Real Estate and Design Tips
Last year, one factor drove the real estate market more than any other: rising mortgage rates.
In March 2022, the Federal Reserve began a series of interest rate hikes in an effort to pump the brakes on inflation.1 And while some market sectors have been slow to respond, the housing market has reacted accordingly.
Both demand and price appreciation have tapered, as the primary challenge for homebuyers has shifted from availability to affordability. And although this higher-mortgage rate environment has been a painful adjustment for many buyers and sellers, it should ultimately lead to a more stable and balanced real estate market.
So what can we expect in 2023? Will mortgage rates continue to climb? Could home prices come crashing down? While this is one of the more challenging real estate periods to forecast, here’s what several industry experts predict will happen to the U.S. housing market in the coming year.
MORTGAGE RATES WILL FLUCTUATE LESS
In 2022, 30-year fixed mortgage rates surged from roughly 3% in January to around 7%. According to Rick Sharga of real estate data company ATTOM, “We’ve never seen rates double in so short a period.”2
This year, economists forecast a less dramatic shift.
In an interview with Bankrate, Nadia Evangelou, senior economist for the National Association of Realtors, shares her vision of three possible mortgage rate scenarios:3
Economists at Fannie Mae fall somewhere in the middle. In a recent press release, they predicted that the U.S. economy will experience a “modest recession” this year.6 But in their December Housing Forecast, they project that 30-year fixed mortgage rates will only fall by half a point from an average of 6.5% in Q1 to 6.0% in Q4.7
“From our perspective, the good news is that demographics remain favorable for housing, so the sector appears well-positioned to help lead the economy out of what we expect will be a brief recession,” said Fannie Mae Chief Economist Doug Duncan.6
What does it mean for you? Even the experts can’t say for certain where mortgage rates are headed. Instead of trying to ”time the market,” focus instead on buying or selling a home when the time is right for you. There are a variety of mortgage options available that can make a home purchase more affordable, including adjustable rates, points, and buydowns—and keep in mind you can always refinance down the road. We’d be happy to refer you to a trusted mortgage professional who can outline your best options.
SALES VOLUME WILL FALL AND INVENTORY WILL RISE
It looks like the home-buying frenzy we experienced in recent years is behind us. While the desire to own a home remains strong, higher mortgage rates have made it unaffordable for a large segment of would-be buyers.
Many economists expect the number of home sales to continue to decline this year, leading to an increase in listing inventory and days-on-market, or the time it takes to sell a home. But, there is a wide range when it comes to specifics.
Economists at Fannie Mae forecast that total home sales will fall by around 20% this year before rising again by nearly 15% in 2024.7 National Association of Realtors Chief Economist Lawrence Yun projects a less extreme dip of 7% in 2023 with a rebound of 10% next year.8
Realtor.com Chief Economist Danielle Hale foresees something in between. “The deceleration in home sales is likely to continue as high home prices and mortgage rates limit the pool of eligible home buyers. We anticipate that existing home sales will decline another 14.1% in 2023.” She expects this drop in sales to lead to a nearly 23% increase in inventory levels this year, offering more choices for buyers who have struggled to find a home in the past.9
However, given the severe lack of housing supply, even with a double-digit increase, the market is expected to remain relatively tight and below pre-pandemic levels. Hale points out: “It’s important to keep historical context in mind. The level of inventory in 2023 is expected to fall roughly 15% short of the 2019 average.”9
What does it mean for you? If you’ve been frustrated by a lack of inventory in the past, 2023 may bring new opportunities for you to find the perfect home. And today’s buyers have more negotiating power than they’ve had in years. Contact us to find out about current and future listings that meet your criteria.
If you’re hoping to sell, you may want to act fast; rising inventory levels will mean increased competition. We can help you chart the best course to maximize your profits, starting with a professional assessment of your home’s current market value. Reach out to schedule a free consultation.
HOME PRICES WILL REMAIN RELATIVELY STABLE
While some economists expect home prices to fall this year, many expect them to remain fairly stable. “For most parts of the country, home prices are holding steady since available inventory is extremely low,” said Yun at a November conference.8
Nationally, Yun expects the average median home price to tick up by 1% in 2023, with some markets experiencing greater appreciation and others experiencing declines.8 Economists at Fannie Mae offer a similar projection, forecasting a slight decrease in their Home Price Index of about 1.5%, year-over-year.7
Other experts foresee a larger fluctuation. Hale expects U.S. home prices to rise by 5.4% this year, while Morgan Stanley is forecasting a 7% drop from the peak in June 2022.9,10
Still, many economists agree that a housing market crash like the one we experienced in 2008 is highly unlikely. The factors that caused home prices to plunge during the Great Recession—specifically lax lending standards and a surplus of inventory—aren’t prevalent in our current market.10 Therefore, home values are expected to remain comparatively stable.
What does it mean for you? It can feel scary to buy a home when there’s uncertainty in the market. However, real estate is a long-term investment that has been shown to appreciate over time. And keep in mind that the best bargains are often found in a slower market, like the one we’re experiencing right now. Contact us to discuss your goals and budget. We can help you make an informed decision about the right time to buy.
And if you’re planning to sell this year, you’ll want to chart your path carefully to maximize your profits. Contact us for recommendations and to find out what your home could sell for in today’s market.
RENT PRICES WILL CONTINUE TO CLIMB
Affordability challenges for would-be buyers, inflationary pressures, and an overall lack of housing could continue to drive “above-average” rent price increases in much of the country.11 The Federal Reserve Bank of Dallas expects year-over-year rental price growth to tick up to 8.4% in May before moderating later in the year.12
According to Hale, “U.S. renters will continue to face challenges from limited supply and excess demand in the coming year that will keep upward pressure on rent growth. At a national level, we forecast rent growth of 6.3% in the next 12 months, somewhat ahead of home price growth and historical rent trends.”9
However, there are signs that the surge in rent prices could be tapering. According to Jay Parsons, head of economics for rental housing software company RealPage, there’s some evidence of a slowdown in demand. He predicts that market-rate rents will rise just 3.3% this year. Still, analysts agree that a return to lower pre-pandemic rental prices is unlikely.10
What does it mean for you? Rent prices are expected to keep climbing. But you can lock in a set mortgage payment and build long-term wealth by putting that money toward a home purchase instead. Reach out for a free consultation to discuss your options.
And if you’ve ever thought about purchasing a rental property, now may be a perfect time. Call today to get your investment property search started.
WE’RE HERE TO GUIDE YOU
While national real estate forecasts can provide a “big picture” outlook, real estate is local. And 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 drive home values in your particular neighborhood.
If you’re considering buying or selling a home in 2023, contact us now to schedule a free consultation. We’ll work with you to develop an action plan to meet your real estate goals this year.
The above references an opinion and is for informational purposes only. It is not intended to be financial, legal, or tax advice. Consult the appropriate professionals for advice regarding your individual needs.
Home for the Holidays: How To Stretch Your Budget
in a Season of Inflation
You don't have to break the bank to celebrate the holidays in style—even in this season of inflation. Prices may be higher on everything from food to gifts to decorations, but there are still plenty of opportunities to eke out extra savings.
For example, according to the U.S. Environmental Protection Agency (EPA), you can save a couple of hundred dollars a year just by sealing your home and boosting its insulation.1 Other small fixes—such as swapping old light bulbs for LEDs and plugging electronics into a powerstrip—can boost your yearly savings enough to pay off some of your holiday budget.
And thanks to a pandemic-era boom in online shopping, it is easier than ever to find deals on new and pre-owned furniture, thrifted gifts, DIY decor, and more. Even secondhand stalwarts like Goodwill have joined the digital fray, making it a cinch to score gently-used treasures at extra-low prices.2
You won't be the only one bargain-hunting your way to a more financially-stable New Year. Multiple surveys have found that inflation is not only chilling people's spending, it's also prompting shoppers to search for better deals and creative ways to reduce their bills. 3
How do I update my dining room?
Formal dining rooms were very popular in the 80's - early 2000's. A common room built as a separate room from the kitchen with matching chairs and table, accompanied by a matching large piece of furniture where the wedding china with all its accessories were displayed. It is commonly used on special occasions and holidays, and there was usually a bulky 'leaf' that extended the table to accommodate larger gatherings.
Our nation is in the midst of a serious housing crunch. Last year, a lack of inventory and soaring prices left many would-be homebuyers feeling pinched. But now, with interest rates climbing, many of them are also feeling desperate to lock in a mortgage—which has only added fuel to the fire.1
Fortunately, if you’re a buyer struggling to find a home, we have some good news. While it’s true that higher mortgage rates can decrease your purchasing budget, there are additional ways to compete in a hot market.
Yes, a high offer price gets attention. But most sellers consider a variety of factors when evaluating an offer. With that in mind, here are five tactics you can utilize to sweeten your proposal and outshine your competition.
We can help you weigh the risks and benefits of each tactic and craft a compelling offer designed to get you your dream home—without giving away the farm.
The home office is taking on a whole new meaning. So many are now working from home. A place were you can focus and be creative is key to a functional office. Of course a well-designed office is a plus.
Here are five tips for getting a functional and aestically pleasing home office.
The best way to start planning your office space in your home is determining what you need to efficiently do your work. Do you need more than one monitor, are you doing a lot of Zoom calls/videos, making private phone calls, etc. The answers to these questions will help you plan your space.
Seller’s Checklist: A Timeline to Prep Your Home for Sale
We’re still in a seller’s market, but that doesn’t mean your home is guaranteed to easily sell.1 If you want to maximize your sale price, it’s still important to prepare your home before putting it on the market.
Start by connecting with a real estate agent as soon as possible. Having the eyes and ears of an insightful real estate professional on your side can help you boost your home’s appeal to buyers. What’s more, beginning the preparation process early allows you to tackle repairs and upgrades that can increase your property’s value.
Use the checklist below to figure out what other tasks you should complete in the months leading up to listing your home. While everyone’s situation is unique, these guidelines will help you make sure you’re ready to sell when the time is right. Of course, you can always call us if you’re not sure where to start or what to tackle first. We can help customize a plan that works for you.
AS SOON AS YOU THINK OF SELLING
Some home sellers want to plan their future move far in advance, while others will be required to pack up on very short notice. Whatever your circumstances, these first steps will help assure you’ll be ahead of the listing game.
Formal dining rooms. A waste of space or must have? The answer seems to vary from person to person, family to family. The open concept is so popular in new homes and among families with young children, that the formal dining room is considered wasted space. An extra room is never wasted space to me. An office, a game room, cocktail space or... a way to completely go bold with your dining room design. Let me convince you of the later!
The best part of the dining room is that large wall. To some it seems daunting but there are so many possibilities, a bold wallpaper, wainscoting, or a wood patterned wall. If you are going to do an 'accent wall' this design is the best. See the picture below of the wall I designed for a client. The home is in the historic district and has a long formal living and dining room. A patterned wood accent wall was the perfect way to draw the eye to the end of the room and make a great statement.
It's the reason you purchased your house. The potential of the space for entertaining, dream of a pool, or the fenced in yard for the kids and dog to roam free. Whatever the reason or dream for your backyard space, the best way to fulfill your dreams is to tackle it like any other room in the house. I am sure there will be a lot more sweat equity with an outdoor project by the overall outcome still needs to start with a plan.
Who will be using the space? Having kids and or pets using your backyard is key in deciding how to layout or plan your outdoor space. Small children will need to have areas they can play and be safe for them to use. A pool will most likely need a separate fence just for the pool itself when small children live in the house. Avoiding large change in the levels of the backyard, like sunken fireplaces and concrete steps. If you have large dogs they could ruin flowers and plants, and will need a lawn or area to run and do their business.
How will you use the space? What do you or your family like to do outside? Not everyone has the space for a pool or the time to maintain it. Do you like to play sports? What type of sports or activities does your family like? Horseshoes, bouche ball, putting green, batting cage are all possibilities but all require lots of space. Do you envision BBQ parties and happy hour? An outdoor kitchen and place to eat will be key to host those activities. Like to sit around the fire pit and roast marshmallows? Need places to sit and lay by the pool, and do you want shade options.
Layout: So now that you have a list of what you want in the space, time to layout the areas in the yard. Pool and an outdoor kitchen. Fire pit and eating area. Putting green and outdoor bar. Or all the above. Walking out the space to see how everything will fit within the limits of your property is key, not to mention if your HOA will allow it. Eating area close to the outdoor kitchen. Fire pit on the opposite side of the yard away from the play set. Pergola attached to the house or stand alone.
Our next stop on our room design tour is the Sunroom or Florida room is what we like to call it. It is the space that lets in the most light. Has tons of windows and usually steps off the living room to the side or back of the house. If you don't have one you want one!
It that place that lets you hang outside without the heat. A place where you drink iced tea and read a book or watch the kids play in the sprinklers. Some use their Florida room as their exercise room, office or painting studio. For our purposes we are doing a relaxing, entertaining space that is airy, sophist aced but functional.
Here we go.
1. Neutral base. The best place to start in designing an airy, sunny room is to keep the large areas neutral. The feature of the space is the large windows and views outside. Large furniture pieces like the sofa and chairs need to be a neutral fade and stain resistant fabric. There are some great furniture showrooms that have the Sunbrella fabric or other indoor/outdoor fabric. Ask to see the under side of the fabric, it should have a layer of waterproof protection between fabric and cushion.
Sheer curtains add to the airy feeling. Can you just picture them blowing in the wind, Shades are a practical choice also as long as they can be raised out of site.
2. Bold design. A sunroom is a chance to step out of the box and get bold! A great bold floor tile is ideal for a small space with lots of light. A great patterned tile or simple brick lay or herringbone layout are all great options. I chose a large hexagon tile with a bold color for this design. Lighting is also a great chance to bring in bold accents. A unique fixture like these basket lights add to the outdoor look.
First Impression is everything! In a previous blog we discovered that improvements to curb appeal added the most return on your investment. Read what curb appeal projects got the most return here.
The next step is right inside the door. Entryway, foyer, main hall, whatever word you use for the area, it sets the tone for the rest of your home. What does your entry say about your home, shoe graveyard, mail center or blank slate?
Let's tackle that entryway with a few easy steps.
Move the mail to the kitchen, the trash can is there for the junk mail and you are not going to stand in the hallway looking at mail. Also you don't want the kids stopping inside the door and dropping book bags and shoes etc. The Drop zone is near the garage or further down the hall in a closet or room. The Entryway is for the guests and for you to have a kid-free or junk-free pretty area;)
2. Space Planning.
Is it a grand foyer or small galley? It may not fit a table or a bench, you may just have room for a shelf and a mirror. So measuring the area and determining what can functional fit in the space is key.
This area is the first introduction to your home, your style starts here and is reflected throughout the other rooms. My entryway is the only space that shows my style and is completed, because it doesn't require a big budget and I don't have to decorate around paperwork and a TV;)'
A great way to discover your style preferences is to look at photos of similar entryways. You can do old school with magazine pictures or you can search Pinterest for entryway designs you love. Once you find that dream look you can build your own design based on that photo.
gina t graham
Home Staging and Redesign for Jacksonville, FL.
"Sometimes excellent is not a good enough word. I recommend Gina to everyone who is selling their home and for setting up the next home they buy." -Kit, staging client.