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Natural Elements in Interior Designs
Interior designers understand that people feel grounded and calm when surrounded by organic elements. Natural materials can add a touch of organic beauty and create a serene, refreshing atmosphere in your home.To bring a bit of outdoor magic into your living space, choose furnishings, surfaces and colors that echo nature’s beauty. Natural materials lend a sense of comfort and familiarity whether you prefer modern, rustic or minimalist style.Stone and brick are timeless, and interior designers keep these fresh by combining them with new colors, textures and shapes. Consider a stone or brick hearth if you prefer a classic look that projects warmth and coziness.Live plants are the ultimate natural decor choice. They lend color and vibrancy with the added benefit of cleaning the air you breathe. Try creating a living wall with moss or other plants for a serious oxygen boost and a literal twist to the idea of a “living” room.Warm up your space even more with wood flooring, furniture and accents. Find pieces and textures that coordinate with your decor — they can be as traditional or as modern as you like. Exposed beams, stained window frames and wall paneling can transform an ordinary room into a one-of-a-kind retreat. Personalize with wood accent pieces like artistic carvings or bowls.If you want to add character along with a nod to sustainability, try repurposing old wood or choose materials like bamboo and rattan. Versatile and stylish, these natural materials make great design choices for unique furnishings, durable flooring, elegant storage baskets, and chic decor.
Homebuyers Are Getting Used to the New Normal
Before you decide to sell your house, it’s important to know what you can expect in the current housing market. One positive trend right now is homebuyers are adapting to today’s mortgage rates and getting used to them as the new normal.
To better understand what’s been happening with mortgage rates lately, the graph below shows the trend for the 30-year fixed mortgage rate from Freddie Mac since last October. As you can see, rates have been between 6% and 7% pretty consistently for the past nine months:
According to Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), mortgage rates play a significant role in buyer demand and, by extension, home sales. Yun highlights the positive impact of stable rates:
“Mortgage rates heavily influence the direction of home sales. Relatively steady rates have led to several consecutive months of consistent home sales.”
As a seller, hearing that home sales are consistent right now is good news. It means buyers are out there and actively purchasing homes. Here’s a bit more context on how mortgage rates have impacted demand recently.
When mortgage rates surged dramatically last year, escalating from roughly 3% to 7%, many potential buyers felt a bit of sticker shock and decided to hold off on their plans to purchase a home. However, as time has passed, that initial shock has worn off. Buyers have grown more accustomed to current mortgage rates and have accepted that the record-low rates of the last few years are behind us. As Doug Duncan, SVP and Chief Economist at Fannie Mae, says:
“. . . consumers are adapting to the idea that higher mortgage rates will likely stick around for the foreseeable future.”
In fact, a recent survey by Freddie Mac reveals 18% of respondents say they’re likely to buy a home in the next six months. That means nearly one out of every five people surveyed plan to buy in the near future. And that goes to show buyers are planning to be active in the months ahead.
Of course, mortgage rates aren’t the sole factor affecting buyer demand. No matter where mortgage rates stand, people will always have reasons to move, whether it’s for job relocation, changing households, or any other personal motivation. As a seller, you can feel confident there is a market for your house today. And that demand is pretty strong as buyers settle into where rates are right now.
Bottom Line
The way buyers perceive today’s mortgage rates is shifting – they’re getting used to the new normal. Steady rates are contributing to strong buyer demand and consistent home sales. Let’s connect so we can get your house on the market and in front of those buyers.
Explaining Today’s Mortgage Rates
If you’re following mortgage rates because you know they impact your borrowing costs, you may be wondering what the future holds for them. Unfortunately, there’s no easy way to answer that question because mortgage rates are notoriously hard to forecast.
But, there’s one thing that’s historically a good indicator of what’ll happen with rates, and that’s the relationship between the 30-Year Mortgage Rate and the 10-Year Treasury Yield. Here’s a graph showing those two metrics since Freddie Mac started keeping mortgage rate records in 1972:
As the graph shows, historically, the average spread between the two over the last 50 years was 1.72 percentage points (also commonly referred to as 172 basis points). If you look at the trend line you can see when the Treasury Yield trends up, mortgage rates will usually respond. And, when the Yield drops, mortgage rates tend to follow. While they typically move in sync like this, the gap between the two has remained about 1.72 percentage points for quite some time. But, what’s crucial to notice is that spread is widening far beyond the norm lately (see graph below):
If you’re asking yourself: what’s pushing the spread beyond its typical average? It’s primarily because of uncertainty in the financial markets. Factors such as inflation, other economic drivers, and the policy and decisions from the Federal Reserve (The Fed) are all influencing mortgage rates and a widening spread.
Why Does This Matter for You?
This may feel overly technical and granular, but here’s why homebuyers like you should understand the spread. It means, based on the normal historical gap between the two, there’s room for mortgage rates to improve today.
And, experts think that’s what lies ahead as long as inflation continues to cool. As Odeta Kushi, Deputy Chief Economist at First American, explains:
“It’s reasonable to assume that the spread and, therefore, mortgage rates will retreat in the second half of the year if the Fed takes its foot off the monetary tightening pedal . . . However, it’s unlikely that the spread will return to its historical average of 170 basis points, as some risks are here to stay.”
Similarly, an article from Forbes says:
“Though housing market watchers expect mortgage rates to remain elevated amid ongoing economic uncertainty and the Federal Reserve’s rate-hiking war on inflation, they believe rates peaked last fall and will decline—to some degree—later this year, barring any unforeseen surprises.”
Bottom Line
If you’re either a first-time home buyer or a current homeowner thinking of moving into a home that better fits your current needs, keep on top of what’s happening with mortgage rates and what experts think will happen in the coming months.
Owning Your Home Helps You Build Wealth
You may have heard some people say it’s better to rent than buy a home right now. But, even today, there are lots of good reasons to become a homeowner. One of them is that owning a home is typically viewed as a good long-term investment that helps your net worth grow over time.
Homeownership Builds Wealth Regardless of Income Level
You may be surprised to learn homeowners across various income levels have a much higher net worth than renters who make the same amount. Data from First American helps illustrate this point (see graph below):
What makes wealth so much higher for homeowners? A recent article from Realtor.com says:
“Homeownership has long been tied to building wealth—and for good reason. Instead of throwing rent money out the window each month, owning a home allows you to build home equity. And over time, equity can turn your mortgage debt into a sizeable asset.”
Basically, the wealth you accumulate when you own a home has a lot to do with equity. As a homeowner, equity is built up as you pay down your loan and as home prices appreciate over time. Mark Fleming, Chief Economist at First American, explains how this same benefit isn’t true for renters in a recent podcast:
“Renters as non-homeowners gain no wealth benefit as home prices rise. That wealth actually accrues to the landlord.”
Before you decide to sign another rental agreement, now is a good time to think about whether it would be better for you to buy a home instead. The best way to figure out what makes sense for you is to have a conversation with a real estate expert you trust. That professional can talk you through the benefits that come with owning to determine if that’s the right next step for you.
Bottom Line
If you’re not sure whether to keep renting or to buy a home, know that owning a home, no matter how much money you make, can help build your wealth. Let’s connect now to get started on the path to homeownership.
Refresh or Remodel?
Would you like to refresh the look of your home quickly and affordably without the chaos of remodeling? You might be amazed at the dramatic impact small changes can make. So before committing to a costly remodel, consider these projects you can finish in a weekend or two.KitchenPaint or stain cabinets and replace hardware. Install pendant lighting above the island or breakfast bar.BathroomUpdate plumbing fixtures and add attractive shelving. Replace large mirrors with smaller, framed mirrors for an instant upgrade.Living RoomModernize your living space with fresh paint in a trending color. Add a stylish area rug to complement the new wall color.WindowsReplace dated window treatments with contemporary blinds or modern draperies. Make your ceiling appear taller by hanging curtain rods higher than your window frame.OutsidePaint your front door and replace old hardware. Clean patio furniture and replace cushions if needed. Add some large potted plants to your deck or patio.
Working With a Contractor
Home renovations often require the expertise of skilled workers. If you need professional help with your project, start with a qualified contractor. Here, we offer tips to help you navigate a client-contractor relationship.Define your project. Create a comprehensive project plan that outlines your goals, budget, timeline, and specific requirements. A well-defined plan helps ensure you and your contractor are on the same page.Sign a detailed contract. Your contract should include a detailed scope of work, payment terms, project timeline, and any other relevant details. Be sure to maintain a signed copy of the contract and put additional changes you want to make in writing.Communicate clearly. State your expectations, preferences and concerns throughout the process. As the project progresses, meet regularly for updates.Track change orders and costs. Alterations to your original plan are inevitable as your vision changes or unexpected issues arise. Keep a written record of all modifications and associated costs. Insist that your contractor provide change orders that both parties sign before initiating any work outside the original scope of the renovations.Get the proper approvals. Many home improvement projects, even small ones, require building permits. While it’s generally the contractor’s responsibility to pull the permits, it’s in the homeowner’s best interest to follow up with the contractor to ensure approvals are obtained. Before work begins, double-check that you have the required documentation. This extra vigilance can save you many headaches down the road.
©2023 The Personal Marketing Company. All rights reserved. Reproductions in any form, in part or in whole, are prohibited without written permission. If your property is currently listed for sale or lease, this is not intended as a solicitation of that listing. The material in this publication is for your information only and not intended to be used in lieu of seeking additional consumer or professional advice. All trademarked names or quotations are registered trademarks of their respective owners.
Keep Your Lawn Green With Less Water
Do you wish for a lush lawn without the high water bills? Fortunately, there are several ways to keep your grass fresh and green while conserving water.Choose Drought-Resistant GrassCertain types of grass stay green with less water. Consider reseeding with species like tall fescue or buffalo grass. Check with your local garden center for varieties that are best for your area.Use a Rain Barrel SystemStore rainwater by directing runoff from your gutter into a storage barrel. You can purchase an irrigation kit that attaches to the bottom of the barrel, then use the stored water when things get dry.Keep Your Grass TallerLonger grass can help lock in moisture, while short grass allows water to evaporate more easily. Keep your lawn mower deck between 3½ to 5 inches high to help conserve water and hold moisture in the soil. Be sure your mower blades are sharp.Resist the Urge To BagAn even layer of lawn clippings helps maintain moisture and provides a source of nutrients to keep your lawn green and healthy.
Putting in a Pool? Consider the Facts
Is your heart set on a backyard pool where friends and family drift around in floating chairs while soaking up the sun? Before you dive in, consider the costs versus the long-term value of such a major investment.Depending on size, design and location, the average price of an in-ground pool can range from $35,000 to $65,000. Most insurance companies and/or local municipal codes require a specific type of fence, so be sure this cost is included in your budget.Aside from their upfront investment, pool owners may spend up to $4,000 per year on water, heating, chemicals, and maintenance.Consider these additional variables as you weigh the pros and cons of building a pool.ValueThe addition of an in-ground pool may or may not increase the property value of a home. According to the National Association of Realtors®, the average homeowner will see about a 56% return on investment (ROI) at resale.RegionROI is far better in climates where you can use a pool year-round. If you live in a community where a pool is an expected amenity, you may recover more of the initial expense. But it’s important to remember some buyers consider a pool a liability.SettingPools that don’t monopolize an entire backyard are more desirable to potential buyers, so try not to sacrifice too much of your green space. Pay close attention to local codes and restrictions, as many communities have specific guidelines for a pool’s location in relation to property lines.If you decide that the lifestyle benefits of a backyard pool outweigh the financial impact, jump in — the water’s fine!
Home sales declined but so did listings, so Twin Cities buyers still pay above asking
During April, the median price of all closings was $367,500, a nearly 4% increase from the previous month but a 0.7% decline compared with last year.
Home prices in the Twin Cities last month marked their first annual decline in more than a decade, but with house listings also on the decline, sellers still nabbed their asking price or more.
During April, the median price of all closings was $367,500, a nearly 4% increase from the previous month but a 0.7% decline compared with last year, according to a monthly report from the Minneapolis Area Realtors.
“Homeowners sometimes panic when prices soften while buyers often rejoice,” said Jerry Moscowitz, president of Minneapolis Area Realtors, in a statement. “But it’s important to remember that it simply reflects the cross-section of homes selling and doesn’t necessarily affect your home’s value.”
During April, sellers listed 5,170 properties, nearly 30% fewer than last year. That caused the total number of homes for sale to post a 4.5% annual decline. With far fewer new houses hitting the market than last year, buyers are acting fast. On average, houses sold in 45 days, more than twice as slow as last year but far quicker than normal.
At the current sale pace, there were enough houses for sale to last 1.5 months. The market is considered evenly balanced between buyers and sellers where there’s a four- to six-month supply of listings. Statewide, the trends were similar. Pending sales were down 29%, and new listings were down nearly as much, according to a separate report the Minnesota Realtors released. That report, which includes every region of the state, showed the median price of all closings during the month was $335,000, a 1.5% decline from last year.
At the end of month, the total number of listings still on the market was up only 1%, slightly less than the metro average, according to the state association. The biggest decline in closings was in the Arrowhead region, where sales were down 43% compared to last year. Closings were down the least in the middle of the state in the North Central region, which saw a decline of just 21%.
Powerful Job Market Fuels Homebuyer Demand
The spring housing market has been surprisingly active this year. Even with affordability challenges and a limited number of homes for sale, buyer demand is strong, and getting stronger.
One way we know there are interested buyers right now is because showing traffic is up. Data from the latest ShowingTime Showing Index, which is a measure of buyers actively touring homes, makes it clear more people are out looking at homes than there were prior to the pandemic (see graph below):
And though there’s less traffic than the buyer frenzy of the past couple of years, we’re not far off that pace. There are a lot of interested buyers checking out available homes right now.
But why are buyers so active at a time when mortgage rates are higher than they were just last year?
The Job Market Is Growing at a Stronger-Than-Expected Pace
With inflation still high, the Federal Reserve (the Fed) repeatedly hiking the Federal Funds Rate, and a lot of chatter in the media about a recession, it might surprise you just how strong today’s job market is. What might be even more surprising is the fact that it appears to be getting stronger (see graph below):
Each month, the Bureau of Labor Statistics (BLS) reports how many new jobs were added to the U.S. job market. The graph above shows 88,000 more jobs were created in April than in March. In fact, the April numbers beat expert projections. That’s a solid indicator the job market is growing.
Unemployment Is at a Near All-Time Low
Ever since the Fed began fighting inflation, many people expected the low unemployment rate we’ve seen over the past couple of years to rise – but that hasn’t happened.
In fact, what has happened is the unemployment rate has dropped to 3.4% – a 50-year low (see graph below):
With so many people steadily employed and financially stable right now, they’re still able to seriously consider buying a home.
What This Means for You
If you’re thinking about selling your house this year, a market with active buyers is music to your ears. That’s because there’ll be increased interest in your home when you put it on the market, especially at a time when the number of homes for sale is so low.
To get started, your best resource is an experienced real estate agent. They can help you price your house appropriately, navigate the offers you’ll receive, negotiate effectively, and minimize your stress and hassle.
Bottom Line
There are plenty of buyers out there right now trying to find a home that fits their needs. That’s because the job market is strong, and many people have the stable income needed to seriously consider homeownership. To put your house on the market and get in on the action, let’s connect.
