April 2017

What Home Buyers Want Most This Spring

Home buyers, through the years, tend to value the same things. It makes sense. Though styles may vary and specific preferences may change, at the end of the day, we all want the same things out of our homes. Generally speaking, it all comes down to storage, space, and a sense of security. This year is no different. For example, a newly released survey of hopeful spring home buyers found that privacy was the top goal cited when asked what they valued most. Privacy even beat out family needs, which came in a close second. As for storage and space, garages and backyards were also near the top of the priorities list for most buyers. Demographically, younger buyers were more likely to want a large yard, while garages were particularly popular with buyers over the age of 55. Either way, it’s clear that this year’s house hunters have common needs. There is one need, however, that buyers share more than any other. When asked which room was most important to them, 80 percent of respondents named the kitchen. For obvious reasons, the kitchen is consistently ranked high atop buyers’ wish lists. After all, no matter how young or old a buyer is, they need to eat – which is why a good kitchen is always a draw for home shoppers. More here.

Rates Fall To Lowest Level So Far This Year

According to the Mortgage Bankers Association’s Weekly Applications Survey, mortgage rates were mostly down last week. Rates fell for 30-year fixed-rate mortgages with conforming loan balances, loans backed by the Federal Housing Administration, and 15-year fixed-rate mortgages. Rates for jumbo loans were unchanged from the week before. The decline brought mortgage rates to their lowest level so far this year. Michael Fratantoni, MBA’s chief economist, told CNBC the spring season is off to a good start. “The spring housing market is off to a solid start,” Fratantoni said. “Despite the relatively weak job report for March, job growth is averaging almost 180,000 [a month] so far this year, providing a strong support for the home purchase market.” The survey found demand for loans to buy homes was up 3 percent from the week before and is now 3 percent higher than at the same time last year. Refinance demand, on the other hand, was virtually unchanged from the previous week, despite falling interest rates. The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. More here.

Townhomes Make A Comeback With Home Buyers

Historically, townhouses were the city homes the wealthy used when they needed to be in town for social events. These days, however, they’re popular with a wider array of buyers and there are a number of reasons why. First off, their small footprint and vertical design means they require less maintenance and are more likely to be located in trendier, walkable neighborhoods close to amenities and jobs. For that reason, townhouses appeal to both first-time buyers and baby boomers looking to downsize. Townhomes are also appealing because they tend to sell for less than the typical, detached single-family home. That combination of a lower price tag and the ability to be close to retail, entertainment, schools, and amenities have led to a bit of a townhouse building boom over the past few years. In fact, recent numbers from the National Association of Home Builders show a nearly 18 percent increase in the number of townhomes built between 2014 and 2015. But though it may not be the first time they’ve experienced a wave of popularity since their 18^th century heyday, with more and more Americans indicating a preference for them, they’re increasingly a desirable option for prospective buyers looking for a house to buy. More here.

Is It Better To Buy Now Or Save For Later?

For first-time home buyers, saving enough money for a down payment is among the top obstacles blocking their jump to homeownership. Where current homeowners can often use the sale of their house to help fund the upfront costs of buying another home, first timers have to come up with the money by budgeting and staying disciplined. But is it better to put off buying a home until you can come up with a full 20 percent down payment or should you buy now and put less down? This can be a complicated equation – especially since it ultimately depends on how much prices and mortgage rates rise or fall in the future. Despite this, a new calculator from mortgage insurer MGIC hopes to show new buyers that sometimes waiting a year or two to save up money can actually cost more. Vance Edwards, MGIC’s marketing program director, says that – while they don’t want to encourage anyone to buy before they can afford to – they want to help counter the notion that buyers have to save 20 percent before they can think about homeownership and help show that, not only are there other options, it sometimes costs more not to explore them. More here.

Spring Has Homeowners Seeing Opportunity

This year’s housing market depends a lot on whether or not current homeowners decide now’s the time to put their home up for sale. With inventory low in many markets, home prices have been climbing and causing affordability concerns for buyers. But there are two ways to relieve upward pressure on prices. One is more new home construction. The other is more homeowners putting their homes on the market. Doug Duncan, Fannie Mae’s senior vice president and chief economist, says the market may get a boost, if current homeowners become more active. “The housing market could get some tailwinds from a seasonal rise in for-sale inventory, particularly as some sellers seek to lock in profits from recent rapid home price gains,” Duncan said. “The market could also get a boost from homebuyers who decide to jump into the market before rates rise further.” The good news is there are an increasing number of Americans who believe this is the time to sell. In fact, Fannie Mae’s most recent Home Purchase Sentiment Index saw a 9 percent jump in the number of survey participants who said they feel it’s a good time to sell a house. If more homeowners begin to list their homes this spring, it’ll offer buyers better choices. It’ll also help moderate future price increases. More here.

How New Homes Help Buyers & The Economy

April is New Homes Month and, according to data from the Commerce Department, there’s a number of reasons to celebrate. Not only do new homes offer buyers the advantage of having a brand-new house with all new plumbing, electrical, mechanical, and structural features but they also provide increased energy efficiency and more amenities. Simply put, new homes can offer things a home built 40 years ago can’t. They’re also a good indicator of the health of your local housing market and economy. Research from the National Association of Home Builders shows every 100 single-family homes built creates nearly 300 jobs, $28 million in wage and business income, and $11 million in tax revenue. In other words, new home construction helps the local economy in addition to offering buyers more choices and helping moderate prices. So far this year, buyer demand and consumer confidence have both been high and there’s an expectation that more new homes will be built to accommodate those prospective buyers. Granger MacDonald, NAHB’s chairman, says there’s reason for optimism. “Our builders remain optimistic about the market for newly-built single-family homes and consumer confidence is strong, which should set the stage for a strong spring home buying season,” MacDonald said. “Americans continue to place a high priority on homeownership and work hard to achieve this goal for their families.” More here.

Average Home Loan Reaches New Record High

According to the Mortgage Bankers Association’s Weekly Applications Survey, the size of the average home loan has reached a record high. And, since the survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications, that’s saying something. But, though the increasing size of the average mortgage may seem like the natural result of rising home prices, it actually has more to do with the fact that there has been more buying activity at the higher end of the real-estate market recently. In short, there are more expensive homes on the market than there are affordable homes to buy. As inventory picks up on the lower end of the market, the size of the average mortgage will likely moderate. Also in the report, mortgage rates were relatively flat from the week before, with little change seen among 15-year fixed-rate mortgages or 30-year fixed-rate loans with both conforming and jumbo balances. Loans backed by the Federal Housing Administration saw the biggest change, falling from the week before. Lynn Fisher, MBA’s vice president of research and economics, says the market was fairly steady last week. “Markets appeared to hit pause last week, with little new information emerging about upcoming administrative or legislative policy changes,” Fisher told CNBC. More here.

Educated Buyers Make Happier Homeowners

The best defense against making avoidable mistakes is education. The more you know about something, the less likely you are to screw it up. So you’d think home buyers would want to learn as much as possible before heading out to find a house to purchase. After all, buying a house is major financial transaction and a serious commitment. And yet, surveys of potential home buyers consistently find that large majorities of them share in some common misconceptions about what it takes to buy a house and how the process should unfold. Recently, Fannie Mae’s Economic & Strategic Research Group interviewed real-estate agents, buyers, and loan officers in an effort to figure out why there isn’t more focus on homeownership education before buying. Not surprisingly, most of their answers boiled down to there not being enough time during the process to focus on education. But common misunderstandings about down payment requirements, financing options, and the added costs of homeownership can scare off buyers or lead them to make unwise financial decisions. That’s why it’s always important, as a buyer, to ask questions along the way. Though you may not have time for hitting the books, you can always lean on the expertise and knowledge of the professionals you hired to guide you along the way. More here.

How To Think About Home Prices In 2017

Home prices can be intimidating. Without some guidance and understanding, it’s easy to get confused about what a particular price will mean when all is said and done. Mortgage rates, taxes, insurance, and your income all play a role in how much house you can afford. So a simple price tag won’t always accurately reflect what that number means in terms of your monthly bills, the overall costs of homeownership, and how it all fits into your plans and goals. A price that is out of reach when mortgage rates are up becomes affordable when they fall. Naturally, the same is true for incomes. When wages grow, so does buying power. That’s why this year’s housing market is, in many ways, a race between prices, rates, and wages. If continued economic growth and job market gains boost buyers’ incomes and confidence in their employment status, it’ll help alleviate concerns about rising home prices. According to Freddie Mac’s most recent monthly outlook, it should be close. Though they expect affordability conditions to affect buyers, they also expect continued economic gains and job market improvement. All in all, they estimate there will be 5.9 million home sales this year, down only slightly from 6 million in 2016. In other words, prices and rates may have an effect but only a small one. More here.

Selling Your House Means Becoming A Buyer

It’s somewhat natural to want to break up the housing market into buyers and sellers. You’re either a homeowner looking for a home buyer or on the hunt for a new place to call your own. But though that’s the way a lot of us think about the real estate market, the fact is, if you’re in the process of selling a house, you’re likely also in the process of looking for a house to buy. And that complicates the transaction a bit more than say a renter looking to become a first-time buyer. Why? Mostly, it’s due to timing. And, according to one recent survey, that’s especially true these days. Because the number of homes for sale is lower than normal in many markets, home sellers are concerned about being able to find a house to move into once they’ve sold theirs. So much so that 65.6 percent of surveyed real estate agents said it’s the greatest challenge for sellers in their market. So what should a home seller do? Well, fortunately, there are options – whether it’s a contingency worked into the sale contract or an arrangement to stay with family in the interim. Whatever the particulars of your situation, your prospects as a buyer are something to consider when deciding when to put your home on the market. More here.