Rates and Housing Costs Move Lower

Home borrowing costs continue to decline and are now well below the multi-decade highs (8% / 30-year fixed) seen in November 2023, yet well above the lows seen in late 2020 (2.67%). Inflation was one of the main culprits that put rates on a roller coaster ride.

As measured by the Fed’s favorite inflation gauge, the Core Personal Consumption Expenditure (PCE), inflation was 1.55% in December 2020 and jumped to 5.57% in February 2022, pushing home borrowing costs to those multi-decade highs. As the inflation rate rose, so did rates. Why? One factor for lenders is risk as inflation could erode the real value of the money they lend. To compensate for this risk, they increase the interest rates they charge on loans.

What's ahead? Not only has inflation cooled but so have oil prices. High oil prices are inflationary as they cause higher production and transportation costs. As a result, the trickle-down effect results in higher costs for consumer goods. Oil prices have dropped due to concerns that China, the world's biggest crude importer, will decrease its demand in the coming months. Lower demand equals lower prices.

And where the market already knows that the Federal Reserve will cut rates in September it may have already factored it in, it still supports lower borrowing costs ahead.

However, potential buyers still face some headwinds, but they are easing. The inventory of homes for sale on the market is still low but has been improving. If rates can be pushed low enough, it could motivate homeowners locked in at low rates to move so inventory grows considerably to meet demand. Home prices are still frothy but if borrowing costs can continue to decline, that could ease some of the pain.

Bottom line: As the economy continues to slow, the housing environment is improving. There will always be demand for the American Dream of homeownership. It's not an easy task nowadays, but it is reachable.

Source: Mortgage Market Guide

The Rise of Multigenerational Living: Benefits and Challenges of Shared Family Homes

In recent years, multigenerational living has become a growing trend in American households. Whether it’s adult children moving back in with their parents to save money or aging family members needing additional care, more families are choosing to live under one roof. According to the Pew Research Center, over 59 million Americans live in multigenerational homes. But what makes this lifestyle so appealing, and what challenges come with it?

Let’s start by exploring the benefits. Multigenerational living offers several benefits, starting with financial savings. Sharing expenses like mortgage payments, utilities, and groceries can significantly reduce the cost of living for all family members. For many, this arrangement also provides the opportunity to fund higher education, save for retirement, or build a nest egg for future needs.

Beyond the financial perks, multigenerational living can strengthen family bonds. With grandparents, parents, and children all living together, there’s more time for shared experiences and building deeper relationships. The built-in support system that comes from having multiple generations under one roof can also be invaluable, especially for those caring for young children or elderly relatives.

Of course, there are plenty of challenges. Privacy can be a significant concern, as not all homes can accommodate the needs of several adults. According to recent surveys, 62% of respondents cite lack of privacy as a major issue, while 46% struggle to balance different lifestyles and needs. Creating clear boundaries and establishing expectations is essential to maintain harmony in a multigenerational home. Without these, minor disagreements can quickly escalate into larger conflicts, potentially straining family relationships.

So, is multigenerational living right for you? It’s important to weigh the pros and cons carefully and ensure that all family members are comfortable with the arrangement. For those who can navigate the complexities, this lifestyle offers a unique opportunity to strengthen family ties and provide a support system that spans generations.

If you’re considering moving to a multigenerational home, it might be worth consulting with professionals to help you plan and set up your household for success. Depending on your current housing situation, you might enlist the expertise of a real estate agent, home renovation specialist, or insurance agent. Other professionals worth contacting may include a financial planner, attorney, elder care specialist, and family therapist or mediator.

Sources: life as human triton financial group, pewresearch, mpr news, lombardo homes

Sustainable Landscaping: Eco-Friendly Yard Makeovers That Save Water and Money

Transforming your yard into an eco-friendly oasis is a great way to help the environment and your wallet. Sustainable landscaping is all about making smart choices that reduce water usage, lower maintenance costs, and create beautiful outdoor spaces that work in harmony with nature. Here’s how you can get started:

Entryways made efficient: Entryways often lack adequate storage for coats, shoes, and daily essentials. Transform your entry into a functional drop zone by installing hooks and open shelves. Customize these with bins or baskets to sort items by family member or category, keeping everything organized and easily accessible.

Go green with organic mulch. By spreading materials like wood chips, shredded bark, or grass clippings around your plants, you can regulate soil temperature, retain moisture, and suppress weed growth. Over time, this mulch naturally breaks down, enriching the soil and promoting healthy plant growth. For those looking to convert grassy areas into garden beds, try the cardboard method - lay down cardboard to smother the grass, then cover it with mulch. This method prevents weeds and retains water.

Embrace xeriscaping for water efficiency. If you live in an area with limited rainfall, xeriscaping is the perfect solution for a lush yard that doesn’t require a lot of watering. This landscaping technique involves using drought-resistant, regional plants that thrive with minimal water. Incorporate hardscaping elements like permeable pavers or gravel to create an aesthetically pleasing, sustainable design. Another perk of xeriscaping is that it reduces the need for pesticides and fertilizers, as the plants used are typically low-maintenance and naturally resilient.

Plant native species for a thriving ecosystem. Native plants are sustainable landscaping superstars. These plants are adapted to your local environment, requiring less water, fertilizer, and maintenance. By creating a native garden, you’ll also attract beneficial pollinators like bees, butterflies, and hummingbirds, which are crucial for a healthy ecosystem. It will add beauty to your yard and help control pests naturally.

Invest in a smart irrigation system. To make your yard even more water-efficient, consider installing a smart irrigation system. These systems use weather data and soil moisture levels to optimize watering schedules so that your plants get the perfect amount of water. High-efficiency sprinkler heads and underground systems can significantly reduce water usage and costs, making them a smart investment for any eco-conscious homeowner.

By incorporating these sustainable landscaping practices, you can create a beautiful, eco-friendly yard that conserves water, reduces costs, and supports the environment. Your yard will not only look good but also do well, contributing to a healthier planet while saving you time and money in the long run.

Sources: extra space, bhg

QUESTION: Should I buy a newly constructed home or an older property?

ANSWER: A newly constructed home provides a fresh start and minimal maintenance in the early years. You can customize the design, layout, and finishes, tailoring the space to your preferences. New homes often come with the latest energy-efficient materials and technologies, which can lead to lower utility bills and a reduced environmental footprint. Plus, new construction typically comes with warranties, offering extra peace of mind.

However, new construction can be more expensive upfront, with higher purchase prices and the potential for unexpected costs during the building process. Customization options, while appealing, can also add to the budget quickly. Additionally, new homes are often in developing neighborhoods, which might lack the established community feel or mature landscaping found in older areas.

Purchasing an existing home offers the charm of established neighborhoods, often with unique architectural details and mature landscaping. These homes may be more affordable and provide the opportunity to negotiate on price. But, older homes may require more maintenance and updates to meet modern standards. Ultimately, the decision comes down to your priorities, budget, and long-term goals for your living space.

Source: updater, builder trend

The material contained in this newsletter has been prepared by an independent third-party provider. The material provided is for informational and educational purposes only and should not be construed as investment, financial, real estate and/or mortgage advice. Although the material is deemed to be accurate and reliable, there is no guarantee it is without errors.

As your Trusted Advisor, I always want to make sure you are clear on all details of the home financing process. If you or someone you know are interested in purchasing or refinancing a home, give me a call today!

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