Thinking about selling your home? You’ve likely got a thousand questions swimming around in your head, but there’s one that tends to stick out in homeowners’ minds above the others: What’s my home worth? Your real estate agent will be your greatest resource in answering this question once you’ve decided you’re ready to sell your home, but knowing how to research home prices on your own beforehand will help to inform those conversations. Here are some of the ways you can make good use of your time before you put your home on the market.
What’s your home worth?
Automated Valuation Models (AVMs) are a great first step in understanding home value but aren’t nearly as comprehensive as your agent’s market analysis. They compare your home against other comparable listings in your area to estimate your home’s selling price. Windermere’s Home Worth Calculator evaluates your property and the surrounding market to give you an idea of what your home is worth. Try it here:
How to Research Home Prices
Though AVMs help you research home prices, to say they’re 100% accurate is one of the most common myths of the selling process. To fully understand what your home is worth, you need a real estate agent’s expertise. They’ll conduct a comprehensive Comparative Market Analysis (CMA) to accurately and competitively price your home. An agent’s CMA compares your home to similar listings in your area, sifting through tons of data on the Multiple Listing Service (MLS), a huge network where agents can share information regarding available listings. Here, your agent can maximize the visibility of your listing and easily connect with buyer’s agents to start a conversation about buying your home.
Your local real estate market conditions should be a point of emphasis in your pre-selling research. Generally speaking, there are three types of markets you could be faced with as a seller: a seller’s market, a buyer’s market, and a balanced market. Each market will have different implications for how you and your agent approach negotiations, how you interpret buyers’ offers, and your philosophy regarding the terms of common real estate contingencies tied to different offers. And maybe of greatest relevance to you, knowing more about your local market conditions will help you understand a bit more about what price your home could sell for. To see the latest housing data on home prices, home sales, and more in your area, visit our Market Updates page:
Finding the Right Agent
Besides all the number-crunching, some of the most helpful research you can do on your own is finding the right real estate agent. Getting referrals from family members or friends is a great starting point, but it’s still worth it to make sure the agent is right for you. Yes, their business acumen should be a priority, but remember that you’ll be together through all the ups and downs of the selling process, so it’s just as important that you connect on a personal level as well. If you’re looking for an agent with a specific specialty, identify professionals that have the certifications and designations to match.
Windermere Chief Economist Matthew Gardner gives an updated look at U.S. home prices and housing affordability in 2023 by examining two key second-quarter reports from ATTOM Data Solutions and the National Association of Home Builders (NAHB).
This video is the latest in our Monday with Matthew series with Windermere Chief Economist Matthew Gardner. Each month, he analyzes the most up-to-date U.S. housing data to keep you well-informed about what’s going on in the real estate market.
U.S. Home Prices 2023
Hello there, I’m Windermere Real Estate’s Chief Economist Matthew Gardner and welcome to this month’s episode of Monday with Matthew. Today we are going to look at home prices and housing affordability. To do this I will be looking at the second quarter sales price data from ATTOM Data Solutions and we will also look at the just released National Association of Home Builders Housing Opportunity Index for the second quarter.
Are home prices dropping?
Starting with the year-over-year change in sale prices at the state level, there aren’t any great surprises. For the past several months I’ve been saying that as the Western U.S. saw the greatest price growth during the pandemic, so it’s not surprising to see most states sale prices in the quarter below the level seen a year ago. But it was pleasing to see that sale prices in 36 states either matched the level seen a year ago or were higher, and in some instances quite significantly so.
U.S. Home Sale Prices 2023 By State
And when we compare second quarter sale prices to their 2022 peaks, 33 states are at or above the highs seen last year, but most of the Western States have yet to fully recover. In the South, Louisiana is still lagging by a good amount, as is New York State on the East Coast.
But as you are all very aware, all markets are different. I thought it would be interesting to dig a little deeper into the data to see which metro markets have seen significant gains over the past 12 months. It’s going to be interesting specifically because of the fact that mortgage rates have risen so much.
Metro Areas: Home Sale Prices 2023
These are markets where sale prices are far above their 2022 peak sale prices. Now I must add that I only looked at markets where more than 1,000 transactions occurred in the last quarter, which takes out some of the volatility. Notably, even though the state of Virginia’s home prices in the quarter were flat when compared to their 2022 peak, the Roanoke market was up by over 9%. And in Pennsylvania, where state prices were only 1.2% above their 2022 peak, Reading is up by 7.6% and York by 7.4%. And in Georgia, where state sale prices were up a modest 1.6%, homes in Macon have leapt by over 13% and prices are up by 6.9% in Savannah.
But, on the other end of the spectrum, there are markets which are underperforming their respective states and, unsurprisingly, California tops the list with three of their metros seeing prices significantly below that of the state as a whole. In other parts of the country, several metro areas which were relatively affordable before the pandemic saw an influx of remote workers and this led prices to skyrocket, and these will take some time to recover. This is particularly true in the Austin and Boise market areas.
I would add that, of the counties across the country where there were more than 1,000 transactions in the second quarter, half have met or exceeded their prior peak and—of the half where sale prices were still lower—the average shortfall is only around 4% and there are just seven counties in the country where sale prices are down by more than 10% from their 2022 peaks.
Now, what I see in the data is that the U.S. housing market, although certainly not fully healed, is headed in the right direction even when faced with mortgage rates that remain remarkably high. So, with sale prices recovering and still faced with stubbornly high financing costs, what does affordability look like?
U.S. Housing Affordability 2023
Well, according to the National Association of Homebuilders (NAHB), of the 241 metros that they track, just 40.5% of sales in the second quarter were affordable to households making the area’s median income—that’s the second lowest share of sales seen since they started generating this dataset a decade ago. Now, their data does go back to 2004, but the interest rate series that they used to use was discontinued, so it’s not accurate to compare their data today with anything before 2012.
Most Affordable U.S. Housing Markets
These were the most affordable markets in the second quarter and their locations should not be of any great surprise. Average sale prices in these markets were measured around $203,000—that’s just marginally above 50% of the national sale price in the quarter, which was $402,600.
Least Affordable U.S. Housing Markets
And unfortunately this should not surprise you either. On the other end of the spectrum, the top-10 least affordable housing markets were all in California, but it gets worse than that. The top 15 least affordable markets again, all in California, and 19 out of the top 25 were in the Golden State!
As far as I can see, the ownership housing market is still showing remarkable resiliency, especially given that mortgage rates have more than doubled from their lows and they’ve risen from 4.8% at the start of the second quarter of last year to 7% at the end of the second quarter of 2023.
Now, I still expect to see rates starting to slowly move lower as we go through the second half of the year. This will help with prices and, to a degree, affordability, but until we see a significant increase in the number of homes listed for sale, the market is going to remain unbalanced.
As always, I’d love to hear your thoughts on this subject so feel free to leave your comments below. Until next month, stay safe out there and I’ll see you soon. Bye now.
To see the latest real estate market data for your area, visit our quarterly Market Updates page.
About Matthew Gardner
As Chief Economist for Windermere Real Estate, Matthew Gardner is responsible for analyzing and interpreting economic data and its impact on the real estate market on both a local and national level. Matthew has over 30 years of professional experience both in the U.S. and U.K.
In addition to his day-to-day responsibilities, Matthew sits on the Washington State Governors Council of Economic Advisors; chairs the Board of Trustees at the Washington Center for Real Estate Research at the University of Washington; and is an Advisory Board Member at the Runstad Center for Real Estate Studies at the University of Washington where he also lectures in real estate economics.
The beauty of real estate is that different properties satisfy different needs. Although single-family homes are great for putting down roots, that may not be your motivation for purchasing your next home. If you’re looking to buy a property with the intent of renting it, both turnkey and fixer-upper listings will cross your path during your home search. The main difference between the two is the condition of the property when you buy it. The right one for you depends on your needs as a homeowner and your goals as a landlord.
What is a turnkey property?
Turnkey properties are move-in ready from day one, which means they’re ready for you to rent them out immediately. Whether it’s a new construction home or a recently remodeled listing, these properties are in tip-top shape when they hit the market. Companies that specialize in renovating and selling these properties may also offer property management services, which may appeal to you if you’re looking for a more hands-off approach to managing your investment property.
What does fixer-upper mean in real estate?
Compared to turnkey listings, fixer-uppers are on the opposite end of the investment property spectrum. Buying a fixer-upper means you’re purchasing a home that needs repairs, remodeling, and some major TLC before it’s ready to rent out. These properties are diamonds in the rough; you’re betting on your ability to make high ROI home upgrades that will attract future renters and put money in your pocket.
Because they are move-in ready, turnkey listings have the potential to generate cash flow right away. Without any pending renovations in your way, you can open up the property to renters as soon as you take possession. They’re primed and ready to place in the hands of a property management company, which means you’ll get passive income without having to deal with day-to-day operational tasks. You can also ask the listing agent for permission to use their photos, which can help your rental stand out amongst the competition in your area.
Turnkey Cons
So, what’s the catch? These benefits all come at a cost; turnkey properties typically cost more than fixer-uppers. You’ll pay a premium for the pristine condition and the buttoned-up appearance of these properties, so it’s important to have a strategy to save money for your home purchase. Also, handing off property management duties to a third party means you’ll have less control over the renting process.
Fixer-Upper Pros
Searching for homes in less-than-pristine condition can give you a leg up as a buyer. Fixer-upper homes tend to have less competition from buyers than turnkey properties, since not everyone is willing to take on a major remodeling project. Talk to your agent about how to make the best offer. Given their lessened condition, you can oftentimes get a great deal on these homes with the right strategy. And the best part is, your remodeling efforts will increase the home’s value over time. The more effort you put in, the more the property will be worth, which means higher ROI potential.
Fixer-Upper Cons
Here’s the downside with fixer-uppers: tapping into their potential requires pouring money into the property. Exactly how much you can expect to spend on a fixer-upper varies by location, the size of the home, and the scope of repairs and renovations needed. Tackling some remodeling projects DIY can save you money, but if certain projects require more skilled hands, it may be best to hire a professional. And for all your planning, it’s impossible to predict the future. Projects may go over budget, material costs may rise, and the market may look completely different when you’re ready to rent out your property than it did when you bought it.
Connect with me and I can help you determine which property type is right for you.
The following analysis of select counties of the Utah real estate market is provided by Windermere Real Estate Chief Economist Matthew Gardner. We hope that this information may assist you with making better-informed real estate decisions. For further information about the housing market in your area, please don’t hesitate to contact your Windermere Real Estate agent.
Regional Economic Overview
Although it slowed in the first quarter of 2023, employment growth has stabilized in Utah. The state added 52,400 jobs over the past 12 months, which represents an annual growth rate of 3.1%. The counties covered by this report added almost 33,000 new jobs over the past year, representing a growth rate of 2.4%. As we saw in the first quarter of the year, the fastest growing county was Summit, which had a 5.8% annual growth rate. The slowest was again Morgan County, where the job level rose 1.6%. Utah’s unemployment rate in May was 2.5%, up .03% from the level in the second quarter of 2022. At the county level, the lowest jobless rate was in Morgan County (1.8%) and the highest was in Weber County, where 2.5% of the workforce was without a job. In aggregate, the unemployment rate within the counties contained in this report was only 2.3%.
Utah Home Sales
❱ In the second quarter, 6,939 homes were sold in the areas covered by this report. This was down 21% compared to the second quarter of 2022 but was 28.3% higher than in the first quarter of this year.
❱ Year over year, sales fell across the board. However, sales increased by double digits in every county covered by this report compared to the first quarter.
❱ It is quite likely that the higher number of homes sold compared to the previous quarter was a result of the impressive increase in the number of homes for sale. Inventory rose 12.6% over the first quarter.
❱ Pending sales rose 14.6% from the first quarter, suggesting that closings in the upcoming quarter will likely rise.
Utah Home Prices
❱ The average sale price in the quarter fell 5.4% from the second quarter of 2022 to $629,289. However, sale prices were 4.1% higher than in the first quarter of 2023.
❱ Median list prices in the second quarter were 8.5% higher than in the first quarter of the year. It’s interesting to see sellers’ continued confidence given the significant increase in mortgage rates the market has experienced.
❱ Year over year, prices rose in Summit County but dropped in the other markets. Compared to the first quarter, prices rose in every county other than Wasatch, where they fell 12.7%.
❱ It was notable that the markets that saw list prices rising were in the more affordable areas. Expensive counties, such as Morgan, Summit, and Wasatch, all had lower median list prices than in the first quarter of this year.
Mortgage Rates
Although they were less erratic than the first quarter, mortgage rates unfortunately trended higher and ended the quarter above 7%. This was due to the short debt ceiling impasse, as well as several economic datasets that suggested the U.S. economy was not slowing at the speed required by the Federal Reserve.
While the June employment report showed fewer jobs created than earlier in the year, as well as downward revisions to prior gains, inflation has not sufficiently slowed. Until it does, rates cannot start to trend consistently lower. With the economy not slowing as fast as expected, I have adjusted my forecast: Rates will hold at current levels in third quarter and then start to trend lower through the fall. Although there are sure to be occasional spikes, my model now shows the 30-year fixed rate breaking below 6% next spring.
Utah Days on Market
❱ The average time it took to sell a home in the counties covered by this report rose 36 days compared to the same period a year ago.
❱ Homes sold fastest in Salt Lake County and slowest in Summit County. All areas saw average market time rise compared to the second quarter of 2022, but market time fell in all areas compared to the first quarter of this year.
❱ During the second quarter, it took an average of 54 days to sell a home. Market time fell 13 days compared to the first quarter of 2023.
❱ It was impressive to see the length of time it took to sell a home in the region fall significantly despite more inventory and higher financing costs.
Conclusions
This speedometer reflects the state of the region’s real estate market using housing inventory, price gains, home sales, interest rates, and larger economic factors.
In the first quarter Gardner Report, I suggested that the region was “very close to bottoming out” in respect to price. It appears I underestimated the resilience of Utah’s housing market. Given all the data presented here, the only thing that favors buyers is that there are more homes for sale. That said, while inventory levels have risen, they remain remarkably low by historic standards. This doesn’t come as a surprise given that 87.6% of all homeowners with a mortgage have rates below 5% and 31.6% have rates at or below 3%. If they don’t have to sell, why would they?
This will keep inventory tight. The only question that remains is how long the market can tolerate high mortgage rates and decreasing affordability. Given all the above factors, I have moved the needle a little more in favor of sellers. I can’t go so far as to suggest that sellers are in a totally dominant position, but they still have the upper hand.
About Matthew Gardner
As Chief Economist for Windermere Real Estate, Matthew Gardner is responsible for analyzing and interpreting economic data and its impact on the real estate market on both a local and national level. Matthew has over 30 years of professional experience both in the U.S. and U.K.
In addition to his day-to-day responsibilities, Matthew sits on the Washington State Governors Council of Economic Advisors; chairs the Board of Trustees at the Washington Center for Real Estate Research at the University of Washington; and is an Advisory Board Member at the Runstad Center for Real Estate Studies at the University of Washington where he also lectures in real estate economics.
Harvard University’s latest edition of “The State of the Nation’s Housing” has arrived, and Windermere Chief Economist Matthew Gardner is here to break down what the data presented in the report means for the U.S. housing market in 2023 and beyond.
This video is the latest in our Monday with Matthew series with Windermere Chief Economist Matthew Gardner. Each month, he analyzes the most up-to-date U.S. housing data to keep you well-informed about what’s going on in the real estate market.
Housing Market 2023
Hello there, I’m Windermere Real Estate’s Chief Economist Matthew Gardner, and welcome to this month’s episode of Monday with Matthew. I spend a lot of time reading reports that relate to the housing market, but there is one in particular I’m always impatiently waiting for, and it’s published by my colleagues at the Joint Center for Housing Studies at Harvard University. Every year they release the The State of the Nation’s Housing report and it’s packed full of fascinating data about the ownership and rental housing markets, demographics, and it also discusses the challenges that lay ahead. So today, I wanted to touch briefly on just a few of the report’s high points, but I highly recommend you download it from their website.
What’s happening in the housing market?
As we all know, the for-sale housing market started softening in mid 2022 in response to rising interest rates and deteriorating affordability. What was particularly notable was that seasonally adjusted home prices fell month over month last July and that was the first monthly drop in over a decade. And over in the rental market, asking rents—while still up year over year—also saw their pace of growth slow considerably, and that is a concern.
Is home construction slowing down?
As you see here, multifamily construction continued to rise last year even as rental demand was softening. In fact, 547,000 new multifamily units were started in 2022, the highest number since the mid-1980s, and the 960,000 units under construction in March 2023 was the highest number seen in half a century. On the ownership side, it wasn’t surprising to see single-family construction falling significantly as buyers reacted to sharply higher borrowing costs.
The report also suggested that the decline in new construction was particularly acute for lower-priced homes. Builders just can’t produce entry-level product with current material, labor, and land costs; limited lot availability; and regulatory barriers such as minimum lot sizes that restrict production of entry-level housing production.
U.S. Population Demographics
Now turning to demographics. Population growth—naturally the primary long-term driver of household growth—remains historically low. Overall, the U.S. population grew by 1.26 million people last year, or just 0.38%. Now, while this does represent a slight uptick from previous years that’s really not saying much as U.S. population growth hit 100-year lows in 2019, 2020, and 2021.
Increases in a country’s population come in two ways. The first is “natural” growth—which equals the number of persons born minus the number that have died—and the second is via immigration. Now, gains from immigration can be fickle because they are subject to unpredictable government policy changes as well as economic cycles here in the U.S. as well as in other countries. But natural growth is more predictable because it is driven by slow-moving factors like birth and mortality rates. Until last year, natural growth had been the primary source of population growth in the U.S., but, as you saw in that last chart, things have shifted.
U.S. Population Growth & Migration
This map shows counties with the highest level of natural growth and it’s dominated by large metro markets in California, Texas, Southern Florida and parts of the Northwest. But, what I found very interesting was that the numbers were remarkably low. Only six counties—three in California, two in Texas, and one in New York—saw natural growth above the 10,000 level and 75% of counties across the country saw negative natural growth.
So with natural growth slowing, states will understand the importance of attracting new residents from other markets as domestic migration will become a more important driver of household growthand housing demand. Here you see that Maricopa County, AZ saw the largest gains from domestic migration but, statewide, Florida dominated last year with 319,000 people moving there. Texas came in second with a net gain of over 230,000 people. But on the other end of the spectrum, California was the biggest loser with net 343,000 people leaving, followed by New York who lost 300,000 residents.
It was international migration that accounted for a full 80% of total growth last year and it was the largest source of total population growth for 26 states and 29% of all counties across the country. The biggest winners were LA County in California, Miami-Dade County in Florida, and Harris County, Texas.
These were just some of the highlights of the report and the biggest conclusions I found were that, in the ownership market, supply will remain tight in the resale arena and new construction will not fill that void, especially as it comes to the entry level product. Housing affordability will not improve. This will continue to be a big issue across the country.
An oversupply of apartments coming online will further moderate rents, but renters will also find affordability to be a big concern. Demographic trends suggest that low domestic population growth going forward will lower new household formations and it’s quite likely that population and household growth will start to rely wholly on immigration earlier than the government expects.
So, there you have it. As always, I’d love to hear your thoughts on this subject so feel free to leave your comments below. Until next month, stay safe out there and I’ll see you soon. Bye now.
To see the latest real estate market data for your area, visit our quarterly Market Updates page.
About Matthew Gardner
As Chief Economist for Windermere Real Estate, Matthew Gardner is responsible for analyzing and interpreting economic data and its impact on the real estate market on both a local and national level. Matthew has over 30 years of professional experience both in the U.S. and U.K.
In addition to his day-to-day responsibilities, Matthew sits on the Washington State Governors Council of Economic Advisors; chairs the Board of Trustees at the Washington Center for Real Estate Research at the University of Washington; and is an Advisory Board Member at the Runstad Center for Real Estate Studies at the University of Washington where he also lectures in real estate economics.
Windermere Chief Economist Matthew Gardner revisits his Top 10 Predictions for 2023. Reviewing his forecasts for home prices, mortgage rates, and more, he highlights recent changes in the real estate market and updates his predictions for the near future.
This video is the latest in our Monday with Matthew series with Windermere Chief Economist Matthew Gardner. Each month, he analyzes the most up-to-date U.S. housing data to keep you well-informed about what’s going on in the real estate market.
Top 10 Real Estate Market Predictions 2023 | Mid-Year Update
Hello there, I’m Windermere Real Estate’s Chief Economist Matthew Gardner and welcome to this month’s episode of Monday with Matthew. You may remember that at the end of last year, I published my Top-10 Predictions for 2023 and, as we hit the mid-year mark, some of you have been asking me how well my forecasts have been holding up. So, I thought it would be interesting to take another look at them to see how accurate they have or have not been! These were the predictions I made last November, and they covered everything from my expectations for home sales and prices to shifting government policies.
U.S. Home Sale Prices
My first forecast suggested that sale prices would fall in 2023; however, I was not expecting any sort of systemic decline in values. Here you can see that year-over-year prices are down by a bit less than 2%, but when you look at how prices have changed month over month, they rose by 3.6% in April and are up by more than 6% since the end of last year.
I stand by my forecast that the median sale price in 2023 will be modestly lower than the 2022 number; and the monthly increase in sale prices that we have seen so far this year also supports my forecast that we are not seeing any long-term decline in home values.
2023 Mortgage Rates
Although mortgage rates have broken above 7% eight times so far this year—the first time because of the banking crisis, and the second because of the looming debt ceiling—I expect them to become a little less frantic as we move through the second half of the year. That said, my call for them to drop below 6% this year is now likely to be inaccurate given where they are today. I still expect them to drop into the “fives” though, but not until early next year.
Is housing inventory increasing?
Listing activity saw a very modest late spring bump, but for perspective, the number of homes for sale is running at about 40% of its long-term average, and I still don’t see much growth this year. Why? Well, by my calculations, there could be over 20 million homeowners with mortgage rates around 3%. Why would they move!
Is 2023 a buyer’s or seller’s market?
And with limited inventory, the market still “technically” favors home sellers. Now, this is a little speculative because what defines a traditional “buyer’s” or “seller’s” market varies by location, but with relatively few homes on the market and the share of homes with price reductions dropping and list prices rising again, I just can’t see a buyer’s market appearing this year.
Are home prices falling?
Well, this doesn’t look to be meeting my forecasts, does it! Sellers have been pretty bullish so far this year, but I would add that this is not true across the whole country. List prices are still down significantly in markets such as Hailey, Idaho; Jasper, Alabama; and Elko, Nevada, where list prices for single-family homes are down between 30 and 50% from their peak. So, I admit that the country has outperformed my forecast for list prices.
Return to Office Statistics 2023
As I had expected, the pace of workers heading back to the office has not been very robust. In fact, the share of people in the office full time dropped to 42% in the second quarter of 2023, down from 49% in the first quarter, that according to The Flex Report. Meanwhile, the share of offices with hybrid work arrangements hit 30% in the quarter, up from 20% the previous quarter. But I still expect to see more workers heading back to their offices, albeit very reluctantly.
New Home Permits and Starts Have Fallen
With new home permits down 21% year-over-year, and new home starts off by 28%, I think its accurate to say that activity in the new construction sector has slowed. Builders continue to be hit by high financing rates as well as high material prices.
Are U.S. home prices dropping?
As we all know, not all markets are created equal, and this chart shows how far below their 2022 highs some of the country’s metro areas are. On the opposite end of the spectrum, there are some markets where prices have already exceeded the highs seen last year (see map below).
Housing Affordability 2023
Affordability has not improved, mainly due to home prices that remain out of sync with incomes as well as financing costs that remain well above the level that buyers had become used to. I still believe that this will not improve in 2023.
And finally, I told you that governments would start to move to address the significant housing shortage that the country is experiencing, and they have. As you can see, in Washington State, Governor Inslee recently signed House Bill 1110 into law which allows the development of duplex up to six-unit buildings within any area zoned for single-family-only development. Additionally, jurisdictions in a significant number of states are either pursuing legislation to tackle this problem or have at least created task forces to look at the issue. It’s a good start, but more needs to be done.
Although it’s really cheating to grade one’s own work, I think that I have been pretty accurate with my forecasts. Yes, I was too pessimistic when it came to list prices and a little optimistic regarding the direction of mortgage rates. But other than those two items, the data seems to suggest that the housing market is headed in the direction that I had suggested.
What do you think? I’d love to hear your thoughts on this subject so leave your comments below. As always, stay safe out there and I’ll see you all next month. Bye now.
To see the latest real estate market data for your area, visit our quarterly Market Updates page.
About Matthew Gardner
As Chief Economist for Windermere Real Estate, Matthew Gardner is responsible for analyzing and interpreting economic data and its impact on the real estate market on both a local and national level. Matthew has over 30 years of professional experience both in the U.S. and U.K.
In addition to his day-to-day responsibilities, Matthew sits on the Washington State Governors Council of Economic Advisors; chairs the Board of Trustees at the Washington Center for Real Estate Research at the University of Washington; and is an Advisory Board Member at the Runstad Center for Real Estate Studies at the University of Washington where he also lectures in real estate economics.
Selling your home is a crash course in real estate education. You’ll learn how to work with your real estate agent to find a buyer and sell at the right price. As you prepare to sell, it’s important to remember that that not everything you’ve heard is true. There are several common myths that can lead to costly mistakes in the selling process. Knowing the truth behind them will clarify your selling journey and help you align your expectations.
Selling Your Home: 5 Common Myths
1. Home Value Calculators Are 100% Accurate
Online Automated Valuation Models (AVMs) are a great starting point for understanding how much your home could be worth. However, they are merely a first step in determining home value; to say they are 100% accurate is a myth. When it comes to pricing your home, you need to rely on your real estate agent’s Comparative Market Analysis (CMA), which uses vast amounts of historical and current data on real estate listings to arrive at an accurate and competitive figure.
2. Selling FSBO Will Save You Money
Selling a home requires an intimate knowledge of the housing industry and how to solve the complex situations that arise throughout a real estate transaction. Despite this, some sellers will go it alone and attempt to sell their property without being represented by an agent.
Selling For Sale by Owner (FSBO) is a risky proposition. It requires the seller to bear added liability, fills their schedule with various marketing and promotional responsibilities, and can leave money on the table by inaccurately pricing the property, causing it to sit on the market for too long. The potential costs of selling a home on your own far outweigh the commission real estate agents earn on a home sale.
3. You Must Remodel to Sell Your Home
The question you’ll face when preparing to sell your home is whether to sell as is or remodel. The answer usually lies somewhere in between, but it depends on your situation and what kinds of home upgrades are driving buyer interest locally. When making improvements to your home, lean toward high ROI remodeling projects to get the best bang for your buck, and avoid trendy projects that can delay listing your home. If you’re considering major upscale renovations, talk to your agent about which projects buyers in your area are looking for.
You’ve likely heard tell that the first buyer’s offer is nothing more than a springboard to up your asking price and to never accept it. In this case, “never” should be approached with caution. In reality, the best offer for your home is one that you and your agent have discussed that aligns with your goals. If a matching offer happens to be the first one that comes your way, so be it. The market can shift at any time, so you never know what may happen if you leave an offer on the table. And if the buyer backs out of the deal, you and your agent will find a path forward.
5. Home Staging Doesn’t Make a Big Difference
Staging your home is so much more than a cosmetic touchup; it has been proven to help sell homes faster and at a higher price than non-staged homes.1 Staging ensures that your home has universal appeal, which attracts the widest possible pool of potential buyers. When buyers are able to easily imagine living in your home, they become more connected to the property. You should stage your home regardless of your local market conditions, but it can be especially helpful in competitive markets with limited inventory where even the slightest edge can make all the difference for sellers.
The Federal Housing Finance Authority recently put a hold on raising upfront mortgage fees given pushback that suggested home buyers with good credit were being penalized. Windermere Chief Economist Matthew Gardner looks at Loan Level Price Adjustments (LLPAs) to explain why some headlines were misleading.
This video on the proposed FHFA mortgage fee changes is the latest in our Monday with Matthew series with Windermere Chief Economist Matthew Gardner. Each month, he analyzes the most up-to-date U.S. housing data to keep you well-informed about what’s going on in the real estate market.
FHFA Mortgage Fee Changes
Hello there, I’m Windermere Real Estate’s Chief Economist Matthew Gardner, and welcome to this month’s episode of Monday with Matthew. As most of you are aware, the Federal Housing Finance Authority announced that they were going to raise the upfront fees for mortgages backed by Fannie Mae and Freddie Mac, and that led to significant backlash from some suggesting that borrowers with good credit would now be paying more than borrowers with bad credit.
And as these voices grew louder, Congress stepped in with House Financial Services Committee Chair Patrick McHenry and Housing and Insurance subcommittee Chair Warren Davidson announcing a plan to repeal these fee increases if they were introduced. Well, this did not go unnoticed, and the FHFA announced on May 10th that they were putting a hold on a new fee structure in order to engage industry stakeholders and better understand their concerns.
So, for now nothing has changed, but I still think it’s a subject worth discussing because we will see another proposal from the FHFA at some point in the future. So, what’s going on?
Well, periodically the FHFA raises the upfront fees that the Agencies charge borrowers for the purchase and refinance of mortgages that they guarantee, and these fees are called Loan Level Price Adjustments, or LLPAs.
In April of 2022, these fees went up for several types of loans including ones in expensive markets that have a higher conforming loan limit than seen nationally, and they also raised fees on second home mortgages. But to support affordable housing, the lower rates for certain programs including HomeReady, Home Possible, and HFA Advantage weren’t increased. And they didn’t raise fees for loans to first-time home buyers in high-cost areas if they earned at or below the area median income.
And the new round of fee increases that was scheduled to start in May of this year has many believing that it was just another subsidy given to households with lower credit that’s being paid for by households with better credit. But is that really an accurate statement? I don’t necessarily think so.
First off, the FHFA had to increase fees this year simply because they needed the money to cover higher capital requirements that went into effect last year, but that’s a topic for another day. For now, let’s take a look at the changes that would have been made.
Changes to LLPAs
The matrix you see here shows you the difference between the fee that was in place and the one that was proposed. Remember, this is not the actual fee itself, but the spread between the old and new pricing. And, as you can see, on face value it really does look to benefit borrowers with lower credit scores and penalize households with better credit. For example…
Changes to LLPAs: Credit Score 640 – 659
A household with a credit score of between 640 and 659 would see savings across all loan-to-value ranges versus the following:
Changes to LLPAs: Credit Score 740 – 759
A household with a credit rating of 740 to 759 who would be paying the same or more in all bar two scenarios with fees increasing between 0.125% and three quarters of a percent.
But is this really something to be worried about?
There are two things that stand out to me. The first is that a household putting down less than 20% has to buy private mortgage insurance. So, in reality, these households are actually less of a risk to the agencies than those who don’t, so isn’t it right that they should pay less in fees? Secondly, although I can’t disagree with anyone who states that families with lower credit will see fees go down and, generally speaking, they will go up for those with better credit, but people are confusing the CHANGE in the fee with the ACTUAL fee itself.
What I am saying is that low credit borrowers aren’t paying less than high credit borrowers. It’s just the spread in the rates between households with lower credit and those with higher credit has simply gotten smaller.
There is absolutely no scenario where someone with lower credit gets a lower fee. Let me show you.
Loan Level Pricing as of March 1, 2023
This was the new pricing schedule had it actually come into effect. Now let’s say there are two households wanting to buy houses for $500,000 and both looking to borrow 80% of the purchase price.
One buyer has a credit score of 640, so their LLPA would be 2.25% of the loan amount, or $9,000. The other buyer had a credit score of 740 so their fee would be 0.875%. That means the household with higher credit would be paying $5,500 less than the household with lower credit on a $400k loan.
No one is arguing that households with lower credit scores would have paid less in upfront fees, but I actually don’t see a problem with that. Remember, Fannie and Freddie’s mission is, in part, to facilitate access to affordable housing. Moreover, these fees don’t even apply to non-conforming or jumbo loans and they don’t impact FHA or VA loans either.
Although I certainly don’t know where the FHFA will end up regarding fee changes, they will have to do something at some point. I just hope that any modified plan is presented in a way that fully describes the situation and isn’t one that’s able to be interpreted in a manner which allows for headlines that don’t describe the full picture.
As always, I’d love to hear your thoughts on this subject but, in the meantime, stay safe out there and I’ll see you all next month. Bye now.
To see the latest housing data for your area, visit our quarterly Market Updates page.
About Matthew Gardner
As Chief Economist for Windermere Real Estate, Matthew Gardner is responsible for analyzing and interpreting economic data and its impact on the real estate market on both a local and national level. Matthew has over 30 years of professional experience both in the U.S. and U.K.
In addition to his day-to-day responsibilities, Matthew sits on the Washington State Governors Council of Economic Advisors; chairs the Board of Trustees at the Washington Center for Real Estate Research at the University of Washington; and is an Advisory Board Member at the Runstad Center for Real Estate Studies at the University of Washington where he also lectures in real estate economics.
Whether you’ve just bought a house or you’ve lived in your home sweet home for years, at some point its walls and surfaces will be due for a fresh coat of paint. Repainting can breathe new life into an interior and help you personalize the space, whether you’re working within the latest interior design trends or blazing your own trail. But there’s one fundamental question facing every homeowner as they begin their painting project: How much paint do I need?
How much paint do I need?
Every project has a budget, and with the right planning you can execute the project to its full potential without going over budget. Painting is the ultimate DIY project and can be quite therapeutic, but still requires some calculation to determine how much you should expect to spend. With the right amount of paint, you’ll avoid overspending and getting saddled with the sunk cost of unused paint after you’ve completed your project.
The amount of paint required varies by project, but as a general rule of thumb, one gallon of paint covers about 400 square feet. So, it only takes a few simple measurements to calculate the amount of paint you’ll need for your walls.
How to Calculate How Much Paint You Need:
Start by measuring the length of each wall
Multiply the wall length by the wall height
Total length x total height = total square footage
Total square footage ÷ 400 = number of gallons
Subtract windows and doors square footage
Following this formula will give you the number of gallons you need to purchase for one coat of paint. Depending on your color scheme and the texture of your walls, your painting project may require multiple coats to have it looking just right.
If the walls you’re painting have windows and/or doors, simply perform the same basic calculation to determine their square footage and subtract that number from the total square footage value before calculating how many gallons you’ll need. When painting your ceilings, remember to account for the square footage of any skylights you may have in your home.
It’s often the case that a paint job is only as good as its base coat. A solid layer of primer can really make your painting project shine. But the same query with your topcoat applies to your primer: how much do you need? A gallon of primer will cover up to 300 square feet, so you’ll need more primer than topcoat for your project. Perform the same calculations as above and divide your paintable square footage by 300 to determine how many gallons of primer you’ll need to pick up.
How to Calculate How Much Primer You Need:
Start by measuring the length of each wall
Multiply the wall length by the wall height
Total length x total height = total square footage
Total square footage ÷ 300 = number of gallons
Subtract windows and doors square footage
Calculating square footage for trim isn’t as straightforward as it is for a square or rectangular wall. When preparing to paint your baseboards and crown molding throughout your home, think in quarts rather than gallons. Trim paint may go on smoother depending on the wood finish, and you’ll be using a brush rather than a roller. If you end up with extra trim paint at the completion of your project, it never hurts to keep it around for future touchups.
The following analysis of select counties of the Utah real estate market is provided by Windermere Real Estate Chief Economist Matthew Gardner. We hope that this information may assist you with making better-informed real estate decisions. For further information about the housing market in your area, please don’t hesitate to contact your Windermere Real Estate agent.
Regional Economic Overview
Continuing the trend that started last summer, employment growth in Utah continues to taper. Over the past 12 months, the state added 52,600 jobs. At an annual rate of 3.2%, this was the slowest percentage growth since Utah started recovering jobs post-COVID. Although this is an improvement over the rate in the last quarter, annual adjustments to the data gave early 2023 data a boost. The counties covered by this report added more than 38,600 new jobs over the past year, representing a growth rate of 2.8%. The fastest growing county was Summit, with a 4.8% increase in employment. The slowest was Morgan County, where the job level rose .7%. Utah’s unemployment rate in February was 2.4%, matching the level at the end of 2022. The labor force continues to grow but, so far, it has not caused the jobless rate to rise, which is very impressive.
Utah Home Sales
❱ In the first quarter of the year, 5,251 homes sold. This was down 21% compared to the first quarter of 2022. Sales were .2% higher than in the fourth quarter of last year.
❱ Year over year, sales fell across the board. Compared to the fourth quarter, sales rose in Utah and Weber counties but fell in the rest of the market areas covered by this report.
❱ The number of homes for sale plummeted by one third when compared to the fourth quarter of 2022, making any increase in sales rather impressive.
❱ Pending sales jumped 38.3% from the fourth quarter, suggesting that closings in the second quarter of this year may rise further.
Utah Home Prices
❱ The average sale price in the first quarter of the year fell 5.3% compared to the first quarter of 2022 to $603,340. Prices were also .1% lower than in the fourth quarter of 2022.
❱ Median listing prices in the first quarter were 3.7% higher than at the end of last year, suggesting that home sellers remain confident about the spring market. Of the counties covered by this report, only Wasatch and Morgan counties saw listing prices fall compared to the prior quarter.
❱ Year over year, prices rose in Wasatch County but fell in the other markets. Compared to the fourth quarter of 2022, prices rose in Morgan, Summit, and Wasatch counties.
❱ The market is correcting. Although this may not be something sellers want to see, it is important to return to some sense of normalcy following the frantic, low-mortgage-rate-induced market of the pandemic period. There will be a relatively modest decline in prices in the coming months, but I expect home values to rise again in the second half of this year.
Mortgage Rates
Rates in the first quarter of 2023 were far less volatile than last year, even with the brief but significant impact of early March’s banking crisis. It appears that buyers are jumping in when rates dip, which was the case in mid-January and again in early February.
Even with the March Consumer Price Index report showing inflation slowing, I still expect the Federal Reserve to raise short-term rates one more time following their May meeting before pausing rate increases. This should be the catalyst that allows mortgage rates to start trending lower at a more consistent pace than we have seen so far this year. My current forecast is that rates will continue to move lower with occasional spikes, and that they will hold below 6% in the second half of this year.
Utah Days on Market
❱ The average time it took to sell a home in the counties covered by this report rose 42 days compared to the same period in 2022.
❱ Homes again sold fastest in Salt Lake County and slowest in Summit County. All areas saw average market time rise compared to the prior quarter as well as the same quarter in 2022.
❱ During the quarter, it took an average of 67 days to sell a home, which was an increase of 9 days compared to the final quarter of 2022.
❱ Although average market time rose compared to the fourth quarter of last year, the increase was not significant. Lower inventory levels may lead to market time pulling back again as we get into the spring months, or at least levelling out.
Conclusions
This speedometer reflects the state of the region’s real estate market using housing inventory, price gains, home sales, interest rates, and larger economic factors.
Higher financing costs and lower affordability rates are acting as headwinds in the housing market, which is offsetting the benefit that housing normally sees from a growing economy. I have stated previously that home prices in Utah would continue to moderate but that a major downward correction was unlikely. That prediction appears to have been accurate. I believe that the market is very close to bottoming out given low inventory levels, rising pending and closed sales, and higher listing prices—all of which benefit home sellers. That said, lower home prices and longer days on market tend to favor home buyers.
Ultimately, I would describe the market as balanced, but I am tilting the needle just a little in favor of sellers. I expect that mortgage rates will start to stabilize as we move through the spring and then start to drop a little. If this occurs and inventory levels do not rise significantly, then we will certainly be back in a position that more firmly favors home sellers.
About Matthew Gardner
As Chief Economist for Windermere Real Estate, Matthew Gardner is responsible for analyzing and interpreting economic data and its impact on the real estate market on both a local and national level. Matthew has over 30 years of professional experience both in the U.S. and U.K.
In addition to his day-to-day responsibilities, Matthew sits on the Washington State Governors Council of Economic Advisors; chairs the Board of Trustees at the Washington Center for Real Estate Research at the University of Washington; and is an Advisory Board Member at the Runstad Center for Real Estate Studies at the University of Washington where he also lectures in real estate economics.
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