All posts by Tomie Raines Housing News

Keep Heating Costs Down This Winter

In fall 2022, experts warned that heating costs will be the highest in 10 years as households pay nearly 18% more this winter. Between the 2020-21 and 2022-23 winters, home energy costs increased by 36%. So, what can you do to stay warm and save energy costs?

Check your home for air leaks:

  • Nearly one-third of a home’s heat loss occurs through windows and doors.
  • Air can leak through electrical outlets, baseboards, and attic hatches.
  • Caulking leaks can save the average household up to $166 per year.
  • Weather-stripping windows can save up to $83 per year.

Next, check your energy usage habits: 

  • Lowering the thermostat by 10 to 15 degrees Fahrenheit for 8 hours at night can save as much as 10 percent on your heating bills.
  • A smart thermostat saves about $180 per year in energy costs.
  • Just one LED bulb can save you $50 over its lifespan. Multiply that by the average number of light sockets in a home – 40 for a savings of $900.
  • A gaming console uses at least 10 times more energy to stream a movie than a Roku box or smart TV app.

 Water Heater Tip!
Lowering your water heater from 140 degrees to 120 degrees will save as much as $400 annually.

Home values are up. Sales numbers are down!

Fourth quarter sales statistics (October – December) shows that the average sales price of Lansing area homes increased from $214,161 to $229,554 during the twelve months ending on December 31, 2022. This 7.2% growth represents an average home value increase of $15,393.  (These figures include all sales throughout the Greater Lansing Association of Realtors.)

 Check out our Fourth Quarter 2022 Sales Statistics Link (below) for an update of sales activity by community. (Please note that pending sales, properties under contract that have not yet closed, are not factored into these statistics.)

Fourth Quarter 2022 Sales Statistics

Interest Rates
The overall number of home sales is 864 units lower than at the close of 2021. This 11.5% drop was due to a sudden change in buyer purchasing power when mortgage rates suddenly escalated from below 3.5% to 5.8% in June. Rates went as high as 7.3%, finally finishing at 6.42% by year’s end. Many buyers, suddenly unable to purchase the home they had been shopping for, just walked away.

Financially, borrowing $200,000 in April 2022 at 3.5% would have produced a monthly mortgage of $898. The same $200,000 mortgage at 5.81% (end of June) cost a buyer $1175, an increase of $277 in the monthly payment.  A mortgage loan at 6.42% results in an increase of $368.

As we enter 2023
Owning is still less expensive, and more satisfying, than renting. Recent sales, and January open house activity has demonstrated that buyers are adjusting to the cost of home ownership at mortgage rates similar to what they were twenty years ago, when the market was booming.

Housing Outlook 2023

What will the new year bring for homebuyers, homeowners and home sellers? Lower or higher home prices? Higher or lower mortgage interest rates? Or a continuation of the overheated pandemic-inspired housing market?

There’s no question that the blistering housing market of the past three years was hard on homebuyers. By October 2022, the average mortgage interest rate for a 30-year fixed is 7.24%, more than double the 3.22% level in January 2022.

According to Fannie Mae, the combination of high inflation, monetary policy tightening, and a slowing housing market is “likely to tip the economy into a modest recession in the first quarter of 2023.” However, the housing market is typically slow during the first quarter in Michigan due to cold weather.

Many economic forecasters believe housing prices will decline, but that homebuyers shouldn’t fear buying during a declining market. Morgan Stanley predicts a 7% dip in home prices for 2023 that would only return housing prices to where they were in January 2022 – 32% higher than prices were in March 2020 when the pandemic began. Economists with Goldman Sachs and Moody Analytics are predicting 5% to 10% declines in home prices, based on lack of homebuyer affordability, slowing housing sales, fewer mortgage applications and a looming recession, however mild.

BusinessInsider.com reports that the Federal Reserve’s overnight rate hikes have raised mortgage interest rates, pushing affordability to new lows, but that a recession could bring interest rates down again. That combined with softer homebuying demand due to inflation and sellers lowering their prices would make spring and summer 2023 great times to buy a home.

Get Ready to Buy a Home in 2023

Inflation, home prices and interest rates were higher in 2022 than they’ve been in years, but if you’re planning to become a homeowner in 2023, you’ve got time to improve your buying power.

It’s strongly recommended to talk to a mortgage lender, even if you aren’t ready to buy until later in the year. They can “review all aspects of your financial picture” and help you find sources for a down payment, help you raise your credit score to improve your future borrowing rate and help you find ways to reduce your existing debt without triggering costly inquiries into your credit history. Most important, they can help you understand the differences between conventional (Fannie Mae, Freddie Mac) and government-guaranteed (FHA, VA, USDA) loan programs and help you choose the right loan so you can work toward qualifying for the most favorable terms.

Your goal for the near term is to save as much as possible toward a down payment. With VA or USDA loans, no down payment is required, but for other loans, you’ll need at least 3.5% of the purchase price of the home you plan to buy as a down payment. At the same time, you want to pay down debts, beginning with the least expensive credit card balances to improve your credit scores. Don’t close any accounts or incur new debt. Keep your revolving loan balances to 30% or below your credit limits. The higher your credit score, the more loan options are available to you.

It’s been the year for contradictions in the housing market

Housing sales have slowed down, home builders are slowing down production and mortgage interest rates are more than double what they were a year ago. Mortgage applications are at their lowest level in 22 years. However, home prices remain near record highs, driven by low supplies, and a strong job market. Is now the time to buy, or should you wait for housing prices and rates to come down?

Only you know when the time is right for you to become a homeowner, but if you’re uncertain, consider that the following:
Lansing area real estate market traditionally slows down during the holiday season and doesn’t gain momentum until early Spring.

Don’t expect housing prices to drop anytime soon. The housing shortage will continue in the greater Lansing area for as long as there are more home buyers than available home to fill the demand. One possible change may be that higher interest rates may reduce the number of bidding wars.

The Lansing area’s largest employers, such as Michigan State University, are in a continuing labor transition. This helps create a continuous housing market.

Owning a home is a long-term investment and a hedge against inflation. With rentals rates costing as much, or more, than the monthly cost of home ownership, purchasing a home is an option worth consideration. Should you stay in your home for a few years, allowing you time to build equity, you’ll likely recover your down payment, closing costs, and maintenance expenses.

Lansing-East Lansing Ranked Top Affordable Housing Market in Nation

Lansing-East Lansing was the nation’s most affordable housing market, defined as a metro with a population of at least 500,000. Here, 84.4 percent of all new and existing homes sold in the third quarter were affordable to families earning the area’s median income of $89,500.

Top five affordable major housing markets:
1. Lansing-East Lansing, Mich.
2. Indianapolis-Carmel-Anderson, Ind.
3. Scranton-Wilkes-Barre, Pa.
4. Toledo, Ohio
5. Syracuse, N.Y.

The National Association of Home Builders has reported this week U.S. housing affordability fell to its lowest level since NAHB began tracking it on a consistent basis in 2012. They say rising mortgage rates, ongoing building material supply chain disruptions, high inflation and elevated home prices and pushed the housing market into a recession.

According to the NAHB/Wells Fargo Housing Opportunity Index, just 42.2% of new and existing homes sold between the beginning of July and end of September were affordable to families earning the U.S. median income of $90,000. This marks the second consecutive quarterly record low for housing affordability since the Great Recession.

Mortgage Rates are 7.08% Home Shortage Continues

The Lansing area housing shortage continues with higher mortgage rates having reduced the number of qualified buyers who are able to invest in a home purchase. Unlike last year’s market, when the monthly mortgage payment considerably cheaper, homes are taking longer to generate an offer. Entering the winter market, sellers listing their home above market value may have few showings.

If you’re looking to buy a home, the days of low interest mortgages below 4% have passed. Recent inflation has translated into higher interest rates with increased monthly payments. Mortgage rates have increased consistently since the start of 2022 when they were at 3.5%.
As of October 31st, the rate for a 30-year conventional mortgage has climbed to 7.08%.

Inflation, home prices and higher mortgage rates are impacting affordability. Causing many homebuyers to stop looking. Buyers who made unsuccessful offers during the Spring 2022 market may need to adjust their budget and their expectations. The table below illustrates the difference in monthly mortgage payments for a few common mortgage amounts.

Mortgage Amount 30-year @ 7.08% (October 31, 2022) 30-year @ 3.5% (April 1, 2022)
$150,000 $1006.02 $673.56
$200,000 $1341.36 $898.08
$250,000 $1676.70 $1122.61
$300,000 $2012.05 $1347.13

Home sales in the Lansing area market remain normal for this time of year and the statistics are consistent with previous years. Of course, things may change, but rents have been steadily increasing, making it economically cheaper to buy than to rent.

Lansing Area Market View – November 1, 2022
• 717 currently listed homes for sale in the five county greater Lansing area.
• 250 homes with accepted offers. Awaiting inspections and/or appraisal.
• 302 homes listed as Pending. Have completed inspections and will soon close.
5684 homes that have closed since January 1, 2022.
• 7051 homes that have closed in the past 12 months.

Mortgage interest rates
30-year fixed – 7.08% ($6.71 per $1000)
15-year fixed – 6.36% ($8.63 per $1000)

Lansing area Home Values are up 8.6%…Mortgage rates up to 6.93%

Third quarter sales statistics (July – September) shows that the average sales price of Lansing area homes increased from $213,401 to $231,683 during the past twelve months. This 8.6% growth represents an average home value increase of $18,282.  (These figures include all sales throughout the Greater Lansing Association of Realtors.)

 Check out our Third Quarter 2022 Sales Statistics Link (below) for an update of sales activity by community. (Please note that pending sales, properties under contract that have not yet closed, are not factored into these statistics.)

Third Quarter 2022 Sales Statistics

Interest Rates
Throughout 2021 mortgage rates were continually between 2.8% and 3.5% making it easy for buyers to make extremely competitive offers for the few available home choices.  At the beginning of 2022, January mortgage rates for a 30-year conventional loan were at 3.55%.  However, mortgage rates on October 19, 2022, have risen to 6.93%. 

Financially, borrowing $200,000 in 2021 at 3.5% would have produced a monthly mortgage of $898. The same $200,000 mortgage at 6.93% will cost a buyer $1321.  An increase of $423 in the monthly payment. 

Selling as we enter the holiday season
Sellers who list their homes during the November and December will not likely see a large number of multiple offers with appraisal guarantees. Buyers are now being more conservative and holding back until the ‘perfect’ home becomes available. However, Holiday shoppers are likely to be serious buyers who need to move now or in early 2023.

Mortgage Rate Increase…Home Sales are Stable

For sellers, sales continue to remain stable due to a continued short supply of homes to satisfy the buyer demand. However, increasing mortgage rates have reduced the number of buyers willing to make extravagant offers in a competitive bidding situation. Going forward, sellers listing their home above market value may have very few showings and see no offers.

If you’re looking to buy a home, the days of low interest mortgages below 4% have passed. Recent inflation has translated into higher interest rates with increased monthly payments. Mortgage rates have increased consistently since the start of 2022 when they were at 3.5%.
As of today (October 1st) the rate for a 30-year conventional mortgage is 6.82%.

Inflation, home prices and higher mortgage rates are impacting affordability. Causing many homebuyers to stop looking. Buyers who made unsuccessful offers during the Spring 2022 market may need to adjust their budget and their expectations. The table below illustrates the difference in monthly mortgage payments for a few common mortgage amounts.

Mortgage Amount30-year @ 6.82% (October 2022)30-year @ 3.5% (March 2022)
$150,000$979.88$673.56
$200,000$1306.50$898.08
$250,000$1633.14$1122.61
$300,000$1959.77$1347.13

Home sales in the Lansing area market remain normal for this time of year and the statistics are consistent with previous years. Of course, things may change, but rents have been steadily increasing, making it economically cheaper to buy than to rent.

Lansing Area Market View – October 1, 2022
• 714 currently listed homes for sale in the five county greater Lansing area.
• 287 homes with accepted offers. Awaiting inspections and/or appraisal.
• 351 homes listed as Pending. Have completed inspections and will soon close.
5161 homes that have closed since January 1, 2022.
• 7150 homes that have closed in the past 12 months.

Mortgage interest rates
30-year fixed – 6.82% ($6.53 per $1000)
15-year fixed – 5.97% ($8.89 per $1000)

9 Tips to Save on Your Heating Bills This Winter

As the leaves begin to turn and cold evenings drift in, heating costs may have entered your mind. Fall is the perfect time to make improvements to save on heating bills this winter. Some of these might be larger projects, while others you can do in a few hours. Go through these tips to save on your heating bill this winter, and see which ones make sense for you.

1. Get an Energy Audit 

If your home heating bills are high, it can be difficult to know where to start. Many local utilities as well as private businesses offer energy audit services to give you a better idea of what improvements offer the best return on investment. Consumers Energy, for example, offers a home energy analysis program to give you an expert opinion on where you can reduce all energy costs, not just your heating bill.

2. Rebates from Energy Upgrades

If you’re considering taking on bigger projects to save on your heating bills this winter, rebates can help reduce the upfront costs. Many utilities offer rebate search services, such as these home energy rebates from Lansing’s Board of Water and Light. This way, you’ll benefit from lower heating bills in the winter while also reducing the costs of energy improvements themselves.

3. Insulate the Attic

When it comes to reducing heating bills in the winter, many people go straight for windows and doors. While this is an area of heat loss, it’s usually not the primary area of heat loss. Since heat rises and since your roof and attic have much more surface area than your windows and doors, most heat loss occurs through your attic and roof.

We all know that heat rises, which is why higher spaces in your home are generally warmer. As you might expect, the warm air doesn’t just park in your attic, though. The process of convection causes it to rise, and then radiation and conduction causes it to escape through the roof, windows, and walls. While it’s impossible to completely stop this from happening, insulating your attic can help to reduce the effect. You might be able to do this yourself, or you might want to hire a contractor.

4. Upgrade Windows 

While attics are responsible for a majority of heat loss, windows are also a culprit, especially in older homes. If your windows are single pane, they’ll lose heat through radiation faster. Double-pane windows, as the name implies, use two panes of glass, with an insulating layer in between. Upgrading to double-pane windows is a significant investment, but it will significantly save on heating bills, and help to lower cooling costs in the summer.

If you have double-pane windows, but you still feel drafts, consider adding weather stripping. If you’re not sure exactly where the draft around your window is coming from, there are two easy tests you can try. First, close the window on a dollar bill or a piece of paper. If the paper is stuck, your seal is tight. If you can move it easily out, your seal is worn-out. If you suspect the glazing around the window is worn-out, use a smoke test. Light an incense stick, hold it near the window, and see how the smoke moves to track a draft.

5. Seal Windows 

If you’re not ready for a full-scale window overhaul, you can add an extra layer of sealing yourself. Clear plastic insulation is made to go over your windows in the winter, and you can install many types of this yourself. Some types stick on, other types require heat, such as a hair dryer, to fit tightly to the window. Make sure those unexpected fall heat waves are over before you start this project, since you won’t be able to open the windows again until you take the plastic off in the spring.

6. Turn Down Thermostat

This is a pretty obvious way to save on heating bills, but it’s easy to underestimate the difference it can make. The Department of Energy estimates a 1% heating bill savings for every 1 degree you lower your thermostat in the winter. This doesn’t mean that you need to wear two pairs of socks all winter long, though. Lowering your thermostat 5 or 10 degrees during the eight or ten hours when no one is home can add up to significant savings. You might also lower your thermostat while you sleep. With about 16 to 18 hours of significantly lowered heating costs, you can feel better about keeping your house warmer while you’re there.

If you’re tired of coming home to or waking up in a cold house, consider installing a programmable thermostat. Many models now allow you to set timers, so you can start warming up the house an hour before you get home or wake up.

7. Update or Tune Up Furnace

You can save on heating bills by reducing the heat escaping from your home, or by improving the efficiency of the heat source itself. If your furnace hasn’t been updated in over ten years, consider making a replacement. Scheduling a tune-up in fall can also help your furnace stay at full efficiency. This might also reveal any problems that could cause a shut-down in the winter. Finally, replace your air filter. A dirty air filter will make your furnace work harder than it needs to.

8. Reverse Ceiling Fans 

In the summertime, ceiling fans should spin counter-clockwise at a high speed. In the wintertime, switch this; run fans clockwise at a low speed. You can usually reverse the fan’s direction using a small switch on the side. Blowing air around to stay warm may seem counter-intuitive, but this interrupts the process of convection. As warm air rises, the slow, clockwise ceiling fan essentially pushes it back down around the edges, and pulls cold air up, without creating a strong current. In summertime, a fast, counter-clockwise fan keeps cold air down by creating a strong downdraft at the center.

9. Insulate Ducts

Heating ducts move warm air throughout your home, but they won’t do this efficiently if they’re not well insulated. Add insulation around ducts and seal any leaks on or around the ducts themselves. This will help warm air move along its intended path with minimal heat loss.

With some tips to save on heating bills this winter, hopefully the cold season doesn’t seem quite so intimidating. Plan out home improvements you can tackle this fall and you’ll be ready for a snug and cozy winter.