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You’ve probably been hearing in the news lately that the real estate market is “shifting.” Well, according to this realtor.com article, many economists feel that we’ve moved from shifting into a “balanced” market. In other words, it’s not really a sellers’ market or a buyers’ market.

That may have you thinking that it’s not as favorable for sellers as it has been, and you missed out on the opportunity to get a historically high price for your house. Oddly, that isn’t the case at all.

Despite what headlines and economists may say, all signs point to it being an absolutely perfect time to sell—especially if you don’t plan on buying another home. This is especially true if you are selling your vacation home in Mammoth Lakes. Consider the following data in that realtor.com article:

Of those three things, the only thing slightly better for buyers is that it’s taking listings longer to sell…by four days. NOTE: Check out our latest Mammoth Lakes Market Update for the actual numbers in our area.

While prices may be stabilizing and leveling off, the fact is, prices are still a good deal higher than they were just a year ago. One of the biggest reasons why the market was so favorable for sellers over the past few years was because there weren’t enough listings, and now there’s even 12% less competition.

That said, the market is shifting and it’s hard to say how much more of a window sellers have to capitalize on high prices and low competition. But, at least for now, there’s still an opportunity for you to sell and reap the benefits of the sellers’ market we’ve seen over the past couple of years.

The Takeaway:

The real estate market is now “balanced,” which might sound like it’s good for both buyers and sellers alike. But the reality is, it’s still more in favor of sellers, and even more so for sellers who aren’t planning on buying another home.

If you’re thinking about selling your house and either renting, moving in with family, into a retirement community, or a second home you already own, now is a good time to capitalize on the market conditions. Prices are still historically high, you’ve likely accrued quite a bit of equity in the past few years, and there are even less listings to compete with than there have been.

So, if you’ve been hesitating because the news made it sound like you missed out on the sellers’ market, you still have a window of opportunity. But it’s hard to say how long that will last.

Be sure and check with us for ANY property you are considering selling. We have a nationwide network of amazing REALTORS® and can connect you with the right one for you and your circumstances.

No matter what’s going on in the housing market, the process of selling a home can be challenging. Some sellers have a hard time saying goodbye to a treasured family residence – especially a second home where many great memories have been made. Others want to skip ahead to the fun of decorating and settling into a new place. Almost all sellers want to make the most money possible.

Whatever your circumstances, the road to the closing table can be riddled with obstacles — from issues with showings and negotiations to inspection surprises. But many of these complications are avoidable when you have a skilled and knowledgeable real estate agent by your side.

For example, here are seven common mistakes that many home sellers make. These can cause anxiety, cost you time, and shrink your financial proceeds. Fortunately, we can help you avert these missteps and set you up for a successful and low-stress selling experience.

MISTAKE #1: Setting an Unrealistic Price

Many sellers believe that pricing their homes high and waiting for the “right buyers” to come along will net them the most money. However, overpriced homes often sit on the market with little activity, which can be the kiss of death in real estate — and result in an inevitable price drop.1

Alternatively, if you price your home at (or sometimes slightly below) market value, it can be among the nicest that buyers see within their budgets. This can increase your likelihood of receiving multiple offers.2

To help you set a realistic price from the start, we will do a comparative market analysis, or CMA. This integral piece of research will help us determine an ideal listing price based on the amount that similar properties have recently sold for in your area.

Without this data, you risk pricing your home too high (and getting no offers) or too low (and leaving money on the table). We can help you find that sweet spot that will draw in buyers without undercutting your profits. 

MISTAKE #2: Trying to Time the Market

You’ve probably heard the old saying, “Buy low and sell high.” But when it comes to real estate, that’s easier said than done.

Delaying your home sale until prices have hit their peak may sound like a great idea. But sellers should keep these factors in mind:

  1. Predicting the market with certainty is nearly impossible.
  2. If you wait to buy your next home, its price could increase as well. This may erode any additional proceeds from your sale.
  3. If mortgage rates are rising, your pool of potential buyers could shrink — and you would have to pay more to finance your next purchase.

Instead of trying to time the market, choose your ideal sales timeline. This may be based on factors like your personal financial situation, shifting family dynamics, or the seasonal patterns in your neighborhood. We can help you figure out the best time to sell given your individual circumstances.

MISTAKE #3: Failing to Address Needed Repairs

Many sellers hope that buyers won’t notice their leaky faucet or broken shutters during home showings. But minor issues like these can leave buyers worrying about more serious — and costly — problems lurking out of sight.

Even if you do receive an offer, there’s a high likelihood that the buyer will hire a professional home inspector, who will flag any defects in their report. Neglecting to address a major issue could lead buyers to ask for costly repairs, money back, or worse yet, walk away from the purchase altogether.

To avoid these types of disruptions, it’s important to make necessary repairs before your home hits the market. We can help you decide which repairs and updates are worth your time and investment. In some cases, we may recommend a professional pre-listing inspection.

This extra time and attention can help you avoid potential surprises down the road and identify any major structural, system, or cosmetic faults that could impact a future sale.3

MISTAKE #4:  Neglecting to Stage Your Home

Staging is the act of preparing your home for potential buyers. The goal is to “set the stage” to help buyers envision themselves living in your home. Some sellers opt to skip this step, but that mistake can cost them time and money in the long run. A 2021 survey by the Real Estate Staging Association found that, on average, staged homes sold nine days faster and for $40,000 over list price.4

Indoors, staging could include everything from redecorating, painting, or rearranging your furniture pieces to removing personal items, decluttering, and deep cleaning. Some times it is as simple as putting away your skis and boards! Outdoors, you might focus on power washing, planting flowers, or hanging a wreath on the front door.

You may not need to do all these tasks, but almost every home can benefit from some form of staging. Before your home hits the market, we can offer our insights and suggestions and even help coordinate next steps.

MISTAKE #5: Evaluating Offers on Price Alone

When reviewing offers, most sellers focus on one thing: the offer price. While dollar value is certainly important, a high-priced offer is worthless if the deal never reaches the closing table. That’s why it’s important to consider other factors in addition to the offer price, such as:

Depending on your circumstances, some of these factors may or may not be important to you. For example, if you’re still shopping for your next home or doing a 1031 exchange, you might place a high premium on an offer that allows for a flexible closing date or leaseback option.

Buyers and their agents are focused on crafting deals that work well for them. We can help you assess your needs and goals to select an offer that works best for you.

MISTAKE #6: Acting on Emotion Instead of Reason

It’s only natural to grow emotionally attached to your home. That’s why so many sellers end up feeling hurt or offended at some point during the selling process. Low offers can feel like insults. Repair requests can feel like judgments. And whatever you do — don’t listen in on showings through your security monitoring system. Chances are, some buyers won’t like your decor choices, either!

However, it’s a huge mistake to ruin a great selling opportunity because you refuse to counter a low offer or negotiate minor repairs. Instead, try to keep a cool head and be willing to adjust reasonably to make the sale. We can help you weigh your decisions and provide rational advice with your best interests in mind. We ALWAYS recommend responding to all offers – even it you respond at full price. Never leave the ball in your court.

MISTAKE #7: Not Hiring an Agent

There’s a good reason 90% of homeowners choose to sell with the help of a real estate agent. Homes listed by agents sold for 22% more than the average for-sale-by-owner home, according to a recent study by the National Association of Realtors.5

Selling a home on your own may seem like an easy way to save money. But in reality, there is a steep learning curve. And a listing agent can:

If you choose to work with a listing agent, you’ll save significant time and effort while minimizing your personal risk and liability. And the increased profits realized through a more effective marketing and negotiation strategy could more than make up for the cost of your agent’s commission.

We can navigate the ins and outs of the housing market for you and make your selling process as stress-free as possible. You may even end up with an offer for your home that’s better than you expected.

BYPASS THE PITFALLS WITH A KNOWLEDGEABLE GUIDE

Your home selling journey doesn’t have to be hard. When you hire us as your listing agent, we’ll develop a customized sales plan to help you get top dollar for your home without any undue risk, stress, or aggravation. If you’re thinking of buying or selling a home, reach out today to schedule a free consultation and home value assessment.

Sources:

  1. The Washington Post –
    https://www.washingtonpost.com/business/2019/07/22/just-because-its-sellers-market-doesnt-mean-you-should-overprice-your-home/
  2. Realtor.com –
    https://www.realtor.com/advice/sell/spark-a-bidding-war-for-your-home/
  3. American Society of Home Inspectors – https://www.homeinspector.org/Newsroom/Articles/Before-You-Sell-6-Reasons-to-Get-a-Pre-Listing-Inspection/15766/Article
  4. Real Estate Staging Association –
    https://www.realestatestagingassociation.com/content.aspx?page_id=22&club_id=304550&module_id=164548
  5. National Association of Realtors –
    https://www.nar.realtor/research-and-statistics/quick-real-estate-statistics

It’s an industry joke that some buyers request the seller to repair even the most minor issue found on a home inspection, like a leaky faucet for example. But over the past couple of years, most sellers could list their house and it would quickly sell for over asking price — and buyers would often waive the home inspection — so sellers wouldn’t have to worry about that at all. Even if the buyers did have an inspection, sellers could easily reply with a firm no, and the buyers would be fine with it. This was happening nationally and in Mammoth Lakes.

So if you’re about to put your house on the market, even if you’ve heard that the market is shifting, you may still be holding onto the hope that things will be the same for you.

The good news is that you’re still in a great position to get a historically high price for your house. That’s despite the fact that we’re in a “housing recession” according to this CNBC article. To put it simply, since inventory is still low for the number of buyers looking for a home, prices aren’t coming down, but the number of homes actually selling have been dropping.

But what sellers should be sensitive to is that buyers are now less likely to waive their rights to a home inspection, as reported by Fortune last week. In addition to that, they followed up this week stating that 16.1% of buyers backed out of deals in July — the highest rate since April 2020. Back in 2020, buyers were canceling contracts due to financial concerns caused by the emerging pandemic. Now more buyers seem to be backing out due to home inspection issues.

Are they all due to home inspection issues? Probably not. Some of them are likely due to financing issues, or any other number of factors. But those using home inspection issues as a reason to back out could also be using it as a remedy for buyer’s remorse — a more technical term for getting cold feet —over their decision.

It doesn’t matter if the buyer is simply using home inspection issues as a handy excuse, or they’re truly concerned about issues found during the home inspection; you should be ready and willing to address their concerns and requests. A buyer can’t easily back out of their contract if you agree to address any problems they find. (And yes, this even means those nitpicky items, like a leaky faucet, that you may feel is being a bit greedy on their part.)

If you do, and have to put your house back on the market, you could find that your house doesn’t sell readily, or for as much as you initially accepted. Plus, your next buyer might throw the same (and possibly more) inspection issues at you.

The Takeaway:

It’s just not worth the risk of losing a buyer in this market. Things are shifting, and the market is already drastically changed from how it was just a few months ago. Yet you’re still in a solid position as a seller to get a historically high price for your house. So, if you find yourself being asked to take care of home inspection issues, truly analyze whether it’s worth being stubborn. Will buyers get even more picky and demanding in the near future? What if there’s more inventory / competition? Will you be able to get as high of a sales price?

While it may seem like you’re caving in and taking a financial hit other sellers didn’t have to take recently, consider how much your home was worth in 2020 (the last time buyers were backing out at this rate). The equity you’ve likely gained just by owning during this period probably far outweighs whatever the cost of whatever your buyer is asking for. Don’t let pride or principles get in the way of moving on and getting as much as you can for your house right now.

Even though mortgage rates dipped below 5% this past week, they’re still higher than they were just a few short months ago. This has priced some home buyers out of the market, and caused others to take a wait-and-see approach, hoping for rates to drop back down to historically low levels.

It’s understandable why current buyers would want to hope and wait, but it’s impossible to say if rates will ever go back down to the 2% or 3% range, let alone soon. But if they do, it’s not likely to happen in the next few weeks or months, so the decision buyers have to make boils down to whether or not they’re willing to potentially wait years to buy a house.

That said, based upon this Market Watch article, buyers could inadvertently be costing themselves more money by waiting for rates to come down. This is because the “real mortgage rate” has gone negative for the first time in 40 years, according to the chief economist at Angi (a home services company). Simply put, if mortgage rates are currently at 5%, and the inflation rate is at 9%, the real mortgage rate is -4%.

So while some buyers may decide not to buy because rates are “high” relative to where they were a while ago, they’re missing the opportunity to capitalize on the fact that inflation is currently making these rates a better deal.

Of course, this is due to inflation, and inflation isn’t forever. So as the inflation rate comes down, one could argue that having a mortgage at the higher rate (relative to where they were) is not ideal. Unfortunately, nobody can predict how long and at what rate inflation will be high. But it’s probably a safe bet that it’s not easing up in the next few weeks or months, and it could last years.

This doesn’t mean you should run out and buy a house just to take advantage of the current negative real mortgage rate, taking inflation into account. But it’s something to think about — and worth crunching the numbers based upon your own personal situation — if you’ve been weighing whether or not to buy right now.

The Takeaway:

Mortgage rates are higher than they were a short time ago, but that doesn’t mean they aren’t a good deal. Due to inflation, the current mortgage rates are actually negative for the first time in 40 years. If you’ve been putting off buying a house hoping rates will come back down, you may be in for quite a wait, and during that time it could be costing you in ways that are hard to see or quantify without truly analyzing the pros and cons of waiting. Crunch the numbers and see how much sense it makes for you to buy now, based upon your personal situation.

If you’ve been thinking about selling your house, you’ve probably heard that the market’s cooling off, shifting or “resetting” (as Federal Reserve Chairman, Jerome Powell, recently put it.) So you might be wondering if that means you won’t be able to get as much money for your house as your neighbors did a few weeks back.

On the other hand, there are still reports that house prices are still rising, like in this realtor.com article, which makes you wonder if you could actually get more money than they did!

So, what’s the truth?

There’s no one-size-fits-all answer to that question. Real estate functions on a very local level, and much of what you read is referring to the broader, national market. Not only does the general area you live in matter, but the specific price range or neighborhood your house is in can affect whether or not you get more or less for your house.

For instance, if your house is in a price range for first-time buyers in your area, the higher interest rates could easily affect how much buyers are willing or able to offer. On the other hand, if your house is in an affluent area and there are a lot of cash buyers, prices may not be affected as much. And a lot depends on how many homes are for sale—if there is still low inventory in your area, and a lot of buyers, then prices may stay strong.

While pricing your home appropriately is always important, it’s even more important to do so in this market. You obviously don’t want to price lower than you have to if the market data doesn’t show signs of lower sales prices, yet you don’t want to shoot for a record-breaking price and have your house sit on the market and not sell.

The problem is, when determining the value and list price for your house, you have to rely on recently sold homes as your proof and basis. The houses that are considered “recently sold” were on the market a few months back. And with the market reportedly shifting, that’s ancient history when you consider how much interest rates have gone up in the past few months, after those homes went under contract. Until the houses that went into escrow between then and now actually close, it’s a guessing game as to how much they actually sold for.

So, here are some thoughts to help you think about if you’re putting your house on the market in the near future:

The Takeaway:

The real estate market is shifting in many areas, but that doesn’t necessarily mean the value of your house is affected—at least yet.

If you’re going to list your house soon, you have the advantage of basing your asking price off of recently sold houses that are similar to yours, which were likely at historically high prices. Just make sure to keep your eye on the reaction of the market and any new sales data that comes in over the course of the first couple of weeks to a month. If there are no offers on your property, or signs of interest on the part of any buyers, then consider reducing your price. This link will take you the latest Market Update for Mammoth Lakes. Keep in mind, as stated earlier, the recently sold properties were on the market a few months back before the changing market. We can help with a real time valuation of your Eastern Sierra property.

Many headlines would have you believe that bidding wars and houses selling for over the asking price are a thing of the distant past. But it was only a few weeks ago that buyers wouldn’t have dreamed of finding a house where that wasn’t the situation.

There have certainly been signs of the market softening a bit in favor of buyers, but if properties are priced right and in desirable locations, some properties are still fetching offers over asking price—even if it isn’t happening on every listing or in every market.

So if you’re a buyer right now, there’s still a good chance you’ve “lost” a house to another buyer within the past few weeks, and you’re still feeling the sting that comes with it. You may be wondering when (or if) the market will truly give you a fair shake at getting a house…

Well, don’t lose hope! In fact, you may even get a second chance at a house you lost to another buyer.

According to this recent Axios article, nearly 15% of pending home sales failed to close in June. Whether it was due to buyers not getting their mortgage, home inspection issues, the house not appraising for the sales price, etc., many sellers found themselves looking for a new buyer or going back to the buyers whose offers weren’t originally accepted.

So if you lost out on a house recently, there’s a chance you may get a second bite at the apple!

If and when that happens for you, here are a few things to keep in mind:

The Takeaway:

There are signs and headlines that the market is shifting in favor of buyers, but they’re a bit misleading. Houses that are desirable and priced appropriately in the market are still selling — some with multiple offers, and some over asking price. So if you’re in the market to buy a home, you still need to be aggressive and make a strong offer.

However, if your initial offer isn’t accepted, don’t lose hope! With 15% of home sales falling through in June, there’s a chance you may find that the buyer they chose backs out and the seller checks to see if you’re still interested.

If that happens, be careful about lowering your offer, and don’t dismiss your second chance due to emotions or concerns about what was “wrong” with the house.

Everybody wants the best mortgage rate they can get, even when rising rates aren’t in the news. But with rates going up lately, people are desperate to find the best deal they can get.

Of course shopping for the best rate is a good thing to do, but more importantly, you should pay attention to whether or not that lender with a sweetheart rate is actually going to get you to the closing table!

It’s funny how lenders want to look at your credit history, your ability to keep a job, and your financial stability, but many home buyers don’t think too much about whether the lender is reliable and a good risk. And yes, the lender you choose to go with is a risk in any market, but all the more so lately…

Whether it’s because they hired too many people to keep up with demand over the past few years, poor management, or that they just can’t handle the market shift, many mortgage lenders are laying off lots of employees, if not entirely going out of business. This is leaving buyers in the lurch in the middle of buying a home, and sometimes just days before their closing.

Picture being totally qualified and going through the majority of the application and underwriting process. Then bam, a day or two before closing, your lender reveals they’re going belly up and won’t fund anymore loans. Or equally as tragic — the lender notifies you at the last minute they cannot lend on one of the condo projects in Mammoth Lakes because nightly rentals are allowed. This may sound like an exaggeration but it can and does happen.

There’s a simple solution: turn to your real estate agent for his or her advice and connections in the business. Go with a lender your agent trusts, can get on the phone, have open lines of communication with, and ultimately push for resolutions when there’s an issue. This is especially important in Mammoth Lakes as many lenders cannot loan on most condo projects because of the transient occupancy component. This link will take you to our current preferred providers.

And don’t be concerned that your agent is recommending someone because they get a piece of the action; there are laws in place to make sure agents aren’t recommending a lender for their own financial gain. The only thing your agent has to benefit from you using one of their recommended lenders is a successful closing!

That’s not to say you shouldn’t shop for the best rate possible. Just make sure you’re doing so with lenders that are solid and aren’t in danger of going out of business, or laying off employees to the point that it’ll affect your ability to get your loan in a timely manner, or at all. This is timeless advice, but all the more critical now when so many mortgage companies are either laying off employees or going out of business.

The Takeaway:

Many homebuyers are tempted to shop for the lowest mortgage rate and trust one who entices them with a tempting rate. Unfortunately, not only do they often switch the initial rate they quoted (or just stuff hidden fees in to make up for the lower rate), there’s always a chance the lender can’t get the loan closed. That’s especially possible now, with so many lenders laying off employees and some going out of business entirely.

While others may gamble with their home purchase, make sure you don’t roll the dice by going with a lender who may offer an enticing rate, but is otherwise a risky bet. Ask your real estate agent for his or her list of recommended lenders.

The lenders an agent tends to recommend are:

Going with a lender your agent recommends could easily be worth more to you than any of the potential savings you may (or may not) get from another lender.

June 25 – September 5, 2022

Strange Waters: South Tufa Tour Daily at 10am and 6pm (1 hour)
Discover the mystery of Mono Lake’s unique waters, geology, and natural history. Easy, 1 mile walk with a naturalist among the spectacular tufa towers on the lakeshore. Meet at South Tufa, 5 miles south of Lee Vining on Hwy 395, then 5 miles east on Hwy 120 E, follow signs to South Tufa.


Bird Outing Sundays and Fridays @ 8am (1 ½ – 2 hours)
Join a naturalist-birder for an outing through various habitats at the Mono Lake County Park and Tufa State Natural Reserve boardwalk. Meet in the parking lot at the County Park, 5 miles north of Lee Vining on Cemetery Rd.


Stars Over Mono Lake Mondays (1 ½ hours)
June 27 th – August 1st at 8:30pm, August 8 th – September 5 th at 8:00pm
Explore the skies over Mono Lake and hear stories about the stars. Bring something to sit on & warm clothing. Meet at South Tufa, 5 miles south of Lee Vining on Hwy 395, then 5 miles east on Hwy 120 E, follow signs to South Tufa.


Nature-based Yoga Fridays at 8am (1 hour and 15 minutes)
Learn natural history of the Mono Basin and Sierra Nevada while we practice yoga. Practitioners “become” White Bark Pines, Clark’s Nutcrackers, Phalaropes, and more. After the program, participants are invited to join on a Naturalist Hike/Stewardship Cleanup at a different trail each
week. Meet at Gus Hess Park in Lee Vining.


Lundy Canyon Bird Outing Saturdays at 8am (1 ½ – 2 hours)
Join a naturalist-birder for a leisurely walk in Lundy Canyon, where the convergence of coniferous forest, sagebrush scrub, riparian woodlands, and open water offers a diverse list of bird species. Meet in front of the Lundy Lake Resort. From Highway 395 turn onto Lundy Lake Road (7 miles north
of Lee Vining). Continue straight for 5 miles to the Lundy Lake Resort.


Panum Crater Volcano Tour Saturdays & Sundays at 10am (1 ½ hours)
Discover the geologic history of the Mono Basin with a walk into the middle Panum Crater, a plug- dome volcano. Meet at the Panum Crater parking lot. 5 miles south of Lee Vining on Hwy 395, then 3 miles east on Hwy 120 East, look for the Volcano Tour sign.

Lundy Canyon Walk Fridays at 10am (1 ½ – 2 hours) Starts July 8 th
Discover the cultural and natural history of beautiful Lundy Canyon on a short stroll starting from the Historic Lundy Lake Resort. Meet at the historical marker at the Lundy Lake Resort. From Highway 395 turn onto Lundy Lake Road (7 miles north of Lee Vining). Continue straight for 5 miles to the Lundy Lake Resort.


Fire and Ice: A Land of Contrast, interpretive hike
Friday July 1 st , August 5 th , and September 2 nd at 10 am (4 hours)
Explore the changing environment on a 4 hour walk from Junction Campground to Bennettville Mine to Fantail Lake. Volcanoes, Glaciations, Fires and Mining History will be topics included on the walk. Meet at Junction Campground on the Saddlebag Lake Rd., 10 miles west of Lee Vining on Hwy 120 W.

For more information call the Mono Basin Scenic Area Visitor Center at 760-647-3044
All programs are FREE of charge. A day-use fee of $3 per adult is required at South Tufa, Federal recreation passes are accepted.

Programs may be cancelled due to wind, rain, or poor air quality.

The last two years caught many of us off guard—and not just because of the pandemic. They also ushered in the hottest housing market on record in Mammoth Lakes and nationwide, with home prices rising nationally by nearly 19% in 2021, driven primarily by low mortgage rates and a major supply shortage.1

But while some had hoped 2022 would bring a return to normalcy, the U.S. real estate market continues to boom, despite rising interest rates and decreasing affordability.

So what’s driving this persistent demand? And is there an end in sight?

Here are three factors impacting the real estate market right now. Find out how they could affect you if you’re a current homeowner or plan to buy or sell a home this year.

MORTGAGE RATES ARE RISING FASTER THAN EXPECTED

Over the past couple of years, homebuyers have faced intense competition for new homes—in part due to historically low mortgage rates that were a result of the Federal Reserve’s efforts to keep the economy afloat during the COVID-19 pandemic.

However, in response to a concerning level of inflation, the Fed is now reversing those efforts by raising the federal funds rate. And as a result, mortgage rates are rising, as well. Few experts predicted, though, that mortgage rates would go up as quickly as they have.

In January 2022, the Mortgage Bankers Association projected that rates would reach 4% by the end of this year.2 By mid-April, however, the average 30-year fixed mortgage rate had already hit 5%, up from around 3% just one year prior.3 On a $400,000 mortgage, that 2% difference could translate into an additional $461 per monthly payment.

Since then, mortgage rates have continued on an upward trend. So what impact are these rising rates having on demand? While many buyers had hoped for a cooling effect, experts warn that may not be the case.

Ali Wolf, chief economist at housing market research firm Zanda, told Fortune magazine, “Rising mortgage rates are having a counterintuitive effect on the housing market. Home shoppers are actually sprung into action in an attempt to buy a home before mortgage rates rise any higher.”4

Since inventory remains low, the resulting “race” has kept the homebuying market highly competitive–at least for now.

What does it mean for you?

While current 30-year fixed mortgage rates represent an increase over previous months, they remain well below the historical average of 8%.5 As inflation across the economy continues, the Fed is likely to raise rates further this year. Buyers should act fast to secure a good mortgage rate. We’d be happy to refer you to a lender who can help.

For sellers, speed is also of the essence. The pool of potential buyers may shrink as mortgages become more expensive. And if you plan to finance your next home, you’ll want to act quickly to secure a favorable rate for yourself. Contact us today to discuss your options.

HOME PRICES KEEP CLIMBING

History shows that higher interest rates don’t necessarily translate to lower home prices. In fact, home prices rose 5% between 1980 and 1982, a period of significantly higher mortgage rates and inflation.5

Forecasters expect that home prices will continue to go up throughout 2022, though likely at a slower pace than the 18.8% increase of the last 12 months.4 Bank of America predicts that prices will be up approximately 10% by the end of this year, while Fannie Mae estimates 11.2%.6,7

In addition to limited supply and a race to beat rising mortgage rates, home values are also climbing because of positive economic indicators, like low unemployment.8 Plus, rents are soaring–up 17% from a year ago–which is prompting more first-time homebuyers to enter the market.9 Add to that the continued popularity of remote work, and it’s easy to see why property prices continue to surge.

However, it’s not all bad news for prospective homebuyers. Economists expect that as mortgage rates rise, the rate of appreciation will continue to taper, though the effect may be gradual.

“Eventually mortgage rates will slow down home prices,” according to Ken Johnson, an economist at Florida Atlantic University interviewed by Marketwatch.10 “We should not see rapid upticks in prices as mortgage rates rise.” Forecasters agree—Fannie Mae expects price increases to slow to 4.2% in 2023.7

What does it mean for you?

While the pace of appreciation is likely to decrease next year, home prices show no signs of going down. However, current labor shortages are leading to higher salaries and better job opportunities for many workers. You may find that your income growth outpaces home prices, making homeownership more affordable for you in the future.

For homeowners, the outlook’s even brighter. You could find yourself sitting on a nice pile of equity. Contact us for a free home value assessment to find out.

INVENTORY REMAINS EXTREMELY LOW

As noted, one of the largest hurdles to homeownership is a lack of inventory. According to a February 2022 report by Realtor.com, there’s an expanding gap between household formation and home construction, which has resulted in a nationwide shortage of 5.8 million housing units.11

The origins of this shortage date back to the 2008 housing crisis, during which crashing home values led contractors to stop building new properties—a trend that has not been fully reversed.12

That decline in home construction also resulted in a decrease in the number of home building professionals, a trend that was exacerbated by job losses during the COVID-19 pandemic. Now, many builders are limited by their ability to find qualified labor.

Another major challenge is a staggering increase in the cost of materials. Pandemic-related supply chain shortages have been a significant driver, with home building material costs rising on average 20% on a year-over-year basis. The price of framing lumber alone has tripled since August 2021.13

These trends add tens of thousands of dollars to the cost of a typical home. Factors like a lack of buildable land in many areas, restrictive zoning, and a shortage of developers are also contributing to the issue.14

Most homebuying experts agree that the lack of inventory is the primary factor driving rising housing prices and unprecedented competition for homes. With available housing units near four-decade lows, the end of the current housing boom is not yet in sight.15

What does it mean for you?

Prospective buyers should be prepared to compete for a home, since low inventory can lead to multiple offers. You may also need to expand your search parameters. If you’re ready to look, we’re ready to help.

For sellers, the picture is rosier. In this strong market, your home may be worth more than you realize. Contact us to find out how much your home could sell for in today’s market.

WE’RE HERE TO GUIDE YOU

While national real estate trends can provide a “big picture” outlook, real estate is local. And as local market experts, the professionals at Destination Real Estate will guide you through the ins and outs of our market and the local issues that are likely to drive home values in your particular neighborhood.

If you’re considering buying or selling a home in Mammoth Lakes or the Eastern Sierra, contact us now to schedule a free consultation. We can help you assess your options and make the most of this unique real estate landscape.

Sources:

  1. Marketwatch – https://www.marketwatch.com/picks/home-price-appreciation-will-normalize-what-5-economists-and-real-estate-pros-predict-will-happen-to-home-prices-in-2022-01646940841
  2. Bankrate –
    https://www.bankrate.com/mortgages/mortgage-rate-forecast
  3. CNBC –
    https://www.cnbc.com/2022/04/16/heres-how-much-the-same-mortgage-costs-now-compared-to-last-year.html
  4. Fortune –
    https://fortune.com/2022/03/23/housing-market-interest-rate-economic-shock/
  5. National Association of Realtors –
    https://www.nar.realtor/blogs/economists-outlook/instant-reaction-mortgage-rates-april-07-2022
  6. Fortune –
    https://fortune.com/2022/03/16/home-prices-2022-2023-bank-of-america-forecast-mortgage-rates/
  7. Fortune –
    https://fortune.com/2022/03/07/what-home-prices-will-look-like-2023-fannie-mae/
  8. Fortune –
    https://fortune.com/2022/03/17/home-prices-drop-housing-markets-california-michigan-massachusetts-corelogic/
  9. CNN –
    https://www.cnn.com/2022/03/23/success/us-national-rent-february/index.html
  10. MarketWatch –
    https://www.marketwatch.com/story/home-prices-increase-at-one-of-the-fastest-rates-on-record-but-higher-mortgage-rates-should-slow-future-growth-11648559497
  11. Realtor.com –
    https://www.realtor.com/research/us-housing-supply-gap-expands/
  12. NPR –
    https://www.npr.org/2022/03/29/1089174630/housing-shortage-new-home-construction-supply-chain
  13. Investopedia –
    https://www.investopedia.com/housing-market-dips-in-early-march-2022-5222449
  14. NPR –
    https://www.npr.org/2022/03/29/1089174630/housing-shortage-new-home-construction-supply-chain
  15. Fortune –
    https://fortune.com/2022/03/14/housing-market-key-metric-inventory-zillow-bad-for-buyers/

When you buy a home, you want to gain equity in that home over time.

So, when it comes to equity, how did homeowners fare over the past year? According to the most recent Home Equity Insights Report from CoreLogic, homeowners did very well.

According to the report, homeowners gained, on average, approximately $64,000 in equity between Q1 2021 and Q2 2022—although many states saw much larger average equity gains for homeowners, including California ($141,000), Hawaii ($139,000), and Washington ($119,000). Overall, U.S. homeowners with mortgages (which makes up 62 percent of all properties) saw their equity increase by a whopping $3.8 trillion between Q1 2021 and Q2 2022—a year-over-year change of 32.2 percent.

The Takeaway:

If you’re a homeowner in Mammoth Lakes or elsewhere, chances are, you’ve gained some equity in your home over the past year—and if you’re planning to sell and/or buy a new home, understanding those equity gains is a must.

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