Monthly Archives: September 2019

You need to have some money if you want to buy a house. That’s no surprise. But knowing how much you need is another question. And it’s a question a lot of potential home buyers don’t know the answer to. In fact, a recent survey from Bankrate found that 51 percent of Americans said they didn’t know the required minimum down payment. Another 28 percent said a down payment of 20 percent was necessary to buy a house. In short, there are a lot of people who want to own their own home who may have misconceptions about what it takes to buy one. Deborah Kearns, mortgage analyst at BankRate, says buyers have options and knowing them can save them money. “Twenty percent of the purchase price has long been the recommended amount, however, many home buyers don’t realize that conventional loans require just 3 percent of the purchase price as a down payment and some VA and USDA loans don’t require anything at all,” Kearns said. “Local first-time home buyer assistance programs can also lower your upfront, out-of-pocket costs substantially at closing.” In other words, if you want to buy a house but think you can’t afford it, talk to your lender before talking yourself out of buying. More here.

These days, there aren’t many things you can’t do on your phone. From grocery shopping to getting a job, smartphones have made nearly everything easier to do. And, according to new research from the National Association of Realtors, that’s also true of looking for a house to buy. The data shows that the vast majority of home buyers used their phones to help search for a house. And it isn’t just young people who are turning to technology to help with their home search. In fact, large majorities of buyers across all generations said they started searching homes using their phones. Among Millennial respondents, a full 80 percent said they used their phone to look for a home, with GenX buyers almost equally as likely to use a phone at 78 percent. There was a slight drop off, however, among Baby Boomers, with 68 percent of buyers between the ages of 54 and 63 saying they began their search on a smartphone. From the numbers, it’s clear that the convenience and accessibility of smartphones has helped prospective buyers more easily find a home that suits their needs. They can also help buyers find an agent to work with. The survey found that nearly 20 percent of participants said that’s how they found the real-estate professionals that helped them seal the deal. More here.

According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates fell last week 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. The decline means rates remain near three-year lows. Joel Kan, MBA’s associate vice president of economic and industry forecasting, says falling rates led to a spike in demand for home purchase loans. “Purchase activity was 9 percent higher than last year, continuing the trend of solid year-over-year gains,” Kan said. Buyers may be responding to falling mortgage rates or trying to wrap up their home search before the summer season comes to a close. But, whatever their motivation, they definitely returned to the market last week. In fact, the MBA’s Purchase Index shows the number of Americans requesting applications for loans to buy homes was up 5 percent week-over-week. The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. More here.

Much like the weather, the housing market’s hottest season is summer. Buyer activity begins to accelerate in the spring and typically reaches its peak right around the time the seasons turn. But then, after the kids go back to school, the air begins to cool and so does the market. Fall brings with it fewer buyers, slowing prices, and less competition for available homes. This is the normal seasonal cycle. But this year, newly released data shows the seasonal slowdown, that usually arrives in September, began earlier than usual. For example, according to a new release from the National Association of Realtors’ consumer website, home prices fell 1.8 percent between July and August. The timing and size of the decline is a good indication that the summer sales season is coming to an early close. But why? Well, one explanation is that – though slowing prices and low mortgage rates are good for affordability – economic uncertainty has potential buyers feeling cautious. Whether or not that feeling intensifies will determine, in part, what conditions fall home buyers encounter when shopping for a house to buy. More here.

Fannie Mae’s Home Purchase Sentiment Index is a monthly measure of Americans’ feelings about the housing market. The survey asks respondents for their perception of the market, their job security and financial health, whether they think it’s a good time to buy or sell a house, mortgage rates, home prices, etc. According to the most recent release, Americans are feeling optimistic and it’s mostly due to favorable mortgage rates. Doug Duncan, Fannie Mae’s senior vice president and chief economist, says falling rates have helped keep sentiment high. “Growing expectations that mortgage rates will remain flat or decline are reflected in the HPSI’s latest reading, which is now at a survey high even though other indicators of economic and housing market sentiment are flat to negative,” Duncan said. The number of participants who said they believe mortgage rates will fall further over the next year was up 11 percent from the month before and 35 percent from last year. Additionally, the share of respondents who believe home prices will rise over the next 12 months fell 1 percent. In short, Americans are feeling positive about affordability conditions and expect them to improve or stay relatively steady heading into 2020. More here.

Recent worries about a potential recession have made news but, according to Freddie Mac’s newest housing market forecast, home buyers and sellers shouldn’t be too concerned. That’s because, there are a number of positive trends that will help keep the real estate market healthy through the fall and into 2020. For one, the job market continues to show strength. And that, combined with mortgage rates hovering at three-year lows, will likely keep things moving in the right direction. Sam Khater, Freddie Mac’s chief economist, says he expects the fall market to continue to improve. “Despite fears of an economic slowdown, the U.S. labor market stands firm,” Khater said. “Specifically, jobless claims are near historic lows. This strong labor market, along with mortgage rates at three-year lows and consumer confidence holding strong, will set the stage for continued improvement in the housing market heading into fall.” In short, despite news of trade tensions and economic uncertainty, the housing market looks steady and poised for continued gains. More here.

According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates for 30-year fixed-rate loans with conforming loan balances fell to their lowest level since November 2016 last week. Rates for jumbo loans, loans backed by the Federal Housing Administration, and 15-year fixed-rate loans were relatively flat. But though rates remain favorable, it hasn’t resulted in increased demand from borrowers. In fact, refinance activity actually declined last week, falling 4 percent. Joel Kan, MBA’s vice president of economic and industry forecasting, said ongoing trade tensions between the U.S. and China has led to market volatility that may be keeping some potential borrowers on the sidelines. “Purchase applications increased 1 percent last week and were 5 percent higher than a year ago,” Kan said. “Consumers continue to act on these lower rates, but the volatility in the market is likely leading some borrowers to pause refinancing and buying decisions.” The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. More here.

When you think about where Americans move once they’ve retired, you probably think of sunny cities in states like Florida or Arizona. But, according to one recent analysis, there are some less obvious spots that should be added to the list of places retirees consider when thinking about where they’d like to spend their golden years. That’s because cities like Plano, Pittsburgh, Lexington, Louisville, and Fort Wayne were included among the top 10 best places to retire – along with sun-drenched cities like St. Petersburg, Mesa, Chandler, and Las Vegas. So how did cities in Pennsylvania, Kentucky, and Indiana make a list of retirement destinations? In a word, affordability. The analysis looked at things like taxes, health insurance rates, and housing to determine where costs were low and you could stretch your retirement savings the furthest. For example, the number one city named was Henderson, Nevada, where the annual cost of living is just $20,672 and social security and pensions aren’t taxed. More here.

Money is an issue when deciding whether it’s a good time for you to buy a house. Your savings, income, and monthly budget will all play a role in determining what you can and can’t afford. But your personal finances aren’t the only variable dictating how much house you can buy. Current market conditions will also be a factor. Whether home prices and mortgage rates are up or down will affect how far your money will go. That’s why recent data from Black Knight Financial is encouraging for anyone considering buying a home. According to their newest Home Price Index, affordability conditions eased in July, marking the first improvement in 16 months. In short, the gains mean prospective home buyers will get more house for their money. One reason conditions have improved is declining mortgage rates. After spiking at the end of last year, interest rates have steadily declined and are now, once again, hovering just above historic lows. The other end of the affordability equation is home prices. Prices, though still rising, are increasing at a slower rate than before. In fact, Black Knight’s data shows prices up 3.9 percent from last year. For comparison, annual home price growth was at 6.75 percent in February 2018. More here.