With home prices continuing to deliver double-digit increases, some are concerned we’re in a housing bubble like the one in 2006. However, a closer look at the market data indicates this is nothing like 2006 for three major reasons.
1. The housing market isn’t driven by risky mortgage loans.
Back in 2006, nearly everyone could qualify for a loan. The Mortgage Credit Availability Index (MCAI) from the Mortgage Bankers’ Association is an indicator of the availability of mortgage money. The higher the index, the easier it is to obtain a mortgage. The MCAI more than doubled from 2004 (378) to 2006 (869). Today, the index stands at 130. As an example of the difference between today and 2006, let’s look at the volume of mortgages that originated when a buyer had less than a 620 credit score.
Dr. Frank Nothaft, Chief Economist for CoreLogic, reiterates this point:
“There are marked differences in today’s run up in prices compared to 2005, which was a bubble fueled by risky loans and lenient underwriting. Today, loans with high-risk features are absent and mortgage underwriting is prudent.”
2. Homeowners aren’t using their homes as ATMs this time.
During the housing bubble, as prices skyrocketed, people were refinancing their homes and pulling out large sums of cash. As prices began to fall, that caused many to spiral into a negative equity situation (where their mortgage was higher than the value of the house).
Today, homeowners are letting their equity build. Tappable equity is the amount available for homeowners to access before hitting a maximum 80% combined loan-to-value ratio (thus still leaving them with at least 20% equity). In 2006, that number was $4.6 billion. Today, that number stands at over $8 billion.
Yet, the percentage of cash-out refinances (where the homeowner takes out at least 5% more than their original mortgage amount) is half of what it was in 2006.
3. This time, it’s simply a matter of supply and demand.
FOMO (the Fear Of Missing Out) dominated the housing market leading up to the 2006 housing bubble and drove up buyer demand. Back then, housing supply more than kept up as many homeowners put their houses on the market, as evidenced by the over seven months’ supply of existing housing inventory available for sale in 2006. Today, that number is barely two months.
Builders also overbuilt during the bubble but pulled back significantly over the next decade. Sam Khater, VP and Chief Economist, Economic & Housing Research at Freddie Mac, explains that pullback is the major factor in the lack of available inventory today:
“The main driver of the housing shortfall has been the long-term decline in the construction of single-family homes.”
Here’s a chart that quantifies Khater’s remarks:
Today, there are simply not enough homes to keep up with current demand.
Bottom Line
This market is nothing like the run-up to 2006. Bill McBride, the author of the prestigious Calculated Risk blog, predicted the last housing bubble and crash. This is what he has to say about today’s housing market:
“It’s not clear at all to me that things are going to slow down significantly in the near future. In 2005, I had a strong sense that the hot market would turn and that, when it turned, things would get very ugly. Today, I don’t have that sense at all, because all of the fundamentals are there. Demand will be high for a while because Millennials need houses. Prices will keep rising for a while because inventory is so low.”
Whether you’re looking for homes for sale in Lake of the Woods VA or Waterfront property in Virginia we are your Real Estate Advisors for Stafford, Fredericksburg, Spotsylvania, Locust Grove, Central Virginia, and Greater Virginia. Thinking of selling? In any market condition, “what is my home worth?” is the #1 question asked by homeowners. If you wish to sell your home, it needs to be sold for top dollar and in a timely manner. Pricing your home accurately, Pat will partner with you to make the selling process so much easier. Get started today by calling us at (540) 388-2541 or contact Pat Licata.
To see available Lake of the Woods properties, please visit our site.
New construction homes can have hidden costs, which is why you have to pay attention to the details when deciding on a new build.
When touring model homes, always ask the builder about what’s standard and what’s considered an upgraded feature with additional costs.
Buy on your terms and work with our team to navigate the ins and outs of purchasing the new construction home of your dreams!
Don’t Mistake “New Construction” with “All-Inclusive”
There are many advantages of buying a new construction home—low-maintenance living, brand-new appliances, and minimal repair costs are just a few. Plus, a new build provides a blank slate for buyers to begin making sweet new memories!
While buyers should be excited about all these benefits, they should also be aware of the potential hidden costs associated with purchasing a new build. We’re here to ensure you know exactly what is included in the overall cost of your new construction home.
Protect yourself before there’s a problem
Just like an existing home, a brand-new home can have hidden issues that could require repairs. Something as simple as inadequate plumbing or roofing could result in sizable amounts of damage—this is why you have to protect yourself by being proactive in the home-buying process. All builders have their own nuances, which is why you should take the time to research different options before deciding on the right one. If you want some tried and true recommendations, your agent can provide valuable insight. Every home, including new builds, should be checked by an independent home inspector who isn’t affiliated with the builder.
Before you commit to purchasing a new build, make sure to read the fine print of the home warranty. You may have to rely on your warranty if any issues arise that aren’t covered by your homeowners’ insurance policy. And remember, not every warranty is the same, so it’s important to determine exactly what your warranty covers and the length of the coverage.
Stay true to your non-negotiables
Newly-built homes aren’t guaranteed to include all the necessities, so you need to know what to expect from a standard model. It’s quite common for new builds to come without certain interior items, such as appliances and window treatments, plus exterior fencing and landscaping.
Before you make an offer, talk to your builder with your agent present and ask about the features included in your future home. Everything from drawer handles to light fixtures could cost extra, so be sure to compile a list of non-negotiables to budget for things you can’t live without.
Don’t be duped by the mesmerizing model home
The model homes you’ll tour often have all the available upgrades the builder offers—we’re talking gourmet kitchens with granite countertops and open-concept floor plans with beautiful hardwood flooring. However, these top-level features could cost you thousands of dollars more than the builder’s grade basics.
You can work with your agent to figure out which features are included in the standard model’s base price. Be sure to focus on what originally made you fall in love with the property, not all the bells and whistles you see in the showy model. When contemplating which upgrades are worth the cost, think about the home’s future resale value—will the upgrades increase your return on investment and appeal to a variety of buyers? This is a prime opportunity to lean on your agent’s expertise to determine which upgrades will add the most value to your home.
Ready to Buy a New Build?
When you buy a new construction home, you always want to have a trusted real estate agent by your side. Remember, the builder’s sales agent has the builder’s best interest in mind—not yours. We have the new construction experience needed to guide you through the negotiation process and make sure you’re getting your money’s worth. Contact us to learn more about new construction properties in the area, and we’ll get the ball rolling on buying your new home today!
Whether you’re looking for homes for sale in Lake of the Woods VA or Waterfront property in Virginia we are your Real Estate Advisors for Stafford, Fredericksburg, Spotsylvania, Locust Grove, Central Virginia, and Greater Virginia. Thinking of selling? In any market condition, “what is my home worth?” is the #1 question asked by homeowners. If you wish to sell your home, it needs to be sold for top dollar and in a timely manner. Pricing your home accurately, Pat will partner with you to make the selling process so much easier. Get started today by calling us at (540) 388-2541 or contact Pat Licata.
To see available Lake of the Woods properties, please visit our site.
The question of whether the real estate market is a bubble ready to pop seems to be dominating a lot of conversations – and everyone has an opinion. Yet, when it comes down to it, the opinions that carry the most weight are the ones based on experience and expertise.
Here are four expert opinions from professionals and organizations that have devoted their careers to giving great advice to the housing industry.
“… conditions today are quite different than in the early 2000s, particularly in terms of credit availability. The current climb in house prices instead reflects strong demand amid tight supply, helped along by record-low interest rates.”
“The housing market is in line with fundamentals as interest rates are attractive and incomes are high due to fiscal stimulus, making debt servicing relatively affordable and allowing buyers to qualify for larger mortgages. Underwriting standards are still strong, so there is little risk of a bubble developing.”
“It’s not clear at all to me that things are going to slow down significantly in the near future. In 2005, I had a strong sense that the hot market would turn and that, when it turned, things would get very ugly. Today, I don’t have that sense at all, because all of the fundamentals are there. Demand will be high for a while, because Millennials need houses. Prices will keep rising for a while, because inventory is so low.”
“Looking back at the bubble years, house prices exceeded house-buying power in 2006 nationally, but today house-buying power is nearly twice as high as the median sale price nationally…
Many find it hard to believe, but housing is actually undervalued in most markets and the gap between house-buying power and sale prices indicates there’s room for further house price growth in the months to come.”
Bottom Line
All four strongly believe that we’re not in a bubble and won’t see crashing home values as we did in 2008. And they’re not alone – Goldman Sachs, JP Morgan, Morgan Stanley, and Merrill Lynch share the same opinion.
Whether you’re looking for homes for sale in Lake of the Woods VA or Waterfront property in Virginia we are your Real Estate Advisors for Stafford, Fredericksburg, Spotsylvania, Locust Grove, Central Virginia, and Greater Virginia. Thinking of selling? In any market condition, “what is my home worth?” is the #1 question asked by homeowners. If you wish to sell your home, it needs to be sold for top dollar and in a timely manner. Pricing your home accurately, Pat will partner with you to make the selling process so much easier. Get started today by calling us at (540) 388-2541 or contact Pat Licata.
To see available Lake of the Woods properties, please visit our site.
Orange County, Virginia, has become one of the most popular areas for people with families. Even though it’s a mostly rural area, it is still close to large cities like Richmond, DC, Charlottesville, etc. Rural areas and suburbs have become desired locations for families looking for new homes, or vacation homes, especially during the pandemic. With that in mind, we want to cover a simple and useful Virginia home loan guide and get you one step closer to your dream house! Let’s get started!
What is a home loan?
Let’s start by defining what a home loan is. Also known as a mortgage, it is a type of loan used only to purchase a house. A lender creates a contract with the borrower for a specified amount of money. The borrower uses that money to buy a house and pays monthly installments to the lender over a period of 15 to 30 years.
When you start browsing the hottest neighborhoods in Orange County, Virginia, be sure to check with your agent what the average cost of homes is. That will tell you if your credit score will allow you to get the amount you will need to buy a house.
Let’s break down the structure of a monthly loan
One of the most critical parts of our instructional is to teach you how to calculate your monthly payment. To get the amount of your monthly loan payment, take the principal amount (the sum that the lender borrows you) and apply the interest rate to it.
conventional fixed-rate mortgage – a kind of loan that conforms to the size of the loan and your financial budget, and the interest rate is fixed until it is fully paid;
adjustable-rate mortgage – interest rate fluctuates and will change based on the predetermined index;
FHA mortgage – Federal Housing Administration loan has more flexible lending requirements than a conventional loan. It also includes insurance premiums, but more of that in the next section;
VA mortgage – Department of Veteran Affairs loan will allow eligible service members to purchase a home with a low down payment, or without a down payment;
Jumbo mortgage – this type of loan is what you would usually use if you want to purchase a luxury home when the price exceeds conforming loan limits. To get it, you need a high credit score and a low debt-to-income ratio;
What are insurance premiums and property taxes?
When buying a home in Virginia, you also need to pay an annual insurance premium that protects your home from any damage. It also protects you from a financial loss or if someone gets injured on your property. Furthermore, you need to pay quarterly property taxes to your local municipality.
It often happens that a lender pays for both the taxes and insurance premiums. In that case, you will actually pay more than your monthly mortgage payment, and that money goes into your escrow account. Then, the lender uses it to cover the expenses when they are due.
When we consider the cost of purchasing a home, paying your real estate agent, and organizing a relocation, you can see how important it is to precisely calculate all of the expenses and know your financial limit. Through this guide, we will also teach you how to save money whenever possible. Since you cannot cut corners when it comes to paying your lender, you can at least consider consulting Verified Movers, and they will connect you with affordable and licensed moving companies in the area.
What is a promissory note?
When you sign the contract with your lender, there is also a second agreement included. It is called a promissory note, and when you sign it, you oblige yourself to repay your home loan and the interest rate. Furthermore, you pledge to stick to the repayment schedule.
A second mortgage and how to use it
It is a common practice to get a second mortgage after you purchase your house. This loan comes in two forms: home equity loan and home equity line of credit.
While with a home equity loan, you borrow a sum of money and pay it back with interest over time, a home equity line of credit works a bit differently. You can borrow a granted amount of money over time, and you can split it. That means you can borrow one amount during this year and the rest during the following year. This means you can calculate how much money you need, and you are not under the obligation to get the whole sum.
A second mortgage is calculated if you take the total cost of your home and subtract the remaining mortgage balance. If you bought a home worth $150,000, and you have $100,000 to pay, that means you own a percentage of your home in the sum of $50,000. That sum is how much you can borrow for your second mortgage.
One of the major benefits of a second mortgage is that you can spend it on anything you want. While you can do home renovation projects, you can also spend money on anything else, like paying for relocation. With that money, you can hire movers that provide an easy and stress-free process. It will undoubtedly make your life a whole lot easier and free up some time to focus on other more pressing matters.
How to secure a mortgage
When you apply for a mortgage, the first step is to research lenders and find the best interest rates for your pocket. Securing a mortgage is a lengthy process, though. The main requirements are a favorable credit score, a low debt-to-income ratio, and a down payment.
A credit score is considered good if it’s above 670. You can still get it with a lower credit score, but your interest rate will be higher. Your debt-to-income ratio should be below 36%, and the down payment is at least 20% of the price. The higher the down payment is, the lower the interest.
Virginia home loan guide made easy
Do not be frightened by the process of getting a mortgage. We hope that this Virginia home loan guide has everything you need to go through the process with ease. Once you have your dream home secured, you will have a lot to do Virginia and you will never be bored. Best of luck in buying the home of your dreams!
Whether you’re looking for homes for sale in Lake of the Woods VA or Waterfront property in Virginia we are your Real Estate Advisors for Stafford, Fredericksburg, Spotsylvania, Locust Grove, Central Virginia, and Greater Virginia. Thinking of selling? In any market condition, “what is my home worth?” is the #1 question asked by homeowners. If you wish to sell your home, it needs to be sold for top dollar and in a timely manner. Pricing your home accurately, Pat will partner with you to make the selling process so much easier. Get started today by calling us at (540) 388-2541 or contact Pat Licata.
To see available Lake of the Woods properties, please visit our site.
Millennial homebuyers approach home purchases very differently from their parents and grandparents. A modern generation is busy, environmentally conscious, and tech-minded. However, some current housing preferences echo past generations, such as updated bathrooms and kitchens. Still, they have many other features on their priorities list. Here are the home features that millennial homebuyers want.
Low maintenance
Nowadays, people are busier than ever before, so they don’t want to spend their free time keeping up with home issues. More and more millennial homebuyers are looking for homes that require little or no maintenance and home amenities that are quick, efficient, and long-lasting. Popular low maintenance materials are hardwood floors, granite countertops, etc. This generation requires something that looks modern and something easy to wipe up and mop down quickly. Many millennials are families with young children, so they need something convenient more than anything else. They will look for a new roof, new windows, and high-efficiency HVAC systems.
Updated kitchen and bath
Brand-new fixtures in the kitchen and bathroom are essential for millennial homebuyers. Many of them have limited budgets, so their savings will go towards a down payment and furniture. That’s why home updates are critical to them. They need a sense of comfort, but they also opt for “trendy” designs. A kitchen that fits a millennial’s needs is stylish and updated with integrated appliances. Two sinks, lots of cabinets, and a big kitchen island for food preparation and serving will catch the eyes of modern homebuyers.
Renovated kitchens and bathrooms not only catch the eye of a young homebuyer, but they are also among features that make the home sell faster, in case they decide to do it later.
Renovated kitchen and bathroom are among the home features that millennial homebuyers want.
Modern and smart amenities
Millennials look for tech-savvy homes and high-functioning amenities, such as dishwashers, washers, and dryers. Home automation and voice devices pique their interest. They are a generation that grew up with technology, and it will always be an integral part of their lives, integrated into their homes. The ability to interact with a home from a smartphone is becoming common. Automated security, smart heating and cooling, and smart lights are among the home features that millennial homebuyers want.
Energy efficiency
Millennial homebuyers focus on environmental sustainability and decreasing energy costs. That’s why green homes are so popular among modern homebuyers. Energy-efficient features are very important for an environmentally conscious generation. A Home with energy-efficient appliances, double-paned windows, LED lights and a programmable thermostat is something they wish for. They are ready to pay more because they know energy-efficient features save their money in the long run. They will eventually save a lot on utility bills.
Home office
Working from home is increasingly common, so working from the kitchen table is not good or a long-term solution. Millennial homebuyers seek designated office space, where they can be concentrated on work tasks, away from any household distractions. Professional couples who make a living from the home list a home office among their top priorities. Even if the homebuyers don’t work from home, in the well-connected world we live in, it’s good to have a nice and comfy place to sit and focus on daily chores or just relax. Some prefer to play computer games, some will pay the bills online, and everybody writes emails and video chats with their friends. That’s why a home office is a crucial part of what young professionals are looking for in a house.
A home office should also have enough adequate outlets to power up necessary mobile devices. Good wireless service and the internet are an absolute must when it comes to home features that millennial homebuyers want.
Millennial homebuyers seek designated office space as more and more people work from home.
Open concept
In recent years open spaces have become prevalent features – a kitchen well-connected with other areas instead of a formal dining room. Modern home buyers want to cook, socialize and watch TV or listen to music, all at the same time. An open concept is a trend that will continue to be popular for generations to come because of the modern way of living. Open spaces encourage family gatherings and entertaining; they are both social and practical.
Laundry Rooms
Millennials wish to have a separate, well-defined laundry room, with some shelving or a folding table. No more stumbling over piles of laundry. Home laundry is one of the top home features for 2021.
Storage matters
Millennials are looking for separate storage spaces, such as:
Spacious closets
A spacious garage
A walk-in pantry
Rooms need to have space for some creativity and expansion; they need to be multi-functional. If a millennial is not satisfied with current home conditions and has enough money for some updates, they will decide to do some basic renovations to make a new home more up to their needs and lifestyle. If the house doesn’t have as much storage space as it should, a homebuyer may decide to make some changes.
Before renovations, renting a storage unit is an excellent option to keep their belongings out of the way. No matter how minor the remodel, it will imply some dirty work and require clear space. So, they can simplify the process by doing this. While their items lay safely in a secured storage unit, the renovation process can go smoothly and stress-free.
Outdoor spaces
Functional outdoor living spaces rate high on the homebuyer’s priorities list. A simple patio may not be enough for a modern generation’s needs. Today’s homebuyers wish to have a pool, outdoor fireplace, comfy lounge chairs, and even a cozy hammock where they can take an afternoon nap or read a good book. This trend is popular both for the cities with mild weather as it is for those who have only a few precious summer months.
Homebuyers want to have functional outdoor living space for relaxing with their friends and family.
Pet-friendly home
A large number of millennials own at least one dog or a cat. They are looking for houses with backyards, sturdy fencing, and shade trees where their pets will be happy.
Enough space for a family
At the top of most millennials’ list of must-haves, you will also find – enough space for starting a family. They want their home to be comfortable, safe, and kid-friendly.
Dealbreakers
There are few dealbreakers for millennials when it comes to buying a home. Those are usually the features that come with the risk of needing more cash to fix later. A list of dealbreakers includes leaky roofs, foundation issues, or mold, pest, and insect infections. That’s why a home inspection is crucial to make the right choice when buying a home.
Conclusion
Home features that millennial homebuyers want are essential to the real estate industry. So, when marketing your home to millennials, think about all these factors. Understanding homebuyers’ needs may significantly help someone sell the house quickly, which is in everybody’s interest.
Whether you’re looking for homes for sale in Fredericksburg, Stafford, Orange, Locust Grove, Culpeper, Northern Virginia or even Maryland or DC, we are your Real Estate team committed to finding the perfect home for you! Thinking of selling? In any market condition, “what is my home worth?” is the #1 question asked by homeowners. If you wish to sell your home, it needs to be sold for top dollar, and in a timely manner. Pricing your home accurately, one of our area expert advisors will partner with you to make the selling process so much easier. Get started today by calling us at (540) 388-2541 or contact Pat Licata.
To see available properties, please visit our website licatagroup.com
Whether you’re looking for homes for sale in Lake of the Woods VA or Waterfront property in Virginia we are your Real Estate Advisors for Stafford, Fredericksburg, Spotsylvania, Locust Grove, Central Virginia, and Greater Virginia. Thinking of selling? In any market condition, “what is my home worth?” is the #1 question asked by home owners. If you wish to sell your home, it needs to be sold for top dollar and in a timely manner. Pricing your home accurately, Pat will partner with you to make the selling process so much easier. Get started today by calling us at (540) 388-2541 or contact Pat Licata.
To see available Lake of the Woods properties, please visit our site.
Nowadays, Millennials are the fastest-growing generation of consumers in Virginia and the whole of the US. If we look at the statistics, we learn that those born between 1980 and 2000 are tough to sell to. However, one of every three homebuyers is a millennial. And the figure is set to explode in this decade. Therefore, the only thing you really need to know is what Virginia young professionals are looking for in a house if you want to expand your buyer pool and interest them into considering your property.
In this article, we’ll tell you everything you need to know. Firstly, it’s important to mention that there is more than one approach here. Young professionals are aware that there are many reasons why buying a vacation home in Virginia is a great investment. Therefore, you can try to appeal to those looking for a holiday home. Or, you can stick with people who want to live here full time.
Whichever way you choose, it shouldn’t be hard to use the information we’re about to give you. So, sit back and learn what you need to concentrate on.
Updated kitchen and bathroom
We all want to buy a house that has a new kitchen and bath fixtures. However, this seems to be much more important for young professionals than anyone else. As the experts explain, these people are budget-conscious buyers, which is why this is crucial to them.
Most of their budget goes toward down payment and furnishing. And with the kitchen and bathroom being the two most expensive parts of the home to update, they don’t want or can’t afford to deal with them.
On the other hand, you need to be careful with remodeling these two features. Unlike a new roof or plumbing, these fixtures are a matter of taste. So, you can’t be sure that the potential buyers will like it. But, if you manage to do something they like, it won’t be long before you need a reliable moving company like Allstate Moving and Storage to relocate you out of your, now sold, house.
Kitchen and bathroom fixtures should be new when selling to millennials, but try to concentrate on the functionality. Alt tag: A man and a woman in the kitchen talking about what Virginia young professionals are looking for in a house.
Good location
Young buyers have experienced some things that their parents didn’t when they were the same age. And “these things” include high gas prices and high-volume traffic. These are the reasons why they tend to see location a lot differently from their parents.
In cities, they are looking for places that are in close proximity to public transport and pleasant for walking. However, in rural areas, the priority is on entertainment options. So, it certainly helps that there are many exciting things to do in Orange County, Virginia. Remember that rural areas are usually attractive for buyers with children. Therefore, make sure to stage your house correctly because people looking at it should be able to imagine themselves living there as soon as they walk through the door.
Low maintenance
The next thing on our list of what Virginia young professionals are looking for in a house is low maintenance. What this means is that low-upkeep features like wooden floors and granite countertops are the things that can get you a sale. Anything that is relatively hassle-free and still attractive is always a great bonus with this generation.
Take a look at this example to understand better what we’re on about. You see, when you’re moving locally in Virginia, you always make sure your belongings arrive safely to a new location, right? Well, the younger generation you’re selling to would probably rather dispose of everything they already have and buy new things when they get to a new house. Millennials grew up watching their parents spend weekends repairing things and doing chores, and they want to avoid that at all costs. They don’t want to do that stuff, and you should provide them with that opportunity.
Wooden floors are much more resistant and easier to clean; that’s why young buyers love them. Alt tag: Dog sitting on the floor.
Home office
According to US Census data, more than 13 million Americans work from home. And if you factor in all the recent developments regarding the COVID-19 outbreak, it’s clear that this number is a bit higher nowadays. Additionally, it seems that the trend of working from home won’t stop any time soon, so it’s clear why having a home office is so important for many buyers.
These rooms have vast appeal. However, it’s also essential to present them in the right way. Most agents will point out that you can use this room as an office or other flex living space, especially if it’s still staged as a bedroom. If you want to give yourself the best chance of selling, read our tips for showing your home to potential buyers. You’ll find lots of good advice in that article.
Energy efficiency
Since energy costs are on the rise, and there’s a growing interest in protecting the environment, young professionals are very often interested in buying green homes. However, the interesting thing is that they’re not alone.
These days both young buyers and buyers in general are at a constant lookout for energy-efficient homes. If the house is not yet set for the energy efficiency they’re after, buyers will usually factor in the cost of conversion.
On the other hand, it’s important to mention that most buyers still focus on insulation levels, seasonal energy-efficiency, and other factors. So, make sure not to rush with green-washing your home just yet. Explore your local market and find out what kinds of holes you need to fill with your offer.
Although it’s not first on the list, when you ask yourself what Virginia young professionals are looking for in a house, energy efficiency comes to mind. Alt tag: Solar panels on the roof of a house.
Other important factors
Of course, there are many more things you should think about, so here are some additional assets most millennial buyers are looking for:
Technological capabilities. The important things here are the internet and cell service. Forget about landline phones and cable.
Proper staging. Many potential buyers watch real estate TV shows, so they’ll expect a higher staging level when they arrive to see a house.
As you can see, when it comes to what Virginia young professionals are looking for in a house, there are quite a few things to consider. Remember that these are bonuses. Ideally, you’ll have them all, but your home still can sell without much trouble, even with just a few features.
Meta: Find out what Virginia young professionals are looking for in a house. Learn how to stage it and which things you should focus on the most.
Whether you’re looking for homes for sale in Fredericksburg, Stafford, Orange, Locust Grove, Culpeper, Northern Virginia or even Maryland or DC, we are your Real Estate team committed to finding the perfect home for you! Thinking of selling? In any market condition, “what is my home worth?” is the #1 question asked by homeowners. If you wish to sell your home, it needs to be sold for top dollar, and in a timely manner. Pricing your home accurately, one of our area expert advisors will partner with you to make the selling process so much easier. Get started today by calling us at (540) 388-2541 or contact Pat Licata.
To see available properties, please visit our website licatagroup.com
As we come to the end of this four-part series, we look to examine the outcome that we will face once this is all over. With that in mind, we ask ourselves the final question; are we going to see the same outcome and devastation that we saw in 2008?
One of the key factors in buying and selling a home is the confidence that people have, and in times like these, memories of past experiences come back to us as we recall all the uncertainties that we faced. But the focus cannot be on what has occurred in the past, but rather what is occurring today and the days to come. With that, we look to see what is being said from the Federal Housing Administration.
The Federal Housing Administration indicated it is enacting an “immediate foreclosure and eviction moratorium for single family homeowners with FHA-insured mortgages” for the next 60 days. The Federal Housing Finance Agency announced it is directing Fannie Mae and Freddie Mac to suspend foreclosures and evictions for “at least 60 days.”
What we are seeing is things in 2008 that we got wrong that you are now seeing the government respond to in regard to the needs that the consumers and the industry have so that It doesn’t happen again. We are seeing how banks are going to respond individually to borrowers in those situations. Actions like this show that the way this is being handled is significantly different than back then, and there are also structural actions that we can look at that are very different now. The visuals provided below will help to better illustrate this.
This first visual shows us exactly where we were in 2008, and what you’ll notice is that there were $828 Billion in cash out refinances back then, and homes were basically being used as ATM machines to which cash was being taken out to harvest equity from their home, a lot of which was being put in depreciating assets. When we start to look at today in the last 3 years, cash out refinances are a fraction of what they were leading up to 2008. What this entails, is that people have learned their lesson and are no longer doing what they have done in the past with the equity in their homes, and today the equity position is very different than what it once was, with over 50% of homes in the united states having over 50% equity. In 2008, people were walking away from homes when they had negative equity, but that is no longer the case.
We are in a very different situation today than we were back then. Those that fail to learn from history are doomed to repeat it, and its fair to say that the government and the American people have learned their lesson.
As we started out this year, we saw a market where income is rising, and mortgage rates have been falling. What this has created is a drop for the historic norm in the payment as a % of income, as demonstrated in the visual above. Historically speaking, the norm percentage of income that has been dedicated to their mortgage has been 21.2%, and right now what we’ve seen leading into this, is that number being 14.8%. This is significantly lower than the historic norm speaking in leverage to the consumer in relative to housing.
In conclusion, what we are seeing now and, in the months/years to come is not going to be the same as we saw after the crash in 2008. Homeowners have learned from their past mistakes, and the government is taking the necessary precautions to ensure that history does not repeat itself. While the uncertainty factor remains for a lot of what is occurring in the county and the world, it can be said with confidence that we will come out of this stronger, and better than going into it.
We hope that this four-part series has shed some light into the biggest questions that you may have right now. If you have any other questions about the current market and what’s to come, feel free to give us a call at (540) 388-2541.
Moving into part three of our four part series, the next question that we need to ask is: Are we headed towards another recession, and what does that mean?
When we talk about where we are today, the reality is that we can feel the slowdown occurring across the county, and it will continue to have an impact on economic activity. When addressing this question/concern, we have to ask ourselves what a recession truly is. A recession is a slowdown in economic activity. Now when we hear the word “recession” we immediately have these ideas and thoughts of what the prior recession was. If we talk about an economic slowdown, it’s very different, and keeping that in mind as we continue to talk about it is critically important in these times. To help discuss this, we’ll turn to the experts. Bill McBride from Calculated Risk had this to say:
“With this sudden economic stop, and with many states shutting down by closing down schools, bars restaurants etc. my view is the US economy is now in a recession (started in March 2020), and GDP will decline sharply in Q2 (as Goldman Sachs is forecasting). The length of the recession will depend on the course of the pandemic.”
Now certainly we can say that we are feeling this slowdown, and it can be said that we will continue to feel this throughout the course of the pandemic. If we look at where we were in 2008 compared to today, 2008 was like a tornado that had ripped through our town and tore things that had to be slowly rebuilt over time, and what we are experiencing today is a heavy snowstorm that is shutting things down. What we do know is that as time moves on, we will start to see things open back up again. We will be able to go to bars, restaurants and sporting events with the only challenge being getting into these places as everyone is going to be out and about.
Looking at that graphically speaking, the figure above provided by Goldman Sachs begins to show a “V” of recovery, and not a “U” like we saw in 2008, being a sharp decline followed by a sharp increase displaying further strong gains as we head into 2021. When looking at what the experts have to say, Wells Fargo agrees as well, saying “We do not expect a repeat of the severe recession of 2008-2009, because the virus and oil shocks are not endemic to the financial system, but are, rather, external. Once the virus infection rate peaks, we expect a recovery to gain momentum into the final quarter of the year and especially into 2021.”
Referring back to the analogy previously used, we will not have to rebuild our financial system like in 2008. Once the snow melts from this current storm, things will kick in, and that’s why we see that “V” curve instead of the “U” curve.
So rather than use the actual word “recession” we should look to use the definition, being an “economic slowdown” and if that does happen, we need to look at our history of events that have shown similarities to what is occurring, and what we can expect to see moving forward. The visual provided below shows what has occurred with changes in home price over the last 5 recessions.
What we can see from this graphic is that in three of the last five recessions, home prices actually increased as a result. We did see a slight decrease in 1991, but what we all really remember is the significant decrease shown in 2008.
The message that needs to be taken from this is that recession does not equal a housing crisis.
As we continue to look for answers to some of the biggest
questions surrounding this crisis, we start to wonder what kind of effect the
stock market has on the housing market, and how much of an impact we will see
as a result. We begin by asking ourselves; When the stock market goes down as
quickly has it has been, does it have a tremendous effect on home prices?
Often the best answers to questions is another question itself, and in this case, we look to the last crisis that occurred; being the crash of 2008. So, we ask, will this be just like 2008?
To help answer this, we take a look at the graph provided above which shows the crash of 2008, to the S&P Correction of the same time. The graph illustrates the S&P Correction at 51% during that time, and the Annual Home Price Deprecation that occurred just under 20%.
In a quote by David Rosenberg, he explains that what we are experiencing now has more in common with what we experienced in 2001 (9/11) than with 2008.
“What 9/11 has in common with what is happening today is
that this shock has also generated fear, angst, and anxiety among the general
public. People avoided crowds then as they believed another terrorist attack
was coming and are acting the same today to avoid getting sick. The same parts
of the economy are under pressure – airlines, leisure, hospitality,
restaurants, entertainment – consumer discretionary services in general.” –
David Rosenberg, Gluskin Sheff + Associates Inc.’s Chief Economist.
When breaking down what was said by Mr. Rosenberg, we can see that this event lines up more with how we acted when 9/11 occurred. To help better illustrate this comparison, we will look at the graph below similarly as we did for 2008, but instead observe what occurred with 9/11 as well as the Dot.com crash.
Here we can see that the S&P Correction was at 45%,
however cumulatively over the same time, Housing Price Appreciation was
up almost 24%. This shows that housing reacted very differently during 9/11 and
the Dot.com crash compared to how it reacted in 2008. This visual helps make
the case that it’s not unreasonable to say that if what we’re experiencing
right now is a lot more like 9/11 and not 2008, than the housing market will react a lot more
like it did during 9/11 and the Dot.com crash than it did in 2008. Annual Home
Price Appreciation reacted very well, and based of off what’s occurred so far,
we can make the argument that we are seeing similar situations now.
When the pandemic began, the housing market was off to a tremendous start, with home sale reports showing the highest number of houses sold within the last 13 years, on an annual basis. While a bit of a slowdown has occurred due to the events going on, we can say that when this is all over, and it will be, we can expect the market to come roaring back and continue that trend that started the year off.
