What is Montana known for? Will Bozeman house prices go down? Is Bozeman a real estate bubble?  Our Bozeman real estate group tackles those questions here and on our Instagram and Facebook page.

Jan. 31, 2022

Why Right Now Is a Once-in-a-Lifetime Opportunity for Sellers

If you’re even thinking about selling your house in 2022, you truly have a once-in-a-lifetime opportunity at your fingertips. How can I make such a bold claim?  Well, when selling anything, whether it's small like a pair of skis or large like a home or piece of land, you always hope for strong demand for the item coupled with a limited supply. That how you maximize your leverage when you’re negotiating the sale. Home sellers are in that exact situation right now. Here’s why.

 

Demand Is Very Strong

According to the latest Existing Home Sales Report from the National Association of Realtors (NAR), 6.18 million homes were sold in 2021. This was the largest number of home sales in 15 years. Lawrence Yun, Chief Economist for NAR, explains:

 

“Sales for the entire year finished strong, reaching the highest annual level since 2006. . . . With mortgage rates expected to rise in 2022, it's likely that a portion of December buyers were intent on avoiding the inevitable rate increases.”

 

Despite anticipated mortgage rate increases, demand isn’t expected to weaken this year.  In addition, the Mortgage Finance Forecast, published last week by the Mortgage Bankers’ Association (MBA), calls for existing-home sales to reach 6.4 million homes this year.

 

Supply Is Very, Very Limited

The same sales report from NAR also reveals the months’ supply of inventory just hit the lowest number of the century. It notes:

 

“Total housing inventory at the end of December amounted to 910,000 units, down 18% from November and down 14.2% from one year ago (1.06 million). Unsold inventory sits at a 1.8-month supply at the present sales pace, down from 2.1 months in November and from 1.9 months in December 2020.”

 

The reality is, inventory decreases every year in December. That’s just how the typical seasonal trend goes in real estate. However, the following graph emphasizes how this December was lower than any other December going all the way back to 1999.

 

Right Now, Sellers Have Maximum Leverage

As mentioned above, when there’s strong demand for an item and a limited supply of it available, the seller has maximum leverage in the negotiation. In the case of homeowners who are thinking about selling, there may never be a better time than right now. While demand is this high and inventory is this low, you’ll have leverage in all aspects of the sale of your house.  Negotiating repairs, what you leave behind (bye bye pool table or grandma's massive china cabinet).

 

Today’s buyers know they need to be flexible negotiators that make very competitive offers, so here are a few more areas that could tip in your favor when your house goes on the market:

  • Competitive sales price
  • Flexible closing date
  • Potential for a leaseback to allow you more time to find a home
  • Minimal offer contingencies
  • Bottom Line

If you’re thinking of selling your house this year, now is the optimal time to list it. In real estate, we can project trends but if you've been through any of the other highs and lows of the market, you know nothing is guaranteed.  Let's connect so I can share some more info on where I see your home's value trending over the next several months, and what it's worth now vs. if you wait and the market changes.

 

Jan. 25, 2022

Sellers: Sell Now or Wait Until Spring To Make Your Move?

Let's dig in and discuss the benefits of selling now before things heat up.

 

As you plan out your goals for the year, moving may top the list. But, how do you know when to make your move? You want to time it just right so you can get the most out of the sale of your current house. You also want to know you’re making a good investment when you buy your new home, if that's part of the plan. What you may not realize is, that opportunity to get the best of both worlds is already here.

 

You don’t want to wait until spring to spring into action. Current market conditions make this winter an ideal time to make the move. Here’s why:

 

1. The Number of Homes on the Market Is Still Low

Today’s limited supply of houses for sale continues to keep sellers in the driver’s seat. There are far more buyers in the market than there are homes available, and that means buyers are eagerly waiting for your house. Listing your house now makes it the center of attention. As a seller, that means when it’s priced correctly, you can expect it to sell quickly and get multiple strong offers this season. Just remember, experts project more inventory will come to market as we move through the winter months. The realtor.com 2022 forecast says this:

 

“After years of declining, the inventory of homes for sale is finally expected to rebound from all-time lows.”

 

Selling now may help you maximize the return on your investment before your house has to face more competition from other sellers.

 

2. Your Equity Is Growing in Record Amounts

Current homeowners are sitting on record amounts of equity thanks to today’s home price appreciation. According to the latest report from CoreLogic, the average homeowner gained $56,700 in equity over the past 12 months ($68K in Montana!)

 

That much equity can open doors for you to make a move. If you’ve been holding off on selling because you’re worried about how rising prices will impact your own home search, rest assured your equity can help fuel your next move. It may be just what you need to cover a large portion – if not all – of the down payment on your next purchase.

 

3. While Rising, Mortgage Rates Are Still Historically Low

In January of last year, mortgage rates hit the lowest point ever recorded. Today, rates are starting to rise, but that doesn’t mean you’ve missed out on locking in a low rate. Current mortgage rates are still far below what they’ve been in recent decades:

 

In the 2000s, the average mortgage rate was 6.27%

In the 1990s, the average rate was 8.12%

Even with mortgage rates rising above 3%, they’re still worth taking advantage of. You just want to do so sooner rather than later. Experts are projecting rates will continue to rise throughout this year, and when they do, it’ll cost you more to purchase your next home.

 

4. Home Prices Are Going To Keep Rising with Time

According to industry leaders, home prices will also continue appreciating this year. While experts are forecasting more moderate home price growth than last year, it’s important to note prices will still be moving in an upward direction throughout 2022.

 

What does that mean for you? If you’re selling so you can move into a bigger home or downsize to the home of your dreams, you want to consider moving now before rates and prices rise further. If you’re ready, you have an opportunity to get ahead of the curve by purchasing your next home before rates and prices climb higher.

 

Bottom Line

If you’re considering selling to move up or downsize, this may be your moment, especially with today’s low mortgage rates and limited inventory. Let’s connect to discuss our seller strategy program.

Jan. 19, 2022

The 2022 Housing Market Market

Let's create some certainty as we roll into the 2022 market.

How? By understanding trends AND looking at what experts in the field have to say. Speculating there will be a crash based on wishful thinking so you can buy low--not a strategy for certainty.

Inventory is the biggest driver for 2022. Mortgage rates, inflation & COVID will have an effect, but available homes to purchase is down 27% nationwide, $23% in Montana.

Demand for showings did not taper off during the holidays. Activity tracking from Showing Time did not lag the way it typically does. Buyers are pressing on.

Equity use by homeowners has seen a big shift. In the past, owners proudly paid down mortgage to get debt free. Now, homeowners are thinking more like investors, considering how to use equity growth. How? Buying a second home, short-term rental, helping a family member. With an average national gain of 57%, with 68% in, there's a lot of options to maximize the use of your equity. Remember, equity is *air* until it is accessed. Equity is useless you utilize it.

Determine current equity: Market value - loans on home = your equity.

Forbearances are below 1 mil as of Dec 21. It was at 2.76 mil in Dec 20, and 4.76 mil in May of 20. Maiclaire BoltonSmith with Corelogic says we may see a slight uptick, but delinquency is trending very low. Numbers just aren't there like before during the last housing crisis. Soooo, waiting for a crash or downturn is not solid strategy.

Jan. 3, 2022

How Much Do You Need for Your Down Payment?

 

As you set out into 2022, determined to purchase, you likely have a plan in place, and you’re working on saving for your purchase. But do you know how much you actually need for your down payment? If you think you have to put 20% down, you may have set your goal based on a common misconception. 

Freddie Mac says:

“The most damaging down payment myth—since it stops the homebuying process before it can start—is the belief that 20% is necessary.”

Unless specified by your loan type or lender (which can differ, as all lenders aren't created equally), it’s typically not required to put 20% down. According to the Profile of Home Buyers and Sellers from the National Association of Realtors (NAR), the median down payment hasn’t been over 20% since 2005. It may sound surprising, but today, that number is only 13%. And it’s even lower for first-time homebuyers, whose median down payment is only 7% (see graph below):

How Much Do You Need for Your Down Payment? | MyKCMWhat Does This Mean for You?

While a down payment of 20% or more does have benefits, the typical buyer is putting far less down. That’s good news for you because it means you could be closer to your homebuying dream than you realize.

There are also options like VA loans and USDA loans with no down payment requirements for qualified applicants. If you’re interested in learning more about down payment assistance programs, information is available through sites like downpaymentresource.com.

To understand your options, you need to do your homework. This starts with getting in touch with me for some local lender referrals, to find the one that best fits your personality style and financial approach.  

Bottom Line

Remember: a 20% down payment isn’t always required. If you want to purchase a home this year, let’s connect to start the conversation and explore your down payment options.

Dec. 27, 2021

How to Choose the Right Agent

How do most people find their agent? 

They ask a friend.  They ask a coworker.  They use the (sometimes mediocre) agent they used before.  Why?

Simply put, it's A PAIN to find an agent, let alone a good one.  And one that suits your business and personal style, gets you and your goals, and has your best interests in mind. 

That's a lot.

Here's a cheatsheet you can download to make sure you get at least a few important questions answered.   To be clear, there are no right answers, but the agent you speak with should have a clear answer of their own for all of these questions:

[Download] Questions to Ask An Agent Before Hiring

 

More info on this topic:

Nationwide Agent Matching Service

 

Dec. 21, 2021

Montana Home Equity Grew $68K This Year



The Average U.S. Homeowner Gained $56,700 in Equity over the Past Year

Your equity is the current value of your home minus what you owe on the loan. So, as home values climb, your equity does too. Right now there aren’t enough homes on the market to meet buyer demand, so bidding wars and multiple offers are driving prices up. This is projected to continue.  

Dr. Frank Nothaft, Chief Economist at CoreLogic, explains it like this:

Home price growth is the principal driver of home equity creation. The CoreLogic Home Price Index reported home prices were up 17.7% for the past 12 months ending September, spurring the record gains in home equity wealth.

Curious how your state stacks up against those in other states? Check out the map below to find out the average equity gain for each state through the third quarter of 2021:The Average Homeowner Gained over $56,700 in Equity over the Past Year | MyKCM

How Rising Equity Impacts You

If you’re already a homeowner, equity not only builds your wealth, as part of your overal plan.  It works like this: when you sell your house, the equity you built up comes back to you in the sale. You can use those proceeds to fuel your next move, including putting a non-contingent offer in on a home.  

If you’re thinking about becoming a homeowner, understanding the importance of equity can help you realize why homeownership is a worthwhile goal. It builds your wealth, and is part of your overall lifestyle and financial goals.  

Bottom Line

Whether you’re a current homeowner or you’re ready to become one, it’s important to know how equity works and why it matters. Equity growth is never guaranteed (remember the recession?) but holding off on using your current equity is an important thing to think about, as it shrinks and expands alongside the market.  

We'll do free custom home value analysis for you so you can track  your home's value anytime.  This isn't a Zestimate (Montana is a non-disclosure state, so they don't have access to our sold pricing data).  Just contact us and we'll start working on it for you.

Dec. 6, 2021

3 Reasons To Sell Over the Holidays

If you’re trying to decide whether or not to sell your home right now, there may not be a better time than this winter. Selling this season means you can take advantage of today’s strong sellers’ market when you make a move.  Rates are projected to rise throughout 2022, which decreases buyer's purchasing power (meaning they can afford less when rates are higher):Win When You Sell (And When You Move) | MyKCMSelling Over The Holidays

If you sell now, here’s what you can expect:

  • Your House Will Stand Out – While recent data shows there are more sellers than usual getting ready to list their homes this winter, there are still more buyers in the market than there are homes for sale. If you sell your house now before more houses are listed, it will get more attention from serious buyers who are eager to find a home.
  • Your House Will Likely Get Multiple Offers – When supply is low and demand is high, buyers have to compete with each other for a limited number of homes. The latest Realtors Confidence Index from the National Association of Realtors (NAR) shows sellers are getting an average of 3.6 offers in today’s market.
  • Your House Should Sell Quickly – According to the same report from NAR, homes are selling in an average of just 18 days. As a seller, that's great news for you if you’re looking for a quick process.

Win When You Move

In addition to these great perks, you’ll also win big on your next move if you sell now. CoreLogic reports homeowners gained an average of $51,500 in equity over the past year. This wealth boost is the result of buyer competition driving home prices up. You can leverage that equity to fuel a move, before mortgage rates and home prices climb higher. To get a feel for how rates are projected to rise, see the chart below.The longer you wait to make your move, the more it will cost you down the road. As mortgage rates rise, even modestly, it will impact your monthly payment when you purchase your next home. Waiting just a few months to make that change could mean a long-term financial impact.

The good news is today’s rates are still hovering in a historically low range. According to Doug Duncan, Senior VP and Chief Economist at Fannie Mae:

“Right now, we forecast mortgage rates to average 3.3 percent in 2022, which, though slightly higher than 2020 and 2021, by historical standards remains extremely low . . .

Selling before rates climb higher means you can make your move and lock in a low rate on the mortgage for your next home. This helps you get more home for your money and keeps your payments down too.

Selling Can Be Better Than Refinancing

With equity (amount you will net) on the rise, selling often makes much more sense than refinancing.  Once you add in the origination fees, prepaids such as taxes and insurance, Title or Attorney fees and other add-ons, it can take years to recoup those costs.  If you don't love your home, why start the clock at zero again?

Bottom Line

As a homeowner, you have a great opportunity to get the best of both worlds this season. You can truly win when you sell and when you buy. If you’re thinking about making a move, let's connect so you have the information you need to get the process started.

Dec. 1, 2021

Pre-Approval: The Best First Move To Make as a Homebuyer

How To Think Strategically as a Buyer in Today’s Market



The game of chess can provide incredible lessons to apply to all aspects of life, including the homebuying process. (Hint: Finding a home online and calling any agent for a showing is not part of a successful strategy). Chess requires you to plan and think about your strategy from the very beginning of the game.

The homebuying process, like chess, requires strategy and planning. Here are a few things to keep in mind to ensure your plan is as strong as possible when you begin your home search.

 

It’s important to have a great opening play when you’re buying a home. And the best move you can make when you begin your home search is getting pre-approved by a lender. You’ve probably already heard this is an important step, but what exactly is pre-approval and what benefits does it provide you?

As Freddie Mac puts it:

“The pre-approval letter from your lender tells you the maximum amount you are qualified to borrow. Getting a pre-approval letter is not a loan guarantee, it simply states how much your lender is willing to lend you. . . .”

And while determining how much you can afford at the start of your search is critical, the pre-approval letter also serves another important purpose. Freddie Mac also notes:

“This pre-approval allows you to look for a home with greater confidence and demonstrates to the seller that you are a serious buyer.”

In the game of chess, a strong opening move signals to your opponent that you’re a serious competitor. As a homebuyer, your pre-approval letter signals to the seller and their agent that you’re a serious, interested buyer.

Bottom Line

Getting a pre-approval letter isn’t just good strategy, it can be game-changing. It allows you to get a full understanding of what you can afford, and it signals to sellers that you’re serious. Let’s connect today to ensure you’re playing chess and being strategic during the home buying process.

Nov. 29, 2021

Is Now Still A Good Time To Sell?



As we near the end of the year, most markets are still seeing strong sales, multiple offers and other signs that indicate the seller's market will continue into 2022.   Record-breaking home price appreciation, growing equity, remote work, and competitive mortgage rates are motivating sellers to make a move to sepspecifically address their desired  lifestyle needs. We'll ttalk about what a sellers market actually is later in this post.

Info from realtor.com shows a larger share of homeowners are planning to list their houses this winter. So, that means more homes are about to hit the market, which will lead to more choices for buyers too.

According to George Ratiu, Manager of Economic Research at realtor.com:

"The pandemic has delayed plans for many Americans, and homeowners looking to move on to the next stage of life are no exception. Recent survey data suggests the majority of prospective sellers are actively preparing to enter the market this winter."

If you’re thinking of waiting until the spring to sell your house, know that your neighbors may be one step ahead of you by selling this winter. A big advantage of selling now is that serious buyers are continuing to look through the holiday season.  I encourage you to run some holding numbers, which means adding up the cost of holding your home for another 6-8 months and comparing it to rising home costs in the place where you intend to purchase, whether it's here or in another area.

If you want to stand out from the crowd, this holiday season could be a good time to make sure your house is available for buyers. Here’s why:

Sellers Are Still Firmly in the Driver’s Seat

Historically, a 6-month supply of homes for sale is needed for a normal or neutral market. That level ensures there are enough homes available for active buyers (see graph below):Why Now Is a Great Time To Sell Your House | MyKCMThe latest Existing Home Sales Report from the National Association of Realtors (NAR) shows the inventory of houses for sale sits at a 2.4-month supply. This is well below a neutral market.

What Does That Mean for You?

When the supply of homes for sale is very low, it’s much harder for buyers to find a home to purchase. This drives up competition among buyers, who then submit increasingly competitive offers to win out against others in the home search process. As this happens, prices rise and your leverage as a seller rises too, putting you in the best position to negotiate a contract that meets your ideal terms.

And while the low housing supply we're facing won't be solved overnight, sellers should move quickly to maximize their potential. As the data shows, with more prospective sellers planning to list their homes this winter, selling sooner rather than later helps your house rise to the top of a holiday buyer’s wish list so you can close the best possible deal.

Bottom Line

Listing your home over the next few weeks gives you the best chance to be in front of buyers competing for homes this holiday season. Let’s connect today to discuss how you can benefit from today’s sellers’ market.

Read more about this topic:

Learn more tips in our Seller Intelligence section of the blog.

Nov. 24, 2021

How Smart Buyers Are Approaching Rising Mortgage Rates

 

How Smart Buyers Are Approaching Rising Mortgage Rates | MyKCM

Last week, the average 30-year fixed mortgage rate from Freddie Mac inched up to 3.1%, and experts project rates will continue rising through 2022:

“The 30-year fixed-rate mortgage was 2.9% in the third quarter of 2021. We forecast mortgage rates to increase slightly through the remainder of the year and reach 3.0%, rising to 3.5% for full year 2022.”

If you’re thinking of buying a home, here are a few things to keep in mind so you can succeed even as mortgage rates rise.

Taking Time Off Can Be Costly

Mortgage rates play a significant role in your home search. As rates go up, your monthly mortgage payment increases if you’re buying a home, directly affecting how much you can afford. And even the smallest increase can have a large impact on your monthly payment (see chart below):How Smart Buyers Are Approaching Rising Mortgage Rates | MyKCMWith mortgage rates on the rise, you’ve likely seen your purchasing power impacted already. Instead of waiting and hoping rates will fall, today’s rates should motivate you to purchase now before rates increase more.

Smart Buyers Can Succeed by Planning Ahead

You can use your newfound motivation to energize your search and plan your next steps accordingly so you’re prepared to act no matter what happens with mortgage rates. One way to do that: take rising rates into consideration as part of your budget.

Danielle Hale, Chief Economist at realtor.com, puts it best, saying:

“Smart buyers should consider calculating a monthly payment not only at today’s rates, but also at rates that are a bit higher so that they won’t be derailed by a sudden upward move. . . .”

You should also be ready to act when you find the home that meets your needs. That means getting pre-approved with a lender so there won’t be any delays when the time arrives.

The best way to prepare is to work with a trusted real estate advisor now (hey there, good looking :). We can connect you with a lender, help you adjust your search based on your budget, and be ready to act quickly when it’s time to make an offer.  Finding that home before this work is done?  Well, that's a heartbreaker when someone else goes under contract only because they did the work and area ready, but you aren't.

Bottom Line

Serious buyers should approach rising rates as a motivating factor to buy sooner, not a reason to wait. Waiting will cost you more in the long run. Let’s connect today so you can better understand your budget and be prepared to buy your home even before rates climb higher.

Posted in Buyer Intelligence