Home Buyers Archives

Is Relief Ahead For Home Buyers?

A new quarterly report from the National Association of Realtors found the median home price reached a new record high during the second quarter. By the end of June, it was up to $413,500. That’s after the vast majority of metro areas saw double-digit price gains from the year before. Put simply, it got more expensive to buy a home this spring. But though buying got more costly during the first half of the year, could the second half of the year bring buyers some relief? Maybe, according to Lawrence Yun, NAR’s chief economist. Yun says buyers may begin to see affordability conditions improve soon, as the market finds better balance. In fact, prices and rates have both gotten more favorable in recent days. “Overall, the national price deceleration inevitably followed the softening sales, providing well-positioned buyers a small measure of welcomed relief,” Yun said. “The recent dips in mortgage rates will bring additional buyers to the market, especially in those places where home prices are still relatively affordable and where jobs are being added.” In other words, home price increases have already begun to slow and, with mortgage rates down from where they were earlier this year, home buyers may begin to see a little relief, after a challenging first half of the year. (source)

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Gov’t Loan Bump May Mean More 1st Time Buyers

According to the Mortgage Bankers Association’s Weekly Applications Survey, demand for mortgage applications was down 2.5 percent last week. But, though there was a decline in the overall number of home buyers looking to secure financing, there was an increase in buyers seeking loans backed by the Federal Housing Administration. And, since FHA loans typically have lower down payment requirements, this could be a indication that, despite the market’s current challenges, first-time home buyers are returning. Mike Fratantoni, MBA’s chief economist, told CNBC last week’s results provide some evidence of that. “The mix of business changed, with FHA purchase volume increasing as conventional and VA volume decreased,” Fratantoni said. “This indicates that more first-time buyers are entering the market, even as the market as a whole continues to be restricted by tight inventories of homes available for sale.” Also in the report, average mortgage rates saw little movement last week, with rates virtually unchanged across all loan categories. The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications.

The Return Of The Gen X Home Buyer

Generally, Generation X is used to refer to people born in the 1960s and ’70s. Because they reached peak home buying age right around the time home prices began to drop, many found themselves underwater on their mortgage and unable to sell their house and upgrade to a larger home. Now, according to the National Association of Realtors 2017 Home Buyer and Seller Generational Trends study, there is evidence that there are an increasing number of Gen X home buyers active in the market. In fact, the most recent increase in buyers from this category was the largest since 2014. Lawrence Yun, NAR’s chief economist, says Gen X homeowners have been in their homes a median of 10 years but may now finally be in a position to put their homes on the market. “Fortunately, the much stronger job market and 41 percent cumulative rise in home prices since 2011 have helped a growing number build enough equity to finally sell and trade up to a larger home.” And, because the number of homes available for sale is low in many markets, a growing number of Generation X homeowners ready to sell could provide the needed inventory boost that helps balance the market and moderate future home price increases. More here.

Lower Rates Give Buyers Spring Fever

The Mortgage Bankers Association’s Weekly Applications Survey is a measure of both mortgage rates and demand for loan applications. Conducted weekly since 1990, the survey is a good source for tracking market trends. According to the most recent survey, average mortgage rates fell last week across all loan categories. Rates declined for 30-year fixed-rate mortgages with both conforming and jumbo balances, 15-year fixed-rate loans, and mortgages backed by the Federal Housing Administration. MBA economist, Joel Kan, said the rate drop was largely due to events overseas. “Rates declined last week as investors favored U.S. Treasury bonds due mainly to political concerns from abroad,” Kan told CNBC. Regardless of the reason rates moved lower, prospective buyers took advantage. In fact, demand for loans to buy homes rose 7 percent from the week before. But because spring is typically the busiest time of year for home buyers, some of that spike might have to do with the approaching sales season more than the rate drop. Also in the report, refinance activity climbed 5 percent over the previous week. It is now at its highest level so far this year. The week’s results contain an adjustment for the Presidents’ Day holiday. More here.

59 Million Americans Say They Want To Buy

A recent survey conducted by Princeton Survey Research Associates says 59 million Americans are considering buying a home this year. That’s roughly one in four adults. Conducted on behalf of Bankrate, the survey shows the strongest demand among parents with young children and adults between the ages of 27 and 52 – not surprising considering the lower-than-usual number of first-time home buyers active in the market over the past few years. Holden Lewis, a mortgage analyst with Bankrate, says there’s a lot of pent-up demand among younger buyers. “They have been stymied by stagnant wages, student loans and a lack of available starter homes,” Lewis said. “If enough affordable homes are put on the market, we might see a surge of first-time home buyers in their early to mid-30s.” That, however, is the big question for home buyers this year. Will there be enough affordable homes on the market to support the increasing number of interested buyers? There have been signs recently that home builders are beginning to build smaller, more affordable homes but, without a spike in the number of Americans hoping to sell their homes, buyers may face another competitive spring market this year. More here.