Scott’s Perspective
The current real estate market of high demand/low supply has some speculating that history will repeat itself in the form of another Financial Crises like what occurred in 2008. I’ve read headlines lately mentioning a “Housing Bubble”, and warning of the “Imminent Housing Crash!” However, nothing could be further from the truth. Leading up to 2008, builders were constructing a record number of houses affecting strong supply. Additionally, underwriting standards were more lenient so practically anyone wanting to borrow money for a home – no matter their credit or income – could get a loan with no money down.
It was a formula for disaster that came to fruition. Fast forward to now when supply has never been lower – factor in (1) a dramatic uptick in homebuyers due to a tremendous increase in the birth rates for first time home buyers coming into their prime buying years (the average first time homebuyer is 33 years old), and (2) more stringent underwriting standards affected by the 2008 crash, and we now find ourselves in a real estate market that desperately needs more supply to meet demand (estimates show that we are about 5.5MM units short to meet actual demand). Comparatively speaking, this borrowing environment is exactly opposite of the 2008-2009 time. What does all this mean if you want to buy your first home?
During the past few months, we have focused our search on better tools to help answer that question, and we were recently introduced to The Art of Homeownership, a new platform so we could offer to all our clients completely free of charge. We believe The Art of Homeownership is a game-changer in terms of providing a more methodical and systematic educational approach upfront for our first-time homebuyers, including supply/demand dynamics; rent vs. own analysis; and a deep dive into all the numbers to understand how much purchase money can be borrowed, the monthly payment amount; closing costs, and cash needed to close. For move-up or downsizing buyers, we offer an equity analysis to determine the appropriate monetary transition plan. We will also offer post-closing tools to ensure that you are a successful homeowner, and further, to maximize your wealth over time. Basically, The Art of Homeownership platform includes a real estate wealth digest, which provides for an updated home value and net worth analysis monthly, and so much more.
House Happy is a tool that can facilitate completion of a whole house inventory, including maintenance reminders and allows borrowers to order home repairs through a concierge service. We will also offer an Annual Financial Review to update you overall financial picture; a plan of action if you are thinking about a move; and we will be able to offer outbound referrals to any contracting professionals you may require. Another tool provides us with the technology to program in key interest rate targets to ensure you are always in the correct loan for your situation.
Last, but certainly not least, we’re offering a service that will allow you to complete pre-listing repairs/upgrades to your home without having to come out of pocket with cash until you sell your home. The good news is that we will be reaching out to all our clients to get you onboarded. So, if you know someone planning a home purchase, we think you will be raving to them about this new platform. That’s how good it is.
Historical Interest Rates
As you most likely have heard by now, interest rates have increased significantly since the first of the year. They have gone from the very low 3% range to the high 4% range as of this writing. We have not seen that dramatic a rise in 3 months since the early 1970’s. That said, it is easy to take this out of perspective. I went back to check on historical residential interest rates to help clear it up. Consider where rates were over the last twenty years:
- 2000 – 2005 – Rates ranged from 8.25% to 5.25% on the low end
- 2006 – 2010 – Rates ranged from 6.15% to 4.25% on the low end
- 2011 – 2015 – Rates ranged from 4.95% to 3.25% on the low end
- 2016 – 2020 – Rates ranged from 4.87% to 3.67% on the low end (prior to COVID)
*Source: Freddie Mac
After COVID hit, we had periods where rates were in the 2’s, but that wasn’t reality. From 1972 – 1999 we never had rates less than 7% and went as high a 18%. Point being that even with rates where they are, historically they remain lower than at most times in history. If you are thinking about making a move, let us show you what it looks like. Don’t just assume because you have a much better rate that it out of reach or doesn’t make sense. For example, higher rates provide for a higher tax write off, softening the blow. For First Time Homebuyers, with rents going up dramatically (over 13% in Atlanta last year), there is nowhere to hide. The silver lining in rates going up may just be a temporary pause in buyers, opening up better opportunities to snag the home you have always wanted with less competition… Just don’t expect that to last forever.
Interest Rate Update
Rates have made a significant move up, from low 3 percent range at the beginning of the year to the high 4’s now. This is being driven because bond investors believe that the Federal Reserve is behind the curve in getting inflation under control. They really should have been raising short term rates last fall or earlier but kept telegraphing that inflation would be transitory (being caused by supply chain issues due to COVID). That turned out to be incorrect and now we have the war in Ukraine that will exasperate the problem. The Fed is now finally saying they will get tough on inflation and get aggressive with interest rate hikes, predicting up to 7 hikes in 2022. The fact that the bond market feels they are behind the eight ball, is why you have seen rates move up recently lately. Ironically, if the Fed rate hikes which started in March start to show inflation improving, you could see long term residential rates stabilize or even improve slightly. Remember that the Fed short term rate increases do not directly impact longer term mortgage rates.
April Checklist
- Drive safely in April Showers: Keep windshields clean, wiper blades functional, and use headlights. Reduce chance of hydroplaning: Don’t use cruise control…following the tracks of the vehicle ahead of you…avoid deep water in the outside lane. If road markings are covered with water, if the road is unsafe.
- Celebrate National Banana Day: Wednesday, April 20th. Nutrient rich bananas contain antioxidants, fiber, and potassium. Slice into fruit salad (lemon juice keeps them from darkening)…freeze peeled bananas to blend into smoothies. Healthy banana recipes: AmbitiousKitchen.com/healthy-bananarecipes
- You may need a reservation at National Parks: Some popular national parks now require reservations to enter or to access certain areas. Purchase the inexpensive tickets in advance at Recreation.gov. Information on individual parks: NPS.gov/index.
Family Mortgage Team News
Our very own John Becker has been promoted to GA1 Branch Manager in charge of Production. As many of you are aware, John joined our team six years ago and has grown to become a true partner that we trust and respect. He brings a wealth of experience in his ability to answer any questions you need answered about your financing options for your new home, or any questions about the application process to obtain our Certified Homebuyer Guaranteed Preapproval. We could never have discovered a more qualified, knowledgeable, or more passionate individual. Whether it is a first-time homebuyer, move-up buyer or a complicated self-employed buyer, John absolutely loves this business. He’s an amazing team player who truly cares about each and every one of our customers and we know you will love working with him as much as we enjoy working with him….CONGRATULATIONS JOHN!!
Did You Know That…
- Snapping your fingers is one of the fastest moves the human body can make?
- A snap occurs in just 7 milliseconds—20 times faster than it takes to blink an eye.
— Study by researchers at Georgia Institute of Technology, Atlanta, published in Journal of The Royal Society Interface
- Social Media has helped solve crimes?
- When a bicyclist was killed in a hit-and-run accident, police posted online pictures of the victim’s bicycle and a small piece of material that came off the car that hit her. Car enthusiasts who saw the picture helped identify the make, model, and year of the vehicle that the broken part came from…leading to the arrest of the driver.
— Komando.com
- Athletes’ blood could boost brain power?
- Exercise activates blood proteins that benefit brain health and stave off Alzheimer’s and similar cognitive conditions.
- Recent finding: Learning and memory improved among sedentary mice injected with blood from mice that had run for miles on exercise wheels. This could lead to new therapies for dementia in humans.
— Study lead by researchers at Stanford University School of Medicine, Stanford, California, published in Nature
- Robot Dogs will be used to protect aircrafts?
- The U.S Air Force is developing four-wheeled robots called FOD Dogs that will scan and clear runways of foreign object debris. Such debris can cause tire punctures, engine damage, crashes— or be an important part that fell off a plane.
— Forbes.com
Editor’s Corner
Birthdays… Some people love them, some people dread them…some people even ignore them, but Me? I celebrate mine all month long. I got the idea from my older sister and adopted it as my own “Birthday Rule.” I figure If you’re going to be turning a year older, why not make the most of it and celebrate the fact you’re alive longer than just one day a year? Then…after trying it out for a few years, it occurred to me that perhaps every day should be celebrated as the miracle it is. Hence, my “Feel Good 100% Everyday Rule.” At first, implementing this rule was difficult because I was still thinking the same thoughts. Once I became conscious of the decisions, I was making every day to enhance the way I was feeling, however, I learned to make better decisions with my time. For instance, I changed my morning schedule from grabbing my phone to do an up-to-the-minute-news-and weather-check, to a relaxing wake-up routine that included stretching and breathing and being consciously grateful. I was astonished how just one small change in my daily habits affected the way I was feeling. I began to be less stressed and calmer and happier as a result. Over time, I realized that multiple small changes made an exponential difference in all areas of my life. It’s amazing the bad habits you can eliminate by just being conscious of the fact that the negative feelings experienced over the course of one day could be a direct result of what you are thinking. “Change your thoughts and you change your world,” is how Norman Vincent Peale said it… and he was totally right on. The key is to understand a reality of life that is true whether you believe it or not… Your thoughts create the way you feel… and if your thoughts are sourced from outside events beyond your control— Like what you hear on the nightly news or read on the internet about crime and government takeovers and bad politicians and global warming, and on and on and on— then you’re not likely to feel good. I realize it’s true that something is always going on somewhere that has the potential to affect your feelings and bring you down; but the opposite is also true—Something is always going on somewhere that has the potential to positively affect your feelings and substantiate your decision to feel good. All you must do is source your thoughts from the good stuff and enjoy how good it feels to Feel Good !
— Jeanne Thompson Evans
Family Dependables
Commercial Signage: Atlanta Sign Services – Call Jim Kraemer @ 404-691-7911. Talented & Professional.
Financial Advisor: Consolidated Planning Corp – Call Michael L. Hines, CFP @ 404-892-1995 cpcadvisors.com
Health Insurance: Balanced Healthcare Solutions – Call Wendy Carvotta @ 678-842-0335.
Health & Life Insurance: The Urquhart Group – Call Charles “Chip” Urquhart @ 770-426-9213.
Printing: Tharpe Printing – Call Mike @ 770-433-2628 or visit www.printwave.com. Print and Marketing Solutions.
and Marketing Solutions.
Restaurant: Little Alley Steak – 770-998-0440; littlealleysteak.com
Plumber: Atlantis Plumbing – Call Michael Whitman @ 770-505-8570.
“The world is a great mirror. It reflects back to you what you are. If you are loving, if you are friendly, if you are helpful, the world will prove loving and friendly to you. The world is what you are.”
— Thomas Dreier