REAL ESTATE NEWS - April 2022
Brought to you by Sarah Marrinan IN THE NEWS: See the newsletter from last month.
IT'S MONDAY. April 18th. TAXES ARE DUE TODAY
According to the National Retail Federation, just over half of Americans who receive a tax refund this year plan on putting it toward their savings. Another 33% will put it toward their debt, while only 8% plan on using it on a “splurge” purchase.
In non-tax-related news, lumber prices have dropped as the mortgage market has slowed. Lumber now comes in at $829 per 1,000 board feet, which is down 39% from its 2022 high of $1,357 in March. Today’s price, though, is still nowhere near pre-pandemic levels of $300 – $500.
Higher Interest Rates Are Here
Many homebuyers are hitting their financial limits just as the prime homebuying season kicks off this spring. Rising costs of just about everything are eating into down payment funds. Mortgage rates, which rose nearly a point and a half in the past year and are expected to keep going up throughout the year, are adding hundreds of dollars to the monthly payments of today’s buyers. And yet home prices just keep ratcheting up while the number of properties for sale continues to dwindle.
How can we slow home price growth and prevent a crash?
The Federal Reserve Bank of Dallas set off alarm bells when it warned of signs of a brewing housing bubble as “purchases arising from a ‘fear of missing out’ can drive up prices and heighten expectations of strong house-price gains,” according to a recent paper.
The previous housing bubble was caused primarily by poor lending practices (and consumers that didn't understand what they were getting into). A bubble now could be partially caused by FOMO. Many real estate agents suggests buyers waive contingencies and "guarantee" prices higher than appraised value with the good intention of helping their buyer "win the house" but it's causing unsustainable price growth. As long as buyers are desperate to get a house and willing to overspend, this price growth will continue... and the buyer pool with dwindle... until the prices and rates are so high buyers just can't buy... and those that bought high will be stuck and can't sell... and the inventory issues may continue...feeding the rental market...
STOCKS or REAL ESTATE?
Stocks had a wild 2021, with more than 10 million new brokerage accounts opened in the first half of the year alone, about equivalent to all of 2020. No wonder, considering the NASDAQ Composite Index was up 68% during November 2021 from February 2020.
After looking at the historical performance of stock prices and home values, however, real estate proves to be much less volatile and more resilient to downturns in the economy than major indices like the NASDAQ.
Twin Cities Homes Sales
While sales are slowing in some segments, others are still growing. Interested in what your market segment is doing? Contact me for a 10 minute zoom call that will drill deep into stats that matter specifically to you.
Cryptocurrency and NFTs.
A brief side note on our new friends: cryptocurrency and NFTs. These assets are relatively new to investors, and at least in part due to their relatively short time in existence, price volatility of these assets is high.
Inflation.
With the Consumer Price Index (CPI) skyrocketing 8.5% YoY in March, inflation is at the top of everyone’s minds. As inflation rises, the consumer’s purchasing power decreases, which is why it’s generally a bad idea to keep an excess of cash and a good idea to diversify one’s assets.
FROM MY BLOGS:
Track Your Home Equity
The equity you have in your home is the difference between the value of your home and the debt you owe on the home.
How Does Inflation Affect Home Prices?
If you’ve followed the news lately, you’ve probably seen quite a bit about inflation. The consumer price index jumped 0.8% in February, bringing the total increase over the last 12 months to 7.9% – this is the largest annual jump in the last 40 years... READ MORE
Easter Egg Hunt Success!
The Egg Hunt, Bunny & Games on Saturday, April 9th, 2022 was awesome! Follow me on Facebook to see great upcoming events!
Sarah Marrinan Awarded Diamond Elite at EVX
ENGEL & VÖLKERS held their annual conference in Las Vegas in early March where they hand out awards... READ MORE
Home Seller Timeline
In the March Issue of Lino Living, I wrote about the timeline to sell your home. It gives a good overview of the selling process and where to start. If you don't receive that publication, please reply and I will send you a PDF copy.
Is it the right time for you to sell your home?
Determining the best time to sell likely requires you to reflect on your home and lifestyle. Certain months may have stronger market activity, but what really signifies if you’re ready to sell are the following personal indicators: Read More |
