No matter how many times you’ve relocated or how long you think you’re going to be at your new duty station, every military PCS comes with this major question: Where are you going to live?
Whether you rent or buy a home depends on a host of factors specific to your situation. But you also need to take into consideration the current housing market. So what do you need to know, going into this military move season?
In this episode of “PCS with Military.com,” VA home loan and mortgage industry insider Michelle Crumley sits down to talk us through the many considerations for deciding whether to buy when the home market is wild. Listen now.
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The following is an edited transcript of this episode of PCS with Military.com
Amy Bushatz: Welcome to PCS With Military.com. I'm your host, Amy Bushatz, Military.com's executive editor. On this podcast, we talk about everything you need to know to make this military move season your best yet. PCS With Military.com is brought to you by Navy Federal Credit Union. Proudly serving all branches of the armed forces, veterans and their families. No matter where you are in your military career, Navy Federal Credit Union has the products and resources to help you navigate your finances. Learn more at NavyFederal.org. Our members are the mission.
Now, let's get this PCS started.
One of the most important steps of any military move is deciding where you're going to live when you get to where you're going. Few things are worse than sitting in temporary housing without any idea of where you'll unpack your boxes once they arrive. House hunting is a roller coaster on its best day, but it's become extra stressful in a post covid world.
High demand, low inventory and inflation have made it that much more complicated. So how can military families navigate this stuff? Should you buy or rent? How do you find a home within your price range? Today we have someone here to help us with this craziness.
A military spouse of 30 years, Michelle Crumley has spent 20 years in the mortgage industry. She's the military client and community liaison for Caliber Home Loans, and today she's gonna give us her best insight on how to house hunt and what you need to know. Michelle, welcome to PCS With Military.com.
Michelle Crumley: Thank you so much for having me, Amy. It is great to be with you guys.
Amy Bushatz: Well, I am very excited to talk to you about this important subject today. Why don't you start by telling us how many times you have moved with or without the military in this 30 year time span?
Michelle Crumley: Well, believe it or not, just four. And two of those we did on our own and they were like, when we first got married and I moved from Georgia to Virginia. We moved around in Virginia once. The two moves that we did use the military for were the formal moves, PCS, moves to and from Alaska. Um, That was a little more than I wanted to bite off on our own.
Amy Bushatz: I'd say there, there are some things that outsourcing completely just sounds very attractive for, and I would agree that that is definitely one of them.
Michelle Crumley: Absolutely.
Amy Bushatz: So, before we start talking about mortgages and home loans and house buying, I just wanna throw in a quick little caveat, which is that this stuff can change month by month. So I think we can characterize the general theme over the last year or so as being bananas- tight market, high interest rates. As I said, it's a rollercoaster.
Okay. But with those caveats in mind that you might wanna check into what's going on right now while you're listening to this, give us some insight about the current housing market. Is it hard to find a home right now to buy in a price range that meets military family needs?
Michelle Crumley: So those are great questions, and there's not a right or wrong and there's not a black and white answer as, as you well know.
Amy Bushatz: Dang it.
Michelle Crumley: And mention, I know, right? Um, it, It varies so greatly, not just from day-to-day, month to month, but from where you're moving to, the location across the US can be very different in what's happening in that market. So I think that where you're going when you're going and then staying abreast as much as you can, as to what is going on in the market as a whole. I read the paper this morning, and there's two articles side by side. They both have valid points, but they are completely contrary to each other as to what they think might be happening with the financial markets, right? So being as educated as you can be.
What we are seeing, and I think that looking at what we are seeing today and then saying, barring anything completely unexpected, this is what we're projecting from here. We know that inventory is still remaining low and that really for those that out there that's, you know, there are a lot more home buyers than there are houses.
In fact, an interesting little tidbit that I read this morning, that was in January this year, there were 1.5 million realtors across the US and in January there were 578,000 homes.
Amy Bushatz: Wow.
Michelle Crumley: That's crazy, right?
Amy Bushatz: That's crazy.
Michelle Crumley: Absolutely crazy. Now the good news is while yes inventory is still low, we are seeing it start to grow a little bit. So there are more houses that are out there than have been in the past. With that, we are, and we know as well that we are seeing less bidding wars happening. Right? So you kind of get a sense that there are more homes, they're staying on the market a little bit longer. The average now is 56 days on market, which is a lot better than where it has been, but it is still expected to remain very tight for the year. In conjunction with those low inventories, again, while they're growing, they're still gonna be pretty stagnant for the year, the values on the homes are still rising, so they're rising at a slower pace, so that is good. We're seeing it cool a little bit, but that doesn't mean that prices are falling. It just means they're not increasing at the pace that they were. That double digit appreciation in a year? We are seeing that slow down to single digits.
Amy Bushatz: So we're saying that there are more people looking for houses and therefore more realtors, fewer houses than there have been, not enough houses to meet the number of people who are looking for them, and comma, the price of the houses, how they're priced when they're being sold is still increasing. It's not doubling overnight, but it is still going up. So homes are more expensive, while still being in less supply.
Michelle Crumley: Correct. Now there are, again those markets, especially around big cities where values have dropped a little bit, actually fall. But in general, the values in mid cities, smaller cities, in the rural areas, staying relatively flat or increasing a little bit.
So again, getting to know your market, working with that local real estate agent that is an expert in that market as well as our military lifestyle, I think is really important.
The average value, just kind of as that tidbit as well, in November, 2022 was $416,000 was the national median purchase price, which is up considerably from where it was pre pandemic, but even 11% higher than it was November, same time the year before.
So the values are still moving up. Which, when you look at that, right, so inventory is low. It can only grow so fast. People have to be willing to sell. People need to want to move. People need, the builders need to build more homes and fewer people need to be buying. And the values are still rising and we don't really see any abate to that.
So that also tells you that prices aren't gonna be plummeting anytime soon. So that idea that you could potentially buy today and that house value is gonna drop 10, 15, 20%, is not likely at this point.
Amy Bushatz: And what you're describing is the fear, right? That you would buy a home at a duty station and then in three years be moving and want to sell the home and it's worth half of what you bought it for, and now you owe more money on it than you can get to sell it and ta-da. You are what we call quote unquote under water. Bad.
Michelle Crumley: Yes. You don't want to be underwater if you can avoid it. Absolutely. And again, we're not projecting anywhere near the kind of depreciation that we saw in value that happened back in with the housing bubble, right. In 2008, 2009, where everything just crashed.
There's just, there's not homes. So there's going to be this, you know, supply versus demand. There's gonna be this out of balance, at least for the next couple of years until the market shakes out a little bit, goes back to kind of that normal situation, at which point, again, we're not seeing dropping values. It's more truly just back to normal appreciation.
Amy Bushatz: Got it. So one thing you haven't really talked about is the high interest rates or high mortgage interest rates. So when you are getting a home loan to buy a house, and I would say almost everybody gets a home loan to buy a house nobody has just this kind of cash sitting in their pocket. You are looking at an interest rate for borrowing that money and while interest rates may have at one point not very long ago, been like, I don't know, 2%, now they're more like seven, 8% or have been recently. So how is that impacting military families who are hunting for what is really just a temporary home for a few years at a duty station?
Michelle Crumley: So the current mortgage environment, right, we haven't seen rates this high in a decade. So historically, when you look backwards, the rates are still low. 6%, 7%, historically is still low. Now, for the vast majority of us that have been in the home buying realm for the last decade or so, they're a lot higher than they have been.
And that's a, that's a sting and it exasperates the issue that we were just talking about with inventory and values and all of that, cuz it directly impacts the affordability of that house, what you can buy. So the good news is that we are expecting that we are hitting the peak with rates in 2023. Um, by the time we get into third and fourth quarter, that we may even see them drop back down to kind of the mid to low sixes.
And as we look out, when we looked at the Mortgage Bankers A ssociation's kind of economic forecast, as we look to 2024 and 2025, we're seeing a decline in those rates over the next two years to probably be back down in the mid to lower fours, which means great for refinance opportunities, right? We always say date the rate- marry the house, date the rate.
You're not gonna be stuck with it because as those rates come down, you have the opportunity to refinance. But it does mean that when you are out looking today, right, you've got to know what you can afford. So you've got to be talking to your expert lender, right? Make sure that you're working with someone that is extremely knowledgeable in the military and veteran space, as well as VA lending, and they can talk to you about what options does a company have to help with the refinance costs? Cuz we are expecting there to be huge refinance opportunities as the rate drops and the market cools.
But in the meantime, you've got to know what you can afford. You've got to feel comfortable with the payment, and you have to stick to your guns when you start house hunting. You've gotta be really purposeful in what you're doing because a high interest rate on an affordable home is extremely doable, but a high rate on a home that you have stretched your budget on, and maybe pushed the envelope on, is gonna put you in a situation that you are going to be uncomfortable or potentially even worse.
Put yourself in a situation where you just cannot make that payment on an any kinda long-term basis, and now you've got other significant financial issues to deal with.
Amy Bushatz: Just a quick pit stop here to thank our sponsor. PCS With Military.com is brought to you by Navy Federal Credit Union.. They may be called Navy Federal, but they don't exclusively serve sailors. Serving all members of the armed forces, they have the products and resources to help you navigate your finances through every phase of life. So even if you can't tell port from starboard, Navy Federal Credit Union will help you earn and save with great rates and exclusive discounts. Learn more at NavyFederal.org. Navy Federal Credit Union, our members are the mission, an equal housing lender.
So you said some things that sound very scary. Um, So .
Michelle Crumley: Don't be scared.
Amy Bushatz: Well, but I'm wondering like on a practical level, does the current market create circumstances under which families who might have bought in the past or considered buying in the past, whether that is buying again or being a first time home owner instead want to consider renting or just living on base until this situation cools.
Michelle Crumley: Well, I think you know that hindsight is 20/20. You could be kicking yourself in 2, 5, 10 years that you didn't buy today. There are a lot of people that are kicking themselves that didn't buy, you know, four or 5, 6, 7 years ago. So it is always, if it is right for you and you can afford it, always take a look at that and do it. Now, with that in mind, are there reasons, right?
So if in this market you're saying, Oh wow. I'm gonna only be somewhere for two years. At two years that's really hard for the cost of getting into the house. Even if values did not increase, it's still hard over two years to project enough appreciation that you'd get out unscathed, right? That you wouldn't have to bring any money to the closing table, or that you'd make back all of the costs along with the purchase. So I think that if you're less than two years, always take a look.
Now we're also running into right in this market, that base housing has long waiting periods. If you're only somewhere two years, I've heard like a JBLM at times that you might have 12 to 18 month wait time and you're only gonna be there for two years. Living on base may not be even an option, right?
So I think you have to look at what is the wait time on base housing? What is your family dynamics? Does it work? If it does and it's two years, why not? At the same time, you're not getting BAH, where if you rent off base, you at least get BAH. And if you can find that rental that meets your needs and it doesn't eat up all of your BAH, you get to pocket that, right? And when you're renting, you don't have to do the maintenance. You don't have to, you know, you might still have to move the lawn, but something breaks, you're picking up the phone and making a phone call. Owning long term, you get to three, four years, I would tell you absolutely take a look at it, right?
The likelihood that you will have appreciation and you will have paid down the loan, through the amortization, that you walk away with some generational wealth that house the proceeds from the sale of that home, that you'll be able to use for the next one that helps you continue buying those next homes.
It's absolutely worth taking a look at. So don't be scared by it, but you've gotta be smart in making those decisions, making sure that you're working with a knowledgeable agent that knows the market, knows the expectations of what's going to happen or what has happened, and then working with that lender that can ensure that you're in a loan that makes sense for your financial position.
Amy Bushatz: So many military families as you just sort of insinuated, might wanna buy a home regardless of the market rollercoaster. Can you offer us three or four tips for making that happen? So we've talked about considerations of how to know if that's something that you wanna have happen, but what do families need to think about or do?
Michelle Crumley: So one of the first thing is you're gonna need to be ready to make an offer fast, right? So if you are in the market and you find that gem, you've gotta be able to move fast on making an offer, on trying to secure that contract on that. So you need to be, have your ducks in a row ahead of time because we are still low in inventory, so it's gonna move fast on the market if it is a good property. The other is find the least expensive house in the most expensive, best neighborhood you can afford. You can always do the upgrades to even add more value to it, but your value is gonna grow a lot more in that less expensive home in that neighborhood than if you buy the best house in the neighborhood, your appreciation is going to be at a slower rate than generally others in that neighborhood. So kind of thinking about what are your needs, what are your wants? What can you give up to find that house that you're looking for? And don't be afraid of fixer uppers, right? If you've got the time to buy that house that maybe needs to have the kitchen redone or you're okay with the 1970s or eighties avocado green, or pink bathroom that's still there, right? So expand what you're willing to look at. Change your search parameters a little bit to open up additional opportunities that you might not have been thinking about.
Amy Bushatz: There's a big difference between a avocado green bathroom that you don't really like fixer upper, and a house with actual problems. And this is important to note because whether the VA will, a VA home loan will be approved for you can be dependent on some of those things that you and I might think of as, oh, we'll just fix that up. But the home inspector thinks of as this has to be happening right now.
Michelle Crumley: This is a safety soundness issue.
Amy Bushatz: Correct. Yes. Yes. So that goes back to what you were saying earlier about having that knowledgeable agent, having that knowledgeable lender who can help you navigate those things and really learn the difference between what's a nice to have and what's a this isn't gonna be approved. Because those things may not seem that big of a difference to you, but they're a big difference when it's time to sign paperwork that you cannot sign because you do not have a loan.
Michelle Crumley: Yep. Oh, a hundred percent.
Amy Bushatz: So, and I'm sure you've seen that as well.
Is there anything else that families need to know?
Michelle Crumley: Try as hard, it is hard, It is a, it is a, an emotional timeframe when you are looking at buying a home. Try not to follow emotions. Really don't get caught up in, in trying to keep up with the Joneses. Don't get caught up in that Vegas mentality of, oh, they didn't accept this bid. I'm gonna bid higher if there's a bidding war. Remember, stick to the facts, know your budget, and then stay the course.
Another thing that you can do that might help put your actual uh, offer ahead of somebody else's offer is don't just get pre-approved with your lender, but actually work with your lender to get fully credit approved so that you know and your seller knows that you've been all the way through underwriting. They've looked at your income, they've looked at your assets, they've, it's all documented. And they have said: you are approved for a purchase on a property up to this amount. Then one, you know you're good. There's no unexpected hiccups. And the seller that you talked to knows that if you needed to move fast on that closing timeframe, you could. And they also know that there won't be, again, any of those credit surprises that might pop up at the last minute.
Amy Bushatz: Absolutely.
Well, Michelle, thank you so much for offering us these really important tips or tricks. All of the scary things not withstanding this stuff is very important to know. And it's one of those things that's sort of like next level expertise and you don't know what you don't know. And without someone like you giving us this advice or giving us these things to think about, we simply wouldn't know it still.
So thank you so much for your time and thanks for joining us on PCS With Military.com.
Michelle Crumley: Always fun guys. Talk to you later.
Amy Bushatz: Thanks so much for listening to PCS With Military.com. Want more PCS advice? Check out the rest of PCS With Military.com wherever you get your podcasts. A special thanks to our sponsor, Navy Federal Credit Union, proudly serving all branches of the armed forces, veterans and their families. No matter where you are in your military career, Navy Federal Credit Union has the products and resources to help you navigate your finances. Learn more at NavyFederal.org. Our members are the mission.
And until next time, happy moving.
