If you're planning to buy a home, one thing to consider is what experts project home prices will do in the future and how that might affect your investment. While you may have seen negative news over the past year about home prices, they’re doing far better than expected and are rising across the country. And data shows, experts forecast home prices will keep appreciating.

Experts Project Ongoing Appreciation

Pulsenomics polled over 100 economists, investment strategists, and housing market analysts in the latest quarterly Home Price Expectation Survey (HPES). The results show what the panelists project will happen with home prices over the next five years. Here are those expert forecasts saying home prices will go up every year through 2027 (see graph below):If you’re someone who was worried home prices would fall because of stories you’ve read online, here's the big takeaway. Even though home prices vary by local market, experts project prices will continue to rise across the country for years to come. And these numbers indicate the return to more normal home price appreciation.

And while the projected increase in 2024 isn’t as large as 2023, it’s important to recognize home price appreciation is cumulative. In other words, if these experts are correct, after your home’s value rises by 3.32% this year, it’ll appreciate by another 2.17% next year. This is a good example of why owning a home is a choice that wins big over time.

What Does This Mean for You?

Once you buy a home, price appreciation raises your home’s value, and that grows your household wealth. To see how a typical home's value could change in the next few years using the expert projections from the HPES, check out the graph below:In this example, let’s say you bought a $400,000 home at the beginning of this year. If you factor in the forecast from the HPES, you could potentially accumulate more than $71,000 in household wealth over the next five years.

So, if you're thinking about whether buying a home is a good choice, remember how it can be a powerful way to grow your wealth in the long run. 

Bottom Line

According to the experts, home prices are expected to grow over the next five years at a more normal pace. If you’re ready to become a homeowner, know that buying today can set you up for long-term success as home values (and your own net worth) grow. Let’s connect to start the homebuying process today.

One question that’s top of mind if you’re thinking about making a move today is: Why is it so hard to find a house to buy? And while it may be tempting to wait it out until you have more options, that’s probably not the best strategy. Here’s why.

There aren’t enough homes available for sale, but that shortage isn’t just a today problem. It’s been a challenge for years. Let’s take a look at some of the long-term and short-term factors that have contributed to this limited supply.

Underbuilding Is a Long-Standing Problem

One of the big reasons inventory is low is because builders haven’t been building enough homes in recent years. The graph below shows new construction for single-family homes over the past five decades, including the long-term average for housing units completed:

For 14 straight years, builders didn’t construct enough homes to meet the historical average (shown in red). That underbuilding created a significant inventory deficit. And while new home construction is back on track and meeting the historical average right now, the long-term inventory problem isn’t going to be solved overnight. 

Today’s Mortgage Rates Create a Lock-In Effect

There are also a few factors at play in today’s market adding to the inventory challenge. The first is the mortgage rate lock-in effect. Basically, some homeowners are reluctant to sell because of where mortgage rates are right now. They don’t want to move and take on a rate that’s higher than the one they have on their current home. The chart below helps illustrate just how many homeowners may find themselves in this situation:

Those homeowners need to remember their needs may matter just as much as the financial aspects of their move.

Misinformation in the Media Is Creating Unnecessary Fear

Another thing that’s limiting inventory right now is the fear that’s been created by the media. You’ve likely seen the negative headlines calling for a housing crash, or the ones saying home prices would fall by 20%. While neither of those things happened, the stories may have dinged your confidence enough for you to think it’s better to hold off and wait for things to calm down. As Jason Lewris, Co-Founder and Chief Data Officer at Parcl, says:

“In the absence of trustworthy, up-to-date information, real estate decisions are increasingly being driven by fear, uncertainty, and doubt.”

That’s further limiting inventory because people who would make a move otherwise now feel hesitant to do so. But the market isn’t doom and gloom, even if the headlines are. An agent can help you separate fact from fiction. 

How This Impacts You

If you’re wondering how today’s low inventory affects you, it depends on if you’re selling or buying a home, or both.

• For buyers: A limited number of homes for sale means you’ll want to seriously consider all of your options, including various areas and housing types. A skilled professional will help you explore all of what’s available and find the home that best fits your needs. They can even coach you through casting a broader net if you need to expand your search.
• For sellers: Today’s low inventory actually offers incredible benefits because your house will stand out. A real estate agent can walk you through why it’s especially worthwhile to sell with these conditions. And since many sellers are also buyers, that agent is also an essential resource to help you stay up to date on the latest homes available for sale in your area so you can find your next dream home. 

Bottom Line

The low supply of homes for sale isn’t a new challenge. There are a number of long-term and short-term factors leading to the current inventory deficit. If you’re looking to make a move, let’s connect. That way you’ll have an expert on your side to explain how this impacts you and what’s happening with housing inventory in our area.

If you’re a homeowner, you might be torn on whether or not to sell your house right now. Maybe that’s because you don’t want to take on a higher mortgage rate on your next home. If that’s your biggest hurdle, understanding your equity may be exactly what you need to help you feel more comfortable making your move.

What Equity Is and How It Works

Equity is the current value of your home minus what you owe on the loan. And recently, that equity has been growing far faster than you may expect.

Over the last few years, home prices rose dramatically, and that gave your equity a big boost very quickly. While the market has started to normalize, there’s still an imbalance between the number of homes available for sale and the number of buyers looking to make a purchase. And it’s because homes are in such high demand that prices are back on the rise today. Rob Barber, CEO of ATTOM, a property data provider, explains:

“Equity levels were high even during the recent downturn, and now they are going back up and better than ever.”

How Equity Benefits You in Today’s Market

With today’s affordability challenges, that equity can be a game changer when you move. Here’s why. Based on data from ATTOM and the Census, nearly two-thirds (68.7%) of homeowners have either paid off their mortgages or have at least 50% equity (see chart below):

That means roughly 70% have a tremendous amount of equity right now.

Once you sell your house, you can use your equity to help with your next purchase. It could be some (if not all) of what you’ll need for your next down payment. It may even be enough to allow you to put a considerably larger down payment on your next home, so you don’t have to finance quite as much. And, if you’ve been in your current house for years, you may have even built up enough equity to pay in all cash. If that’s true for you, you’d be able to avoid borrowing altogether, so you wouldn’t have to worry about today’s mortgage rates.

How To Find Out How Much Equity You Have

The best way to learn how much you have is to reach out to a trusted real estate agent for a Professional Equity Assessment Report (PEAR).

Bottom Line

If you’re planning to make a move, the equity you’ve gained can make a big impact. To find out just how much equity you have in your current home and how you can use it to fuel your next purchase, let’s connect.

Buying a new construction home can be an exciting experience. From being the very first owner, to customizing your home’s features, there are a lot of benefits. But navigating the complexities of buying a home that’s under construction can also be a bit overwhelming. This is where a skilled real estate agent can make all the difference.

An article from The Mortgage Reports sums it up like this:

“Your Realtor or real estate agent will be key to helping you navigate this process. . . . they can guide you through construction and help anticipate and solve for any possible snags along the way.”

Here’s how your agent is an invaluable resource in your search to find and buy your new home.

Agents Know the Local Area and Market

Your agent is well-versed in the emerging communities and upcoming developments that could influence your decision. For example, you'll want to be aware if there were any plans to construct a highway through the woods behind your prospective backyard. It’s important to consider how the neighborhood and the surrounding area might evolve before making your home purchase. Your agent can help you find a community that perfectly aligns with your preferences, lifestyle, and future needs.

Knowledge of Construction Quality and Builder Reputation

An agent also has the expertise to evaluate the construction quality and reputation of different builders. Their knowledge and experiences with local builders allow them to offer insights into each one’s track record, customer satisfaction, and construction practices. This information can help you avoid any potential risks and help you confidently select a builder known for delivering quality homes.

Assistance with Customization and Upgrades

The most obvious benefit of opting for new home construction is the opportunity to customize your home to suit your preferences. Your agent will guide you through that process and share advice on the upgrades that are most likely to add long-term value to your home. Their expertise ensures you focus your budget on areas that will give you the greatest return on your investment later on.

Understanding Builder Contracts and Negotiations

Builder contracts can be complex and differ from traditional home purchase agreements. Your agent can help you navigate these contracts to make sure you fully understand the terms and conditions. They’re also skilled negotiators who can advocate on your behalf, potentially securing better deals, upgrades, or incentives for you throughout the process.

Bottom Line

The guidance and expertise of a local real estate agent can make all the difference in turning your vision of the perfect home into a reality. Let’s connect so you can feel confident about purchasing your new construction home.

BEFORE: 

The original owner of this home truly embraced 1980's trends - check out that black jetted tub!  The original shower had a small plastic / plexi enclosure that was worn & cracked, with a door that did not close properly.  The original custom vanity was considerably shorter in height than today's vanities, with considerable storage challenges and, frankly TOO MUCH counterspace.

AFTER;

This bathroom has been transformed into a spa-like retreat! 

• The free-standing tub boasts a Brizo free-standing tub filler.  This new-style tub is not only luxurious but also frees-up floor area. 
• The shower has been expanded considerably.
  • Custom shower pan & tile work
  • 12 x 24 porcelain wall tile
  • Brizo fixtures
  • Custom, frameless glass enclosure with matte black hardware
• On the floor:  24 x 24 porcelain tile designed to resemble distressed marble.
• The custom vanity is a game-changer for this space:
  
  • Drawer space rather than tiny lower cabinets with shelves
  • A "lazy susan" in the lower corner space (My carpenter told me this is the first time he has installed a "lazy susan" in a bathroom.  It was interesting getting that piece of cabinetry through a bedroom door, and then through the bathroom door!)
  • Vicostone Quartz countertop
  • Brizo fixtures
  • A countertop upper cabinet for added storage, with interior outlets to enclose / hide razor and toothbrush chargers.

Drone photography captures a view of homes and settings not possible from the ground.  Here are examples of drone photos for two different listings.  In the top example, the home was situated on a 2.7 acre hilltop, surrounded by trees.  I asked my drone photographer to capture the size and privacy of the lot.  The result was 8 offers within the first 12 hours!  In the lower example, the home is situated on a small lake near an historic, scenic downtown on the Mississippi.  I received calls from all over the country from buyers interested in this home!  13 offers received before the deadline.  Buyers continue to contact me to see this home, knowing it is under contract.

Minnetonka School District - One of the most coveted school districts in the State of MN

Here you will find up-to-date Market Reports for homes in the Minnetonka School District, by price range.  Simple click a link!

Market Report - Minnetonka School District - Homes up to $500k

Market Report - Minnetonka School District - Homes from $500,000 - $1,000,000

Market Report - Minnetonka School District - Homes $1,000,000 and up

Before & After Videos - One of My Favorite Renovations

Here you will find before and after videos of one of my favorite transformations.  This home was a time capsule and had been neglected for many years.  As a part of this major renovation, we removed the wall between the kitchen and living room.  In the upper level, we moved walls, removed an awkward 1/2 bath that was virtually unusable and added a new 3/4 bath in a better location.  We created a beautiful upper level with two possible uses - either as two bedrooms with a Jack & Jill 3/4 bath, or an owner's suite with bedroom, private master, and a dressing / sitting room.  The people who purchased this home chose to make the upstairs their private owners' suite!  Click on the highlighted links to view videos.

Whole Home Renovation by Laura Keogan

Second Story Transformation

The link below leads to some good advice about those lovely hardwood floors you may have.  In our own home, years ago we made the mistake of using a steam mop on our sealed hardwood - never again!!

Things You Should Never Do to Your Hardwood Floors

WHAT IS MINNEAPOLIS TISH?

The City of Minneapolis has long required home sellers to obtain a Truth in Sale of Housing (TISH) evaluation prior to selling a home.  This TISH evaluation is required to be made available to all potential buyers.  The report outlines repairs required prior to the transfer of ownership.  

WHAT IS CHANGING AND WHEN?

Beginning on January 15, 2020, home energy data will be collected during the required Truth in Sale of Housing (TISH) evaluation.  This data will be used to create an Energy Disclosure Report, to be included in the City's TISH report.  Why is Minneapolis adding this new disclosure?  According to the City of Minneapolis, the City believes that the energy performance of a home should be known by potential buyers prior to the purchase of a home.  

WHAT HOMES WILL BE AFFECTED BY THIS POLICY?

• All 1-2 unit properties (such as single family homes and duplexes)
• Townhomes
• First-time condo conversions

WHAT IS INCLUDED IN THE NEW ENERGY DISCLOSURE REPORT?

The Energy Disclosure Report will report an "energy score" that rates the energy efficiency of each home.  The scale used is 0-100, with 100 being considered the most energy efficient home.  The score evaluates the energy performance of four key areas of the home:

1. Attic Insulation
2. Wall Insulation (a 2" hole will be drilled in the interior side of an exterior wall by the inspector, reportedly in an "inconspicuous area".  See below for more information on this topic.)
3. Heating System
4. Windows

The report will also include recommendations on how to improve these areas, reportedly prioritized by potential return on investment (according to the City of Minneapolis opinion).  

THIS IS A SAMPLE DISCLOSURE REPORT PROVIDED BY THE CITY OF MINNEAPOLIS

WILL THE CITY REQUIRE ANY ENERGY IMPROVEMENTS?

The City reportedly will not be requiring any energy improvements, as of the writing of this article.  The City reports that the aim of this new policy is to inform residents and realtors of the energy performance of homes AND the opportunities that exist for energy-saving improvements.

WHAT ABOUT THAT DRILLING A HOLE IN THE WALL THING??

Whenever a home as been built prior to 1980, a 2" hole will be drilled in an exterior wall in order to evaluate wall insulation.  According to the representative that conducted a training I attended, the inspectors will be finding a relatively inconspicuous location in which to drill this hole.  When possible, they will look for an exterior wall closet or cabinet in which to drill, so that the hole will be concealed.  After the drilling and evaluation, a plastic plug will be inserted in the wall.  Why will it be a plastic plug?  The idea, according to the city, is that each time the home is sold, the inspector will be able to access the same hole by simply removing the plug. rather than drilling another hole.

Why are homes built after 1980 exempt?  Buildings code as of 1980 has required certain exterior wall insulation.

WILL THIS NEW ENERGY DISCLOSURE EVALUATION ADD TO THE COST OF THE MINNEAPOLIS TISH INSPECTION?

The answer if YES. At present, the City of Minneapolis has a list of inspectors that meet the qualifications to conduct Minneapolis TISH inspections. Each qualified TISH inspector sets his / her own price for the current TISH inspection as well as this new, additional Energy Disclosure Evaluation.  It is expected that each inspector will add an additional fee to their current TISH inspection price for this new, additional requirement in Minneapolis.  

ALREADY HAVE A RECENT MINNEAPOLIS TISH EVALUATION?

The new Energy Disclosure Report is required for all MPLS TISH evaluations ENTERED ON OR AFTER JANUARY 1, 2020.  This means that if you recently obtained a Minneapolis TISH evaluation and that evaluation is entered into the City of Minneapolis system prior to January 15, 2020, then you are not required to have this additional evaluation done.  Minneapolis TISH evaluation reports are valid for 2 years, but for no more than one sale.  

Thinking about selling your Minneapolis home and looking for more information?  Call, text or email me:

cell:  612-964-5926

laura@laurakeoganrealty.com

...or simply click on the phone or mail icon at the top of this page!