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Buckle Up: Home Prices Are Expected To Fall by a Lot—Even If There Isn't a Recession

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The Federal Reserve’s rate hikes slammed the brakes on the housing market and may cause a recession that would lead home prices to plunge.

(Getty Images)

By Clare Trapasso

The U.S. Federal Reserve has completely upended the housing market, taking it from turbocharged to rapid deceleration.

The effects of the Fed's rate hikes in its war against inflation are being felt in just about every crevice of the economy, as recession fears are quickly mounting. The stock market keeps falling, companies are scaling back on hiring or letting workers go, and mortgage interest rates are rising even more than anticipated, causing homebuyers to slam on the brakes.

Home prices in many markets have even begun falling from their peaks. Now, the question is how far they will drop—and what fissures will be opening elsewhere in the economy to propel these changes.

The red-hot housing market will likely “have to go through a correction” as “housing prices were going up at an unsustainably fast level,” Jerome Powell, chair of the Federal Reserve, said in a press conference last week.

While economists debate whether the nation is already in a recession or heading toward a downturn, it’s clear that the housing market has shifted dramatically.

“The Fed is determined to cool inflation, and they’re willing to throw housing under the bus to do so,” says Devyn Bachman, senior vice president of research at John Burns Real Estate Consulting. “When you raise [mortgage] rates to the point they’re at today, it breaks the back of housing.”

A year ago, homes were selling in mere hours as throngs of buyers tried to outbid one another by tens, if not hundreds, of thousands of dollars over the asking price. However, when the Fed began raising its rates, mortgage interest rates also went up, making it significantly more expensive for buyers to afford housing.

So home prices have begun coming down from the summer, and many would-be buyers aren’t purchasing homes. Sellers, realizing they missed the peak, are holding off on listing their homes. Many who need to sell are cutting prices.

“The deceleration in housing prices that we’re seeing should help bring … prices more closely in line with rents and other housing market fundamentals—and that’s a good thing,” Powell said last week. “For the longer term, what we need is supply and demand to get better aligned so that housing prices go up at a reasonable level, at a reasonable pace, and that people can afford houses again.”

Some fear the Fed’s course of action could be too much for the housing market to withstand. Prices have been falling from a peak in June. And while prices are still up from a year ago, many real estate experts predict they’re about to fall much further.

Mortgage rates have more than doubled in the past year, rising from an average of 2.87% this time last year to 6.7% for 30-year fixed-rate loans in the week ending Sept. 29, according to Freddie Mac. Those higher rates have made monthly mortgage payments about 74% more expensive than they were this time last year.

“The housing market is the most interest-rate-sensitive sector of the economy,” says Mark Zandi, chief economist at Moody’s Analytics. “It’s on the front lines of the fallout from the Fed’s efforts to bring down inflation.”

Buckle up: Home prices are expected to fall

Home prices are expected to fall—whether the nation succumbs to a recession or not. Buyers simply can’t afford the giant price tags plus the highest mortgage rates in 15 years.

“There’s going to be a coast-to-coast downturn in the housing market. It’s going to be brutal,” says Zandi. “No part of the market is immune.”

Places that experienced the biggest run-ups in prices during the COVID-19 pandemic, with the most investors bidding them up further, will see the steepest declines, say real estate experts.

Vacation areas will likely see larger declines as fewer buyers are likely to buy second homes during an economic downturn. Areas with a lot of new construction, smaller cities, and farther-out suburbs could also take a big hit.

“Pricing declines are going to happen, likely in the double-digit range,” says Bachman of John Burns. “We may see pricing corrections that are similar to those that occurred during the great financial crisis in certain markets.”

She expects markets like Austin, TX; Boise, ID; Phoenix; Salt Lake City; Riverside, CA; and Sacramento, CA, to be affected.

Zandi believes home prices will fall about 10% nationally over the next 12 to 18 months if the country avoids a recession. If one happens, he anticipates price declines could approach 20% from peak to trough in 2024.

“Prices have to come down quite a bit to make it affordable with these mortgage rates,” says Zandi.

They won’t come down immediately.

Sellers won’t drop prices unless they have to—especially as they watched their neighbors’ homes sell for record prices just a few months earlier. While about 19.5% of sellers cut prices in September, a percentage that has steadily been ticking up, the majority of sellers have held firm.

“Sellers are looking at prices from six months ago [but] buyers can’t afford those prices,” says Ron DeVries, senior managing director of Integra Realty Resources, a market research provider for commercial real estate. “There’s going to be a disconnect for a while.”

That disconnect is already resulting in fewer home sales—which experts believe will continue as the uncertainty in the economy grows. Existing-home sales, which exclude new construction, plunged 19.9% in August compared to the same time a year earlier, according to the most recent National Association of Realtors® data.

“It makes less sense to buy a home,” says Zandi. “House prices are high, mortgage rates are high, and there’s no inventory. And now people are worried about their jobs.”

Don’t expect more homes to go up for sale

The silver lining for buyers grappling with higher prices and rates has been more homes are now on the market. Inventory was up 26.9% in September compared to the same time last year, according to Realtor.com® data.

However, like everything else in the housing market, it’s a double-edged sword. It’s not that sellers and builders are putting more homes up for sale—they’re doing the opposite at the moment. It’s that homes aren’t selling as quickly, so what’s been listing is sitting longer, boosting inventory.

In fact, new listings were down 9.8% year over year in September.

Sellers know they’ve missed the peak of the market. Plus, most sellers are also buyers. Those who locked in lower mortgage rates will be reluctant to give those up to buy a new home as they could wind up paying a lot more for a lot less. That narrows the seller pool down to those who need to move.

“The reason why people do make a trade is generally because they have to,” says Jessica Lautz, NAR’s vice president of research. “If someone has a new job and they have to go into work or they have a growing family and they need more space that’s going to a bigger motivating factor than [mortgage] interest rates.”

Don’t expect another wave of foreclosures

However, there are still more people who need homes than there are homes to go around.

Rents are high and rising pushing more people into the for-sale market. And most real estate experts don’t expect another flood of low-priced foreclosures and short sales to hit the market, as they did in the housing crash.

Just 1% of realtors worked with a client going through a foreclosure or short sale in the last month, according to National Association of Realtors® data. However, 49% of realtors worked on these sales in March 2009.

“We’re in a completely different environment today,” says NAR’s Lautz.

Much of this is due to lenders only giving mortgages to the most qualified borrowers and the eradication of the really bad subprime loans that got borrowers in trouble during the Great Recession. Even if Powell’s projections are correct and unemployment rises from 3.7% in August to 4.4%, another tsunami of foreclosures is unlikely.

But if unemployment rises, fewer people will buy homes.

“If you think there’s a chance you’ll lose your job in the near term, you’re not going to run out and buy a house,” says Integra’s DeVries.

The one bright spot for the housing market is if the nation does fall into a recession, the Fed is likely to cut rates again to stimulate the economy. That’s likely to lead mortgage rates to fall again.

“Whether we go into a recession or not, it’s going to be uncomfortable,” says Zandi.

 

Clare Trapasso is the deputy news editor of Realtor.com where she writes and edits news and data stories. She previously wrote for a Financial Times publication, the New York Daily News, and the Associated Press. She also taught journalism courses at several New York City colleges.

 

Landscape and Garden Edging Ideas That Make Your Yard Look Sharp

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Use these stone and brick garden edging ideas to lend character, definition, and texture to your landscaping beds.

By Viveka Neveln

Brick Garden Edging

 

Brick is a common landscape edging choice: It's classic, widely available, and relatively inexpensive. Push bricks tightly together to minimize spaces between them that turf can slip through. To prevent heaving and unevenness in your garden edging, set your bricks in a bed of sand.

Note: If you set the brick just above the soil, you can use it as a mowing strip, running your lawn mower's wheel right over the brick. This eliminates the need for trimming.

 

Diagonal Brick Garden Edging

Lay old, mismatched bricks on the diagonal for a 19th-century domino effect in your garden edging. Dig a trench and add several inches of sand for drainage so the bricks don't heave. Set the bricks in the trench, half exposed, leaning tightly one against the next, then fill in with soil. If you are edging several garden beds, lean all the bricks in the same direction.

Cast Concrete Edging

Concrete garden edging eases mowing, and its serpentine shape creates a winding path through the landscape shown here. Varying heights add interest and allow for a smooth transition on a slope or uneven landscape.

Flagstone Garden Edging

Edging your landscaping garden beds with flagstone lends a classic look that's particularly well-suited to country and cottage gardens. Flagstone is available in a number of colors and thicknesses so you can easily use it to coordinate or contrast your plants, other stonework in the landscape, or even stonework on your house. Irregular in shape, flagstones are durable and stack securely in the yard.

Rock Garden Edging

Mix and match rock shapes and colors for a natural stone garden edge. Large multicolor rocks complement this landscape's informal style. Positioned in a winding pattern, the round boulders allow sweet alyssum to creep over and between the rocks, creating a lacy, scalloped look in this landscaped flower bed.

 

Cobblestone Garden Edging

Square cobbles of granite garden edging combine with a hedge of Korean boxwood to give this landscape shape. 'Annabelle' and oakleaf hydrangeas add billowing blooms of white, their large leaves contrasting with the textures and shapes of the paving, edging, and hedge.

Garden Edging with Plants

Low, mounding plants can be a fantastic landscaping garden edging choice. When planted in one long mass of draping color, low-growing plantings of sweet alyssum (shown here), veronica, bouncing bet, artemisia, coralbells, or candytuft soften hard edges and add a splash of color.

 

 

Fall Lawn Care Tips to Take Your Yard to the Next Level

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There's more to maintaining a beautiful yard during autumn than simply raking up dead leaves, and these steps will ensure your yard not only survives but thrives during the colder months ahead.

CREDIT: SCHULZIE / GETTY IMAGES

By Emily Goldman

Fall denotes beautiful rich-hued foliage and crisp, cool temperatures, but with this change in weather comes a change in your yard's needs. "After a long summer of pets, kids, and searing heat, your lawn can be left looking battered and worn, which is why the fall is the perfect time to repair it," says Brian Parker, senior live goods merchant at Home Depot. "The maintenance that you perform in the fall can help sustain your lawn's ongoing health throughout the year." But when is the time to start preparing your yard for cooler temperatures? 

According to Steven Schwager, landscaping manager at Cornerstone Sonoma, it's best to start adjusting your lawn care for fall once the heat of summer is over. "The more time you have to prepare the lawn for winter dormancy, the better the lawn will look in the spring. The objective is to create strong and healthy roots," he says. But there's more to getting your yard ready for fall than simply raking up your leaves—you must also mow, aerate, fertilize, and water it. 

Aerate Your Lawn 

Let your lawn breathe. According to Parker, your soil may be compressed from rainfall during the previous seasons, which is why it's important to aerate it. If you don't own an aerator, he recommends renting one. "Holes formed from aerating will provide room for water, air, and fertilizer to travel deeper into the soil. This important step will help your lawn look lush and healthy by spring," Parker says. 

We suggest using a power aerator or star-wheeled cultivator to till the target area to a depth of about 1/4-inch. Then, lightly coat the area with fresh soil, and sprinkle grass seeds to match the surrounding grass. Sow about 15 seeds per square inch (check the seed-box label for application rate). Till once again and tamp lightly with your foot to get good seed-to-soil contact. Use bamboo stakes or bent twigs to mark newly seeded areas, and water well.

Rake Your Leaves 

While it may be tempting to let leaves accumulate on your yard, actively raking them is an important step to mark off your fall lawn care checklist. "I know that raking up the leaves isn't the most glamorous task, but it really is important so that your lawn can continue the photosynthesis process of absorbing the sun's rays to keep healthy and green." says Ryan McEnany, public relations and communications specialist for Bailey Nursery. "Just like the plants in your garden, the grass needs to continue seeing that sun to be healthy in fall and again next spring." Raking leaves also exposes your grass to the air, Schwager notes, which helps it prevent diseases like mold and fungal infections. 

Mow Your Grass 

During summer it seems like you can't go more than a few days without needing to mow your grass, but as temperatures drop, growth slows. However, this doesn't mean mowing should cease. "Your lawn needs to be mown as long as it's actively growing," Schwager says. "Depending on the weather, that may extend well into fall." Trimming your grass also helps protect it from diseases as it allows more air to reach the soil. "Shorter lawns also typically use less water and encourage better root development," Schwager says. 

Trim Your Trees 

Cutting back small amounts of your shade and ornamental flowering trees will be important, too. "Trim shade and ornamental flowering trees to prevent branches from falling on your lawn or garden due to wind or heavy snow," Parker says. "By pruning dead limbs you're preventing the hazards a fallen branch may bring to the home." He recommends cutting close to the trunk, but not flush with it, so as not to cause even more damage in the future.

Lay Down Mulch 

Protect your trees from the harsh conditions that winter brings by starting prep during the fall. "Adding mulch around the base of trees and plants can help prevent them from freezing once winter comes," says Parker. Looking ahead to next spring, fall is a good time to add mulch to any garden beds you might want to expand in the new year. "Planning ahead will guarantee that the soil is free of unwanted growth once the ground is warmer and ready for planting," he explains.

Be Sure to Fertilize 

Help your grass build up strong and healthy roots by fertilizing it as part of your fall lawn care. "Use a slow-release fertilizer that has a high concentration of nitrogen; it's the first number on the N-P-K ratio listed on each bag," says McEnany. "Nitrogen is the element that encourages green growth, so it's key for turf development." 

When to Fertilize 

He recommends giving one application of fertilizer in early autumn— which helps plants reestablish their root systems that may have suffered during summer— and another application a couple of months later. Fertilizing twice will help your grass store energy for next spring and break down any mulched leaves from the fall months. 

Hand Fertilize Near Plants 

McEnany cautions against fertilizing a lawn right next to a garden bed of blooming shrubs. "High-nitrogen fertilizer is intended to promote green growth, so it can slow flower development," he says. "In this instance, hand-fertilize as you near the flower bed versus a broadcast application, and then give your flowers a bloom-boosting fertilizer that's higher in phosphorus to push out those flowers."

Watering Is Still Important 

Your plants still need water, so don't forget to give them a drink just because it's cooler out. "Also, like your garden, continue watering the lawn until frost," says McEnany. "It will not need as much water as you give it in the summer, but it's important to keep the soil evenly moist until frost hits and the lawn goes dormant." Schwager says you'll know your yard is ready for watering when you poke your finger a couple of inches down into the soil and don't feel moisture. "Most lawns will look a little drab when they're thirsty, but some people have trouble noticing this change in color," he says. 

Fill in Dead Patches 

Fall is a good time to care for thinning and dead patches of lawn that may have occurred until the hot sun during summer. "The soil is still warm enough that the seed will germinate quickly, and the new grass plants will appreciate the cooler temperatures and higher levels of moisture usually associated with fall weather," Schwager says. "Your lawn will have a jump-start next spring with the new grass already somewhat established." 

Store Items Like Lawn Furniture 

Preparing your lawn for the upcoming winter is pivotal in ensuring the safety of you and your plants. Winter storms can be brutal, so returning tools and lawn furniture inside or to a shed can save you time and money in the long run. "Clean, repair, and put away any lawn furniture," says Parker. "Close down and drain fountains, and water features before freezing temperatures arrive." It's also important to drain and store hoses and sprinklers in the fall, too. Clean and put away garden tools and prepare mowers and other lawn care equipment for the winter. Also, don't forget about your warm-weather plants. "Store or cover pots and planters that might crack in freezing rain or ice," he says.

 

She joined the Martha Stewart Living team in 2020 as a digital editor for MarthaStewart.com, with a focus on SEO, touching on all verticals across the website.

4 Surprising Reasons Homebuyers' Real Estate Deals Fall Through Today: Could Yours Be Next?

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Home sale contracts are falling through at the highest rate since the start of the COVID-19 pandemic. Why is this happening—and what can you do to make sure that your own real estate offer doesn’t crash and burn?

Here are some of the reasons deals are collapsing right now, and what to do to help prevent this from happening to you.

(Getty Images)

By Kimberly Dawn Neumann

Owning a home is the American dream, but at the moment it’s more like homebuying cancel culture.

According to a 2022 survey by home warranty site Cinch Home Services of 1,000 Americans who have tried to buy or sell a home in the past year, more than half of buyers (51%) say they had a home purchase contract fall through in that time period.

1. Rising interests rates cause financing to fall through

When buyers first start looking for a home, they often dutifully check into mortgages to figure out how much home they can afford. The problem? In a mere year’s time, interest rates have nearly doubled—from the low 3% range in 2021 to the 6% range today.

As a result, buyers might not be able to borrow as much now. In fact, the Cinch survey found that 42% of buyers who had to pull out of home deals did so because their mortgage did not come through.

“Many homebuyers may have gone through the pre-approval process back in early 2022 or even 2021, but continually lost out on homes during bidding wars,” says Elizabeth Sugar Boese, a real estate agent with Coldwell Banker Realty in Boulder, CO. “So while shopping in today’s market, they may be putting offers in at a price point they qualified for months ago.”

Jason Gelios, author of “Think Like a Realtor” and a real estate agent with Community Choice Realty in Southeast Michigan, says mortgage approvals often fail at the finish line when a homebuyer is attempting to purchase a home in the higher range of their approval amount.

“When the interest rates rise, it causes the buyer to no longer be approved for the amount of home they are purchasing,” explains Gelios. “For example, if a homebuyer is maxed out on their approval at, let’s say, $250,000, and the increase in interest rates has them now being approved for $230,000, they will no longer be able to get a $250,000 loan.”

What to do: Make sure to lock in a low interest rate before you start home shopping. But if that doesn’t work, try looking at different loan options to see if you can find one that still works for your deal.

“We have been able to protect the interests of a few buyers recently by talking to their lenders about different loan products,” says Jeffrey Mistretta of EXIT Realty in Smithstown, NY. “As an example, FHA loans, which are government-backed, still remain in the mid to low 4% range.”

Also, see if you can figure out how to lower your interest rate by paying upfront for points.

“In some cases, we were able to consult with buyers and determined, in conversation with their lender, that they were able to use some of their down payment funds and reallocate it to buy down their interest rate,” says Mistretta.

Last but not least, buyers should check in with potential lenders every 30 days to keep their borrowing estimates accurate.

“This helps buyers to find out what they are currently qualified for,” says Boese. “They should also talk with their lender about an estimate for their monthly payments.”

2. The house doesn’t appraise for what the buyer offered

Another scenario that homebuyers may encounter in today’s inflated real estate market is that they’re forced to pay way over the asking price to get the house. Yet, once the lender sends an appraiser to deem how much they think the house is worth, the appraisal comes in lower than what the buyers had offered.

According to the Cinch survey, 35% of property purchases fell through because of appraisal problems.

This happened recently to real estate broker Debbie Murray, of Allie Beth Allman & Associates in Dallas.

“My buyers had won a bidding war against 19 other people, coming in with an offer way over the list price,” she says. But then the house didn’t appraise for that amount, and the buyers had to cough up an additional $50,000 in order to close the deal.

“The appraiser would not back down,” says Murray.

Statistics from CoreLogic showed that in May 2021, 19% of home purchase transactions had a contract price above what the home appraised for, which is unsurprising since the market has been so hot.

What to do: Before you get into a bidding war, keep in mind how far above the purchase price you think you can go and still cover the mortgage if the house doesn’t appraise for that amount.

“While sales are collapsing, we are still in an inventory shortage in many markets, and as a result, prices in most markets have continued to increase,” says real estate agent and lawyer Bruce Ailion, of Re/Max Town & Country in Atlanta.

In other words, try not to bid over your head. And if the appraisal comes back too low, you can also ask the sellers if they’ll renegotiate a lower sales price.

3. Buyers have racked up too much debt

We get it, times have been tough—and with the currently high inflation, it’s easy to just put purchases “on a credit card” and worry about it later.

But if you’re a potential homebuyer, you need to keep an eye on your debt-to-income ratio. Your DTI ratio calculates how much you owe each month versus how much you earn. Specifically, it’s the percentage of your gross monthly income (before taxes) that goes toward payments for credit cards, car loans, college loans, and yes, mortgages. The lower your DTI, the less of a risk you are to lenders and the more you can borrow.

“Mortgage lenders calculate the DTI percentage when they look to approve someone for a maximum amount—most of the time it’s 43% to 45%,” says Gelios. “For example, if someone makes $2,500 a month in gross income, they can’t have more than $1,125 in monthly debt showing on their credit report.”

What to do: Though it’s tempting when money is tight to just pay the minimum on your credit card and let balances go up, a better move for homebuyers is to try to get their other debts down before applying for a mortgage. And don’t buy a bunch of big-ticket items while home shopping, as this will negatively affect your DTI.

You might also want to weigh whether, in today’s uncertain economy, you feel financially secure enough to buy a home.

“Some home shoppers are interested in buying a home, but feel a bit uneasy about the state of the economy and their job security,” says Ali Wolf, chief economist for Zonda. “Consumers are also wondering if it might make more sense to wait on a purchase until we get more certainty about how the housing market progresses.”

In uncertain financial times, it’s always wise to shore up your emergency fund for life’s curveballs. And if you do decide to move forward on your house hunt, aim for properties comfortably within your budget.

4. Home prices have dropped—and buyers have found a better deal

While most failed real estate deals today occur despite a buyer’s wishes, in certain cases, buyers are actually decidingto back out. According to the Cinch survey, 23% of buyers have pulled out of a contract, and the reason might surprise you: They found a similar house at a lower price.

“The real estate market slowed recently from red-hot levels of activity to a more sustainable pace of activity, resembling the 2018, 2019 housing markets,” says Wolf. “The housing market has finally tilted to be more friendly to buyers after two years of the ultimate seller’s market.”

As a result of this shift, buyers who’ve recently gone under contract for a home at a highly inflated price may now realize that their property’s value has dropped significantly before they even close. This definitely has some buyers questioning their bids, and in some cases looking for better deals.

What to do: Buyers already under contract in a declining market have several options, says Ailion. First, they can seek a reason to terminate the contract without penalty. For example, there might be a title, condition, financing, or appraisal contingency with a way out. You can also negotiate a lower home price with the seller. Barring that, if the property’s value has declined more than the earnest money deposit, then walking away may actually make financial sense as well.

Also, Wolf suggests that buyers may wish to look at purchasing new homes from homebuilders. According to Zonda, 46% of homebuilders in the U.S. reported an increase in contract cancellations from July to August. As a result, builders may be more willing to negotiate with homebuyers right now than at any point in the past few years; some are even offering to help pay down mortgage rate interest points to help buyers qualify.

 

Kimberly Dawn Neumann, who is based in New York City, is an author, performer, and fitness professional.

The Earnest Money Deposit: How It Helps Buy a Home

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What is earnest money? Depositing earnest money is an important part of the home-buying process. It tells the real estate seller you’re in earnest as a buyer, and it helps fund your down payment.

However, the earnest money check is different than the downpayment. It is typically cashed and held in a title company trust account, or in the broker’s escrow company account. You get a receipt from your brokerage when you hand in the earnest money.

(aydinmutlu/iStock)

By Angela Colley

Without the requirement of earnest money, a real estate buyer could make offers on many homes, essentially taking them off the market until they decided which one they liked best. Sellers rarely accept offers without the buyers putting down earnest money to show that they are serious and are making the offer in good faith.

Assuming that all goes well and the buyer’s good-faith offer is accepted by the seller, the earnest money funds go toward the down payment and closing costs. In effect, earnest money is just paying more of the down payment and closing costs upfront. In many circumstances, buyers can get most of the earnest money back if they discover something they don’t like about the home.

How much should you put down in the earnest money deposit?

The amount you’ll deposit as earnest money will depend on factors such as policies and limitations in your state, the current market, what your real estate agent recommends, and what the seller requires. On average, however, you can expect to hand over 1% to 2% of the total home purchase price.

In some real estate markets, you may end up putting down more or less than the average amount. In a market where homes aren’t selling quickly, the listing agent may note that the seller requires only 1% or less for the earnest money deposit. In markets where demand is high, the seller may ask for a higher deposit, perhaps as much as 2% to 3%. Your real estate agent may recommend that you are more likely to win a bid if you give the seller a large deposit. In fact, the seller may be willing to negotiate on the purchase price a little if you make a bigger good-faith deposit.

On the other hand, you may not want to put too much earnest money down. Coming up with that much money, and losing the use of it for weeks or months before the sales contract closes, may not be the best use of your cash.

However, you may wind up having to do some paperwork for your mortgage lender, and the bank may want to verify the source of the funds for larger deposits of earnest money. It won’t be a problem if you can show that you’ve had the money for at least 60 days.

When do you make an earnest money deposit, and who holds it?

In most cases, after your offer is accepted and you sign the real estate purchase agreement, the contract stipulates that you give your deposit to the title company. In some states, the real estate broker holds the deposit.

Always check the credentials of the title company or real estate broker taking the deposit, and verify that the funds will be held in escrow. Never give the earnest money to the seller; it could be difficult or impossible to get it back if something goes wrong.

After turning over the deposit, the buyer’s funds are held in an escrow account until the home sale is in the final stages. Once everything is ready, the funds are released from escrow and applied to your down payment.

Can you get your earnest money deposit back?

If the real estate transaction falls through, a small cancellation fee is usually taken out of your earnest money deposit, but the remainder remains in escrow. Whoever holds the deposit determines whether you should get the earnest money back under the terms of the purchase and sale contract. Make sure that the purchase agreement covers how an earnest money deposit refund is handled.

To be on the safe side, make sure the purchase agreement contains contingency addendums that stipulate how a refund is handled (e.g., an inspection contingency protects the buyer if the real estate fails a home inspection). Buyers can also usually get their earnest money back if they find problems with the property, or if they are unable to get title insurance.

A financing contingency ensures that the earnest money is refundable and the buyer can get out of the transaction if he cannot get financing. Keep in mind that a pre-approval from a lender does not guarantee a borrower can get a loan at mortgage rates he can afford. Even if a buyer has a good credit score and is pre-approved for a mortgage loan, the lender can still turn him down  based on unforeseen factors such as the appraisal amount being too low. In such cases, a standard contingency allows buyers to renegotiate the purchase contract, or get their money back.

Updated from an earlier version by Laura Sherman.

 

Angela Colley writes about real estate and all things renting and moving for Realtor.com. Her work has appeared in outlets including TheStreet, MSN, and Yahoo.

Will Home Prices Drop? Will Mortgage Rates Rise? What To Expect in the Fall Housing Market

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Buying a home has never been easy. However, over the past few years, the process has become truly herculean as buyers have been pushed to emotional and financial limits. Sellers, on the other hand, largely have been able to sit back and enjoy the ride, which has typically culminated in a massive payday.

(Getty Images)

By Clare Trapasso

The housing market has shifted dramatically over the past few months. Higher mortgage rates have thinned the pool of buyers, begun to rein in runaway home prices, and forced many sellers back to the negotiating table. The changes are leading buyers and sellers to wonder who has the upper hand these days.

So as real estate continues to cool along with the weather, what do we know about this year’s much anticipated fall housing market?

“The housing market is going to continue to be in an adjustment period as buyers and sellers try to figure out what’s ahead,” says Realtor.com® Chief Economist Danielle Hale. “The economy is at a turning point, and that’s going to result in uncertainty among buyers and sellers. People are more worried about a recession than they have been.”

She anticipates buyers will have more opportunities and less competition this fall to purchase homes. There will be more homes for sale as many properties sit on the market longer. Buyers won’t have to submit offers within hours of touring a home, and they will be able to insist on inspections and other common-sense contingencies. In many markets, they won’t even have to offer more than the asking price—and may even be able to negotiate a lower price.

However, home prices and mortgage rates—the latter of which has more than doubled in the past year—are expected to keep rising, leaving buyers this fall saddled with significantly higher monthly payments than they would have had earlier this year. And buyers shouldn’t expect a large influx of homes to hit the market to provide any relief.

“The fall housing market is still going to be challenging for buyers and sellers,” says Ali Wolf, chief economist of real estate consultancy Zonda. “Buyers have more options than they did at the beginning of the year, but someone who is looking for homes won’t be flush with options.”

Mortgage rates will likely continue to rise

The fate of the housing market this fall, and what ultimately happens with prices, will largely depend on mortgage rates. They are now the highest they’ve been since 2008 and more than double what they were just a year ago, according to Freddie Mac. Rates hit an average of 6.02% for 30-year fixed-rate loans in the week ending Sept. 15—up from 2.86% a year earlier, according to Freddie Mac.

Mortgage rates are likely to keep rising as the U.S. Federal Reserve continues hiking its own rates to fight inflation. Mortgage rates generally follow a similar trajectory.

Each additional percentage point can make monthly mortgage payments significantly more expensive and add tens of thousands of dollars over the life of a 30-year loan. Today’s buyers are paying about two-thirds more each month for the same house than they would have a year ago, thanks to a punishing combination of higher rates and prices.

“Rates are not likely to fall in the near term and could even increase,” says Len Kiefer, deputy chief economist at Freddie Mac.

The good news for buyers is rates vary tremendously based on the loan and the lender as loan officers compete for business. That presents opportunities for savings.

“It may benefit a borrower to consider shopping around,” says Kiefer.

Will home prices go down?

Those hoping for another housing bubble to pop—and home prices to plummet—shouldn’t hold their breath.

Another crash doesn’t look likely. But while it still costs more to buy the same home today than it did a year ago, price growth is going down as mortgage rates have ratcheted up. Higher mortgage rates mean that buyers have less money to spend on homes, creating a sort of cap to keep prices in line with their budgets.

“Prices will decline a little bit more than what would be common seasonally,” says Hale. “But they’ll still be higher than what they were a year ago.”

While home prices could actually fall, “the deck is stacked against” this happening, says Hale. There aren’t enough homes for sale for everyone who wants one. Rents are also rising, making the prospect of locking in a fixed mortgage payment especially appealing.

Many real estate experts consider the days of endlessly skyrocketing home prices to be over. Instead, they expect prices will flatten out this year, and could even dip a little in 2023. Buyers are already slamming the brakes in the most overheated markets, where prices rose the most at the fastest clip. (Think the Southwest and Mountain West, like Austin, TX; Phoenix; and Boise, ID.)

“We are due for home prices to come down a bit. That’s not a crash,” says Zonda’s Wolf. She predicts prices will fall 5% to 10% nationally, although the drop will vary market to market.

“Over the next couple of years, some of the frothiest markets may see price drops that may look more like 20% down,” she adds.

Sellers have already begun reducing their prices in earnest, and builders are offering all kinds of incentives to lure buyers. About 19.4% of sellers were forced to cut their list prices in August—up from 11% a year earlier, according to Realtor.com data.

Now that the market has cooled, most sellers are no longer receiving 15 offers, all above the asking price, half in cash with no contingencies within hours of putting their homes on the market. Instead, bidding wars have died down as the number of buyers in the market has fallen.

“If someone is trying to buy a renovated home in a great school district, the housing market is still extremely competitive. And you should still expect to go through a bidding war,” says Wolf. “But if the home needs a little bit of work, is not in the best neighborhood, or is priced high, then buyers are not going to find a bidding war. [They] may be able to negotiate down the price or not waive contingencies.”

Don’t expect a surge of homes to go up for sale

While buyers have more negotiating power than they’ve had in years, they shouldn’t get their hopes up that there will be an influx of homes going on the market this fall.

More “For Sale” signs went up in late spring and summer as sellers attempted to cash in while they could. However, there’s less incentive for them to list their properties now that the market has cooled and homes are no longer going under contract in just a few days.

“That big shift in inventory that helped shift the market in a buyer-friendly direction has lost some momentum,” says Hale. “We’re not seeing as many homeowners decide to sell.”

Of course, most sellers are also buyers—and it’s a tough road for that group. So plenty of sellers are choosing to stay put.

“It’s harder to make that math work out on moving because the costs are so much higher than they were,” says Hale. “If you have to take a new mortgage, it’s obviously going to be a lot higher today.”

Few homes and high costs mean fewer home sales going forward. Some would-be buyers may prefer to wait to see if prices fall or the nation heads into a recession. Others are simply priced out.

Mortgage applications to purchase homes were down 28.6% year over year in the week ending Sept. 9, according to the Mortgage Bankers Association. That lack of buyers will help to turn the pendulum in their favor.

“In the fall, we’ll see the return of a buyer's market in some metros across the country. In other markets, it’s still more buyer-friendly,” says Zonda. “You don’t have to make an offer the day the home is listed. You don’t have to offer over the asking price. And you don’t have to give up your first-born child.”

 

Clare Trapasso is the deputy news editor of Realtor.com® where she writes and edits news and data stories.

 

Economists Have a Strange New Buzzword for the Housing Market That Will Shock Buyers and Sellers

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(MLS via Realtor.com)

By Judy Dutton

The housing market has been called plenty of things this summer: red-hotinsanebrutal. But the latest word du jour to describe the state of real estate today is almost shocking in its tepidness: balanced.

This term cropped up most recently in an analysis by Realtor.com economist Jiayi Xu, who notes, “Our weekly data suggests that the U.S. housing market keeps progressing toward a more balanced market.”

Many economists of late have remarked on the market’s more even-keel turn.

“Selling prices will level out as the market cools but this cooling is just a return to the type of balanced market that has been absent the past couple of years.”
– Greg McBride, chief financial analyst at Bankrate

“What goes up, must eventually moderate… As some buyers pull back from the market due to affordability and supply constraints and as new construction adds more supply, house prices will moderate, resulting in a more balanced housing market.”
– Mark Fleming, chief economist at First American

“The early 2022 enthusiasm that homeowners had toward selling is evaporating as the housing market rebalances.”
– Danielle Hale, Realtor.com chief economist

But what does a balanced housing market actually look like—and mean—for buyers and sellers?

In a nutshell, “balance” means that the raging seller's market that’s dominated since the COVID-19 pandemic is slowly shifting—not into full buyer's market territory, but toward a middle ground that puts buyers and sellers on more even footing.

But there’s more to it than just that, and our weekly column “How's the Housing Market This Week?” can help shed light on these nuances by delving into the latest real estate statistics for the week ending Aug. 20.

Here’s what balance looks like—in terms of home prices, number of new listings, and more—so both buyers and sellers can better navigate this new normal of real estate today.

Homes are lingering on the market longer

Over the past two years, the pace of real estate sales has sped up significantly. Nationally, homes are on the market a median 35 days before getting snapped up. But this rush is waning.

For the week ending Aug. 20, properties spent four extra days on the market compared with this time last year.

“For a fourth week in a row, homes are sitting on the market for a longer time than last year,” adds Xu. “As both buyers and sellers adjust to the rebalancing market, expectations shift, reducing the sense of urgency in the market and reinforcing the trend toward longer sale timelines.”

Home sellers are less eager to list

While today’s homebuyers are less gung-ho to sprint to the closing table, home sellers are also dragging their feet to the market. For the week ending Aug. 20, the number of new listings dropped by 12% from a year earlier.

“This week marks a seventh straight week of year-over-year declines in the number of new listings coming up for sale, and a second consecutive week with double-digit declines,” notes Xu.

This newfound reluctance to list not only means buyers have fewer fresh listings to peruse, but it could also throw the market’s rebalancing progress off-kilter.

“This pullback from sellers could slow the speed at which the housing market rebalances,” says Xu. “Buyers looking for more bargaining power may need patience.”

Home prices are still high

The deep irony in listing skittishness is this: Sellers still stand to make bank, since home prices continue to soar through the roof.

Currently, property asking prices clock in at a median of $449,000 nationwide. And for the week ending Aug. 20, home prices shot up by 14.4% over that same time period last year.

To give you a sense of how far this sum has come, prices have climbed by double-digit percentages for 36 weeksstraight. As Xu points out, “Home equity remains at a record high.”

But the clock seems to be ticking, which means there’s some good news for buyers, too: Despite high home prices, Xu says, “more of the usual seasonal price slowdown is ahead.”

Mortgage rates are up

For the week ending Aug. 25, the average 30-year fixed-rate mortgage shot up to 5.55% from the previous week’s 5.13%, according to Freddie Mac.

This is grim news for buyers, since it means that financing a home today is much more expensive than it was a year earlier. As Xu puts it, “The costs of purchasing today’s typical home [is] up more than 50% compared to a year ago.”

And perhaps herein lies the reason behind sellers’ growing reluctance to list: If they have to buy a new home, it means they’ll have to lock in a new loan at today’s higher interest rates, which could quickly eat away at any windfall their home sale may bring. And so, as Xu points out, with “nearly three-quarters of today’s potential sellers also planning to buy another home, it seems that more homeowners are deciding to stay put.”

And maybe that’s not such a bad idea. Moving is not a process to be rushed, and a more deliberate, level-headed, and balanced housing market may do us all a world of good.

 

Judy Dutton is Executive Editor at Realtor.com covering news and advice about personal finance, homebuying, selling, decorating, and all things real estate.

You Won't Believe What Homeowners Are Doing to Their Bathrooms Today—and What They Pay

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Sure, money’s tight, but home improvements still aren’t completely stalled. Here’s what’s hot right now in bathroom remodels.

By Jennifer Kelly Geddes

Even though inflation has been sending prices soaring through the proverbial roof, homeowners are still willing to dig deep into their wallets to upgrade their bathrooms.

The 2022 U.S. Houzz Bathroom Trends Study polled more than 2,500 homeowners who renovated their bathrooms in July of this year. And the results shed some surprising light on what people are changing—and how much they’re paying.

Per the report, the national median spent for primary bathroom remodels increased nearly 13% this past year, to $9,000. But it’s the bigger projects that left our heads spinning. Higher-budget projects, at the top 10% of spending, leapt 17%, to $35,000!

Marine Sargsyan, Houzz staff economist, notes that bathrooms have always been popular renovation targets, so it’s not surprising that homeowners are “doubling down on their investment in these private sanctuaries.”

And inflation won’t scare someone who wants a swankier loo.

“While the cost of products and materials has increased due to inflation and supply chain disruptions, renovation activity remains strong, propped up by high home equity,” Sargsyan adds.

Curious about what your friends and neighbors are actually doing in (and to) their bathrooms? Here’s a peek at what’s trending now in these room renovations.

Way bigger showers

Photo by Restructure Studio

Shower upgrades have consistently been super popular—and the numbers kept climbing this year, to 84%, which is up two percentage points. And for those who removed their bathtubs, 78% of folks made the shower larger, often by 25%.

“Showers are more functional so more space makes sense,” says Khari Washington, a real estate broker with 1st United Realty in Riverside, CA.
“Plus, it’s a good move for resale since few buyers need a tub but most fall in love with extensive showers.”

And depending on the bathtub and showerhead specs, showers are better for water conservation, he adds.

Vanities get some love

Photo by Kimberly Demmy Design 

A crummy-looking vanity can crater your bathroom’s look. That’s probably why better counter materials are trending, with engineered quartz on top (40%), along with natural stones like marble and granite (up 18% and 16%, respectively). And, just as in the kitchen, Shaker-style cabinetry is riding high with 51% of homeowners picking this style for their projects. That’s up seven points over last year.

 

Traditional is out, transitional is in

Photo by Ulrich Inc

“People are committed to making their homes work for them, including investing in bathroom renovations—and the No. 1 reason to redo this space is that homeowners could no longer stand the style,” says Sargsyan.

The bottom line: traditional is no longer in favor. Instead, transitional style is the front runner.

“Transitional takes trad flavoring and style to a cleaner, fresher and modern look,” says Jen Dallas of the eponymous design firm. Transitional design was chosen by 25% of respondents, with modern and farmhouse in the rear, at 16% and 5%.

Dallas also notes that “transitional rooms are great for resale value, as most people can picture themselves living in it or creating the home they want with this starting point.

“Transitional aims to create a room that’s less sterile-looking, which in a bath means clean, modern design but with trad touches like a claw-foot tub, vintage artwork and a bit of color on the walls using paint or tile,” explains Tony Mariotti, a real estate broker and founder of RubyHome in Los Angeles.

Bidets for the win

Photo by Glenn Robert Lym Architect 

Once you go bidet, you never go back.

“A lot of clients love the Toto washlet and specify them in many of my projects,” Dallas says.

She echoes the Houzz report, which showed healthy increases in bidets (24%); self-cleaning seats (17%); heated seats (15%); and even built-in night lights (13%)—because who wants to stumble around in the wee hours?

White paint with blue accents

Photo by Kala Interior Design

White is still king on vanities, countertops and bathroom walls, as it signals a fresh, clean vibe. But gray walls both inside and outside the shower continue to have fans, at 25% and 15%, respectively. Blue is also a solid choice, per the report, with one in 10 homeowners picking it outside the shower.

Greenery to clean the air

Photo by Factor Design Build 

We gardened with abandon during the pandemic—and we adopted plants inside too, which dovetails nicely with the uptick in greenery seen in bathrooms in 2022. Indeed, plants are the crowning touch for 35% of respondents once the dust has settled in their bathroom renos.

Wondering why? Most said aesthetics (88%), while others felt they created a calming environment (64%). Additional reasons included air purification (34%) and odor-fighting ability (7%).

 

 

Jennifer Kelly Geddes creates content for WhatToExpect.com, the National Sleep Foundation, American Airlines Vacations, Oxo, and Mastercard.

 

Why Is Everyone Moving to This State? (Maybe It's the Zero Taxes and Promise of Freedom)

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In the past year, two cities in New Hampshire have topped the Realtor.com list of the hottest real estate markets. Here’s why...

(Realtor.com / Getty Images)

By Meera Pal

What is it about New Hampshire? It’s the ninth state of the union, the site of the first potato grown in these United States, and, perhaps most laudably, the home to not one but two of the nation’s most desirable real estate markets.

Over the past year, two cities in the Granite State have topped the Realtor.com® hottest markets list: Manchester, which held the top spot for nine out of 12 months, and Concord, which ranked No. 1 in June 2022.

And according to the U.S. Census Bureau, New Hampshire was one of 2021’s fastest-growing states in the Northeast, with a population growth of 0.8%.

So let’s take a look at why people are flocking to this tiny, unassuming state—and making it one of the most popular places to buy a home in the country.

New Hampshire’s location

“New Hampshire is an hour from the mountains, the sea coast, and to Boston and Vermont,” says Pamela Young, a real estate agent with eXp Realty who’s called New Hampshire home since 1983.

In addition to boasting breathtaking views and easy access to nature, the state is ideally situated in the Northeast—and bordered by Maine, Massachusetts, and Vermont. New Hampshire is also within driving distance to several major metropolitan areas, including New York City and Montreal.

White Mountain National Forest in New Hampshire (Getty Images)

“Many people are choosing New Hampshire as a place to work and live,” says Kris Neilsen, communication manager with the New Hampshire Department of Travel and Tourism. “Its seven regions are distinct and diverse, offering something for everyone.”

Homes are still affordable in New Hampshire

Concord, NH (Getty Images)

Next up on New Hampshire’s list of many charms: relative affordability. Home prices are slightly higher than the national median list price of $450,000 in both Manchester ($478,000) and Concord ($457,000). Yet those prices are far below the median list price in nearby Boston, where homes average an eye-watering $759,000.

And the median list price in Hillsborough County (home to Manchester) currently sits at $425,000. Meanwhile, homes in Merrimack County (where Concord is) have a median list price of $399.000.
 

New Hampshire has no state income or sales taxes

Benjamin Franklin famously said, “Nothing is certain except death and taxes.” What he didn’t mention is that where you choose to live can play a huge role in how much you pay Uncle Sam—or if you pay taxes at all.

It’s little wonder then that New Hampshire’s tax structure is a huge draw for homebuyers. It’s the only state that does not impose a tax on wage or salary income.

Instead, the state has a flat 5% individual tax levied only on interest and dividend income. However, beginning in 2023, the state is phasing out the interest and dividend tax by 1 percentage point a year until it’s fully repealed by 2027. And once that happens, the state income tax will be 0%.

New Hampshire also does not have state or local sales taxes. (For comparison, you pay an extra 7.25% for everything you buy in California.)

The state’s ‘Live Free or Die’ ethos

Entering New Hampshire (Getty Images)

New Hampshire adopted “Live Free or Die” as its official motto in 1945. And its in-your-face assertion of independence, a founding tenet of this country, makes it one of the most well-known state mottos.

The maxim is attributed to Gen. John Stark, the state’s most famous Revolutionary War hero, who wrote a letter to a group of veterans commemorating the Battle of Bennington.

“I will give you my volunteer toast—Live free or die—Death is not the greatest of evils,” Stark wrote as a postscript.

“Granite staters are fiercely proud of this motto, and you can see it displayed on our license plates and at our state borders,” says Neilsen. “New Hampshire is the only state that has proudly integrated the state’s motto into its tourism brand ‘Live Free.'”

New Hampshire is proudly politically independent

New Hampshire has one of the country’s largest groups of independent voters, at nearly 42%. And because the state runs an open primary, any undeclared voter can cast a vote on primary day.

A recent Vox news report notes that most of New Hampshire’s undeclared voters don’t sign up as Democrats, Republicans, or independents because they want flexibility in their voting rights. (And they simply don’t like labels.)

Is New Hampshire right for you?

Young, who has been in real estate since 1986, says she’s seen a recent influx of homebuyers from out of state. She recently worked with homebuyers from Arizona, California, and Oklahoma who purchased homes sight unseen.

“I even sold an investment property to somebody from Hawaii,” Young says. “That’s a long way for an investment property, so I asked him why.”

According to Young, the buyer was attracted to the state’s motto, tax structure, and independent voters.

Another reason the Granite State draws people? “New Hampshire’s weather is great year-round, with temperate summers, gorgeous falls, and cold but charming winters,” says Young.

So if you love saving money, having political independence, and experiencing great weather—maybe it’s time to start home shopping.

 

 

Meera Pal is a Northern California-based writer with a background in journalism and books. She covers tech, real estate, and everything in between.

 

10 Festive Fall Porch Ideas You'll Want to Copy ASAP

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Wow, is it me or did summer fly by this year! Yet, here we are, kids are back or about to be back at school and the leaves will start to change before you know it. You know what that means don't you, it's time to start thinking about decorating your house for the Fall season!

By Caitlin Sole

Whether you have a balcony, a wraparound porch, or just a small stoop, you can add seasonal touches to your outdoor space using pumpkins, mums, and more with these fresh fall porch ideas.

It's easy to give your front porch a seasonal refresh with a few fall decorations. Adding fall flowers, pumpkins, gourds, and simple decorating touches to your porch creates a warm and inviting entry for guests. Consider a classic fall color scheme, like red, yellow, and orange, for your fall front porch, or try something new, like a farmhouse-style display of soft white pumpkins paired with pastel accents and rustic planters. Use these ideas for fall porch decor to achieve a festive harvest look that lasts all the way through Thanksgiving.

PHOTO: JAY WILDE

1. Create a Fall Porch Seating Area 

Add a bench to your porch for a comfy outdoor seating area that doubles as a festive fall vignette. Set a simple bench against an exterior wall or railing, then layer it with pillows and throws in weather-resistant fabrics. Fill planters, such as baskets and galvanized buckets, with fall flowers like mums to flank the seating area. Complete the fall porch decor with miniature gourds tucked between the planters and a nubby rug underfoot.

PHOTO: ANTHONY MASTERSON

2. Start with Classic Fall Porch Decor 

If you start with the right basic elements, you can easily update your front porch for fall with just one trip to the pumpkin patch. A pretty faux fall wreath makes a good investment you can reuse for years to come, and lanterns in varying sizes make versatile vessels you can switch up as the seasons change. For your autumn outdoor display, fill them with small pumpkins or fiery bittersweet branches and set a few larger pumpkins nearby for more fall color. Traditional fall porch decor such as pumpkins, rustic lanterns, and colorful wreaths will never go out of style.

PHOTO: WERNER STRAUBE

3. Extend Fall Decor Beyond the Porch 

If your entryway has limited square footage, let your fall porch decor extend past the front stoop. Line the walkway leading up to your front door with pumpkins in a variety of shapes and colors. Tuck smaller gourds into window boxes or planters for an unexpected fall twist.

PHOTO: ADAM ALBRIGHT

4. Decorate with Fall Foliage 

Nature abounds with this colorful fall porch decor. A mix of textures, including spiky grasses, mounds of mums, fluffy 'Magic Carpet' spirea, and ruffled kale, fill a variety of rustic containers. Be sure to pack planters full and water only occasionally because plants grow slowly in cool temperatures. Mix orange carving pumpkins with unusual varieties of gourds and squashes. Wrap a thick rope with outdoor string lights and grapevine balls to create a festive garland to welcome visitors.

PHOTO: WERNER STRAUBE

5. Add Farmhouse Style to Your Porch 

Easily achieve a farmhouse look with a few inexpensive fall decorating ideas. The traditional farmhouse decor that decorates this space can be found at a local craft store, flea market, or secondhand shop. Vintage furniture, rustic signage, colorful door decorations, and comfy chair cushions all add up to the quintessential fall farmhouse porch.

PHOTO: ADAM ALBRIGHT

6. Create a Cozy Fall Nook 

To make your outdoor decorations more functional, include a cozy seating area for enjoying the fall colors. Here, a fluffy pillow in an Adirondack chair creates a spot for relaxation. A matching orange side table holds a decorative lantern and spooky painted pumpkin for a festive fall porch setup.

PHOTO: JASON DONNELLY

7. Frame Your Front Door with Fall Decor 

If you don't have a large porch to decorate, think vertically and add cornstalks or a leaf garland around your door. A vertical display will give you a big impact without taking up a lot of space. For fall porch decorating ideas on a budget, buy faux seasonal garlands instead of creating one with live produce or leaves. These can look convincingly realistic and be used year after year. Here, pumpkins get a vertical lift on pedestals that provide added interest to this decorative porch.

PHOTO: CARSON DOWNING

8. Soften Fall Porch Decor with Neutrals 

Decorate with natural elements in soft colors and textures for an inviting front porch that easily transitions from season to season. We love this home's inexpensive fall porch decor, including a straw basket filled with gourds. Weatherproof pillows provide extra comfort and a sturdy blanket brings warmth. And, of course, the more pumpkins, the merrier!

9. Make a Harvest Planter 

If you have the space, add a large container like a wheelbarrow or wagon to your list of cute fall porch ideas. Fill it with an assortment of fall elements, such as bittersweet, pumpkins, gourds, and leaves. Add a short message or your home's numbers to the pumpkins for a finishing touch. This decoration can easily span the fall holidays, taking you right through Thanksgiving.

PHOTO: CARSON DOWNING

10. Add an Accent Pattern to Your Fall Porch 

Create a neutral fall display by grouping elegant white and pale-orange pumpkins. To keep it interesting and add a touch of farmhouse style, incorporate painted gingham pumpkins throughout. Finish with white mums, lanterns, and patinaed planters to complete the rustic fall porch decor.

 

Caitlin is the senior digital home editor at Better Homes & Gardens, where she covers all things home, including decorating and interior design, cleaning and organization, paint and color, home improvement, and more.

Home Prices Just Dipped—Does That Mean They're Poised To Plummet This Fall?

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Home prices have dipped, and many real estate experts predict they could fall even further. Some housing markets are particularly vulnerable.

By Clare Trapasso

For the past two-plus years, home prices were unstoppable. Buyers watched in horror as they swiftly ratcheted ever higher from one month to the next—and bidding wars drove these price tags up even further.

Higher mortgage interest rates have since poured cold water on the red-hot housing market, forcing it into a correction as buyers reached their financial limits.

But it turns out, what goes up may have to come down—even if by just a little.

“House prices are rolling over,” says Mark Zandi, chief economist at Moody’s Analytics. “They’re going from straight north to going sideways and, I expect, would be going south in the not too distant future, certainly by this time next year.”

Just take a look at what’s happened this summer: Sale prices of existing homes fell by $10,000, to a median of $413,800 in July, compared with a month earlier, according to the National Association of Realtors®. (Existing homes do not include new construction.) However, prices were still up 10.8% year over year in July.

“We are going to see prices drop as we do seasonally,” says Realtor.com® Chief Economist Danielle Hale. (Home prices typically peak in June and then begin to dip.) “We tend to see smaller homes and sellers who are more willing to make a deal [in July]. In general, there are fewer buyers because they’re on vacation, getting ready for back to school, they’ve already found a home or decided to extend their rental.”

But, Hale adds, “I don’t think it’s likely for home prices to fall significantly. Prices are still growing [annually] by double digits. We have a long way to go before we see prices decline.”

However, the number of buyers is drying up rapidly. In July, existing-home sales dropped 20.2% year over year, according to NAR data. And new-home sales plummeted even further, plunging nearly 30% in July compared with a year earlier, according to federal government data.

“Demand has fallen off, and supply has increased. Economics 101 says prices have to decelerate, and that’s what we’re seeing today,” says Devyn Bachman, senior vice president of research at John Burns Real Estate Consulting. “It’s the polar opposite of what we’ve seen over the last few years.”

That doesn’t mean that all corners of the housing market will fare equally. Certain parts are already seeing price declines that could worsen as time goes on.

“Everyone’s vulnerable. It’s just to what degree,” says Zandi.

Nationally, he anticipates that home prices will go flat or fall as much as 5%, particularly if the nation avoids a recession.

Whether prices fall—and by how much—depends on mortgage interest rates. The higher rates go, the less money buyers have to put toward the asking price of a home. And if a recession hits and many would-be buyers lose their jobs, there will be fewer folks to bid up prices.

“There’s an expectation that prices fall immediately, but they don’t. Prices are sticky on the downside,” says national real estate appraiser Jonathan Miller. “Sellers who don’t get their price and don’t have to sell, wait.”

New construction may be vulnerable to falling prices

Some of the biggest price corrections could happen in new construction. New homes are typically more expensive than existing homes—and with soaring inflation, fears of a recession, and sky-high prices and higher mortgage rates, buyers have backed away.

Even though prices for new homes are still up year over year, the market correction is already happening. In July, about 42% of builders decreased their prices, mostly through incentives, compared with just 25% in June, according to a recent John Burns survey.

(Incentives are a way for builders to lure buyers without actually reducing their prices, and can include buying down buyers’ mortgage interest rates, contributing to closing costs, and throwing in nicer finishes and home amenities to sweeten deals, among other perks.)

Only 8% of builders raised prices in July.

Plus, many homes were built without buyers committed to them. If those houses don’t sell, builders will eventually be forced to cut prices.

“When you look at the direction pricing is going, it paints a really interesting picture,” says Bachman. “Pricing got over its skis, to put it lightly. Buyers are not going to purchase a home today with a price tag from four months ago.”

Which parts of the country could see the largest price drops?

States such as Texas—and especially in the capital city of Austin, which experienced a flurry of new construction and a big rise in prices—could see some of the largest corrections.

For example, median list prices in Austin soared 68% from March 2020 to May 2022, according to Realtor.com data. They’ve since come down about 4.5% from the May peak.

“The pricing has gotten so overblown,” says Bachman. “I’m very concerned about Austin. Every warning indicator out there is flashing that Austin is high-risk at this point.”

Many experts believe markets in California, the Pacific Northwest, and the Southwest could also be more at risk because they’re so expensive. This includes areas such as Boise, ID; Phoenix; Salt Lake City; Seattle; Denver;  and much of Florida.

In fact, prices are already dropping in many of these markets. In Phoenix, where prices soared during the COVID-19 pandemic by roughly 36% (from March 2020 through May 2022), they dipped 4.5% from May to July, according to Realtor.com data. And in California, median list prices peaked at $759,500 in May and June, but have since fallen by about $10,500.

“These most juiced-up markets … could see 10% to 15% declines, and that’s assuming no recession,” says Moody Analytics’ Zandi. “If we get into a recession, then we’re talking 15%, 20%. I could even see some markets down 25% from their peak.”

“But you’ve got to put that in perspective,” he adds. “Some of these markets saw 30% price gains last year. … So they’re just giving up a year’s worth of price growth.”

Which price ranges are the most vulnerable to a correction?

Middle-tier homes could see price corrections. Here’s why: As mortgage rates continue to soar, second-time buyers who want more space but don’t have a big budget may be inclined to stay in their starter homes—and make renovations instead of buying a bigger house. As a result, those homes they would have bought around the median price range might linger longer on the market, ultimately forcing their prices to drop.

Starter homes on the lower end of the market are less likely to see price cuts. The competition is generally fiercest for lower-priced homes, especially as the cost of becoming a homeowner has surged.

However, with fewer buyers able to qualify for mortgages and fewer investors bidding up prices, this cheaper market may not be immune to a correction. Many investors are waiting to see if prices drop even further before pulling the trigger on new purchases.

Exurbs, vacation destinations could see price drops, too

The farthest-out suburbs, often referred to as the exurbs, could also be more vulnerable. Buyers might see distance from city hubs as a negative. This is also where builders have been putting up more homes because land is still available.

As more homes become available closer to cities, buyers may forgo these outer-ring suburbs, suggests Bachman. (Or maybe not. With more people working from home at least part of the week, those exurbs might still be enticing.)

Vacation areas could also see prices shrinking if demand dwindles. Those who need mortgages to buy a vacation home will be hit with higher rates, and wealthier buyers who typically pay in all cash have likely lost money in the crypto and stock markets.

“The types of individuals who are buying vacation and second homes are getting the money from other investments that have also gone down significantly in value,” says Mark Fleming, chief economist at First American Financial, a title insurance and supplement service provider based in Santa Ana, CA.

Are new homeowners about to find themselves underwater on their mortgages?

Amid all this talk of price drops, it’s important to remember that they might not decline everywhere.

“Historically, prices rarely decline on a national basis,” says Fleming. “The exception was the global financial crisis. Prices were speculatively high, and then you got the foreclosures that helped pull prices lower.”

This time around, there are more folks in need of homes than there are residences available, bad mortgages have largely been banished, and there isn’t another wave of foreclosures looming.

If home prices do correct, most homeowners don’t need to worry about suddenly finding themselves underwater on their mortgages, where they owe more than their properties are worth.

“The good news is home prices are so elevated that homeowners who have owned for a while are sitting on record levels of equity,” says Hale. “This gives homeowners a financial cushion. Even if home prices decline, they’ll still likely have equity in their homes.”

Even recent buyers who bought at the very top of the market shouldn’t worry too much, provided they plan to stay put for a few years.

“If you hold on to your home for a long period, the home will always appreciate,” says Bachman of John Burns. “But there are going to be short-term pricing blips that will decrease the home’s value if you don’t hold it for the long term.”

 

Clare Trapasso is the deputy news editor of Realtor.com where she writes and edits news and data stories. 

4 Stylish Kitchens With All-Wood Cabinets

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Pros share how cabinets with a natural wood finish add warmth and flair to a variety of kitchen styles.

by Suzanne Ennis, Houzz Editorial Staff

Wood-finish cabinets can add warmth and a natural element to any style kitchen. And while they’re timeless, they’re also enjoying a resurgence in popularity right now. Here, pros share how they used all-wood cabinets in a variety of finishes and styles to create inviting spaces.

1. Light and Luxurious

Designers: Homeowner Holly D’Amour and consulting designer Nate Fischer
Builder: Osada Construction 
Architect: Michael McDonough
Location: Asheville, North Carolina
Size: 282 square feet (26 square meters); 24½ feet by 11½ feet


Homeowner’s request. “The homeowner wanted a light, functional, easy-to-clean kitchen, with plenty of storage,” says project manager Cory Wax of Osada Construction. “It needed to take advantage of the views of the forest through the large kitchen window and the river on the opposite end of the great room.”

While looking for ideas, the homeowner, Holly D’Amour, fell in love with a kitchen she saw on Houzz. “It turned out to be designer Nate Fischer’s personal kitchen, and it became the inspiration for mine,” D’Amour says.

Cabinet details. The custom cabinets are made from rift-cut white oak, finished in aged cedar with an ultraflat sheen. Matte black hardware adds contrast. 

Other special features.  The countertops are Crossville’s porcelain Lightning polished slabs with a 2½-inch mitered edge. The backsplash is white 5-by-5-inch ceramic tile, and the floor is 32-by-32-inch Porcelanosa tile from Spain. 

Because this is a retirement home, the homeowner designed the kitchen with accessibility in mind. The lower cabinets in the back run are primarily drawers, and those with doors have pullouts.

“Uh-oh” moment. Building at the height of the pandemic with the homeowner in a different state at the time presented unique challenges. “Originally there was an appliance garage below the microwave-convection oven,” Wax says. “When the appliances were installed and the homeowner came to check on the project, we realized the microwave was too high for her to reach comfortably. We removed the appliance garage, lowered the microwave and had new doors made for the cabinet. We added shelves for small appliances in the pantry. The homeowner doesn’t miss the appliance garage, and the microwave is a perfect height now.”

Light fixture over sink: Clark, Visual Comfort

2. Warm and Worldly


Designer: Laurel Mullikin of Infinite Home
Location: Suwanee, Georgia

Homeowner’s request. An avid cook and globetrotter, the owner of this eclectic kitchen wanted to improve function and have the space evoke feelings from her trips. “She is an antique collector and had many items she wanted to display,” says designer Laurel Mullikin, who used Houzz for inspiration for the project. “It was really important for this home to feel curated, just like [her] favorite items from her travels.” 

Cabinet details. The slab-style full-overlay kitchen cabinets, as well as the floating shelves, are rustic white oak plank veneer applied to maple. The wood was prefinished with gray stain and a wax sealer. The countertop is steel gray granite with a leather finish and a standard 3-centimeter edge.

Other special features. “My favorite element is the handcrafted Cle zellige tile,” Mullikin says. “This tile is hand-molded and hand-cut in Morocco, so no two are alike. This really set an authentic tone for our kitchen. We decided to not grout the tile so we could highlight the texture and varying depth of the tiles once in place. The end result was reflective of a European villa kitchen and the perfect backdrop for an antique copper tureen displayed on our client’s floating shelves.”

Designer tip. “To give stained wood cabinets a modern feel, I suggest choosing a slab-style cabinet door construction and confirming with your cabinetmaker that they will follow the grain through, so you have a beautiful consistent grain throughout,” Mullikin says.

3. Welcoming in Walnut

Designer: Kim Rice of R. Designs
Builder: Starr Homes 
Location: Stilwell, Kansas
Size: About 300 square feet (28 square meters)

Homeowner’s request. The homeowner had the home custom-built to match his architectural vision. He also made the specific material and design selections for the kitchen.

The open floor plan of the midcentury-modern-style design required that the kitchen blend seamlessly with the family room, which has an operable glass wall with views of the beautiful rolling hills of Kansas. “Removing most of the upper kitchen cabinets provided space for large windows and unencumbered walls integral to modern design,” designer Kim Rice says. 

Cabinet details. The walnut cabinets are full-overlay flat-panel-style with a vertical grain. Sleek linear hardware and a black-painted feature wall allow the natural materials to shine. 

Other special features. Marble countertops and backsplash. 

Designer tip. “When designing a modern all-wood kitchen, it’s important to limit finishes and provide clean lines,” Rice says. “The marble countertops were used as a backsplash, which visually maximizes the space between the upper and lower cabinets.”

Cabinet design and installation: Cabinets by King

4. Calm Connection

Architect: Pierre-Henri Hoppenot of Studio PHH Architecture
Builder: Lasley Brahaney Architecture + Construction
Location: Princeton, New Jersey
Size: 210 square feet (20 square meters); 21 by 10 feet

Homeowners’ request. “There was not a specific look we were trying to achieve,” architect Pierre-Henri Hoppenot says. “The conversations around a successful outcome were always around the way the space would feel and the performative aspects of the home. The home has always been a revolving door for friends, family and international visitors, so the kitchen is meant to be a wonderful place to cook while spending time with family or friends.”

Cabinet details. The rear storage wall is reclaimed teak. Bifold and pocket doors conceal a work area, a coffee station and other elements. The 21-foot island features oversize plain-sawn white oak veneers, carefully bookmatched to maintain continuous grain all the way around the unit.  

Other special features. Concrete-look quartz countertop with an integrated sink. The flooring is 24-by-36-inch gray Indiana limestone. Rooftop solar panels offset much of the energy usage in the house, and all of the lighting is LED. “Careful siting shelters the space from the southern sun and provides diffuse natural light all day, minimizing the need for artificial lighting,” Hoppenot says. “The room was designed around the windows on both ends, so the sunrise and sunset are visible from the kitchen every day. The kitchen lives within a room that feels like it is outdoors, tied to the rain, sun [and] trees swaying in the wind. The room was specifically designed so that the tops of the trees are visible from anywhere in the space.”

 

 

 

 

 

Selling Your Home? Don't Neglect These 6 Maintenance Tasks—or Else

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A well-cared-for house shows better: Small things like broken doorbells and leaky faucets make buyers wonder if your property also has bigger issues elsewhere. But more important, a little routine maintenance can help you avoid a catastrophic problem down the line (e.g., burst pipes, roof leaks, critters moving into your attic) that could devalue your property and derail that sale.

By Wendy Helfenbaum

If you’re a homeowner, you already know that keeping your property in tiptop shape requires dedication and patience for ongoing maintenance. But what if you’re putting your home on the market or even accepted an offer? Perhaps you’re thinking: Not my problem anymore.

Sorry, folks, we’ve got news for you: Just because you’re selling doesn’t mean you’re off the hook from routine maintenance tasks—and that’s especially true if you’ve already vacated the house.

To prevent minor issues from escalating into full-blown, money-sucking, sale-killing problems, focus on these six important areas you can’t afford to neglect.

1. Keep up the yard and walkways

Whether you’re still living at the home or not, you’ll want to make sure to keep your landscaping tidy —remove dead tree limbs, rake leaves, and clean out flowerbeds.

If your home is already vacant, have someone tend to the yard regularly so that grass and weeds don’t detract from your home’s appearance, suggests Kyle Hiscock, a Realtor® with Re/Max Reality Group in Rochester, NY.

“If your home does not have a well-maintained exterior, (potential buyers) will keep driving,” he cautions. “Plus, this kind of neglect can be a bull’s-eye for vandals to break into your property.”

Consider having lights on timers so the house doesn’t look dark all the time, and arrange for driveways and walkways to be plowed weekly in the winter months. And don’t let mail pile up in the mailbox.

2. Clean the gutters and check the roof

This one’s easy to forget about, even when you don’t plan on going anywhere. But when it comes to gutter and roof issues, neglect can cause a dangerous domino effect.

Overflowing gutters can damage your foundation, and also lead to drainage issues. And, of course, you don’t want buyers seeing puddling water as they approach your house.

Just ask Alise Roberts, owner/broker at Maple + Main in Bellevue, WA. In the rainy Pacific Northwest climate, she frequently has to remind her clients to keep sidewalks clear of moss and clean gutters of pine needles and leaves.

“Buyers, seeing the house when it’s raining, will also see your gutters overflowing,” she says. “That’s a terrible first impression.”

And then there’s the roof. Of course, it’ll be examined during the home inspection, but it would behoove you to do it before putting your home on the market. Small roof cracks can remain undetected for years, causing water to slowly infiltrate your home and damage ceilings and walls.

“If water starts to penetrate a property, it can be a very difficult sale,” Hiscock notes. “Water in basements or in homes is one of the top three things buyers are scared of.”

3. Service your heating systems

It’s not sexy, but the hidden guts of your home need regular attention, whether you’re still living there or not. That means having your HVAC systems professionally serviced.

First up, your furnace: If you get it addressed before you list your home, it won’t smell like dust when you crank up the heat during an open house on a chilly day. While you’re at it, have the duct work and filters cleaned as well. And if you have baseboard heaters, vacuum those out, too.

(Speaking of heat, Roberts suggests keeping the thermostat at 66 degrees Fahrenheit when agents are showing your house so buyers can visit your place comfortably. This will also avoid any issues with pipes freezing or bursting.)

Have a chimney? Be sure to have it inspected and cleaned as well.

“You want to make sure there are no cracked flue tiles, and that from the exterior, there are no gaps in the mortar between the bricks,” Hiscock explains. “Otherwise, you could potentially have the chimney fall over onto the house, and that’s a very expensive fix.”

4. Keep the critters out

If you don’t want to add “family of raccoons included” to your listing (and pay the hefty tab to hire an exterminator to them out), inspect the inside and outside of your home for any areas that need to plugged up. Take care of holes from damaged siding or fascia under the roofline—and do it promptly.

“In a colder climate, squirrels look for somewhere warm to go, and they’ll find their way into your property,” Hiscock says.

Stove and dryer vents, for example, should be covered with wire mesh to deter pests.

5. Wash your windows

Most people associate sparkling windows with spring-cleaning, Roberts says. But if your house is on the market, it doesn’t matter what time of year it is—you need to get those babies squeaky clean.

“If buyers walk through your home and all they see is dirty windows, that’ll really mar the showing process,” she says.

Make sure to wipe them down after a bad storm, when they’re especially likely to show muck and grime buildup.

6. Check the calendar

Depending on what time of year you bring your house to market, pay attention to any details that scream, “We don’t live here or care anymore,” Roberts says.

That means tackling seasonal tasks such as clearing away lawn mowers in the fall and storing shovels in the spring.

“Too often, I see a seller’s patio furniture still outside during the winter time. To me, that’s not a good reflection on the property,” Hiscock says. “It shows deferred maintenance and lack of caring, and can really turn off a potential buyer.

“If a seller can’t put away their patio furniture and lawn mower, what makes you believe that they’ve actually maintained the property all the years they’ve been there?” he adds.

Staying on top of these regular tasks will make it easier to sell your home with fewer headaches. Plus, it’ll preserve the value of your property, and potentially, the thickness of your wallet, too.

 

Wendy Helfenbaum is a journalist and TV producer who covers real estate, architecture and design, DIY, gardening, and travel. Her work has appeared in Woman's Day, Metropolis, Costco Connection, Garden Collage, Parenting, Canadian Living, Canadian Gardening, and more.

What Is Wainscoting? Pros, Cons, and Costs of This Trendy Wall Decor

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Wainscoting is a decorative wall trim that’s centuries old and has never gone out of style, likely due to its versatility—there’s a type of panel that suits just about every design style.

(Houzz)

By Cathie Ericson

Many homeowners and interior designers appreciate wood trim, as it makes any room look a little more buttoned up. Here are some details on where the heck this trend came from, and (more importantly) the many ways wainscoting can be used to boost your home’s interior appeal.

What is wainscoting and what is it used for?

Wainscoting came into use in the 18th century, as a wall covering, applied to the lower third of the wall. It’s similar to chair rail—a less opulent form of wood trim that was placed “chair height” along all the walls of a dining room to protect the walls from chairs bumping into them—in that it started out as a way to protect walls. Walls were made of plaster by this time, and plaster was relatively expensive to repair. While a thin strip of chair rail did the trick, wainscoting covers much more of the wall than chair rail, so it has a secondary benefit in that it’s a good way to insulate a room.

These days, wainscoting main use is as a decorative molding that helps make a room more visually appealing. It still typically rises to just chair-rail height (though some take it as high as shoulder height), but while historically wainscoting was made from wood, today’s wall panels can be manufactured from a variety of materials, says Dayna Hairston, owner and interior designer at Dayziner, in Cary, NC. Other materials include PVC plastic, embossed metal, and molded drywall—any of which can add texture and style to a room.

Photo by Upside Development

The height of this detail can vary depending on your rooms’ designs and the look you are trying to achieve.

According to Barbara Mount of Barbara Mount Designs and Windermere Realty Group, in Lake Oswego, OR, wainscoting that goes up as high as 5 feet or more has more impact. It can be taken up well beyond chair-rail height—leaving just the top 2 feet for paint or accent wallpaper.

Wainscoting comes in a wide variety of materials

Today’s wainscoting designs run the gamut of wood products. Depending on the value of the home, some contractors will use medium-density fiberboard, an engineered product also known as pressed wood—a fine, cost-effective choice for any room except for kitchens and bathrooms, says Mount. A steamy bathroom can cause fiberboard to expand over time, and the product will start to ripple and bloat.

“If you want this paneling element in a bathroom or kitchen, use real wood because it will hold up to spatters and spills,” she adds.

Another choice in bathrooms and other areas prone to moisture is wainscoting made from ceramic tile, which appeals because it is nonporous and easy to clean.

Photo by C&M Woodworking

If you’re going for that shabby chic, rustic farmhouse look in a kitchen or den, you might want to consider beadboard wainscoting, which is historically made from a series of thin, vertical wood planks separated by a strip of wood “bead.”

Another option you can choose is shiplap, which is horizontally installed interlocking planks that are several times wider than beadboard.

“While white shiplap has been on-trend, painted shiplap can give a room a country feel,” says Nikki James, studio manager for Ashton Woods, a homebuilding company in Dallas. Those looking for a more traditional look would be happier with full wood panels.

Wainscoting is a versatile trim for many rooms

Traditional wainscot designs—whether the wood is painted, left natural, or stained—can add sophisticated trim, with either straight or beveled edges, to a living room, dining room, or study.

Mount’s favorite uses for this panel treatment are in an entryway and along stair walls, as these spaces typically lack architectural interest.

James loves to put wainscoting panels or beadboard designs in a powder room.

“Most of your guests will see this room during their visit.” she says.  

To achieve a less formal look, Hairston recommends painting wainscoting panels an accent color rather than the conventional white.

The one look to avoid? Installing wainscoting all the way up to the ceiling for a full wall of brown paneling, which is too reminiscent of the ’70s-era rec room, say experts. If you’re dying to install trim near the ceiling, consider crown molding.

Is wainscoting expensive?

Wainscoting is a valuable investment from a design standpoint as it can add value and warmth to your space. That said, the cost of this wall treatment can vary greatly depending on the material it’s made from, the type and size of panel used, the height (whether to chair-rail level or higher), room size, as well as local market supply-chain availability..

“The average price of wainscoting is $1,325, or about $5.50 per square foot,” according to recent data by HomeAdvisor. “Expect to pay $1,050 to $1,600 including materials and labor to install 5-foot-high unpainted solid wood wainscoting in a 12-by-12-foot room.”

“Installing wainscot paneling can certainly be done as a DIY project, provided the user is skilled in precise measurements and knows their way around a chop saw,” Hairston says. However, typically she will recommend you call on a skilled carpenter to install it. She recommends sourcing a local installer from the National Association of the Remodeling Industry site.

 

Cathie Ericson writes about real estate, finance, and health. She lives in Portland, OR.

7 Cheap Ways To Make Your Kitchen Cabinets Look Expensive

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It’s a Catch-22 homeowners are all too familiar with: Remodeling your outdated kitchen is almost certain to pay off big when you sell—but the actual makeover takes big bucks.

By Jennifer Kelly Geddes

Is there any way to make a huge change without all the expense? Well, believe it or not, you can give your kitchen a face-lift without ripping out everything and starting from scratch. Yes, it all comes down to being creative with your cabinets—uppers, lowers, and everything in between.

Here’s some savvy advice from the pros who know, along with excellent cheap and simple cabinet updates you can start—and finish—this weekend.

 

1. Cabinet upgrade: paint your cabinets a fresh color

Photo by Cabinets by Design

You can’t go wrong with basic white in the kitchen. It channels a clean vibe that’s easy to live with, and makes resale a breeze when you’re ready to move.

But a little color is also lovely, especially cool blue hues and trendy pastels. A handy DIYer can paint kitchen cabinets in a couple of days. (It’ll cost you only the paint and brushes—and your time.)

Marty Basher, a professional organizer with Modular Closets, votes for matte paint finishes over glossy, as the latter sheen can veer into garish territory.

“Choose muted colors in jewel and earth tones instead of overly bright ones for a more luxe feel,” he says.

 

2. Cabinet upgrade: install brushed-brass accents

Photo by Boswell Construction 

This one’s easy: Grab a screwdriver and put in new drawer pulls, says Drew Henry of Design Dudes.

“It’s supereasy to upgrade your cabinets with different hardware, and it’ll give you a lovely look,” he says.

Henry’s pick: brushed brass for a chic but quiet appeal.

“And go for elongated drawer pulls with clean angles over small knobs,” he adds.

 

3. Cabinet upgrade: brighten cabinet backs

Photo by Alair Homes Decatur

Glass-front cabinets are all the rage—you might even have a set in your kitchen right now. But rather than style (and restyle) the plate stacks and glasses inside, let paint step in (again) to do the tough work of updating and beautifying your workaday cabinets.

“A fun pop of color on the backs of a few glass-front cabinets adds interest to the room and lightens up the look,” Henry says.

 

4. Cabinet upgrade: add temporary wallpaper

Photo by The Cross Interior Design 

Just as bright paint can enliven your cereal bowl display, so too can a couple of pieces of wallpaper. This can be a quick DIY,  just watch a few tutorials first on how to hang wallpaper. Even better: Make it temporary paper, which you can remove anytime you need a change.

And don’t stop with cabinet backs—temporary wallpaper is a nifty surprise along your drawers’ outside edges. (Just pull the drawers open to reveal a pretty pattern.)

 

5. Cabinet upgrade: install under-cabinet lighting

Photo by Bartelt. The Remodeling Resource

You know that gorgeous glow you spy on Instagram when you’re scrolling kitchen renovations? It comes from under-cabinet lighting. This smart upgrade brightens shadows that are invariably created by overhead pendants and can be installed by a pro for just a couple hundred bucks.

Want to go cheaper? You can get lights that plug in to existing sockets or grab some adhesive lights to press on in dark corners. Or just place a couple of small lamps you already own along counters under your cabinets.

 

6. Cabinet upgrade: consider smart storage

Photo by Dura Supreme Cabinetry

A simple rack or drawer rearrangement can take advantage of unused kitchen cabinet space. If you’re a wine person, you can quickly create an X design with plain wood for stacking bottles on their sides.

Photo by Dura Supreme Cabinetry

Or if baking’s your game, a shallow pull-out to store cookie cutters means you’ll never lose these little tin items again.

 

7. Cabinet upgrade: decorate your cabinets with molding

Photo by Anthony Baratta LLC 

You may not notice it at first, but molding is the unsung decor hero in every room. Simple pieces of crown molding, whether stacked, stepped, or the traditional variety, can be added to the tops of your cabinets for an upgrade that looks custom and expensive.

Karen Gray-Plaisted of Design Solutions KGP approves of crown molding on top of cabinets as it extends the design right the ceiling.

“Or reconfigure just a couple of upper cabinets to reach your ceiling like the ones around the sink or refrigerator area,” she says.

You might also try bottom molding, which is just what it sounds like: decorative pieces you attach to the edges or the base of lower cabinets or the kitchen island.

Adding these “feet” transforms lowers or an island, making them look like pieces of furniture.

 

Jennifer Kelly Geddes creates content for WhatToExpect.com, the National Sleep Foundation, American Airlines Vacations, Oxo, and Mastercard.

America's Real Estate Market May Be Finally Recovering From the Pandemic—Here's Proof

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America’s housing market has undergone some wild swings during the coronavirus pandemic, but at long last, it appears to be recovering.

(Realtor.com / Getty Images)

By Margaret Heidenry

In June, the number of real estate listings rose by 18.7% compared with a year earlier, according to a new report by Realtor.com®. That’s the second straight month of growth, and the fastest rise on record since July 2017, when this data was first collected. All told, this amounts to 98,000 more homes for sale every day compared with the same time last year.

Granted, this record-setting growth has a long way to go before boosting the nation’s housing inventory levels back to where they were before COVID-19. Three years ago, in June 2019, there were 53.2% more homes on the market—more than double what’s available today.

Nonetheless, the latest numbers suggest that America’s housing shortage woes might be seeing a glimmer of light at the end of the tunnel.

High home prices set yet another record

This gush of new sellers is likely motivated by the desire to cash in, as their profits continue to skyrocket. In June, median home prices hit another record high of $450,000—up 16.9% compared with last year and a whopping 31.4% compared with June 2020.

Meanwhile, weary buyers face not only sky-high home prices but also rising mortgage rates that now hover at 5.8%. And that financial double whammy is hitting homebuyers hard: Compared with just a year ago, the cost of financing 80% of a typical home rose 57.6%, amounting to an extra $745 per month.

Yet there is some relief in sight for home shoppers: The flood of new homes on the market likely means they’ll have more leverage when it comes to negotiating down the asking price. This, in turn, could help temper the raging seller's market of the past two years and begin to balance the highly lopsided negotiating dynamics.

“The increase in the number of homes for sale in June is due to a couple of key factors: Namely, sellers are putting more homes up for sale than last year. In fact, we’re back to about as many sellers as we saw in a typical pre-pandemic market,” explains Realtor.com Chief Economist Danielle Hale.

“At the same time, buyers have grown pickier as home prices and, more importantly, their monthly payment costs skyrocketed as mortgage rates surge,” says Hale. “We’re getting more supply of homes for sale just as demand is reaching a breaking point for many buyers, and this has led to a rapid rebalancing or reset of the housing market.”

One city that illustrates the changes afoot is Austin, TX, which was one of the hottest markets during the height of the early pandemic real estate frenzy. In June, Austin’s active listings shot up 144.5% compared with last year.

“Prices are definitely starting to go down again, and the competition is slowing,” says Ryan Rodenbeck, owner and broker at Spyglass Realty in Austin. “Last Friday, an Austin home was listed at $825,000. The next day, at the open house, no one came. A few months ago, there would have been 20 or more buyers showing up. The sellers didn’t want to test the market, so on Sunday, they dropped it to $790,000. It sold for $760,000.”

Other hot spots, including Raleigh, NC, and Phoenix, also saw their inventory levels increase by more than 100% year over year.

“These markets are undergoing rapid adjustments and are great examples of the nationwide trend we’re seeing,” says Hale. “Sellers in these areas are jumping into the market while buyers are growing more selective.”

How quickly are homes selling today?

Despite skyrocketing listings, home prices, and mortgage rates, many buyers continue to waste no time making an offer. In June 2019, listings remained active for 59 days on average. Today, that window has shrunk to a mere 32 days. This time crunch is tied with last month’s record low, the shortest time on record since 2016.

Desperate home shoppers likely still jump at the chance to land a home because they see the writing on the wall: Interest rates are likely to continue to climb.

“Surveys showed that shoppers generally expected higher mortgage rates throughout the course of the year,” says Hale. “Concern that mortgage rates could continue to trend even higher is going to keep home shoppers motivated through summer and likely all throughout 2022.”

 

Margaret Heidenry is a writer living in Brooklyn, NY. Her work has appeared in the New York Times Magazine, Vanity Fair, and Boston Magazine.

Are Bidding Wars Over? That Depends on Whether Home Sellers Make These Mistakes

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Bidding wars: Sellers love ’em, buyers hate ’em.

(Getty Images)

By Lisa Johnson Mandell

In the rollicking seller's market we’ve had over the past couple of years, sellers have enjoyed watching homebuyers bend over backward to outdo one another, with ever-higher home prices, fewer (or no) contingencies, and other perks in an effort to entice sellers to pick their offer over all others.

But a subtle shift is afoot. Interest rates are rising, slashing buyers’ borrowing power. Plus, the Realtor.com® June Housing Report shows an uptick in the number of homes for sale.

“The biggest positive for buyers is that they’re seeing more homes on the market now,” says Realtor.com Chief Economist Danielle Hale. “This means more options for them to consider in their home search.”

While the market still has a long way to go before it tilts definitively in buyers’ favor, sellers today can no longer kick back and just presume a bidding war will roll in.

“As the market is transitioning, buyer psychology is also transitioning,” says Lauren Schaffer of Triplemint in New York. “Bidding war fatigue coupled with a softening market has created a newfound sentiment that buyers don’t need to engage in a bidding war in order to secure a home.”

However, home seller psychology has yet to catch up to this new reality, putting many at risk of making a variety of mistakes that could squash their odds of receiving multiple offers—or of coming out ahead if they do. Here are some missteps sellers will want to avoid in today’s changing market.

Keeping an eligible homebuyer waiting too long because you’re hoping for a bidding war

Schaffer in New York currently has a three-bedroom condo that should have sold weeks ago.

“When the listing first hit the market, we received a ton of interest and even received an offer from a qualified buyer over asking price within the first week, ” she says. However, “instead of accepting the offer right away and pushing to contract, our seller wanted to take some time to let the offer ‘breathe.'”

In the past, this breathing room might have allowed time for more offers to roll in. But that did not happen this time.

“When we shared with other buyers that we had an over-ask offer on the table, everybody flaked,” Schaffer says. “For some buyers, there was an immediate and visible adverse reaction to the update. For others, it took a few days for them to circle back, only to say, ‘thanks, but no thanks—we don’t want to engage in a bidding war.'”

You can guess what happened next.

“From there, we circled back to accept the first buyer’s offer, but that buyer also decided to move on,” says Shaffer. The condo is still on the market today.

The moral of this story: If you get a decent offer, especially over the asking price, accept it in a reasonable amount of time, which is typically no more than a few days. No one likes to feel like you’re holding out for something better, and today’s buyers have other options, too—and may very well move on.

Expecting homebuyers to bend to your every whim

In the past, home sellers had so much leverage that their “negotiation” with buyers seemed more like sellers simply telling them how it is. Want buyers to waive their home inspection or home appraisal contingency? No problem. Buyers would have to fall in line or else would lose the house.

Now, however, this lopsided, somewhat despotic dynamic is no longer a given.

“We are seeing more contingencies for inspections, financing, and more modest earnest money deposits,” says Jenn Cameron, managing partner of The Agency Seattle.

Today, sellers in many markets can’t really expect buyers to waive contingencies. And if an inspector finds something seriously wrong with the roof, for example, the seller is more likely to have to give the buyers a credit to get it fixed. Buyers might also make additional requests, like certain pieces of furniture being thrown in or other seller concessions.

Don’t be offended; be flexible.

“Sellers would be best advised to go with the flow,” says Cameron. “This doesn’t mean automatically dropping their price. But it does mean being realistic. This is not the time to be steadfastly fixed in any one position. Sometimes you only need to give a little to get a lot.”

Skimping on presentation

There was a point, not too long ago, when homebuyers were so desperate to purchase property that sellers need not lift a finger in terms of making their home look its best. Many buyers were even willing to buy homes sight unseen.

But with housing inventory rising and rabid homebuyer desperation in the rear-view mirror, sellers are again having to step up their game and spruce up their homes. So put a little elbow grease into the presentation of your home, and expect buyers to be as particular as they were before COVID-19.

“Setting the stage for obtaining multiple strong offers is very important,” says Cindy O’Gorman of The Agency Los Altos. “Sellers need to take great care in preparing their homes to bring in the most amount of buyers at the highest price. This is what creates a successful bidding war for the seller.”

Accepting the highest offer, even if it’s on shaky ground

Steve Brown of Las Vegas chose to accept the highest offer on his house, even though the buyer requested a four-month escrow.

“I thought a long escrow would be just fine, since it would give me plenty of time to look for my next home,” he recalls. But you know what they say about the best-laid plans.

“During the first month, I found two homes I really wanted to buy, but lost out in bidding wars because I had to request a longer escrow myself,” he laments. “To make matters worse, at the end of the four months, my buyer backed out of his offer, and I had to go through the hassle of putting my house on the market all over again.”

Brown says he really wishes he would have chosen the second-highest offer on his house the first time around, even though it was $15,000 less than the highest.

The lesson: Don’t be deceived by dollar signs. Certain other deal factors, like an all-cash offer or release of contingencies, can be worth far more than the difference in price. Carefully consider the pluses and minuses of every offer, even if it’s not one of the highest.

Pricing your home way below market value in anticipation of a bidding war—which may not happen

During the home-selling heyday a year ago, one Tampa, FL, homeowner with the initials J.R. (who prefers anonymity) saw his neighbors price their homes below their estimated value. He soon saw why with the insane bidding war that ensued, driving the final sales price well over the asking price.

“So I listed my house about $10,000 below the estimated value, thinking a lot of buyers would see that and jump in,” he says. “I hate to admit it, but I guess my timing was off. I couldn’t believe it when I started getting offers that were actually below my list price.”

With an increased number of homes in the same price range on the market, buyers had more choices and weren’t as desperate. It’s a good lesson that sellers can’t take anything for granted these days, and that the old ploy of pricing low to sell high might have lost its oomph. As always, this will vary by area, so make sure to check the sales price of comparable properties, aka comps, and consult with a real estate agent on the best pricing strategy for you.

Getting frustrated by how long it’s taking for offers to roll in

All that said, just because the market is shifting a bit definitely does not mean sellers will never see a bidding war again.

According to real estate agents, residential properties are still receiving multiple offers. It’s just taking a wee bit longer to get them, and there might not be quite as many bidders as the deluge a home might have received a year earlier.

“It’s likely sellers will experience longer market times,” says Cameron. She adds that the wait can be frustrating for sellers, many of whom have come to expect a swift sale. But in most cases, it’s worth the wait.

 

Lisa Johnson Mandell is an award-winning writer who covers lifestyle, entertainment, real estate, design, and travel. Find her on ReallyRather.com

How to Clean Brick Pavers for an Outdoor Space That Looks Like New

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Brick pavers are a strong material perfect for creating patios, garden paths, driveways and even pool surrounds. But without maintenance, brick starts to look worn and dirty, and can even become loose or uneven.

CREDIT: KRITSADA PANICHGUL

By Kristina McGuirk

Frequent sweeping is one of the best ways to keep brick pavers looking good. But pavers can get soiled with muddy shoes, windblown dirt, food spills, and standing water—and these require a bit more elbow grease. Here's how to clean brick pavers so they keep their crisp lines and natural color. 

Before You Start 

The cleaning methods discussed below are for unpainted, clay brick pavers only. Some cleaners and scrubbing tools may damage paint, so look for specific cleaners and directions to best care for those surfaces. Concrete brick pavers can be treated similar to clay brick pavers, but look for commercial products approved for cement and concrete. A home improvement store that sells cleaning solutions should be able to help.

Just a few supplies and bit of elbow grease can keep your patio or garden path looking new.

What You'll Need

  • Stiff-bristle scrub brush 

  • Broom

  • Garden hose

  • Cleaning solution

  • Gloves

  • Handheld sprayer or bucket and sponge

  • Tarps (optional)

  • Low-power pressure washer (optional)

  • Additional mortar or sand for joints (optional)

 

How to Clean Brick Pavers 

Step 1: Check the Weather 

When using a solution to tackle paver grime, the Brick Industry Association (BIA) recommends cleaning when the temperature is above 50 degrees and will stay above freezing for a week. Avoid cleaning in high temperatures so that water and cleaning solutions don't dry too quickly. Cleaning solutions that dry on brick often result in residue that you'll have to scrub away again. 

Step 2: Clear the Area and Make Repairs

Relocate planters, furniture, and other items on or obstructing access to pavers. Remove moss growth and pull out weeds and other plants sprouting between pavers. Be cautious not to loosen pavers when uprooting big weeds or damage the bricks or joints with sharp weeding tools. Your goal is to fully expose the brick for an even clean, which may mean trimming back encroaching overgrowth from landscaping. Consider covering nearby landscaping to protect it from overspray and cleaning solutions. 

If there are damaged bricks, uneven pavers, or mortar that's worn away, now is the good time to make those fixes, too. For brick installations that use sand in the joints, do not replace sand until you're done cleaning. Finally, sweep away large debris like rocks, twigs, or chunks of dirt.

Step 3: Pick a Cleaning Solution (or Two)

The BIA recommends checking with brick manufacturers for maintenance advice, since cleaning methods vary based on the specific material, installation, and what needs to be cleaned from the paver. However, if that information is not available, the BIA has a basic guide for brick types and cleaning methods. It also discusses how to tackle specific stains.

Start by identifying cleaning solutions based on what you're trying to do, whether that's getting an overall clean or spot-treating a specific stain (or both). Water and mild dish soap is a popular cleaning solution because it's easy to find at home and it won't damage brick, but it will tackle stains. The BIA recommends using hot water for surface cleaning with a detergent. 

White vinegar and water, another common household cleaner, can also be used on mildew. For brick pavers that get a greenish or blackish hue from moss and lichen, damp shady environments, or water run-off, the BIA recommends bleach and water (mixed with a one-to-one ratio) or commercially available biocide treatments.

There are also a number of commercial cleaners available at home improvement retailers. Products should indicate if they work for brick or masonry, but you can also look for stain-specific cleaners too. Simple Green is a popular brick-friendly cleaning product that can tackle oil, grease, or rust that builds up on locations like driveways. 

Avoid harsh, acidic cleaners if you don't need them—the BIA notes these cleaning solutions "may not be appropriate for pavements containing joint sand stabilizers or polymeric sand-filled joints." If you're not sure what you're trying to remove from the brick's surface, start with the least harsh cleaner first, like detergent and water. Then work up to more powerful solutions. 

Choose an inconspicuous spot, like under a chair or table, to test the cleaning solution before going forward with all the pavers. Follow the steps below to clean the area, and give the spot time to dry, too, in order to make sure nothing looks funny or discolored later.

Step 4: Wet the Brick Pavers

Before you apply most cleaners to brick, coat the area with water. "Saturating the surface prior to cleaning reduces the masonry's absorption rate, permitting the cleaning solution to stay on the surface of the brickwork rather than being absorbed," says Charles B. Clark, Jr., vice president of engineering services for the Brick Industry Association. Stopping absorption not only allows the cleaner to stay on the surface to break down grime, but it also prevents cleaning solution residue from settling into the brick. 

Step 5: Apply Cleaning Solution and Scrub

Put on gloves to protect your hands, especially when working with a short-handled brush. The BIA recommends working in small, manageable sections to avoid letting the water primer or cleaning solution dry. Apply the cleaning solution as directed on packaging, or with a sponge and bucket, handheld sprayer, or watering can designated for cleaning solution, depending on the size of the area. 

Most solutions need to sit on brick for a few minutes so the cleaner can loosen dirt and hard residue like stuck-on food particles. However, follow directions for commercial products, and consider giving something like a vinegar solution a little time to work on particularly dense mildew or mold. Then scrub the surface with a stiff-bristle brush to dislodge and remove the grime, being careful not to brush away sand intended to remain between pavers. Do not use steel brushes because they can scratch the brick.

You can use a pressure washer for cleaning and rinsing newer brick pavers, but it is not recommended for older bricks or damaged mortar. "In general, using a low pressurized water cleaning device is appropriate," says Clark. "Low pressure is categorized by less than 400 psi." When pressure washing, the BIA recommends a wider degree nozzle (15 or 40 degrees) and maintaining a minimum distance of 12 inches between the nozzle and the brick. Do not spray directly into the joints between the pavers because it can dislodge sand and mortar that keeps the pavers in place. 

Cleaning mildew or lichen might take a few attempts; don't get discouraged if you have to go through the process more than once to revive especially dingy pavers. 

Step 6: Rinse Surface

After cleaning brick pavers, rinse the surface with a regular hose. You can use a low-pressure power washer if you want extra cleaning power for stuck-on gunk, but be sure not to aim it between pavers. Don't let water linger after rinsing. Sweep water off the pavers in places where water gathers, especially if it's a spot previously suffering from mildew buildup. 

Step 7: Refill Joints with Sand (Optional)

If there's sand (not mortar) between the brick pavers, you'll likely need to add more after pressure washing. You might even need to touch up the sand if you pulled out weeds before cleaning, or if it's simply been a while since the pavers were installed. 

Once the pavers have dried (give it a day or two), refill the spaces between bricks with sand. Brush the sand into the joints and sweep away excess on the surface. Hose down the area to settle the new sand between the pavers. 

 

Kristina McGuirk is a Milwaukee-based freelance writer and editor who covers kitchens, bathrooms, home improvement, decorating, and more for BHG.com. 

6 Ways To Upgrade Your Outdoor Space for $100 or Less

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The sizzle of summer is in full effect, and the priority for most homeowners seems to be replicating the spirit and convenience of the indoors, outside. That means making backyards, patios, and decks as comfortable and fun as possible.

(Photo by Smith & Vansant Architects PC via Houzz)

By Kathleen Willcox

The appetite for upgrading outdoor spaces is at an all-time high, but with the pressures of inflation, 43% of homeowners are less willing to part with their hard-earned cash on home improvement projects.

Homeowners who want a prettier and more functional space outdoors don’t need to wait for an economic miracle to make their yard more livable, though. We reached out to design and landscaping experts for insight into how to upgrade their yards on a dime—no special equipment or skills required. Read on and get ready for instant outdoor inspiration.

1. Paint your front door

Photo by Ana Williamson Architect 

One of the fastest and most impactful ways to improve the look of your home, enhance curb appeal, and make the front porch feel more welcoming is by painting the front door.

“There are so many things that homeowners can do to improve the look and feel outside their homes at a very low cost,” says Tomas Satas, founder and CEO of Chicago’s Windy City HomeBuyer. “When we buy and flip a home, one of the first things we do is repaint the front door.

A fresh coat of paint and a bright color—red, purple, royal blue—won’t just draw people to your yard, they can also give you an opportunity to show off your unique style.

Estimated cost: Supplies, including high-quality paint and a paintbrush, will run you $75 or less.

2. Install a hammock or swing chair

Photo by studiovert environmental + interior design

Swinging in the breeze under a tree is practically the definition of a laid-back summer.

“There’s no more enjoyable way to pass a sunny summer afternoon or evening than from the coziness of a hammock,” says Robert J Fischer, owner and broker at the Robert J Fischer Team at Keller Williams Realty in Round Rock, TX.

Zaeem Chaudhary, an architectural draftsman at AC Design Solutions, suggests adding a swinging rope chair to your seating setup.

“Outdoor chairs can be really uncomfortable,” Chaudhary notes. “Switch to rope chair swings instead, especially if you want to spend a lot of time outside.”

Estimated cost: This dreamy, bohemian hammock will cost you $70, or you can pick up a whimsical swing chair of $65 at Walmart.

3: Bring the Wi-Fi outside

If you work from home or your family loves being able to stream videos outside, upgrade your Wi-Fi.

“If you work from home as so many of us still do, summer is the time to turn the back deck or patio into your office,” says Martin Orefice, CEO of Rent To Own Labs in Orlando, FL. “Unfortunately, your home’s Wi-Fi signal doesn’t always travel to every area of your yard. Investing in a simple Wi-Fi repeater will solve the problem, enabling you to get online and take a Zoom call. It’s also obviously convenient for families who like to spend a lot of time outside.”

Estimated cost: Wi-Fi repeaters are $60-plus at Amazon.

4. Block out the noise with wind chimes

Photo by Buckminster Green LLC 

If noise pollution from yakking neighbors, lawn mowers, or traffic is turning your tranquil space into a cacophonous nightmare, there’s a refreshingly simple and lo-fi solution to that.

“Wind chimes provide outdoor areas with a little musical personality, while also reducing other noises,” says Laurice Constantine, founder of real estate development platform Casadar. “They also add a multisensorial layer to your outside space.”

Estimated cost: Wind chimes can be found for as little as $15 on Wayfair.

5. Upgrade the accessories

“Adding a few colorful outdoor throws to your patio furniture adds a pop of color and can come in handy on chilly nights,” says Kate Diaz, an interior designer and co-founder of Swanky Den. “Hanging a decorative banner or flag above your porch or deck or buying a new doormat or welcome sign for your front door are also fast and inexpensive ways to make a big impact.”

Or, grab a colorful outdoor rug to zhuzh up your space.

“Outdoor rugs are perfect for adding personality and making your space more cozy and inviting,” says Kevin Lenhart, design director at online landscape design platform Yardzen. “If you don’t have the budget to upgrade all of your outdoor furniture, a rug is a great way to liven up the space. Look for rugs made from recycled plastics for fun but inexpensive options.”

Estimated cost: Throws start at $25 at Amazon, or pick up an outdoor rug at Home Depot for as little as $22.

6. Set up a movie theater

If you really want to transform your space, bring Hollywood to the backyard,

“Creating a backyard movie theater is one of the best and easiest ways to make over your space on a budget,” says Emma Loker, a landscaping and design expert at DIY Garden. “All you need is a projector, foldable screen, and speaker. The impact is instantaneous.”

Estimated cost: Outdoor theater kits start at $70 on Amazon.

 

Kathleen Willcox is a journalist who covers real estate, travel, and food and wine. She lives in Saratoga Springs, NY.

The Housing Market Is Correcting—So Why Are Home Prices Still Soaring?

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Home prices have continued their seemingly inexorable rise, despite America’s housing market purportedly being in the throes of a correction, a slowdown—whatever you want to call it. It’s defying what many experts predicted and, just maybe, conventional wisdom.

(Collage by Realtor.com / Getty Images)

By Clare Trapasso

Buyers can’t afford these higher prices on top of higher mortgage interest rates. Deals are falling through. Bidding wars are drying up. Six-figure offers over the asking price are going the way of the dinosaurs. So how is it possible that median home list prices were 15.9% higher in the week ending July 9 than they were a year ago, according to Realtor.com® data?

The disconnect appears to be that home sellers have yet to adjust to this new reality—the one where they can’t slap whatever price they’d like on their properties, sit back, and wait for the bidding wars to commence. Surging mortgage rates have made it impossible for many buyers to afford what they could have just a few months ago.

Meanwhile, record-high home prices are up more than 31% over the past two years, according to Realtor.com June list price data. And they keep rising. Something seems like it needs to give.

“Prices adjust really slowly,” says Realtor.com Chief Economist Danielle Hale. “Sellers are shaped by recent experiences. Before we see prices start coming down, we’re going to have to see sellers stop shooting for the moon.”

And just because sellers are asking for more money, it doesn’t mean they’re getting it. Buyers are negotiating. The number of price reductions on properties doubled in June compared with a year earlier.

Last month, about 11% of builders dropped prices on newly constructed homes, according to building consultancy Zonda. An additional 70% kept them flat compared with May.

“Real estate markets freeze when you see a big change in mortgage rates or the economy,” says Mark Zandi, chief economist at Moody’s Analytics. “Buyers cannot handle these house prices at these mortgage rates,” he says. “The mortgage payment is just too high for most first-time homebuyers. Trade-up buyers aren’t going to trade up because they’re going to have to get a higher mortgage rate.”

Home prices typically spike in the summer. Larger, more expensive homes go up for sale, and families eager to be settled before the kids start school in the fall compete for them. Plus, there are scores of millennials who are reaching the point in their lives when the idea of homeownership becomes more appealing. But now there still aren’t nearly enough homes for sale, or rent, to go around.

Record-low mortgage rates, which fell into the 2% range last year, allowed buyers to afford higher home prices. The lower rates meant that many monthly mortgage payments remained reasonable, balancing out the extra buyers spent on their properties.

However, mortgage rates have spiked from just about 3% a year ago to the mid-5% range. That’s tacked hundreds of dollars a month onto many mortgage payments. Buyers today are faced with mortgage bills 58% higher than they were just one year ago—when prices were also at record highs—on top of higher inflation, rents, and gas prices. That’s rendered many unable to borrow nearly as much for a home anymore and forced many others out of the market.

“A lot of homeowners are still pricing homes based on the market of six months ago,” says George Ratiu, manager of economic research for Realtor.com. “There is a gap between what homeowners are asking and what they’re getting.”

Will home prices fall?

The top question on the minds of homebuyers and sellers alike is whether home prices are going to fall—and if so, by how much.

Many real estate experts anticipate the rate of price growth will slow down as the year goes on. Others predict prices will flatten out as sellers and builders digest the new state of the market and buyers figure out their finances.

“It takes a little time for the wheel to turn,” notes Devyn Bachman, senior vice president of research at John Burns Real Estate Consulting.

Ultimately, exactly what happens to prices will depend largely on individual real estate markets as well as the price ranges the homes are in. Places where prices rose the most during the COVID-19 pandemic are the most likely to come down and have the potential to decrease the most.

These places, such as Austin, TX, Phoenix, AZ and Boise, ID, got juiced by an influx of remote workers and investors who kept prices above what many locals could afford. Now that fewer telecommuters are moving in and with mortgage rates making purchases even more difficult, prices might readjust.

But prices could continue to rise, at least by low single digits, in other parts of the country.

“Housing is so local that it’s hard to paint with a broad brush and say prices will decline. But if you look at the individual ZIP codes as well as certain metros, we will see pricing declines in some of them,” says Bachman. “Home values are no longer realistic for today’s buyers. They can’t afford them.”

A recession is the wild card in the future of home prices

The wild card in all of this is a recession. If there’s an economic downturn, then home prices (as well as mortgage rates) are more likely to adjust. Potential buyers who are laid off or are worried about losing their jobs, probably aren’t going to be attending open houses and putting in offers.

However, home prices aren’t expected to drop off a cliff the way they did during the Great Recession.

The reason: The number of investors and aspiring homeowners right now far exceeds the number of properties for sale. Builders have struggled to ramp construction back up since the mid-2000s, and investors have bought many of the properties that used to house homeowners and turned them into rentals. That demand is expected to keep prices high.

“The market is very tight. That will put a proverbial floor under prices,” says Zandi.

Meanwhile, an influx of foreclosures and short sales like what the housing market experienced in the Great Recession doesn’t appear on the horizon. Lenders have become much choosier when doling out mortgages to ensure only the most qualified applicants receive them. Most predatory mortgages have been eliminated. This leaves homeowners in a much better place to weather another downturn.

“To get big declines in prices, you need to see a lot of foreclosure and distressed sales at big discounted prices,” says Moody’s Zandi. “That’s very unlikely because mortgage lenders have been very cautious since the crisis, and they’ve only [mainly] been making plain vanilla 30-year and 15-year fixed-rate loans.”

He anticipates a downturn could push prices down 5% across the board and much more so in overheated markets.

And, in a boon for buyers, mortgage rates typically fall when the economy is hurting. That can “cushion the blow” for many folks struggling to afford real estate, says Zandi.

The housing correction is fewer sales, more available homes

While the housing correction might not yet be showing up in prices, it’s apparent in the fast-falling number of homes changing hands.

There were about 6.1 million home sales a month in 2021, according to the National Association of Realtors® data. (This doesn’t include sales of newly constructed homes.) In May, the latest month of data available, that fell to about 5.4 million sales a month. That’s a substantial change.

“Home sales have slowed pretty notably. They’re back below their pre-pandemic pace,” says Hale, of Realtor.com. “The housing market is not as hot as it was last year. But compared to any pre-pandemic year, it’s still a pretty hot real estate market.”

One of the side effects of fewer sales is an increase in the inventory of homes on the market, helping to ease the housing shortage. There were 18.7% more homes for sale in June than there were a year ago.

While there aren’t nearly enough properties on the market to ease the housing crunch, more homes for sale is “a reason for buyers to get optimistic,” says Hale.

 

Clare Trapasso is the deputy news editor of Realtor.com where she writes and edits news and data stories. She previously wrote for a Financial Times publication, the New York Daily News, and the Associated Press. She also taught journalism courses at several New York City colleges.