Hello, raving fans! I’m back with your hot-off-the-press market report for the month of October.
Remember how last month I told you that home price appreciation would slow down and become more normalized? Well, at least throughout the lower-middle price ranges in the market, it looks as though we might be drifting back toward a seller’s market where price appreciation will reaccelerate. According to CoreLogic, home prices went up by 3.6% over the last 12 months.
At 0:40 in the video above, you’ll find a chart that forecasts the year-over-year net change in price for each state in America. Overall, the prediction is that prices will increase by 4.5% throughout the United States in the coming year. By the time my next report comes out, I think that the projected number is going to be over 5%! In Pennsylvania, they’re already predicting that prices will increase by 5.6%, and for New Jersey, they predict a change of 6.2%.
With supply and interest rates being low, and with more buyers looking for homes, we’re still looking at a supply-and-demand situation. Now, whenever we talk about prices going up, there is always a group of people who are thinking of selling their home so they can move on to buying their dream home—these are called “trophy homebuyers.” And understandably, trophy homebuyers will worry about if they can afford to buy now.
Affordability is determined by three things:
- Wages, or the ability to earn
- Interest rates
Even though home prices are going up, if we take a look at the report released by the NAR, you’ll see that the percentage of income needed to buy a median-priced home is down to 15.7%. This same time last year, that percentage was at 18.2%, and the historic norm is 21.2% Taking everything into consideration, it’s much more affordable to purchase a home now than it has been in the past.
CoreLogic also broke down the typical mortgage payment that buyers commit to. The most recent reports from June show that the typical payment was $878, which is less than it was a year previous and much less than it was in January of 2000. For June of 2020, it’s projected that the typical mortgage payment for buyers will be $899, which is more than this year, but still less than it was just a year ago. Overall, this means home affordability is in good shape.
If this news isn’t good enough for you, take a look at what Frank Nothaft, the chief economist for CoreLogic, had to say about home equity:
“Borrower equity rose to an all-time high in the first half of 2019 and has more than doubled since the housing recovery started. Combined with low mortgage rates, this rise in home equity supports spending on home improvements and may help improve balance sheets of households who take out home equity loans to consolidate their debt.”
Also, with home equity increasing so dramatically, you might now have enough in equity to use as a down payment to move up to the home of your dreams or to downsize. Now’s the perfect time to make some money.
The fall is the ideal time to start thinking about things you could be doing to your home to increase its value for a 2020 sale. If you’re thinking of buying a home next year, there are also things you can to do find your dream home at the lowest price—I call this advanced real estate planning, and as your real estate planner, I believe it’s important to start earlier than you might think when it comes to one of the largest assets you own. If you don’t start now, you’ll lose every opportunity to do the things that bring you the highest return on your investment.
To learn all about my strategy and get a free copy of my book, “How to Fight the Home Selling Sharks,” I encourage you to attend my next home selling seminar on Saturday, January 18, 2020, at the Fort Washington Garden Inn at 9:30 a.m. You can also find my book on Amazon right now to get an early start on it.