WHAT RECESSION: Experts Predict a Strong Housing Market for the Rest of 2019

Here’s what some of the experts have to say:

Ralph McLaughlin, Deputy Chief Economist for CoreLogic

“We see the cooldown flattening or even reversing course in the coming months and expect the housing market to continue coming into balance. In the meantime, buyers are likely claiming some ground from what has been seller’s territory over the past few years. If mortgage rates stay low, wages continue to grow, and inventory picks up, we can expect the U.S. housing market to further stabilize throughout the remainder of the year.”

Lawrence Yun, Chief Economist at NAR

“We expect the second half of year will be notably better than the first half in terms of home sales, mainly because of lower mortgage rates.”

Freddie Mac

“The drop in mortgage rates continues to stimulate the real estate market and the economy. Home purchase demand is up five percent from a year ago and has noticeably strengthened since the early summer months…The benefit of lower mortgage rates is not only shoring up home sales, but also providing support to homeowner balance sheets via higher monthly cash flow and steadily rising home equity.”

Bottom Line
The housing market will be strong for the rest of 2019. If you’d like to know more about our specific market, let’s get together to discuss what’s happening in our area

When to Drop Your Listing Price

Though low inventory is prompting buyers to raise their offers in order to beat out competitors, you still want your sellers to know: an overpriced listing will linger on the market. Buyers pay attention to time on market and may erroneously assume something is wrong with a property that has gone “stale.” Real estate pros say it’s critical to determine what time frame is considered stale in your market and drop the price of your listing before getting to that pivotal moment.

Ronald Dwyer / Realtor

"I typically drop the price after the third week on the market, usually in $5,000 to $10,000 increments.  But I may be more aggressive than most. DwyerProperties.com powered by 3DX Real Estate.
Price cuts in the Detroit-area market  have been common lately. But “there is a strange change that is in the air, and sellers are starting to have to become more humble. I would not say it is a buyer’s market, but a new balance between buyers and sellers has been hitting us since May of this year", said Ronald Dwyer of

Soaring home prices may make buyers pause, but houses are still selling fast. Nationwide, the average time a home spent on the market was 34 days , according to the National Association of REALTORS®. Some sellers may be adamant about “testing the market” with a high asking price, so you should have a game plan for what to do if it backfires. I personally don’t believe in testing the market, but if we enter the market [with a list price] pushing the top of the range, we can easily gauge response within seven to 10 days.  “It’s almost a certainty that if we don’t get an offer within that first 10-day period, then we’ve missed the mark.”

Sellers should be open to do a rapid price adjustment that can then result in a quicker sale. You can bring those same buyers back—the ones who liked the property in the first place and who will view the price adjustment as ‘the seller is listening to me.

The long-term consequences of not buying a house

The longer a person puts off buying a home, the more they will pay for one and the more likely they are to have mortgage debt later in life.

Research from the Urban Institute, a Washington, D.C.-based think tank, shows people who bought their houses between the ages of 25 and 34 (the age millennials are now), had $135,000 more value built up in their homes when they turned 60 than people who bought their first homes after they were 45 years old.

The bottom line: “The delay [in buying a house] is not just going to affect [millennials’] current life satisfaction. It could have a longer term effect on their wealth as they age,” said Jung Hyun Choi, a research associate with the Urban Institute.

Will millennials benefit from historically low mortgage rates?

Mortgage rates are at near-record lows as many millennials are hitting their 30s — the age when many people traditionally become homeowners. Yet the low rates are unlikely to significantly increase millennial homeownership

Are you a first-time home buyer?
Are you a renter tired of renting?
 Interest rates are still at and all time low
Would you like to qualify for $7,500 towards
 a down payment of your home?
 Give me a call or send me a message
 and I will get you going on the
right path. 248-390-6345.

rates, which are about 8 percent lower than past generations, according to analysts.

Here’s what’s stacked up against millennials, and why homeownership matters in building wealth, at a time when this generation is already lagging behind its predecessors. While there is no official definition, millennials are generally considered people born between 1981 and 1996.

Current housing market conditions
The interest rates for a 30-year fixed rate mortgage dropped sharply last week to 3.6 percent, on fears of an economic downturn. The current rates are more than a percentage point lower than they were last November.

Let’s say you considered buying a $300,000 home on a 30-year mortgage in the fall, but held off. If you were to buy the same house now, the interest rate drop could decrease your monthly payments by $160 per month and save more than $60,000 over the life of the loan.

“Conditions are very favorable [to buy a home],” said Greg McBride, an economist with Bankrate.com. In addition to low interest rates, “the labor market is the best it’s been.”

But there aren’t many affordable homes on the market. Older Americans are not “moving up” to larger houses like they did in past generations. Investors have bought up many of the smaller homes that would have been affordable for first-time homebuyers. And developers are building more apartments to rent instead of condos to sell.

Even if there were lots of homes to choose from, many millennials would have a difficult time saving enough money to purchase one. What’s holding them back? Student debt and the high cost of housing.

Student debt weighs on millennials’ ability to save and make mortgage payments. With college costs soaring, the average student loan balance for a millennial borrower is $34,500, according the consumer credit reporting agency Experian. It also factors into whether a lender will approve a borrower’s loan.

But even if millions of millennials weren’t contending with the expense of college loans, incomes have not kept up with rising housing costs.

If someone with a median income saved 10 percent of their earnings, it would now take them 5.7 years to save enough money for a 20-percent down payment on a median-valued home — that’s 1.5 years longer than it took in 1988..

The good news: A 20-percent down payment is no longer needed to purchase a home. Lenders and government programs offer a variety of other options for lower down payments. Some of them come with an additional mortgage insurance that will be added to monthly payments, but that extra fee can be eliminated once 20 percent of the home’s value is paid down.

30-year mortgage rate falls to its lowest level in nearly three years

Economic uncertainty drove mortgage rates down, according to Freddie Mac data released Thursday, with the popular 30-year reaching its lowest level in nearly three years.

The 30-year fixed-rate average fell to 3.55 percent from 3.60 percent — the lowest since November 2016 — with an average 0.5 point. (Points are fees — equivalent to 1 percent of the loan amount — paid to a lender on top of the interest rate.) It averaged 4.51 percent a year ago.

Ronald Dwyer / Realtor

The 15-year fixed-rate average fell to 3.03 percent from 3.07 percent with an average 0.5 point. It averaged 3.98 percent a year ago. The five-year adjustable rate average decreased to 3.32 percent from 3.35 percent with 

"The drop in interest rates to a 3 year low, is fantastic news for buyers since lower mortgage rates make buying much more affordable," said Ronald Dwyer, a veteran Realtor with DwyerProperties.com powered by 3DX Real Estate. "Home prices have gone up anywhere from three percent to 6 percent and some areas higher in the past year in the Metro Detroit area, so these lower interest rates really help new home buyers  Now is the time to buy!"

Cheat The System, How To Pay Your Mortgage Off Early

New data shows that nearly 40 percent of all homes in the United States are owned free and clear, with “the highest share” in West Virginia at 54%,” reported Bloomberg.com “Maryland and the District of Columbia were on the other end of the spectrum with rates of 27% and 24%, respectively.”

When many a real estate dream is focused on the idea of buying a home and staying just long enough to earn enough equity to move up to something bigger and better, this may come as somewhat of a surprise. If you have considered the idea of buying a forever home (or if you’re already there!) and want to be amongst the almost 40 percent of owners living mortgage free, there are some tips that can help you move toward that zero balance.

Switch to biweekly payments
Say your mortgage payment is $2,000. Pay it once per month, and you’re paying $24,000 per year. Switch to biweekly payments of $1,000 every two weeks, and you end up paying $26,000 for the year. That adds up.

“This will have the nearly the same impact on your budget as one monthly payment, but because there are 52 weeks in a year, a biweekly payment schedule will result in 13 full-sized payments a year instead of the normal 12,” said The Motley Fool. You'll be making an entire extra payment every year without having to scrounge around for the extra money. To look at some real-life numbers, if you have a 30-year $200,000 mortgage at an interest rate of 5%, making biweekly instead of monthly payments would save you $34,328 in interest and allow you to pay off the loan almost five years early.”

Make extra principal payments
Especially in the early years of your mortgage, your payments are likely to be mostly interest. But you can eat away at your principal by making an extra "principal only" payment. “The benefit of paying additional principal on a mortgage isn’t just in reducing the monthly interest expense a tiny bit at a time,” said Bankrate. “It comes from paying down your outstanding loan balance with additional mortgage principal payments, which slashes the total interest you’ll owe over the life of the loan.”

Let’s use their example of a $120,000 mortgage at a 4.5 percent interest rate, with monthly principal and interest of $608.02. Pay an extra $25 principal payment every month and you can save more than $9,000 in interest over the life of the loan.

You’ll want to make sure you’re allowed to make these extra principal payments per the terms of your loan, however. “Check with your mortgage company first,” said Dave Ramsey. “Some companies only accept extra payments at specific times or may charge prepayment penalties.”

Refinance into a shorter-term loan
Can you swing a higher monthly payment? Refinancing out of a 30-year mortgage to a 15-term can save you an enormous amount of money. “A mortgage amount of $250,000 over 30 years at a rate of 4% would cost $429,674 in principal and interest payments by the end of the term,” said Investopedia. “The total interest would be $179,674 for borrowing for 30 years. The same loan amount and interest rate over 15 years would cost $332,860 by the end of the term. Total interest would be $82,860 for borrowing for 15 years. At 4%, you'd pay only about 46% of the total interest for a 15-year than you'd pay for the 30-year.”

There is a secondary benefit to refinancing to a shorter term; these rates are typically lower. At press time, Wells Fargo’s 30-year fixed mortgage rate was 3.875%, while the 15-year fixed rate was 3.125%.

Make small sacrifices
“Other small sacrifices can go a long way to help pay off your mortgage early,” said Dave Ramsey. “How much could you save if you took your Starbucks money and added it to your mortgage payment each month? According to the Acorns Money Matters Report, the average American spends $3 per day on their coffee. That’s around $90 a month added to your mortgage payments—which will save you $25,000 in interest and four years on the life of your loan!”

7 Tips for Buying Your First Home in the U.S.

Nothing says you’re truly an American like owning a home. And just over half of all foreign-born households living in the U.S. own their own home.

If you’re ready to join them, try these seven tips for American-style homebuying success — the process here may be quite different from what you’re used to.

1. Be Ready to Prove Who You Are
You don’t have to get your citizenship, a green card, or any particular type of visa before you buy a home. But you do need:

An Individual Taxpayer Identification Number. That’s a number assigned by the Internal Revenue Service to foreign nationals who need to file income tax returns.
A valid foreign passport, or two or more current photo identifications, such as a driver’s license, to show who you are.

Although property ownership isn’t tied to immigration or visa status, there are rules about how long you can stay, so if you’re not a citizen, check out U.S. visa requirements before you purchase.   

2. Plan to Get a Mortgage
That way, you don’t have to save your money for years to become a homeowner and start building equity. The U.S. home loan market offers many safe, affordable mortgages, including ones that allow Muslims to buy a home without violating Islamic laws against paying interest. 

To get a U.S. mortgage, you must establish credit and earn a good credit score. To boost your score:

Open U.S. bank and credit card accounts.
Report all your income on your tax returns. Lenders use tax returns to verify your income and decide how much you can afford to borrow to buy a home.

When it’s time to apply for a mortgage, you’ll find major banks with global operations have experience working with foreign buyers and tend to have a process for verifying credit established in other countries.

3. Work with a experienced Realtor. 
Make sure your REALTOR®  has experience, training, and education in helping foreign-born home buyers. An experienced real estate or title attorney can help you protect your interests, too.

Tell your real estate agent how the home buying process works in your native country and ask her to explain U.S. home-buying customs to identify any differences. Even within the U.S., local differences exist in how people buy and sell homes. Knowing how homes are sold here and what to expect with closing costs, inspections, and the negotiation process reduces your stress and helps you get a good deal on your first home.

4. Don’t Be Shocked By Casual Attitudes
Americans’ casual attitudes toward buying or selling real estate is a byproduct of the relaxed U.S. business culture. Although real estate contracts must be in writing, the process leading up to the sales contract signing may be more informal and casual than it would be in your home country.

5. Convert Units
Learn to convert from the U.S. standard measurement into metric, or pick up a metric converter app so you can better estimate room and home sizes while shopping.

6. Find Someone Who Can Translate
If you’re not fluent in English, or prefer speaking in your native language, choose inspectors, mortgage bankers, and REALTORS® fluent in your own language. Dwyer Properties has staff that speak English and Arabic.  Although it’s possible to get translated copies of standard real estate documents, you’ll likely have to sign the English versions during your home purchase.

7. Create a Financial Plan for Your Home
Consider all the real-estate related expenses you’ll have as a homeowner, including property taxes, homeowners insurance, and maintenance costs. Set up a financial plan for your home so you know how much money to set aside for ongoing expenses.