Why The Market's Cooling, Not Crashing
Home prices are falling from all-time highs while rising interest rates are making it difficult for some buyers to purchase. This is causing some newcomers to the real estate industry to panic...but there's no reason for this.
Here are three reasons why experts say the market is headed for a correction, not a crash:
Housing inventory levels remain low.
Many homes would need to flood the market to cause a significant price reduction. Beautiful, bright, and updated homes continue to sell quickly while homes that aren't "move in ready" often stay on the market a bit longer.
Home values remain high.
Prices have skyrocketed in the last two years. That means even if prices go down 10-15% they're still up. Ultimately, moving forward there will simply be more negotiation room between buyers and sellers.
Lending standards reduce risk.
Today's real estate lending market is far from the subprime mortgage crisis of 2008. Newer laws, such as the Dodd-Frank Qualified Mortgage and Appraiser Independence Requirements (AIR), have reduced risks for buyers concerned about affordability.1
How to Prepare for Google's YMYL Changes
New, revised best practices are coming to Google's search algorithm, with the newest revision described as "the YMYL change."
YMYL is an acronym for Your Money or Your Life, and it's a content classification that may have serious implications for real estate bloggers and their search engine results.
The YMYL classification is Google's attempt to be socially responsible by prioritizing the most beneficial - versus misleading and potentially harmful - searched content.
The good news is that Google provides detailed guidance within Section 2.3 of their recently published "Search Quality Elevator Guidelines." These guidelines include examples of what is considered potentially harmful or misleading YMYL content, so you can craft your blog accordingly to ensure better search engine results.
Following EAT (Expertise, Authoritative, and Trustworthiness) guidelines prove that you're a subject matter expert regarding your blog topics. Be sure your blog content is authentic and draws on reliable sources, and your content will keep the YMYL classification at bay.2
House-Hunting Topics for New Clients
House-hunting can be overwhelming for first-time and seasoned homebuyers alike. That's why it's important to address their questions early on in your relationship. Here are four topics to share with your new clients:
1. Explain why research is essential.
Advise your clients to decide what's most important to them in a home – in other words, the "must-haves" - and what's negotiable. The same applies to their preferred neighborhoods.
2. Be realistic.
Ensure clients understand that the perfect home doesn't exist. Instead, suggest they follow the "triangle concept": price, features, and location. They can often find a home that meets two sides. But it may be difficult to find that dream home that meets all three.
3. Review finances and credit.
Ensure your clients understand they need enough money for a down payment and have them check their credit scores. Be sure to remind them that a basic FICO score is not the same as a mortgage FICO. Any errors in credit reports need to be corrected before they start the homebuying process.
4. Get prequalified for financing first.
Clients need to know the advantages of a loan pre-qualification before they begin viewing homes, and I can provide these quickly and easily. A "pre-qual" tells them what they can afford and enables them to concentrate their search on homes within their price range.3
First-Time Homebuyers are Back
New data from Zillow finds that first-time homebuyers make up 45% of all buyers, compared to 37% last year.
This means that first-time buyers have identified a cooling market and more opportunities. By comparison, during the pandemic, these decreased dramatically due to skyrocketing home values. First-time buyers also faced greater competition from repeat buyers who could leverage more assets and make better offers.
Another positive market change for buyers: although new listings are on the market for an average of 16 days, that's up from eight days in June. This gives first-time buyers more time to negotiate a purchase, often with less pressure. And they have increased bargaining power because some current sellers are willing to drop their prices.4
Why Basements are Regional
If you live in the Midwest, Northeast, or West, you most likely have a basement. But you generally don't if you live in the South. If you've recently moved from the basement-free South to another region, you may be wondering why.
The reason is that Southern states like Florida and Louisiana have a higher water table, which results in too much water in the soil. There's usually less than three feet between the ground's surface and groundwater.
However, homes in Northern and some Western regions have foundations below the frost line to help prevent freezing water pipes. Since the frost line in these regions is usually several feet below ground, this often makes basements a necessary feature. Houses in the South have a frost line closer to the surface, making it unnecessary to build deeper. Plus, some Southern states have a shallow layer of soil on top of limestone bedrock. Limestone is hard to dig into, and the extra expense and work make basements less popular.5
Sources: 1consumeraffairs.com, 2realtybiznews.com, 3theclose.com, 4themreport.com, 5tasteofhome.com
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