What’s Ahead for Mortgage Rates and Home Prices?

Now that the end of 2022 is within sight, you may be wondering what’s going to happen in the housing market next year and what that may mean if you’re thinking about buying a home.

Here’s a look at the latest expert insights on both mortgage rates and home prices so you can make your best move possible.

Mortgage Rates Will Continue To Respond to Inflation

There’s no doubt mortgage rates have skyrocketed this year as the market responded to high inflation. The increases we’ve seen were fast and dramatic, and the average 30-year fixed mortgage rate even surpassed 7% at the end of last month. In fact, it’s the first time they’ve risen this high in over 20 years (see graph below):

In their latest quarterly report, Freddie Mac explains just how fast the climb in rates has been:

“Just one year ago, rates were under 3%. This means that while mortgage rates are not as high as they were in the 80’s, they have more than doubled in the past year. Mortgage rates have never doubled in a year before.”

Because we’re in unprecedented territory, it’s hard to say with certainty where mortgage rates will go from here. Projecting the future of mortgage rates is far from an exact science, but experts do agree that, moving forward, mortgage rates will continue to respond to inflation. If inflation stays high, mortgage rates likely will too.

Home Price Changes Will Vary by Market

As buyer demand has eased this year in response to those higher mortgage rates, home prices have moderated in many markets too. In terms of the forecast for next year, expert projections are mixed. The general consensus is home price appreciation will vary by local market, with more significant changes happening in overheated areas. As Mark Fleming, Chief Economist at First American, says:

“House price appreciation has slowed in all 50 markets we track, but the deceleration is generally more dramatic in areas that experienced the strongest peak appreciation rates.”

Basically, some areas may still see slight price growth while others may see slight price declines. It all depends on other factors at play in that local market, like the balance between supply and demand. This may be why experts are divided on their latest national forecasts (see graph below):

Bottom Line

If you want to know what’s happening with home prices or mortgage rates, reach out to a trusted real estate professional for the latest on what experts are saying and what that means for your local area.

Learn more on Keeping Current Matters.

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If there is a home that you would like more information about, if you are considering selling a property, or if you have questions about the housing market in your neighborhood, please reach out. We’re here to help.

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Thanksgiving Food Drive Benefitting the Jeffco Action Center

Join us in supporting the Jeffco Action Center!

Please bring your donations to any West + Main Homes or Streamline Home Loans office by Tuesday, November 15th.

About the Jeffco Action Center

The Action Center provides an immediate and compassionate response to those in our community experiencing hardship and offers the resources and services needed to stabilize lives and promotes pathways lasting change.

Since 1968, The Action Center has been committed to expanding and refining its services to meet our participant’s ever-changing needs. The Action Center’s goal is to provide clients with a continuum of services to meet their current needs and become self-sufficient. It is through the tireless effort of our volunteers, dedication of our professional staff, and generous donations from our amazing community that The Action Center provides hope and assistance with dignity and break the cycle of poverty.

Our Vision is that one day, all individuals and families in our community will have access to the resources, jobs and housing that they need to fulfill their greatest potential.

5 Ways to Increase Your Home’s Value

There are many reasons why one may want to increase the value of their home.

Perhaps you want to sell your home and downsize, or maybe you want to make home additions or improve its efficiency. Regardless of the reason, there are many ways to increase the value of your home. In this post, we will help you learn proven ways to consider if you want to increase your house's value.

Give It Some Fresh Paint
One of the easiest yet effective ways of increasing the value of your home is by giving it a fresh coat of paint. The good thing about painting is that it doesn't require a high budget or time. If you are a DIY enthusiast, all you'll need is paint and a brush. However, there are some situations where you'll need the input of a professional. For example, if you want to paint an extension or a room that is not accessible. Also, ensure you select colors that make bold statements and complement your home's architecture.

Build an In-Ground Pool
In-ground pools have become a growing trend over the past years. It is also one of the fastest ways to increase your home's value. Although it will require substantial money and time, they unconsciously trigger a sense of relaxation. There are different types of pools you can consider. To get the most suitable and cost-effective, feel free to contact a professional fiberglass pool builder.

Upgrade to Energy Efficient Appliances
Installing energy-efficient appliances can greatly improve your home's value. Therefore, focus on projects that lower the cost of energy bills. For example, consider installing central air conditioners, which can significantly decrease the cost of your energy bills. Also, you can replace the old, leaky windows with energy-efficient ones.

Give the Kitchen Updated Look
The kitchen is ultimately the central feature of any home. Therefore, if it has outdated components, it will definitely impact your overall home value. As such, upgrading the kitchen will help you increase your house value as fast as possible. Whether installing a new cooker or replacing the old tired countertops, updating your kitchen ensures it looks contemporary and helps keep up with the latest trends.

Work on Your Landscape
Improving your landscape also means improving your home's value. There are a lot of things you can work on in the landscape, but it depends on what fits best for your home. First, you can consider fencing your compound in case it lacks one. Also, you can consider adding up a garden, planting some flowers in the yard and trimming up your bushes. Also, don't forget to add a deck or a patio that's well-lit.

Final Thought
Whether you want to sell your home fast or make it more appealing, applying these tips will help you do just that. As such, we encourage you to take some time out and contemplate the ideas above and apply what you consider relevant.

Keep reading.

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If there is a home that you would like more information about, if you are considering selling a property, or if you have questions about the housing market in your neighborhood, please reach out. We’re here to help.

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Are Luxury ADUs the House Hack This Tight Economy Needs?

Who would want to live in a tiny home in their parents’ backyard? As it turns out, a lot of people.

The writer, director, and millennial antihero recently opened the doors of her newly built 1.5-bedroom forever home to Architectural Digest. The twist? It’s situated 10 feet behind her parents’ house in Connecticut.

For the uninitiated, Dunham is a married 36-year-old woman who created HBO’s “Girls,” one of the most successful TV shows of her generation. She has made the Time 100 list of most influential people in the world and considers Taylor Swift a close personal friend. She could presumably live just about anywhere, but she opted to move into an accessory dwelling unit on her parents’ New England compound.

With distinctive design and sumptuous details just a stone’s throw away from Mom and Dad’s lasagna, laundry services, and warm hugs, it’s easy to see why someone like Dunham would love to live here. But what about the rest of us?

For young would-be homebuyers who don’t mind sharing a yard with their family, is designing and living in an ADU the next hot housing trend? And—perhaps more timely—is multigenerational living a solution to the current real estate affordability problem?

The rise of ADUs for ‘normal’ people

Few of us have Dunham’s budget or access to the kind of architects and designers who could make a pencil box feel roomy and look chic. But the average person can also make an ADU a lovely space to be.

“You definitely don’t need to be rich to build and design a luxury ADU,” says Ryan Fitzgerald, owner of UpHomes in Charlotte, NC.

You just need to approach the ADU as you would a regular home, just on a smaller scale, he explains.

In other words: Choose the best materials, craftsmanship, and design that you can reasonably afford.

In many ways, the rise of ADUs is a win for both younger people in need of an affordable home—and their parents.

“The skyrocketing cost of housing has sparked a national housing crisis,” says Kerry Sherin, consumer advocate at Ownerly in Myrtle Beach, SC. “Rents are rising, so millennials are looking for long-term and affordable housing. ADUs can be a better investment than renting—and an investment that appreciates, not just in value, but in long-term utility.

“For both parents and their millennial children, there’s no reason not to consider adding an ADU to their property,” says Sherin.

Where are ADUs being built, and what does it entail?

ADUs are on the rise everywhere, but more than half of the estimated 1.4 million ADUs in the U.S. are in California, Florida, Texas, and Georgia, according to Freddie Mac. The metro areas with double-digit ADU growth include Seattle, Los Angeles, and Miami.

Rules vary from state to state and town to town, but you will definitely need a permit before you can begin construction.

“ADUs may be subject to specific rules in your city or county, such as height restrictions. You will need to show detailed plans drawn to scale for your project,” says Sherin. “An architect or ADU designer may be able to help you figure out what permits you need and prepare your application. Depending on your jurisdiction, you may also need electrical, plumbing, and mechanical permits.”

Size rules will vary. too. In California, the minimum space requirement is 150 feet, and the average cost to construct one is $150,000, or $250 per square foot, according to a report from the Terner Center for Housing Innovation at the University of California, Berkeley.

“ADUs can cost anywhere up to $400,000,” says Sherin. “The cost depends on the area where you live and the size of the ADU you want. ADU construction costs can reach $350,000 to $390,000 in the San Francisco Bay Area.”

When it comes to the cost of interior design, it’s going to depend on the materials. If you’re going the way of Dunham and building your dream home, it may be worthwhile to invest in high-quality appliances and furnishings.

ADU in spirit, if not in fact

If zoning restrictions or the realities of your property’s layout prevent the construction of an ADU, there are still plenty of options.

“With current housing market conditions, we will see more and more multigenerational living,” says Denise Supplee, a licensed real estate agent in Philadelphia and the founder of SparkRental.com. “I have already been seeing it in my market area of Philadelphia and the suburbs.”

However, Supplee acknowledges that adding or converting a building on a property to be used as a separate living quarter can be tricky in any area, especially urban and suburban neighborhoods.

In situations like that, where there is still a need for a separate living space, Supplee suggests converting a basement or garage, where having a different entry is still possible.

Lear more on Realtor.com.

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If there is a home that you would like more information about, if you are considering selling a property, or if you have questions about the housing market in your neighborhood, please reach out. We’re here to help.

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Home equity loan vs. HELOC – What’s the difference?

While mortgage rates are high and economic uncertainty looms, there is good news for borrowers who already have a mortgage and may be looking to tap into their equity. 

According to Black Knight’s mortgage monitor report, the country’s housing equity position remains strong compared to its position at the beginning of the pandemic, with equity positions $5 trillion, or 46%, above pre-pandemic levels. The average mortgage holder is up by more than $92,000 compared to the start of the pandemic.

Home equity loans and home equity lines of credit (HELOCs) are both loan products that are secured by the equity on a borrower’s home. 

But which is the best option for your borrower? Read on to find out.

What is a home equity loan?

A home equity loan – also referred to as a second mortgage, a home equity installment loan or an equity loan – is a fixed-term loan based on the equity in a borrower’s home. Borrowers apply for a set amount of money that they need and receive that money as a lump sum if approved. Home equity loans have a fixed interest rate and a set schedule of fixed payments for the life of the loan.

The equity in your borrower’s home serves as the collateral for a home equity loan, so there needs to be enough equity in the home for the borrower to qualify. The loan amount is based on several factors, including the combined loan-to-value ratio and whether the borrower has a good credit history. Typically, a home equity loan amount can be 80-90% of the property’s appraised value. 

The interest rate on a home equity loan is fixed and so are the payments, meaning the interest rate doesn’t change with time and the payments are equal over the life of the loan. The term of an equity loan can be between five to 30 years, and the borrower will have predictable monthly payments to make for the life of the loan. 

Pros and cons

In terms of pros, a home equity loan has a fixed amount – decreasing the likelihood of impulse spending – and a fixed monthly payment amount, which makes it easier for the borrower to budget their payments. This type of loan can also be good for those who need a set amount of cash for something due to the lump sum payout. 

The largest potential downside to a home equity loan is that the borrower can lose their home if they can’t make their payments on time. Additionally, tapping all of their equity at once can work against them if property values in their area decline. Home equity loans also require refinancing to get a lower interest rate, and the borrower can’t take out more money for an emergency without taking out another loan.

What is a HELOC?

A HELOC is a revolving credit line that allows the borrower to take out money against the credit line up to a preset limit, make payments on that line of credit and then take out money again. Rather than receiving the loan proceeds as a lump sum, with a HELOC the borrower can tap into their line of credit as needed. That line of credit remains open until its term ends. The amount borrowed can change, which means the borrower’s minimum payments can also change based on the credit line’s usage.

HELOCs are also secured by the equity in a borrower’s home. While it shares characteristics with a credit card due to being a revolving credit line, a HELOC is secured by that asset, while credit cards are unsecured. HELOCs have a variable interest rate, which can increase or decrease over time. That means the minimum payment can increase as rates rise. Additionally, the rate will depend on the borrower’s creditworthiness and how much they’re borrowing.

HELOC terms have two parts –  a draw period and a repayment period. The draw period is the time during which borrowers can withdraw funds. During this period, the borrower will have to make payments, but they tend to be interest-only and therefore typically small. When the draw period ends and the borrower enters the repayment period, they cannot borrow any more money, and their payments now include the principal amount borrowed along with the interest. 

Pros and cons

HELOCs come with a few advantages. The borrower can choose how much or how little of their credit line to use, and that credit line will be available for emergencies and other variable expenses. Variable interest rates mean that a borrower’s interest rate and payments could potentially go down if their credit improves or market interest rates go down. The borrower pays the interest compounded only on the amount they draw, not the total equity available in the HELOC. And HELOCs have a lower interest rate compared to other options to get cash, such as credit cards or personal loans. 

However, because the HELOC is secured by the borrower’s home, they could go into default and lose their home if they stop making their payments on time. It’s also harder to budget for fluctuating payment amounts, and easy for the borrower to accidentally spend up to their credit limit. Variable interest rates mean that the interest rate and payments could potentially increase if a borrower’s credit worsens or market interest rates increase. And the transition from interest-only payments to full, principal-and-interest payments can be difficult for borrowers.

How to choose between a home equity loan and a HELOC

The best way to approach the choice between a home equity loan and a HELOC is to ask the borrower about the purpose of the loan.

If they know exactly how much they need to borrow and how they want to spend the money, a home equity loan can be a good choice. Many borrowers use home equity loans for big expenses such as a college fund, remodeling or debt consolidation.

If the borrower is unsure exactly how much they need to borrow or when they’ll need to use it, a HELOC may be the better choice. The borrower will have ongoing access to cash for a set period, and can borrow against the line, repay it partially or in full and borrow that money again later, provided they are still in the HELOC’s draw period. HELOCs also generally process slightly faster than a home equity loan, if the borrower needs money more quickly. 

Visit HousingWire to learn more.

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If there is a home that you would like more information about, if you are considering selling a property, or if you have questions about the housing market in your neighborhood, please reach out. We’re here to help.

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Search Homes in Oregon