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The Two Big Issues the Housing Market’s Facing Right Now

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The biggest challenge the housing market’s facing is how few homes there are for sale.

There are two things keeping existing-home inventory historically low - rate-locked existing homeowners and the fear of not finding something to buy. Let’s break down these two big issues in today’s housing market.

Let’s break down these two big issues in today’s housing market.

Rate-Locked Homeowners

According to the Federal Housing Finance Agency (FHFA), the average interest rate for current homeowners with mortgages is less than 4% (see graph below):

 
 

But today, the typical mortgage rate offered to buyers is over 6%. As a result, many homeowners are opting to stay put instead of moving to another home with a higher borrowing cost. This is a situation known as being rate locked.

When so many homeowners are rate locked and reluctant to sell, it’s a challenge for a housing market that needs more inventory. However, experts project mortgage rates will gradually fall this year, and that could mean more people will be willing to move as that happens.

The Fear of Not Finding Something To Buy

The other factor holding back potential sellers is the fear of not finding another home to buy if they move. Worrying about where they’ll go has left many on the sidelines as they wait for more homes to come to the market. That’s why, if you’re on the fence about selling, it’s important to consider all your options. That includes newly built homes, especially right now when builders are offering concessions like mortgage rate buydowns.

What Does This Mean for You?

These two issues are keeping the supply of homes for sale lower than pre-pandemic levels. But if you want to sell your house, today’s market is a sweet spot that can work to your advantage.

Be sure to work with a local real estate professional to explore the options you have right now, which could include leveraging your current home equity. According to ATTOM:

“. . . 48 percent of mortgaged residential properties in the United States were considered equity-rich in the fourth quarter, meaning that the combined estimated amount of loan balances secured by those properties was no more than 50 percent of their estimated market values.”

This could make a major difference when you move. Work with a local real estate expert to learn how putting your equity to work can keep the cost of your next home down.

Bottom Line

Rate-locked homeowners and the fear of not finding something to buy are keeping housing inventory low across the country. But as mortgage rates start to come down this year and homeowners explore all their options, we should expect more homes to come to the market.

Learn more on Keeping Current Matters.

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How to Know You’ve Found the Home of Your Dreams

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You know it when you feel it. That feeling of excitement, anticipation and joy when you walk into a house and just know that it’s the one.

But how do you know for sure that you’ve found your dream home? Here are some key factors to consider before signing on the dotted line. 

Check Your List of Must-Haves 
When house hunting, it is important to make a list of must-haves before you begin looking at potential homes. As you look at each property, check off what items it has that were on your list and note if there are any features that were missing or not as expected. This will help narrow down which properties are worth taking a closer look at and which ones should be crossed off your list. Additionally, by having a list of must-haves from the start, it will make it easier to know when one home stands out from the rest and makes your heart leap with joy. 

The Perfect Location
Location is one of the most important things to consider when choosing a new home. Are you looking for a quiet suburb or luxury high-end properties with plenty of amenities? Do you want easy access to public transportation or do you prefer a more rural setting? Thinking about what type of neighborhood will best suit your lifestyle is key in determining if a particular house is right for you. 

Consider Functionality
It's also important to think about how well a potential home functions for your needs. Does the size and layout meet your requirements? Is there enough storage space? Is the kitchen set up in such a way that it would make cooking and entertaining easy? Will any renovations need to be done in order for the house to meet your needs? Thinking through these questions ahead of time can help ensure that the house you choose truly meets your family’s needs. 

Look for Signs of Comfortability 
Another way to tell if you have found the perfect home is if you feel comfortable in the space immediately upon entering. This could mean anything from feeling like it already feels like yours or simply being able to envision yourself living there comfortably in the future. If you enter a home and feel relaxed and contented, then this is likely an indication that this could be the one. Don’t discount these feelings; sometimes our intuition can guide us towards making better decisions than we even realize! 

Consider What You Can Do With It 
Think about what projects would make the home better suited for your lifestyle. Whether it means redecorating certain rooms or making more structural changes such as adding a deck or renovating a basement, consider whether these projects would be feasible or too expensive without drastically reducing your budget or putting yourself in debt. If these changes would allow you to not just live in but truly enjoy this place, then this could mean that this is indeed your dream home! 

Finding a new place to call home can be daunting; however, by following these tips you can determine whether any given property fits into your vision of what constitutes “the perfect home” for you and your family. From considering what features are most important for making life comfortable within those walls to seeing how feasible certain projects may be given its structure, use these guidelines as helpful resources during your search for a dream home!

Read on.

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Can’t Get an Apartment Because of a Credit Report Error? Here’s How To Fix It

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By now you know that your credit score can have a big impact on your life—like when you want to finance a big purchase such as a house, or when you’re looking for a new rental.

You can expect your potential landlord to run a credit check and, as a general rule, you will need a score of 620 or higher to rent an apartment.

But credit reports can, on occasion, contain errors—and those errors can derail your apartment search when a landlord gives you a hard pass as a tenant.

“Credit report errors are actually common,” says David Bitton, co-founder of and chief marketing officer of DoorLoop, a property management software. “In fact, at least 1 in 5 people can encounter an error in any of their credit reports.”

Apartment hunting is hard enough, especially if you live in an area where desirable properties get snatched up at a moment’s notice. The last thing you need is to lose out on a rental because of errors on your credit report. But knowing what to look out for can get you back on level playing field. Read on for more information about credit score errors.

Why credit report errors happen

Errors on your credit report happen for a number of reasons: A creditor or lender might report incorrect information to a credit bureau. Other times, it can be a case of mistaken identity. You might share a similar Social Security number with someone with a less-than-stellar credit history.

“Someone with a similar name may show up on your account,” says Adjina Dekidjiev, a broker for Coldwell Banker Warburg.

Closed accounts, like student loans or car loans that you paid off in full, can still show as open or delinquent, show the wrong balance, or show an inaccurate payment history because the creditor didn’t update the account.

Errors can also happen in cases of identity theft or fraud.

Mihal Gartenberg, a broker for Coldwell Banker Warburg, says one of her tenant clients had a major credit issue due to a case of family fraud.

“The only way the credit bureaus would fix the problem was for my client to press charges against the family member. As my client was unwilling to do so, the credit hit remained in their history,” says Gartenberg.

Unfortunately, most credit report errors aren’t discovered until after a potential landlord has pulled your credit report.

You can fix a credit report error

When there’s a credit report error, the damage can be fairly severe. But it can be fixed.

When you discover the mistake, you must present written proof—as well as documents that support your dispute—to the company that provided the information and the three major credit-reporting agencies: Equifax, Experian, and TransUnion.

“Send a copy of the report along with your letter. Make sure that the errors in the report you want to dispute are highlighted,” says Bitton. “You may also send a copy of any pertinent documents that will support your dispute. Send these through certified mail, so you can request a return receipt.”

The Consumer Financial Protection Bureau offers a number of tools, including a sample letter, that you can send to a credit-reporting agency to dispute inaccurate information.

Credit-reporting companies must investigate your dispute and report the results back to you. However, if they determine that your dispute is baseless, they can choose not to investigate and will notify you within five days of their decision.

If your credit report does need to be corrected, the reporting agency must notify all of the furnishers (aka the bank or business that provided the information to the credit-reporting agency), so they can update their reports with the accurate data.

“A lot of bureaucratic work needs to be done to fix the error, but it’s well worth the effort,” says Josh Tepper, an agent for Coldwell Banker Warburg.

Monitor credit before renting

Before you start your apartment search, it’s best to get familiar with your credit score by going to a website like Credit Karma or myFICO, which allows you to check your credit whenever you’d like.

“It doesn’t cost anything, and it won’t affect your credit rating,” says Ellen Sykes, a broker for Coldwell Banker Warburg. “If you read the report carefully, you will be able to pick up on any negative issues—which could be errors—and fix them.”

Learn more on Realtor.com

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The 4 Most Popular Trends in Hardwood Flooring Right Now

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For the hardwood fans out there, there’s nothing more thrilling than a gorgeous original hardwood floor in a century-old townhouse, or, say, ripping up 50-year old tile to reveal pristine wood planks below. 

Yet for years, hardwood played second fiddle to wall-to-wall carpet. Then came the luxury vinyl plank trends. Despite all its competitors, hardwood floors are still a classic — and many homebuyers agree. Marie Bromberg, a real estate agent with Compass in New York City, sets the stage: “I cannot overstate how important flooring is to a home. It is probably the single most important factor in giving a home its ‘vibes.’”

Though synthetic and engineered options have become popular recently, Leda Broxson, a Realtor with Spears Group at Compass in Santa Rosa Beach, Florida, notes that hardwood has been used since the 1600s — and it’s not going anywhere anytime soon. Trends change, stains wax and wane, but hardwood retains its value and its beauty.

Oak floors continue their dominance.

Oak, bamboo, and maple continue to be the most popular hardwood options, with walnut and its striking grain making an occasional appearance. 

But there’s one runaway favorite: Oak overtakes 60 percent of the hardwood market. It takes a stain easily, it lasts for years, and it has the classic hardwood look that many buyers look for.

Wide plank floors are making a comeback.

Wide plank is on the rise again, and Broxson notes that recent trends include red and white oak wide plank floors. She says we’ll see more light and almost bleached tones and dark espresso colors coming back, as well.

Bromberg notes that these wide plank oak floors add an extra dose of flair. Think of every home renovation show where you’ve watched a DIYer excitedly rip up 1950s carpet to reveal original wide plank floors. Now imagine that you just bought those brand-new. It’s a splurge, but it’s one that will last. “Not only does wide plank oak impart all the warmth we want from wood, it’s also incredibly durable and will last through the generations with just minimal maintenance efforts,” adds Bromberg.

Lived-in flooring is having a moment.

“I have noticed a trend, which I fully support, which is to have not just ‘raw’ flooring, but flooring reflective of how we live,” Bromberg says. “No longer are people struggling to maintain the picture perfect, scratch-free floor.” 

She sees buyers and sellers embracing imperfection, including scratches, paint, and blotchiness on the floor. Bromberg notes that it makes it less stressful when you don’t feel like you’re in a museum and instead feel like you have permission to live in your home. 
Plus, she adds, “A well-used floor has a certain character and gravitas that a newly-placed floor doesn’t. I think people want a home that has a story to tell and not one that is striving to be as blemish-free as possible.”

Buyers look for durable choices.

Though surprising to some, bamboo is one of the most durable flooring choices. “Comparing bamboo to oak flooring, bamboo is actually harder, more eco-friendly, and in most cases more affordable,” says Broxson, which makes it a smart choice if you’re looking to retain value in your home or stay there for years to come.

Bromberg explains that bamboo is popular with green buildings since it is affordable and regrows quickly, making it a sustainable option. And this quick regrowth has one other big advantage — “I know several homeowners who tired of waiting for their lumber during the Covid crisis and opted for bamboo instead just to ‘get the job done,’” says Bromberg.

Is anything on its way out?

For those who can’t stand to see a gray tone floor, I have good news. Broxson says, “Flooring color trends that are going out or have been out of style for awhile are orange and honey tones and gray.”

Get more like this on Apartment Therapy.

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Builders are feeling cautiously optimistic thanks to lower mortgage rates

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Builder sentiment rose for the second consecutive month in February

Temperatures are slowly starting to rise in many parts of the country as we head into spring — and so is homebuilder sentiment, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI) report, released Wednesday.

In February, builder confidence in the market for newly built single-family homes rose seven points from January’s reading, to an index value of 42. This is the second consecutive month of gains after a year of decreases, and it is the index’s strongest reading since September 2022.

The NAHB/HMI report is based on a monthly survey of NAHB members, in which respondents are asked to rate both current market conditions for the sale of new homes and expected conditions for the next six months, as well as traffic of prospective buyers of new homes. Scores for each component of the builder confidence survey are then used to calculate an index, with any number greater than 50 indicating that more homebuilders view conditions as favorable than not.

The NAHB attributes the increase to the slight easing of mortgage rates, which the trade organization feels is a signal that the housings market might be turning, despite builders still dealing with high construction costs and supply chain issues.

“With the largest monthly increase for builder sentiment since June 2013, the HMI indicates that incremental gains for housing affordability have the ability to price-in buyers to the market,” Alicia Huey, an NAHB chairman, said in a statement. “The nation continues to face a sizeable housing shortage that can only be closed by building more affordable, attainable housing. However, the two monthly gains for the HMI at the start of 2023 match the cautious optimism noted by the large number of builders at the recent International Builders’ Show in Las Vegas, who reported a better start to the year than expected last fall.”

According to Huey, the most challenging part of the homebuilding market is the construction of entry-level homes, and he called on policymakers to “help by reducing the cost of developing lots and building homes via regulatory reform.”

Builders are continuing to offer a variety of incentives. However, data shows that things may be stabilizing. In November, 36% of builders were reducing home prices, but the percentage of builders who are dropping home prices declined to 31% in February. In addition, the average price drop decreased from 8% in December to 6% in February.

“While the HMI remains below the breakeven level of 50, the increase from 31 to 42 from December to February is a positive sign for the market,” Robert Dietz, the NAHB’s chief economist, said in a statement. “Even as the Federal Reserve continues to tighten monetary policy conditions, forecasts indicate that the housing market has passed peak mortgage rates for this cycle. And while we expect ongoing volatility for mortgage rates and housing costs, the building market should be able to achieve stability in the coming months, followed by a rebound back to trend home construction levels later in 2023 and the beginning of 2024.”

Three other indices monitored by the NAHB also posted gains in February. The gauge measuring current sales conditions rose to 46, up six points month over month. The component analyzing sales expectations for the next six months rose 11 points to a reading of 48, and the index that charts traffic of prospective buyers rose six points from January to a reading of 29.

Regionally, the three-month moving averages for HMI rose in all four regions, with the West gaining three points to a reading of 30, the South rising four points to 40, the Northeast adding four points for a reading of 37 and the Midwest rising one point to a reading of 33.

Another survey, the BTIG/HomeSphere State of the Industry Report, also reported a leveling in homebuilder outlook.

According to the survey, 54% of builders saw a yearly decrease in sales last month, down from 71% in December. Despite a 41% yearly decrease in sales, builders again reported a slight improvement in performance relative to expectations, with 21% of respondents reporting that sales were better than expected, and 38% reporting that sales were worse than expected. These metrics improved from 11% and 35%, respectively, in December.

The BTIG/HomeSphere study is an electronic survey of approximately 50-100 small- to mid-sized homebuilders that sell, on average, 50-100 homes per year throughout the nation. In January, the survey had 107 respondents.

The January survey included a special question about the impact of mortgage rates, with 80% of builders reporting that lower rates have positively impacted business.

“Conditions continue to be sluggish overall, but we believe the environment is improving heading into the Spring selling season,” BTIG analyst Carl Reichardt said in a statement.

Keep reading on Housing Wire.

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