According to the Federal Reserve’s Flow of Funds report released This Week in Real Estate the value of U.S. owner-occupied homes increased to a record of $29.2 trillion in the third quarter of 2019. Home values rise as mortgage rates remain low. Fannie Mae believes the average fixed rate in 2020 will probably be 3.6% and if so, will be the lowest annual average ever recorded in Freddie Mac records going back to 1973. Below are a few highlights from the first full week of 2020…
* U.S. Home Values Rise to Record $29.2 Trillion, Fed Says. The value of all U.S. owner-occupied homes increased to a record $29.2 trillion in the third quarter, according to a Federal Reserve report known as the Flow of Funds. That was a gain of 4.2% from a year earlier, the slowest annualized increase since 2012. The collective value of U.S. homes is now 21% higher than the bubble peak reached in 2006. The Fed’s tally of home values for all U.S. residential real estate, whether occupied by homeowners or not, was $32.9 trillion, the report said.
* U.S. Mortgage Debt Hits a Record $15.8 Trillion. Outstanding U.S. mortgage debt rose to $15.8 trillion in the third quarter of 2019, according to the Federal Reserve. The biggest chunk of debt was held on homes, at $11.1 trillion, followed by commercial, with $3 trillion of loans, multifamily at $1.6 trillion and farms at $254.1 billion, according to the Fed data. Mortgage debt is rising as U.S. real estate values gain. Low mortgage rates boost real estate prices, and hence the volume of loans, because cheaper financing means buyers qualify for higher-balance mortgages and can bid more for properties they want. The average fixed rate probably will be 3.6% in 2020, which would be the lowest annual average ever recorded in Freddie Mac records going back to 1973.
* Homebuying Sentiment Up Sharply From 2018. Fannie Mae’s Home Purchase Sentiment Index (HPSI) finished out the year with little change from November to December, but with a strong increase over the December 2018 version. “The continued strength in the HPSI attests to the intention among consumers to purchase homes. This is consistent with the Fannie Mae forecast for 2020,” said Doug Duncan, Senior Vice President and Chief Economist. “The HPSI hit and remained near an all-time high in 2019, driven by the 16-percentage point year-over-year increase in the share of consumers believing it is a good time to buy. The HPSI’s strength supports our prediction of a healthy housing market in 2020, as well as consumers’ appetite and ability to absorb the expected increase in entry-level inventory.”
For most of us, our home is the biggest investment we will ever make. When it comes time to sell, treating your home as such will help you get a bigger return on your investment. You want it to look it’s very best when potential buyers come through or view your photos online. First impressions matter, which is where home staging comes in. Home staging emphasizes its strengths and minimizes its weaknesses. This is important for your marketing photos and when potential buyers are trying to visualize a life there.
Here are a few tips to help you get your home ready to sell.
One of the first things you want to do is declutter. Clutter
takes up space and space is what sells. Make your home look bigger and more
desirable by editing down to just the basics.
De-personalizing goes hand-in-hand with decluttering. You want
potential buyers to be able to picture their things in the house. Go
room-to-room and clear off the countertops, desk tops and shelves of all
personal items. This includes your family photos. In this case, less is
Cleaning goes a long way to improve the look and feel of your
investment. A deep clean before you list the home is a good idea, but then set
aside time each week to give the floors and bathrooms a once over.
Spackle and Paint
Now that your home is decluttered, de-personalized and clean, it’s
a good time to spackle and paint. Filling in the holes and applying a fresh
coat of paint will freshen the look of the house. Using lighter colors like
white or beige will make the room feel bigger.
The National Association of REALTORS took a look at the value staging a home brings to the selling process, the return on investment or ROI. Here is what it determined.
83% of buyers’ agents say that staging makes it
easier for buyers to visualize the property as their future home.
44% of buyers’ agents say that staging a home
increases the dollar value offered
53% of sellers’ agents say that staging a home
decreases the amount of time a home spends on the market
95% of agents recommend that sellers declutter
their home before putting it on the market.
When it comes to the return on investment, a staged home will sell faster and for more money than a non-staged home. The results of a recent Coldwell Banker survey show staged homes sell for more than 6% above the asking price. For a $200,000 listing, that’s $12,000 extra in the seller’s pockets.