Housing Market Trends November 2023 | Residential Snapshot

Last Updated on November 8, 2023 by Luke Feldbrugge

Welcome to the Housing Market Trends November 2023 monthly update from Homes for Heroes. This report focuses on the residential real estate housing market. We listen to the experts and boil down what they have to say to assist you, our heroes, with decision making regarding buying a home, selling your home, or refinancing your mortgage.

Housing Market Trends November 2023

The housing market is ever-evolving. Economic factors, government policies, interest rates, and even socio-cultural shifts can play a role in how the market behaves. That said, here are some housing market trends to help keep you informed as you determine what’s best for you.

• We are NOT in a foreclosure crisis.
• Rental Properties: Some homeowners are opting to rent out their home; while apartment construction is booming, causing current rental property owners to sell their homes.
• Housing inventory sees an uptick during peak season which is a rare occurrence.
• Many U.S. home sellers have built up tremendous equity and have strong buying power if they’re able to sell first.
• Rising home prices will continue throughout 2023.

We are NOT in a Foreclosure Crisis

Yes, foreclosures have increased versus a few years ago, but we’re nowhere near a crisis like we experienced in 2008. Instead, the increases in foreclosures people are talking about are compared to the foreclosure moratorium that took place during the pandemic in 2020-2021. Today’s foreclosures are still near all-time lows when compared to the annual average over the past twenty years.

Rental Properties: Entering or Exiting the Rental Business

One trend we’re seeing, according to John Burns Consulting, is 7% of potential home sellers in the U.S. want to rent their home instead of sell it. The main reason is because they want to hold onto the low interest rate they have on their mortgage and make some additional income from tenants.

This is a great way to hold onto that equity and make some incremental income, but it does come at a cost. Maintaining a second home while managing tenants can be a lot of work and present its own set of challenges. For example, the toilet stops working at midnight and you get the call, or your tenant keeps missing payment deadlines. Renting your home is a business. There is a cost to running a business, and it is not for everyone. But some manage it extremely and enjoy doing it.

Another trend is apartment construction is booming at a 40-year high. That translates into more choices for renters, likely at lower rents, as everyone jockeys for more tenants.

The apartment construction boom is causing current home renters to evaluate their renting business. Based on data from Buildium, 32% of current rental property owners are more likely to sell their rental properties over the next two years.

Maybe this is something you’re considering? If selling your rental home is important to you, consider working with a Homes for Heroes local real estate specialist to get it done, and save yourself an average of $3,000 after closing. Simply sign up to speak with a member of our team to get things started.

If these rental property owner sentiments continue to play out, it could mean more housing inventory coming into the market over the next two years to help ease some of the current inventory drought.

This is good news for home buyers looking to purchase a new home soon.

Inventory: Home Buyers Need More Options

For the first time in seven years, when looking at the amount of new listings coming into the market, inventory increased during the July-August time frame (September data wasn’t out yet). If this is not a one-time blip in the data, this could be great news for home buyers.

The July-August time frame is typically when new listings begin to slow down due to the seasonality of the real estate business, and continue to decline through the end of the year.

This is reason for excitement and a potential big sigh of relief, because maybe some sellers are now ready to make the move, giving home buyers more options to meet their needs.

That said, we cannot overlook how many current homeowners have a significantly lower interest rate, and how that may be playing in their decision making regarding whether to sell or not.

Over 70% of home owners have a current mortgage rate under four percent, according to FHFA. There’s a good chance it will take a life changing event to cause these homeowners to sell their home.

But, according to Credit Karma findings, 26% (1 in 4) of homeowners say high mortgage rates would not impact their decision on when to sell their home.

The main reason provided by 43% of those homeowners was because if they chose to sell now, they would not need a mortgage to buy a new home. If you break these home sellers down by generation, we find that mortgage interest rates are less relevant to Baby Boomers.

A primary reason is because of accumulated equity in their current home.

Equity: Many Home Sellers have Built Up Equity

Many American homeowners have built up an amazing amount of equity in their home over the past 30 years. Just in the past 5 years alone, the percent change in home prices has gone up 57%. If we look at the past 30 years, the percent change in home prices is 300%! And, these price change figures do not account for any principal paid off by the homeowner.

Nearly 69% of American homeowners have either paid off their mortgage or have at least paid off half of their mortgage.

Over 38% of current homeowners own their home free and clear.

These are big reason why many homeowners are not extremely concerned about current mortgage rates when it comes to selling their home. Because when they do sell, and need to purchase another home, they may not need a mortgage to purchase their new home.

Granted, they will need to coordinate the sale of their home to use that equity toward a new home, but the advantages are clear. It gives the home seller the ability to be an All-Cash Buyer, and that makes their buying power more significant in the eyes of another home seller. At the very least, it likely gives them the ability to put down a larger down payment.

Another trend is many home sellers are looking to move closer to family. NAR found the top five reasons why home sellers chose to sell, and the top reason by far was home sellers wanted to move closer to friends and family.

The pandemic experience changed things for many people. Travel restrictions, and being directed to avoid close contact with others due to concern in spreading the COVID virus, kept many apart from their loved ones. This experience made many people reprioritize things, including where they live, and has meant many more current homeowners selling to move closer to the people they care about.

Home Prices: Rising Prices Will Continue

Another trend that continues is the rise in home prices is not slowing down. Great news for sellers, not so great for buyers. The home prices are forecast to continue rising into 2024. The year end home price forecast for 2023, based on the average from six industry sources is an increase of 3.3%.

Sellers will continue to build more equity in their homes.

But, buyers will continue to face challenges in finding a home that meets their needs for a price they can afford.

Does it Make Sense to Refinance Now?

Even with interest rates above seven percent, there are some instances where it may make sense financially to refinance your existing home mortgage.

However, it is important to carefully consider your options before choosing to go through with any refinance to assure you are helping your financial situation over the long-term. And, remember to consider the closing costs and fees associated with a refinance.

Sign up to speak with your local Homes for Heroes mortgage specialist to find out if refinancing makes sense for you. If you decide to work with them, they will save you money by reducing their fees.

Here are some reasons why refinancing may make sense for you, given the current housing market trends:

• Lower Monthly Mortgage Payment – If the current interest rate has fallen below your original mortgage interest rate (for the same type of mortgage), you may be able to refinance to a lower interest rate and reduce their monthly payment.
• Shorten Your Loan Term – By refinancing to a shorter loan term, you can pay off your mortgage sooner and save money on interest over the life of the loan. Although, you can simply increase the amount you pay each month, or make an additional mortgage payment occasionally and apply these extra amounts to your principal to reduce the amount of interest you pay over the life of the loan as well. Research what works best for your personal financial situation before going through the process and the expense of a refinance.
• Eliminate Private Mortgage Insurance (PMI) – PMI is a required payment for borrowers with less than 20% equity in their home. If your home value has increased since taking out your original mortgage, you may be able to refinance to a loan with a higher loan-to-value ratio and eliminate your PMI payments.
• Consolidate Debt – A cash-out refinance allows you to borrow against the equity in your home to pay off other high-interest debt, such as credit card debt. Or, it can be used to pay for renovations, repairs, or other improvements to your home.
• Switch Loan Types – For example, if your current mortgage is an adjustable-rate mortgage (ARM), you may want to refinance to a fixed-rate mortgage to avoid future interest rate fluctuations.

Receive an Average of $3,000 from Homes for Heroes

Homes for Heroes assists firefighters, EMS, law enforcement, active military and veterans, healthcare workers and teachers; buy, sell and refinance their home or mortgage. But if you work with their local real estate and mortgage specialists to buy, sell or refinance; they also provide significant savings after you close on a home or mortgage. They refer to these savings as Hero Rewards, and the average amount received after closing on a home is $3,000, or $6,000 if you buy and sell!

Simply sign up to speak with a member of the team. There’s no obligation. After you sign up they will contact you to ask a few questions and help you determine the appropriate next steps for you. When you’re ready, they will connect you with their local real estate and/or mortgage specialists in your area to assist you through every step and save you money when it’s all done.

It is how Homes for Heroes and their local specialists thank community heroes, like you, for your dedicated and valuable service.

LIST OF SOURCES:
https://www.keepingcurrentmatters.com/
https://www.newyorkfed.org/microeconomics/hhdc.html
https://twitter.com/johnburnsjbrec/status/1696502206676230331
https://www.realtor.com/research/data/
https://www.fhfa.gov/DataTools/Downloads/Pages/National-Mortgage-Database-Aggregate-Data.aspx
https://www.fhfa.gov/DataTools/Tools/Pages/House-Price-Index-(HPI).aspx
https://data.census.gov/cedsci/all?q=mortgage
https://www.attomdata.com/news/market-trends/home-sales-prices/attom-q2-2023-u-s-home-equity-and-underwater-report/
https://www.fhfa.gov/Media/Blog/Pages/Homeowners-Equity-Remains-High.aspx
https://store.realtor/2022-nar-profile-of-home-buyers-and-sellers-download/
https://www.zillow.com/research/data/
https://www.mba.org
https://www.fanniemae.com/research-and-insights/forecast
https://www.aei.org/research-products/report/housing-finance-watch-week-37-2023/
https://www.nar.realtor
https://www.pulsenomics.com