Will Home Values Appreciate or Depreciate in 2020?

Will Home Values Appreciate or Depreciate in 2020? | Simplifying The Market

With the housing market staggered to some degree by the health crisis the country is currently facing, some potential purchasers are questioning whether home values will be impacted. The price of any item is determined by supply as well as the market’s demand for that item.

Each month the National Association of Realtors (NAR) surveys “over 50,000 real estate practitioners about their expectations for home sales, prices and market conditions” for the REALTORS Confidence Index.

Their latest edition sheds some light on the relationship between seller traffic (supply) and buyer traffic (demand) during this pandemic.

Buyer Demand

The map below was created after asking the question: “How would you rate buyer traffic in your area?”Will Home Values Appreciate or Depreciate in 2020? | Simplifying The MarketThe darker the blue, the stronger the demand for homes is in that area. The survey shows that in 34 of the 50 U.S. states, buyer demand is now ‘strong’ and 16 of the 50 states have a ‘stable’ demand.

Seller Supply

The index also asks: “How would you rate seller traffic in your area?”Will Home Values Appreciate or Depreciate in 2020? | Simplifying The MarketAs the map above indicates, 46 states and Washington, D.C. reported ‘weak’ seller traffic, 3 states reported ‘stable’ seller traffic, and 1 state reported ‘strong’ seller traffic. This means there are far fewer homes on the market than what is needed to satisfy the needs of buyers looking for homes right now.

With demand still stronger than supply, home values should not depreciate.

What are the experts saying?

Here are the thoughts of three industry experts on the subject:

Ivy Zelman:

“We note that inventory as a percent of households sits at the lowest level ever, something we believe will limit the overall degree of home price pressure through the year.”

Mark Fleming, Chief Economist, First American:

“Housing supply remains at historically low levels, so house price growth is likely to slow, but it’s not likely to go negative.”

Freddie Mac:

“Two forces prevent a collapse in house prices. First, as we indicated in our earlier research report, U.S. housing markets face a large supply deficit. Second, population growth and pent up household formations provide a tailwind to housing demand.”

Bottom Line

Looking at these maps and listening to the experts, it seems that prices will remain stable throughout 2020. If you’re thinking about listing your home, let’s connect to discuss how you can capitalize on the somewhat surprising demand in the market now.

A Day When Americans Can Return to Work [INFOGRAPHIC]

A Day When Americans Can Return to Work [INFOGRAPHIC] | Simplifying The Market

A Day When Americans Can Return to Work [INFOGRAPHIC] | Simplifying The Market

Some Highlights

  • Taking a moment to reflect upon what we’ve heard from historical leaders can teach us a lot about getting through the many challenges we face today.
  • We’re all eager for the day when every American can safely return to work. That day is coming. Timing is everything. Patience is essential.
  • Our courage, strength, and unparalleled resilience will get us there.

Unemployment: Hope on the Horizon

Unemployment: Hope on the Horizon | Simplifying The Market

Tomorrow, the unemployment rate for April 2020 will be released by the U.S. Bureau of Labor Statistics. It will hit a peak this country has never seen before, with data representing real families and lives affected by this economic slowdown. The numbers will alarm us. There will be headlines and doomsday scenarios in the media. There is hope, though, that as businesses reopen, most people will become employed again soon.

Last month’s report indicated we initially lost over 700,000 jobs in this country, and the unemployment rate quickly rose to 4.4%. With the release of the new data, that number will climb even higher. Experts forecast this report will show somewhere between a 15% – 20% national unemployment rate, and some anticipate that number to be even greater (see graph below):Unemployment: Hope on the Horizon | Simplifying The Market

What’s happened over the last several weeks? 

Here’s a breakdown of this spring’s weekly unemployment filings:Unemployment: Hope on the Horizon | Simplifying The MarketThe good news shown here indicates the number of additional unemployment claims has decreased week over week since the beginning of April. Carlos Rodriguez, CEO of Automatic Data Processing (ADP) says based on what he’s seeing:

“It’s possible that companies are already anticipating some kind of normalization, opening in certain states and starting to post jobs.” 

He goes on to say that this doesn’t mean all companies are hiring, but it could mean they are at the point where they’re not cutting jobs anymore. Let’s hope this trend continues.

What will the future bring?

Most experts predict that while unemployment is high right now, it won’t be that way for long. The length of unemployment during this crisis is projected to be significantly shorter than the duration seen in the Great Recession and the Great Depression.Unemployment: Hope on the Horizon | Simplifying The MarketWhile forecasts may be high, the numbers are trending down and the length of time isn’t expected to last forever.

Bottom Line

Don’t let the headlines rattle you. There’s hope coming as we start to safely reopen businesses throughout the country. Unemployment affects our families, our businesses, and our country. Our job is to rally around those impacted and do our part to support them through this time.

Maintaining Wood Floors

Wood floors can help make a home feel warm and inviting, and they’re always a big selling point. Like any natural material, though, wood needs some special care to ensure it maintains its good looks for decades.

  • Dust acts like sandpaper the second you walk on it. Sweep regularly to keep dust at bay. And always sweep before using a spray cleaner.
  • Put an extra layer of protection in high-traffic or high-impact areas, including padded discs under furniture legs. On dining room chairs that drag on the floor regularly, change the pads each month.
  • Use specialized cleaning agents made for the type of finish on your wood floor. Other cleaners (including vinegar and furniture polish) can dull the finish on your floors or damage them over time.
  • A floor’s finish won’t wear evenly all over, and you can’t repair just one area—as soon as one spot is showing bare wood, the whole floor needs to be refinished. As soon as you notice a discolored or faded spot, it’s time to recoat the floor.

For more information, check out the National Wood Flooring Association’s website: woodfloors.org

Top 3 Tips for DIY Home Fixes

Image by Alexas_Fotos from Pixabay

There are many jobs around the home that people normally hire experts for, but some of them you can actually do yourself. Here are our top 3 DIY home fixes that will look like a pro did the job.

  • How to paint like a painter. The key to painting well is in the preparation: remove fixtures and fittings, clean walls with a damp sponge, fill any holes or gouges with spackle (don’t forget to sand-filled holes once dried), and add tape to any areas that can’t be removed, like permanent fixtures and trim. Then lay down drop cloths to ensure you don’t get paint on the floor. Next, apply a primer (unless your paint contains primer). Once dry, start painting. Use long strokes and try not to go over the same spot more than twice. Wait until it is dry to add a second coat. Tip: do not paint when the weather is very warm, otherwise the paint will bubble or dry unevenly.
  • Fix a shut-off valve without a plumber. Turn off the main water valve, remove the packing nut, and unscrew the stem (if you need images, you can search online for images of what those are). Take the stem to the hardware store to replace the washer. Clean out the valve removing any grit, replace the washer, and screw back in. Don’t forget to turn the water back on!
  • How to caulk around the bath like a pro. Step 1: Remove the old caulking with either a plastic putty knife/scraper or a caulk removal solution. Remember, old caulk will not stick to new caulk, so you need to remove it all. Next, clean the surface with a damp cloth and rubbing alcohol, and wait until completely dry. Once dry, prepare a damp cloth/paper towel to clean up any messes. Before caulking, apply painters’ tape a few millimeters from the tile so that you avoid having to remove caulking once dried — this is particularly difficult with silicone caulking. Caulk around the tub and wait until it is dry. Then remove the tape and you should have a neat line of caulking.

De-Cluttering Series: The Garage

Photo by Mike from Pexels
Photo by Mike from Pexels

From athletic equipment to holiday décor, the garage often ends up being the dumping ground for storing big, bulky items that don’t have anywhere else to go … but that doesn’t mean it has to be overrun and unruly. Start here to get that mess under control.

  1. Give yourself room — and time — to declutter. Start in the morning on a day with good weather. Pull everything possible into the driveway. As you clear the garage, group like items together: automotive products, tools, holiday items, sporting equipment and toys, etc.
  2. Throw away, right away. Some things aren’t even worth sorting. Toss old newspapers and magazines into the recycling bin. Set old electronics, paint, and other chemicals aside so you can properly dispose of them later. Anything that’s broken needs to go right into the trash.
  3. Thoroughly clean the garage. Use a shop vac to clean up the floor, shelving units, and cobwebbed corners. Wipe down all countertops, cabinets, and drawers.
  4. Decide on storage. Once you’ve sorted all of your items, think about how they can best be stored. Because items in the garage are often used only occasionally, vertical and overhead storage is a good use of space. Use a variety of cabinets and bins to separate and store items, and label them clearly so you can easily locate things in the future. Use locked cabinets for household chemicals and dangerous items to keep kids and pets out. Consider storing larger items, like kayaks and artificial Christmas trees, hanging from the ceiling. You can also find ceiling storage racks at home improvement stores. Also, label everything clearly!
  5. Don’t put everything back in the garage — yet! As you sort through everything that was in the garage, put duplicate items and anything you no longer need or want in a separate place. These items will be donated or put into a yard sale later — but they don’t get to go back into the garage.
  6. Mindfully keep the garage organized. Moving forward, as you use items in the garage, put them back where they came from. Before buying another tool, garden sprayer, or basketball, make sure you don’t already have what you need. Check those new labels you created first.

What Impact Might COVID-19 Have on Home Values?

What Impact Might COVID-19 Have on Home Values? | Simplifying The Market

A big challenge facing the housing industry is determining what impact the current pandemic may have on home values. Some buyers are hoping for major price reductions because the health crisis is straining the economy.

The price of any item, however, is determined by supply and demand, which is how many items are available in relation to how many consumers want to buy that item.

In residential real estate, the measurement used to decipher that ratio is called months supply of inventory. A normal market would have 6-7 months of inventory. Anything over seven months would be considered a buyers’ market, with downward pressure on prices. Anything under six months would indicate a sellers’ market, which would put upward pressure on prices.

Going into March of this year, the supply stood at three months – a strong seller’s market. While buyer demand has decreased rather dramatically during the pandemic, the number of homes on the market has also decreased. The recently released Existing Home Sales Report from the National Association of Realtors (NAR) revealed we currently have 3.4 months of inventory. This means homes should maintain their value during the pandemic.

This information is consistent with the research completed by John Burns Real Estate Consulting, which recently reported:

“Historical analysis showed us that pandemics are usually V-shaped (sharp recessions that recover quickly enough to provide little damage to home prices).”

What are the experts saying?

Here’s a look at what some experts recently reported on the matter:

Ivy Zelman, President, Zelman & Associates

“Supported by our analysis of home price dynamics through cycles and other periods of economic and housing disruption, we expect home price appreciation to decelerate from current levels in 2020, though easily remain in positive territory year over year given the beneficial factors of record-low inventories & a historically-low interest rate environment.”

Freddie Mac

“The fiscal stimulus provided by the CARES Act will mute the impact that the economic shock has on house prices. Additionally, forbearance and foreclosure mitigation programs will limit the fire sale contagion effect on house prices. We forecast house prices to fall 0.5 percentage points over the next four quarters. Two forces prevent a collapse in house prices. First, as we indicated in our earlier research report, U.S. housing markets face a large supply deficit. Second, population growth and pent up household formations provide a tailwind to housing demand. Price growth accelerates back towards a long-run trend of between 2 and 3% per year.”

Mark Fleming, Chief Economist, First American

“The housing supply remains at historically low levels, so house price growth is likely to slow, but it’s unlikely to go negative.”

Bottom Line

Even though the economy has been placed on pause, it appears home prices will remain steady throughout the pandemic.

Uncertainty Abounds in the Search for Economic Recovery Timetable

Uncertainty Abounds in the Search for Economic Recovery Timetable | Simplifying The Market

Earlier this week, we discussed how most projections from financial institutions are calling for a quick V-shaped recovery from this economic downturn, and there’s research on previous post-pandemic recoveries to support that expectation.

In addition, we noted how there are some in the business community who believe we may instead be headed for a U-shaped recovery, where the return to previous levels of economic success won’t occur until the middle of next year. Yesterday, Reuters released a poll of U.S. and European economists which revealed that most surveyed are now leaning more toward a U-shaped recovery.

Here are the results of that poll:Uncertainty Abounds in the Search for Economic Recovery Timetable | Simplifying The Market

Why the disparity in thinking among different groups of economic experts?

The current situation makes it extremely difficult to project the future of the economy. Analysts normally look at economic data and compare it to previous slowdowns to create their projections. This situation, however, is anything but normal.

Today, analysts must incorporate data from three different sciences into their recovery equation:

1. Business Science – How has the economy rebounded from similar slowdowns in the past?

2. Health Science – When will COVID-19 be under control? Will there be another flareup of the virus this fall?

3. Social Science – After businesses are fully operational, how long will it take American consumers to return to normal consumption patterns? (Ex: going to the movies, attending a sporting event, or flying).

The challenge of accurately combining the three sciences into a single projection has created uncertainty, and it has led to a wide range of opinions on the timing of the recovery.

Bottom Line

Right now, the vast majority of economists and analysts believe a full recovery will take anywhere from 6-18 months. No one truly knows the exact timetable, but it will be coming.

Keys to Selling Your House Virtually

Keys to Selling Your House Virtually | Simplifying The Market

In a recent survey by realtor.com, people thinking about selling their homes indicated they’re generally willing to allow their agent and some potential buyers inside if done under the right conditions. They’re less comfortable, however, hosting an open house. This is understandable, given the health concerns associated with social contact these days. The question is, if you need to sell your house now, what virtual practices should you use to make sure you, your family, and potential buyers stay safe in the process?

In today’s rapidly changing market, it’s more important than ever to make sure you have a digital game plan and an effective online marketing strategy when selling your house. One of the ways your agent can help with this is to make sure your listing photos and virtual tours stand out from the crowd, truly giving buyers a detailed and thorough view of your home.

So, if you’re ready to move forward, virtual practices may help you win big when you’re ready to sell. While abiding by state and local regulations is a top priority, a real estate agent can help make your sale happen. Agents know exactly what today’s buyers need, and how to put the necessary digital steps in place. For example, according to the same survey, when asked to select what technology would be most helpful when deciding on a new home, here’s what today’s homebuyers said, in order of preference:

  • Virtual tour of the home
  • Accurate and detailed listing information
  • Detailed neighborhood information
  • High-quality listing photos
  • Agent-led video chat

After leveraging technology, if you have serious buyers who still want to see your house in person, keep in mind that according to the National Association of Realtors (NAR), there are ways to proceed safely. Here are a few of the guidelines, understanding that the top priority should always be to obey state and local restrictions first:

  • Limit in-person activity
  • Require guests to wash their hands or use an alcohol-based sanitizer
  • Remove shoes or cover with booties
  • Follow CDC guidance on social distancing and wearing face coverings

Getting comfortable with your agent – a true trusted advisor – taking these steps under the new safety standards might be your best plan. This is especially important if you’re in a position where you need to sell your house sooner rather than later.

Nate Johnson, CMO at realtor.com ® notes:

“As real estate agents and consumers seek out ways to safely complete these transactions, we believe that technology will become an even more imperative part of how we search for, buy and sell homes moving forward.”

It sounds like some of these new practices might be here to stay.

Bottom Line

In a new era of life, things are shifting quickly, and virtual strategies for sellers may be a great option. Opening your doors up to digital approaches may be game-changing when it comes to selling your house. Let’s connect so you have a trusted real estate professional to help you safely and effectively navigate through all that’s new when it comes to making your next move.