Nick Briggs, Realtor

Real estate is a fascinating world. But with it comes a slew of misconceptions. Let’s dive into some of the most common “Real Estate Misconceptions” and set the record straight.

1. Internet Property Gurus Know It All:

We’ve all seen them. TV property experts with flashy advice. But here’s the thing. While many claim to have top-notch advice, some have ulterior motives. They might be promoting courses or seminars to make a quick buck. Remember, true industry secrets aren’t often shared so openly.

2. You Need Big Bucks to Start:

Another common “Real Estate Misconception” is the need for a hefty initial investment. The truth? It’s not always necessary. With the right strategy and knowledge, you can dive into real estate with minimal capital.

3. Start with House Tours:

Touring homes is thrilling. But before you get carried away, take a step back. It’s smarter to start by getting pre-approved or prequalified by a lender. This way, you ensure you’re only eyeing homes within your budget

4. Who Needs Agents, Right?

Wrong. While you can buy or sell homes on your own, agents are invaluable. They bring insights, market knowledge, and negotiation prowess to the table. So, don’t dismiss them just yet.

5. New Homes are Perfect:

A new home gleams with promise. But “Real Estate Misconceptions” can creep in here too. Just because it’s new doesn’t mean it’s flawless. Always get a new home inspected. Quality can vary.

6. The 20% Down Payment Rule:

Many believe a 20% down payment is set in stone. But that’s not always the case. Several mortgage programs require much less, making the dream of homeownership closer than you think.

7. Only Focus on the Down Payment:

While the down payment is crucial, it’s not the only cost. Be ready for other upfront expenses, like inspections and closing costs. They can add up.

8. Green Construction Breaks the Bank:

Think sustainable construction is pricey? Think again. This “Real Estate Misconception” isn’t always true. In many scenarios, green construction costs are on par with traditional methods.

9. Real Estate = Easy Money:

Yes, real estate can be a goldmine. But it’s not always passive income. Managing properties, especially rentals, takes work. From tenant searches to maintenance, it’s not always a walk in the park.

10. Every Property is a Rental Gem:

Lastly, not all properties are rental gold. Before jumping in, evaluate the property. Consider its location, condition, and market demand. Not every property is cut out for the rental game.

Conclusion

The world of real estate is riddled with myths. But with a clear understanding and a dash of research, you can navigate it like a pro. Don’t let “Real Estate Misconceptions” hold you back. Knowledge is power.

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Nick Briggs, Realtor

The real estate market has always been a subject of intense scrutiny and speculation. As we approach 2024, various financial institutions and research firms have released their predictions for the housing market. Let’s dive into the forecasts from some of the most reputable sources for their 2024 real estate market predictions.

Goldman Sachs’ Housing Market Outlook

Goldman Sachs, one of the world’s leading investment banks, has made some significant revisions to its housing market predictions:

• Home Price Forecast: Contrary to their previous prediction of a 2.2% decline, Goldman Sachs now anticipates a 1.8% increase in home prices for 2023.
• Housing Affordability Index: This index reached a record low in August. The factors influencing this decline include household income, housing prices, and mortgage rates. Even though household incomes have been rising, they haven’t kept up with the surge in mortgage rates and the consistent appreciation of home values over the years.
• Mortgage Rate Predictions: Goldman Sachs expects a drop of approximately 100 basis points in mortgage rates by the end of 2024. This could bring some stability to housing affordability.
• New Home Supply: A significant portion of newly built homes is still under construction. This has been a major contributor to the current inventory shortage in the housing market.

Fannie Mae’s Housing Market Forecast

Fannie Mae, a major player in the mortgage industry, has its own set of predictions:

• Economic Outlook: Fannie Mae is predicting a modest recession, which could start either in the last quarter of this year or the first quarter of 2024.
• Housing Market Resilience: Despite the looming recession, the strength of the housing market, characterized by a limited supply and robust demand from buyers, is expected to mitigate the economic downturn’s impact.
• Home Price Growth: Fannie Mae has revised its forecast for home price growth. They now predict a 3.9% increase for 2023, up from their previous prediction of a 1.2% decline. However, for 2024, they anticipate a decrease of 0.7% in home prices.
• Mortgage Rate Outlook: Mortgage rates have hovered between 6% and 7% since the beginning of the year. Fannie Mae expects this trend to continue as long as the Federal Reserve persists with its interest rate hikes.

Mortgage Rate Predictions by Various Research Firms:

1. Mortgage Bankers Association: They expect the 30-year fixed mortgage rate to average 5.9% in Q4 2023, dropping to 4.9% by Q4 2024.
2. Morningstar: Their projections for the average 30-year fixed mortgage rate are 6.25% in 2023, 5.0% in 2024, and 4.0% in 2025.
3. National Association of Realtors (NAR): NAR forecasts the rate to decrease to 6.4% by the end of 2023 and further to 6.0% in 2024.
4. Morgan Stanley: Their strategists predict the 30-year fixed mortgage rate to start 2024 at 6.0%.
5. Moody’s Analytics: They project the rate to average 6.5% for most of 2023, decrease to 6.0% by the end of 2024, and then reach 5.5% in 2025.
6. Fannie Mae: Their forecast is for the rate to average 6.6% in Q4 2023, and then average out at 5.9% in Q4 2024. For the entire 2024, they expect an average rate of 6.1%.

Conclusion

The consensus among these predictions is that while there might be economic challenges on the horizon, the housing market’s inherent strength will likely cushion the blow. Mortgage rates, although fluctuating, are expected to see a gradual decline, which could bring relief to potential homebuyers. However, the supply of new homes remains a concern, and it’s something the industry needs to address to ensure a balanced market.

As always, while these 2024 real estate market predictions provide a roadmap, the real estate market’s actual trajectory can be influenced by various unforeseen factors. It’s essential for investors, homebuyers, and industry professionals to stay informed and be prepared for any market shifts.

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Nick Briggs, Realtor

Exploring the Current Home Values in Spokane WA

Spokane, Washington’s real estate is growing steadily. Current home values show diverse options for buyers and investors. Spokane’s median home value is $300,000. Therefore, it’s a prime spot for property buyers. Let’s explore Spokane home prices and trends.

Different neighborhoods in Spokane affect home values. So, each has its unique charm and price range. For instance, South Hill boasts upscale homes and scenic streets. This pushes its property values above other areas

Home values in Spokane rose by 8% over the past year. This shows a robust appreciation in the market. Investing in Spokane’s real estate seems promising.

The median sale to list ratio is another key metric. It reveals how close sale prices are to listing prices. In Spokane, it’s at 98%. This means properties sell near their listed prices.

Exploring Spokane’s housing further, opportunities emerge for all. Sellers benefit from high demand and low inventory. Yet, buyers have affordable choices compared to bigger cities.

Market Analysis of Spokane Neighborhoods

Spokane, Washington is a vibrant city. Its diverse neighborhoods offer varied housing options. To understand Spokane’s real estate market, key indicators are essential. These include the median sale to list ratio, percentage of sales over and under list price, and median days to pending across neighborhoods.

Analyzing the Median Sale to List Ratio in Spokane

The median sale to list ratio reveals Spokane’s housing market competitiveness. It compares a home’s final sale price to its listing price. A high ratio means homes sell near or above their list prices. A low one indicates sales below list prices.

In Spokane, this ratio has risen over the past year. It shows strong home demand and buyers paying more. Current data places Spokane’s ratio at 98%. Homes sell at about 98% of their list prices.

Yet, this ratio varies across Spokane’s neighborhoods. Some areas have high ratios due to limited homes and strong demand. Others might be lower due to slow markets or less buyer interest. Thus, buyers and investors should study this ratio by neighborhood before buying.

The Percentage of Sales Over and Under List Price

The Median Days to Pending in Spokane Neighborhoods

The median days to pending shows how fast homes sell in Spokane’s neighborhoods. It counts the days from listing to pending status. It reveals buyer interest and market activity.

In Spokane, it’s about 10 days. Homes sell fast due to strong housing demand. Yet, this varies by neighborhood. Some areas have shorter days due to high demand and few homes. Others take longer because of slow markets or less interest.

Knowing this metric helps buyers and investors. It shows competition in neighborhoods. It also guides pricing and negotiation strategies.

2023 Housing Market Forecast and Predictions

Spokane, Washington’s housing market is set for an intriguing year. Experts are tracking trends for 2023 predictions. They consider the economy, population growth, mortgage rates, and inventory. These indicators hint at Spokane’s future home prices and trends.

Predicting the 2023 Housing Market in Spokane

Forecasting the housing market is complex. Yet, experts have a positive view of Spokane’s 2023 real estate. The city has seen steady growth. A robust economy and good living standards draw people. More residents mean higher housing demand and prices.

Realtor.com® 2023 Forecast for Key Housing Indicators

Realtor.com® is a top online real estate platform. It offers insights for Spokane’s 2023 housing indicators. They consider home values, sales, mortgage rates, and inventory. Their forecast predicts slower price growth for Spokane. It suggests a market stabilization after fast-paced growth.

The Impact of Mortgage Rates on Home Prices

Mortgage rates affect Spokane home prices and trends. Low rates boost buying, raising prices. High rates reduce affordability, slowing price growth. In 2023, rates might rise from historic lows. The Federal Reserve hints at rate hikes. This could raise home buying costs. Yet, experts see a moderate impact on Spokane’s market.

Examining Existing Home Median Price Appreciation

To predict Spokane home prices and trends, look at home median price appreciation. This metric shows how fast values rise. Experts use past data for future predictions.

Spokane’s prices rose recently due to demand and low inventory. But with more homes, growth may stabilize. Experts see modest 2023 price hikes, aligning with income growth.

The State of Existing Home Sales in Spokane

Existing home sales show a market’s health. Sales data reveals demand and activity. In Spokane, sales have been strong, driven by locals and outsiders. This affects Spokane home prices and trends.

For 2023, experts expect steady sales or slight growth. They consider population, jobs, and affordability. Yet, economic shifts or mortgage rate changes could alter predictions.

The Availability of Existing Home For-Sale Inventory

Home availability impacts the housing market. Low inventory boosts prices and favors sellers. High inventory empowers buyers. In Spokane, low inventory has raised prices. Yet, 2023 might see more homes available. This could balance the market.

The Importance of Single-Family Home Housing Starts

Housing starts measure new construction beginnings. Single-family starts show new market supply. In Spokane, these starts are stable but don’t meet demand.

New construction should match demand for a balanced market. Challenges include material costs and labor shortages. Yet, more single-family starts could stabilize the market.

The Homeownership Rate in Spokane

The homeownership rate shows market stability and economic health. High rates mean strong communities and real estate confidence. Spokane’s rate often beats the national average.

For 2023, experts expect Spokane’s rate to stay stable or grow slightly. Furthermore, they consider affordability, population, and homeownership culture. Yet, economic shifts or lifestyle changes could alter this trend.

Rent Growth in Spokane: A Key Indicator

Rent growth matters to tenants and investors. Higher rents hint at rental demand and investment chances. Spokane’s rents have risen, driven by locals and newcomers.

For 2023, experts see Spokane’s rent growth slowing down. They consider population, income, and the economy. Yet, rental rules or economic shifts could change predictions.

Conclusion

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Nick Briggs, Realtor

Buying a home is a significant milestone in anyone’s life, often marked by excitement and anticipation. As you embark on this journey, it’s important to be well-informed about the various expenses associated with a real estate transaction, and one key aspect to consider is closing costs. In this blog post, we’ll delve into what closing costs are, how much they typically amount to, and how to prepare for them. This article is purely meant to inform, it is not financial advise whatsoever.

What Are Closing Costs?

Closing costs refer to the fees and expenses that buyers and sellers incur during the process of transferring ownership of a property. These costs are separate from the property’s purchase price and can vary widely depending on factors like location, property value, and the terms of the transaction. Closing costs can include a diverse range of fees, covering services from various parties involved in the real estate transaction. Keep in mind, these are just examples and the actual closing costs can vary widely, but these are some common closing costs.

Common Buyer Closing Costs (3%-6% of Loan)

• Appraisal Fee ($400-$600): Appraisal fees are charges for assessing a property’s value by a professional appraiser during a real estate transaction. Lenders use appraisals to gauge if the property’s value aligns with the loan amount. These fees cover the appraiser’s services and vary based on property specifics. They’re a standard part of closing costs, ensuring fair property valuation for buyers and lenders.
• Escrow Account Fund (~2 Months of Expenses): An escrow account fund is a separate account managed by a third party, holding money for real estate expenses like property taxes and homeowners insurance. It’s used to ensure timely payment without requiring direct involvement from buyers or sellers. This arrangement offers convenience and predictability, benefiting both homeowners and lenders.
• Home Inspection ($300-$500): A home inspection is a thorough evaluation of a property’s condition, conducted by a certified professional. It examines various aspects like structure, systems, and safety. The inspection report helps buyers understand potential issues and make informed decisions before purchasing.
• Homeowners Insurance: ($50/Month Per Each $100K In Home Value): Homeowners insurance safeguards your home and belongings from damage caused by perils like fire, theft, and natural disasters. It covers dwelling repairs, personal property replacement, liability costs, and living expenses during home repairs. Lenders often require it for mortgages. Premiums vary based on factors like location and coverage.
• Home Warranty ($400-$600/Year): A home warranty is a service contract that covers repairs or replacements for major home systems and appliances due to normal wear and tear. It’s different from homeowners insurance and focuses on mechanical breakdowns. Homeowners select coverage plans, request service for issues, pay a service fee, and have service providers repair or replace covered items. Home warranties offer peace of mind for unexpected repairs, but it’s important to review terms and exclusions before purchasing.
• Loan Origination Fee (~1% of Loan): A loan origination fee is a charge from lenders to cover processing costs when creating a new loan. Paid by borrowers, it compensates lenders for tasks like application review, underwriting, and document preparation. Typically a percentage of the loan amount, it’s separate from the interest rate and varies among lenders and loan types. Comparing origination fees along with interest rates helps borrowers make cost-effective loan decisions.
• Lender’s Title Insurance (0.5%-1% of Loan): Lender’s title insurance is a policy that safeguards a mortgage lender’s interests in a property transaction. It’s usually required by lenders to protect against unforeseen title issues, like defects, fraud, or disputes. The insurance covers the lender’s investment and is paid by the borrower as part of closing costs. However, buyers may also consider owner’s title insurance to protect their own equity in the property.
• Owner’s Title Insurance (~1% of Loan): Owner’s title insurance is a policy protecting a homeowner’s investment in a property purchase. Unlike lender’s title insurance, it covers the buyer’s equity and ownership rights. It safeguards against title defects, fraud, unrecorded liens, and ownership disputes. The one-time premium, paid at closing, is based on the property’s purchase price. While optional, owner’s title insurance can provide valuable financial protection and peace of mind.
• Mortgage Insurance (FHA, USDA, and VA Loans): Mortgage insurance for FHA, VA, and USDA loans is a protection required by these government-backed loan programs. It safeguards lenders against borrower defaults, enabling more accessible homeownership. For FHA loans, it involves an upfront and ongoing premium. VA loans have a funding fee, while USDA loans require an upfront and ongoing guarantee fee. These insurance measures allow for lower down payments and more inclusive lending criteria, helping a wider range of homebuyers access loans.
• Prepaid Daily Interest Rates (Varies in Cost): Prepaid daily interest rates are the upfront interest payments made by borrowers on a mortgage loan when they close in the middle of a month. It covers the interest that accrues between the closing date and the end of that month. This is a part of closing costs and ensures the lender receives interest for the partial month when the loan begins. The regular monthly mortgage payment starts the following month after the prepaid interest period.
• Prorated Property Tax (Varies in Cost): Prorated property tax is the fair division of property tax between the buyer and seller in a real estate sale. Taxes for the whole year are divided into daily amounts. The seller pays for the portion they owned, and the buyer pays for their ownership period. This practice ensures equity and accurate tax distribution in the transaction.
• Recording Fee (Varies in Cost): A recording fee is a charge by local authorities for registering real estate documents like deeds and mortgages in public records. This ensures an accurate history of property ownership and rights. The fee covers processing and archiving costs and is part of closing costs in real estate transactions.

Common Seller Closing Costs (6%-10% of Sale Price)

• Agent Commissions (~6% of Sale Price): Agent commission fees are payments to real estate agents for their services in property transactions. Listing agents help sellers sell their property, while buyer’s agents assist buyers in purchasing. Both receive a percentage of the sale price, typically split between them. The total commission is usually around 5-6%, but it can vary. The fee is deducted from the seller’s proceeds at closing. Buyers don’t directly pay agent commissions; it’s factored into the sale price.
• Seller Concessions, If Applicable (3%-9% of Sale Price): Seller concessions are when the seller agrees to cover a portion of the buyer’s closing costs or other expenses in a real estate transaction. It’s a negotiation tactic to attract buyers and facilitate sales. For example, the seller might pay a percentage of the sale price toward closing costs. This can make the deal more appealing to buyers and broaden the pool of potential buyers. There are limits and guidelines depending on the loan type. Seller concessions are outlined in the purchase agreement and closing statement.
• Home Warranty ($400-$600/Year): A home warranty is a service contract that covers repairs or replacements for major home systems and appliances due to normal wear and tear. It’s different from homeowners insurance and focuses on mechanical breakdowns. Homeowners select coverage plans, request service for issues, pay a service fee, and have service providers repair or replace covered items. Home warranties offer peace of mind for unexpected repairs, but it’s important to review terms and exclusions before purchasing.
• Prorated Property Tax (Varies in Cost): Prorated property tax is the fair division of property tax between the buyer and seller in a real estate sale. Taxes for the whole year are divided into daily amounts. The seller pays for the portion they owned, and the buyer pays for their ownership period. This practice ensures equity and accurate tax distribution in the transaction.
• Transfer Tax (Varies in Cost): A transfer tax is a fee charged by governments when real property changes ownership. It’s based on the property’s sale price or assessed value. The tax generates revenue for local governments, documents transactions, and can help regulate real estate activities. The amount varies by location and is paid by the buyer, seller, or both parties, depending on local rules. Understanding transfer tax laws is crucial for budgeting in real estate transactions.
• Outstanding Liens, If Applicable (Varies in Cost): Outstanding liens are unpaid debts or claims on a property that grant creditors the right to take action if the debt isn’t repaid. These can arise from unpaid taxes, bills, mortgage payments, and more. Liens are recorded in public records and impact property sales. Clearing liens is crucial for a smooth sale, ensuring a clear title for the buyer. Both buyers and sellers need to address liens in real estate transactions.

Estimating Closing Costs

While the exact amount of closing costs can vary significantly, a general rule of thumb is that they typically range from 2% to 5% of the home’s purchase price. For instance, on a $300,000 home, closing costs might amount to $6,000 to $15,000. However, it’s essential to consult with professionals in your area to get a more accurate estimate based on your specific circumstances.

Preparing For Closing Costs

1) Research and Estimates: You can begin by researching the average closing costs in your area. You can consult real estate agents, lenders, and even online calculators to get an idea of what to expect.

2) Requesting Quotes: When obtaining mortgage quotes from lenders, you could ask for estimates of their closing costs as well. This will help you compare not only interest rates but also the associated fees.

3) Budgeting: As you plan your home purchase, ensure you budget for closing costs in addition to the down payment and other expenses.

4) Negotiation: Depending on the negotiation dynamics, you might be able to negotiate with the seller to cover part of the closing costs or include them in the purchase agreement.

In Conclusion

Understanding closing costs is a crucial aspect of navigating the real estate market. By being aware of these expenses and factoring them into your budget, you can ensure a smoother and more financially prepared home buying experience. Remember that these costs can vary, so seeking guidance from real estate professionals and experts is advisable to make well-informed decisions.

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