Downsizing is on the minds of many homeowners today. Some are ready to retire, others want to live more simply, and many want to save money and say goodbye to home maintenance. If you can relate to any of those sentiments, ask yourself these five questions:
Have you done the math?
The financial savings that can be generated by downsizing can be significant – especially as they add up over time. When doing the math, make sure the move will save money, rather than spend unnecessarily.
Have you researched elder-care options?
Many homeowners hold on to their current home longer than they should because their parents / parents-in-law may need to come live with them in the future. While a noble gesture, there are many excellent elder care living options available today. Often, all it takes is a tour of those facilities to realize that your loved one may actually be happier, and far better served, in a place devoted to their care and happiness.
Have you considered off-site storage?
You don’t need to immediately discard a big chunk of your belongings in order to downsize. In fact, trying to do so in one fell swoop only creates needless stress. Most people find it works much better to move some of their belongings into off-site storage for six months. During that time, you can gradually incorporate some of those items into your new living arrangement, and slowly figure out what to do with the others.
How do you feel about sharing costs and decision-making?
Townhomes and condominiums are popular downsizing options. But both require that you share the decision-making and expenses associated with any maintenance and improvement projects with your neighbors and potentially an HOA. If you’re a people-person and agree that two heads are better than one, and you like the idea of sharing the cost/responsibility for expensive repairs, you’ll enjoy condo living. If not, this may not be the best option for you.
Have you consulted with a real estate agent?
Many homeowners don’t think to consult with a real estate agent until they’ve made the decision to downsize. This leads to guesstimating about some of the most important factors. The truth is, your real estate agent is someone you want to talk with very early in the decision-making process.
Mortgage rates dropped again for the fourth week in a row.
The average 30-year rate is now 4.06% which is the lowest it has been all year.
Rates today are actually the lowest they have been since early 2018.
The main factor driving rates down is the trade war with China.
Investors are shifting money from stocks into bonds which causes the yield on the 10-year Treasury to drop.
Mortgage rates are closely aligned with the 10-year Treasury.
At the beginning of the year, most experts believed that 2019 would have a trend of increasing mortgage rates eventually reaching 5.5%.
Instead, the opposite has happened which is good news for real estate.
We’ve seen some headlines recently that suggest home prices along the Front Range have peaked and are starting to decline.
When we dig in and do the research, this is what we find…
Home prices are still going up, just not as fast as they have been.
We’ve known that the double-digit appreciation that we’ve seen for the last several years could not be sustained and we expected the pace of appreciation to slow down.
So far in 2019, this is the case. Prices still going up, just not as fast.
It’s like running up stairs. Eventually you will get tired and you will need to start walking (but you’re still going up).
Headlines that suggest that prices have peaked and are falling create unrealistic expectations for buyers and give sellers a skewed perspective on the market.
Here are the numbers…
- Up 1.53% in Metro Denver
- Up 6.1% in Larimer County
- Up 5.1% in Weld County
Months of Inventory:
- 5 Months in Metro Denver
- 5 Months in Larimer County
- 4 Months in Weld County
- (Remember that 4-6 months of inventory represents a balanced market)
There has been an increase in Days on Market which means that homes are taking longer to sell. But the increase is measured in days, not months.
Here are those numbers…
Days on Market:
- Up 4 Days in Metro Denver
- Up 11 Days in Larimer County
- Up 3 Days in Weld County
So, be mindful of headlines that can be sensationalized and might suggest that the market is falling.
Bottom line, the market is going up, just not as fast as it was.
If you have been in your home for a while you may be restless for change. The great part about having a home of your own is you can make improvements and give your home a chance to evolve over time. You just need to help your home live up to its potential! Here is a top ten list of improvements that will help you make the most of your home.
- Find your home’s purpose. Each home is as unique as its owners, so in order to fully utilize your home, consider how you view your home’s purpose. Some people like to entertain, others find it a calm space in the frenzy of daily life; some nurture their families and others nurture their creativity. Your home’s purpose can be any combination of these and more, but it helps to consider the function of your space in order to ultimately find its purpose.
- Assemble a list. A list always helps me figure out where to start or prioritize what is the most important project. Think about what you want to change in your home, inspirations, and preferences.
- Make an “inspiration board”. An “inspiration board” is a great way to visualize your home’s decor. You can create a board online with a tool like Pinterest to organize ideas you love or you can do it the old fashioned way with a board, magazine cutouts, color swatches, and fabric samples. Doing this will allow you to see all the elements you like in one place so that you can then tie it all together into a room you love.
- Create a collection. If you have items that you like to collect, think about how to transform that collection into something you can display. If you don’t already have a collection of loved objects think about what this collection would be for you. You can center a room design around your travel souvenirs, old camera collection, figurines, unique plates, or familial objects. Adding to this collection over time can be a great way to keep your spaces new while maintaining a personal feel to your decor.
- Choose a new palate. Shake up your sensibilities and think of a color that will compliment your room while making a statement. It’s easy to fall into the white/beige standby to keep our rooms neutral, but sometimes a color that provides a contrast to your décor will make the room pop.
- Repurpose an old piece of furniture. Instead of replacing your furniture give it a facelift. You can have a sofa or chairs reupholstered or make use of a slip cover. Also, Painting and staining can add new life to your wood pieces.
- Rearrange. Moving furniture around is another easy way to reinvent your space. Try placing your sofa on an angle to open up your entertaining room or move your lamps to improve lighting. You can also think about moving a piece of furniture into a room to give it new life, like using a unique dresser for a credenza or a chair as a side table.
- Make a room of your own. Find some space in your home that is uniquely yours, whether this is the corner of the guest room or an office of your own. It can be very rewarding to have a space that you can organize to fit your personal needs without the worries of others intruding
- Find an inspirational object. Have you ever fallen in love with an object that inspired you to want to completely redo a room to accommodate it? Designing a room around an inspiring object can be a great way to create a space that truly embodies your design sensibility.
- Find design motivation. Home design evolves over time and can be sustained by finding items that inspire you. Read magazines and books that inspire your interests in architecture, design, art, etc. Or find stores and flea markets that sell pieces that influence your aesthetic. Or bring a camera with you when you’re doing your favorite activities and bring back memories or inspirations. Most of all have fun!
What inspires your home design?
While the “Bomb Cyclone” closed roads and schools over the last two days, the “Condo Cyclone” is opening new opportunities for first-time buyers.
What’s the “Condo Cyclone” you ask. It’s the proliferation of multi-family inventory that has come on the market up and down the Front Range.
Compared to last year, multi-family inventory which includes town-homes and condominiums, has increased…
• 79% in Metro Denver
• 34% in Larimer County
• 45% in Weld County
This is terrific news for the market overall, as inventory has been unusually low for several months. It’s especially terrific news for first-time buyers who need this type of product as a stepping stone to home ownership.
What we notice is a $170,000 to $130,000 difference in average price between a single-family home and a multi-family home in Front Range markets.
Specifically, here’s the spread between multi-family and single-family average price:
• $349,801 vs. $512,312 in Metro Denver
• $312,493 vs. $469,294 in Larimer County
• $237,645 vs. $370,027 in Weld County
So as we dig out from the “Bomb Cyclone” we can be happy for the “Condo Cyclone” which brings more affordability and opportunity to our markets!
Just Released (a new resource site just for you…)
• Want to see the latest market trends?
• Curious to see the process of buying or selling a home?
• Interested in what it takes to own investment property?
• Be sure to visit www.ColoradoLivingBlog.com
Pretend you have been driving on the Interstate at 100 miles per hour.
Also, pretend you have been doing that for a long time.
Now pretend you slow down to 83 miles per hour.
How would that feel?
It would probably feel slow, right?
83 miles per hour is a 17% decrease from 100. It may feel slow, but it’s still pretty fast.
How does this relate to real estate?
Well, the market has been moving fast for a long time.
It’s been going 100 miles per hour for at least two years (some would argue even longer).
We’ve recently seen a 17% change in terms of number of transactions that are occurring.
There were 17% fewer sales in October 2018 versus October 2017 in Metro Denver.
It feels slow because we’ve been driving so fast for so long. But, our market is still moving.
For example, prices are still up. So, remember, that it’s all relative.
Virtually all of the experts we follow put rates above 5% going into next year and some see rates approaching 5.5% by the middle of 2019. What’s certain is that there are economic forces at work that are pushing rates higher.
So, how about a little history lesson? How do today’s 30- year mortgage rates compare to this same date in history going all the way back to 1990?
• Today = 4.85%
• 2017 = 3.94%
• 2015 = 3.82%
• 2010 = 4.27%
• 2005 = 5.98%
• 2000 = 7.84%
• 1995 = 7.75%
• 1990 = 10.22%
While today’s rates feel high only because they are higher than 2017, they are quite a bit lower than at many times in history.
Interest rates have been trending higher since the fall of 2017, and I fully expect they will continue in that direction – albeit relatively slowly – as we move through the balance of the year and into 2019. So what does this mean for the US housing market?
It might come as a surprise to learn that I really don’t think rising interest rates will have a major impact on the housing market. Here is my reasoning:
1. First Time Home Buyers
As interest rates rise, I expect more buyers to get off the fence and into the market; specifically, first time buyers who, according to Freddie Mac, made up nearly half of new mortgages in the first quarter of this year. First-time buyers are critical to the overall health of the housing market because of the subsequent chain reaction of sales that result so this is actually a positive outcome of rising rates.
2. Easing Credit Standards
Rising interest rates may actually push some lenders to modestly ease credit standards. I know this statement will cause some people to think that easing credit will immediately send us back to the days of sub-prime lending and housing bubbles, but I don’t see this happening. Even a very modest easing of credit will allow for more than one million new home buyers to qualify for a mortgage.
3. Low Unemployment
We stand today in a country with very low unemployment (currently 4.0% and likely to get close to 3.5% by year’s end). Low unemployment rates encourage employers to raise wages to keep existing talent, as well as to recruit new talent. Wage growth can, to a degree, offset increasing interest rates because, as wages rise, buyers can afford higher mortgage payments.
There is a clear relationship between housing supply, home prices, and interest rates. We’re already seeing a shift in inventory levels with more homes coming on the market, and I fully expect this trend to continue for the foreseeable future. This increase in supply is, in part, a result of homeowners looking to cash in on their home’s appreciation before interest rates rise too far. This, on its own, will help ease the growth of home prices and offset rising interest rates. Furthermore, if we start to see more new construction activity at the lower end of the market, this too will help.
5. National versus Local
Up until this point, I’ve looked at how rising interest rates might impact the housing market on a national level, but as we all know, real estate is local, and different markets react to shifts in different ways. For example, rising interest rates will be felt more in expensive housing markets, such as San Francisco, New York, Los Angeles, and Orange County, but I expect to see less impact in areas like Cleveland, Philadelphia, Pittsburg, and Detroit, where buyers spend a lower percentage of their incomes on housing. The exception to this would be if interest rates continue to rise for a prolonged period; in that case, we might see demand start to taper off, especially in the less expensive housing markets where buyers are more price sensitive.
For more than seven years, home buyers and real estate professionals alike have grown very accustomed to historically low interest rates. We always knew the time would come when they would begin to rise again, but that doesn’t mean the outlook for housing is doom and gloom. On the contrary, I believe rising interest rates will help bring us closer to a more balanced real estate market, something that is sorely needed in many markets across the country.