Scott Smolen's Maryland Real Estate News and Updates

Nov. 7, 2023

Safeguarding Your Inbox: 2 Strategies to Prevent Mortgage Rate Shopping Spam

Imagine this scenario: You were recently in pursuit of the best mortgage rates or submitted an online application for a home loan, and now your phone is buzzing incessantly. Your email inbox is overflowing with messages from lenders vying for your attention. You simply wanted to explore the interest rate on that charming bungalow, but now you find yourself inundated with unsolicited communication. How did all these companies manage to obtain your contact information?

One likely explanation, as highlighted by Fred Winchar, co-founder and CEO of MaxCash, a financial brokerage connecting users with lenders, is that your data may have been sold by a credit bureau. When you apply for a loan with a mortgage company, they typically pull your credit record to assess your creditworthiness. As a result, the credit bureau obtains a record of this credit inquiry, which they subsequently sell to other mortgage companies as potential leads.

"This information informs other mortgage companies that you are actively searching for a mortgage, prompting them to reach out to you in an attempt to secure your business," explains Winchar.

In case you were curious, credit bureaus are indeed allowed to sell your information to lenders and insurers, who can then inundate you with unsolicited credit or insurance offers through "prescreening offers." Fortunately, you can opt out of these offers, as advised by the Federal Trade Commission. Here's how:

Opting Out for Five Years: You can visit optoutprescreen.com or call 1-888-5-OPT-OUT (1-888-567-8688). Both the phone number and the website are managed by the major credit bureaus.

Opting Out Permanently: Visit optoutprescreen.com or call 1-888-5-OPT-OUT (1-888-567-8688) to initiate the process. To complete your request, you'll need to sign and return the Permanent Opt-Out Election form, which you can obtain online after starting the process.

Another likely scenario, according to financial planner Jeff Rose, CFP, and the founder of GoodFinancialCents.com, is that when you apply for a mortgage, your application enters various databases or networks associated with the initial company. Some companies may also sell or share lead information with other lenders, particularly if they are unable to service your loan, resulting in multiple companies reaching out to you.

Feel free to reach out to Scott and the Smolen Team at anytime so they can connect you with a reputable, local lender that can discuss your mortgage options with you privately!

Posted in Home Tips
Nov. 4, 2023

Continuous Rise in Home Prices: Insights from the Case-Shiller Index

In a remarkable turnaround, home prices have experienced a seven-month streak of growth, as reported by the S&P CoreLogic's Case-Shiller U.S. National Home Price NSA Index. The latest data, released on October 31, reveals that home-price growth surged by 2.6 percent in August 2023, more than doubling the 1.0 percent increase seen in July. This positive trend is evident in 13 out of the 20 metropolitan markets assessed by the Case-Shiller Index.

Reaching New All-Time Highs

Craig J. Lazzara, the managing director at S&P DJI, expressed, "U.S. home prices continued to rise in August 2023," highlighting that the national composite index marked its seventh consecutive monthly gain since hitting its lowest point in January 2023. The national composite now stands at a level 2.6 percent higher than a year ago and a significant 6.4 percent above its January level. This growth is not isolated to the national level; both the 10- and 20-city composites also showed year-over-year improvements.

Remarkably, many facets of the index are currently at historically high levels. Lazzara noted, "One measure of the strength of the housing market is the relationship of current prices to their historical levels." Notably, the national composite, the 10-city composite, and seven individual cities are all at their all-time highs. These cities include Atlanta, Boston, Charlotte, Chicago, Detroit, Miami, and New York.

On a year-to-date basis, the national composite has recorded a substantial increase of 5.8 percent, exceeding the median full calendar year increase observed over the past 35 years.

Regional Variation Persists

Lazzara emphasized that regional differences continue to play a significant role in housing market dynamics. The best-performing metropolitan areas in August included Chicago, New York, and Detroit, each showing positive year-over-year growth.

However, the Western region experienced the largest decline in August, with both Las Vegas and Phoenix witnessing price drops of 4.9 percent and 3.9 percent, respectively. The Southwest, in general, faced a regional decline of 0.9 percent.

August's data continues to highlight the Midwest as the nation's strongest region, with a 3.9 percent increase, followed by the Northeast with a 3.8 percent rise. These disparities underscore the varying dynamics in the U.S. housing market.

The Fed's Impact on the Housing Market

The Federal Reserve's efforts to combat inflation through consecutive interest rate hikes have inevitably influenced mortgage rates. While the Fed does not directly control mortgage rates, its policy decisions shape market expectations, impacting the cost of home loans.

The era of historically low mortgage rates that followed the Great Recession ended in 2022, with rates exceeding 6 percent for the first time since 2008. This upward trend persisted, with rates crossing the 7 percent and 8 percent thresholds in October 2022. As of October 25, 2023, the average 30-year mortgage rate stood at 8.01 percent, a level not witnessed in over two decades.

Steve Reich, division president at Go Mortgage, Pennsylvania, highlighted the profound effects of these trends on the housing market. He pointed out that the higher interest rates have constrained the purchasing power of homebuyers, impacting home sales. Furthermore, the increased rates have exacerbated the housing shortage by discouraging homeowners from selling their properties, limiting the supply of available housing.

Implications for Homebuyers and Sellers

In this evolving market, both homebuyers and sellers must adapt to changing conditions, which have proven challenging on both sides of the real estate transaction. Prospective sellers may need to remain flexible on pricing to navigate the challenges posed by rising mortgage rates.

For motivated homebuyers, the current market requires preparation for potential financial adjustments, given the increased cost of financing a home. This adaptability may involve considering smaller properties, different neighborhoods, or even a downgrade in the quality of the home.

Reich assures that despite the difficulties, buying a home in this market is still possible. The extended duration that active listings stay on the market has contributed to a slightly less competitive atmosphere, offering some relief to homebuyers. This is corroborated by data from the National Association of Realtors, which shows an increase in the median days-on-market length, offering hope to homebuyers who are determined to enter the housing market.

Posted in Market Updates
Sept. 26, 2023

Unlocking the Non-Financial Perks of Homeownership

The decision to purchase and possess your own home extends far beyond financial considerations. It's about embracing the intangible benefits that transform a mere residence into a place that truly reflects you.

Here, we explore some of the compelling non-financial incentives that accompany homeownership.

1. Creative Control Over Your Living Space

According to a survey by Fannie Mae, a resounding 94% of respondents place great value on "Having Control Over What You Do with Your Living Space" as a prime motivation for homeownership. When you own a home, it becomes your canvas, a space where you can freely express yourself. Except for specific homeowner association restrictions, your home is your blank slate. Whether it is small adjustments or significant renovations, the power to mold your dwelling according to your unique taste lies firmly in your hands. Investopedia highlights this freedom: "One often-cited benefit of homeownership is the knowledge that you own your little corner of the world. You can customize your house, remodel, paint, and decorate without the need to get permission from a landlord."

In contrast, renting may limit your ability to truly imprint your personality on your living space, often requiring you to revert any modifications upon departure. Ownership grants you the liberty to craft a home that resonates with your individuality, fostering a sense of pride and connection to your living environment.

2. A Nurturing Environment for Your Family

Another pivotal aspect to consider is your stage in life. U.S. News provides insights into this: "For those with young children, buying a home and putting down roots is a major driver. . .. You don't want the upheaval of a massive rent increase or a non-renewed lease to impact your sense of stability." At any life stage, stability and predictability are priceless commodities.

Life is marked by change, but having a steadfast home base, unaffected by the uncertainty of frequent moves, can bolster your sense of security and comfort.

3. Deepening Community Engagement

Fannie Mae's research underscores that 82% of individuals regard "Feeling Engaged in Your Community" as a compelling motive for homeownership. Homeownership naturally encourages a deeper connection to your neighborhood. Typically residing in one place for an average of nine years, homeowners could cultivate friendships and solidify bonds within their communities, as noted by the National Association of Realtors (NAR).

Gary Acosta, CEO and Co-Founder at the National Association of Hispanic Real Estate Professionals (NAHREP), highlights: "Homeowners also tend to be more active in their local communities . . ." When you feel a profound connection to your neighbors, you are inclined to actively contribute to the betterment of your local area.

In Conclusion, owning a home transcends mere financial investment; it enriches your life with a sense of accomplishment, pride, stability, and community. If you are contemplating the journey to homeownership and desire further insights, do not hesitate to connect with Scott and the Smolen Team! They can provide invaluable guidance and help you embark on the path toward achieving your homeownership goals.

Posted in Buying a Home
Sept. 21, 2023

Today's Mortgage Interest Rates Report - September 21, 2023 | Rates Show Decline, but Federal Reserve Hints at Future Hikes

In the ever-fluctuating world of mortgage rates, today's update brings a significant dip in rates across the board. The standout news is the 30-year mortgage rates, which have plummeted by 16 basis points in just one week. But while borrowers may rejoice at the immediate savings potential, there is a shadow of uncertainty cast by the Federal Reserve's recent meeting.

The Federal Reserve concluded its September meeting today, and the central bank announced a decision that could have a substantial impact on the lending landscape. For now, the Federal Funds Rate remains untouched, providing a sigh of relief for borrowers who feared another hike. However, it's imperative to note that the Fed hasn't ruled out the possibility of future rate increases before the year's end.

During his press conference following the meeting, Federal Reserve Chair Jerome Powell emphasized the central bank's commitment to data-driven decision-making. As borrowers eagerly await the next moves, it's recommended to keep a close eye on forthcoming job reports and Consumer Price Index releases, scheduled for early next month. These indicators will shed light on the economic trajectory and potentially signal whether another Fed rate hike is on the horizon.

The direction of mortgage rates hinges on how the broader economic factors play out. Should the economy continue its sluggish pace and the Federal Reserve manages to steer clear of additional rate hikes, borrowers could anticipate further decreases in mortgage rates soon. However, if inflation remains persistently high, we may find ourselves grappling with elevated mortgage rates for a bit longer.

Now, let us take a closer look at the specific mortgage rates for homebuyers and those considering refinancing: 30-Year

Fixed Mortgage Rates: Down by 0.16%

The current average 30-year fixed mortgage rate stands at 6.89%, marking a substantial 16 basis point decrease from the previous week. Notably, this rate is also lower compared to a month ago when it was at 7.10%. At this rate, for every $100,000 borrowed, you can expect to pay $658 monthly toward principal and interest. The 30-year fixed-rate mortgage is a popular choice, offering stability with a consistent interest rate over the loan's lifetime.

20-Year Fixed Mortgage Rates: A Slight Decrease of 0.02%

The average 20-year fixed mortgage rate has dipped by just two basis points, now sitting at 6.79%. In comparison to the previous month's rate of 6.88%, this marks a minor reduction. With this rate, borrowers would allocate $763 per month toward principal and interest for every $100,000 borrowed. While less common than its 30-year counterpart, 20-year fixed mortgages are still an available option.

15-Year Fixed Mortgage Rates: Virtually Unchanged, Up by 0.01%

The average 15-year mortgage rate currently stands at 6.29%, registering a marginal one basis point increase from the previous week. In contrast to the rate of 6.28% recorded a month ago, it remains essentially stable. With this rate, borrowers can anticipate monthly payments of $860 for every $100,000 borrowed. The 15-year fixed-rate mortgage offers predictability and the potential to save significantly on interest over the life of the loan.

7/1 ARM Rates: A 0.17% Increase

The 7/1 adjustable mortgage rate has experienced a slight uptick from the previous week, currently settling at 7.62%. This represents an increase from the 7.36% rate observed a month ago. For the first seven years, borrowers can expect monthly payments of $707 for every $100,000 borrowed, with subsequent adjustments in the following years based on the new rate.

5/1 ARM Rates: A Minor Decrease of 0.06%

The average 5/1 ARM rate has decreased slightly, now at 7.23%, compared to a slightly higher rate of 7.26% recorded last month. For the initial five years, borrowers would make monthly payments of $681 for every $100,000 borrowed.

30-Year FHA Rates: No Change

The average 30-year FHA interest rate remains stable at 6.04%, consistent with the previous week's rate. However, it reflects a decrease from the 6.68% rate noted a month ago. Borrowers considering FHA mortgages should note that a 3.5% down payment and a minimum 580 credit score are typically required to qualify.

30-Year VA Rates: Minimal Decrease of 0.02%

The current VA mortgage rate is 6.11%, a modest two basis point decrease from the previous week. Compared to a rate of 6.44% a month ago, it represents a slight reduction. With this rate, borrowers would allocate $607 monthly toward principal and interest for every $100,000 borrowed.

Now, let's delve into the refinancing rates:

30-Year Fixed Refinance Rates: Slight Decrease of 0.06%

The average 30-year refinance rate is 7.17%, slightly lower than the previous week. It also reflects a decrease from the 7.47% rate recorded a month ago. For every $100,000 borrowed, this rate would entail monthly payments of $677. While refinancing into a 30-year term may yield lower monthly payments, it's essential to consider the overall cost.

20-Year Fixed Refinance Rates: An Increase of 0.11%

The current 20-year fixed refinance rate stands at 6.92%, marking a rise from the previous week. In comparison to the 7.50% rate observed a month ago, it's still a more attractive option. Borrowers contemplating this rate would anticipate monthly payments of $771 for every $100,000 borrowed.

15-Year Fixed Refinance Rates: Decrease of 0.25%

The average 15-year fixed refinance rate is 6.50%, lower than the previous week. In contrast to the 6.68% rate noted last month, it offers potential savings. With this rate, borrowers would allocate $871 each month for every $100,000 borrowed. A 15-year term can result in long-term savings due to the lower interest rate, albeit with higher monthly payments.

7/1 ARM Refinance Rates: An Increase of 0.21%

The average 7/1 ARM refinance rate has risen slightly to 7.97%, compared to the previous week's rate. A month ago, it was at 7.42%. Borrowers considering this rate would have monthly payments of $732 for every $100,000 borrowed for the initial seven years, followed by annual adjustments.

5/1 ARM Refinance Rates: A Decrease of 0.27%

The 5/1 ARM refinance rate has decreased to 7.27%, down from the previous week. Compared to the 7.45% rate observed last month, it offers a more favorable option. For the first five years, borrowers can anticipate monthly payments of $684 for every $100,000 borrowed.

30-Year FHA Refinance Rates: No Change

The 30-year FHA refinance rate remains at 5.92%, consistent with the previous week. This rate is down from the 6.52% rate recorded a month ago. Borrowers considering FHA refinancing can expect monthly payments of $594 for every $100,000 borrowed.

30-Year VA Refinance Rates: A Minor Decrease of 0.01%

The average 30-year VA refinance rate is 6.34%, marking a minimal one basis point decrease from the previous week. In contrast to the 6.50% rate noted a month ago, it represents a slight reduction. Borrowers contemplating VA refinancing would allocate $622 monthly for every $100,000 borrowed.

In summary, mortgage rates have seen a decline in the short term, presenting potential opportunities for both homebuyers and those considering refinancing. However, the Federal Reserve's stance and economic indicators will play a pivotal role in shaping the mortgage rate landscape. As borrowers navigate these changes, exploring options like home equity lines of credit (HELOC) with low current rates can be a prudent strategy to leverage home equity for major expenses. For more information, check out our recommendations for the best HELOC lenders.

A HELOC functions as a flexible line of credit that allows you to borrow against your home's equity, providing financial flexibility akin to a credit card without the need to replace your existing mortgage. Furthermore, the current HELOC rates remain favorable compared to other borrowing options, such as credit cards and personal loans.

Posted in Market Updates
Sept. 20, 2023

Navigating the 2023 Housing Market: Insights and Strategies

As we welcome the arrival of cooler temperatures, the housing market continues to generate heat of its own, leaving potential homebuyers wondering when they can expect more affordable prices. The current scenario is marked by soaring mortgage rates and scorching home prices, which have become increasingly challenging for aspiring homeowners to contend with.

In mid-August, the national average 30-year fixed mortgage rate soared to a staggering 7.23%, reaching its peak for the year 2023. As of September 14, it stands at 7.18%, according to data from Freddie Mac. Simultaneously, year-over-year monthly home sales showed a 2.2% decline in July for the second consecutive month. This decline was observed across all four major U.S. regions, as reported by the National Association of Realtors (NAR).

Despite the daunting mortgage rates and home prices, the market remains fiercely competitive, driven by demand that continues to outstrip the limited housing inventory, coupled with homeowners who are reluctant to leave their homes due to previously locked-in low-interest rates. These factors contribute to the persistent affordability crisis that sidelines many prospective homeowners.

Housing Market Outlook for September 2023

The housing market's overall performance remains subdued, primarily due to the trifecta of challenges posed by high mortgage rates, elevated home prices, and restricted housing inventory. Additionally, concerns about high inflation and the possibility of further interest rate hikes loom in the background.

Mortgage rates began their ascent in mid-July and have remained on an upward trajectory. The 30-year fixed rate peaked at 7.23% in late August, marking the highest level since March 2022. This surge in rates followed the Federal Reserve's decision to raise the federal funds rate by 25 basis points during their July meeting. Notably, this was the 11th rate increase since the Fed initiated its battle against inflation in March 2022. The federal funds rate, which had been near zero in March 2022, now ranges between 5.25% and 5.5%. The Fed has indicated its readiness to continue raising rates to combat inflation.

The impact of a Fed rate hike indirectly affects long-term home loans, such as 30-year fixed-rate mortgages. As we look ahead, Fed projections suggest the terminal federal funds rate could reach 5.6% by the end of 2023, implying at least one more rate increase this year. Consequently, many experts anticipate that mortgage rates will remain well above 6% for the remainder of the year. All eyes are now on the Fed's September 19-20 meeting, where policymakers will review the latest economic data to determine their monetary policy stance—whether to keep rates steady or raise them.

The Fed's Influence on Mortgage Rates

Keith Gumbinger, Vice President at mortgage website HSH.com, emphasizes that the crucial factor is not just what the Fed does but also what they intend to do. While another quarter-point rate hike at this stage may not dramatically alter the situation, Gumbinger suggests that policymakers' statements about the duration of elevated rates and the potential for rate cuts hold more significance.

Timing the Housing Market Recovery

Gumbinger outlines several conditions that need to be met for a housing market recovery. One key requirement is a significant increase in housing inventories for sale. This additional inventory would help alleviate the upward pressure on home prices, potentially stabilizing or even reducing them from their peak levels. Concurrently, interest rates need to stabilize, although Gumbinger advises against rapid rate reductions, which could trigger a surge in demand, erasing any inventory gains and causing home prices to rebound. Ideally, mortgage rates should gradually return to a more "normal" range in the upper 4% to lower 5% territory, allowing the housing market to resemble the conditions seen between 2014 and 2019. However, Gumbinger cautions that it may take some time before we see rates return to these levels.

Current State of Mortgage Originations

With the average 30-year fixed mortgage rate now comfortably above 7%, the idea of a 5% mortgage rate seems distant. Despite these elevated rates, mortgage originations saw an uptick in the second quarter of 2023, reaching $393 billion after a low of $344 billion in the first quarter—marking the lowest total since the second quarter of 2014. Housing experts predict that originations will likely remain muted throughout the remainder of the year. Year-over-year existing-home sales in July 2022 were down significantly, with a staggering 16.6% decrease compared to July 2022. Pending home sales, often considered a leading indicator for existing-home sales, showed only a marginal increase of 0.9%.

Housing Inventory in September 2023

Housing supply remains critically low, particularly in the entry-level segment, which continues to fuel demand and sustain higher home prices. Nevertheless, new single-family homes have entered the market to some extent, attracting eager buyers frustrated by limited resale inventory. Additionally, the price gap between median existing-home sales prices and new home sales prices has narrowed significantly in recent months, making new homes more attractive to potential buyers.

On the existing home front, inventory has remained at historically low levels for months. After a stagnant June, unsold existing-home inventory increased by 3.7% between June and July, raising the supply from a meager 3.1-month to a 3.3-month supply at the current sales pace. Experts generally consider a balanced housing market to have four to six months of inventory. In contrast, new houses available for sale at the end of July totaled 437,000, representing a 7.3-month supply at the current sales rate—a decline from the 10.9-month supply seen a year ago.

Jack Macdowell, Chief Investment Officer and Co-Founder at Palisades Group, notes that inventory remains approximately 46% below historical averages dating back to 1999. He believes that resolving the inventory problem in 2023 is highly unlikely.

New Homes on the Rise

Despite mortgage rates remaining above 6.75% in July, new home sales saw a 4.4% increase to a seasonally adjusted annual rate of 714,000 in comparison to June's rate of 684,000. Notably, new home purchase mortgage applications also surged by 35.5% year-over-year in July, according to the Mortgage Bankers Association. A significant share of these new home sales was backed by FHA-insured loans, rising from 12.1% to 14% in the second quarter of 2023. These loans appeal to low- to moderate-income borrowers and first-time homebuyers due to their lower credit score and down payment requirements.

Robert Frick, Corporate Economist at Navy Federal Credit Union, suggests that new homes are now competitive on price, and this trend has been facilitated by the narrowing price gap between new and existing homes. While the median sales price for a new home in the U.S. dipped to a low of $417,200 in April 2023, it rebounded significantly, reaching $436,700 in July. Year-over-year new home sales surged by 31.5%, even as existing-home sales showed a decline.

Housing Starts Forecast for 2023

In the realm of construction, there have been mixed signals, indicating some caution among home builders due to rising mortgage rates and other industry challenges. Single-family construction starts increased by 6.7% following a dip in June. Building permit applications also rose by 0.6% from the previous month, according to the Census Bureau and HUD.

However, builder confidence took a hit, declining after seven consecutive months of increases. The National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI), which tracks builder sentiment, dropped from 56 to 50, with a reading of 50 or above indicating optimism for new construction conditions. Mortgage rates' upward trajectory prompted builders to offer incentives in August, with 25% of builders providing sales cuts compared to 22% in July. More builders also introduced incentives to boost sales, marking a 3% increase between July and August.

Alicia Huey, Chairman of NAHB, noted that rising mortgage rates and high construction costs resulting from various factors, including a shortage of construction workers and buildable lots, were dampening builder sentiment. Tighter credit conditions, a consequence of the Fed's aggressive interest rate hikes to combat inflation, are also expected to negatively impact the pace of home building. Bill Adams, Chief Economist at Comerica Bank, points out that rising long-term interest rates affecting residential financing costs are limiting the recovery of single-family construction. Home builders are consequently downsizing new units to enhance affordability.

Affordability Challenges for Home Buyers

Given the current state of the housing market, it's no surprise that many prospective homebuyers are putting their plans on hold. A Fannie Mae Home Purchase Sentiment Index (HPSI) revealed that 82% of consumers have delayed their home buying plans, even if they feel their job and income are stable or improved compared to a year ago. Escalating mortgage rates and persistently high home prices have significantly impacted affordability, pushing the goal of homeownership further out of reach for many, particularly first-time buyers.

For example, prospective buyers with $3,000 monthly budgets, who could have afforded a $500,000 home a year ago, can now only afford a $429,000 home, according to a recent Redfin report. Starter home costs continue to rise, making homeownership less attainable for those with limited down payment savings and incomes struggling to keep pace with rising monthly payments. Monthly mortgage payments in cities like Wichita, Kansas, have surged by a staggering 271% since 2019, mirroring similar trends in historically more affordable regions across the country.

Home Price Trends and the Possibility of a Market Crash

Despite indications that home prices may be softening in certain regions, the housing affordability crisis is likely to persist due to meager housing supply, ongoing high mortgage rates, and sales prices that approach the record-high median existing-home sales price of $413,800 seen in June 2022. Although the median existing-home sales price slid from $410,200 to $406,700 between June and July, it still marked a 1.9% increase from a year ago, according to NAR.

First-time homebuyers face challenges in affording starter homes, with a recent report indicating that they would need to earn about $64,500 annually, reflecting a 13% increase compared to a year ago. Starter home prices reached an all-time high of $243,000 in June. Although those earning $75,000 a year can afford a $256,000 home, properties in this price range or lower accounted for only 23% of existing home listings in April, according to a Realtor.com and NAR Home Affordability & Supply Report.

The Likelihood of a Housing Market Crash in 2023

Despite price declines in certain areas, the likelihood of a housing market crash—a sudden drop in unsustainably high home prices due to reduced demand—remains low. Experts highlight that homeowners today are in a much more stable position compared to those who weathered the 2008 financial crisis, with many homeowners holding positive equity in their properties. Nicole Bachaud, an economist at Zillow, notes that homeowner equity is currently at its highest level in decades, providing a substantial buffer against foreclosure.

Foreclosures in 2023

Foreclosure rates continue to trend downward month over month, according to a recent report from ATTOM, a property data provider. In July, foreclosure filings decreased by 9% compared to June but were up 5% year over year. Foreclosure completions also increased by 4% from the previous month and 9% from the previous year.

Rob Barber, CEO at ATTOM, suggests that the slight decline in foreclosure filings is another sign of a recovering housing market. The combination of rising home prices and increased financial resources available to homeowners has provided more options to avoid foreclosure. Nevertheless, the ongoing unpredictability of the housing market and economic factors make it challenging to predict whether this trend will continue.

Timing Your Home Purchase in 2023 The decision to buy a home in 2023 remains a highly personal one, as purchasing a home is a significant financial commitment. Experts advise against attempting to time the housing market, as it is notoriously unpredictable. Instead, prospective buyers should focus on finding a home that meets their needs, is affordable, and aligns with their financial situation.

Tips for Buying and Selling in Today's Housing Market

For those considering buying in today's competitive market, flexibility is key. Moving to lower-priced housing markets is an option for those who can work remotely or change jobs. Adequate preparation is also crucial, involving a review of financial circumstances, gathering required documents, shopping around for lenders, and improving credit scores. Local real estate agents can provide valuable insights and advantages in a tight market.

Sellers are advised to work with agents to price their homes correctly, as appropriately priced homes attract more attention and competition. Prepping homes for sale in advance and considering online curb appeal can also help attract potential buyers.

In conclusion, the housing market of 2023 presents a multifaceted scenario marked by steep mortgage rates, elevated housing costs, and restricted inventory. Considering these challenges, it is crucial for potential buyers and sellers to thoughtfully evaluate their choices, stay well-informed, and remain flexible in response to the dynamic market landscape. If you are considering buying a new home or selling your current one, don't hesitate to reach out to Scott and the Smolen Team to explore your options and get expert guidance!

Posted in Market Updates
Sept. 8, 2023

Exploring the Evolution of Mortgage Rates: A Historical and Future Perspective

If you are on the hunt for a new home this year, chances are you are keeping a close eye on mortgage rates. It is no secret that mortgage rates wield a significant influence on what you can afford when embarking on the journey of homeownership. Given the ongoing challenge of affordability in today's housing market, it is an opportune moment to delve into the broader context of mortgage rates. Let's take a journey through their historical trajectory, compare them to today's rates, and peek into the crystal ball to speculate on their possible future.

Putting Today's Rates in Perspective

Since April 1971, Freddie Mac has been diligently tracking the 30-year fixed mortgage rate. Each week, they unveil the findings of their Primary Mortgage Market Survey, a compilation of mortgage application data from lenders across the nation. Over the past year, mortgage rates have seen a notable upswing. However, even with this uptick, today's rates remain beneath the 52-year average. While this historical benchmark provides essential context, prospective homebuyers have grown accustomed to mortgage rates in the range of 3% to 5% over the past 15 years.

This context is crucial in understanding why the recent surge in rates may trigger a sense of sticker shock, despite them hovering near their long-term average. Many homebuyers have adapted to these slightly elevated rates during the past year, but a slight dip in rates would undoubtedly be a welcome sight. To gauge the feasibility of such a scenario, we must turn our attention to inflation.

The Intricate Dance of Mortgage Rates and Inflation

Since early 2022, the Federal Reserve has been diligently combatting inflation. This is a noteworthy development because history has shown a compelling link between inflation and mortgage rates. Typically, when inflation undergoes significant movements, mortgage rates tend to follow suit shortly thereafter. If historical trends hold true, the market is likely anticipating a correlation between declining inflation and a subsequent drop in mortgage rates. Predicting the exact trajectory of mortgage rates remains a challenging task, but the reduction in inflation suggests that the future might hold positive news for both mortgage rates and your homeownership aspirations.

To gain insight into the potential trajectory of mortgage rates, it is valuable to examine their historical path. The undeniable connection between inflation and mortgage rates highlights the importance of monitoring economic factors. If past patterns serve as a guide, the recent downturn in inflation could bode well for the future of mortgage rates and, in turn, your dreams of homeownership.

Posted in Buying a Home
Sept. 7, 2023

Enhancing Your Home with Elegance: Exploring 10 Varieties of Wall Molding and Trim

Within the realm of interior design, it's often the minuscule details that leave the most profound impressions. Enter the realm of wall molding and trim – often unheralded champions of home metamorphosis. From the graceful contours of crown molding to the intricate allure of wainscoting, these architectural embellishments possess the power to uplift any living space.

Understanding Wall Moldings

Wall moldings, commonly referred to as wall trim, are ornamental architectural components that grace the edges and surfaces of walls within homes and structures. Available in a plethora of shapes, dimensions, and styles, they are typically crafted from materials such as wood, plaster, or composite blends. Among their incarnations are baseboards that align with the floor, crown molding that crowns the ceiling, chair rails at mid-height, and wainscoting adorning the lower wall section. Beyond conferring texture, dimension, and personality, these moldings cultivate an air of refinement and opulence within a space.

A Catalog of 10 Wall Molding Types to Elevate Your Home

From the rustic allure of bead board to the meticulous intricacies of panel molding, each variant of wall molding presents an abundance of charisma, capable of metamorphosing your environment.

1. Crown Molding

Known also as ceiling molding, crown molding imparts a touch of grace where walls and ceiling converge. Its profiles span from simplicity to intricacy, augmenting the vertical expanse of a room.

2. Corbel Molding

Decorative brackets known as corbels jut from walls, adding architectural flourish. They find their place beneath shelves, countertops, or as stand-alone accents.

3. Casing Molding

The trim segments framing doors and windows are dubbed casing molding. Their clean, straightforward contours encircle these openings, harmonizing with surrounding architecture.

4. Chair Rail Molding

Horizontally adorning walls, chair rail molding sits at chair-back height, injecting a horizontal visual intrigue while safeguarding walls from furniture contact.

5. Picture Rail Molding

Positioned higher on walls, picture rail molding offers a horizontal platform for art and décor, sparing the wall surface. A fusion of utility and aesthetics.

6. Baseboards

Baseboards grace the wall-bottom juncture, safeguarding the wall and floor transition while furnishing a neat aspect.

7. Panel Molding

Panel molding crafts the illusion of raised or recessed wall panels, instilling depth and texture through its geometric configuration.

8. Wainscoting

A decorative treatment involving panels or molding beneath chair rail height, wainscoting bestows dimension to walls.

9. Beadboard

Beadboard features vertical planks with rounded ridges, emanating a cozy, cottage-style appeal within interiors.

10. Cove

Cove molding, characterized by its concave curvature, bridges walls and ceilings, introducing smooth elegance that softens harsh angles.

The Rationale for Incorporating Wall Moldings and Trim The inclusion of moldings within a home encompasses manifold advantages that amplify aesthetics and utility. These embellishments elevate the room's overall ambiance and offer:

- Character Enhancement: Wall molding imparts instantaneous texture and character to walls. Its versatility, from straightforward designs to intricate geometric arrangements, caters to both beginners and skilled artisans.

-Affordable Grandeur: Moldings proffer a swift, flexible, and cost-effective means to infuse grandeur and character into your dwelling. Several designs lend themselves to DIY projects, like board and batten treatments or geometric patterns.

-Property Value Appreciation: Executed skillfully, wall molding enriches interiors with depth, texture, and elegance, augmenting visual allure. Beyond aesthetics, it defines spaces, camouflages imperfections, and bolsters property value.

Insights for Introducing Wall Moldings to Your Home

Elevate your dwelling's panache through wall molding with these essential guidelines, seamlessly integrating decorative elements for a transformative elegant space.

- Design Deliberation: Prior to embarking, conceptualize your desired look. Contemplate molding types, their placement, and their compatibility with your home's style. This foresight ensures a cohesive, well-executed design.

- Universal Appeal: Wall moldings' versatility ensures suitability for any domicile. Whether you opt for traditional chair railing or modern geometric arrangements, the possibilities are limitless.

- Material Selection: Choose molding materials that harmonize with your home's aesthetic. Wood evokes classic allure, while polyurethane options, lighter and simpler to install, offer a contemporary alternative.

- Differential Paint Sheens: Elevate modest molding by employing two paint sheens – flat for walls and satin for molding – or opt for a slightly darker shade on the molding. Trim sealant and corner gluing during installation enhance durability.

- Expansive Applications: Embrace molding beyond wall adornment. Doors, ceilings, and cabinet fronts now host molding to elevate ambiance and augment intrigue.

Embellishing with Distinction

The incorporation of moldings and trim into your home's interior parallels adding final brushstrokes to a masterpiece. These subtleties, although unobtrusive, wield a remarkable ability to metamorphose any abode into an enduring, sophisticated space characterized by its uniqueness.

Posted in Home Tips
Sept. 6, 2023

Home Price Forecasts Revised Up for 2023

Toward the end of last year, there were a number of headlines saying home prices were going to fall substantially in 2023. That led to a lot of fear and questions about whether there was going to be a repeat of the housing crash that happened back in 2008. But the headlines got it wrong.

While there was a slight home price correction after the sky-high price appreciation during the ‘unicorn’ years, nationally, home prices didn’t come crashing down. If anything, prices were a lot more resilient than many people expected.  Let’s take a look at some of the expert forecasts from late last year stacked against their most recent forecasts to show that even the experts recognize they were overly pessimistic.

Expert Home Price Forecasts: Then and Now

The graphic below shows the 2023 home price forecasts from seven organizations. It provides the original 2023 forecasts (released in late 2022) for what would happen to home prices by the end of this year and their most recently revised 2023 forecasts: As the red in the middle column shows, in all instances, their original forecast called for home prices to fall. But, if you look at the right column, you’ll see all experts have updated their projections for the year-end to show they expect prices to either be flat or have positive growth. That’s a significant change from the original negative numbers.

There are a number of reasons why home prices are so resilient to falling. As Odeta Kushi, Deputy Chief Economist at First American, says: “One thing is for sure, having long-term, fixed-rate debt in the U.S. protects homeowners from payment shock, acts as an inflation hedge – your primary household expense doesn’t change when inflation rises – and is a reason why home prices in the U.S. are downside sticky.

A Look Forward To Get Ahead of the Next Headlines

For home prices, you’re going to continue to see misleading media coverage in the months ahead. That’s because there’s seasonality to home price appreciation and they’re going to misunderstand that. Here’s what you need to know to get ahead of the next round of negative headlines. As activity in the housing market slows at the end of this year (as it typically does each year), home price growth will slow too. But, this doesn’t mean prices are falling – it’s just that they’re not increasing as quickly as they were when the market was in the peak homebuying season. Basically, deceleration of appreciation is not the same thing as home prices depreciating.

Bottom Line

Headlines can wield influence, even when they lack accuracy. Although the media predicted a significant drop in home prices in their coverage at the end of the previous year, this scenario did not materialize. To navigate through this information, it's advisable to connect with an experienced Relator like Scott Smolen who can provide you with reliable data to distinguish fact from fiction. 

These estimates are based on what the "experts" believe will happen nationally.  Real estate markets vary from state to state, county to county and city to city.  Scott has been working in this field since 1999, so he can let you know what is happening in your particular area as opposed to some of the widely inaccurate national estimates.  

Posted in Market Updates
Sept. 5, 2023

Unpacking the Delay: Why Home Sellers Are Holding Off

Due to the ongoing persistence of higher mortgage rates, numerous homeowners may find themselves hesitant to sell, despite their strong desire to relocate. Consequently, the housing market is currently grappling with a scarcity of available listings, leaving potential buyers with limited options.

In the week ending on August 26, new listings recorded an 8.8% decrease compared to the previous year, marking a continuous 60-week decline. Moreover, the total housing inventory, encompassing both new and existing listings, is trailing behind last year's figures by 5.9%.

The limited availability of listings is propping up home prices, a situation that may disappoint hopeful buyers. In August, median list prices held steady at $435,000. While there was an annual decline in prices during June and July, for the week ending August 26, prices remained unchanged compared to the same week in the previous year.

"The tension between the demand for affordable homes and the shortage of available properties is keeping prices close to last year's levels," explains Jones. Buyers seeking potential growth in listings and reasonable prices can turn their attention to new construction. "Builders are actively increasing new construction projects to offer more options to buyers," Jones explains. A Shift in the Pace of Real Estate Sales Despite the presence of high mortgage rates, elevated home prices, and limited choices, Jones notes that homebuyers still appear "enthusiastic" about making purchases.

This is evident in the pace of home sales, which has been slowing for the past 58 weeks but is showing signs of a turnaround. "For over a year, the typical time a home spends on the market has been increasing compared to the same period the previous year," Jones points out. "However, this gap has generally been decreasing this year." For the week ending August 26, this gap narrowed to just two days, down from four days the previous week and six days the week before. "As we move beyond the 2022 housing slowdown period, it's likely that this gap will continue to shrink, and by fall, we may even witness homes selling more quickly than they did a year ago," says Jones.

"If this materializes, it could signify that the market is establishing a new norm, where homes spend fewer days on the market than pre-pandemic but more days than during the peak of the real estate frenzy.""We anticipate a 5% decrease in the overall existing home inventory available for sale in 2023 compared to 2022," states Jones.

Nevertheless, she further explains, "Even if there is some improvement in inventory during the fall, the number of new listings remains more than 20% lower than what was typically observed during this time of year before the pandemic. This shortfall could potentially contribute to further price increases in the weeks ahead."

The reality of the situation is home prices are continuing to rise due to the inflation we have seen over the past few years.  The dollar has become weaker than it was pre-pandemic, so it takes more dollars to buy homes and property.

Real estate has historically been a solid hedge against inflation and this current cycle of rising prices has proven that true again.  If you are in the market and can afford the home you want, then you should buy it.  When rates drop again, you will have the ability to pay less per month for the same home you are already in by refinancing it.  

You marry your house, but you only date your mortgage rate...

  

 

Posted in Market Updates
Sept. 4, 2023

Celebrating Labor Day: Honoring the American Worker

As summer draws to a close and the scent of barbecue wafts through the air, it's that time of year again when we come together to celebrate Labor Day. Beyond the long weekend and the unofficial end of summer, Labor Day holds profound significance in American history. It's a day dedicated to recognizing the achievements, contributions, and sacrifices of the American worker. In this blog post, we'll explore the history, importance, and contemporary relevance of Labor Day.

The Origin of Labor Day

Labor Day, observed on the first Monday in September, has a storied history dating back to the late 19th century. The labor movement in the United States was gaining momentum, as workers were fighting for better working conditions, reasonable hours, and fair wages. One of the key events leading to the establishment of Labor Day was the Haymarket Riot in Chicago in 1886. Amidst protests for an eight-hour workday, a bomb exploded, leading to violence and loss of life.

In response to these labor tensions and to honor the American worker, Labor Day was declared a federal holiday in 1894 by President Grover Cleveland. This was a significant step towards acknowledging the labor movement's efforts in improving workers' rights and conditions.

The Significance of Labor Day

Labor Day serves as a reminder of the progress made in the labor movement. It stands as a tribute to the millions of workers who have paved the way for safer workplaces, fair wages, and reasonable hours. The holiday emphasizes the importance of organized labor and the power of collective action to bring about positive change.

Today, Labor Day symbolizes a well-deserved break for the American workforce, providing an opportunity to relax, spend time with family and friends, and enjoy recreational activities. It also marks the end of summer and the beginning of the fall season.

The Contemporary Relevance of Labor Day

While we've made significant strides in workers' rights and conditions since the late 19th century, Labor Day remains relevant in today's world. It serves as a reminder that the struggle for workers' rights is ongoing, with new challenges emerging in the modern workplace.

Issues such as fair wages, workplace safety, job security, and the gig economy continue to be important concerns for workers across various industries. Labor unions, which played a vital role in the early labor movement, still work tirelessly to protect and advance the rights of workers in the 21st century.

Moreover, the COVID-19 pandemic highlighted the essential role of workers in various fields, from healthcare to grocery stores, delivery services, and more. Labor Day 2023 carries added significance as we reflect on the resilience and dedication of these essential workers who kept our society functioning during challenging times.

Celebrating Labor Day

As we celebrate Labor Day, it's essential to take a moment to honor the American worker and acknowledge the progress we've made in labor rights and conditions. It's also an opportunity to support local businesses and communities by participating in parades, barbecues, and other festivities.

In conclusion, Labor Day is not just another long weekend. It's a time to remember the struggles and achievements of the American worker, to recognize the contemporary challenges they face, and to celebrate the strength and unity of the labor movement. So, fire up the grill, enjoy some time off, and join in the celebration of Labor Day, a holiday that reminds us of the power of the American worker and the importance of a fair and just workplace for all.

 

Posted in News