Can Be True at Once! Could October’s rise in mortgage rates both hurt and help the housing market, and how is the increase actually a positive? Believe it or not, keeping mortgage rates in the 6-7% range even after the Federal Reserve cuts is actually a positive? This is because mortgage rates are driven by the bond market. If you meet with any financial advisor, they will advise keeping your 401K, IRA or investment account balanced between stocks and bonds. When times are good, you aim for account growth, so you increase the percentage of your funds in stocks. During uncertain times or at a stage in life where you prefer less risk, you shift your investment towards bonds. Right now, the market, investors and businesses are feeling more secure, and are purchasing more in the stock market rather than in bonds. Less buyers of bonds means the rates must go up to attract more purchases. Historically, mortgage rates have fallen below the 10-year treasury yield, which generally tracks where mortgages rates are heading. Per the graph below, you can see the correlation over the last year between the 10-year treasury yield and national mortgage rates. September’s dip in mortgage rates was closely related to international uncertainty in the market rather than the Federal Reserve rate drop, as rates had already adjusted for the anticipated Fed Rate cut back in July and August. The market was certainly expecting the Fed to cut rates, if rates hadn’t been cut then it would have been perceived by the bond market as unstable conditions, resulting in the mortgage market immediately responding upwards. When the economy is working on a positive outlook, increased expansion and job growth occurs, which is backed up by higher than expected job and wage reports that were recently released. So in conclusion, the increase in mortgage rates is in fact a positive sign for housing, as people buy homes when they feel more certain about the future and the economy. The opposite is also true, because the increase in mortgage rates in turn hurts the housing market. With Nevada being a swing state in the election, you can barely turn on the radio, TV, a podcast or social media without being bombarded about the US housing market crisis. Home affordability is in a critical state. With mortgage rates remaining in the 6-7% range and house prices rising year-over-year, many families simply cannot afford to purchase a home. The number of Southern Nevadans who can afford the median home price of $479,900 in Las Vegas is less than 33% of households. There is currently a 15% deficit between median income and median home price. A reduced number of homebuyers affects the home market with either increased lengths of time to sell, or eventually median home prices if incomes do not rise to match. Other factors that affect the real estate market in Southern Nevada: Cash Buyers or Retired Buyers: Although the number of cash buyers purchasing homes in 2024 has declined from previous years, there’s still a significant number who are unlimited by income and affecting home prices. Cash buyers increased over the last year, and by September 2024 we had already exceeded the total number of cash buyers for all of 2023. Limited Inventory: House prices are affected by supply and demand. Although inventory is rising slightly, it’sstill at record lows. Sellers are reluctant to let go of very low mortgage rates and are therefore holding onto their homes longer than they have previously. As buyer activity is limited by affordability, low inventory has kept home prices stable. With a slight uptick in inventory, and life events eventually requiring people to move, prices have remained steady but the days-on-market (DOM) have increased. Homes are taking longer to sell than in previous years. The key matrix for the Southern Nevada housing market over the 3rd quarter of 2024 Median Home Price: $479,000 ⬆ YOY* 6.6% | 1% up from 2nd Qtr # of Homes Sold (3rd Qrt): 6,833 ⬆ YOY (1%) | down 6.6% from 2nd Qrt Inventory (3rd Qrt): ⬆ YOY 36% | over 50% up from 2nd Qtr Mortgage Rate: ⬇ YOY (1.18%) on rate | .25% down from 2nd Qtr *YOY = year-over-year Five Year Look at the Housing Market Seeing all green in the 3rd quarter column is not a good thing– the increase in months of inventory means it will take longer for the average home to sell. The real positive for homeowners is the percentage of equity gained in the last five years, based on the median sales price equity gain of $142,650: Core Factors – Housing Market Mortgage Rates: On October 8th, Business Insider reported the following projections from leading mortgage experts. However, these projections were most likely made prior to the surprising job reports published in October and personally feel a little too aggressive on the projected rate cuts. We expect rates to stay relatively flat through November, and if the economy continues to stay robust, we may not see lower rates until later in 2025. Affordability: The housing crisis that is cited on every political ad is really an affordability crisis. Median home prices combined with current mortgage rates are out of reach for the majority of US households, which will be an ongoing concern for the rest of 2024 and 2025. We have seen an increasing trend for new construction building less upper-end homes and focusing more on entry-level priced houses. Over the past few months alone, we have helped numerous clients to secure a new home for below market interest rates, allowing them to step into homeownership for the first time. National Law Change in Buyer’s Representation Commission Update: Effective August 1st in our Las Vegas Realtor Association, seller consideration for buyer’s representation commission is no longer offered. Previously, the compensation was set and paid by the seller, so this was a significant change for buyers as they will now set the amount their agent is paid to represent them. Over the last 45 days, we have seen buyer’s offers that e ask sellers to cover the amount they negotiated with their buyer’s agent. This is because it’s an out-of-pocket expense to buyers, and as of right now they cannot roll it into their mortgage. Most buyers need the cash they have for down payment, and simply cannot go ahead with a purchase without the seller’s assistance on closing costs. However it’s not just buyers with loans, every cash offer we’ve received since August 1st asked for the seller’s contribution towards the buyer’s closing costs. Rental Market The median rent for a single-family home remained steady over the thirdquarter,with the median lease rate now standing at $2,190 for a +/- 1,807 sf home. The median price-per-square foot is $1.22, with new homes or updated homes still obtaining a premium. Days-on-market jumped from 18 days to 26 days. We were recently asked the following question by a potential renter: “You cannot still be requiring 3x the monthly rent for income? There is no way the average person can do that.” Quick Housing Snapshot Housing snapshot of 2nd Quarter, 2024: Our Takeaway What is expected for the rest of 2024? Sales Prices: Flat; We may see weeks where prices fluctuate up and down slightly. Interest Rates: Remaining in the mid 6% range for most of the final quarter. . Foreclosures: Very slight increase due to the amount of credit card and student loan debt. Inventory: Hovering around 3 months. Rental Rates to Flatten: Maintaining the median price of $1.15 to $1.20. Buyer Opportunities Moderate Selection: Inventory will continue to rise slightly, giving buyers more options. Be Prepared: If we had a dollar for every prospective Buyer who said that they’re waiting until after the election to buy because they “think prices are going to drop”, we would be rich. But historically facts dispute this notion_ because as our most recent blog covers, over the last 50 years election years have had no effect on home prices. +/- Out-of-Pocket Expenses a. Very few over-appraisals value offers. b. Sellers are willing to contribute to the buyer’s closing costs & buyer’s agent representation commission. c. Sellers are willing to accept offers with loan programs for down payment assistance. We have closed several homes with these programs so far this year. Neutral Terms a. Repair requests will be more evenly considered now. b. Buyers can really think about the homes they tour and decide on the best one for them, with no pressure to make a same-day decision. c. Competing with less multiple offers. d. Longer close of escrow (COE) periods. If you are on a lease and need time to coordinate the end of your lease term closer to the COE, we have successfully negotiated longer dates which reduces costs and gives you more time, relieving stress. Affordability: Never buy more home than you can afford –e don’t want our clients to be house poor. Financial Advisors and Mortgage lenders recommend the range of 25-35% of your gross monthly income be put towards your home mortgage payment (Principle, Interest, Tax, Insurance = PITI). For those who have the income to qualify, and providing it fits their family’s budget, buying ahead of the wave of buyers may offer the best deal. Many of our lender partners offer their clients a one-time rate adjustment within 3-to-5 years, which can give you an advantage at today’s home prices and then a reset when mortgage rates drop. Never speculate about rates dropping however; only purchase a home that fits your budget. New Home Option: New homes continue to provide the best interest rates as builders are still offering incentives. We expect this will slow down and incentives will drop off first, followed by mortgage rate discounts. Mortgage rate discounts offered today range between 5-6%, with a 5-10% down payment and less incentives being offered inthe most desirable new home communities We can provide a weekly update of the incentives being offered by each builder. Renting Will Still Be Expensive a. If you rent a home for $2,200 for 3 years, you just paid your landlord $79,200 with no equity, no gain. Be willing to compromise: Think about purchasing a smaller home than the one you’re renting, to stay within budget.Think of it as a stepping stone to reach your ultimate home. Every year you are investing $24,000 in your future self towards your ultimate home goal. Seller Opportunities Price-to-market value: The market moved slightly from a seller’s market to a neutral market, andsellers who overpriced their homes sat on the market. When a home sits on the market, you lose buyer appeal and in most cases the eventual achieved price will be lower than if it was priced to market in the first place. There’s no need to price under market, but if you price correctly, you can expect several offers to choose from. You’ll also be able to identify the best buyer on price, terms, and qualifications. We expect buyer activity to stay flat through the 3rd quarter. Our Advice: Review the market comparably and be realistic with your home’s current value. Marketing your home will be extremely important, andhaving a high-quality online presence is crucial. Have patience: It will take longer to sell. 61% of homes sold in 30 days; we expect to see that number drop in the 4th quarter. Buyer terms: Expect home buyers to ask for closing cost credits, contributions toward their agent commission, and reasonable repairs. We are seeing a lot more seller-occupied homes on the market. Have a showing schedule that accommodates the most amount of buyer traffic, resulting in more and better offers. Post Occupancy for our sellers: We can negotiate terms that allow the seller to remain in the home for up to 60 days (sometimes longer, depending on the buyer’s mortgage), which allows our sellers to make stronger offers on their home purchases. It also takes the stress out of worrying about a contingency deadline on their new home. Questions about this report? Contact us below: Graham Team Real Estate • (702) 930-9551 • Team@grahamteamnv.com 3007 W Horizon Ridge Pkwy, Ste. 210, Henderson, NV 89052
Summer 2024 Housing Market Report: Key Stats for Southern Nevada
Graham Team Housing Market Update • Summer 2024 • Las Vegas & Henderson, NV The latest housing figures for Southern Nevada paint a complex picture of market dynamics, showcasing both notable shifts and enduring trends. Let’s examine some key metrics: Median Home Price: $475,000 ⬆ YOY* 7.7% in 2nd Qtr. over 2.1% in 1st Qtr. # of Homes Sold (2nd Qrt): 6,833 ⬇ YOY (3.5%) | June 2024 was down (8%) from June 2023 Inventory: ⬆ YOY 11.7% in 2nd Qtr. over 23% in 1st Qtr. Mortgage Rate: ⬇ YOY (.70%) in 2nd Qtr. over (.40%) in 1st Qtr. *YOY = year-over-year Interpreting the Trends: The housing market in Southern Nevada is navigating contrasting trends. Despite increased inventory (+11.7%) and fewer transactions (-8%), home prices continue to rise, albeit at a moderate pace compared to previous years when supply was more limited. Demand remains resilient despite growing supply. Long-Term Trends and Insights: For the last two years we have been tight on inventory supply, and the number of transactions slowed in 2023 carrying into 2024. In June we saw a significant increase in supply, bringing us to 2 months of inventory. When you are working with a low denominator, adding a couple hundred homes to the market makes the increase percentage seem high. By contrast, if we look back to pre-pandemic inventory levels which were double what they are today, adding several hundred homes would barely affect the percentage increase. It's important when you consider % adjustments to look at the underlying numbers to see if the % increase or % decrease is truly significant. Here's a 5 year look back at the Las Vegas housing market data: Homebuyers from 2023 did well with a median equity gain of $35,000 on a single-family home. We were recently asked what the many concerns are for potential sellers: If they sell their current home at a 2.75 to 3.5% mortgage, even with substantial equity in the sale of their existing home, their new home payment would be more than double if they upsize and equal, or slightly more if they downsize. That’s a big challenge for many sellers, as it doesn’t make financial sense. With low inventory, would they find the right home that checks all their boxes? Item 1 above is a significant challenge, but regardless, it doesn’t stop life from occurring and the historical reasons why people sell remain the same. Babies are still being born, and you truly can only fit so many kids in one bedroom. Changes in jobs, marriages, deaths – or needing a single-story vs two-story for health reasons. We have seen a dramatic decline in sellers who want vs. those who need a change in their home. There has also been a significant rise in first-time investors. Our Property Management team receives multiple calls each week about homeowners who want to retain their home at the super low mortgage rate and purchase another home for either need or want. My family taught me the value of investing in rental homes – for retirement income and stability – and it was a lesson I’m glad I learned early in life. I’m excited to see a whole new generation of investors doing the same. Switching a family home into an investment property is not for everyone, as it requires a change in mindset to see your home (that you may have lived in for years, raised a family, and have amazing memories in) as an asset instead. Affordability is still the #1 concern for future homeowners and will affect sellers as well. Legislators, business leaders, city officials, homebuilders, and realtors are all looking for solutions to provide affordable housing in our new future. There are some great ideas being discussed and some not-so-great solutions, but the bottom line is people need to be able to afford to live. What's Affecting the 2024 Housing Market in Las Vegas? Mortgage Rates: We started to see the rate declines that economists were predicting for the 1st quarter happen in the 2nd quarter instead. Mortgage rates ended at around 6.25% for FHA loans, 6.3% VA and 6.5% conventional mortgage in the 2nd quarter. The graph below from Freddie Mac shows conventional mortgage rate trends for the last year on a national level – Nevada tends to run .30 higher than the national average. The above graph is from Freddie Mac (https://www.freddiemac.com/pmms) Note: Conventional rates have been running 0.5% higher than FHA and VA. Good News Continues: Inflation continues to moderate. JP Morgan’s outlook reported: CPI fell by 0.1% in June 2024 (month-over-month) and rose 3% year-over-year Nationally, shelter prices declined slightly Decline in fuel prices Positive job reports JP Morgan looks for the Fed to start cutting rates in September. Affordability: The gap between the median income in Southern Nevada and the income required to qualify for the median home price is widening even further. Using the predictions below, we have forecasted the income required to qualify for a home purchase over the next 3 years. Note: Assumes Conventional loan, 5% down payment, 33% of household income applied toward house payment (PITI). Only 33.1% of Southern Nevadans currently have a median household income sufficient to afford the median sales priced home. According to a graph provided by Applied Analysis, this figure is projected to move up to about 40% in the next five years. Check out all of our Lender Resources to help you buy a home. National Law Change in Buyer’s Representation Commission: Effective August 1st in our Las Vegas Realtor Association, seller consideration for buyer’s representation commission will not be offered. This will be a significant change for buyers as they will now set the amount their agent is being paid to represent them. Previously, the compensation was set and paid by the seller. We were concerned about how this would affect our VA buyers as under VA loan guidelines they are not allowed to pay commission for their representation. However, in June the VA revised the rules and now VA buyers may pay their agent for representing them. It makes sense that buyers should determine the amount their agent is paid for working for them, but it will take some time for loan programs, appraisal values and rules to work through this. We have prepared, researched, and worked hard to develop a system where we feel that our buyers will succeed. Rental Market in Las Vegas The median rent for a single-family home rose by $100 on average, and the median lease rate now stands at $2,200 for a +/- 1,835 sf home. The median price-per-square foot is $1.23, with new homes or updated homes still obtaining a premium. Days-on-market (time it takes to lease a home) went down quarter-over-quarter to 18 days. We were recently asked the following question by a potential renter: “You cannot still be requiring 3x the monthly rent for income? There is no way the average person can do that.” Housing Snapshot Housing snapshot of 2nd Quarter, 2024: Our Takeaway What is expected for the rest of Summer? Sales Prices: Flat; We may see weeks where prices fluctuate up and down slightly. Interest Rates: Slight decrease; conventional in the mid 6% range. FHA and VA in the lower 6% range. Foreclosures: Very slight increase due to the amount of credit card debit and student loan debt. Inventory: To hover between 2-3 months. Rental Rates to Flatten: Maintain the median price of $1.15 to $1.20. Buyer Opportunities Moderate Selection: Inventory will continue to rise slightly, giving buyers more options. Be Prepared: We have many buyers who are waiting for rates to be closer to 6% before making a home purchase, as the debt-to-income ratios do not work for qualifying at today’s rate. We have been telling our future buyers to GET PREPARED! Do all that you can now to be ahead of the wave when rates drop. There are a few simple steps future buyers can take to give themselves better options and more competitive rates if mortgage rates finally fall. We’ve held a lot of buyer consultations this last quarter which has allowed our clients to action these small steps, including moving their credit score (even those with excellent credit can move up), because the stronger your credit score, the lower your interest rate. +/- Out-of-Pocket Expenses Very few over-appraisals value offers. Sellers are willing to contribute to the buyer’s closing costs & buyer’s agent representation commission. Sellers are willing to accept offers with programs with down payment assistance. We closed several homes with these programs in 2nd quarter and expect to do more in 3rd quarter. More Favorable Terms Repair requests will be more evenly considered now. Buyers can really think about the homes they tour and decide on the best one for them, with no pressure to make a same-day decision. Competing with less multiple offers. Longer close of escrow (COE) periods. If you are on a lease and need time to coordinate the end of your lease term closer to the COE, we have successfully negotiated longer dates so it reduces costs and gives you more time, therefore relieving stress. Affordability: Never buy more home than you can afford. We don’t want our clients to be house poor. Financial Advisors and Mortgage lenders recommend the range of 25-35% of your gross monthly income to be put towards your home mortgage payment (Principle, Interest, Tax, Insurance = PITI). For those who have the income to qualify, and providing it fits their family’s budget, buying ahead of the wave of buyers may offer the best deal. Many of our lender partners offer their clients a one-time rate adjustment within 3-to-5 years. If your budget allows, this can give you an advantage at today’s home price and then a reset when mortgage rates drop. Never speculate about rates dropping; only purchase a home that fits your budget. New Home Option: New homes continue to provide the best interest rates as builders are still offering incentives. We expect this will slow down and the incentives will drop off first, followed by mortgage rate discounts. The mortgage rate discounts being offered today range between 5-6%, with a 5-10% down payment. The most desirable new home communities will offer less incentives. We produce a weekly update of the incentives being offered by each builder. Renting Will Still Be Expensive If you rent a home for $2,200 for 3 years, you just paid your landlord $79,200 with no equity, no gain. If you really want to own a home in the next couple of years, reduce the size of home you are currently renting and put away the difference in rent. It will also prepare you for the size of home you can afford to purchase. We foresee that rents will run lower than purchasing options monthly, before appreciation and accounting for principal reduction. Seller Opportunities Price-to-market value: The market moved slightly from a seller’s market to a neutral market. Sellers who overpriced their homes sat on the market. When a home sits on the market, you lose buyer appeal and in most cases the eventual achieved price will be lower than if the home was priced to market in the first place. There’s no need to price under market, but if you price to market correctly, you can expect several offers to choose from and will be able to identify the best buyer on price, terms, and qualifications. We expect buyer activity to stay about flat through the 3rd quarter. Our Advice: Review the market comparably and be realistic with your home’s current value. Marketing your home will be extremely important. Having a high-quality online presence is crucial. Have patience: It will take longer to sell. 71% of homes sold in 30 days; we expect to see that number drop in the 3rd and 4th quarters. Buyer terms: Expect home buyers to ask for closing cost credits, contributions toward their agent commission, and reasonable repairs. We are seeing a lot more seller-occupied homes on the market. Have a showing schedule that accommodates the most amount of buyer traffic, which will result in more and better offers. Post Occupancy for our sellers: We can negotiate terms that allow the seller to remain in the home for up to 60 days (sometimes longer, depending on the buyer’s mortgage), which allows our sellers to make stronger offers on their home purchases. It also takes the stress out of Sellers worrying about a contingency deadline on their new home purchase. By offering a post-occupancy option for our sellers, we eliminate this stress from the sale. Questions or Comments? Contact us: Graham Team Real Estate | 702-930-9551 | team@grahamteamnv.com www.grahamteamnv.com
Las Vegas & Henderson Housing Market Update | May 2024 | Spring Review
Graham Team Housing Market Update • Spring 2024 SPRING, where we normally see the housing market blossom the most, is looking to deliver mixed results. Home prices will remain relatively flat at $465,000 for the median home price for a single-family home. This is where the 1st quarter of 2024 ended. We expect inventory to pick up slightly – we mean very slightly – still below 2 months of inventory, keeping it a Seller’s Market. Interest rates rallied from 6.25% in the 1st quarter to 7.75% in April when inflation came in hotter than expected. The bond market has settled down some, and rates have started to fall, with FHA at the lower end at 6.25% heading into May. How did the numbers for the first quarter of 2024 turn out? The median sales price is up year-over-year by 9.4%, a real appreciation on the median of $40,000. Those who purchased in 2023 did well. Year-to-date, the market is up 3%. The number of homes sold in Q1 2024 over Q1 2023 is flat, almost at the same number. Interest rates have been the driving factor in both seller and buyer activity. When rates drop below 7%, we see a significant rise in mortgage applications, which typically results in increased sales 2 months later. Why are interest rates significantly impacting sellers? Most sellers secured their current mortgage when rates were at record lows. So, even if they are looking to downsize, their payment could be higher, making them second guess their timing. Right now, most of the seller activity we are seeing is from people relocating out-of-state, those upsizing who need a larger home to meet their household needs, or those who have substantial equity and are not impacted by mortgage rates. We have also seen a rise in first-time investors who want to retain the value of their low mortgage rate and lease their existing home, while purchasing a new home for their family. The largest impact on the housing market is still the concern of affordability. Even with this significant concern, home prices are expected to rise through the remainder of 2024. Many of our clients ask us how this is possible – if people cannot afford homes, how can prices continue to go up? The basic economics of supply and demand on the national market means we are at a 23-year low of housing inventory. Single-Family Homes 1st Qrt 2024 1st Qrt 2023 1st Qrt 2022 Median Sale Price $465,000 $425,000 $460,000 No. of Sold Units 5,457 5,408 8,347 % Sold less than 30 days 62% 50% 82% Months of Inventory 1.6 1.8 0.6 Sold Price to List Price 93% 90% 95% Flat from Previous Year Gain from Previous Year Decline from Previous Year Trends for 1st Quarter 2024 and into Spring: Median Sales Price: ↑ with pricing expected to rise slightly through to the 2nd qtr. | # of Homes Sold: Flat | Days on Market: ↑ | Inventory: ↓ 10% from 2023, flat for 1st qtr. heading into 2nd qtr. 2024 Core Factors Affecting The Market MORTGAGE RATES The housing market’s nemesis in 2024 was higher-than-expected mortgage rates. We started the 1st quarter of this year with rates showing a nice trending decline, then *boom*, in February we obtained bad inflation figures, and rates jumped up. We saw a slight reprieve in March, and then in April another unexpected inflation report came in jumping rates as high as 8%. As we mentioned earlier, rates into late April have started to decline from these record highs. FHA and VA came in this week at around 6.25% and Conventional around 7%. Above graph is from Freddie Mac (https://www.freddiemac.com/pmms) and reflects conventional loan rates nationally. Blue is a 30-year mortgage rate and green is a 15-year rate. Note: Conventional rates have been running 0.5% higher than FHA and VA GOOD NEWS: inflation figures appear to be leveling off on some of the core figures and we expect to see this have a relatively quick impact on mortgage rates. In fact, this week's drop is most likely in response to the inflation data that was recently released. Federal Reserve officials announced on May 1 that they are keeping their benchmark rate unchanged, citing a halt in progress toward reducing inflation. The bond market typically responds ahead of the Fed announcement unless the Feds take them by surprise, which is not typical. AFFORDABILITY The gap between the median income in Southern Nevada and the amount of income required to qualify for the median home price is widening. Using the predictions below, we have forecasted the income required to qualify for a home purchase over the next 3 years. Median Sales Price Mortgage Rate Income Required 2023 $450,000 6.75% $125,890 2024 $462,500 4.78% $109,380 2025 $479,380 4.33% $108,945 Note: Assumes Conventional loan, 5% down payment, 33% of household income applied toward house payment (PITI). We have concerns that home price prediction in the 3% range may be unaccounted for, especially when rates drop, and buyers flood the market. Only 33.1% of Southern Nevadans have a median household income sufficient to afford the median sales priced home. According to a graph provided by Applied Analysis, this figure is projected to move up to about 40% in the next five years. Rental Market The median rent for a single-family home has followed the sales market, remaining relatively flat since Q1. The median lease rate is $2,100 for +/- 1,841 sf home. The median price-per-square foot is $1.16 with new homes or updated homes still obtaining a premium. The days-on-market (time it takes to lease a home) has increased quarter-over-quarter to 27 days (almost 4 weeks). As a reminder, most landlord qualifications require 3x the rent of monthly income. From the household income graph mentioned earlier, this means less than 47% of households in Southern Nevada can afford the median rent. Housing Snapshot Snapshot of 1st Quarter 2024: Our Takeaway What is expected this Spring? Sales Prices: Appreciate around 1-2%, with a jump when mortgage rates drop closer to 6%. Interest Rates: Slightly decreasing; conventional in the mid 6% range. Foreclosures: Very low rates. With credit card debt increasing and student loan payment deferral at an end, we expect that foreclosures will slightly increase. Inventory: We expect the number of homes on the market to remain low; however, the days-on-market lower from March through June. Rental Rates to Flatten: Maintain the median price of $1.15 to $1.20. Buyer Opportunities Moderate Selection: Inventory to remain low and with a predicted jump up in buyer activity in the Spring. When rates decline, buyers could be facing a multi-offer competition, but only a couple per home (nothing like the 2021 frenzy). Be Prepared: We have many buyers who are waiting for rates to be closer to 6% before making a home purchase, as the debt-to-income ratios do not work for qualifying at today’s rate. We have been telling our future buyers to GET PREPARED! Do all that you can now to be ahead of the wave when rates drop. There are a few simple things future buyers can do to provide themselves with the best options and more competitive rates if mortgage rates finally fall. We’ve held a lot of buyer consultations this last quarter which has allowed our clients to do the small things. This includes moving their credit score (even those with excellent credit can move up), because the stronger your credit score, the lower your interest rate. Less Out-of-Pocket Expenses No more over-appraisal value offers unless a home has sizzle and pop. Sellers are willing to contribute to the buyer’s closing costs. Sellers are willing to accept offers with programs with down payment assistance. More Favorable Terms Repair requests will be more evenly considered now. Buyers can really think about the homes they tour and decide on the best one for them, and no pressure to make a same-day decision. No competing with multiple offers. Longer close of escrow (COE) periods. If you are on a lease and need time to coordinate the end of your lease term closer to the COE, we have successfully negotiated longer dates so it reduces costs and gives you more time, therefore relieving stress. Affordability: Never buy more home than you can afford. We don’t want our clients to be house poor. Financial Advisors and Mortgage lenders recommend the range of 25-35% of your gross monthly income to be put towards your home mortgage payment (Principle, Interest, Tax, Insurance = PITI). For those who have the income to qualify, and it fits their family’s budget, buying ahead of the wave of buyers may provide them with the best deal. Many of our lender partners offer their clients a one-time rate adjustment within 3-to-5 years. If your budget allows, this can give you the advantage at today’s home price and then a reset when mortgage rates drop. Never speculate about rates dropping; only purchase a home that fits your budget. New Home Option: New homes continue to provide the best interest rates as builders are still offering incentives. We expect this will slow down and the incentives will drop off first, and then the mortgage rate discounts. The mortgage rate discounts being offered today range between 5-6%, with a 5-10% down payment. The most highly desired new home communities will be offering less incentives. We have a weekly update of the incentives being offered by each builder. Renting Will Still Be Expensive If you rent a home for $2,150 for 3 years, you just paid your landlord $77,400 with no equity, no gain. If you really want to own a home in the next couple of years, reduce the size of home you are currently renting and put away the difference in rent. It will also prepare you for the size of home you can afford to purchase. We foresee that rents will run lower than the purchasing options on a monthly basis, before appreciation and accounting for principal reduction. Seller Opportunities Price-to-Market Value: even in the Spring, the market moved slightly towards a seller’s market. Sellers who overpriced their homes sat on the market. When a home sits on the market, you lose buyer appeal for the home and the eventual achieved price in most cases will be lower than if you priced the home to market. No need to price under market. If you price to market, you will have several offers to select from and will be able to identify the best buyer on price, terms, and qualifications. We expect buyer demand to decrease in the 3rd quarter based on mortgage application rates today. Our Advice: Review the market comparably and be realistic with your home’s current value. Marketing your home will be extremely important. Having a high-quality online presence is crucial. Have patience: it will take longer to sell. 68% of homes sold in 30 days; we expect to see that number drop in the 3rd and 4th quarters. In the Springtime, you can expect 30 to 45 days; fall and winter closer to 2 months. If you price over market, it will take quite some time. Your home will get a lot of tours before a buyer offer is received. Buyers want to see many options before deciding on a home. Buyer terms: expect home buyers to ask for closing cost credits and repairs. We are seeing a lot more seller-occupied homes on the market. We can negotiate terms that allow the seller to remain in the home for up to 60 days (sometimes longer, depending on the buyer’s mortgage), which allows our sellers to make stronger offers on their home purchases. It also takes the stress out of the buyer’s contingency, especially loan contingency. Lenders are tightening their standards and requiring a lot more documentation. Many lenders have reduced staff, so they are not hitting their time frames. By negotiating a post-occupancy option for our sellers, we eliminate this stress from the sale. As always, if you have any questions about this report or would like more information about your neighborhood, contact us below: Graham Team Real Estate Advisors(702) 930-9551 • www.GrahamTeamNV.com • Team@GrahamTeamNV.comB.0143551.LLC
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