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Time in the Market Beats Timing the Market

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Trying to decide whether it makes more sense to buy a home now or wait? There’s a lot to consider, from what’s happening in the market to your changing needs. But generally speaking, aiming to time the market isn’t a good strategy – there are too many factors at play for that to even be possible.

That’s why experts usually say time in the market is better than timing the market.

In other words, if you want to buy a home and you’re able to make the numbers work, doing it sooner rather than later is usually worth it. Bankrate explains why: 

“No matter which way the real estate market is leaning, though, buying now means you can start building equity immediately.” 

Here’s some data to break this down so you can really see the benefit of buying now versus later – if you’re able to. Each quarter, Fannie Mae releases the Home Price Expectations Survey. It asks over one hundred economists, real estate experts, and investment and market strategists what they forecast for home prices over the next five years. In the latest release, experts are projecting home prices will continue to rise through at least 2029 – just at a slower, more normal pace than they did over the past few years (see the graph below):

 
 

But what does that really mean for you? To give these numbers context, the graph below uses a typical home value to show how it could appreciate over the next few years using those HPES projections (see graph below). This is what you could start to earn in equity if you buy a home in early 2025. 

 
 

In this example, let’s say you go ahead and buy a $400,000 home this January. Based on the expert forecasts from the HPES, you could gain more than $83,000 in household wealth over the next five years. That’s not a small number. If you keep on renting, you’re losing out on this equity gain.

And while today’s market has its fair share of challenges, this is why buying is going to be worth it in the long run. If you want to buy a home, don’t give up. There are creative ways we can make your purchase possible. From looking at more affordable areas, to considering condos or townhomes, or even checking out down payment assistance programs, there are options to help you make it happen.

So sure, you could wait. But if you’re just waiting it out to perfectly time the market, this is what you’re missing out on. And that decision is up to you.

Bottom Line

If you’re torn between buying now or waiting, don’t forget that it’s time in the market, not timing the market that truly matters. Connect with an agent if you want to talk about what you need to do to get the process started today.

Read more at Keeping Current Matters

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Mortgage rates above 7% are clouding the housing market outlook

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December jobs data is expected to cool, but how will Fed officials respond at their next meeting?

The new year has arrived, but little has changed regarding the direction of mortgage rates and their impact on the U.S. housing market.

At HousingWire’s Mortgage Rates Center on Tuesday, the 30-year fixed rate averaged 7.09%. That was up 2 basis points (bps) from a week ago. The 15-year fixed rate was slightly higher at 7.11% and was up 11 bps in the past week.

“The 10-year yield is currently close to my peak forecast of 4.70%. However, mortgage rates have not reached my peak prediction of 7.25% because mortgage spreads have improved in the early part of the year,” HousingWire Lead Analyst Logan Mohtashami wrote. “If mortgage spreads had been as unfavorable as they were in 2023, mortgage rates would be around 8% instead of near 7%.”

Mortgage rates have continued to rise since the Federal Reserve meeting on Dec. 18, when the central bank cut benchmark rates by 25 bps to a range of 4.25% to 4.5%. The Fed has implemented a total of 100 bps in cuts over its past three meetings, but mortgage rates have not moved in tandem. The 30-year fixed rate, for instance, has jumped by 78 bps since the rate-cutting cycle began in mid-September.

Market observers believe that the cuts will be paused when the Fed meets again at the end of January. On Tuesday, the CME Group’s FedWatch tool showed that 95% of interest rate traders predict no cut this month. Looking ahead to March, 37% of traders believe there will be an additional 25-bps cut that would lower the federal funds rate to a range of 4% to 4.25%.

The next employment report from the U.S. Bureau of Labor Statistics (BLS) will be released Friday and should provide some direction to Fed policymakers before their next meeting. A Reuters poll of economists calls for 150,000 new jobs to be added in December, down from a figure of 227,000 in November.

Last week, the labor department reported a seasonally adjusted annual rate of 211,000 unemployment claims — a lower-than-expected figure which signaled that “the labor market isn’t breaking,” according to Mohtashami.

“For mortgage rates to go lower, we need to focus on the labor market, which has been critical to every economic cycle in recent history, and particularly the labor market for residential construction and remodeling,” Mohtashami wrote.

“The existing home sales market has been in a recession since June 16, 2022, and hasn’t experienced any significant growth in sales for some time. However, the labor market for those working in in the existing home sales market isn’t substantial enough to impact an economy, since it is a sector that revolves around a transfer of commission.”

There weren’t any surprises in regard to home sales or new listings during the typically slow holiday season, according to Altos Research President Mike Simonsen. Altos data showed a weekly average of 44,000 new pending sales in December, nearly unchanged from the same period last year. Simonsen said he expects activity to rise next week.

“In ‘normal’ years, it’d be early February before inventory hits the absolute low point and starts climbing for the spring,” Simonsen wrote Monday. “When demand was hot during the pandemic, inventory might not reach its low point until March or April. In those times, we just had far more buyers than sellers. That’s not true now, so we should expect inventory to begin building for the year in February 2025.”

Mortgage and real estate professionals may take solace in the fact that homebuyer sentiment is considerably higher than it was a year ago. Survey data released Tuesday by Fannie Mae also showed that 42% of respondents expect mortgage rates to decline in the next 12 months, up from 31% one year ago.

“While respondents remain discouraged by the pandemic-era run-up in home prices and mortgage rates, the upward trend in home buying sentiment in 2024 may reflect a slow acclimatization to the generally less-affordable market conditions,” Fannie Mae chief economist Mark Palim remarked.

Redfin data released this week showed some positive signs for housing affordability. The brokerage reported that the share of income needed to buy the median-priced home fell slightly last year — the first time since the start of the COVID-19 pandemic that had happened. Still, a household earning the median income of $83,782 would need to spend nearly 42% of their paycheck to afford the median-priced home of $429,734, much higher than the typical share of 30% or less during the 2010s.

“For many Americans, buying a home remains more out of reach than ever and that’s unlikely to change anytime soon,” Redfin senior economist Elijah de la Campa said. “Even with inventory trending upwards, we still expect prices to continue rising in 2025 due to a lack of homes for sale — pushing more would-be homebuyers to rent instead.”

Read more at Housingwire

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America’s frozen housing market is finally starting to thaw

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After nearly three years of grappling with an expensive housing market, home buyers are showing signs of getting used to it.

Though the data is still preliminary, it points to an emerging trend in which house hunters are adjusting to higher mortgage rates. Home transactions are broadly up over the past few months, and consumer sentiment toward buying a house is warming up.

“Home-sales momentum is building,” Lawrence Yun, the chief economist at the National Association of Realtors, a trade group, said recently. Consumers have grown accustomed “to a new normal of mortgage rates between 6% and 7%,” he added.

Even if homeowners with ultra-low mortgage rates remain reluctant to move — a phenomenon known as the lock-in effect — that dynamic may be easing among those with relatively higher rates, Andy Walden, vice president of research and analytics at Intercontinental Exchange told MarketWatch.

And that gradual shift in home-buying attitude is giving the housing industry some hope for 2025.

“This is the first year in three years where I’m like, ‘It’s probably going to be better than the year before,’” Leo Pareja, chief executive of eXp Realty, told MarketWatch. 

But for people trying to buy a house this year, the future may feel less rosy.

Early indications of a thawing housing market

The two major pieces of data that suggest consumers are begrudgingly accepting a new, more expensive housing market are the recent increase in home sales and the uptick in housing sentiment.

In October and November, the latest months for which data was available, home sales increased, according to the NAR.

That trend was broad-based: The number of homes sold across most of the nation grew between October and November as buyers snapped up properties during a brief period of time when the 30-year mortgage rate fell close to 6%. 

The median price of a home sold over that period was $406,100, which was up nearly 5% from the same month a year ago.

Additional data suggested that more buyers were on their way. Pending home sales, which refer to contracts signed a month or two before a home is sold, also rose in November in most regions.

At that point, Yun said, “consumers appeared to have recalibrated expectations regarding mortgage rates and are taking advantage of more available inventory.”

Meanwhile, in a recent survey of consumers by the housing-finance giant Fannie Mae, consumer sentiment ticked up over the course of 2024, even though people were “discouraged” by soaring home prices and mortgage rates over the past few years, said Mark Palim, the company’s chief economist. 

That “may reflect a slow acclimatization to the generally less-affordable market conditions,” Palim said. 

Part of the optimism, however, was driven by an expectation that rates would fall over the next 12 months. And the data did not indicate a sea change in terms of attitudes toward buying a home: Only 22% of consumers said it was a good time to buy.

The math on buying a $400,000 home

Getting a foot on the homeownership ladder remains a daunting prospect for most Americans. Case in point: the salary required to afford a home that costs $400,000, considered to be the typical home price. 

To afford that, home buyers would need to earn a six-figure salary, according to calculations by Lisa Sturtevant, the chief economist at Bright MLS, a real-estate-listings service. 

The 30-year mortgage rate averaged 6.91% in the week of Jan. 2, according to Freddie Mac data. Assuming a 10% down payment, the monthly payment — which includes principal, interest, property taxes and insurance — for a $400,000 home would be about $2,900. In other words, a buyer would need to make almost $125,000 to qualify for a mortgage, Sturtevant said. 

The median U.S. household income, adjusted for inflation, is around $80,000, according to Census data .

Not a full recovery — yet 

To be sure, prospective home buyers are still looking at a frosty housing market, due to the yawning gap between the cost of buying a home and incomes.

Rates are still high enough to spook buyers who don’t have a pressing need to buy a home, and high home prices deter those who want to upgrade or downgrade but don’t want to give up their ultra-low rate for a higher one.

Most homeowners have a rate that’s lower than the current 7%. Only about two in 10 borrowers had a mortgage rate of 6% or more in the third quarter of last year, according to the most recent data available from the Federal Housing Finance Agency. 

The prevalence of low rates among people who already own homes is leading some real-estate pros to remain skeptical about whether the housing market has turned a corner. They expect homeowners to stay put for longer, while buyers struggle to find homes to buy.

“It’s like when you were a kid at a dance, and the boys are on one side and the girls are on the other, and nobody wants to make the first move,” Bess Freedman, chief executive of Brown Harris Stevens, a real-estate brokerage in New York City, told MarketWatch.

“We have been at a standstill,” she added, “and that is unhelpful.” 

So “we need to get more people on the dance floor. I want 2025 to come alive and get people out there in the market,” Freedman said.

Some also believe that the industry is overly optimistic about a turnaround in buyers’ attitudes toward rates. “I don’t know that there has been a broad acceptance of mortgage rates being at these levels,” Greg McBride, the chief financial analyst at Bankrate, told MarketWatch. 

“There are still a lot of prospective buyers that are pinning their homes on a return of 4% or 5% mortgage rates,” he added. “I just don’t think that’s what 2025 is going to deliver.”

Read more at MarketWatch

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Mortgage Forbearance: A Helpful Option for Homeowners Facing Challenges

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Let’s face it – life can throw some curveballs. Whether it’s a job loss, unexpected bills, or a natural disaster, financial struggles can happen to anyone. But here’s the good news. If you’re a homeowner feeling the squeeze, there’s a lifeline that many people don’t realize is still available: mortgage forbearance.

What Is Mortgage Forbearance?

As Bankrate explains:

“Mortgage forbearance is an option that allows borrowers to pause or lower their mortgage payments while dealing with a short-term crisis, such as a job loss, illness or other financial setback . . . When you can’t afford to pay your mortgage, forbearance gives you a chance to sort out your finances and get back on track.”

A common misconception is that forbearance was only accessible during the COVID-19 pandemic. While it did play a significant role in helping homeowners through that crisis, what many people don’t know is that forbearance is still a tool to support borrowers in times of need. Today, it remains a vital option to help homeowners in certain circumstances avoid delinquency and, ultimately, foreclosure.

The Current State of Mortgage Forbearance

Forbearance continues to serve as a valuable safety net for homeowners facing temporary financial challenges. While the overall rate of forbearance has seen a slight increase recently, it’s important to understand what’s driving this change and how it fits into the broader picture.

According to Marina Walsh, VP of Industry Analysis at the Mortgage Bankers Association (MBA):

“The overall mortgage forbearance rate increased three basis points in November and has now risen for six consecutive months.”

While the share of mortgages in forbearance has significantly declined since its peak in mid-2020, there has been a slight but notable increase in recent months. This uptick is largely tied to the effects of two recent hurricanes - Helene and Milton.

Natural disasters like these often create temporary financial hardships for homeowners, making forbearance a crucial safety net during recovery. In fact, 46% of borrowers in forbearance today cite natural disasters as the reason for their financial struggles.

Even with the most recent uptick, the share of mortgages in forbearance is nowhere near pandemic levels, and, thankfully, reflects a very small portion of homeowners overall.

Why Forbearance Matters

Forbearance can help borrowers avoid the spiral of missed payments and foreclosure. It provides breathing room to address challenges and plan next steps. And while most homeowners today are not in a position to need forbearance, thanks to strong equity and foundations of the current housing market, it is an option for the few who do need it.

If you or a homeowner you know is facing financial difficulties, the first step is to contact your mortgage lender. They can walk you through the forbearance process and help you understand your options. Keep in mind that forbearance is not automatic — you need to apply and discuss the terms with your lender.

Bottom Line

In tough times, knowing your options can bring peace of mind. Forbearance isn’t just a financial tool — it’s a lifeline. And while the recent increase in forbearance rates might make headlines that give you pause, the truth is this option is working exactly as it should: helping those who need it most get through difficult moments without losing their homes.

Read more at Keeping Current Matters

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As Featured in West + Main Home Magazine: Vintage Vibe to Inspired Design

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West + Main agent Jessie Matteson

“We fell in love with the vision of what the space could be”
— Jessie Matteson

When West + Main Agent Jessie Matteson and her family bought their off-market home two years ago, they saw potential where others might have seen only orange shag carpeting, outdated windows, and mechanicals begging for an upgrade. But instead of being overwhelmed, Jesse and her family dove headfirst into what would become a major labor of love.

“We fell in love with the vision of what the space could be,”

says Jesse, who didn't shy away from doing much of the work herself. In fact, the family tackled the entire demo by hand. With the help of her handy father-in-law and dad, the Mattesons opened up the main level, knocking down walls to create a kitchen and dining area perfect for entertaining.

“We wanted a space that felt warm and inviting,” Jessie explains. “We went big with the kitchen island to make it a spot for friends and family to gather. It’s the main hangout spot in our home, so we made sure it was both pretty and practical.” The kitchen, with its massive island, quickly became the heart of the house. “We spend a lot of time around that island, whether it's hosting, working from home, or just living life.”

One of Jessie’s favorite features is the flooring, which was lovingly laid by her husband. “It adds such a cozy feel to the whole house,” she says, reflecting on the warmth and comfort it brings to the space.

The remodel also boasts a custom railing, adding a playful transition from the kitchen to the lower-level living room. And though the basement still awaits its full makeover, Jessie says, “The main floor is mostly finished, and it feels so good to see our hard work finally pay off.”

Remarkably, the family didn’t work with an architect or designer for the project. Instead, inspiration came from nearby neighbors who had tackled similar renovations.

“Once we saw that what we were thinking was possible, I started designing the kitchen layout myself,” Jessie explains.

As foster parents, they wanted flexible, cozy spaces that could evolve with each child. “We used furniture that was my grandmother’s and some refinished pieces my mom redid. A mix of new and old makes a space feel cozy and lived in.”

Renovations, of course, come with their share of challenges. But for Jessie, the highlight was working alongside her dad and father-in-law. “It’s the third home renovation we’ve done, and I love the extra time I get to spend with them. There’s a lot of problem-solving and brainstorming – it’s always fun, though sometimes stressful!”

As for advice for others thinking of doing their own remodel? “Things won’t always go as planned, and that’s okay. For design, don’t overthink it. Often, the first thing that catches your eye is what you’ll come back to. And know your limits—it’s important to hire out when you need to.”

For Jessie, the remodel has been more than just an aesthetic transformation. “This house has been a real labor of love,” she says. And with the warmth and care woven into every detail, it’s easy to see why.

 

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