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June 2024 Market Update
May 2024 Market Update
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What is Credit and Why It’s Important
What’s a credit score?
There are few numbers in life that matter as much to your financial health as your credit score. Your credit report and rating compose a financial snapshot that presents you to the business world. Your financial history can affect how easily you can get a mortgage, rent an apartment, make big-ticket purchases, take out loans, rent a car, and even get hired in some industries.
Your credit score is a three-digit number that relates to how likely you are to repay debt. It has nothing to do with how much money you make. This number can go a long way in determining whether a lender will approve you for a credit card or loan and the interest rate you will be charged. I can’t stress enough how important your credit scores will be throughout your entire life.
You actually have more than one credit score. The three major consumer credit bureaus – Equifax, Experian and TransUnion – each create credit reports and scores that contain important information about your credit accounts and financial profile. There are slight variations among the bureaus, but credit scores are always three-digit numbers, typically from 300 to 850. The scores are derived from information in the full credit report, including the person’s payment history, amount of debt outstanding, length of credit history, credit mix, and number of recent applications for new credit. Equifax and Experian provide detailed credit histories that include items like outstanding liens and collections, mortgage history and the exact month of any late payments. Transunion provides more insight into job history.
Scores can be different across the three bureaus because creditors aren’t required to report to all three credit bureaus (it costs them money) and might report to only one or two. The bureaus each have their own frequency and timing for compiling data, so scores may differ depending on the day of the month the data was collected. Residential mortgage companies usually report to all three bureaus.
Different lenders use different scoring models. Since mortgage lenders use the FICO score, we will focus on that. FICO is an acronym for Fair Isaac Corporation, which created the proprietary algorithm used to calculate credit scores from all three credit bureaus. FICO Scores range from 300 (extremely high risk) to 850 (extremely low risk). Having a high score increases your odds of getting approved for a loan and helps with the conditions of the offer, such as the interest rate. Having a low FICO Score can be a deal breaker for many lenders or result in a higher borrowing cost. More banks and lenders use FICO to make credit decisions than any other scoring model.
Your credit score is based on five differently weighted elements:
- Payment History – paying your bills on time is the most important element in your credit score. Its importance is weighted at 35%.
- Credit Utilization – How much of your available credit you are using is weighted at 30%. Consumers should strive to use 30% or less of their available credit.
- Length of Credit History – This is weighted at 15% and is the length of time the accounts on your credit report have been established.
- Credit Mix – Consumers need various types of debt – mortgage, auto loans, revolving debt, etc. This is weighted at 10%.
- New Credit – FICO frowns on borrowers who recently opened new accounts because it signals that more credit is about to be accessed and used. This element is weighted at 10%.
What’s Considered a Good Credit Score?
According to Consumer Reports a credit score in the mid to high 600s is considered good. Consumers with a credit score below 600 typically have a harder time getting loans and apartments. Mortgage lenders like to see numbers in the 700s to secure a favorable interest rate, and FICO scores of 760 or higher qualify for a mortgage lender’s lowest rates.
How Can I Improve My FICO Score?
If you have an average credit score or worse, it’s worth taking steps to improve it. Follow these steps to improve your FICO score, but be patient because improvement happens over time.
- Pay on time, every time. Late and missed payments are the #1 reason scores are lowered. This practice will have the most impact.
- Lower your credit utilization. Stop maxing out your cards every month, even if you pay them off in full each month. Aim for no more than 30%.
- Monitor your credit report. This will help identify any errors that impact your score so you can take steps to correct them. You can check your credit report from each of the three credit bureaus once per year for free at annualcreditreport.com.
- Get a secured credit card, but make sure it reports to all three credit bureaus.
- Don’t close credit accounts after they have been paid off. This will lower your total available credit and impact your credit utilization negatively.
- Speak with a credit counselor to get sound advice. Credit is complicated.
How to Build Credit
Many younger consumers who are recent high school or college graduates don’t have solid credit scores because they haven’t had time to build a credit history. Consumers who pay cash for everything (no loans or credit cards) typically don’t have a credit history either. To build credit follow these steps:
- Become an authorized user on someone else’s credit card account, like a parent or partner. In this case you’re not the primary cardholder and are not responsible for payment but can use the card.
- Find a co-signer with better credit. A co-signor guarantees that you will pay the debt.
- Apply for a secured credit card at your bank, but make sure they report to all three bureaus. The funds you deposit in the credit account serve as collateral in the event you don’t pay the debt. Secured cards typically have much lower credit limits, but it’s a good place to start.
- Apply for a credit card and make sure you pay the bill on time each month. This could be a gas card, department store card, or major credit card.
Few things in life follow you as your credit score does. It provides a snapshot to lenders on how likely you are to pay your debt and has nothing to do with your income. Every time you apply for a car loan, mortgage, cell phone account, cable television, and sometimes even a job, your credit worthiness is being reviewed. Credit is fragile and needs to be used responsibly.
Market Update – April 2024
Earthquakes, Huskies, and a Solar Eclipse
The past week has been very exciting! How often do you experience an earthquake (what?!), solar eclipse, and a national championship all in one week? The UCONN women and men’s teams both advanced to the Final Four together for the first time in history. It was an amazing weekend for basketball! The Husky women fell to Iowa in the semi-finals but the men took the NCAA championship for the second year in a row. Congratulations UCONN!
Spring is here and so is the Spring market. We are still dealing with historically low inventories across Fairfield County. Homes that are properly priced and prepped for sale are still seeing multiple offers over asking price.
Interest rates are trending up again since the beginning of the year. The Fed is in no rush to make any cuts to interest rates given the strong economy and stubborn inflation data. Positive jobs and unemployment data are great for our national economy but bad for mortgage interest rates. Economists hope to see rates decline in the medium term.
Buyers, make sure your mortgage pre-approval and taxes are current, especially if you would like to use 2023 income to qualify. A solid credit score and healthy down payment could improve your rate.
Buyers are out and actively looking, but because of the price inflation, are not always feeling the value on what they are bidding on. Presentation matters more than ever. Sellers, consider small improvements like staging, a paint refresh, professional cleaning, and small fixes so your home looks, smells, and feels well cared for. And take advantage of the spring blossoms to increase your home’s curb appeal.
There’s a lot of misleading information in the media about agency representation and commissions. If you have questions, please reach out and let’s have a conversation. We’re hearing friends, family, and clients repeating things that aren’t accurate, so let us help clear up any confusion.
Market Update – March 2024
Our team is celebrating! Both Kelly and Jeanne received the Five Star Professional award for 2024, based on consumer evaluations and production. I was awarded the Rising Star designation, recognizing newer professionals who excel in client satisfaction. We don’t take these awards lightly! Buying and selling real estate can be fun, but also stressful, and we are honored to guide you through the process. We thank you for your trust.
As we begin the transition from winter to spring, the Spring market usually ramps up with an increase in buying and selling activity. There are many serious buyers out looking for a home, evident in the robust Open House and showing activity. Homes that are properly priced and prepped for sale are still seeing multiple offers over asking price. Unfortunately, the lack of inventory seems to be the main issue again this year. We are STILL at low historic inventory levels, even compared to 2023, which was much lower than previous years. Housing inventory for Fairfield and Easton fell by 36.4% and 21.7%, respectively, when comparing January 2023 and 2024. However, prices are continuing to rise. The median sales price rose by 36.4% in Fairfield and 12.2% in Easton as of January 31, 2023 vs 2024.
Despite the higher demand, sellers are still reluctant to put their house on the market because of the challenge of finding a suitable place to buy, given the inventory shortages in our market. Inventory should improve when we see interest rates become more manageable, but no one can say with certainty when that will happen. Before 2022, most homeowners were able to refinance with mortgage rates below 3.5%, which makes selling now far less attractive. Until mortgage rates ease, inventory scarcity will remain.
The medium-term forecast is still for rates to drop but the market got ahead of itself only to reset when some economic indicators came in stronger than expected. Rates continue to vary significantly from borrower to borrower with credit score, down payment, loan size, property type, lock length, closing costs, and product all contributing to the ultimate rate. Tim Martin, our mortgage partner at Guaranteed Rate understands the market and can help you sort through these details.
While this market can seem daunting at times, it’s still a very energetic market! Let me help you see the opportunities instead of the obstacles. Please reach out if you are considering buying or selling or are just curious about the value of your home.
Market Update – February 2024
Our team is celebrating our Coldwell Banker President’s Circle Award, representing the top 10% of small teams worldwide. We also rank as the Number 2 Small Team for Coldwell Banker in Connecticut! These awards could not have been possible without the trust you have placed in us to guide you through the purchase and/or sale of your homes and the referrals you have made on our behalf. We are humbled and grateful!! Here’s to another great year!
There are many ready buyers out there right now looking for a home. Open House traffic has been robust these past few weeks and multiple offers is still a trend! We are already feeling the energy of the spring market! This is a great time to list your property and get ahead of it. The homes that are getting the most attention are those that have been properly prepped for sale and are priced appropriately. Let me help you highlight the features in your home that buyers are looking for and set the right price for your home. Call me today if you’re considering selling. I can offer valuable insight on buyer preferences and worthwhile improvements.
Although interest rates ebb and flow, they seem to be on a downward trend. In the last quarter of 2023 many buyers purchased with rates in the 7s and almost 8%. Rates will continue to vary, but strong applicants could see their rate in the 6% range. This is a good time to buy and take advantage of the lower interest rates. I can get you in contact with our mortgage partners at Guaranteed Rate Affinity to learn about financing options.
As always, reach out if you are thinking of buying or selling. I would love to hear about your real estate goals and discuss creative buying and selling strategies or answer any questions you may have. Or just reach out to say “hi”. I would love to catch up.
Market Update January 2024
Although the housing market typically slows down during the winter months, we can assure you that there are still many ready buyers out there right now looking for a home. This is the perfect time to list your property and get ahead of the spring market. With less inventory now in the winter months, your property will get more attention from active and ready buyers. Buyers looking this time of year are typically more determined to make strong offers to secure a home and close quickly. These buyers understand the need to act before the more competitive spring market takes off. And selling in the winter months generally means less time and money dedicated to improving curb appeal.
Call me today if you’re considering selling. We can offer valuable insight on buyer preferences and worthwhile improvements.
Interest rates seem to be coming down. In the last quarter of 2023 many buyers purchased with rates in the 7s and almost 8%. Rates will continue to ebb and flow, but strong applicants could see their rate in the 6% range. This is a good time to buy and take advantage of the lower interest rates. We can get you in contact our mortgage partners at Guaranteed Rate Affinity, for more information.
As always, reach out if you are thinking of buying or selling. I would love to hear about your real estate goals and discuss creative buying and selling strategies or answer any questions you may have. Or just reach out to say “hi”. I would love to catch up.
Market Update – November 2023
We are still in a market with record low inventories across all towns in Fairfield County compared to 2020, and home prices are still appreciating. Properties that are prepared and priced properly continue to close above asking price. The pace of the market has slowed a bit, which is normal for this time of year.
We are seeing Relocation buyers this time of year who would like to buy and be ready for the new year with their new job. This is a good time to buy and take advantage of the decreased competition from other buyers. Sellers, even if you’re just beginning to think about selling, we can offer valuable insight on buyer preferences and worthwhile improvements. Let our team help you get your home
looking its best.
The rental market is transitioning. In Fairfield County the average lease price has decreased 5.1%, while the number of properties leased has risen 9.7% compared to one year ago. Both Fairfield and Westport saw a decrease in average lease price (12.2% and 12.5%, respectively).
As always, reach out if you are thinking of buying or selling. I would love to hear about your real estate goals and discuss creative buying and selling strategies or answer any questions you may have. Or just reach out to say “hi”. I would love to catch up.
Market Update – December 2023
The market feels slower, as it does each year at this time. We are still in a market with record low inventories across all towns in Fairfield County compared to 2020. Units sold in Easton are down 50% from 2020, and down 53% from 2020 in Fairfield.
Our team is having several conversations with clients who are thinking about selling in 2024. If you’re considering selling, we can offer valuable insight on buyer preferences and worthwhile improvements. This is a good time to buy and take advantage of the lower interest rates and decreased competition from other buyers who may put their search on pause from holiday time until spring. Beating the rush can be a great idea!
As always, reach out if you are thinking of buying or selling. We would love to hear about your real estate goals and discuss creative buying and selling strategies or answer any questions you may have. Or just reach out to say “hi”. We would love to catch up.
We wish you all a happy and healthy holiday!
Market Update – October 2023
We are still in a market with record low inventories across all towns in Fairfield County compared to 2020, and this has contributed to a swell in home prices. Properties are still closing above asking price. Despite this market appreciation, 25% of properties in Fairfield County have taken a price reduction in the last 60 days – 36% took reductions in Easton and 33% in Fairfield. Are we transitioning? Are properties not being priced correctly? Probably a little of both.
Buyers are looking for homes that are move-in ready, and those that are not, are eventually taking price reductions. Sellers that prepare their home for sale and price it properly when it initially goes on the market are attracting the most interest and getting top dollar for their homes. Sellers, even if you’re just beginning to think about selling, I can offer valuable insight on buyer preferences and worthwhile improvements. Start planning how to get your home looking its best. Presentation matters!
There is still time to purchase a home and move-in for the holidays. Buyers, let me help you see the opportunities in this market instead of the obstacles. Sellers, this is a good time to put your house on the market and take advantage of the decreased competition.
As always, reach out if you are thinking of buying or selling. I would love to hear about your real estate goals and discuss creative buying and selling strategies or answer any questions you may have. Or just reach out to say “hi”. I would love to catch up.
