More and more economists are predicting a recession is imminent as the result of the pullback in the economy caused by COVID-19. According to the National Bureau of Economic Research:
“A recession is a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales.”
Bill McBride, the founder of Calculated Risk, believes we are already in a recession:
“With the sudden economic stop, and with many states shutting down by closing down schools, bars and restaurants…my view is the US economy is now in a recession (started in March 2020), and GDP will decline sharply in Q2. The length of the recession will depend on the course of the pandemic.”
How deep will it go?
No one knows for sure. It depends on how long it takes to beat this virus. Goldman Sachsanticipates we will see a difficult first half of the year, but the economy will recover in the second half (see below):This aligns with the projection from Wells Fargo Investment Institute:
“Once the virus infection rate peaks, we expect a recovery to gain momentum into the final quarter of the year and especially into 2021.”
Again, no one knows for sure how long the pandemic will last. The hope is that it will resolve sometime over the next several months. Most agree that when it does, the economy will regain its strength quickly.
This virus is not only impacting the physical health of Americans, but also the financial health of the nation. The sooner we beat it, the sooner our lives will return to normal.
Earlier this month, the National Association of Realtors (NAR) released a special study titled Single-Family Home Price Gains by Years of Tenure. The study estimates median home price appreciation over the last 30 years based on the length of homeownership.
Below are three graphs depicting the most important data revealed in the study.
How much have home prices increased?
One of the first measures of the financial benefits of homeownership is the net worth (in the form of equity) an owner can build over time. The study showed the average increase in home values based on how long homeowners stayed in a home.
What was the percentage of appreciation?
Another way to look at this is by the percentage increase in value over time, called appreciation:
Was this appreciation consistent throughout the country?
Today, when we think of markets that have done well over the last decade, we have a tendency to think about San Francisco, San Diego, Seattle, and other West Coast cities. Though it is true the West Region showed the highest price growth over the last three decades, we can see how every region of the country did quite well in ten-year increments:This data validates the claim that homeownership is great for building wealth. The importance of this information was highlighted in the study’s first sentence:
“Homeownership is an important source of wealth creation, enabling current homeowners and succeeding generations to move up the economic ladder.”
Homeownership has many financial and non-financial benefits. The accumulation of “housing wealth” through increased equity is a major one. If you’re thinking of buying a home for the first time or moving up to your dream home, the sooner you make the move, the sooner your net worth will begin to grow.
These 2020 Real Estate Projections May Surprise You
First, I’d like to say Happy New Year! I hope that 2020 will be a wonderful year, and the beginning of a great decade, for all of us!
Now that 2020 is here, I’d like to take a few minutes to try and get a sense of which way things might go with the real estate market. This will be an interesting year for residential real estate. With a presidential election taking place this fall and talk of a possible recession occurring before the end of the year, predicting what will happen in the 2020 U.S. housing market can be challenging. I’ve always found my crystal ball to be a bit cloudy, so I’ve dug in and found some thoughts from some of the big names in the national real estate space about, mortgage rates, home sales, and home prices. Read on to get the scoop!
Projections from the experts at the National Association of Realtors (NAR), the Mortgage Bankers Association (MBA), Fannie Mae, and Freddie Mac all forecast mortgage rates remaining stable throughout 2020:Since rates have remained under 5% for the last decade, we may not fully realize the opportunity we have right now.
Here are the average mortgage interest rates over the last several decades:
I got my first mortgage back in the late 1980’s and the rate was 12%, which was lower than it had been for quite a while and I remember doing my first refi when rates dropped to 10%. I thought that was such a bargain!!
Three of the four expert groups noted above also predict an increase in home sales in 2020, and the fourth sees the transaction number remaining stable:With mortgage rates remaining near all-time lows, demand should not be a challenge. The lack of available inventory, however, may moderate the increase in sales.
Below are the projections from six different expert entities that look closely at home values: CoreLogic, Fannie Mae, Ivy Zelman’s “Z Report”, the National Association of Realtors (NAR), Freddie Mac, and the Mortgage Bankers Association (MBA).Each group has home values continuing to improve through 2020, with four of them seeing price appreciation increasing at a greater pace than it did in 2019.
Is a Recession Possible?
In early 2019, a large percentage of economists began predicting that a recession might occur in 2020. In addition, a recent survey of potential home purchasers showed that over 50% agreed it would occur this year. The economy, however, remained strong in the fourth quarter, and that has caused many to rethink the possibility.
“Markets sounded the recession alarm this year, and the average forecaster now sees a 33% chance of recession over the next year. In contrast, our new recession model suggests just a 20% probability. Despite the record age of the expansion, the usual late-cycle problems—inflationary overheating and financial imbalances—do not look threatening.”
Mortgage rates are projected to remain under 4%, causing sales to increase in 2020. With growing demand and a limited supply of inventory, prices will continue to appreciate, while the threat of an impending recession seems to be softening. It looks like 2020 may be a solid year for the real estate market overall. If you’d like to have a peek at what’s happening in your neighborhood, or a place that you want to move, let me know. I’m happy to put together some local data for you.
Why Are Many Americans Choosing to Live in a Multigenerational Household?
The benefits to multigenerational living are significant. According to Toll Brothers,
“In recent years, there’s been a steady rise in the number of multigenerational homes in America. Homeowners and their families are discovering new ways to get the most out of home with choices that fit the many facets of their lives.”
The piece continues to explain the top 5 benefits of multigenerational living. Here is the list, and a small excerpt from their article:
1. Shared Expenses
“…Maintaining two households is undeniably costlier and more rigorous than sharing the responsibilities of one. By bringing family members and resources together under one roof, families can collectively address their expenses and allocate finances accordingly.”
2. Shared Responsibilities
“Distributing chores and age-appropriate responsibilities amongst family members is a tremendous way of ensuring that everyone does their part. For younger, more able-bodied members, physical work such as mowing the lawn or moving furniture is a nice trade-off so that the older generation can focus on less physically demanding tasks.”
3. Strengthened Family Bond
“While most families come together on special occasions, multigenerational families have the luxury of seeing each other every day. By living under one roof, these families develop a high level of attachment and closeness.”
4. Ensured Family Safety
“With multiple generations under one roof, a home is rarely ever left unoccupied for long, and living with other family members increases the chances that someone is present to assist elderly family members should they have an accident.”
“One of the primary trepidations families face when shifting their lifestyle is the fear of losing privacy. With so many heads under one roof, it can feel like there’s no place to turn for solitude. Yet, these floor plans are designed to ensure that every family member can have quiet time… [and] allow for complete separation between the generations within the household.”
The trend of multigenerational living is growing, and the benefits to families who choose this option are significant. If you’re considering a multigenerational home, let’s get together to discuss the options available in our area.
No one knows for sure when the next recession will occur. What is known, however, is that the upcoming economic slowdown will not be caused by a housing market crash, as was the case in 2008. There are those who disagree and are comparing today’s real estate market to the market in 2005-2006, which preceded the crash. In many ways, however, the market is very different now. Here are three suppositions being put forward by some, and why I think they don’t hold up.
A critical warning sign last time was the surging gap between the growth in home prices and household income. Today, home values have also outpaced wage gains. As in 2006, a lack of affordability will kill the market.
The “gap” between wages and home price growth has existed since 2012. If that is a sign of a recession, why didn’t we have one sometime in the last seven years? Also, a buyer’s purchasing power is MUCH GREATER today than it was thirteen years ago. The equation to determine affordability has three elements: home prices, wages, AND MORTGAGE INTEREST RATES. Today, the 30 year fixed mortgage rate is about 3.5% versus 6.41% in 2006.
In 2018, as in 2005, housing-price growth began slowing, with significant price drops occurring in some major markets. Look at Manhattan where home prices are in a “near free-fall.”
The only major market showing true depreciation is Seattle, and it looks like home values in that city are about to reverse and start appreciating again. CoreLogic is projecting home price appreciation to reaccelerate across the country over the next twelve months.
Regarding Manhattan, home prices are dropping because the city’s new “mansion tax” is sapping demand. Additionally, the new federal tax code that went into effect last year continues to impact the market, capping deductions for state and local taxes, known as SALT, at $10,000. That had the effect of making it more expensive to own homes in states like New York.
Prices will crash because that is what happened during the last recession.
It is true that home values sank by almost 20% during the 2008 recession. However, it is also true that in the four previous recessions, home values depreciated only once (by less than 2%). In the other three, residential real estate values increased by 3.5%, 6.1%, and 6.6%.
Price is determined by supply and demand. In 2008, there was an overabundance of housing inventory (a 9-month supply). Today, housing inventory is less than half of that (a 4-month supply).
We need to realize that today’s real estate market is nothing like the 2008 market. Therefore, when a recession occurs, it won’t resemble the last one.
If you’ve wondered what’s the difference between a split level and a split foyer, then you’ve come to the right place, ‘cause that’s what we’re talking about today and we’re starting right now.
My name is Harry Moore and I’m a 25-year veteran real estate agent in the Washington DC Metro Area. If you’d like to see my YouTube video on this, click the image below. If you are interested in seeing the content of these blog posts in video format, please subscribe to my channel!
Right now, I’ll take on another pair of real estate terms that seem to regularly confuse people, split level vs. split foyer houses. Both designs were mostly built in the mid 1950’s through the late 1960’s. They have different names in other parts of the country. In some areas split levels are called “ tri-levels” and Split Foyers are called Raised Ranchers.
In a split level house you usually have two sections of the house , one rectangular and one square. They normally have 3-4 levels, but you’ll sometimes see 5 and I’ve even seen 6 level splits a few times. You’ll generally walk in on the main level, with the living rm Dining room and kitchen on that level, then immediately to one side are two short sets of stairs, one that goes up to the bedrooms and one that goes down to the family room, other bedrooms and utility space. Often there is another level down which is a full below grade basement.
A split foyer is usually a 2 level rectangularly shaped house with the entry door and small foyer between the two levels of living space. So immediately when you walk in you’ll either go up to the living/dining/ kitchen and most of the bedrooms or down to family room, other bedrooms and utility space.
If you’re interested in other mid century style houses (like bilevels or maybe ramblers) reach out, my contact information is below, and I’ll set up a custom search for you.
My name is Harry Moore and I want to say thank you for taking the time to read this post. If you know someone, maybe a friend or neighbor, who might benefit from this information, please share this link with them. Make it a great day!
You’re wondering what’s happening with Kensington Maryland Real Estate these days, you’ve come to the right place, ‘cause that’s what we’re talking about today. My name is Harry Moore and I’m a full time veteran real estate agent in the Washington DC Metro Area. If you’d like to see this in video format please click the image below!
I’ve been out previewing a few houses on my way to the office, including this new listing at 11410 Soward Drive in Kensington. It’s a fixer upper in Kensington Knolls that backs to woods so the view out the back is really nice. If you’re interested in seeing the interior pictures, click on the image below and check it out, and if you’d like to arrange a showing, my contact information is below.
One of the questions that I get all of the time is “ hows the market”? If you’re curious about what’s going on with Kensington Maryland home sales, then stick around for the next few minutes for an up to the minute snapshot of the Kensington Maryland Real Estate Market. So let’s get going!
First we’ll look at the current numbers for July and the year to date numbers
This year- 16
New listings are down 47%
Total Active listings
Total active listings are down 40%
Under contract properties are down 33%If you are getting your updates from Zillow, Trulia, Realtor.com or any of the other portal sites then many of the listings you are seeing may not even be available.
If you want up to the minute data, then contact your agent and have them set up an update for you that’s coming directly from the Multiple Listing Service, it’s the primary source that feeds all of the portal sites, why not get it direct?
Another benefit of a direct MLS search, is that you can see coming soon listings, so if you want to know about listings when they are being “pre-marketed” on the MLS then you’ll need to have your agent set that up for you.
Now let’s take a quick look at the Year To Date numbers
Number of sold properties
Average Sales Price
Average Days on Market
If you’ve got a house on the market and it’s not selling, maybe it’s been on the market for longer than 51days and you’d like to figure out how to get your house sold, then check out my video about the 4 things you need to do to get your house that’s already on the market sold.
There’s another number that I like to watch, the properties that failed to sell. In August, 12 properties failed to sell. Although some of those probably came back on the market, it reminds us that, even in a strong seller’s market, not every house sells.
2 other numbers that I keep an eye on are the absorption rate and the list to sell ratio.
What’s absorption rate? -Take the average number of sales over the past 12 months and divide that into the active properties, that tells you how long it’d take for all of the houses in your market to sell if nothing else came on the market. By using a 12 month average that takes seasonal market cycles into account .
If you know the number of months of inventory that helps to determine what sort of market you are in.
0-4 months is a sellers market
4-6 is a transitional market
6+ is a buyers market
Kensington had 1.12 months of inventory at the end of August, that’s down from 1.29 months at the end of July. Part of that is seasonal, August is the end of the spring and summer season, and lots of people are at the beach, or wherever they go to get away.
How much the average home sells for as a percentage of the asking price. This is another good indicator of what sort of market you are in. Higher list to sell ratio means a sellers market. A lower ratio points to a buyers market. The list to sell ratio for August was 97.9%.
What does this all mean??
The big news is that the shelves are pretty bare. Inventory continues to sink, 1.12 months of inventory is the lowest number since March of 2018. Demand has remained strong, with average days on market dropping year over year. The gap in average sales price Year over Year from 2018 has narrowed substantially. Prices were actually down a bit over July, but still are well above the numbers last year. So, it’s a good time to sell. If you know anyone who’s thinking about selling, I’d appreciate the opportunity to speak with them about how I can help them to capitalize on this strong seller’s market.
This is all big picture data, which is good to have, but real estate is very local, and you can see big variations in the market based on price range and specific location. If you’re thinking about getting into the market, either as a buyer or a seller and would like a detailed neighborhood-specific analysis my contact information is below, just reach out and I’ll get right back to you.
If you know someone, maybe a friend or neighbor, who might benefit from this information, please share this article with them. Make it a great day!
My name is Harry Moore and I’m a realtor in the Washington DC Metro Area. If you’ve got a house on the market and it’s not selling, maybe it’s been on the market for a while and you’re starting to get nervous, then it’s time for you to take a look at what needs to be done to get your house sold.
If you’d like to see this in video format, please click the image below!
There are four things that sell homes- location, condition, presentation and price. Let’s go through each of them and examine how they affect the ability to sell your house.
Location- Not much to do here, unless you’re going to pick the house up and move it, but make sure that when you’re looking at the competition and what’s going on in the market that you’re focused on properties in comparable locations.
Condition- You really need to take a good hard look at how your house will look to someone who’s never seen it before. Take off your seller glasses and put on your buyer glasses.
It’s human nature to get used to the “quirks” of your house when you see them every day, but buyers have fresh eyes, and they’ll react very differently.
Once you’ve taken a survey of the condition of the house with your buyer’s eyes, then put together a list of things that need to be addressed. Think about your budget and how much time you have to get these things done.
Now, take a look at the competition.
Take a look at other properties that are on the market right now that buyers are looking at and comparing to yours, and see how your house stacks up.
Remember those seller glasses, take ‘em off!!
You can view a lot of your competition online, but it’s even better if you contact your agent and go look at some of them in person.
Once you’ve put together your list of condition items and done a survey of the competition, then you can decide what needs to be done to make sure your house is putting it’s best foot forward.
Have a frank conversation with your agent about the pros and cons of the different alternatives and put together a plan that makes sense for you.
Next, take a look at the presentation of your property. Does your listing have professional photographs? Has the property been staged to show it’s best? Is there a 3D and or video tour available?
I am a big fan of Matterport 3D tours. I think they are a great way for people to get a really good sense of your house and how everything fits together. You can start with the “dollhouse” view so that you know where everything fits together, and then zoom in to the individual rooms and walk around.
Next, what sort of social media marketing campaign is being used? How does your listing appear on the portal sites? Is it the same as what’s showing up on the MLS? Sometimes it isn’t and that may need to be fixed.
Once you’ve addressed condition and presentation and made adjustments, then take a good hard look at the price.
It’s not a conversation that anyone looks forward to, but it’s an important one to have. The market moves quickly, and you don’t want to be left behind.
Have your agent gather the current market data, and set up a time to review it with ‘em. Think about your goals, why you are selling your home, and focus on what needs to be done to move you towards that.
So now you’ve learned the 4 things that you need to review address if your house isn’t selling.
My name is Harry Moore and I want to say thank you for taking the time to read this post.
If you know someone, maybe a friend or neighbor, who might benefit from this information, please share this article with them. Make it a great day!
If you want to learn more about this topic in video format, please click the image below!
You’ve done lots of hard work to get your house ready and now it’s on the market and lickety split. You get an offer. If you’re wondering what to do next, then you’ve come to the right place.
My name is Harry Moore and I’m a realtor in the Washington DC metro area. Today, we’ll talk about what it means when an offer comes in quickly and the things that you can do to be prepared. If an offer comes in quickly, many sellers hesitate to work with it because they think that means there are more buyers out there and if they wait, they’ll get something better. There’s an old saying in the real estate business that the first offer is the best offer and I found that to be true most of the time in any segment of the market at any given time, there’s a pool of buyers that are ready, willing, and able to purchase real estate. I like to call them ripe buyers.
They’ve been out there, they’ve seen what’s available. Maybe they’ve written a couple of offers on other properties that didn’t work out and they’re ready to buy. Those are the people whose attention we want to get. We’re not really interested in buyers that are just getting started or looky-loos or nosy neighbors. The real estate market isn’t static. It’s not as quick to move as the stock market, but the dynamics do change and there’s always a push pull of market forces that you as a seller need to be aware of and prepared for. It’s key to lay out a plan from the very beginning so that you’re aware of what the different scenarios might be and if there is a clear process about how to deal with offers when they come in. I break this down into two components, paperwork and Intel. First we’ll talk about paperwork.
One thing that I like to do to help my seller clients be prepared is to review the contract forms with them ahead of time. That way, they’re familiar with the 20 to 30 pages of terms, conditions and disclosures. That’ll come at them as part of the offer that helps them be able to focus on the offer itself, instead of digesting all of the legal ease. I know that it’s a little passe in this era of email and text messaging, but I really like to get on the phone to gather my intel first. I try to gather feedback from agents who’ve shown the property so that the sellers can have some sense about what the market is saying about their home. It’s not easy to get. Most people don’t answer their phones and they don’t return voicemail messages, but I find that the quality of feedback that I am able to get from those who do respond is much better than what comes back from automated email or texts requests.
Second, I talked to the buyer’s agent. When an offer comes in, this helps to understand where the buyer stands, what experience they’ve had in the market, and if this is their first offer that they’ve written, how long they’ve been in the market, other things that are important background information for me to share with my sellers. It’s also good to get a read on what sort of personality the agent has. All of that helps me to give my client perspective about how they want to respond. Today’s real estate market is momentum driven. I like to use the analogy of surfing. If you’ve ever been to the ocean and Gone Body Surfing or regular surfing, you know what I mean? It’s that feeling of catching the wave versus the wave roll in right past you as a seller. You don’t want to miss that wave of early market momentum.
That’s when you have the most control. The market’s been pretty brisk for a number of years and in many market segments, a number of listings go into contract in the first week. Savvy buyers know that and they look at the properties that have been on the market for awhile and say what’s wrong with it and can I get a deal that’s, which can flip pretty quickly depending on the market. We want a buyer who’s looking to please not looking to negotiate. Some strategies to help be prepared when an offer comes in early. First, understanding the paperwork before offers come in. Second background information about the market, showing feedback and the background on the buyer and the buyer’s agents. All of this will help you to be in a good position to respond.
If you know someone, maybe a friend or neighbor or family member who might benefit from this information, please share this post with them. Make it a great day!
You’ve got a contract on your house, and you’re wondering about what to expect from a home inspection. If you’d like some home inspection tips for sellers, you’ve come to the right place, ‘cause that’s what we’re talking about today, and we’re starting right now! My name is Harry Moore and I am a realtor in the Washington DC Metro Area and I post new videos every week about all things real estate in the DMV.
If you’d like to view my YouTube video on this topic, click the image below
Whew, you’ve got a contract on your house. Congratulations! Now you can relax, well…not quite yet. Once they have a contract, most people tend to lighten up a little. That’s natural, and I’m not saying that you need to keep your house “ show ready” but there are still a few more hurdles to overcome before you get to settlement.
In this episode of the series on home selling tips we’ll talk about the home inspection . For many sellers it can be almost as stressful as having their house on the market.Today I’ll share a list of some simple tactics that you can use to avoid potential issues and keep things moving along as smoothly and possible towards settlement.
If you’d like some great tips on other parts of the home selling process, from thinking about curb appeal all the way to settlement, then click the link above, or check the notes below to access other videos in the home selling series. Enough of that, let’s jump right in.
1.)Try to keep the house looking tidy. It doesn’t have to be as spotless as you kept it when it was on the market, but don’t let it slide back to the way you live normally. Spend 15-30 minutes the morning of the home inspection cleaning it up a bit. Remember this will be the first time that the buyers have been in the house since the contract was accepted. They’ll be excited and a little nervous. You want them to be happy and feel reassured when they walk in the door.
2.)People won’t be surprised if you’ve started packing, just try to keep the boxes away from the walls, especially in the basement and garage if you have one. Stack things neatly in the middle of the room. Inspectors are usually more interested in the stuff that’s along the walls; plugs and pipes and such, so keeping your things towards the middle will enable them to see what they need to. This doesn’t mean you have to move furniture, just don’t have stacks of boxes backed right up against the walls.
3.)Keep the utility area clear of clutter and easily accessible- A lot of times people have all sorts of things stored around the furnace and hot water heater. Keeping those areas clear for the inspector so they can access those systems easily will keep the inspection moving along smoothly. Inspectors generally can’t move personal items for insurance and liability reasons. If they’re not able to access the major systems, then the issue of a reinspection could come up, and you’d rather avoid that if at all possible.
4.)Make sure that all appliances which convey with the house are plugged in and operating, so they can be tested. That includes things like fans on fireplace inserts, spare fridges or freezers and other things like that.
5.)This might seem a little silly, but make sure you don’t have any burnt out lightbulbs, especially in hard to access light fixtures. It’ll keep the inspector from noting it in their report and suggesting an electrician come out to confirm the fixture is working.
6.)Make sure your toilets are functioning properly. Often people get used to the “personality” of their toilets when they live in the house, the fact that you have to jiggle the handle, or that it’s slow to refill…things like that. But the inspector and the buyers won’t be. Sometimes there is a toilet that does not get much use, maybe in a basement bathroom. Check it and make sure it’s working.
7.)Change your HVAC air filter and dust off the return grills. Dirty filters are a sure sign of deferred maintenance, and that’s a big red flag for one of the more expensive systems in the house.
8.)Check the roof and gutters. Clogged gutters, or even worse gutters that have plants growing in them are not good. Also check the roof for fallen branches and other debris.
9.)Make sure that all keys and remotes are available and working, and that any out of the way places such as crawl spaces and sheds are easily accessible. It’s human nature to fear the unknown. If they can see everything the first time, they’ll feel better about the whole house.
10.)Provide any documentation for substantial upgrades, or repairs and major maintenance items so that the buyers and the inspector can see them. That will help them to understand what you’ve done to maintain your home. A classic example is if you’ve had major work done to your furnace. The inspector might look at the outside of the unit and say that it looks old, but you might have replaced the heat exchanger or the condensor recently. That could influence their opinion about the remaining life of the unit.
Sometimes sellers want to be at the inspection. That’s generally not a good idea. The buyers want to feel comfortable in the house, and be able to talk openly with the inspector and their agent about questions they might have. It’s really very much like a showing. You want the buyers to feel at ease in the home. Remember you want them to feel like its theirs. I suggest that sellers plan to be out of the house for about 3 hours during the inspection, sometimes more or less, but that’s a pretty good rule of thumb.
Here’s a little post inspection tip for you. Take a few minutes right when you get home after the inspection to check all the appliances, faucets, toilets and spigots and other systems to make sure that everything is in good order. You’ll also probably have to re set your digital clocks on the microwave and your alarm clock, since they may have been testing circuits. Inspectors are professionals, but they’re human too, sometimes they forget things and it’s always better to nip those issues in the bud.
So, you’ve gotten some great tips about how to prepare for the home inspection. If you’ve sold a home before, do you have any tips and tricks that were helpful in preparing for your home inspection? If so, please share them in the comments. I’d love to hear from you and learn some new things that I can let future sellers know about.
Once the inspection has been finished there are a few different options, depending on the jurisdiction and the type of contingency that was negotiated. In the next seller’s video we’ll talk about negotiating the home inspection contingency.