Gardner ReportMatthew GardnerReal EstateStats April 27, 2023

Q1 2023 Gardner Report

 

 

 

Gardner ReportMatthew GardnerReal EstateStats April 27, 2023

Mortgage Rate Predictions and Misconceptions

Written by Matthew Gardner

The Federal Reserve Bank of New York just released their 2023 Housing Survey, which shows how the U.S. population feels about the housing market. Windermere Chief Economist Matthew Gardner digs into the mortgage rate predictions, showing how demographics played a role in the results.

This video on mortgage rate predictions is the latest in our Monday with Matthew series with Windermere Chief Economist Matthew Gardner. Each month, he analyzes the most up-to-date U.S. housing data to keep you well-informed about what’s going on in the real estate market.

 

Mortgage Rate Predictions

Hello there! I’m Windermere Real Estate’s Chief Economist Matthew Gardner. This month we’re going to take a look at the latest SCE Housing Survey, which gives us a really detailed look at consumers’ psyche in regard to the housing market.

I’ve always been fascinated by surveys, as they frequently give me insights that I simply don’t get from just looking at raw data and, as luck would have it, the New York Fed just released its 2023 Consumer Expectations Housing Survey. Now, this particular survey has always given me some great and often surprising insights as to how the U.S. population views the overall housing market. We certainly don’t have time to cover all of the questions that the survey poses, but there was one section I wanted to share with you today as it really resonated with me, and it relates to mortgage rates.

Will mortgage rates continue to rise?

The first question asked was where they expected mortgage rates to be one year from now. And as you see here that, on average, households expected rates to rise all the way up to 8.4%. Although some may see this as extreme, you can see that in the 2022 survey respondents predicted rates would hit 6.7%, almost exactly where they were at the beginning of this March.

And when asked where they thought rates would be three years from now, on average, households expected to see them climb to 8.8%. Now, that’s a rate we haven’t seen since early 1995!

Well, I’m not sure about you, but I was very surprised by these results as they counter just about every analyst’s expectation regarding where rates will be over the next few years. In fact, myself and every economist I know believes that rates will slowly pull back as we move through this year. I haven’t seen a single forecast suggesting that mortgage rates will rise to a level this country hasn’t seen in decades.

But as they say, the devil’s in the details. When I dug deeper into the numbers, it became very clear to me that demographics played a pretty big part in guiding people’s answers. Let me explain.

1-Year Mortgage Rate Expectations by Education

Here the data is broken down by educational achievement. You can see that survey respondents who didn’t have a college degree thought that mortgage rates would rise to 9.4% within a year. But college graduates were far more optimistic, and they expected rates to be in the high 6’s.

3-Year Mortgage Rate Expectations by Education

And when asked to look three years outrespondents without degrees expected rates to break above 10%. While college graduates saw them pulling back a little from their one-year expectations of 6.7%, down to 6.4%.

Now we are going to look at the survey results broken down by housing tenure.

1-Year Mortgage Rate Expectations by Tenure

And here you see that renters expect mortgage rates to be at almost 11% within a year. And homeowners also saw them rising, but only up to 7.3%. 

3-Year Mortgage Rate Expectations by Tenure

And over the next three years, renters expected rates to break above 12%. That’s a level not seen since the fall of 1985. But homeowners expected to see rates at a somewhat more modest 7.4%.

So, what does this tell us? I see two things.

Firstly, the rapid increase in mortgage rates that we all saw starting in early 2022 has a lot of people believing that we will see rates continuing to rise, sometimes at a very fast pace, over the next few years. I mean, if it happened before, why can’t it happen again? And this mindset leads me to my second point, which is that it’s very clear that a lot of would-be home buyers just don’t understand how mortgage rates are calculated.

The bottom line here is that I see a potential buyer pool out there that needs educating and that can give an opportunity to brokers to discuss how rates are set and where the market is expecting to see them going forward.

This may alleviate the concerns that many households have who may be thinking that they will never be able to afford to buy a home because of where they expect borrowing costs to be in the future. Education is everything, don’t you agree?

As always, I’d love to get your thoughts on this topic so please comment below! Until next month, take care and I will see you all soon. Bye now.

To see the latest housing data for your area, visit our quarterly Market Updates page.

 


About Matthew Gardner

As Chief Economist for Windermere Real Estate, Matthew Gardner is responsible for analyzing and interpreting economic data and its impact on the real estate market on both a local and national level. Matthew has over 30 years of professional experience both in the U.S. and U.K.

In addition to his day-to-day responsibilities, Matthew sits on the Washington State Governors Council of Economic Advisors; chairs the Board of Trustees at the Washington Center for Real Estate Research at the University of Washington; and is an Advisory Board Member at the Runstad Center for Real Estate Studies at the University of Washington where he also lectures in real estate economics.

 

If you have further questions and would like to discuss with a Realtor connect with us here. 

Real Estate April 24, 2023

Real Estate 101

Real estate refers to the buying, selling, and renting of land, buildings, and other properties. The real estate market is a vital part of the economy. Real Estate can be an excellent investment opportunity for those looking to purchase property for personal use or as a rental income source. Check out our article “Is it better to buy vs. rent” to discuss how some people view their homes as investments. Consider following Matthew Gardner’s YouTube channel to stay in the know about the market here.

Location, location, location: 

One important aspect of real estate is understanding the location and condition of a property. The location of a property greatly affects its value, as properties in desirable areas will typically be more valuable than those in less desirable areas. The condition of a property is also important, as a property that is well-maintained and updated will generally be more valuable than one that is in poor condition. If you have questions about this and would like to discuss it in more detail message us here: Whidbeycommunications@windermere.com.

Costs and Financing:

Real estate is expensive, so an important aspect of the real estate market is understanding the various financing options available to buyers. Some buyers may choose to pay for a property in cash, while others may choose to take out a mortgage to finance the purchase. Additionally, buyers may choose to utilize various government programs, such as FHA of VA loans, to assist with financing. Need help finding a lender? Give us a call at 360.675.5953.

Types of Real Estate:

In addition to residential properties, there also commercial real estate and industrial real estate. Commercial properties are used for business purposes and include office buildings, retail spaces, and warehouses. Industrial properties are typically used for manufacturing, and include factories, warehouses and distribution centers. Investing in commercial or industrial properties can provide a steady stream of rental income. We can help you with these purchases too.

When and How to Ask for Help:

Real estate can be a complex and nuanced field, and it is important to do research and seek the advice of experts before making any major real estate decision. Whether you’re looking to buy, sell, or rent property, having a solid understanding of the real estate market and the various factors that can affect property value can help you make informed decisions. If you have questions do not hesitate to ask. Connect with us here.
Perhaps your interest in becoming an agent is what urged you to read this article, Real Estate 101. If you are interested in becoming an agent and want to learn more about how to get into the industry email us at Whidbeycommunications@windermere.com and we will connect with you.
HomeReal Estate April 17, 2023

Title Insurance: Protecting Your Property Investment

When you purchase a home, you receive a deed to the property which typically means you have full ownership. Unfortunately, sometimes mistakes happen where hidden inaccuracies in previous deeds, mortgages, and easements might leave someone else with a claim to your property. Title insurance is a type of insurance policy designed to protect property owners from financial loss due to title defects, liens, or other issues with a property’s title. Title insurance provides peace of mind to homeowners and lenders alike, ensuring that their investment in the property is secure. In this blog, we will look at who is covered by title insurance and what risks are covered.

Who is Covered by Title Insurance?

Title insurance typically covers both the property owner and the lender. The policies can be separate policies so always check with your insurer regarding who and what is covered. The policy holder can be either an individual or a corporation, and the insurance covers their financial interest in the property. For homeowners, title insurance provides protection against any challenges to their ownership of the property, such as disputes over ownership, missing heirs, forgeries, or encumbrances that were not disclosed during the sale. For lenders, title insurance protects their investment in the property and ensures that their loan is secured by a valid title.

What Risks are Covered by Title Insurance?

Title insurance covers a wide range of risks, including but not limited to:

  1. Title defects: This refers to any challenges to the property’s title, such as disputes over ownership, missing heirs, forgeries, or encumbrances that were not disclosed during the sale. Title insurance protects the policy holder against these title defects and provides the necessary financial support to resolve any issues.
  2. Liens: Liens refer to claims or encumbrances against a property, such as mortgage loans, taxes owed, or judgements against the property owner. Title insurance provides coverage against any liens that exist and protects the policy holder’s financial interest in the property.
  3. Fraud: Fraudulent activities such as forgeries or false impersonation can pose a threat to a property’s title. Title insurance provides protection against any fraudulent activities that may affect the property’s title.

In conclusion, title insurance is an important investment for property owners and lenders. It provides peace of mind by ensuring that the property’s title is secure and that any issues with the title can be resolved without incurring significant financial losses. Whether you are a homeowner or a lender, title insurance is an investment worth considering.

If you are preparing to purchase a home and need help connecting with a lender or would like help answering your questions while preparing to buy please don’t hesitate to give us a call at 360.675.5953.

Real Estate April 10, 2023

The Importance of Escrow in Real Estate Transactions

Real estate transactions can be complex and involve a considerable amount of money. Whether you are a buyer or a seller, real estate is often your biggest investment. That is why it is important for both buyers and sellers to protect their interests and ensure that the transaction is completed smoothly. This is where escrow comes in.

What is Escrow?

Escrow is a financial arrangement where a third party holds and regulates the payment of funds required for both the buyer(s) and the seller(s) involved in a transaction. Escrow helps ensure that the transaction is completed smoothly and according to the terms agreed upon by both parties. Both the buyer and the seller provide the escrow agent with written instructions. When all conditions have been met, the escrow officer sends the closing papers to the county recording office, where the new deed is recorded. The escrow officer then releases funds to the seller.

How is Escrow Used in Real Estate Transactions?

In a real estate transaction, escrow is used to ensure that the buyer’s funds are securely held until all the terms of the sale, such as the transfer of the property title, have been completed. In addition, the escrow agent may also be responsible for completing tasks such as ordering a title search, obtaining necessary documentation, and disbursing funds according to the instructions of the parties involved in the transaction. During this process you may hear the term title insurance and you might wonder what it is. Title insurance is like a safety net around your property. Sometimes hidden mistakes in previous deeds, mortgages, easements or other recorded documents might give someone else an ownership stake in the property. It is important for you to get Title Insurance to protect you and your home as it will save you time and money in the future if problems arise. You can learn more about it in our “What is title insurance and why is it important?” blog. Read it here.

In conclusion

Escrow is an important tool that helps to protect the interests of both buyers and sellers in a real estate transaction. It ensures that the transaction is completed smoothly and according to the agreed upon terms, and helps to reduce the risk of disputes or issues arising. If you are buying or selling a property, it is important for you to understand the role of escrow and how it can benefit you.

If you are ready to connect with an agent or have any further questions, please don’t hesitate to connect with us today by clicking here. If you are just getting started on your home buying journey, consider reviewing these real estate terms to help you along the way.

Destination WhidbeyOak HarborPlacesThings to Do on Whidbey April 3, 2023

Pier at Cranberry Lake

Deception Pass State Park is packed with a plethora of things to do year-round. From hiking trails, camping, swimming, kayaking, even the occasional events held at the amphitheater, but unbeknownst to those rushing by to make a big splash in the designated swimming area there is a quaint pier surrounded by reeds on the other side of Cranberry Lake. From this dock discover fishermen of all ages scattered along the edges of the pier. Each has their own techniques for catching a stocked Rainbow or Brown Trout, or a resident Largemouth Bass or Yellow Perch. It is a great place for beginners and expert anglers alike!

Check out the rest of Whidbey’s beautiful destinations from this series here.

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