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    Lavastone: Better Than Granite for Countertops?

    Granite has ruled the luxury kitchen design world for decades, its popularity surpassing marble, quartz, limestone, soapstone, and other luxury materials quarried from the earth. The whites, grays, blacks, beiges, and browns of stone bring an attractive earthiness to interior design, giving a designer look to any kitchen and bath. But stone has its drawbacks. Most stone must be resealed periodically and cleaned only with compatible products. Some stone is soft and subject to chips and scratches.

    One stone stands above the rest in performance: lavastone. While most igneous stones are formed underground, lava is molten rock spewed from a volcanic eruption onto the surface of the earth. As the lava cools, it hardens into lavastone, which can then be “extracted, custom-cut for each order, and glazed with enamel at heat in excess of 1,300 degrees Fahrenheit (1000 Celsius).” Because lavastone is mined from ancient lava eruptions, availability is limited. Consequently, lavastone is the most expensive stone for countertops at approximately $250 to $300 or more per square foot.

    Lavastone is known to be more durable than other stones. Once it’s fabricated into a countertop, it can withstand chipping, hot pans, stains, abrasion from cleaners, and the UV rays of the sun.

    Any pigment that can be added to ceramics is suitable for lavastone countertops, for a universe of colors. Once the ceramic cools, the smooth, non-porous glaze crackles into distinctive patterns as individual as snowflakes. Choose your color wisely, as your countertops will last for decades.

    Is the Housing Market Turning?

    The U.S. avoided a recession in 2023, and some say it will have a soft landing in 2024. Inflation has hovered in the 3% range for many months—higher than the central bank would prefer, but at 2.6% for personal consumption expenditures (PCE), it’s closer to the target range of 2% and far from the double-digit highs since the pandemic began. Most sources cite the “core” PCE, which excludes volatile energy and food prices which sat at 3.2% by year’s end—the lowest level since March 2021.

    Meanwhile, existing home sales volume began to edge higher by the end of 2023, and prices rose 4.0% year over year to a median of $387,600. Mortgage interest rates ended the year at 6.61% for a benchmark 30-year fixed-rate conventional home loan. Existing housing inventory remains tight with approximately 3.5-months’ supply on hand at the current sales pace.

    Due to the improvement in market conditions and higher consumer confidence, Realtor.com’s research finds that two factors will drive housing sales in 2024—relative affordability in the Midwest and Northeast and the 2023 dip in western home prices. Areas like Oxnard, Riverside, Bakersfield, San Diego, and Sacramento in California; Las Vegas, Nevada; Toledo, Ohio; and Springfield, Massachusetts could get double-digit sales growth in 2024. Toledo, for example, offers housing 51% below the national median with low unemployment.

    These improvements should encourage more homebuyers to make the leap to homeownership. Ask your Berkshire Hathaway HomeServices network professional to update you on the latest market conditions in your area.

    How Important is a Large Home to You?

    House sizes have come a long way from 1973 when the average home was 1,660 square feet. The average in 2015 was 2,687 square feet, and since then home sizes have fluctuated, according to the economy, mortgage interest rates, and overall affordability. The question is – how much space do you really need?

    Automobiles with luxuries like 360 degree back-up cameras, lane change assists and tail-gating prevention have accelerated in price, and so have homes equipped with smart features, walk-in closets, en suite baths, and other can’t-live-without amenities. Homes are larger and come with more bedrooms – most homebuyers want at least three to four so they can use the extra rooms as offices, guest rooms, craft rooms and nurseries.

    To help you decide how much home you really need, here are a few things to think about:

    Larger homes may have better resale values, but they’re more expensive to maintain, so get a detailed home inspection to help you plan future replacement and repair costs.

    Affordability is paramount. Buy a home that you can comfortably afford so you don’t have to live under economic pressure. Let your lender help you determine the most you should spend.

    Larger homes tend to be located further away from urban city centers. Think about your commutes to and from work, schools, family, healthcare, etc.

    Consider how long you plan to live in the home. The longer you occupy your home, the better it serves as a hedge against inflation while you build equity.

     

    Will Mortgage Interest Rates Go Lower in 2024?

    While many potential homebuyers have been knocked out of the market by higher mortgage interest rates and home prices, there’s hope on the horizon that they’ll have better luck in 2024.

    Banks are tightening their lending standards due to increases in credit card and car loan delinquencies, according to Freddie Mac. This is also impacting mortgage applications, credit lines and refinance activity – loan originations were down approximately 30% in October 2023 from the previous year. The good news is that mortgage delinquencies are low compared to other loan types. Inflation is waning, but still remains above the Federal Reserve’s target of 2%. Consumer spending will decelerate due to slower economic and weaker employment growth which will cause rates to come down in 2024. Continuing homebuyer demand will keep home prices elevating 2.6% in 2024, but with rates dipping as low as 6%, housing will be a little more affordable.

    If you’re planning to buy a home in 2024, Lending Tree recommends that you have at least a 3% down payment for a conventional loan –a loan that’s “originated, backed and serviced by private mortgage lenders like banks, credit unions and other financial institutions.” If you have less than 20% down, expect to pay for private mortgage insurance (PMI) between 0.14% and 2.33% of your loan amount in annual PMI premiums. To get the best interest rate and lower PMI premiums, your credit score must be at least 780 or higher, or you’ll pay a higher interest rate.

    How to Save the Sale of Your Home

    When you sell your home, things can go smoothly or go wrong, and which way it goes depends largely on how well you prepare for the transaction and respond to glitches that may occur along the way.

    Your Berkshire Hathaway HomeServices network professional can help you determine the right asking price to sell your home the fastest and for the most money. If you list your home too high, you’ll find that homebuyers become more critical and demanding. If your homebuyer feels good about the purchase, they’re more likely to be reasonable with you.

    Some homebuyers may not be well prepared enough to buy a home, so it’s prudent for you to insist that only homebuyers who’re pre-approved by a lender or can prove cash assets be allowed inside your home. Ask to see the lender’s letter of pre-approval before you sign a contract.

    During the home inspection, homebuyers may fear that the home needs too much work. If there are repairs or replacements to be done, offer to take care of them immediately or be willing to negotiate on price.

    Your agent will monitor each step in the transaction to make sure all parties perform their roles, from good faith deposits, to appraisals, to title searches, on time and in a professional manner.

    If you’ve put your home in pristine condition and listed it at fair market value, you’ll prevent many problems from occurring. A reasonable homebuyer won’t walk away from a well-kept home at the right price.

    How to Convert Your Home into an Investment Property

    Many homeowners who need to make a move may be reluctant to sell their homes because they have a low interest rate and will pay a much higher price for their next home, as well as a higher interest rate in today’s market.

    Renting out an existing home and buying another property is an attractive option—if you play fairly with your lender. Some purchase loans aren’t available to investors—such as FHA and VA-guaranteed loans—and are only for owner-occupants, while investment property loans require larger down payments and charge higher interest rates. Trying to buy a property while hiding the fact that it’s a rental could result in your loan being called due.

    You can buy a home with owner-occupied financing and turn your home into a rental with little risk of penalty if you do the following:

    • Occupy the home for at least 12 months, as agreed in the loan documents. Frequent applications for new owner-occupied financing every few months will make underwriters suspicious.
    • Use the same mailing address as the property.
    • Be prepared for lender scrutiny with a logical explanation, such as a job change, or moving closer to family, if you have other, nicer properties and seek owner-occupied financing for a lesser quality home.
    • Don’t refinance your owner-occupied home to pull out equity to use as a down payment on the next home and then finance your next home as an owner-occupant unless you intend to actually occupy the home for 12 months or more.

    Shifting Tides: Market Dynamics Ignite a Surge in New Home Interest

    Lack of supply in the resale market is favorably impacting new home sales. In September 2023, the pace of new home sales was up 33.9% year over year to a seasonally-adjusted rate of 759,00 units. The median new home sale price in September was $418,800, down 12.3% compared to a year ago, largely due to builder incentives and a shift toward building slightly smaller homes. Meanwhile, existing, or pre-owned home sales sank 15.4% from the previous year, yet existing home prices rose slightly to $394,300.

    New home construction is typically more expensive than existing homes of similar size, condition, and amenities, but homebuyers are flocking to new homes because the costs and benefits between existing homes and new homes has narrowed. According to NewHomeSource.com, new home buyers get numerous benefits, including:

    • The ability to choose the finishes, fixtures and decor
    • A “honeymoon” period when everything in the house is brand new
    • Builder-supplied warranties for finishes, systems and structure
    • Energy-efficient heating, ventilation, cooling and appliances that will save you money
    • The latest in architecture, design, floorplans, construction techniques, and in-home automation.

    In the overheated market of the past few years, shopping for a home has become wearisome to homebuyers, including some buyers’ remorse caused by unexpected issues with the home, too much maintenance and upkeep, and too many compromises simply to get into a home.

    Ask Jane At The Lake, your Berkshire Hathaway HomeServices network professional to show you new homes in your area. Don’t visit builders or model homes without your agent, so they can negotiate for you.

    Navigating the 2024 Housing Market

    In the new year, homebuyers and sellers are still facing the same challenges as they did in 2023—high interest rates, sky-high home prices, and an inadequate supply of homes. As affordability issues slow housing sales volume, low supplies are keeping home prices high.

    Bankrate.com experts say that mortgage interest rates reached 8.01% in October, the highest level since 2000, but since then rates have come down. There’s no likelihood of a housing market turndown as long as lending standards remain strict, and there aren’t enough homes to meet demand. Goldman Sachs Research expects 30-year-mortgage rates to open 2024 at 7.6% and to end the year at 7.1%. Home prices will appreciate 2% in 2023, 1.9% in 2024, and 2.8% in 2025. If mortgage interest rates continue to ease, it’s likely that demand for homes will reignite, despite higher purchase prices.

    The Federal Reserve’s aggressive handling of inflation by raising overnight borrowing rates to banks has had a positive effect, and further rate hikes appear unlikely as the numbers get closer to the Fed’s target of 2% inflation.

    Meanwhile, help is out there for those being squeezed out of the market. FHA-guaranteed loans require as little as 3.5% down. Numerous state and local governments have increased programs for first-time and lower-income homebuyers. Many lenders offer grants, down payment assistance programs, and mortgages with no closing costs. The National Association of REALTORS® offers the Housing Opportunity Program, with resources for homebuyers.

    For further advice, ask Jane At The Lake your Berkshire Hathaway HomeServices network professional.

    What to Consider When Selling a Home “As Is”

    It’s no secret that homebuyers prefer move-in ready homes that have been repaired and updated. The Wall Street Journal reports that fewer homebuyers want fixer-uppers because of high mortgage interest rates and construction loans. Since the seller has disclaimed the home, the cost of repairs and updates are unknown. Some mortgage guarantors like FHA and VA have certain safety and home integrity requirements, which means that if the seller doesn’t make the improvements needed, the homebuyer won’t be approved for the mortgage loan.

    Yet, there are times when the seller simply doesn’t have the financial or practical means to make repairs and improvements. So, what can the seller expect from the marketplace?

    Selling a home “as is” means selling the home in its current condition to relieve the seller of most of the responsibilities and costs associated with selling a home. As-is sellers still need to meet minimum state and federal disclosures, such as filling out a seller’s disclosure that declares known defects and problems in the home, but this can have a sobering effect on homebuyers. A balanced market, or one in favor of buyers can reduce the selling price of an as-is home as much as 15% to 20% below market value and takes longer to sell, exacerbated by carrying costs such as mortgage payments, HOA fees, utilities, and more.

    Lower offers can also be expected from investors who pay cash, as they have purchase and resale formulas that must be met before they’re interested.

    Should Sellers Help Buyers With a Mortgage Buydown?

    In August 2023, the average 30-year mortgage interest rate hit its highest level since 2000. At 7.48%, they were nearly triple where they were during the pandemic when they reached a low of 2.65% in January 2021. Meanwhile, median home prices rose for 10 consecutive quarters beginning in fall 2020, only declining for two straight quarters to $416,100, which is still 26.4% higher than the quarter just before the pandemic.

    The National Association of REALTORS® reported that existing home sales volume in July 2023 slipped 16.6% from the previous year, even as home prices rose to $406,700 from $399,000 a year ago. While many markets are still robust, others have slowed considerably. How can sellers bring more homebuyers to the table?

    As a concession, the seller can offer to pay discount points to the homebuyer’s lender to help the homebuyer get a lower mortgage interest rate. Called a seller-paid mortgage rate buydown, these discount points are typically 1% of the homebuyer’s loan amount and every discount point paid reduces the mortgage interest rate by 0.25 percentage points. If the mortgage amount is $400K, a discount point would be $4,000, and the monthly principal and interest payment at 7.5% would be $2,797. A seller-paid discount point would lower the interest rate to 7.25% and a monthly payment to $2,729. Over the life of the loan, the borrower would save$24,535.

    Talk to your Berkshire Hathaway HomeServices network professional about seller-paid mortgage rate buydowns and see if they can benefit your transaction.