Saving for a down payment is often a big hurdle for buyers, especially those purchasing their first home. Without the benefit of equity from a previous home’s sale, first-time home buyers have to come up with the money from scratch. That can be difficult, especially if they live in an area where there are fewer homes available in an affordable price range. So, if you’re thinking of buying a home in the near future, how much should you expect to need? Well, one recent analysis looked at down payments by state and found that the nationwide average was $28,000 – though there was a pretty wide range depending on location. For example, West Virginia had an average down payment of just over $15,000, while New York came in at $43,404. Other states, including Florida, Texas, North Carolina, Nevada, and Illinois, were within a few thousand of the national average. Wherever you’re buying, though, you will have options depending on the particular terms of the loan type you’ve chosen. Which means, averages are good for getting a ballpark idea of what other buyers are putting down but may not reflect the actual amount required when it comes time to sign the paperwork. More here.
Choosing a home to buy is a pretty big decision. For the amount of money and time you’ll end up investing, it wouldn’t be smart to make it a hasty one. But depending on how competitive your market is, you also can’t spend too much time deliberating over a particular property. So what’s a normal amount of time to expect to be searching for the right home to buy? Well, according to new numbers from the National Association of Home Builders, 58 percent of buyers who were actively looking for a home to buy during the fourth quarter of last year said they’d been searching for three or more months. The reasons they said they’d been looking that long were fairly evenly split between those that were having trouble finding an affordable home and those that said they couldn’t find any homes that had their desired list of features. But buyers weren’t discouraged. In fact, the vast majority said they planned to continue looking in the neighborhoods they’d been searching, while 44 percent said they’d expand their search area to better their chances. More here.
Buying a home means making an investment in the real estate market. And, while it may not be your main motivation for buying, the chance that you’ll see a return on that investment is undoubtedly a good thing. It’s among the reasons that homeownership has retained its appeal over the years. It’s also why new numbers from ATTOM Data Solutions are encouraging. Their Year-End 2018 U.S. Home Equity & Underwater Report shows that in the fourth quarter of last year more than 14.5 million properties were considered equity rich – which means the loans used to purchase the property are 50 percent or less than the estimated value. In short, an increasing number of American homeowners are seeing their investment grow. Todd Teta, ATTOM’s chief product officer, says – in addition to increasing values – homeowners are seeing their equity grow because they’re staying in their homes longer. “With homeowners staying put longer, homeownership equity will most likely continue to strengthen,” Teta said. The rise of equity rich homeowners also coincides with a dramatic decline in the number of seriously underwater properties, which have dropped from nearly 30 percent in 2012 to just 8.8 percent at the end of last year. More here.
Last year’s housing market had its challenges. Though there was plenty of interest from home buyers, too few homes for sale, rising interest rates, and high prices dampened some of the enthusiasm. Now, according to the most recent Home Purchase Sentiment Index from Fannie Mae, Americans may be feeling more optimistic about their options. That’s because, in addition to an 8 percent increase in the number of respondents who say their income is substantially higher than it was at the same time last year, there are also a declining number who feel home prices and mortgage rates will keep rising. In short, consumers feel more confident in their money and see affordability conditions starting to improve. Doug Duncan, Fannie Mae’s senior vice president and chief economist, says the boosted optimism and more favorable conditions may help home sales this year. “Overall, these results are in line with our forecast that, amid improving affordability conditions, home sales should stabilize in 2019 after declining last year for the first time in four years.” More here.
According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates fell sharply 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 loans. But though rates were more favorable, requests for mortgage loan applications still fell. In fact, overall demand was down 2.5 percent from the previous week. Joel Kan, MBA’s associate vice president of industry surveys and forecasts, says, though demand for loans to buy homes dropped, the outlook remains good. “Despite more favorable borrowing costs, and after a three-week surge in activity, purchase applications have slowed over the past two weeks, and are now almost 2 percent lower than a year ago,” Kan said. “However, moderating price gains and the strong job market, including evidence of faster wage growth, should help purchase growth going forward.” The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. More here.
Homeowners who sold a house in 2018 saw an average gain since purchase of $61,000, according to new numbers from ATTOM Data Solutions. ATTOM’s Year-End 2018 U.S. Home Sales Report found that home sellers averaged a 32.6 percent return on investment when comparing the price their home sold for with the original purchase price. The improvement was an $11,000 increase from the year before. But though that’s good news for anyone thinking about selling a home sometime soon, ATTOM’s chief product officer, Todd Teta, says changes may be on the way. “The economy is still going strong and home loan rates remain historically low,” Teta said. “But there are potential clouds on the horizon. The effects of last year’s tax cuts are wearing off as limits on homeowner tax deductions are in place and mortgage rates are ticking up ever so slowly, so this could dampen the potential for home price gains in 2019.” But though market conditions are beginning to change, home prices are still expected to rise this year and, with home seller profits at a 12-year high, that means it’s still a good time to sell a house. More here.
Fannie Mae’s quarterly Mortgage Lender Sentiment Survey asks senior mortgage executives for their perceptions of the market and forecast for the future. According to the most recent release, lenders point to an “insufficient supply of homes available for sale” as the primary reason for slow home sales growth last year. In fact, 48 percent of responding lenders said that too few homes for sale held buyers back, while rising interest rates and higher prices were also commonly cited factors. Similarly, when asked for suggestions for what could be done to improve affordability in the months ahead, increasing the housing stock led the list. In short, mortgage execs see low inventory as the market’s biggest issue. This isn’t a surprise. The fact that there’s been a lower-than-typical number of homes for sale has been pushing home prices upward and keeping competition for affordable homes high. The good news, however, is that recent data shows inventory has been rising and, if the trend continues, it could help provide some relief to buyers this year. More here.
Potential spring home buyers may find that they’ve regained some negotiating power when they head out to shop for a house to buy. That’s because, after a few years where sellers held all the cards, buyers are beginning to see conditions shift in a more favorable direction. For example, new data shows that the number of home buyers who paid above asking price in December saw its biggest month-over-month decline in six years. In fact, just 19 percent of homes sold during the month went for a price above what their owner had it listed for. That’s a five percent decline from its peak in May of last year. Simply put, continued home price increases have motivated more homeowners to put their homes up for sale. And, as the number of homes for sale has risen, it’s reduced the amount of competition among buyers. But, while competition may have begun to slow down, it isn’t quite a buyer’s market just yet. So, if you’re looking to buy a home in the months ahead, you should still be prepared, prequalified, and ready to move fast. Good homes will be in high demand, even if the competition isn’t quite as heavy as it has been in years past. More here.
The National Association of Realtors’ Pending Home Sales Index measures the number of contracts signed to buy homes during a given month. Since it measures signings, and not closings, it can be an important indicator of future home sales. In December, the index fell 2.2 percent from the month before. But, Lawrence Yun, NAR’s chief economist, sees some encouraging signs amid the end-of-the-year slowdown. “The longer-term growth potential is high,” Yun says. “The Federal Reserve announced a change in its stance on monetary policy. Rather than four rate hikes, there will likely be only one increase or even no increase at all. This has already spurred a noticeable fall in the 30-year, fixed-rate for mortgages. As a result, the forecast for home transactions has greatly improved.” In addition to good news about rates, there is also an increasing number of homes for sale. And, since more available inventory helps keep prices down, that’s good for home buyers. Cities in the West saw the largest increase in active listings year-over-year, with Denver-Aurora-Lakewood, Seattle-Tacoma-Bellevue, San Francisco-Oakland-Hayward, San Diego-Carlsbad, and Portland-Vancouver-Hillsboro seeing the biggest improvement compared to the year before. More here.