October 2018

The Winter Market May Be Good For Buyers

Typically, spring and summer are thought of as the prime times to buy or sell a home. There are a number of reasons for this, including weather and the end of the school year. But whatever the reason, there are usually more homes for sale and more active buyers during what is typically the busiest sales season. Fall and winter, on the other hand, are the time of the year when the housing market slows down. The approaching holidays and colder temperatures across much of the country mean fewer Americans are in the mood for a move. But that can mean opportunities for buyers who are. A recent analysis looked at the country’s largest metro areas and compared typical affordability levels, projected rent increases, and the share of listings with a price cut to determine where buyers might have the best chances in the coming months. The results showed conditions in hot markets like Orlando, Boston, Seattle, and Las Vegas are becoming more favorable as the end of the year approaches. That means, interested buyers may be in a better position this fall and winter than they will be next spring when things begin to heat back up. More here.

How Affordable Is The Typical New Home?

Generally speaking, there are two types of homes available to buyers. There are previously owned homes and there are new homes. Which one you choose comes down to a couple of factors. The first is personal preference. Some people prefer the quirks and character of an older home, while others like the comfort of knowing everything in their house is brand new. But though it’d be nice if it was, preference isn’t usually the deciding factor. Ultimately, your decision will come down to budget and affordability. New homes tend to be more expensive than existing homes. Which means, whether or not you consider buying new might be determined by your price range. So how affordable is the typical new home? Well, according to the most recent numbers from the U.S. Census Bureau and the Department of Housing and Urban Development, they’re becoming more affordable. In September, for example, the median sales price of new homes sold was $320,000, which is down from $331,500 last year at the same time. More here.

Pending Home Sales Increase In September

When an offer on a home has been accepted, that home’s sale is considered pending. It isn’t final until closing, which typically takes place a few weeks later. But, because most accepted offers result in completed sales, the National Association of Realtors tracks contract signings as an indicator of what sales should look like in the near future. In September, the NAR’s Pending Home Sales Index showed a slight increase from the month before, though it’s still below where it was at the same time last year. Lawrence Yun, NAR’s chief economist, says the month-over-month increase is a good sign. “This shows that buyers are out there on the sidelines, waiting to jump in once more inventory becomes available and the price is right,” Yun said. In other words, though tight inventory and the end of the summer season may lead to slowing sales in the near term, home buyer demand remains elevated. Additionally, Yun points out that compared to data going back to the year 2000, affordability levels are favorable and should help keep housing demand steady in the coming months.

Mortgage Demand Bounces Back After Holiday

According to the Mortgage Bankers Association’s Weekly Application Survey, demand for mortgage loans rose 4.9 percent last week from one week earlier. Refinance activity led the way, increasing 10 percent from the previous week. Demand for loans to buy homes was also higher, however, posting a 2 percent increase. But though demand was up, the rebound follows a holiday week that saw sharp declines. “Mortgage application activity rebounded the week following the Columbus Day holiday, but both purchase and refinance levels remained lower than where they were two weeks ago,” Joel Kan, MBA’s AVP of economic and industry forecasting, said. In other words, despite last week’s gains, activity overall has slowed. It may have something to do with climbing interest rates. Last week, average rates rose again. Rates were up across most loan types, including 30-year fixed-rate loans with both conforming and jumbo balances and loans backed by the Federal Housing Administration. Average rates for 15-year fixed-rate loans were unchanged from one week earlier. The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications.

How Long Will It Take To Save A Down Payment?

When asked, most Americans who don’t own a home say they’d like to become homeowners someday. Regardless of current market conditions or the state of the economy, the desire to own a home endures. Part of this is because it helps to build wealth. The other part is homeownership’s long-cemented status as a key element of the American dream. So what’s keeping aspiring homeowners from pursuing their dream? Well, one main factor is coming up with a down payment. The down payment is among the biggest obstacles that keep people from buying. Mostly, this is because the traditional 20 percent down payment can be difficult to save. In fact, according to one recent analysis, someone making the median income and saving 10 percent of their earnings each month would take more than seven years to save a down payment on the typical American home. And, because home prices have grown faster than incomes over the past few decades, the amount of time it takes has been increasing. Fortunately, though, a 20 percent down payment isn’t required, depending on the type of loan you choose. Also, where you’re looking to buy will affect the amount of time it’ll take. For example, a down payment in Pittsburgh will take just 4.8 years to save, while in cities like Boston or Miami it can take twice that long. More here.

The Forecast For First-Time Home Buyers

Buying your first home is different than buying your second. For one, first-time buyers have never been through the process before and face a lot of unknowns. They also have to build a down payment from scratch, since they don’t have a house to sell. And without the benefit of home equity to help fund a home purchase, buying prospects can look a little different. In short, first-time buyers face some challenges other home buyers may not. So what can they expect from today’s market? Well, according to Fannie Mae’s chief economist, Doug Duncan, affordability is the top concern for first-time buyers. Prices have largely recovered from their post-crash decline and mortgage rates have been on the rise lately. That means, affordability conditions are changing. It also means for-sale inventory is the key factor to watch for buyers interested in an entry-level house. If the number of homes for sale rises, that should help moderate future price increases and give new buyers more homes to choose from. This could help balance the effect of higher rates and make finding an affordable home a little easier for first-time buyers. More here.

Most People Say They Have Good Neighbors

There are a lot of things you can tell about living in a particular a house from a quick visit or two. There are even some things you can tell just from driving through the surrounding neighborhood. But, while you can know how much available storage a house has or how new the windows are, you won’t have as easy a time knowing what your prospective neighbors are like and what it’ll be like living next to them. Fortunately, though, most Americans say they have good neighbors. In fact, according to the results of a new survey from the National Association of Realtors’ consumer website, three out of four people said they have good neighbors. That means, more likely than not, you’ll be able to get along with the people living around you. But what exactly makes a neighbor good? Well, respondents said being trustworthy and quiet were the most important qualities in a neighbor and being disrespectful of property was the worst trait a neighbor could have. But while everyone wants to have a good relationship with their neighbors, they don’t necessarily expect to become best friends. Very few participants said a close friendship was a must, with just 9 percent of women saying so and 20 percent of men. More here.

Demand Slows As Mortgage Rates Rise

According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates increased last week across most loan categories, including 30-year fixed-rate mortgages with conforming loan balances, loans backed by the Federal Housing Administration, and 15-year fixed-rate loans. The increase follows a general upward trend driven primarily by economic improvement and a stronger job market. Joel Kan, an MBA economist, told CNBC higher rates are also the result of actions taken by the Federal Reserve. “Treasury rates increased over the week, mainly as communication from Federal Reserve officials pointed to a continued path of rate hikes, based on the strength of the economy and hot job market,” Kan said. “Furthermore, four out of five rates tracked in our survey increased.” The increase hit refinance activity hardest, with demand falling 9 percent from the week before. Purchase activity also fell but remains 2 percent higher than at the same time last year. The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. More here.

Optimistic Builders Offer An Encouraging Sign

When builders feel confident that there are a lot of buyers looking for new homes, they build more homes. It’s simple, really. It’s also good for the housing market, as more new homes help provide choices and keep prices from spiking. That’s why the National Association of Home Builders tracks builder confidence each month. In October, their survey found builders optimistic about the market for newly-built homes and confident that buyer demand will remain high. “Builders are motivated by solid housing demand, fueled by a growing economy and a generational low for unemployment,” Randy Noel, NAHB’s chairman, said. “Builders are also relieved that lumber prices have declined for three straight months from elevated levels earlier this summer, but they need to manage supply-side costs to keep home prices affordable.” Among the survey’s three components – scored on a scale where any number above 50 indicates more builders view conditions as good than poor – current sales conditions rose a point to 74 and expectations for the next six months increased to 75. The results are an encouraging sign that new home inventory will improve and help bring more balance to the market, which is good news for buyers. More here.

Fewer Home Buyers Making Offers Sight Unseen

No one wants to make big decisions hastily. It’s a great way to make mistakes and end up with regrets. Which is why, in an ideal situation, home buyers would have time to consider the pros and cons of multiple houses and choose the one that best fits their needs and wishlist. Unfortunately, in a competitive market, that’s not always possible. And so, buyers have to be prepared and ready to make an offer when they see a house they like. The good news is, now that inventory is beginning to rise and houses are staying on the market longer, home buyers have more time to weigh their decision. In fact, according to a recent survey, the number of buyers who made an offer on a house without seeing it first has fallen 15 percent since late last year. This is a good indication that buyers are feeling some relief and aren’t feeling pressured to move as quickly as they were when inventory was tighter. But though this is encouraging news for potential buyers, it doesn’t mean the market isn’t competitive. If you’re interested in purchasing a home any time soon, it’s still best to do your homework, be prepared, prequalified, and ready to make an offer when you find a house you like. More here.