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Monthly Value Program (MVP): National Snapshot: How’s the Real Estate Market?

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Download the September Calendar by clicking here: September 2019 – MVP – Calendar
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National Snapshot: What’s Ahead for Real Estate

The U.S. unemployment rate is at a 50-year low, and consumer confidence remains high. In fact, the University of Michigan’s latest Surveys of Consumers found that Americans have their most positive personal finance outlook since 2003.1

However, if you follow national news, you’ve probably heard speculation that we could be headed toward a recession. Global trade tensions and a slow down in the GDP growth rate has sparked volatility in the stock market, leading to economic uncertainty.

Given these differing signals, you may be wondering: How has the U.S. housing market been impacted? Where is it headed? And more importantly … what does it mean for me?

 

MORTGAGE RATES ARE NEAR HISTORIC LOWS

In August, Freddie Mac reported that the average 30-year fixed mortgage rate hit its lowest level since November 2016, falling to 3.6%, down a full percentage point from a year earlier.Variable mortgage rates also fell when the Federal Reserve cut interest rates at the end of July for the first time since 2008.3

This was welcome news for many in the real estate industry. Freddie Mac predicts that low interest rates and a robust job market will help the housing market remain strong despite the threat of recession. 

“There is a tug of war in the financial markets between weaker business sentiment and consumer sentiment,” said Sam Khater, Freddie Mac’s chief economist. “Business sentiment is declining on negative trade and manufacturing headlines, but consumer sentiment remains buoyed by a strong labor market and low rates that will continue to drive home sales into the fall.”2

 

What does it mean for you?

If you’re looking to buy a home, now is a great time to lock in a low mortgage rate. It will shrink your monthly payment and could save you a bundle over the long term. Or if you plan to stay in your current home for a while, consider whether it makes sense to refinance your mortgage at today’s lower rates.

 

PRICES CONTINUE TO RISE AT A MODEST PACE

According to the S&P CoreLogic Case-Shiller Indices, housing prices continue to rise. But the rate at which prices are rising is slowing down. For May 2019, the National Home Price Index rose by 3.4%, down from 3.5% the previous month.4

Of course, national averages often don’t present the whole picture. Some markets have seen modest declines, while other areas are witnessing double-digit increases. The key differentiating factor in most cases? Housing affordability.5

Since 2012, home prices have increased at about three times the pace of wages, according to National Association of Realtors chief economist Lawrence Yun.6

“Housing unaffordability will hinder sales irrespective of the local job market conditions,” said Yun. “This is evident in the very expensive markets as home prices are either topping off or slightly falling.”5

But what about all this talk of a recession? Will we see housing values plummet like they did in 2008? Economists say no.

If we look at history, the real estate crash experienced during the Great Recession isn’t typical.

The recent Housing and Mortgage Market Review report from Arch Mortgage Insurance provides data to support this. “What we found is that the next recession is likely to be far less severe on the housing market than the last one. It’s not that this time is different; it’s that last time was really different from historic norms.”6

“A large decline in national home prices is unlikely in the next recession,” Arch economists write. “A persistent housing shortage should help cushion home price declines.”6

 

What does it mean for you?

If you have the ability and desire to buy a home now, don’t let the threat of a recession hold you in limbo. The market is cyclical, and it will experience ups and downs. But over the long term, real estate has consistently proven to be a good investment.

 

 

STARTER INVENTORY REMAINS TIGHT WHILE LUXURY MARKET SOFTENS

As we’ve seen in the past, it’s become a tale of two sectors.

The low-end of the market remains highly competitive as buyers compete for affordable housing. A lack of new construction during the last recession led to an undersupply of starter homes. This trend continues—despite growing demand—due to a lack of skilled workers, rising land and material costs, and a slow permitting process in many areas.7

The result? There’s a shortage of homes for sale that Americans can actually afford to buy.

The luxury market, on the other hand, has softened. Economic uncertainty, changes to tax laws, and rising prices have slowed demand. Plus, to recoup their higher costs, builders flocked to this segment—causing an overabundance of supply in some areas.

“If you’re selling an entry level home, you’re probably still looking at a pretty competitive market in most places,” according to Danielle Hale, chief economist at Realtor.com. “But if you’re selling a more expensive home you probably have to adjust your expectations.”8

 

What does it mean for you?

Move-up buyers, you’re in luck! If you’re ready to trade in your starter home for something more luxurious, you may get the best of both sectors. We’re still witnessing strong demand for entry-level homes, giving sellers the upper hand. At the same time, buyers of high-end homes are finding a greater selection (and more negotiating power) than they’ve had in years.

 

INVESTORS ARE BUYING HOMES AT RECORD LEVELS

There’s one group that hasn’t been slowed down by lack of affordability or economic uncertainty: investors.

According to CoreLogic, investors are purchasing homes at a record pace. In 2018, the share of U.S. homes bought by investors reached 11.3%—the highest level since the company began tracking nearly 20 years ago.9

Notably, this increased activity wasn’t led by institutional investors, but instead by small and individual investors focused on the starter-home segment.Declining interest rates and an uncertain stock market has led investors to flock to real estate as they seek out greater stability and higher returns.

“With declining mortgage rates … they’re searching for a better return for their money,” said NAR chief economist Lawrence Yun.10

 

What does it mean for you?

If you’re looking for a way to “recession proof” your money, you might want to consider investing in real estate. People will always need a place to live, and (unlike the stock market) a rental property can provide a steady source of cash flow during uncertain economic times.

 

WE’RE HERE TO GUIDE YOU

While national real estate numbers can provide a “big picture” outlook, real estate is local. As local market experts, we can guide you through the ins and outs of our market and the issues most likely to impact sales and home values in your particular neighborhood. 

If you have specific questions or would like more information about how market changes could affect you, contact us to schedule a free consultation. We’re here to help you navigate this shifting real estate landscape.

 

Sources:

  1. University of Michigan Surveys of Consumers – http://www.sca.isr.umich.edu/
  2. Freddie Mac – https://freddiemac.gcs-web.com/news-releases/news-release-details/mortgage-rates-drop-significantly?_ga=2.29332539.689041222.1565464527-928629548.1565464527
  3. CNN – https://www.cnn.com/2019/07/31/business/fed-rate-cut-july-meeting/index.html
  4. S&P Dow Jones Indices – https://us.spindices.com/documents/indexnews/announcements/20190730-965771/965771_cshomeprice-release-0730.pdf?force_download=true
  5. National Association of Realtors – https://www.nar.realtor/newsroom/metro-home-prices-increase-in-91-of-metro-areas-in-second-quarter-of-2019
  6. Forbes – https://www.forbes.com/sites/alyyale/2019/04/18/with-a-recession-looming-is-now-the-time-to-sell-your-home/#7d3a21665bce
  7. CNN – https://www.cnn.com/2019/08/09/economy/mortgages-home-buyers/index.html
  8. Forbes – https://www.forbes.com/sites/carolinefeeney/2019/07/01/halfway-into-2019-how-is-the-housing-market-holding-up/#7e656e3ec5d8
  9. CoreLogic – https://www.corelogic.com/blog/2019/06/special-report-investor-home-buying.aspx
  10. Fox Business – https://www.foxbusiness.com/economy/investors-snapping-up-homes-at-record-levels

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Subject: What could a recession mean for real estate?

Hi {first_name},

We’re in the midst of one of the longest economic expansions in U.S. history. So it’s not surprising that there’s been speculation about a recession. In an economic cycle, what goes up must eventually come down.

But would a recession lead to another housing market crash?

You can find the answer in our latest blog post, National Snapshot: How’s the Real Estate Market? [insert link to post]

In the post, we also discuss the latest trends in mortgage rates and real estate prices and reveal the buyer segment that is starting to enter the market in droves.

If you have any questions or would like to discuss what we’re seeing in our local market, reply to this email or give us a call. We’d love to hear from you!

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P.S. If you don’t already follow us on Facebook, click here and hit the “Like” button to receive notifications about future blog posts and market updates!

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  • Post the copy below to your Facebook Business or Public Figure Page. If the link preview that pops up when you add your blog post doesn’t show the image below, consider adding it as a photo to your post.
    Post Content (click to copy):
    Tune in to the news, and chances are you’ll hear speculation about an economic downturn.

    But will a RECESSION = REAL ESTATE CRASH?

    We answer that question and more in our latest blog post: [insert link to post]



    Alternate Post Content (click to copy):

    We talk a lot about the [insert city] real estate market, but what about national numbers? Where is the country headed, and how will it impact local buyers, sellers, and homeowners?

    Find out in our latest blog post!

    National Snapshot: How’s the Real Estate Market?  [insert link to post]

  • Share link from Business page to your personal profile
  • Later in the month, post to your Facebook Business or Public Figure Page again using this new post copy and image.
    Post Content (click to copy):

    We all want to make smart investments. So naturally, we get questions from clients about how to time the market.

    Should they buy a home now, or wait to see if prices go down?

    Unless they are purchasing an investment property (different rules), we generally tell our clients to focus on buying a home they can truly afford … and one they are willing to own for at least five years.

    If you purchase a home that you are able to stay in if the market takes a dip, then you don’t have to worry so much about timing the market. Housing prices may rise and fall, but over the long term, an investment in real estate has shown to appreciate.

    Our latest blog post explores the current state of the market, where it’s headed, and what it means for buyers, sellers, and homeowners.

    National Snapshot: How’s the Real Estate Market? [insert link to post]

    Of course, every buyer’s circumstances are unique. If you want to find out if it’s a good time for YOU to buy a home, message us to schedule a free custom assessment!

  • Boost the Post on Business Page to the people in your sphere

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    • INTRO: “I share a lot about the local housing market, but it’s also important to keep an eye on national real estate trends and where the country is headed.”
    • Compare and contrast how what you’re seeing in your local market is similar and/or different than the national trends discussed in the latest blog post.
    • Share any reasons why it might be a good time to buy or sell real estate right now, such as low mortgage rates for buyers or low inventory for sellers in a particular segment.
    • Encourage the viewer to read your latest blog post for more information and call you to schedule a free consultation.
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  • Phone Script:

    Hi [NAME],

    This is [Your Name] at [Company]. I’m just calling to check in and see how things are going. How are you?

    [Chat]

    Another reason I’m calling is to follow up on an email I sent you with our latest blog post on the state of the U.S. housing market. Did you have a chance to read it?

    [Pause for response]

    I’ve been getting a lot of calls from clients and friends who are concerned about a recession and how it could impact real estate.

    While I have you on the phone, do you have any concerns or questions I can answer?

    [pause for response]

    [If they seem curious]
    Here’s what we’re seeing in our local area ...

    [If they don’t seem curious/concerned about real estate]
    Do you know anyone who is considering buying or selling a home who might find our latest blog post useful?

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Post Content (click to copy):

We talk a lot about the [insert city] real estate market, but what about national numbers? Where is the country headed, and how will it impact local buyers, sellers, and homeowners?

Find out in our latest blog post—National Snapshot: How’s the Real Estate Market? (link in profile)

Suggested Hashtags (click to copy):

: #realestate #realtor #realestateagent #realestateexperts #realestatetips #realestategoals #realestatemarket #homesearch #homeseller #homebuyer #realestateinvestor #realestateinvesting 

Also include at least one local hashtag, ex: #austinrealestate or #austinhomes

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Post Content (Click to Copy):

Dreaming about a new house in [city]? Find out if it’s a good time to buy real estate!

Need Help?

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Tune in to the news, and chances are you’ll hear speculation about an economic downturn. But will a RECESSION = REAL ESTATE CRASH? I answer that question and more in my latest article.

Suggested Hashtags (click to copy):

#realestate #housing #personalfinance #homesellers #homebuyers #economics #investing

Also include at least one local hashtag, ex: #austin #austinrealestate or #austinhomes

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National Snapshot: How’s the Real Estate Market?

The U.S. unemployment rate is at a 50-year low, and consumer confidence remains high. In fact, the University of Michigan’s latest Surveys of Consumers found that Americans have their most positive personal finance outlook since 2003.[1]

However, if you follow national news, you’ve probably heard speculation that we could be headed toward a recession. Global trade tensions and a slow down in the GDP growth rate have sparked volatility in the stock market, leading to economic uncertainty.

Given these differing signals, you may be wondering: How has the U.S. housing market been impacted? Where is it headed? And more importantly … what does it mean for me?

 

MORTGAGE RATES ARE NEAR HISTORIC LOWS

In August, Freddie Mac reported that the average 30-year fixed mortgage rate hit its lowest level since November 2016, falling to 3.6%, down a full percentage point from a year earlier.[2] Variable mortgage rates also fell when the Federal Reserve cut interest rates at the end of July for the first time since 2008.[3]

This was welcome news for many in the real estate industry. Freddie Mac predicts that low interest rates and a robust job market will help the housing market remain strong despite the threat of recession.

“There is a tug of war in the financial markets between weaker business sentiment and consumer sentiment,” said Sam Khater, Freddie Mac’s chief economist. “Business sentiment is declining on negative trade and manufacturing headlines, but consumer sentiment remains buoyed by a strong labor market and low rates that will continue to drive home sales into the fall.”[2]

What does it mean for you? If you’re looking to buy a home, now is a great time to lock in a low mortgage rate. It will shrink your monthly payment and could save you a bundle over the long term. Or if you plan to stay in your current home for a while, consider whether it makes sense to refinance your mortgage at today’s lower rates.

 

PRICES CONTINUE TO RISE AT A MODEST PACE

According to the S&P CoreLogic Case-Shiller Indices, housing prices continue to rise. But the rate at which prices are rising is slowing down. For May 2019, the National Home Price Index rose by 3.4%, down from 3.5% the previous month.[4]

Of course, national averages often don’t present the whole picture. Some markets have seen modest declines, while other areas are witnessing double-digit increases. The key differentiating factor in most cases? Housing affordability.[5]

Since 2012, home prices have increased at about three times the pace of wages, according to National Association of Realtors chief economist Lawrence Yun.[6] 

“Housing unaffordability will hinder sales irrespective of the local job market conditions,” said Yun. “This is evident in the very expensive markets as home prices are either topping off or slightly falling.”[5]

But what about all this talk of a recession? Will we see housing values plummet like they did in 2008? Economists say no.

If we look at history, the real estate crash experienced during the Great Recession isn’t typical.

The recent Housing and Mortgage Market Review report from Arch Mortgage Insurance provides data to support this. “What we found is that the next recession is likely to be far less severe on the housing market than the last one. It’s not that this time is different; it’s that last time was really different from historic norms.”[6]

“A large decline in national home prices is unlikely in the next recession,” Arch economists write. “A persistent housing shortage should help cushion home price declines.”[6]

 

What does it mean for you? If you have the ability and desire to buy a home now, don’t let the threat of a recession hold you in limbo. The market is cyclical, and it will experience ups and downs. But over the long term, real estate has consistently proven to be a good investment.

 

STARTER INVENTORY REMAINS TIGHT WHILE LUXURY MARKET SOFTENS

As we’ve seen in the past, it’s become a tale of two sectors.

The low-end of the market remains highly competitive as buyers compete for affordable housing. A lack of new construction during the last recession led to an undersupply of starter homes. This trend continues—despite growing demand—due to a lack of skilled workers, rising land and material costs, and a slow permitting process in many areas.[7]

The result? There’s a shortage of homes for sale that Americans can actually afford to buy.

The luxury market, on the other hand, has softened. Economic uncertainty, changes to tax laws, and rising prices have slowed demand. Plus, to recoup their higher costs, builders flocked to this segment—causing an overabundance of supply in some areas.

“If you’re selling an entry level home, you’re probably still looking at a pretty competitive market in most places,” according to Danielle Hale, chief economist at Realtor.com. “But if you’re selling a more expensive home you probably have to adjust your expectations.”[8]

 

What does it mean for you? Move-up buyers, you’re in luck! If you’re ready to trade in your starter home for something more luxurious, you may get the best of both sectors. We’re still witnessing strong demand for entry-level homes, giving sellers the upper hand. At the same time, buyers of high-end homes are finding a greater selection (and more negotiating power) than they’ve had in years.

 

INVESTORS ARE BUYING HOMES AT RECORD LEVELS

There’s one group that hasn’t been slowed down by lack of affordability or economic uncertainty: investors.

According to CoreLogic, investors are purchasing homes at a record pace. In 2018, the share of U.S. homes bought by investors reached 11.3%—the highest level since the company began tracking nearly 20 years ago.[9]

Notably, this increased activity wasn’t led by institutional investors, but instead by small and individual investors focused on the starter-home segment.[7] Declining interest rates and an uncertain stock market have led investors to flock to real estate as they seek out greater stability and higher returns.

“With declining mortgage rates … they’re searching for a better return for their money,” said NAR chief economist Lawrence Yun.[10]

What does it mean for you? If you’re looking for a way to “recession proof” your money, you might want to consider investing in real estate. People will always need a place to live, and (unlike the stock market) a rental property can provide a steady source of cash flow during uncertain economic times.

 
WE’RE HERE TO GUIDE YOU

While national real estate numbers can provide a “big picture” outlook, real estate is local. As local market experts, we can guide you through the ins and outs of our market and the issues most likely to impact sales and home values in your particular neighborhood.

If you have specific questions or would like more information about how market changes could affect you, contact us to schedule a free consultation. We’re here to help you navigate this shifting real estate landscape.

Sources:

  1. University of Michigan Surveys of Consumers
  2. Freddie Mac
  3. CNN
  4. S&P Dow Jones Indices
  5. National Association of Realtors
  6. Forbes
  7. CNN
  8. Forbes
  9. CoreLogic
  10. Fox Business

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