Avoid the Rental Trap in 2023
Avoid the Rental Trap in 2023 If you’re a renter, you likely face an important decision every year: renew your current lease, start a new one, or buy a home. This year is no different. But before you dive too deeply into your options, it helps to understand the true costs of renting moving forward. In the past year, both current renters and new renters have seen their rent go up based on information from realtor.com: “Three out of four renters (74.2%) who have moved in the past 12 months reported seeing their rent increase. The strain from recent rent hikes isn’t exclusive to renters who have recently moved. Nearly two-thirds of renters (63.2%) who have lived in their current rental between 12 and 24 months, and likely renewed their lease, have also reported increases in their rent.” And if you look back at historical data, that shouldn’t come as surprise. That’s because, according to the Census, rents have been rising fairly consistently since 1988 (see graph below): So, if you’re considering renting as an option in 2023, it’s worth weighing whether this trend is likely to continue. The 2023 Housing Forecast from realtor.com expects rents will keep climbing (see graph below): That forecast projects rents will increase by 6.3% in the year ahead (shown in green). When compared to the blue bars in the graph, it’s clear that the 2023 projection doesn’t call for an increase as drastic as the ones renters have seen over the past two years, but it’s still above the historical average for rent hikes between 2013-2019. That means, if you’re planning to rent again this year and you’ve not yet renewed your lease, you may pay more when you do. Homeownership Provides an Alternative to Rising Rents These rising costs may make you reconsider what other alternatives you have. If you’re looking for more stability, it could be time to prioritize homeownership. One of the many benefits of owning your own home is it provides a stable monthly cost that you can lock in for the duration of your loan. As Freddie Mac says: “Monthly rent payments may increase over time, but a fixed-rate mortgage will ensure that you’re paying the same amount each month. With a fixed-rate mortgage, your interest rate is locked in for the life of loan. Steady payments allow you to budget wisely and make plans for the future.” If you’re planning to make a move this year, locking in your monthly housing costs for the duration of your loan can be a major benefit. You’ll avoid wondering if you’ll need to adjust your budget to account for annual increases like you would if you left your housing payment up to your landlord and their renewal cycle. Homeowners also enjoy the added benefit of home equity, which has grown substantially. In fact, the latest Homeowner Equity Insight report from CoreLogic shows the average homeowner gained $34,300 in equity over the last 12 months. As a renter, your rent payment only covers the cost of your dwelling. When you pay your mortgage on a house, you grow your wealth through the forced savings that is your home equity. Bottom Line If you’re thinking of renting this year, it’s important to keep in mind the true costs you’ll face. Let’s chat to see how you can begin your journey to homeownership today.
What Are Your Goals in the Housing Market This Year?
What Are Your Goals in the Housing Market This Year? If buying or selling a home is part of your dreams for 2023, it’s essential for you to understand today’s housing market, define your goals, and work with industry experts to bring your homeownership vision for the new year into focus. In the last year, high inflation had a big impact on the economy, the housing market, and likely on your wallet too. That’s why it’s critical to have a clear understanding of not just the market today, but also what you want out of it when you buy or sell a home. Danielle Hale, Chief Economist at realtor.com, explains: “The key to making a good decision in this challenging housing market is to be laser focused on what you need now and in the years ahead, so that you can stay in your home long enough that buying is a sound financial decision.” Here are a few questions you can start thinking through as you fine tune your goals for 2023. 1. What’s Motivating You? You’re dreaming about making a move for a reason – what is it? No matter what’s happening in the market, there are still many compelling reasons to buy a home today. Your needs may have changed in a way your current house can’t address, or you could be ready to step into homeownership for the first time and have a space that’s truly your own. Use what’s motivating you as a guidepost in partnership with an expert advisor to help make sure your move will give you a lasting sense of accomplishment. 2. What Does Your Next Home Look Like? You know you want to move, but how would you describe your dream home? The available supply of homes for sale has grown, and that could mean more options to choose from when you buy. Just be sure to keep your budget in mind and work with a trusted real estate professional to balance your wants and needs. The better you understand what’s essential and where you can be flexible, the easier it can be to find the home that’s right for you. 3. How Ready Are You To Buy? Getting clear on your budget and savings is essential before you get too far into the process. Working with a local agent and a lender early is the best way to make sure you’re in a good position to buy. This could include planning how much to save for a down payment, getting pre-approved for a home loan, and assessing your current home equity if your move involves selling your existing house. A Professional Will Guide You Through Every Step of the Process Buying or selling a home is a big process that takes expertise to navigate. If that feels a bit overwhelming, you aren’t alone. According to a recent Harris Poll survey, one in five respondents see a lack of information or knowledge about the homebuying process as a barrier from owning a home. Don’t let uncertainty hold you back from your goals this year. A trusted expert can bridge that gap and give you the best advice and information about today’s market. Bottom Line Let’s connect to plan how your dreams for 2023 can become a reality.
3 Best Practices for Selling Your House This Year
A new year brings with it the opportunity for new experiences. If that resonates with you because you’re considering making a move, you’re likely juggling a mix of excitement over your next home and a sense of attachment to your current one. A great way to ease some of those emotions and ensure you’re feeling confident in your decision is to keep these three best practices in mind. 1. Price Your Home Right The housing market shifted in 2022 as mortgage rates rose, buyer demand eased, and the number of homes for sale grew. As a seller, you’ll want to recognize things are different now and price your house appropriately based on where the market is today. Greg McBride, Chief Financial Analyst at Bankrate, explains: “Price your home realistically. This isn’t the housing market of April or May, so buyer traffic will be substantially slower, but appropriately priced homes are still selling quickly.” If you price your house too high, you run the risk of deterring buyers. And if you go too low, you’re leaving money on the table. An experienced real estate agent can help determine what your ideal asking price should be. 2. Keep Your Emotions in Check Today, homeowners are living in their houses longer. According to the National Association of Realtors (NAR), since 1985, the average time a homeowner has owned their home has increased from 5 to 10 years (see graph below): This is several years longer than what used to be the historical norm. The side effect, however, is when you stay in one place for so long, you may get even more emotionally attached to your space. If it’s the first home you bought or the house where your loved ones grew up, it very likely means something extra special to you. Every room has memories, and it’s hard to detach from the sentimental value. For some homeowners, that makes it even harder to negotiate and separate the emotional value of the house from fair market price. That’s why you need a real estate professional to help you with the negotiations along the way. 3. Stage Your Home Properly While you may love your decor and how you’ve customized your home over the years, not all buyers will feel the same way about your design. That’s why it’s so important to make sure you focus on your home’s first impression so it appeals to as many buyers as possible. As NAR says: “Staging is the art of preparing a home to appeal to the greatest number of potential buyers in your market. The right arrangements can move you into a higher price-point and help buyers fall in love the moment they walk through the door.” Buyers want to envision themselves in the space so it truly feels like it could be their own. They need to see themselves inside with their furniture and keepsakes – not your pictures and decorations. A real estate professional can help you with tips to get your house ready to sell. Bottom Line If you’re considering selling your house, let’s connect so you have the help you need to navigate through the process while prioritizing these best practices.
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