It isn’t just the home’s buyer who has to settle up at the end of the closing process, sellers have costs too. In fact, according to one recent estimate, the average seller spends $15,000 before they hand over the keys to their home’s new owner. A big part of that is closing costs, agent commission, and any repairs required following the home’s inspection. But another chunk of that is renovations done before the sale. In fact, a large majority of homeowners fix up their homes before putting them on the market. Things like having the home painted, cleaned, and staged can add up for the 80 percent of homeowners who decide to spruce things up before showing their house. Nationally, the average cost of home improvements done before selling was $2,650, though that can vary greatly from region to region and is also dependent on the type of work that is done to get the house in shape. Of course, unlike buyers, home sellers have the sale of their home to help cover their costs but – assuming they’re going to buy another home – these expenses will obviously have an effect on how much money they have left over to put toward their next house. More here.
Home buyers are out in large numbers this spring. Proof of that can be found in the most recent sales report from the National Association of Realtors. Their monthly tally of how many previously owned homes sold the month before found that the typical home for sale was on the market for just 29 days in April, down from 34 days the previous month. That’s a strong indication that buyer demand is outpacing the number of homes for sale this spring. And that’s saying something, especially since April saw a 7.2 percent increase in for-sale inventory by the end of the month. In other words, there are more homes coming on the market but still not enough to match the number of interested home buyers. Lawrence Yun, NAR’s chief economist, says affordable homes are going fastest. “Homes in the lower-and mid-market price range are hard to find in most markets, and when one is listed for sale, interest is immediate and multiple offers are nudging the eventual sales prices higher.” But despite the competition, buyers aren’t deterred. In fact, the number of first-time home buyers was up for the month and, a look at regional results, shows existing-home sales are above or even with last year’s results in the South, West, and Midwest. More here.
According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates fell to their lowest level since last November this past week. Rates fell across all loan categories, including 30-year fixed-rate mortgages with both conforming and jumbo balances, loans backed by the Federal Housing Administration, and 15-year fixed-rate loans. Naturally, lower rates spurred an increase in the number of current homeowners looking to refinance their loans. Lynn Fisher, vice president of research at the MBA, told CNBC homeowners were quick to take advantage of the drop. “Homeowners took advantage of the 6 basis-point drop in rates,” Fisher said. “Jumbo rates fell even more, sending the average refinance loan size up 5 percent as borrowers with larger loans, who are typically more sensitive to rate changes, moved to refinance.” But though the rate drop led to more refinance activity, demand for purchase loans was relatively flat from the week before. Still, compared to last year at this time, application demand for loans to buy homes is up 3 percent. The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. More here.
Each month, the U.S. Census Bureau and the Department of Housing and Urban Development release an estimate of how many new homes were sold during the previous month. Because it’s an estimate, the month-to-month numbers can be volatile. For example, the most recent residential sales statistics show an 11.4 percent decline in the number of new homes sold in April compared to March. However, a closer look shows that – not only are sales coming off three consecutive months of gains – but March’s estimate was revised upward. In short, last month’s results, though down sharply, are coming off a nearly 10-year high and are about even with where they were at the same time last year. That means, though the numbers may make it look like there is housing trouble ahead, the market is relatively stable and will likely continue along its current path. In fact, economists told ABC News that they believe April’s decline represents a one-month correction and not a warning sign. Also in the report, the median sales price of new homes sold in April was $309,200; the average sales price was $368,300. More here.
There are two groups commonly associated with renting. One is young people. The other is people living in urban centers. Conjure up an image of the typical renter and you’ll probably end up imagining someone in their 20s living in a downtown apartment building. The suburbs, on the other hand, have been traditionally thought of as the place you move to when you’re ready to settle down and buy a house. However, new numbers tell a different story. In fact, the latest data shows rental costs are actually rising faster in the suburbs than in cities. Why? There are a couple of reasons. First, rent has been rising rapidly in cities for quite a few years now, which is causing people to look outside city limits for a more affordable place to live. Another is a relative lack of rental properties in the surrounding suburbs. Where there are fewer options, potential renters are going to find rising prices. One option for discouraged renters is to compare the costs of homeownership in their area. In many markets, buying is actually a more affordable option or, at the very least, compares favorably. More here.
When shopping for a house, you have to choose from the homes that are for sale at the time you’re looking. In other words, unless you’re having a house custom built to your specifications, you’re going to have to make do with what’s on the market now. These days, that’s become more challenging in some areas due to the fact that there aren’t as many homes for sale as is historically normal. So why is that? Well, there are a couple of different factors behind current inventory levels. One is homes that have yet to recover their value. If a homeowner purchased their home just before the housing crash, they may be waiting for prices to reach pre-crash levels before selling. Another is mortgage rates. Many homeowners were able to refinance their loans while rates were low and – though they remain lower than historical norms – these potential sellers fear they won’t be able to get as good a deal, if they move now. Finally, and perhaps most significantly, current homeowners are less likely to put their homes on the market if they feel they won’t be able to find a house they like in their price range. However, despite the factors keeping more homeowners from putting their homes up for sale, there are also some reasons to believe that homeowners who have been waiting may end up selling sooner than later. Among them, surging buyer demand, higher prices, and mortgage rates still hovering near historic lows top the list. More here.
Over the past few years, a pattern has emerged: The economy slows during the first quarter then begins to rev up during the second quarter. Now, according to Fannie Mae’s Economic & Strategic Research Group, we may be on pace to see the same thing this year. But what will that mean for the housing market and hopeful home buyers and sellers? Well, according to Fannie Mae’s chief economist, Doug Duncan, it means things will continue to move forward – although gradually. “Positive demographic factors should continue to reshape the housing market, as rising employment and incomes appear to be positively influencing millennial homeownership rates,” Duncan says. “However, the tight supply of homes for sale continues to act as both a boon to home prices and an impediment to affordability.” In other words, as long as the economy continues to post gains, buyers should be able to manage higher home prices due to their improving financial situation. At the same time, current homeowners hoping to sell their homes this year, will benefit from the upward pressure currently pushing home prices higher. In other words, the market’s outlook remains relatively unchanged from previous months. Low inventory is boosting home prices but the economy and job market have kept buyers in the hunt. More here.
According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates were relatively flat last week across all loan categories, including 30-year fixed-rate loans with both conforming and jumbo balances, loans backed by the Federal Housing Administration, and 15-year fixed-rate mortgages. Despite this, however, demand for mortgage applications was down 4.1 percent from the week before. Michael Fratantoni, MBA’s chief economist, told CNBC the drop could be evidence that first-time buyers are having trouble finding homes this spring. “The survey saw relative weakness in the growth of government application volume, suggesting that many potential first-time buyers remain on the sidelines due to the lack of entry-level homes on the market,” Fratantoni said. A lack of affordable inventory in some markets has been credited with holding back home sales this spring, especially among younger home buyers. Overall, though, demand for loans to buy homes is still higher than at the same time last year, up 9 percent as of last week. The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. More here.
It’s always good to prepare before you set out to buy a house. But that’s especially true in a tight market. If there are more buyers than homes for sale, there’s naturally also going to be competition. And where there’s competition, buyers need to be ready. So what can buyers do to make sure they don’t lose the home of their dreams or blow up their budget? Well, the first thing is to set some boundaries. You’ll need to have a firm idea of what you’re willing to spend, so that you don’t get in a bidding war and buy more house than you can comfortably afford. You’ll also need to know where you’re able to compromise. If there aren’t as many homes to choose from, chances are you’re not going to get everything you wanted in a house. Make sure that you’re focused on things that can’t be remedied later. For example, if you don’t like the kitchen cabinets, they can change but you won’t be able to add more outdoor space, if the yard is small. Buyers in competitive markets should also expect to act fast. You won’t have the luxury of thinking things over once you’ve found a good house. Be prepared to make an offer quickly, as there will likely be other buyers interested in the same property. For this reason, it’s also good to bid competitively. You may want to see if you can get a lower offer accepted but, if you’re trying to beat out other buyers, it’s a better idea to put in an attractive offer than to try and steal a deal. Generally, the more focused and prepared you are, the better your chances will be for successfully navigating a tight market. More here.
Among the many barometers of housing-market health, one of the more significant indicators is new home construction. Especially in areas where there are more buyers than homes for sale, the number of new homes being built can make a difference in how quickly prices rise and how many choices buyers have to choose from. One way to gauge how well the new home market is doing is to look at the National Association of Home Builders’ Housing Market Index. The Index – which measures builder confidence on a scale where any number above 50 indicates more builders view conditions as good than poor – is a monthly look at how builders feel about current and upcoming market conditions. According to the latest results, builder confidence has now risen to its second highest level since the housing crash, hitting 70 in May. Robert Dietz, NAHB’s chief economist, says there is growing confidence in the market for new homes. “The HMI measure of future sales conditions reached its highest level since June 2005, a sign of growing consumer confidence in the new home market,” Dietz said. “Especially as existing home inventory remains tight, we can expect increased demand for new construction moving forward.” More here.