The Latest on the Luxury Home Market
The Latest on the Luxury Home Market Luxury living is about more than just stunning views and cutting-edge smart home technology—it's about elevating your lifestyle. And if you're in the market for a million-dollar home, now is an excellent time to explore the thriving luxury market. Here's why. The Number of Luxury Homes Is Growing The top of the market, or luxury homes, can mean different things depending on where you live. But in general, these are homes that are in the top 5% price range in any area. According to a recent report from Redfin, the average value of those homes has risen to over one million dollars: “The median sale price for U.S. luxury homes, defined as the top 5% of listings, rose 9% year-over-year to a record $1.18 million during the second quarter.” That same report goes on to show the percentage of homes valued at a million dollars or more has risen to an all-time high (see graph below): That means, if this is your desired price range, you have options to choose from, each with different features and styles. Whether you're looking for the latest designs, like modern kitchens with high-end appliances, exclusive amenities, or enhanced privacy and security, the market that fits this lifestyle is growing. Your Luxury Home Is an Investment In addition, a luxury home could help you build significant long-term wealth. As the Redfin quote mentioned earlier says, luxury home prices are rising. That may be the reason there are a lot of people investing in luxury real estate right now. According to the August Luxury Market Report: “By the end of July, the overall growth in the volume of sales in 2024 stood at 14.82% for single-family homes and 11.35% for attached homes compared to the same period in 2023.” Bottom Line With more million-dollar homes on the market and prices going up, you have luxury options to choose from and a chance to build significant long-term wealth. Want to see the best homes in our area? Let’s get in touch today.
How the Federal Reserve’s Next Move Could Impact the Housing Market
How the Federal Reserve’s Next Move Could Impact the Housing Market Now that it’s September, all eyes are on the Federal Reserve (the Fed). The overwhelming expectation is that they’ll cut the Federal Funds Rate at their upcoming meeting, driven primarily by recent signs that inflation is cooling, and the job market is slowing down. Mark Zandi, Chief Economist at Moody’s Analytics, said: “They’re ready to cut, just as long as we don’t get an inflation surprise between now and September, which we won’t.” But what does this mean for the housing market, and more importantly, for you as a potential homebuyer or seller? Why a Federal Funds Rate Cut Matters The Federal Funds Rate is one of the key factors that influences mortgage rates – things like the economy, geopolitical uncertainty, and more also have an impact. When the Fed cuts the Federal Funds Rate, it signals what’s happening in the broader economy, and mortgage rates tend to respond. While a single rate cut might not lead to a dramatic drop in mortgage rates, it could contribute to the gradual decline that’s already happening. As Mike Fratantoni, Chief Economist at the Mortgage Bankers Association (MBA), points out: “Once the Fed kicks off a rate-cutting cycle, we do expect that mortgage rates will move somewhat lower.” And any upcoming Federal Funds Rate cut likely won’t be a one-time event. Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), says: “Generally, the rate-cutting cycle is not one-and-done. Six to eight rounds of rate cuts all through 2025 look likely.” The Projected Impact on Mortgage Rates Here’s what experts in the industry project for mortgage rates through 2025. One contributing factor to this ongoing gradual decline is the anticipated cuts from the Fed. The graph below shows the latest forecasts from Fannie Mae, MBA, NAR, and Wells Fargo (see graph below): So, with recent improvements in inflation and signs of a cooling job market, a Federal Funds Rate cut is likely to lead to a moderate decline in mortgage rates (shown in the dotted lines). Here are two big reasons why that’s good news for both buyers and sellers: 1. It Helps Alleviate the Lock-In Effect For current homeowners, lower mortgage rates could help ease the lock-in effect. That’s where people feel stuck within their current home because today’s rates are higher than what they locked in when they bought their current house. If the fear of losing your low-rate mortgage and facing higher costs has kept you out of the market, a slight reduction in rates could make selling a bit more attractive again. However, this isn’t expected to bring a flood of sellers to the market, as many homeowners may still be cautious about giving up their existing mortgage rate. 2. It Should Boost Buyer Activity For potential homebuyers, any drop in mortgage rates will provide a more inviting housing market. Lower mortgage rates can reduce the overall cost of homeownership, making it more feasible for you if you’ve been waiting to make a move. What Should You Do? While a Federal Funds Rate cut is not expected to lead to drastically lower mortgage rates, it will likely contribute to the gradual decrease that’s already happening. And while the anticipated rate cut represents a positive shift for the future of the housing market, it’s important to consider your options right now. Jacob Channel, Senior Economist at LendingTree, sums it up well: “Timing the market is basically impossible. If you’re always waiting for perfect market conditions, you’re going to be waiting forever. Buy now only if it’s a good idea for you.” Bottom Line The expected Federal Funds Rate cut, driven by improving inflation and slower job growth, is likely to have a positive, though gradual, impact on mortgage rates. That could help unlock opportunities for you. When you’re ready, let’s connect. That way you’ll be prepared to take action when the time is right for you.
Are We Heading into a Balanced Market?
Are We Heading into a Balanced Market? If you’ve been keeping an eye on the housing market over the past couple of years, you know sellers have had the upper hand. But is that going to shift now that inventory is growing? Here’s a breakdown of what you need to know. What Is a Balanced Market? A balanced market is generally defined as a market with about a five-to-seven-month supply of homes available for sale. In this type of market, neither buyers nor sellers have a clear advantage. Prices tend to stabilize, and there’s a healthier number of homes to choose from. And after many years when sellers had all the leverage, a more balanced market would be a welcome sight for people looking to move. The question is – is that really where the market is headed? After starting the year with a three-month supply of homes nationally, inventory has increased to four months. That may not sound like a lot, but it means the market is getting closer to balanced – even though it’s not quite there yet. It’s important to note this increase in inventory is not leading to an oversupply that would cause a crash. Even with the growth lately, there’s still nowhere near enough supply for that to happen. The graph below uses data from the National Association of Realtors (NAR) to give you an idea of where inventory has been in the past, and where it’s at today: For now, this is still seller’s market territory – it’s just not as frenzied of a seller’s market as it’s been over the past few years. As Mark Fleming, Chief Economist at First American, says: “The faster housing supply increases, the more affordability improves and the strength of a seller’s market wanes.” What This Means for You and Your Move Here's how this shift impacts you and the market conditions you'll face when you move. Lawrence Yun, Chief Economist at NAR, explains: “Homes are sitting on the market a bit longer, and sellers are receiving fewer offers. More buyers are insisting on home inspections and appraisals, and inventory is definitively rising on a national basis.” The graphs below use the latest data from NAR and Realtor.com to help show examples of these changes: Homes Are Sitting on the Market Longer: Since more homes are on the market, they’re not selling quite as fast. For buyers, this means you may have more time to find the right home. For sellers, it’s important to price your house right if you want it to sell. If you don’t, buyers might choose better-priced options. Sellers Are Receiving Fewer Offers: As a seller, you might need to be more flexible and willing to compromise on price or terms to close the deal. For buyers, you could start to face less intense competition since you have more options to choose from. Fewer Buyers Are Waiving Inspections: As a buyer, you have more negotiation power now. And that’s why fewer buyers are waiving inspections. For sellers, this means you need to be ready to negotiate and address repair requests to keep the sale moving forward. How a Real Estate Agent Can Help But this is just the national picture. The type of market you’re in is going to vary a lot based on how much inventory is available. So, lean on a local real estate agent for insight into how your area stacks up. Whether you’re buying or selling, understanding how the market is changing gives you a big advantage. Your agent has the latest data and local insights, so you know exactly what’s happening and how to navigate it. Bottom Line The real estate market is always changing, and it’s important to stay informed. Whether you’re buying or selling, understanding this shift toward a balanced market can help. If you have any questions or need expert advice, don’t hesitate to reach out.
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