Lakewood Realty Blog

After two years of historic year-over-year home value jumps in the greater Nashville market, a cooling trend has taken hold.

NASHVILLE TENNESSEAN

There’s no doubt about it: the 2018 housing market has seen its ups and downs.

The year started with sky-high home prices, historically low mortgage rates and a definitive upper hand for sellers. In recent months though, home price growth has faltered, rates have risen to their highest point in nearly eight years, and favor has started to shift from seller to buyer.

Will these trends continue? Will housing experience the same wild ride in the new year? Here’s what experts predict will happen in 2019 real estate market:

Mortgage rates will continue rising.

“Despite steady climbing for the past two years, mortgage rates remain lower than they were during most of the recession and below average for the type of strong economic growth we’ve been experiencing. That will change in 2019, as the 30-year, fixed rate mortgage reaches 5.8% — territory not seen since the dark days of 2008 when rates were racing downward in response to the housing crisis.” — Aaron Terrazas, director of economic research for Zillow

Millennials will keep buying homes — despite those rising rates.

“The housing market in 2019 will be characterized by continued rising mortgage rates and surging millennial demand. Rising rates, by making housing less affordable, will likely deter certain potential homebuyers from the market. On the other hand, the largest cohort of millennials will be turning 29 next year, entering peak household formation and home-buying age, and contributing to the increase in first-time buyer demand.” — Odeta Kushi, senior economist for First American

“Millennials will continue to make up the largest segment of buyers next year, accounting for 45% of mortgages, compared to 17% of Boomers, and 37% of Gen Xers. While first-time buyers will struggle next year, older Millennial move-up buyers will have more options in the mid-to upper-tier price point and will make up the majority of Millennials who close in 2019. Looking forward, 2020 is expected to be the peak Millennial home buying year with the largest cohort of millennials turning 30 years old. Millennials are also likely to make up the largest share of home buyers for the next decade as their housing needs adjust over time.” — Danielle Hale, chief economist for Realtor.com                                                                                                                                                                                                                                                                                                       

I’m no Nostradamus, but I’d like to take a stab at what the world of real estate transactions might look like in the year 2025. Yes, it’s only six or so years away, but with the speed at which technology is changing our world, to make predictions any further in the future would be purely speculation. I do like to think about what the future of our industry might look like because it gives us the ability to remain nimble and keeps us aware of trends and changes in the real estate world so we can adapt. Anyone who thinks that real estate transactions are immune to technology and shifting consumer trends will likely find themselves in a different line of work in the not-so-distant future.I see homes in the future being listed not with a couple dozen still photos and a short description, but on a platform developed to immerse the buyer in a 3D environment where they are able to read reviews and comments on a property by anyone who has seen the property physically. Perhaps pre-loaded inspections and repair estimates included in the platform would remove the classically intensely uncomfortable period of requesting and negotiating repairs. How about links to service providers and anticipated maintenance schedules? Everything a prospective homeowner would need to know to make an informed buying decision.

The key here is information — and transmitting it quickly. People expect more and more information and to have to expend less effort to get it. They expect to have even their biggest purchases secured with a money-back guarantee or a trial period. It isn’t too much of a stretch to think that real estate technology that mirrors these expectations would create a new world where the traditional agent transaction is just that — traditional.
Forbes Real Estate

By: Stephanie Betters

Home prices are at the top of everyone’s minds. Can they maintain their current pace of appreciation? Will rising mortgage rates negatively impact home values? Will the next economic slowdown cause prices to crash?

Let’s try to answer these questions based on what has happened in the past as well as what we know about the current real estate market.

The impact of rising interest rates!

We explained earlier this year that rising mortgage rates have not negatively impacted home prices in the past and probably wouldn’t this timeThey were correct. So far this year, home values have continued to appreciate above normal historic percentages and it appears the gradual increase in rates has had little impact on prices.

The economic slowdown!

Many people fear that when the economy turns, we may see the same depreciation in home values as we did a decade ago.

However,we recently reported that the same group of economists, real estate experts, and investment & market strategists who predicted the next recession will occur in the next 18-24 months have also projected that house prices will continue to appreciate for the next five years, albeit at smaller percentages.

Supply & Demand!

As always, home prices will be determined by the demand to purchase compared to the available inventory of homes for sale. For the last six years, demand has far exceeded the available supply which has resulted in the average annual appreciation to top 6% since 2012. That is far greater than the historic norm of 3.6% annual appreciation that we saw prior to the housing boom.

There are currently small signs that housing inventory is slowly beginning to increase. Months supply of houses for sale matched last year’s numbers for the last two months after 37 consecutive months of decreasing inventory. New construction data has also shown positive signs that inventory will be increasing.

As inventory begins to meet demand, we will see appreciation return to more normal levels. We are already seeing projections coming in lower than the 6.2% annual average we have seen more recently.

CoreLogic is predicting that home values will appreciate by 5.1% over the next twelve months and the price expectation calls for values to increase by 4.2% in 2019.

Bottom Line

Mark Fleming, Chief Economist at First American, explained it best:

“We’re seeing the first indications that price appreciation may be slowing, but the underlying fundamental housing market conditions support a natural moderation of house prices rather than a sharp decline”.

Most of us are aware of the existence of a “subconscious” mind — but we don’t necessarily know what it is, what it does or how we master it. The truth is, your subconscious mind power is an amazing ally when you master it, yet if it stays untamed, it can drive the direction of your life in undesirable ways.

Throughout your life, you have programmed your subconscious with thought habits and beliefs. Just like any of your other habits, the thoughts that you have repeated to yourself have become habits. There’s no difference between a habit such as the sequence of actions you use to tie your shoes and the habit of thinking about yourself in a certain way.

Repetition creates habit. These mental habits are combined with things you have heard from people important to you (such as your parents) and your own personal experiences to form an incredibly complex network of beliefs that help you understand and negotiate the world.

The subconscious mind, just like a computer, does not judge or discriminate between what can and cannot be achieved or obtained. However, the conscious mind evaluates a situation and says, “you can’t do this or have that” based on the programming in place within the subconscious!

As you can see, it can be a vicious circle.

When you learn to master your conscious mind, and imprint the RIGHT programming into the subconscious, you will be absolutely unstoppable.

Watch your business grow by leaps and bounds when using your most expensive computer ” your brain”.

Lifestyle has a profound impact on your brain health. What you eat and drink, how much you exercise, how well you sleep, the way you socialize, and how you manage stress are all critically important to your brain health.

YOUR BODY: GET MOVING. People who exercise regularly have a lower risk of developing Alzheimer’s disease. Exercise improves blood flow and memory; it stimulates chemical changes in the brain that enhance learning, mood and thinking. Be fit. Be smart.

EAT SMART, THINK BETTER. You are what you eat. As you grow older, your brain is exposed to more harmful stress due to lifestyle and environmental factors, resulting in a process called oxidation, which damages brain cells. Rust on the handlebars of a bike or a partially eaten apple gives you an idea of the kind of damage oxidation can cause to your brain. Food rich in antioxidants can help fend off the harmful effects of oxidation in your brain.

CONTROL MEDICAL RISKS. Hypertension, diabetes, obesity, depression, head trauma, higher cholesterol, and smoking all increase the risk of dementia. You can control and reduce these risks. Get your annual check-up, follow your doctor’s recommendations and take medications as prescribed. Get engaged in a brain healthy lifestyle for your body and your mind.

REST WELL. Sleep energizes you, improves your mood and your immune system, and may reduce buildup in the brain of an abnormal protein called beta-amyloid plaque, which is associated with Alzheimer’s disease. Practicing meditation and managing stress may help fend off age-related decline in brain health. Stay positive. Be happy.

YOUR MIND: USE IT OR LOSE IT. Mental exercise is just as critical as physical exercise in keeping your brain fit and healthy. Mental exercises may improve your brain’s functioning and promote new brain cell growth, decreasing your likelihood of developing dementia. Like your muscles, you have to use your brain or you lose it.

STAY CONNECTED. Leading an active social life can protect you against memory loss. Spending time with others, engaging in stimulating conversation, and staying in touch and connected with family and friends are good for your brain health. Studies have shown that those with the most social interaction in their community experience the slowest rate of memory decline.

If you’re in the market to buy a home, knowing what kind of shape your credit score is in can give you an idea of whether you’ll qualify for a loan and what kind of interest rate you’ll pay. Loans are necessary for most future homebuyers because they cannot afford to pay cash upfront.

While lenders look at your income, debt and savings when making mortgage decisions, your credit score is the biggest factor in determining whether you get approved or rejected for financing. That’s why it’s so important to check your credit report regularly so you can gauge the overall state of your financial health.

If you want to buy a house soon or are looking into house refinance for an existing mortgage, checking your credit score should be at the top of your to-do list. Here’s a look at just how important your credit score is for mortgage lending decisions.

Find out how your credit score compares to people who have a mortgage loan. (Data is based on nearly 140,000 People who have a mortgage; 67,000 People who have an FHA mortgage.)

• People who have a conventional real estate mortgage: Average score is 682

• People who have an FHA mortgage loan: Average score is 649

• People who do not have a mortgage (or FHA loan): Average score is 613

Before we get into the details of buying a house, getting a mortgage, and what your credit needs to look like, let’s back up and lay out exactly what a mortgage is. A mortgage is a loan specifically used to finance the purchase of a home.

A house mortgage is likely the largest loan you will ever take on and that is why they have multiple parts and they can last 15-30 years. Mortgages include collateral, a down payment, taxes and insurance. It is important to keep these different parts in mind before deciding whether you can take on this much debt. Once you’ve decided to take the plunge, you’ll need to know what it’s going to take to get your dream home.

The minimum credit score needed to buy a house isn’t set in stone and in fact, it can change quite often especially during and after a recession when the economy is on a downturn. It’s not unusual for lenders to enforce tighter restrictions on borrowing when the economy is shrinking instead of expanding.

In the wake of the housing collapse, for instance, applicants with credit scores of 720 and above were getting rejected for mortgage loans.

Fortunately, the real estate market has improved dramatically since 2008 and lenders have eased up a bit in terms of the minimum credit score they’re looking for. The minimum score also depends on the type of loan you’re applying for.

Lenders will also look at the area you are looking to purchase a home in because there are outside factors that might make increase the risk thereby increasing the credit score needed to secure a mortgage loan. As you can tell, there are many different requirements to buy a house so do not take the decision to become a homeowner lightly. Get to work !!!

1. Hardwoods

Costs: Depending on the type of hardwoods you go with, it could cost you anywhere from $3 to $12 per square foot. Engineered wood will cost you a little less. On top of the cost of materials, you will need to pay to get it installed which will likely run you in the hundreds or thousands of dollars.

Pros: Hardwoods look very nice and have a great resale value. They are easy to clean and maintain and usually only require vacuuming.

Cons: The cost is the largest drawback. Like tile, hardwoods are also loud to walk on. Real hardwoods also need refinishing occasionally in high-traffic areas. Standing water can also ruin hardwoods.

Best Rooms: The best place to put hardwoods is in a living room. It looks good and is stylish. It is not a high-traffic area such as a foyer so the would can remain protected. You can also use a rug to muffle the noise a bit.

2. Tile

Costs: There are many different types of tile. It can range in price from $1 to $20 a square foot. Professional installation can run into the hundreds of dollars depending on the size of the area.

Pros: Glazed ceramic tile is very durable and resistant to scratches. It is water resistant. Tile comes in a variety of sizes and materials, such as marble, porcelain, travertine, slate, and granite. Additionally, tile is fairly easy to clean, and stains are not much of a concern.

Cons: Tile can be very loud to walk on and echos. It can also be cold, and heating systems for tile are very expensive. Tile can crack and can be difficult to repair. The grout gets stained and needs to be cleaned.

Best Rooms: Since tile is water resistant, it is perfect for a bathroom or a kitchen. It may also work well in a dining area where food and drinks tend to be spilled frequently.

3. Laminate

Costs: Again, this ranges in price, but I have seen it anywhere from $0.50 to $3 a square foot. You will also have to pay for installation.

Pros: My favorite thing about laminate is that it does not easily scratch. And if it does, a little vegetable oil rubbed on the scratch will get it right out. It also can look like real wood or tile, and it can even be difficult to tell if it is real or not. Like hardwoods, laminate is easy to clean. You can even make your own cheap and natural house cleaners. It is also great for pets because they can’t scratch or stain it.

Cons: Standing water will ruin laminate flooring. I learned this the hard way after having a refrigerator leak, and I ended up having to replace all the flooring in my kitchen. If the laminate does get ruined, unlike read hardwoods, laminate can not be refinished.

Best Rooms: Laminate is great for high traffic areas such as a foyer or any room with a lot of activity because of its durability. I highly recommend not putting it in a kitchen, bathroom, or a laundry room since laminate should not get wet.

4. Carpet

Costs: The cost of carpet varies greatly depending on the quality. However, standard carpeting and padding is between $2 and $5 per square foot. There are usually decent installation deals at Lowe’s and Home Depot for around $50.

Pros: Carpet not only feels soft, but it also gives a soft look to a room. It is quiet to walk on and prevents echoing throughout a home. Carpet is quick and simple to install and can go over uneven subfloors.

Cons: Although advancements in fiber technology have enabled carpet to be more stain-resistant, it still gets stained. Even when vacuumed frequently, it still may contain hidden dirt. When my husband and I tore up our old carpet, it had mounds of dirt underneath it. Carpet also needs to be steam-cleaned occasionally to keep it fresh. Additionally, carpet is not good for people with allergies.

Best Rooms: The best location for carpet is low traffic rooms, such as bedrooms, to minimize the dirt that gets trapped in it. It also gives bedrooms a more cozy look and feel.

5. Vinyl

Costs: Vinyl can cost less than $1 per square foot on the low end but can cost up to $5 per square foot on the high end. Installation is a couple hundred dollars.

Pros: Like carpet, vinyl is quiet and easy on your feet. It is inexpensive compared to some of the other flooring types.

Cons: Although vinyl has come a long way and can be made to look like wood or tile, it still does not look as good as the real thing. Vinyl dents and tears easily, and I have found that it can be a challenge to clean.

Best Rooms: Vinyl is great for a laundry room as it can shield a lot of the sound from your laundry machines. It could also work well in bathrooms and the kitchen because of the warmth it adds.

6. Cork

Costs: Again, there is a range of prices: $2 to $8 per square foot.

Pros: Cork is a good insulator. It is warm, soft, and absorbs sounds. Cork is a natural material, so it is environmentally friendly. Also, since it’s antimicrobial and resistant to mold, it’s safe for the family.

Cons: Since cork is a natural material, it will fade in direct sunlight. It also has been known to turn yellow with time. Because of the moldable nature of cork, it may get damaged underneath furniture pressure points. It will also swell when it is in standing water.

BestRooms: Cork would work great in bedrooms because of it softness and warmth.

Mistake 1: Falling in Love With a House You Can't Afford
Once you've fallen in love with a particular home, it's hard to go back. You start dreaming about how great your life would be if you had all the wonderful things it offered — the lovely, tree-lined streets, the jetted bathtub, the spacious kitchen with professional-grade appliances. However, if you can't or won't be able to afford that house, you're just hurting yourself by imagining yourself in it. To avoid the temptation to get in over your head financially, or the disappointment of feeling like you're settling for less than you deserve, it's best to only look at homes in your price range.
Start your search at the low end of your price range — if what you find there satisfies you, there's no need to go higher. Remember, when you buy another $10,000 worth of house, you're not just paying an extra $10,000 — you're paying an extra $10,000 plus interest, which might come out to double that amount or more over the life of your loan. You may be better off putting that money toward another purpose.

Mistake 2: Assuming There's Nothing Better Out There
Unless you are a high-end buyer looking at custom homes, chances are that for any home you find that you like, there are quite a few others that are nearly identical to it. Most neighborhoods have multiple homes that are the same model. Further, most neighborhoods are full of homes that were all constructed by the same builder, so even if you can't find an identical model for sale, you can probably find a house with many of the same features. If you're considering a condo or townhouse, the odds are also in your favor.
Even when you have a long list of must-haves, there are probably several homes out there that can meet your needs. If there are snags with the home you've decided you like – such as major repair issues, an inflexible asking price or a difficult possession date – consider moving on. Being open to keep looking will save you from making rash decisions you might regret later.

Mistake 3: Being Desperate
When you've been looking for a while, and you do not see anything you like — or worse, you're getting outbid on the houses you do want – it's easy to get desperate to get into your new house now. However, if you move into a house you'll end up hating, the transaction costs to get rid of it will be costly. You'll have to pay an agent's commission (up to 5-6% of the sale price), and you'll have to pay closing costs for the mortgage on your new house. You'll also deal with the hassle and expense of moving yet again. If you decide not to move but to try to make the best of what you have, remember that alterations and renovations are expensive, time-consuming and stressful. If you have time on your side, it's OK to wait until something that suits you comes along – as long as your demands are realistic for your budget, you are bound to find something you live with.

Mistake 4: Overlooking Important Flaws
For any of the three reasons we just discussed, you might be tempted to ignore major problems with the house that will be difficult, expensive or impossible to change. Carefully consider your options before you make a commitment, and consider waiting until something better comes along. New houses come on the market every day.

Mistake 5: Overestimating Your Handyman Skills
Don't buy a fixer-upper that's more than you can handle in terms of time, money or ability. For example, if you think you can do the work yourself then realize you can't once you get started, any repairs or upgrades you were planning to make will probably cost twice as much once you factor in the labor – and that may not be in your budget. Not to mention the costs involved to fix anything you may have started and the fees to replace the materials you wasted. Honestly evaluate your abilities, your budget and how soon you need to move before purchasing a property that isn't move-in ready.

Mistake 6: Rushing to Put In an Offer
In a hot market, it may be necessary to pull the trigger very quickly if you find a home you like. However, you have to balance the need to make a quick decision with the need to make sure the home will be right for you. Don't neglect important steps like making sure the neighborhood feels safe at night as well as during the day and investigating possible noise issues like a nearby train. Ideally, you'll be able to take at least a night to sleep on the decision. How well you sleep that night and how you feel about the home in the morning will tell you a lot about whether the decision you're about to make is the right one. Taking the time to consider the decision also gives you a chance to research how much the property is really worth and offer an appropriate price.

Mistake 7: Dragging Your Feet
It's a tough balancing act to make sure you make a careful decision, but don't take too long to make it. Losing out on a property that you were almost ready to make an offer on because someone beat you to it can be heartbreaking. It can also have economic consequences. Let's say you are self-employed. Perhaps for you more than anyone else, time is money. The more time and energy you have to take out of your normal activities to search for a house, the less time and energy you have available to work. Not dragging out the home buying process unnecessarily may be the best thing for your business, and the continued success of your business will be essential to paying the mortgage. If you don't pull the trigger quickly, someone else might, and you'll have to keep looking. Don't underestimate how time-consuming and routine-disrupting house shopping can be.

Mistake 8: Offering Too Much
If there's a lot of competition in your market and you find a place you really like, it's all too easy to get sucked into a bidding war – or to try to preempt a bidding war by offering a high price in the first place. There are a couple of potential problems with this. First, if the house doesn't appraise at or above the amount of your offer, the bank won't give you the loan unless the seller reduces the price or you pay cash for the difference. If this happens, the shortfall on your bid as opposed to your mortgage will have to be paid out of pocket. Second, when you go to sell the house, if market conditions are similar to or worse than they were when you purchased, you may find yourself upside down on the mortgage and unable to sell. Make sure the purchase price for the home you buy is reasonable for both the house and the location by examining comparable sales and getting your agent's opinion before making an offer.