{"id":36236,"date":"2023-04-18T15:53:49","date_gmt":"2023-04-18T19:53:49","guid":{"rendered":"https:\/\/www.glensfalls.com\/glensfallsbusinessjournal\/?p=36236"},"modified":"2023-04-18T15:53:49","modified_gmt":"2023-04-18T19:53:49","slug":"business-report-immovable-object-vs-unstoppable-force","status":"publish","type":"post","link":"https:\/\/www.glensfalls.com\/glensfallsbusinessjournal\/2023\/04\/business-report-immovable-object-vs-unstoppable-force\/","title":{"rendered":"Business Report: Immovable Object Vs. Unstoppable Force"},"content":{"rendered":"
\"\"
Steven Luttman, broker\/owner of SJ Lincoln Realty, host of The Expected Returns podcast.<\/figcaption><\/figure>\n

By Steven Luttman<\/p>\n

April 2, 1989 marked a formative day in the childhood of many within a certain age demographic. Following the dissolution of their tag team, Hulk Hogan battled Randy Savage for the world title in what was billed as \u201cThe Mega-Powers Explode.\u201d<\/p>\n

Two icons of the sport engaged in battle, the former relying on brute strength and power while the latter found success with finesse and quickness. It was impossible to imagine either succumbing to the other. Three-plus decades later and this impasse parallels today\u2019s conflict between buyers and affordability within the residential real estate market.\u00a0<\/span><\/p>\n

On one side of the housing equation, you have interest rates. Last March the Federal Reserve announced what would go on to be the first of several increases to their Fed Funds rate. Since then, the velocity in which the cost of borrowing money has risen hasn\u2019t been seen since the early 1980s.\u00a0<\/span><\/p>\n

Many homeowners fortunately saw the writing on the wall, and locked in attractive mortgage payments before the escalation fully got underway. Goldman Sachs now estimates nearly three-quarters of all borrowers have interest rates below 4 percent, and 99 percent possess one below six.<\/p>\n

While this was financially prudent, the corresponding friction it would go on to cause is significant. When considering moving up, downsizing or simply eyeing a change, one of the first factors a homeowner must come to terms with is the idea of trading in a 3 percent mortgage in exchange for the prevailing rates of today which are double that.<\/p>\n

<\/span><\/span><\/span>Consider a $250,000 loan amount. On a 30-year mortgage this change represents an additional $450 of monthly interest required when compared to a purchase made just twelve months ago. This puts sellers in an uncomfortable situation where they could conceivably be priced out of buying a house that is less expensive than the one in which they currently reside. Let that sink in for a moment.<\/p>\n

This is not simply a theory, as we can actually see this playing out in real time. According to The Greater Capital Association of Realtors, February saw 1,426 available homes for sale in our area, a 40 percent reduction from just two years ago. While six months of inventory (how quickly the buyer pool would absorb the current stock given no additional listings) is viewed as healthy, today we have one fourth that amount.\u00a0 \u00a0 \u00a0<\/span><\/p>\n

Employment is not immune from this entrenchment. Real estate data firm ATTOM reported 1.52 million residential mortgages were originated in Q4 of 2022, down 55 percent year over year. A decreasing number of real estate transactions unfortunately leads to a lower number of professionals needed to facilitate them. LoanDepot, Wells Fargo and of course Better.com (whose CEO went viral for how not to lay off workers) together account for thousands of reductions in head count, largely attributed to a slowing real estate market. \u00a0<\/span><\/p>\n

Let\u2019s now touch on prices. While stocks have taken a beating, bond portfolios have been whacked (hello Silicon Valley Bank) and crypto currencies appear to have gone the way of Beanie Babies. Real estate values, on the other hand, have held up relatively well.\u00a0<\/span><\/p>\n

On a national level, the median existing-home sale price retreated 0.2 percent last month compared to the same time in 2022 according to NAR. Looking into the future, a panel of experts recently convened by Forbes expects housing prices to climb 3.5 percent annually from 2024-2027. This would be on par with standard price appreciation seen prior to the pandemic fueled buying spree of 2020-22.\u00a0<\/span><\/p>\n

Locally, things have fared even better, with values increasing 3 percent year over year as reported by GCAR. \u00a0 \u00a0<\/span><\/p>\n

I\u2019ll wrap up today with some strategies you can consider implementing to increase your chances of success. While variable rate mortgages were a bit of a dirty word following the Great Financial Crisis, these days they are very much back in vogue. Depending on the product, you may find this avenue saves you a full percentage point versus its fixed rate counterpart.\u00a0<\/span><\/p>\n

Are you in a position to pay cash? One-third of buyers do not rely on financing, and sellers traditionally prefer offers with as few contingencies as possible. For those willing to put in some leg work, loan assumptions can be extremely powerful. Consult with your attorney and agent, however taking over the current owner\u2019s mortgage versus obtaining a new one could save you thousands of dollars. Finally, consider purchasing a property with potential for rental income.\u00a0<\/span><\/p>\n

Adding homes with 2-4 rental apartments to your search criteria will widen the number of homes available for you to consider, and this additional revenue can often be used to help you qualify for a home loan.<\/p>\n

Time is the great healer of conflict. This holds true for professional wrestling grudges of the 1980s, and for real estate markets of the 2020s. But just like any good storyline, the time frame future events are to transpire over remains unknown. \u00a0<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

By Steven Luttman April 2, 1989 marked a formative day in the childhood of many within a certain age demographic. Following the dissolution of their tag team, Hulk Hogan battled Randy Savage for the world title in what was billed as \u201cThe Mega-Powers Explode.\u201d Two icons of the sport engaged in battle, the former relying […]<\/p>\n","protected":false},"author":89,"featured_media":35207,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9,30],"tags":[],"yoast_head":"\r\nBusiness Report: Immovable Object Vs. 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