April 2018

Housing Outlook Says Take The Long View

If you spend any time following the real estate market or economy, you know there’s no shortage of data. Nearly every day there’s a new report detailing some corner of our economic lives, whether it’s consumer spending, mortgage rates, jobs, or home sales. But reading the day-to-day news reports can sometimes give you a distorted view of what’s really happening. That’s because monthly updates on the housing market’s ups-and-downs can be more volatile than a look at annual results. And so it’s important to take a big-picture view of the market from time to time. For example, Fannie Mae’s most recent Economic and Housing Outlook says, despite a slower-than-expected first quarter, the economy will continue to grow. And, according to Doug Duncan, Fannie Mae’s chief economist, home sales will also continue to improve, despite a more challenging environment for buyers. “Soft residential investment last quarter should prove temporary, as home sales resume their slow upward grind, with inventory shortages playing friend to prices but foe to affordability and sales.” More here.

New Home Sales Spike In March

New numbers from the U.S. Census Bureau and the U.S. Department of Housing and Urban Development show sales of new homes rose 4 percent in March and were 8.8 percent above year-before levels. The improvement is a good sign for the spring market and evidence that recent gains in building permits and housing starts are beginning to show results – as those homes are now being finished and put up for sale. It’s also good news for inventory, as growing demand for new homes will help relieve pressure on prices as builders add stock to the market. Not to mention, with an increasing number of hopeful home buyers looking to purchase a house this spring, added inventory means more choices. Still, prospective buyers should know that the new homes that are being built tend to be higher priced. In fact, the median sales price of new homes sold in March was $337,200; the average price was $369,900. That means, though added new home inventory will be good for the overall market, first-time buyers looking for entry-level, affordable homes may still face challenges. More here.

Positive Economic News Moves Rates Higher

According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates increased across all loan categories last week. In fact, rates were up 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. The increase, according to MBA economist, Joel Kan, was due to positive economic news. “Treasury rates increased significantly last week, partly driven by the market’s reaction to more hawkish comments from key Fed officials and positive economic news on strong retail sales and declining jobless claims,” Kan told CNBC. In other words, when the economy is strong, interest rates move higher. But though mortgage rates are now higher than they’ve been in recent months, they are still low when compared to where they’ve been historically. That means, there are still opportunities for buyers to lock in a lower-than-normal mortgage rate when buying a home this spring. The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. More here.

Busy Buyers Say They Hope To Avoid Renovations

Unless you’re buying a new house, you’re likely to be choosing which house to buy based on how much work it might need. And if you don’t have the time and expertise to do the work yourself, you’re going to have to factor possible remodeling costs into your buying equation. In other words, it can get complicated. That’s why, today’s home buyer says they’re looking for a move-in ready home that requires very little renovation. Busy schedules and tight budgets mean many Americans don’t have the resources or time to invest in a major kitchen overhaul or bathroom upgrade. But is it realistic to expect to find the perfect home in perfect condition at a time when many markets have lower-than-normal inventory levels? Well, probably not. That’s why buyers should have an idea about what they will or won’t compromise on before heading out to shop homes. Conversely, home sellers should think about any investments they can make before listing that might help sell their house at a higher price.

Buyers Come Out Despite Market Challenges

For the second straight month, sales of previously owned homes increased from one month earlier, according to new numbers from the National Association of Realtors. In fact, sales of single-family homes, townhomes, condos, and co-ops, rose 1.1 percent to an annual rate of 5.60 million in March. Lawrence Yun, NAR’s chief economist, says warmer weather may have had something to do with the sales pickup. “Robust gains last month in the Northeast and Midwest – a reversal from the weather-impacted declines seen in February – helped overall sales activity rise to its strongest pace since last November at 5.72 million,” Yun said. Put simply, low inventory and higher prices have made the housing market more challenging for buyers in some markets but overall demand is running high and, as the weather improves, may even see further gains. For interested buyers, that means available homes are selling fast this spring. The NAR reports that the typical property was on the market for just 30 days in March and half of the homes that sold were purchased in less than a month.

Prices Below Peak In Nearly Half Of All Markets

If you’ve been at all interested in shopping for a home, you’ve likely heard news about rising home prices. Since the housing crash, home values have rebounded and, in some areas, the climb has been quick. However, news about increasing prices should be measured against how far they fell. In other words, though prices have rebounded, they are still below their previous peaks in many markets. In fact, according to recent numbers from ATTOM Data Solutions, median home prices are still below their pre-recession peaks in 46 percent of the 105 metro areas analyzed – including cities like Chicago, Baltimore, Tucson, Las Vegas, and New York-Newark-Jersey City. That’s why it’s always a good idea to look into where prices are in the specific neighborhoods where you’d most be interested in buying. Price increases will vary from one city to the next. So there may still be opportunities for buyers in the areas you’d like to live, despite home prices’ overall upward trend. More here.

Green Homes Aren’t Necessarily More Expensive

Conventional wisdom has it that if you find a home equipped with the latest eco-friendly features it’s going to cost you significantly more than one without. After all, energy-efficiency and green-home technologies have become more popular with prospective home buyers in recent years. But though that’s commonly thought, new research says it’s not necessarily true. In fact, in some markets, homes with eco-friendly features such as solar panels, smart thermostats or bamboo floors don’t sell for much more than the median home price. According to the National Association of Realtors’ consumer website, for example, green homes in the Dallas metro area sell for about four percent more than the median. But in Fort Collins, Colo., there is virtually no difference in home price. Among the reasons for this is the fact that green-home features are becoming more common in markets across the country. While they’re still more prevalent in the South and West, they are becoming increasingly incorporated into homes as buyers recognize the benefits of energy-efficient systems and smart-home technology. More here.

Boosted Mortgage Demand May Be A Sign Of Spring

According to the Mortgage Bankers Association’s Weekly Applications Survey, demand for loans to buy homes spiked 6 percent last week and is now 10 percent higher than at the same time last year. The increase was part of an overall gain in mortgage demand that may be a signal that the spring home buying season is ramping up. The improvement may have also been due to relatively flat mortgage rates from the previous week. In fact, average rates were virtually unmoved for 30-year fixed-rate loans with both conforming and jumbo balances, as well as 15-year mortgages. Joel Kan, an MBA economist, told CNBC competing economic factors kept rates steady. “Rates were roughly flat compared to last week, as the downward pressure of geopolitical uncertainty offset the upward pressure of higher inflation and Fed minutes that signaled greater certainty of rate hikes this year,” Kan said. Regardless of the reason, steady mortgage rates and elevated demand are good signs for the housing market as it enters its busiest season. The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. More here.

Homes Sell At Fastest Recorded Pace In 2017

Making big decisions quickly is not usually a recipe for success. However, in today’s housing market, that’s exactly what home buyers have to do. That’s because homes are selling faster than ever these days. In fact, according to a recent analysis, the average home took 81 days to sell last year. And that includes closing, which usually takes four to six additional weeks. In other words, since many markets have more buyers than they do available homes, houses for sale are selling fast. So what should buyers do to prepare for possible competition? Well, for starters, adjust your expectations. A recent report from Zillow found the average buyer spends just over four months searching for a home and makes two offers before successfully buying a house. That means, expect a process. Outside of that, be prepared. Get prequalified, know what you want, what you want to spend, and what your dealbreakers are. The more prepared you are, the more likely you’ll make good decisions, even if they have to be made quickly. More here.

New Home Builders Take An Optimistic View

Home builders are a good gauge of what is going on in the housing market. After all, their business depends on knowing whether or not Americans are interested in buying a house. And so, the National Association of Home Builders tracks builder confidence as a way of measuring how much demand there is for new homes today and over the next six months. In April, builder confidence dropped a point from the month before but remains high, due to expectations for the spring and summer season. “Ongoing employment gains, rising wages, and favorable demographics should spur demand for single-family homes in the months ahead,” NAHB chief economist, Robert Dietz, says. “The minor dip in builder confidence this month is likely due to winter weather effects, which may be slowing housing activity in some pockets of the country. As we head into the spring home buying season, we can expect the market to continue to make gains at a gradual pace.” In short, economic conditions are fueling Americans’ desire to buy a home and, as the buying season begins, builders expect increasing interest.