In today’s Ruidoso real estate market, low inventory and high demand are driving up the prices on homes $$$. Nationally many as 54% of homes are getting offers over the listing price, based on the latest Realtors Confidence Index from the National Association of Realtors. Locally though in Lincoln County, New Mexico our percentage is much lower at closer to 11%. While this is great news for sellers everywhere, it can be tricky to say the least to navigate if the price of your contract doesn’t match up with the appraisal for the house. It’s called an appraisal gap, and it’s happening more and more in today’s real estate market. 

The chart seen uses the latest insights from NAR’s Realtors Confidence Index to showcase how often an issue with an appraisal slowed or stalled the momentum of a house sale in May of this year compared to May of 2020. If an appraisal comes in below the contract price, the buyer’s lender won’t loan them more than the house’s appraised value. That means there’s going to be a gap between the amount of loan the buyer can secure and the contract price on the house. That can spell TROUBLE for both parties involved. 

In this situation, both the buyer and seller have a vested interest in making sure the sale moves forward with little to no delay. The seller will want to make sure the deal closes, and the buyer won’t want to risk losing the home. That’s why it’s common for sellers to ask the buyer to make up the difference themselves in today’s competitive market.

Whether you’re buying or selling, let’s connect so you have an ally throughout the process to help you navigate the unexpected, including appraisal gaps.

The question of whether the real estate market is a bubble ready to pop seems to be dominating a lot of Realtor's conversations lately – and everyone has an opinion. It’s clear that consumers are concerned about how quickly home values are rising. Many people fear the speed of appreciation may lead to a crash in prices later this year in the last quarter. Google has even reported that the search for “When is the housing market going to crash?” has actually spiked 2450% over the previous month. Yet, when it comes down to it, the opinions that carry the most weight are the ones based on experience and expertise. Here are four expert opinions from professionals and organizations that have devoted their careers to giving advice to the housing industry.

Nathaniel Karp, Chief U.S. Economist at BBVA:

    “The housing market is in line with fundamentals as interest rates are attractive and incomes are high due to fiscal stimulus, making debt servicing relatively affordable and allowing buyers to qualify for larger mortgages. Underwriting standards are still strong, so there is little risk of a bubble developing.”

Mark Fleming, Chief Economist at First American:

    “Looking back at the bubble years, house prices exceeded house-buying power in 2006 nationally, but today house-buying power is nearly twice as high as the median sale price nationally… "

Bill McBride of Calculated Risk:

    “It’s not clear at all to me that things are going to slow down significantly in the near future. In 2005, I had a strong sense that the hot market would turn and that, when it turned, things would get very ugly. Today, I don’t have that sense at all, because all of the fundamentals are there. Demand will be high for a while, because Millennials need houses. Prices will keep rising for a while, because inventory is so low.”

The Joint Center for Housing Studies in their The State of the Nation’s Housing 2021 report:

    “… conditions today are quite different than in the early 2000s, particularly in terms of credit availability. The current climb in house prices instead reflects strong demand amid tight supply, helped along by record-low interest rates.”

All four strongly believe that we’re not in a bubble and won’t see crashing home values as we did in 2008. And they’re not alone – Goldman Sachs, JP Morgan, Morgan Stanley, and Merrill Lynch share the same opinion. Let's see what these major financial services giants have said recently.

Goldman Sachs’ Research Note on Housing:

    “Strong demand for housing looks sustainable. Even before the pandemic, demographic tailwinds and historically-low mortgage rates had pushed demand to high levels. … consumer surveys indicate that household buying intentions are now the highest in 20 years. … As a result, the model projects double-digit price gains both this year and next.”

Joe Seydl, Senior Markets Economist, J.P.Morgan:

    “Homebuyers—interest rates are still historically low, though they are inching up. Housing prices have spiked during the last six-to-nine months, but we don’t expect them to fall soon, and we believe they are more likely to keep rising. If you are looking to purchase a new home, conditions now may be better than 12 months hence.”

Morgan Stanley, Thoughts on the Market Podcast:

    “Unlike 15 years ago, the euphoria in today’s home prices comes down to the simple logic of supply and demand. And we at Morgan Stanley conclude that this time the sector is on a sustainably, sturdy foundation . . . . This robust demand and highly challenged supply, along with tight mortgage lending standards, may continue to bode well for home prices. Higher interest rates and post pandemic moves could likely slow the pace of appreciation, but the upward trajectory remains very much on course.”

Merrill Lynch’s Capital Market Outlook:

    “There are reasons to believe that this is likely to be an unusually long and strong housing expansion. Demand is very strong because the biggest demographic cohort in history is moving through the household-formation and peak home-buying stages of its life cycle. Coronavirus-related preference changes have also sharply boosted home buying demand. At the same time, supply is unusually tight, with available homes for sale at record-low levels. Double-digit price gains are rationing the supply.”

If you’re concerned about making the decision to buy or sell right now, let’s connect to discuss what’s happening in the Ruidoso area's real estate market (575) 257-3221

You may have heard get pre-approved at the beginning of the homebuying process, before you look at any homes. What does that really mean, though and why is it so important? In today’s market, with rising home prices and high buyer competition, it’s crucial to have a clear understanding of your budget so you stand out to sellers as a serious homebuyer.

With limited housing inventory, there are many more buyers active in the market than there are sellers, and that’s creating some serious competition. According to the National Association of Realtors (NAR), homes are receiving an average of 5.1 offers for sellers to consider. As a result, bidding wars are more and more common. Pre-approval gives you an advantage if you get into a multiple-offer scenario, and these days, it’s likely you will. When a seller knows you’re qualified to buy the home, you’re in a better position to potentially win the bidding war.

Being intentional and competitive are musts when buying a home right now. Pre-approval from a lender is the only way to know your true price range and how much money you can borrow for your loan. Just as important, being able to present a pre-approval letter shows sellers you’re a qualified buyer, something that can really help you land your dream home in an ultra-competitive market

Freddie Mac explains that “By having a pre-approval letter from your lender, you’re telling the seller that you’re a serious buyer, and you’ve been pre-approved for a mortgage by your lender for a specific dollar amount. In a true bidding war, your offer will likely get dropped if you don’t already have one.”

Every step YOU can take to gain an advantage as a buyer is crucial when today’s market is constantly changing. Interest rates are low, prices are going up, and lending institutions are regularly updating their standards. You’re going to need guidance to navigate these waters, so it’s important to have a team of professionals such as a loan officer and a trusted real estate agent making sure you take the right steps and can show your qualifications as a buyer when you find a home to purchase.

In a competitive market with low inventory, a pre-approval letter is a game-changing piece of the homebuying process. Not only does being pre-approved bring clarity to your homebuying budget, but it shows sellers how serious you are about purchasing a home.

The pandemic created a tremendous interest in vacation homes across the country. Throughout the last year, many people purchased second homes as a safe getaway from the challenges of the health crisis. With many professionals working from home and many students taking classes remotely, it made sense to see a migration away from cities and into counties with more vacation destinations.

The 2021 Vacation Home Counties Report from the National Association of Realtors (NAR) shows that this increase in vacation home sales continues in 2021. The report examines sales in counties where “vacant seasonal, occasional, or recreational use housing account for at least 20% of the housing stock” and compares that data to the overall residential market.

Their findings show:

• Vacation home sales rose by 16.4% to 310,600 in 2020, outpacing the 5.6% growth in total existing-home sales.
• Vacation home sales are up 57.2% year-over-year during January-April 2021 compared to the 20% year-over-year change in total existing-home sales.
• Home prices rose more in vacation home counties – the median existing price rose by 14.2% in vacation home counties, compared to 10.1% in non-vacation home counties.

This coincides with data released by Zelman & Associates on the increase in sales of second homes throughout the country last year.

As the data above shows, there is still high demand for second getaway homes in 2021 even as the pandemic winds down. While we may see a rise in second-home sellers as life returns to normal, ongoing low supply and high demand will continue to provide those sellers with a good return on their investment.

If you’re one of the many people who purchased a vacation home during the pandemic, you’re likely wondering what this means for you. If you’re considering selling that home as life returns to normal, you have options. There are still plenty of buyers in the market. If, on the other hand, you want to keep your second home, enjoy it! Current market conditions show that it’s a good ongoing investment.

The Ruidoso area's real estate market is full of unprecedented opportunities. The high buyer demand paired with low housing inventory has created the ultimate sellers’ market, which means it’s a fantastic time to sell your house if you were still in the hole from 2008. However, that does not mean sellers are guaranteed success no matter what. There are still some key things to know so you can avoid costly mistakes when you make a move. Prioritizing these 3 things can put you on the right track.

Price Your House Right

When inventory is low, like it is in the current market, it’s common to think buyers will pay whatever we ask when setting a listing price. Believe it or not, that’s not always true. Even in a sellers’ market, listing your house for the right price will maximize the number of buyers that see your house. This creates the best environment for bidding wars, which in turn are more likely to increase the final sale price. A real estate professional is the best person to help you set the best price for your house so you can achieve your financial goals.

Keep Your Emotions in Check

Today, homeowners are living in their houses for a longer period of time. Since 1985, the average time a homeowner owned their home, or their tenure, has increased from 5 to 10 years. Several years longer than what used to be the historical norm. The side effect, however, is when you stay in one place for so long, you may get even more emotionally attached to your space. If it’s the first home you purchased or the house where your children grew up, it very likely means something extra special to you. Every room has memories, and it’s hard to detach from that sentimental value.

For some homeowners, that connection makes it even harder to separate the emotional value of the house from the fair market price. That’s why you need a real estate professional to help you with the negotiations along the way. 

Stage Your House Properly

We’re generally quite proud of our décor and how we’ve customized our houses to make them our own unique homes. However, not all buyers will feel the same way about your design and personal touches. That’s why it’s so important to make sure you stage your house with the buyer in mind.

You want a Buyer to envision themselves in your home. They need to see their style and keepsakes – not your pictures and decorations. Once they see themselves in your home they then want your home. Stage for views not usability, do a good deep cleaning which includes baseboards, door jams and switches, and clear off counters / tables. When you declutter they can visualize their own dreams as they walk through each room. A real estate professional can help you with tips to get your home ready to stage and sell. 

Today’s sellers’ market might be the opportunity you've been looking for to make a move. If you’re considering selling your primary residence or second home, let’s connect today so you have the expert guidance you need to navigate through the process and prioritize these key elements. Giving YOU the information YOU need to make an informed decision.