Joseph Federico - Donahue Real Estate Company | Dedham, MA Real Estate, Canton, MA Real Estate


The Cost of a Home Is Far More Important than the Price

The Cost of a Home Is Far More Important than the Price | MyKCM



Housing inventory is at an all-time low. There are 39% fewer homes for sale today than at this time last year, and buyer demand continues to set records. Zillow recently reported:

“Newly pending sales are up 25.5% compared to the same week last year, the highest year-over-year increase in the weekly Zillow database.”

Whenever there is a shortage in supply of an item that’s in high demand, the price of that item increases. That’s exactly what’s happening in the real estate market right now. CoreLogic’slatest Home Price Index reports that values have increased by 5.5% over the last year.

This is great news if you’re planning to sell your house; on the other hand, as either a first-time or repeat buyer, this may instead seem like troubling news. However, purchasers should realize that the price of a house is not as important as the cost. Let’s break it down.

There are several factors that influence the cost of a home. The two major ones are the price of the home and the interest rate at which a buyer can borrow the funds necessary to purchase the home.

Last week, Freddie Mac announced that the average interest rate for a 30-year fixed-rate mortgage was 2.87%. At this time last year, the rate was 3.73%. Let’s use an example to see how that difference impacts the true cost of a home.

Assume you purchased a home last year and took out a $250,000 mortgage. As mentioned above, home values have increased by 5.5% over the last year. To buy that same home this year, you would need to take out a mortgage of $263,750.

How will your monthly mortgage payment change based on today’s lower mortgage rate?

This table calculates the difference in your monthly payment:The Cost of a Home Is Far More Important than the Price | MyKCMThat’s a savings of $61 monthly, which adds up to $732 annually and $21,960 over the life of the loan.

Bottom Line

Even though home values have appreciated, it’s a great time to buy a home because mortgage rates are at historic lows.


Homes Across the Country Are Selling Fast 

Homes Across the Country Are Selling Fast [INFOGRAPHIC] | My KCM



Some Highlights

  • Buyers are actively searching for and purchasing homes at a record-breaking pace. According to the latest report from the National Association of Realtors (NAR), in July, 68% of homeswere on the market for less than a month.
  • With homes moving from listing day to pending sale in an average of just 22 days, it’s a great time to sell a house.
  • Let’s connect today so you can make your move while buyers are scooping homes up faster than they’re coming to market.

Is the Economic Recovery Beating All Projections?

Is the Economic Recovery Beating All Projections? | MyKCM



Earlier this year, many economists and market analysts were predicting an apocalyptic financial downturn that would potentially rattle the U.S. economy for years to come. They immediately started to compare it to the Great Depression of a century ago. Six months later, the economy is still trying to stabilize, but it is evident that the country will not face the total devastation projected by some. As we continue to battle the pandemic, forecasts are now being revised upward. The Wall Street Journal (WSJ) just reported:

“The U.S. economy and labor market are recovering from the coronavirus-related downturn more quickly than previously expected, economists said in a monthly survey.

Business and academic economists polled by The Wall Street Journal expect gross domestic product to increase at an annualized rate of 23.9% in the third quarter. That is up sharply from an expectation of an 18.3% growth rate in the previous survey.”

What Shape Will the Recovery Take?

Economists have historically cast economic recoveries in the form of one of four letters – V, U, W, or L.

A V-shaped recovery is all about the speed of the recovery. This quick recovery is treated as the best-case scenario for any economy that enters a recession. NOTE: Economists are now also using a new term for this type of recovery called the “Nike Swoosh.” It is a form of the V-shape that may take several months to recover, thus resembling the Nike Swoosh logo.

A U-shaped recovery is when the economy experiences a sharp fall into a recession, like the V-shaped scenario. In this case, however, the economy remains depressed for a longer period of time, possibly several years, before growth starts to pick back up again.

A W-shaped recovery can look like an economy is undergoing a V-shaped recovery until it plunges into a second, often smaller, contraction before fully recovering to pre-recession levels.

An L-shaped recovery is seen as the worst-case scenario. Although the economy returns to growth, it is at a much lower base than pre-recession levels, which means it takes significantly longer to fully recover.

Many experts predicted that this would be a dreaded L-shaped recovery, like the 2008 recession that followed the housing market collapse. Fortunately, that does not seem to be the case.

The same WSJ survey mentioned above asked the economists which letter this recovery will most resemble. Here are the results:Is the Economic Recovery Beating All Projections? | MyKCM

What About the Unemployment Numbers?

It’s difficult to speak positively about a jobs report that shows millions of Americans are still out of work. However, when we compare it to many forecasts from earlier this year, the numbers are much better than most experts expected. There was talk of numbers that would rival the Great Depression when the nation suffered through four consecutive years of unemployment over 20%.

The first report after the 2020 shutdown did show a 14.7% unemployment rate, but much to the surprise of many analysts, the rate has decreased each of the last three months and is now in the single digits (8.4%).

Economist Jason Furman, Professor at Harvard University's John F. Kennedy School of Government and the Chair of the Council of Economic Advisers during the previous administration, recently put it into context:

“An unemployment rate of 8.4% is much lower than most anyone would have thought it a few months ago. It is still a bad recession but not a historically unprecedented event or one we need to go back to the Great Depression for comparison.”

The economists surveyed by the WSJ also forecasted unemployment rates going forward:

  • 2021: 6.3%
  • 2022: 5.2%
  • 2023: 4.9%

The following table shows how the current employment situation compares to other major disruptions in our economy:Is the Economic Recovery Beating All Projections? | MyKCM

Bottom Line

The economic recovery still has a long way to go. So far, we are doing much better than most thought would be possible.


Walpole MA 02081 - 2019 market in review! 

According to the MLS (multiple listing service), 210 single family homes sold in Walpole last year. Average sale price $599,280 

For context:
2018 had 208 single family sales, average sale price $598,233
In 2017, 213 sales, average price $553,098

If you are interested in the whole report for 2019 (average days on market, price changes, original list price to sale price, etc.), for Walpole or another town, for single families, condos, or multi-families - I can customize and email it to you. Let me know below or send me a message.

Let's hope the market holds strong for 2020!

Joseph D. Federico

Donahue Real Estate Co. 

Dedham-Canton-Walpole

5 Lincoln Street, Canton

"Neighbors Helping Neighbors"

www.Joefed.com

joe@donahuere.com


Westwood, MA 02090 - 2019 market in review! 

According to the MLS (multiple listing service), 171 single family homes sold in Westwood last year. Average sale price $902,133.

For context:
2018 had 179 single family sales, average sale price $926,645
In 2017, 180 sales, average price $896,656

If you are interested in the whole report for 2019 (average days on market, price changes, original list price to sale price, etc.), for Westwood or another town, for single families, condos, or multi-families - I can customize and email it to you. Let me know below or send me a message.

Let's hope the market holds strong for 2020!


Joseph D. Federico

Donahue Real Estate Co. 

Dedham-Canton-Walpole

5 Lincoln Street, Canton

"Neighbors Helping Neighbors"

www.Joefed.com

joe@donahuere.com




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