It’s been an uncertain year thus far for the US housing market to say the least. Historic rises in interest rates, combined with disappearing protections on foreclosures and evictions are slowly starting to take their toll on home values. As the dominoes “begin to fall”, we wanted to inject some honest advice into the airwaves with the hopes of helping those uncertain.
My team came up with a few “what would you do” style questions depicting scenarios people navigating this market may find themselves in. I did my best to answer based on my experience in the space, and what I’m seeing today.
Q: You’re a potential first time homebuyer. You just found the perfect home within your desired budget and neighborhood. Would you put an offer on the house now, or would you wait to see how the market evolves?
There are two parts to this question. The first question I’d ask myself here is, “Will this be my ‘forever’ home?”
If this is a starter home, and I plan on “moving up” within the next few years, I’m not anticipating that I’ll be making money with potential appreciation. Prices are being forced downward due to the fact that interest rates have more than doubled from the beginning of the year. I could wait to buy something, but interest rates are the “wild card” and could also reduce my purchasing power…
I would look at the rental market in the area that I’m interested in and see what I could get in rent if for some reason I want/have to move. If the numbers are close, then maybe it’s a go.
Q. You purchased your home last April and are considering selling soon to get out of California. Would you list your house sooner rather than later?
If my goal was to move in the near future, I would have sold yesterday.
If you are not aware, it has been almost impossible for banks to foreclose with the government mandates over the past two years. Covid has run its course (In the government’s eyes, at least), and they are now allowing banks to start foreclosure proceedings.
Besides the tidal wave of potential foreclosures, there is also a large supply of homes available for sale. Sellers (individual and corporations alike), are literally competing against each other, driving down prices in a “race to the bottom” type scenario.
I was on the verge of listing, I wouldn’t be waiting around to see what the bottom looks like.
Q. You just lost your job and have little savings to cover your next mortgage payments. You do not want to sell your house. Do you risk foreclosure while looking for another job or try to sell/rent your home quickly?
The last thing the bank/mortgage servicer wants is to foreclose on your home, as they make zero profit from this. I would reach out to the bank/loan servicer immediately and explain my current situation. Communication is key with your mortgage servicer. Always be sure to document all communication (mail, phone calls, emails) between you and your provider for future reference.
Best case scenario, they’ll work with you until you get back up on your feet. Worst case, you can always list your house for sale to avoid foreclosure and at least try to maximize your value.
There are many alternate avenues in this scenario, and also many legal options to get you back on track. I’ve met dozens of people in this boat over the years, and most of them didn’t realize just how many options they had. Knowing all of your options can be the difference between keeping and losing your home.
Hopefully you find these answers helpful as you navigate your way in our ever changing market. In the event you ever feel uncertain of your options, we’re always here to help.