With so much in flux during the period between selling a home and buying a new one, short-term financing can provide some calm among the storm. With the fate of two properties up in the air, those who are selling a home will often look to secure a bridge loan to bridge the gap between the sale of their existing home and the purchase of a new one. So, is a bridge loan right for you? The following information is meant to help you decide whether it is a fitting solution.
What is a bridge loan?
Bridge loans have shorter terms—generally up to one year—than mortgages and often come with higher interest rates. Bridge loans allow buyers to borrow a portion of the equity in real estate they already own (usually their current primary residence) to use as a down payment on the purchase of a new residence. Borrowers will commonly package the two loans together, in which they borrow the difference between the amount they owe on their current home and a percentage of the home’s value (often 75% or 80%). Just like a home equity loan, a home equity line of credit (HELOC), or a mortgage, bridge loans are secured by your current home as collateral.
Once your home sells, you can use the proceeds to pay off the bridge loan, leaving you with only the mortgage for your new home.
Bridge loans can get you cash quickly to expedite the transition from one house to another.
With a bridge loan, you can expect a shorter application and loan-approval process than a typical mortgage.
A bridge loan offers you the opportunity to buy a new house before your current one sells. As a buyer, this allows you to make a contingency-free offer on a new house, meaning you can still make the purchase without having to sell your current home first. This can be a useful resource in a seller’s market, where sellers may view an offer without contingencies as favorable amongst the competition.
Bridge Loans: Cons
If your home doesn’t sell in the allotted term, you’ll be left with making payments on your current home’s mortgage, your new home’s mortgage, and the bridge loan.
Bridge loans usually come with higher interest rates than a typical mortgage and come with their own set of costs, including interest, as well as legal and administrative fees.
Having a low debt-to-income ratio, a solid credit score, and a considerable amount of equity in your current home are all required to secure a bridge loan, so qualifying may be out of reach for some homeowners.
Alternatives to Bridge Loans
Home equity loans, home equity lines of credit (HELOCs), and personal loans are all viable alternatives to bridge loans that can still create a pathway to purchasing your new home. Be sure to compare the costs associated with each line of financing before making your decision.
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
Utah closed 2021 strongly with solid employment gains and an annual growth rate of 4.7%. It has been almost a year since the state recovered all the jobs lost due to the pandemic—a remarkable statistic. Even more impressive is that the employment level is now more than 61,000 jobs higher than before COVID-19 hit. The counties covered by this report have added almost 50,000 new jobs over the past year, representing a growth rate of 3.8%. Such robust growth has driven the unemployment rate down to just 2.1%, a level not seen since the Labor Department started keeping records back in 1976. Utah’s economic growth continues to impress. I believe it could be even better if the number of people in the workforce was rising significantly, which isn’t the case. But all in all, the employment picture is extremely positive.
UTAH HOME SALES
❱ In the final quarter of 2021, 9,158 homes sold, representing a 13.2% drop from a year ago and 11.6% lower than in the third quarter.
❱ Year-over-year, sales dropped in all areas except for Morgan County. Sales slowed in all counties other than Weber compared to the third quarter of 2021.
❱ The drop in sales between the third and fourth quarters doesn’t concern me and can be attributed to seasonal factors. Lower sales compared to a year ago may be due to the number of homes for sale, which was 11.2% lower than in the same quarter of 2020.
❱ Pending sales, which are an indicator of future closings, were down 4% relative to the third quarter, suggesting that sales in the first quarter of 2022 may not rise significantly.
UTAH HOME PRICES
❱ Given Utah’s strong economy, it’s not surprising that home prices continue to rise significantly. Year over year, prices rose 17.3% to an average of $602,369. Prices were also .3% higher than in the third quarter of 2021.
❱ Compared to the third quarter, prices rose in Salt Lake, Utah, and Summit counties, but were down in the balance of the market areas.
❱ All areas contained in the report except for Summit and Wasatch counties saw prices rise by double digits. Morgan County’s rise was particularly impressive.
❱ The pace of price growth has slowed, but only very modestly. Whether this was a function of mortgage rates, which started rising in the quarter, is unclear. I expect rates to continue rising as we move through the year, which may have a compressing effect on price growth.
DAYS ON MARKET
❱ The average amount of time it took to sell a home in the counties covered by this report dropped five days compared to the final quarter of 2020.
❱ Homes sold fastest in Davis County, with all but two counties seeing average time on market drop. Relative to a year ago, the greatest decline in market time was in Summit County, where it took 29 fewer days to sell a home.
❱ During the quarter, it took an average of 28 days to sell a home in the region. Although this is lower than a year ago, it was up 6 days compared to the third quarter of the year.
❱ The modest increase in market time is not very surprising given the frenetic market in 2020. The question is whether the pace of sales will increase as we move into the spring selling season.
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.
Utah’s rock-solid economy has been a major boost to the housing market. Prices continue to increase at a very impressive pace, but we will have to wait and see if this is sustainable given that mortgage rates are expected to continue rising in the coming months.
My current 2022 forecast suggests that, despite a very modest decrease in the pace of price growth compared to 2021, prices will rise by more than 10% in all the counties in this report. A few may even rise by close to 20%.
To say that it is a seller’s market in Utah would be an understatement. In the coming year, I don’t expect the housing supply to satisfy demand, which will cause prices to rise higher even in the face of rising mortgage rates. As such, I have moved the needle a little more toward 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.
In honor of our 50th anniversary, Windermere set a goal to reach $50 million in giving and officially announced our third generation of leadership during our 2022 Kick-Off event.
Seattle – On Wednesday, January 26, we hosted a virtual event for our agents, franchise owners, and staff, to kick off 2022 and celebrate our 50th anniversary. More than 4,400 people attended the virtual event to hear from several speakers, including company founder, John Jacobi, Windermere Chief Economist, Matthew Gardner, and keynote speakers Matthew Ferrara and Candace Doby. Second-generation leaders, OB Jacobi, Jill Jacobi Wood, and Geoff Wood kicked off the event by reflecting on Windermere’s 50-year history and the pride that comes from still being a family-run organization. They also introduced Lucy Wood, daughter of Jill and Geoff, and the third generation to take on a leadership role within our company.
Founded in 1972 by John Jacobi, Windermere started with seven agents in a single office in Seattle, WA. Over the next two decades, Jacobi would grow Windermere into Seattle’s largest real estate brokerage and eventually the largest in the Pacific Northwest. But according to son, OB, his dad never had aspirations of becoming a large company. “My dad’s goal was to build a real estate office where the agents were respected on the same level as other business professionals, so he made it a priority to hire people who were above all else, professional,” said OB Jacobi, adding, “It was because of the quality of the people who joined Windermere that the company began to grow and thrive.”
Fifty years later, Windermere is the largest regional real estate company in the Western U.S. with over 6,500 agents and 300+ offices in 10 states. Last year we exceeded $43 billion in sales.
During the January 26 event, the second-generation leaders talked about how their dad set out to change the real estate industry. According to son, OB Jacobi, his dad didn’t believe in awards and felt the highest achievement an agent could earn is repeat and referral business from their clients. He also thought it was the responsibility of real estate agents to make their communities a better place to live, and in 1989, through the creation of the Windermere Foundation, pioneered a giving model that is now used by real estate companies around the country.
“My dad and his team came up with an idea that would make it really easy for agents to give back,” said Jill Jacobi Wood. “It was simple but sort of ingenious; every time an agent sold a home, a small donation from their commission would automatically be made to the Windermere Foundation. All that the agents had to do was sign up to donate and we handled the rest.”
Jacobi Wood added that the goal was to create a system that would allow Windermere to make a big difference without being a financial burden on any one person. In its first year (1989), the Windermere Foundation raised $90,000 for low-income and homeless families. In 2021, our network collectively raised over $2.5 million for a total of $46 million in donations. In honor of our 50th anniversary, the Windermere network has been given a new challenge: to reach $50 million in donations by the end of 2022.
Windermere CEO, Geoff Wood, closed the 50th anniversary event by saying, “Great companies don’t stagnate or stay the same. They are constantly evolving and looking for ways to improve, grow, and give back. Over the past 50 years we have done just that; here’s to 50 more.”
This video shows Windermere Chief Economist Matthew Gardner’s Top 10 Predictions for 2022. 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.
Matthew Gardner’s Top 10 Predictions for 2022
1. Prices will continue to rise
There are some who believe that U.S. home prices will drop in the coming year given last year’s extremely rapid pace of growth, but I disagree. I don’t expect prices to fall; however, the pace of appreciation will slow significantly, rising by around 6% in 2022 as compared to 16% in 2021 (nationally). As such, agents need to be prepared to explain this new reality to their clients who have become very accustomed to prices spiraling upward. Those days are likely behind us—and it’s not a bad thing!
2. Spring will be busier than expected
The work-from-home paradigm is here to stay for the foreseeable future, and this could lead to increased buyer demand. Many companies have postponed announcing their long-term work-from-home policies due to the shifting COVID-19 variants, but I believe they will soon off er more clarity to their employees. Once this happens, it will likely lead to a new pool of home buyers who want to move to more affordable markets that are further away from their workplaces. I also expect to see more buyers who are driven by the need for a home that is better equipped for long-term remote working.
3. The rise of the suburbs
For a large number of people whose employers will allow them to work from home on an ongoing basis, remote working will not be an all-or-nothing proposition. It will be a blend of working from home and the office. I believe this will lead some buyers to look for homes in areas that are relatively proximate to their office, such as the suburbs or other ex-urban markets, but away from high-density neighborhoods.
4. New construction jumps
I anticipate the cost of building homes to come down a bit this year as inflation finally starts to taper, and this should provide additional stimulus for homebuilders to start construction of more units. Material costs spiked in 2021 with lumber prices alone adding about $36,000 to the price of a new home. This year, I’m hopeful that the supply chain bottlenecks will be fixed, which should cause prices to moderate and result in a drop in building material costs.
5. Zoning issues will be addressed
I’m optimistic that discussions around zoning policies will continue to pick up steam this year. This is because many U.S. legislators now understand that one of the main ways to deal with housing affordability is to increase the supply of land for residential construction. Despite concerns that increased density will lower home values, I believe existing homeowners will actually see their homes rise in value faster because of these policies.
6. Climate change will impact where buyers live
Now that natural disasters are increasing in frequency and climate risk data is starting to become more readily available, get ready for home buyers to require information from their agents about these risks and their associated costs. Specifically, buyers will want to know about an area’s flood and fire risks and how they might impact their insurance costs and/or their mortgage rate.
7. Urban markets will bounce back
While increased working from home can, and will, raise housing demand in areas farther away from city centers, it may not necessarily mean less demand for living in cities. In fact, some urban neighborhoods that were once only convenient to a subset of commuters may now be considered highly desirable and accessible to a larger set of potential home buyers. At the same time, this could be a problem for some distressed urban neighborhoods where proximity to employment centers may have been their best asset.
8. A resurgence in foreign investors
Foreign buyers have been sitting on the sidelines since the pandemic began, but they started to look again when the travel ban was lifted in November 2021. Recently, the rise of the Omicron variant has halted their buying activity, but if our borders remain open, I fully expect foreign buyer demand to rise significantly in 2022. Keep in mind, foreign buyers were still buying homes sight unseen even when they were unable to enter the country, and this will likely still be the case if borders are closed again.
9. First-time buyers will be an even bigger factor in 2022
Once remote working policies are clearer, we should see increased demand by first-time buyers who currently rent. In 2022, 4.8 million millennials will turn 30, which is the median age of first-time buyers in the U.S. An additional 9.4 million will turn 28 or 29 in the coming year. I believe this group is likely to contemplate buying sooner than expected if they can continue working from home in some capacity. Doing so would allow them to buy in outlying markets where homes are more affordable.
10. Forbearance will come to an end
Forbearance was a well-thought-out program to keep people in their homes during the height of the pandemic. Some predicted this would lead to a wave of foreclosures that would hurt the housing market, but this has not been the case. In fact, there are now fewer than 900,000 U.S. homeowners in forbearance, down from its May 2020 peak of almost 4.8 million, and this number will continue to shrink. That said, there will likely be a moderate increase in foreclosure activity in 2022, but most homeowners in this situation will sell in order to meet their financial obligations rather than have their home repossessed.
Appliances are broken down into two main categories: gas- and electric-powered. You may be more familiar with one or the other based on personal experience, but when it comes time to choose appliances for your home, you’ll likely be weighing a variety of factors including the conversion costs, operation costs, safety, sustainability, and more. The following breakdown of the differences between gas and electric appliances can help inform your decision about what is ultimately best for your home.
What is the difference between gas and electricity?
Homes with natural gas are powered by a series of pipeline connections. The gas lines flowing from the property lead out to and connect with a larger pipeline farther away. Homes can also be powered by propane gas, which is stored in a tank on the property.
Electric power flows from generators to substations and eventually to individual homes, carried by transmission and distribution lines. In short, gas can power a variety of appliances in your home, but it won’t power your lights or electronics, whereas electricity can do both.
What is the difference between gas appliances and electric appliances?
The costs of gas and electric appliances vary region-to-region, both in upfront and operation costs. Having said that, gas is the more efficient heating fuel, and using gas appliances could save you up to 30 percent on your utility bill (consumeraffairs.com). Keep in mind that gas furnaces tend to be noisier but will usually heat up your home quicker, while electric furnaces are quieter but may take more time to warm your home.
So, what do you do if you want to convert your home from one fuel to the other? To switch from electric to gas, you’ll need to route gas lines, purchase the new appliances, and install them. Switching from gas to electric will require installing an electric line and capping the gas line(s). Each of these conversion methods will require an investment, so be sure to budget for these costs before you switch.
Gas and electric have their own unique safety hazards. With gas, you’ll need to take a couple extra steps to protect your home’s air quality. You’ll want to make sure you have a good ventilation system and that your carbon monoxide alarm is functioning properly to alert you of any potential poisoning from the furnace or the appliances themselves. With electric appliances, you won’t run the risk of a gas leak, but if the appliance’s wiring is faulty or neglectfully maintained, it could start a fire.
The range tends to be the focal point of the gas-versus-electric debate for many homeowners. While some prefer the quick-heating power of an open-flame gas stove, others view an electric stove as safer for their household and therefore better. While some enjoy the even-heating quality of an electric oven, others prefer gas ovens with traditional coil burners. Electric stoves are usually easier to maintain; especially glass tops since you only have to clean one smooth surface.
Gas vs. Electric – Dryer & Fireplace
In general, gas dryers can heat up faster than electric dryers, which means they are more efficient and can save you money on your energy bills. However, gas dryers tend to be more expensive than their electric counterparts.
Electric fireplaces are usually cheaper to install but may not be as effective as gas fireplaces for heating larger spaces. And apart from all the financials, some people simply enjoy the feeling of a natural flame (gas) coming from the hearth, while the electric heating element appeals to others.
At the end of the day, choosing between gas and electric appliances depends on your situation. Saving on energy bills may be your number one priority, or perhaps you can’t stand the idea of not cooking on an open flame. Whatever your choice, it’s helpful to know the pros and cons of each option.
For the Windermere Foundation, 2021 was a year of milestones. Windermere owners, staff, and agents stepped up to support their communities in a variety of ways. Their collective efforts helped to raise over $2.5 million in 2021 for low-income and homeless families, bringing the Foundation’s grand total to over $45 million in donations since 1989.
Windermere Foundation 2021 Year in Review
Early 2021
The year got off to a quick start. Windermere offices showed an outpouring of support in their communities, raising nearly $500,000 by the end of March. The Windermere Lane County office in Eugene, Oregon was highly active, raising money for a host of local organizations dedicated to supporting local children who are in crisis due to neglect, abuse, poverty, or homelessness. The office also collected donations for Florence Food Share and Food for Lane County, two local non-profits working to solve hunger issues in the community. All in all, the Lane County office’s donations totaled over $10,000.
Community Service Day
In June, Windermere celebrated its 37th annual Community Service Day, a tradition since 1984 in which our agents, staff, and franchise owners spend the day volunteering in their communities to complete neighborhood improvement projects. The Windermere Pinole and Diablo Realty offices joined together to support the Food Bank of Contra Costa & Solano by working in their warehouse to help bag produce. The offices were able to gather $2,850 in donations, which empowered The Food Bank to deliver 5,700 meals to the local community. The Park City office also made an impact with a local food health organization, EATS Park City, by donating $5,000 to help EATS in their mission to promote nutrition advocacy in the area.
These are just a couple examples of the impact last year’s Community Service Day had throughout the Windermere footprint. By the end of June, the Foundation surpassed $1 million in donations for 2021.
Pictured: Scott Tuffnell, Denise Ramirez, Mike Rowland, Renee Rowland, Diane Cockrell, Mona Logasa, Dave Nardi, Ellen Osmundson, Jim Georgantes, Tina Rowland, Jacob Cardinale, Nicolars Ramirez, Luis Ramirez-Agudelo, George Gross, John Kula, Carol Nasser, Neil Zarchin (Food Drive Administrator – Food Bank of Contra Costa and Solano) – Image Source: Windermere Rowland Realty – California
Late 2021
Windermere agents, staff, and owners continued to give back to their communities through the summer and fall, eventually passing $1.5 million raised in 2021 by September’s end. Here are a few highlights from the final months of the year.
UW Certificate Scholarship Program
The UW Certificate Scholarship program is part of Windermere’s commitment to better serve and support students of color, especially Black and Hispanic students, who have been impacted by systemic racial inequities. Since it was introduced in 2019, the scholarship program has given a total of $41,000 to scholars to date.
Gina, a 2021 scholar, was able to complete the UW Certificate in Data Visualization with her scholarship from Windermere. Originally from Colombia, Gina moved to the U.S. ten years ago. She eventually found work as a nanny but was laid off in the early days of the COVID-19 pandemic. Gina knew she needed to find a stable career to help support her family and wanted to put her data visualization skills to work. Gina was hired as an Attendance Specialist with her local school district. “Now, you may wonder how an Attendance Specialist can contribute if she has data visualization skills,” she said. “I was a little skeptical at first, but as I started learning more about data, I started connecting the dots. I started collecting data on the reason why the students were not making it to classes and tracking down the kids that needed extra attention.” Gina began making weekly analyses and data visualizations for her team and was soon helping the district connect with students they hadn’t been able to reach for six months. “I can’t thank you enough for this great opportunity,” she said of the UW Certificate Scholarship. “I have helped my community, grown as a professional, and feel empowered as a mom and as a brown woman.”
The Windermere Foundation plans to expand the UW Certificate Scholarship program in the future to help more Black, Indigenous, or People of Color (BIPOC) adult learners.
2021 UW Certificate Scholar Gina (top left) with her family. Image Source: Gina / Jo Gubas—University of Washington
Windermere Sand Point / Lake Oswego West / Fort Collins /
The following Windermere offices didn’t let up in their community efforts during the final weeks of 2021. Windermere Sand Point looked no further than their local elementary school, Sand Point Elementary, when deciding how they could make an impact during the holiday season. The Sand Point office donated $3,000 to the school, which will help to provide low-income students and their families with clothing, shoes, food assistance, and payment aid for after school activities.
The Windermere Lake Oswego West office makes it a point to support Transition Projects annually in any way they can. Transition Projects engages with the local homeless population to support them on their journey out of homelessness while delivering lifesaving and life-changing assistance. In early December, the Lake Oswego West office donated $3,500 to Transition Projects.
Windermere Fort Collins has close ties to ChildSafe Colorado, a local organization that provides therapy for victims of childhood abuse. One of their agents had a personal experience with ChildSafe and couldn’t thank them enough for all they did for their family. The office has rallied to support the organization, as they are unable to provide their services without donations. The Northern Colorado office hosted a tailgate party fundraiser, collecting donations from agents and the public. All in all, they were able to donate $4,000 to ChildSafe in November.
Pictured L to R: Suzanne Ekeler, Eric Thompson – Image Source: Natalie Parsons, Windermere Fort Collins
Finding your dream home may not be easy, but there are things you can do to make it easier, like creating a “Must-Haves” list and a “Nice-To-Haves” list. These lists allow serious homebuyers to save time, energy, and ultimately, money as they prepare to buy a home.
A Must-Have List is exactly what it sounds like, a checklist of the details that are non-negotiable for your new home. It’s essential to sit down and think about the things you need in order to feel comfortable there for the next 7-13 years.
Your “Nice-To-Haves” list is a checklist of details that you’d like to have, but you can live without. This list is great for those things that you’ve always dreamed of but may be out of reach for reasons such as your budget or location. This list may include things like fireplaces or gas appliances, a pool, or other non-essential items.
Your “Must-Haves” list focuses your search and helps your agent narrow down which homes are worth your time. Your “Nice-to-Haves” list will help you determine what you’re willing to sacrifice, which will ultimately solidify your must-haves.
These lists can also help manage your expectations regarding price. Take your lists to your real estate agent, along with your pre-approval from a lender, and you’ll be able to work together to determine what is a reasonable ask within your budget and your desired location.
Creating Your “Must-Haves” List
The first step is to think about the essentials. If things like location and number of bedrooms and bathrooms are a priority, then you’ll want to include them in your must-haves. Consider where you live now and use that as a starting point; what do you love and what are you missing? You may need more storage space, or an extra room to work remote, or a larger backyard for the newest member of the family.
Here are some questions to ask yourself as you build your “Must-Haves” list:
Where do you want to live? (Be as specific as you can.)
What do you have now that you can’t live without?
What are you missing now that you may need for the next several years?
If you’re struggling to determine what it is you need to have, you can start working on your “Nice-To-Haves” list. This can also help you determine what is essential. For example, it may be nice to have five bedrooms when in reality, a three-bedroom house with a flex space that works for an office or guest room would do the trick.
Creating your “Nice-To-Haves” List
While you’re working on your “Nice-To-Haves” list, you’ll be thinking about the parts of a home that would be great to have but aren’t as important for you. You might also want to take into consideration what is reasonable in your area and if it’s a common amenity.
Here are some questions to ask yourself as you build your “Nice-To-Haves” list:
What home upgrades are you willing to make?
What is something you’d like to do in your house more often?
What do you have in your current home that you love, but don’t need?
Searching for Your Next Home
These lists will help guide you and your real estate agent as you search for your next home. During this process you might realize some aspects aren’t as important to you as you thought, and vice versa. Keep your agent in the loop as you update your lists so they can continue to search for the perfect home for you.
You don’t have to be an accomplished art collector, historian, or aficionado to curate and hang a well-crafted, visually appealing gallery at home. Hanging a gallery wall will give your collection of photos, drawings, and other works of art a place to be displayed. It can also give life to bland stretches of empty wall space, helping to tie together the spaces in your home. So, before you touch nail to drywall, keep the following information in mind to hang the perfect gallery wall for your home.
How to Create a Gallery Wall at Home
The first step to hanging a gallery wall at home is to assemble your artwork. Once you’ve gathered the artwork you intend to hang, take measurements of each piece to determine their framing dimensions. You’ll have an easier time finding frames for the pieces in your art collection with common dimensions—such as 5” x 7” or 8” x 10.” For artwork with uncommon dimensions, you can either shop around for custom framing or simply buy a larger frame with the appropriate matting to fit the artwork. Applying a mat can also give your pieces an elevated, professional look. Once you’ve taken your measurements, it’s time to shop for supplies.
Gather your gallery wall essentials first: a hammer, nails, hooks, and picture hangers. If you have a large piece of artwork in your collection, be sure to find a hanging apparatus certified to hold its weight. You may find it helpful to use paper and tape to “sketch” your desired layout on the wall before you start hanging, and while you’re hanging, use a level or framing square to determine when your artwork is level. During installation, start in the center of your wall space and work towards the edges. It may also be helpful to hang larger works first and work your way down in size. This way, if you need to make adjustments, you can easily adjust your smaller artworks around a focal point.
A living room gallery wall may be just the remedy for that large, blank space behind your couch. Because living room walls tend to be one of the larger surface areas in a home, it is a fitting place for large pieces of art and intricate collages of frames. Consider how the proportions of your gallery wall can create balance in your living room.
With the recent increase in remote work, home offices are more important now than ever before. Keeping your home office fresh and lively is the key to staying productive and inspired while working from home, and a gallery wall can help to do exactly that. Experiment with different combinations of artwork, photos of friends and family, and other cherished collectibles.
Hanging a gallery wall on the space above your headboard or on an adjacent wall is a quick and easy way to upgrade your bedroom. Fill the space with inspiring paintings, memorable photos, motivational quotes, or whatever artwork best compliments the color and décor throughout the room.
These are just a few of the ways you can incorporate a gallery wall into your home. Hanging a gallery wall in a children’s playroom can be a fun way to highlight their artwork. Curating a cascading gallery along a staircase between floors will create a flow between the levels in your home. The options are endless.
Some expenses that come with buying a home are easier to account for than others. Knowing the costs associated with buying a home will not only help you budget accordingly but will also pinpoint which homes are truly affordable for you. In no particular order, here are ten costs you can expect to encounter when buying a home.
10 Costs Associated with Buying a Home
1. Down payment
The down payment is a lump sum paid by the buyer upfront. The exact amount required varies by lender and loan type, but in general, a substantial down payment will help decrease your monthly payments. Making a traditional twenty percent down payment means less risk for your lender, opening the door for lower interest rates and avoiding the need for private mortgage insurance (PMI). But if you can’t come up with that much, it’s not a dead end. PMI and its various alternatives can help close the gap and provide a path to homeownership.
2. Homeowners insurance
Once you’ve purchased a home, there’s no time to delay in protecting it. A standard homeowners insurance policy typically covers your home, your belongings, injury or property damage to others, and any living expenses in the event of an insured disaster that renders your home unlivable. Homeowners insurance policies provide coverage for the owner(s) living on the property. If you plan on renting out your home or dwellings on your property, you’ll need to purchase separate landlord insurance to cover your tenants.
3. Mortgage payment
There’s a give and take with mortgage payments—the more you pay down your home, the more equity you build. Unless you’re making an all-cash offer, you can expect to budget for mortgage payments. Use the general rule that your house payments should be roughly 25% of your take-home pay. Use an online mortgage calculator to get an idea of what you can afford.
4. Closing costs
Before your home purchase is a done deal, you can expect to pay closing costs, which usually total somewhere between 2-5% of the total mortgage value. The terms of the purchase agreement will dictate how you and the seller will split the closing costs. They include but are not limited to underwriting fees, credit check fees, title insurance and title search, escrow fees, and more. These expenses can add up, so be sure you’re prepared when it comes time for closing day.
5. HOA fees
For those who are buying in developments governed by a homeowner’s association or are purchasing a townhouse or condo, you’ll likely have to pay HOA fees on top of your monthly mortgage payment. HOA fees, usually paid monthly, go towards maintaining the shared spaces, property, and amenities within the community. Before moving forward with your purchase, determine if the property is under the governance of a homeowner’s association and the cost of the fees.
6. Property taxes
Your annual property tax is calculated by multiplying the assessed value of your home by the tax rate. This figure is broken down into monthly installments and added on top of your mortgage payment. Because property taxes are based on the assessed value of your home, they are subject to change. If the assessed value of your home increases over time, so will your property taxes.
7. Repairs and remodeling
Unless you’re buying new construction, your new home will likely need repairs. Even after having completed a thorough home inspection, underestimating repairs expenses can be a costly mistake. Certain repairs may require the help of a professional, and while hiring them will ensure your home is in good hands, their services come with a price. If you’re buying with the intention of remodeling, remember to leave room for the other costs on this list before breaking ground on any projects.
8. Appraisal and inspection fees
Not only will a home inspection allow you to negotiate repairs and concessions with the seller, but it will also help you budget for the home repairs you’ll need to make in the future. An appraisal, carried out by a licensed third party, will determine your home’s appraised value—or in other words, how much the bank thinks your home is worth. Both fees can cost upwards of a few hundred dollars each.
9. Utilities
One of the first steps you’ll take in your new home is setting up your utilities. In general, the larger the property the more you can expect to pay in utilities. Electricity, gas, water, sewer, and trash and recycling pickup are just a few of the utilities you can expect to arrange for your new home. Get an early start on this list to avoid a situation where you need heat or running water, only to realize they haven’t been set up yet.
10. Moving costs
Often buyers can be so taken with the prospect of living in their new home that they forget to account for the costs it will take to move there. Set a timeline, take inventory of the items in your home, and stay organized throughout the process to make the moving process as efficient as possible. For more moving tips, read our guide on how to Make Your Move.
To understand more about how to navigate the buying process, give me a call.
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.
Hello there! I’m Windermere Real Estate’s Chief Economist, Matthew Gardner, and welcome to the latest episode of Mondays with Matthew.
Before I get started, I wanted to let you know that this will be the final episode of Monday with Matthew for 2021 as I’m going to be taking Christmas off. So it’s time to offer you my forecasts for the U.S. economy and the country’s housing market in 2022.
Although many people – including myself – had hoped that COVID-19 would have become a somewhat distant memory by now, and that the economy would have recovered this was – sadly – not to be the case, and the pandemic’s influence on the economy is still being felt and all the datasets I track tell me that, although we are certainly healing, COVID continues to act as a drag on economic growth and I expect that to continue through the spring of next year – if not a little longer.
Economic Recovery & Growth
And it’s because of this that I – along with many other economists – have spent the last few months lowering our forecasts for economic growth – at least through the middle of 2022. So, let’s look at this a little closer.
Here is my forecast for economic growth through the end of next year and you will note that, even though I am cautious in regard to the economy as we move through the winter and into 2022, I am still expecting to see a fairly decent bounce back in the fourth quarter of this year following the very disappointing rate that we saw in Q-3.
And on an annualized basis, I believe that the economy will have expanded by just shy of 5% this year and come in a little below 4% in 2022.
Simply put, the impacts of COVID-19 are going to continue to act as a drag on virus sensitive consumer services next year and ongoing supply chain issues will also delay inventory restocking. Both of these impacts have a depressing effect, in more ways than one, on economic growth, but I don’t see any chance that we will fall back into a recession.
Looking at the employment picture this chart shows my forecast for average monthly growth in jobs during a quarter and to give you some context, over the last decade or so the country has added an average of around 200,000 jobs per month during any one quarter and my forecast is for more robust employment growth as we move through 2022 and, if correct, I expect to see the country return to pre-COVID employment levels in the second half of the year.
And with jobs continuing to return I’m looking for the unemployment rate to continue trending lower and breaking south of 4% during the final quarter of the year. With the expiration of enhanced unemployment benefits – in concert with wages rising significantly in many face-to-face industries such as leisure and hospitality – prospects for people currently unemployed are looking rather good. That said, there are still millions of unemployed Americans who are not looking for work even with wages rising, the labor force still down by 3 million from its pre-pandemic peak, and this is worrying as businesses continue to have a hard time finding employees which raises the expectation that inflation will remain higher for longer than I would have liked to see.
Measures of Inflation
And that leads nicely into my final economic forecast and that is my outlook for inflation. As we have discussed, supply chain issues and labor shortages have increased prices significantly and this top chart shows annual changes in all consumer prices which I expect to remain around 5% until next spring, before gradually dropping down to below 3% by the end of the year.
But the core inflation rate – which excludes the volatile food and energy sectors – won’t peak until early next year before it too starts to gradually pull back and, at these levels, the Federal Reserve will undoubtedly have started to raise interest rates to counteract inflationary pressures. This is not pretty, but I absolutely do not believe that we are in some sort of inflationary spiral, or that “stagflation” will raise its ugly head again.
U.S. Housing Market
Okay! Now it’s time to turn our attention to the U.S. housing market which was a beacon of hope during the pandemic period and, given the massive spike in demand that started last June, I’m looking for a little more than 6 million existing homes will have changed hands in 2021, but I don’t see this level increasing in 2022 – mainly due to ongoing supply limitations as well as rising affordability issues, and I’m therefore forecasting sales to pull back – albeit very modestly – next year. That said, the country has never seen more than 6 million home selling in a single year since records were first kept so the number is still very impressive.
And with the market as tight as it has been so far this year, it shouldn’t be any surprise to see median sale prices skyrocketing and, even though we have 3 more months of sales data yet to be released, I still anticipate prices will have risen by almost 16 and a half % in 2021- a quite remarkable number. This pace of appreciation has never been seen before. In fact, the closest was back in 2005 – when the housing bubble was inflating rapidly – but even then, prices only rose by 12.2%.
But, as I mentioned in my sales forecast, this pace of growth is unsustainable and I am expecting to see some of the heat to come off the market next year but, a growth rate of 7.3% is certainly nothing to sniff at.
There are three major reasons why we will see the pace of growth slow. I have already mentioned my concerns regarding housing affordability, but mortgage rates and new supply will both influence the slowdown in sales and price growth in the resale arena.
Although I do not prepare a forecast for housing affordability, this is my where I expect to see mortgage rates through the end of next year and I am looking for them to continue “stair-stepping” higher but still ending 2022 below 4% – very low by historic standards given that the long-term average for a conventional 30-year mortgage is somewhere around 7 1/2%.
Obviously, as rates notch higher that starts to compress price growth as it puts a lower ceiling on how much a buyer can afford to pay for a home.
And slowing growth in existing home prices and sales will also be a function of additional supply and this chart shows my forecast for single-family starts this year and next. I expect more than a million homes to start construction in 2022 – continuing the trend that started in mid-2020 – but I am sure that some of you may be asking yourselves that if starts are already robust, how have existing home sales been able to increase so significantly if there has been solid supply coming from homebuilders – and that would be a great question.
And I would answer this by telling you that the way the Census gathers data on start is to count the number of home foundations that have been poured, but vertical construction has not necessarily started. And what we have been seeing is a lot of foundations but not so many homes actually being built – and we know this by looking at the number of homes that are for sale but have yet to be started. So, it’s important to look at a separate number that the Census Bureau also puts out which counts the number of units actually under construction, and that number has been growing significantly over the course of the last 18 months or so.
Builders have been hamstrung with rising labor and material costs which will lead new home sales this year to fall below the number seen in 2020; however, I do expect this to pick up significantly next year and my current forecast calls for 927,000 new homes to be sold in 2022.
So, there you have it, my economic and housing market forecast for 2022.
Of course, there are still a number of variables that could lead me to revise this forecast but, as an old economics professor of mine used to tell me, “Gardner, forecast well, but forecast often!”
If everything goes according to my plan, you should expect to see the housing market start to move towards some sort of balance next year, but I am afraid that it will still remain out of equilibrium until at least 2023.
And if you’re wondering, no, I don’t see a housing bubble forming and I’m also not at all concerned about homeowners currently in forbearance, but it would be silly to say that there aren’t any issues in the housing market that concern me because there are and the biggest of which is housing affordability and this will have a significant impact on the millennial generation who are continuing to get older, and they are all – well most – thinking about settling down and, possibly, having children, and I wonder how hard it will be for many of them to be able to afford to buy their first home because most really do want to become homeowners. Will builders figure out how to build to this massive pent-up demand? I guarantee you that whoever can solve this puzzle will do very, very well.
COVID-19 caused an unparalleled shock to the US economy and the rise of the delta variant has certainly impacted the speed of our recovery but, rest assured, this particular forecaster firmly believes that we will recover and that the economy will continue to grow.
Demand for ownership housing remains remarkably buoyant and, in fact, it is quite likely that demand may actually increase with the work from home paradigm that will start to gain momentum next year. It will be fascinating to watch how this impacts not just demand, but where these buyers will ultimately choose to live.
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