Monthly Archives: May 2017

In recent years, there’s been an increasing number of older Americans who rent rather than own their own home. But is renting really a better choice for retirees looking to reduce costs and obligations? Well, not necessarily. While it’s true that homeownership brings with it ongoing expenses like routine maintenance and property taxes that continue even after you’ve paid off your mortgage, renting can’t offer some of the benefits that homeownership alone provides. For example, equity. Once you’ve built up equity in your home, you can take out a line of credit and borrow money from your home’s value. Obviously, this can be a good option for older homeowners on a fixed income. Also, provided you have a fixed-rate mortgage, your house payment isn’t subject to the ups-and-downs of the market the way rent can be. As a renter, you’re at the mercy of your landlord. After all, they own the house or building you’re living in and can set the price to their liking. Like anything, there are pros and cons to owning a home during retirement. However, homeownership provides a valuable asset that can be advantageous for retired homeowners in a position to benefit from it. More here.

According to the Mortgage Bankers Association’s Weekly Applications Survey, demand for home purchase loans was at its highest level since October 2015 last week. The increase was credited to Americans feeling better about their job security and financial situation. “Continuing strength in the job market and improving consumer confidence drove overall purchase applications to increase last week,” Joel Kan, an MBA economist, told CNBC. “The index for purchase applications reached its highest level since the beginning of October 2015, which was the week prior to the implementation of the federal government’s ‘know before you owe’ rule.” Overall, demand for applications for loans to buy homes rose 2 percent from the week before and are now 6 percent higher than at the same time one year ago. Also, in the report, average mortgage rates were up and down last week, with rates flat for 30-year fixed-rate loans with conforming loan balances, up for jumbo loans and those backed by the Federal Housing Administration, and down for 15-year fixed-rate loans. The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. More here.

Last year, first-time home buyers spent 22 percent more renovating their new house than buyers the year before. The increase shows a significant spike in younger buyers who are willing to take on the challenge of buying a fixer-upper. But what’s behind the surge? Well, one obvious reason to buy a house in need of some work is price. Naturally, if you’re going to find a bargain, it’s likely going to be because the house isn’t in the best shape. Depending on how handy you are – or how much savings you’ve built up – you may be inclined to grab a lower-priced house with a plan to upgrade it to your liking. The other reason, which would help explain the recent spike, are current market conditions. Since inventory in many markets is low, there are fewer homes available for buyers to choose from. That means, more buyers are going to have to look at homes that may need a little help. Nino Sitchinava, principal economist for Houzz, the company who conducted the survey, says recent buyers are always a big share of renovations and low inventory of affordable homes is helping to boost those numbers. “Younger and cash-constrained first-time buyers are responding to the low inventory of affordable homes by purchasing properties that require more than just cosmetic upgrades,” Sitchinava said. More here.

When home prices were low and mortgage credit was tighter, hopeful home shoppers worried they might not be able to qualify for a home loan. These days, mortgage credit is more available and home price increases have taken the lead as the biggest affordability concern among potential home buyers. The latest evidence of that can be found among the most recent results of Fannie Mae’s monthly Home Purchase Sentiment Index. April’s survey found a record number of respondents who said they thought they’d have an easy time getting a mortgage. Combined with job stability and higher income, the news means Americans are feeling optimistic about their finances and the prospect of buying a home. Doug Duncan, Fannie Mae’s senior vice president and chief economist, says things are trending in the right direction. “Historically strong inflation-adjusted house price gains are tempering consumer sentiment, whereas consumer optimism regarding the ease of getting a mortgage reached a survey high,” Duncan said. “On balance, housing continues on a gradual growth track.” Overall, five of the index’s six components saw increases and the number of participants who said they felt now was a good time to buy a house was up 5 percent over the month before. More here.

There’s new evidence that younger Americans are beginning to form households of their own at a faster rate than before. And, though young adults are more likely to become renters before they become buyers, the rate at which millennials are pursuing homeownership really depends more on where they live than anything else. Proof of that can be found in the latest Ellie Mae Millennial Tracker, which tracks the mortgage application activity of Americans born between the years 1980 and 1999. According to the latest results, the most popular metro areas among millennial buyers were those in the Midwest. But does that really mean young Americans are flocking to small, Midwestern cities? Well, not exactly. “What this data shows is where there is an inventory of affordable homes, the millennial buyers are ready to enter the market,” Joe Tyrrell, Ellie Mae’s executive vice president of corporate strategy, said. In other words, because affordability conditions are more favorable for buyers in the Midwest, there are more young Americans deciding to buy rather than rent. However, regardless of where you live, the results indicate a strong desire for homeownership among millennials, which should help keep buyer demand healthy for years to come. More here.

According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates were up last week, rising across all loan categories. Though rates remain low overall, they moved up slightly for 30-year fixed-rate loans with both conforming and jumbo balances, loans backed by the Federal Housing Administration, and 15-year fixed-rate loans. Higher rates didn’t hold back buyer demand, though. In fact, demand for loans to buy homes rose 5 percent from the week before and is now 5 percent higher than at the same time last year. Joel Kan, MBA’s associate vice president of industry surveys and forecasting, told CNBC that the rebound may have more to do with the time of year than any other factor. “More prospective home buyers returned to the market after two weeks of decreases in purchase activity, which were possibly due to spring break season and Easter,” Kan said. The rise in purchase activity was balanced by a 5 percent drop in refinance activity, however, which likely fell due to the first mortgage rate increase following consecutive weeks of decline. The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. More here.

Home prices are expected to match their 2006 high at some point later this year, according to CoreLogic’s chief economist, Frank Nothaft. Nothaft says prices were up in March and are now just 2.8 percent below their peak. “With a forecasted increase of almost 5 percent over the next 12 months, the index is expected to reach the previous peak during the second half of this year,” Nothaft says. In fact, prices have already surpassed their previous highs in nearly 20 percent of cities included in the index. So what’s fueling the increases? Well, it’s a combination of a stronger economy, population growth, low mortgage rates, and a lower-than-normal number of homes for sale in many markets. Together, they’ve created an environment where the supply of homes can’t keep up with the number of interested buyers. And, when there are more buyers than available homes, prices rise. Still, buyers shouldn’t be scared off. Mortgage rates remain low by historical standards and that, combined with a stronger job market, should help make conditions better for buyers. Also, as the sales season continues, more homeowners will put their homes up for sale, helping to balance the market and slow future price gains. More here.