It doesn’t matter if you’re someone who closely follows the economy or not, chances are you’ve heard whispers of an upcoming recession. Economic conditions are determined by a broad range of factors, so rather than explaining them each in depth, let’s lean on the experts and what history tells us to see what could lie ahead. As Greg McBride, Chief Financial Analyst at Bankrate, says:
“Two-in-three economists are forecasting a recession in 2023…”
As talk about a potential recession grows, you may be wondering what a recession could mean for the housing market. Here’s a look at the historical data to show what happened in real estate during previous recessions to help prove why you shouldn’t be afraid of what a recession could mean for the housing market today.
A Recession Doesn’t Mean Falling Home Prices
To show that home prices don’t fall every time there’s a recession, it helps to turn to historical data. As the graph below illustrates, looking at recessions going all the way back to 1980, home prices appreciated in four of the last six of them. So historically, when the economy slows down, it doesn’t mean home values will always fall.
Most people remember the housing crisis in 2008 (the larger of the two red bars in the graph above) and think another recession would be a repeat of what happened to housing then. But today’s housing market isn’t about to crash because the fundamentals of the market are different than they were in 2008. According to experts, home prices will vary by market and may go up or down depending on the local area. But the average of their 2023 forecasts shows prices will net neutral nationwide, not fall drastically like they did in 2008.
A Recession Means Falling Mortgage Rates
Research also helps paint the picture of how a recession could impact the cost of financing a home. As the graph below shows, historically, each time the economy slowed down, mortgage rates decreased.
Fortune explains mortgage rates typically fall during an economic slowdown:
“Over the past five recessions, mortgage rates have fallen an average of 1.8 percentage points from the peak seen during the recession to the trough. And in many cases, they continued to fall after the fact as it takes some time to turn things around even when the recession is technically over.”
In 2023, market experts say mortgage rates will likely stabilize below the peak we saw last year. That’s because mortgage rates tend to respond to inflation. And early signs show inflation is starting to cool. If inflation continues to ease, rates may fall a bit more, but the days of 3% are likely behind us.
The big takeaway is you don’t need to fear the word recession when it comes to housing. In fact, experts say a recession would be mild and housing would play a key role in a quick economic rebound. As the 2022 CEO Outlook from KPMG, says:
“Global CEOs see a ‘mild and short’ recession, yet optimistic about global economy over 3-year horizon…
More than 8 out of 10 anticipate a recession over the next 12 months, with more than half expecting it to be mild and short.”
While history doesn’t always repeat itself, we can learn from the past. According to historical data, in most recessions, home values have appreciated and mortgage rates have declined.
How To Choose The Perfect Paint Color
Whether you’re about to sell your home or renovate, there are few better low budget ways to add some sparkle than a fresh coat of paint. Many agents recommend homeowners break out the brushes before putting their property on the market because a good interior and exterior painting job helps to clean up the bumps and scratches that walls endure over the years. Choosing the right color can be intimidating.
If you’re selling, opt for soft whites and creams throughout the home. These tones help make rooms feel bigger, whereas rich and bright colors will dominate and shrink a space. A vanilla style approach also avoids potential objections from prospective buyers who might not like your taste in color schemes. Incredibly, we’ve seen buyers reject perfect homes because they didn’t like the shade in a room. So, keep your paint colors inoffensive when selling. Of course, if you’ve just bought your home or you’re renovating, then you can be a little more expressive. If you struggle with color, an interior designer will be a huge help.
Here are some tips for selecting colors.
- Light it up If you plan to change your home’s lighting design, do this before you paint. That way, you’ll have a more accurate assessment of how each candidate color will impact your home.
- Paint with purpose If you’re testing colors for a wall, then paint on the wall or seek guidance from a painter. Don’t use blank boards and hold them against the wall. (Many people do). The texture of the wall and boards will be different. The saturation of the paint into the surface affects the subsequent impression of color.
- Test different areas If you’re looking to use the same color throughout the home or in multiple rooms, don’t restrict yourself to testing one wall. Try candidate colors in different areas.
- Be brave If you’re going to paint a wall, then it doesn’t matter how many colors you test on it. Eventually, you’ll paint over them anyway. Paint a minimum of one square foot for each color. The larger the area, the better.
- Keep colors together Paint the candidate colors close together on the wall as this will give you a more accurate impression of their impact. Between the colors, leave a small gap to place a piece of white paper between them. The white in the paper acts to balance the impression of each color accurately. It’s an optical illusion and a helpful trick.
- Lay it on thick Apply two coats even when testing. If you’re going to paint new drywall use an undercoat or primer.
- Undercoat tip If you’re in love with bright colors or plan a feature wall, you’ll get the best result on all surfaces by applying a primer or undercoat.
image courtesy of Jessie Pearl
Open House Listings
Thinking about getting out this weekend and checking out an open house or two? You can now find open houses to view in San Antonio and surrounding areas. Our list of open houses come direct from the listing agent’s information and the listings are updated regularly throughout the day and are sourced directly from the MLS information for the property (so you can preview before you even attend the open house).
Plan your weekend house hunting trip during the week using our open house website and as always, please let us know if you’d like any assistance in finding your next home. Happy house hunting!
You can also click the “Open Houses” link in the menu under the “Listings” menu item.
image courtesy of Alex Ermolin
A Bird’s Eye View of 650 Winding Ravine
As 650 Winding Ravine continues to take shape, Stadler Custom Homes has provided us with some new drone footage to share with you. The home, which is being built to benefit the Military Warriors Support Foundation and the San Antonio Food Bank, will be sold with all net proceeds going to these two terrific charities. Kimberly Howell Properties is thrilled to be a part of this project and we’re excited to see the home take shape. The home will be a 4,814 square foot, four bedroom, 3.5 bath contemporary luxury home right in the heart of Stone Oak. There aren’t many opportunities like this left in Stone Oak and with all of the proceeds being donated to worthy causes, this home will be something you can be proud of for many reasons. If you’d like to schedule a tour, please contact Kimberly Howell.
How To Create Real Estate FOMO
This week, we turn the keys over to agent Tatiana Delaserna and let her take over the blog. In this post, Tatiana discusses “FOMO” – we don’t want to spoil her article, but we have to say, it’s a very real thing and we love that she’s teaching her clients about it (and now, we benefit from it, because she’s sharing the knowledge with all of us).
FOMO – “Fear Of Missing Out” is real. It is especially real in real estate and is the reason we often see multiple offers on a freshly listed home. The ability to leverage this emotional response from buyers has never been so powerful as it is today thanks to our integrated world of social media, websites like zillow.com, and instant satisfaction consumers crave on all aspects of life. Because buyers can see in real time when a home hits the market, the idea of “you only get one time to make a great first impression” is more impactful than ever. If a buyer sees a home that looks great on pictures, in an area they have been looking for, and for the right price, they start wondering who else saw it too and the race begins.
Unfortunately, the opposite has also never been more damaging to sellers. When a buyer disqualifies your property, they will never revisit it online (they can block that home permanently!). If they feel it is overpriced, they will save it, and wait on the sidelines to see when seller will drop the price.
The three components of creating the perfect FOMO are visual appeal, being at the right place at the right time, and price.
- Visual appeal – Over 96% of all buyers start shopping online…and they will move on if you do not catch their attention within the first 3 seconds. If they cannot see how great your home is from the pictures, then you may have lost the “perfect buyer.” Taking the time to prepare your home before it hits the market is not a luxury, it’s a must if you want to ignite the desire of buyers. At Kimberly Howell Properties, many of our agents work closely with stagers for this exact reason.
- Being at the right place at the right time – Your property has to be seen by the right people at the right time (when they are in the market to buy!). If a buyer sees your property popping up in all the places she has been looking, the reality that other buyers are seeing it too hits home quickly. Unlike at our favorite clothing store, there is no way the buyer can hide your home behind the out of season sweaters – the only way of hiding it from other buyers is to submit a competitive offer and take it off the market!
- Price – There is that saying, “everything sells…at the right price.” The thing is, many times that “right price” is very different from what a seller has in mind and what the market will bear (what a buyer will ultimately be willing to pay for it). There are several pricing strategies for each seller situation but if we want to create that fear of missing out, there are some time tested principles successful listing agents utilize.
Remember, the biggest enemy of creating FOMO is days on market. The longer you property sits on the market, the less buyers worry someone will come and snag it from them. They have less and less desire to submit a strong offer and start to wonder why no one has bought it yet. It becomes a vicious cycle – they wonder what is wrong with it. Do not let your home become victim of “nobody wants what nobody wants,” let’s work together to create the perfect FOMO storm!
image courtesy of Jesper Sehested and PlusLexia.com
You Passed Your Real Estate Exam – Now What?
Once upon a time, we all started at the beginning, with a fresh new real estate license in our hands and a ton of things to learn in front of us…being licensed is one thing, but becoming an incredible agent takes time. Jessica Flores remembers her days at the beginning and in this post, she speaks to those that are just wrapping up their licensing process and entering the world of real estate for the first time. We’ll step aside and let her do the rest…
Congratulations! You just passed your state and national real estate exam and you are ready to go sell houses. But where do you start?
Well, first off, you are now an independent contractor, but you are required to be sponsored by a broker. So how do you choose your brokerage?
This may seem like an easy answer, but in reality your choice can be the difference between making it or giving up.
There are many brokerages that you can choose to interview with. You should take the time to find out which is the right fit for you. Some questions you may want to ask include: Will training and education be offered? What are office fees, if any? What type of support system is included? What are the commission splits? The answers you receive can help you decide where you will thrive.
Once you have decided where you will hang your license it is time to get to work. This is the hardest part. What you learned in real estate school does not fully prepare you for what you will be doing. What you have seen on the cable TV network shows is even further from the reality of the amount of hard work, hours, and dedication that is needed to become a producing agent.
But don’t let that scare you. If it is something that you really want to achieve then it will require work and often anything of worth requires hard work.
Now, don’t fret, get to work. Go help people to sell their homes and help others make new memories by getting them into their dream home.
image courtesy of j.o.h.n. walker