Monthly Archives: February 2020

According to the Mortgage Bankers Association’s Weekly Applications Survey, demand for mortgage applications was up last week. But though most of the improvement was refinance activity, purchase demand is still higher than last year at the same time. In fact, demand for loans to buy homes is now 16 percent higher than one year ago. Joel Kan, MBA’s associate vice president of economic and industry forecasting, said it was the best January since 2009. “Last month was the strongest January for purchase applications since 2009, which is perhaps a sign that mild weather brought out prospective buyers earlier than normal,” Kan said. It could also be mortgage rates. The survey found average rates up from the week before but still near lows last seen in 2016. That, combined with slower price increases and a mild winter, has buyer interest growing weeks ahead of the typical spring sales boom. The MBA’s survey has been conducted weekly since 1990 and covers 75 percent of all retail residential mortgage applications. (source)

In markets where there are fewer homes for sale, prospective home buyers might have to look around a while before they find a home that fits their lifestyle and checks off the right boxes on their wishlist. This can be frustrating. But, if you know what to expect and have a plan to deal with it, it doesn’t have to be. So what do buyers who have been looking a while do when they can’t find a home that works? Well, according to one recent survey from the National Association of Home Builders, the majority of buyers say they practice patience. In fact, 51 percent of respondents said they’d just continue looking for the right home in the same location. If you’ve run out of patience, however, you can also try looking in a different neighborhood. Expanding your search area will give you more options and you may stumble upon a neighborhood you hadn’t consider that ends up being a perfect fit. Other survey participants said they’d be willing to look at smaller or older homes, though only 19 percent said so. Still, rethinking your list of must haves and dealbreakers can help you see your current options in a different light. Finally, 16 percent said they’d up their budget and look at more expensive homes, which is a fine strategy if you can afford it. (source)

For the past few years, inventory has been the main issue affecting housing market conditions. Many markets had fewer homes for sale than normal and that meant higher prices and more competition among interested home buyers. Then, last year, there was improvement. Inventory started to climb again, price increases began to slow, and sales rose. Combined with declining mortgage rates, conditions were better balanced than they’d been in a while. So how does for-sale inventory look so far this year? Well, according to newly released numbers from the National Association of Realtors’ consumer website, the number of homes for sale has started to decline again. In fact, year-over-year, there were 164,000 fewer homes for sale across the country in January. That could mean a more competitive spring for home buyers. Of course, the conditions you’ll find if you’re shopping for a house will largely depend on where you’re shopping. For example, while homes for sale sold faster in cities like Oklahoma City, Hartford, and Raleigh, they were selling more slowly in Las Vegas, Boston, and Detroit. (source)

Each month, Fannie Mae’s Home Purchase Sentiment Index measures Americans’ feelings about the housing market, the economy, and their personal finances. Survey participants weigh in on their expectations for mortgage rates, home prices, their job security, income, and whether or not they think it’s a good or bad time to buy or sell a home. In January, sentiment rose for the third consecutive month, moving the index closer to an all-time survey high. Put simply, Americans are feeling optimistic and a lot of it is due to an expectation that mortgage rates will stay low for the foreseeable future. Doug Duncan, Fannie Mae’s senior vice president and chief economist, says the outlook is good. “Low rates continue to be a key driver of consumer optimism about both current home buying and home-selling conditions,” Duncan said. “Favorable views on job security and personal financial expectations reflect the strength of the labor market, which we believe will continue to bolster housing demand.” Survey results show 59 percent of respondents say it’s a good time to buy a home and 66 percent say it’s a good time to sell. (source)

In a competitive market – where there are more home buyers than there are homes for sale – buyers often have to offer to pay more for a house than the seller is asking. By raising their offer, buyers better the odds that theirs will be the one chosen and they’ll get the house, rather than losing it to another buyer. In recent years, this type of bidding war has been common. And that competition between buyers was a primary factor pushing prices upward. However, according to a new analysis, last year was different. In fact, the number of homes that sold for an amount above the seller’s asking price fell to a three year low in 2019. Just 19.9 percent of homes sold above list price last year, which was lower than any year since 2016. Part of that was due to a housing market slowdown that returned things to a more normal pace. Inventory improved, the market was better balanced, and home price growth became more in line with historic norms. But, going into this year’s spring selling season, rising buyer demand and fewer homes for sale means interested buyers should be prepared for competition, as bidding wars may heat up once again. (source)

From the time they’re born, children rely on their parents for support. Whether it’s help figuring out their math homework or how to ride a bike, children need their parents’ guidance to find their way in the world. And, according to a new survey of millennials, that parental help extends to the home buying process as well. In fact, survey results show that 37 percent of potential millennial home buyers said they regularly ask their parents for advice about buying a home and nearly half said their parents are helping them financially by contributing to their down payment fund, helping with closing costs, monthly mortgage payments, or co-signing their loan. The survey – which focused on millennials planning to buy their first home this year – asked for their perceptions of the buying process, their home buying plans, and how their feelings about homeownership were shaped by their past. For example, 47 percent of respondents said growing up during the financial crisis and housing crash has made them nervous to buy a house. Despite their misgivings, though, 68 percent said it’s a good time to buy, and just over half said they’re actively looking for a home to buy. (source)

Choosing a home to buy means considering everything from whether the roof is in good condition to whether the neighborhood fits your needs and lifestyle. And, since you’re unlikely to find a home that checks every box on your wishlist, you have to prioritize. Are good schools worth sacrificing the big backyard you’ve always wanted? Can you stand a longer commute in order to live closer to family and friends? In short, you’ve got to make choices about what’s most important to you. One factor that seems to be a priority for today’s buyers is walkability. In fact, according to one recent analysis, home buyers are willing to pay nearly 25 percent more for a home that is within walking distance to amenities like shopping, entertainment, and recreation. That works out to nearly $80,000 more than a similar home in a more car-dependent neighborhood. But, while home buyers are clearly interested in living in neighborhoods close to the things they need, the premium they’re willing to pay has fallen over the past few years. In fact, since 2016, the premium buyers pay for homes in walkable neighborhoods has declined 2.3 percent. (source)