Mortgage Rates • November 7, 2024

This Week’s Fed Meeting: What to Expect

by Drew Jones

The Fed meets again this week to decide the next step with the Federal Funds Rate. So, let’s dig into how their decisions will impact the housing market.

First, the Federal Funds Rate is how much it costs banks to borrow from each other. Although that’s not the same as setting mortgage rates, mortgage rates can be influenced through this process.

If you’re thinking of buying or selling your home, here’s a quick rundown of what you need to know to help you anticipate what’ll happen next. The Fed’s decisions are guided by these three key economic indicators:

The Direction of Inflation
How Many Jobs the Economy Is Adding
The Unemployment Rate

Let’s take a look at each one:

1. The Direction of Inflation

You’ve likely noticed prices for everyday goods and services seem to be climbing higher and higher.. That’s because of inflation – and the Fed wants to see that number come back down so it’s closer to their 2% target.

Right now, it’s still higher than that. But despite a little volatility, inflation has generally been moving in the right direction. It gradually came down over the past two years, and is holding fairly steady right now (see graph below):

The path of inflation – though still not at their target rate – is a big part of the reason why the Fed will likely lower the Fed Funds Rate again this week to make borrowing less expensive, while still ensuring the economy continues to grow.

2. How Many Jobs the Economy Is Adding

The Fed is also keeping an eye on how many new jobs are added to the economy each month. They want job growth to slow down a bit before they cut the Federal Funds Rate further. When fewer jobs are created, it shows the economy is still doing well, but gradually cooling off—exactly what they’re aiming for. And that’s what’s happening right now. Reuters says:

“Any doubts the Federal Reserve will go ahead with an interest-rate cut . . . fell away on Friday after a government report showed U.S. employers added fewer workers in October than in any month since December 2020.”

Employers are still hiring, but just not as many positions right now. This shows the job market is starting to slow down after running hot for a while, which is what the Fed wants to see.

3. The Unemployment Rate

The unemployment rate shows the percentage of people who want jobs but can’t find them. A low unemployment rate means most people are working, which is great. However, it can push inflation higher because more people working means more spending—and that makes prices go up.

Many economists consider any unemployment rate below 5% to be as close to full employment as is realistically possible. In the most recent report, unemployment is sitting at 4.1% (see graph below):

Unemployment this low shows the labor market is still strong even as fewer jobs were added to the economy. That’s the balance the Fed is looking for.

What Does This Mean Going Forward?

Overall, the economy is headed in the direction the Fed wants to see – and that’s why experts say they will likely cut the Federal Funds Rate by a quarter of a percentage point this week, according to the CME FedWatch Tool.

If that expectation ends up being correct, that could pave the way for mortgage rates to come down too. But, it’ll take some time for them to fall. Remember, the Fed doesn’t determine mortgage rates. Forecasts show mortgage rates will ease more gradually over the course of the next year as long as these economic indicators continue to move in the right direction and the Fed can continue their Federal Funds rate cuts through 2025.

But a change in any one of the factors mentioned here could cause a shift in the market and in the Fed’s actions in the days and months ahead. So, brace for some volatility, and for mortgage rates to respond along the way. As Ralph McLaughlin, Senior Economist at Realtor.com, notes:

“The trajectory of rates over the coming months will be largely dependent on three key factors: (1) the performance of the labor market, (2) the outcome of the presidential election, and (3) any possible reemergence of inflationary pressure. While volatility has been the theme of mortgage rates over the past several months, we expect stability to reemerge towards the end of November and into early December.”

While the Fed’s actions play a part, economic data and market conditions are what really drive mortgage rates. At the moment, rates are expected to stabilize, with some possible downward movement, as we move through the rest of 2024.

Selling Your House • October 28, 2024

Planning To Sell Your House in 2025? Start Prepping Now

by Drew Jones

If your goal is to sell your house in 2025, now’s the time to start prepping. Even though it might seem like there’s plenty of time between now and the new year, you should get a head start on any updates or repairs you want to make now. As Danielle Hale, Chief Economist at Realtor.com, says:

“ . . . now is the time to start thinking about what you need for your next home and then taking those steps to prepare to list . . . We have survey data that says 47 percent of sellers are taking longer than a month to get their home ready to sell, so getting them to start that process early can mean more flexibility.”

By starting your prep work early, you’ll give yourself plenty of time to get your house market-ready by the end of the year. But be sure to partner with a great agent before you get started, so you have expert insight into what repairs are worth it based on your local market.

Why Starting Early Is Key

To get the best price and sell quickly, it’s important that your home looks its best. And that means it’s up to you to make the necessary repairs, declutter, and even consider updates that could add value as part of getting your house ready to list.

By starting now, you can tackle things one task at a time. Whether it’s fixing that leaky faucet, refreshing your landscaping, or painting a room, getting an early start gives you the flexibility to do the job right and with as little stress as possible. Because, if you wait to knock items off your list later on, they could quickly stack up and get overwhelming. As Realtor.com explains:

“There are some important repairs to make before selling a house, so don’t be in too much of a hurry to get your home listed … if you move too fast, buyers see right through the fact that you skipped important home renovations. And this . . . might end up costing you time and money.”

What Should You Focus On?

Feeling motivated to start chipping away at that to-do list, but not sure where to start? Here’s a look at the most common improvements other sellers are making today (see graph below):

The Importance of Working with a Local Agent

And while that data gives you a starting point, it shouldn’t be seen as a comprehensive list. What buyers want in your area may be different, and only a local agent will have this in-depth understanding.

For example, if homes in your area are selling quickly with updated kitchens, your agent might suggest focusing on minor kitchen improvements rather than spending money on other areas that won’t offer as much return. They’ll also help you figure out if tackling larger projects, such as replacing your roof or upgrading your HVAC system, is worth it based on other recently sold homes. As Point says:

“Not all renovations are created equal, and focusing on upgrades that offer the highest potential for increasing your home’s value is key.”

And remember, it’s not just big-ticket items that can have an impact. Your agent will also speak to some of the smaller details – like cleaning up your yard, adding fresh mulch, or painting your front door – to make a real difference in how buyers feel about your home. This type of expert eye is crucial to help your house sell fast and for top dollar.

So, if you’re thinking of selling your house next year, don’t wait until the last minute to get it ready. By getting a head start now, you can ensure everything is in place by the time the new year rolls around.

Need advice on what to tackle first? Let’s connect.

Buying a Home • October 28, 2024

Debunking Home Buying Myths

by Drew Jones

Buying a Home • October 16, 2024

The Benefits of Using Your Equity To Make a Bigger Down Payment

by Drew Jones

Did you know? Homeowners are often able to put more money down when they buy their next home. That’s because, once they sell, they can use the equity they have in their current house toward their next down payment. And it’s why as home equity reaches a new height, the median down payment has too.

According to the latest data from Redfin, the typical down payment for U.S. homebuyers is $67,500—that’s nearly 15% more than last year, and the highest on record (see graph below):

Here’s why equity makes this possible. Over the past five years, home prices have increased significantly, which has led to a big boost in equity for current homeowners like you. When you sell your house and move, you can take the equity that gives you and apply it toward a larger down payment on your new home. That’s a major opportunity, especially if you’ve had concerns about affordability.

Now, it’s important to remember you don’t have to make a big down payment to buy your next home—there are loan programs that let you put as little as 3%, or even 0% down. But there’s a reason so many current homeowners are opting to put more money down. That’s because it comes with some serious perks.

Why a Bigger Down Payment Can Be a Game Changer

1. You’ll Borrow Less and Save More in the Long Run

When you use your equity to make a bigger down payment on your next home, you won’t have to borrow as much. And the less you borrow, the less you’ll pay in interest over the life of your loan. That’s money saved in your pocket for years to come.

2. You Could Get a Lower Mortgage Rate

Providing a larger down payment shows your lender you’re more financially stable and not a large credit risk. The more confident your lender is in your credit score and your ability to pay your loan, the lower the mortgage rate they’ll likely be willing to give you. And that amplifies your savings.

3. Your Monthly Payments Could Be Lower

A bigger down payment doesn’t just help you reduce how much you have to borrow—it also means your monthly mortgage payment may be smaller. That can make your next home more affordable and give you a bit more breathing room in your budget.

4. You Can Skip Private Mortgage Insurance (PMI)

If you can put down 20% or more, you can avoid Private Mortgage Insurance (PMI), which is an added cost many buyers have to pay if their down payment isn’t as large. Freddie Mac explains it like this:

“For homeowners who put less than 20% down, Private Mortgage Insurance or PMI is an added insurance policy for homeowners that protects the lender if you are unable to pay your mortgage. It is not the same thing as homeowner’s insurance. It’s a monthly fee, rolled into your mortgage payment, that’s required if you make a down payment less than 20%.”

Avoiding PMI means you’ll have one less expense to worry about each month, which is a nice bonus.

So, down payments are at a record high, largely because recent equity gains are putting homeowners in a position to put more money down.

If you’re thinking about selling your current house and moving, let’s work together to figure out how much home equity you have right now, and how it can boost your buying power in today’s market.

Seasonal Home Maintenance • October 14, 2024

6 Easy Ways to Protect Your Home from Rain Damage

by Drew Jones

I love rainy days. The sound of rain on the roof and windows usually provides me with a peaceful, relaxed feeling. I remember one time, though, when the sound of raindrops sounded more like alarm bells going off than a soft, cozy pitter-patter.

Years ago, when my wife and I were new homeowners (and before I was a realtor), I was at the office on a rainy day in January. My phone rang and I picked it up to hear my wife’s stressed voice telling me I needed to come home asap. The basement carpet was soaking wet.

I rushed home. My wife and I lifted the carpet, put sandbags down, and did everything we could to stop our things and our home from complete catastrophe.

That week felt like a crash course in homeownership. We replaced the carpet, installed a sump pump, and gained a wealth of knowledge about safeguarding our home from the devastating effects of water damage.

As homeowners in the Pacific Northwest, it’s essential to protect your valuable home from water damage. Over many years of working in real estate, I’ve seen water damage affect all parts of people’s homes, ranging from minor to catastrophic. I don’t want that to happen to you.

If I’m your realtor, you can be sure I’ll help you spot potential issues – raindrops on your roof should lull you to sleep, not send you into a middle-of-the-night scramble to stop a disaster.

Here are 6 key things you can do to prevent water damage:

Keep your gutters and downspouts clear.

Make sure they’re free of debris so water flows freely and away from your home. You’ll prevent water from accumulating on your roof and causing leaks and damage.

Inspect your roof regularly

You can look for missing or damaging shingles, cracking, and other signs of wear and tear. If you notice anything, have it repaired as soon as possible so water won’t find its way into your house.

Seal your windows and doors.

I’ve learned this one the hard way too. Take the time to seal around windows and doors, so you can prevent water from leaking in and damaging your interior walls and rooms.

Check your grading and drainage.

Where is the water running once it hits the ground? If your yard doesn’t slope away from your home, you can create ways for the water to drain away from the house so it doesn’t pool, causing flooding and/or foundation damage.

Check your sump pump.

If you have a sump pump, make sure it’s in working order and not blocked by debris.

Create a disaster plan.

It’s always a good idea to be prepped for emergencies. Having sandbags and tarps on hand can help in the case of flooding. Make sure you and your family know what to do in case of flooding and severe weather, and know how to shut off your utilities in case of an emergency.

Seasonal Home Maintenance • October 14, 2024

Prevent Disaster with this Handy Winter Checklist

by Drew Jones

Seasonal Home Maintenance • October 14, 2024

8 Simple Fall Feng Shui Tips

by Drew Jones

Real Estate News • October 8, 2024

Seattle Real Estate: Numbers You Need to Know Now

by Drew Jones

In today’s economy, understanding the latest numbers can give us valuable insights into where things are headed. Here are three key figures from the latest jobs report and their implications for the market.

The numbers and commentary below come directly from Windermere’s Principal Economist Jeff Tucker’s recent video that you can watch here.

254,000
That’s the number of net jobs added in September, according to the latest jobs report released on Friday, October 4th. This is a strong report, far exceeding the expected 145,000 jobs forecasted. Additionally, payroll counts for July and August were revised upward by 72,000 jobs combined. Altogether, this makes September the best month for job gains since March of this year, bucking the trend of a cooling labor market seen over the summer months.

4.1%
This is the unemployment rate for September, down slightly from 4.2% in August and 4.3% in July. The combination of falling unemployment and rebounding job growth points to an economy that’s in much better shape than it was over the summer. In other words, concerns about a looming recession are easing, which leads us to our final number…

6.5%
This is the latest 30-year mortgage rate, which jumped by about a quarter point following the strong jobs report on Friday, October 4th. While this was a significant one-day increase, it’s important to put it in context. Rates are still roughly where they were in August, and they remain down almost a full percentage point from their levels in April and May of this year. Compared to this time last year, mortgage rates have dropped by more than a point. However, this is a reminder that rate cuts won’t follow a smooth, predictable pattern—instead, we should expect more of a “zigzag” when it comes to mortgage rates.

Any questions? Feel free to contact me anytime with your real estate questions and needs.

Real Estate Agents • October 8, 2024

4 Myths About Real Estate Agents—Debunked!

by Drew Jones

When it’s time to buy or sell a home, one of the most important decisions you’ll make is who you’ll work with as your agent. That choice will have an impact on your entire experience and how smoothly it goes.

And, you’ve probably heard a few things about real estate agents—some of them are spot on, but others? Not so much. Let’s take a minute to break down four common myths about real estate agents and why they simply don’t hold up—especially if you’re working with a local expert like me!

Myth #1: All Real Estate Agents Are the Same

This myth couldn’t be further from the truth. Real estate agents differ in experience, local knowledge, and approach. Working with an agent who truly knows the ins and outs of your local market makes a huge difference. It’s not just about finding you a home, it’s about finding the right home that fits your needs and has solid resale value down the road. When you choose an agent, you want someone who’s in tune with the market and who will take the time to understand exactly what you’re looking for.

Myth #2: You Can Save Money by Not Using an Agent

The idea that cutting out an agent will save you money might seem appealing, but in reality, it could cost you more. Without an agent, you’re navigating a complex process solo—negotiating, pricing, handling inspections, and more. A skilled agent not only guides you through these steps but can also help you avoid costly mistakes, like overpaying for a home or underpricing one you’re selling. Plus, agents are experts at negotiating the best possible deal, which often results in savings you wouldn’t have achieved on your own.

That’s why U.S. News Real Estate says:

“When it comes to buying or selling your home, hiring a professional to guide you through the process can save you money and headaches. It pays to have someone on your side who’s well-versed in the nuances of the market and can help ensure you get the best possible deal.”

Myth #3: Agents Will Push You To Spend More

A common misconception is that agents push buyers to spend more so they can earn a bigger commission. As a professional, I can assure you that this is not how I—or any good agent—operate. My goal is to help you find a home that fits your needs and your budget. I want to make sure you’re comfortable with your investment, and that means sticking to what works for you financially. Whether it’s your first home or your dream home, the focus is always on what’s best for you, not the price tag.

Myth #4: Market Conditions Are the Same Everywhere, So Why Do I Need a Pro?

Every market is different! Conditions that apply in one city, or even one neighborhood, may not apply in another. That’s why working with a local expert is key. I know the ins and outs of our market, from pricing trends to neighborhood amenities, and I keep my finger on the pulse of what’s happening. That knowledge helps me guide you toward properties that are not only a good fit for today but will also offer good resale value in the future.

At the end of the day, real estate is about so much more than just buying or selling a home. It’s about finding the right property for your life, your budget, and your long-term goals. As your local agent, I’m here to take the time necessary to make sure you get exactly what you’re looking for. If you’re ready to make a move or just have some questions, I’d love to help you navigate the process!

Selling Your House • October 8, 2024

Why Now’s Not the Time To Take Your House Off the Market

by Drew Jones

Has your house been sitting on the market longer than expected? If so, you’re bound to be frustrated by now. Maybe you’re even thinking it’s time to pull the listing and wait to see what 2025 brings. But what you may not realize is, the decision to hold off could actually cost you. Here’s a look at why staying the course could be the smarter move.

Other Sellers Are Pulling Back. Should You Hold Off Too?

According to recent data from Altos Research, the number of withdrawals is increasing – that means more sellers are opting to pull their listings off the market right now. And this isn’t unusual for this time of the year.

In the housing market, there are seasonal ebbs and flows. Inventory levels typically start to drop off a bit headed into the fall season as some sellers delay their plans until the new year. As Mike Simonsen, Founder of Altos Research, explains:

“. . . we’re seeing a more normal seasonal pattern now with inventory beginning to decline. We’re also seeing more home sellers withdrawing their listings to try again next year. In fact, for every two sales, there is another listing withdrawn from the market.”

But is that a smart move? While it might seem like a good idea to pull your listing too, here’s why that approach may not pay off this year.

Today’s Buyers Are Serious and Ready To Act

The biggest reason to stick with your plan to sell now is that the buyers who are looking at this time of year are serious about making a purchase.

They’ve been sitting on the sidelines for a while waiting for affordability to improve. And now that mortgage rates are down from their recent peak, they’re ready to make their move. Mortgage applications are rising – and that’s a leading indicator that buyers are preparing to jump back in. And since they’ve already put their needs on the back burner for so long, they’re even more eager than buyers usually are at this time of year.

These aren’t window shoppers. They’re highly motivated buyers who want to move fast – and that’s the kind of buyer you want to work with. As Freddie Mac says:

“During the fall months, serious homebuyers are eager to settle in to a new home before the holiday season ramps up and the winter weather begins.”

By keeping your home on the market, you increase the chances of attracting people who are truly ready to make a purchase.

So, while some sellers are choosing to take their homes off the market, this may not be the best move. With serious buyers eager to purchase, this is a great time to sell your house. Let’s connect to make sure we’ve got a strategy in place to make it happen.