Monthly Archives: March 2020

These days, you hear a lot about how there are too few homes for sale and it’s driving prices upward. But though that’s true in many markets, it doesn’t mean hopeful home buyers should give up on buying. In fact, the most recent Housing Opportunity Index from the National Association of Home Builders shows there are still plenty of available homes for buyers earning the U.S. median income. According to the index, 63.2 percent of all new and existing homes sold between the beginning of October and the end of December were affordable. But obviously, where you’re looking to buy will determine how many affordable homes you find. The West Coast, for example, was far less affordable than the nation’s most accessible markets, which were found in places like Scranton, PA, Kokomo, Ind., Fairbanks, Alaska, Davenport, Iowa, and Springfield, Ohio. Robert Dietz, NAHB’s chief economist, says there are a number of factors at play. “Growing household formations, ongoing job creation, and rising wage growth are fueling housing demand,” Dietz said. “But a record-low resale inventory, coupled with underbuilding as builders deal with supply-side constraints, continue to put upward pressure on home prices even as interest rates remain at low levels.” (source)

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 loans with both conforming and jumbo balances, loans backed by the Federal Housing Administration, and 15-year fixed-rate loans. The drop brought rates to their lowest level since 2012 and matched an all-time survey low. Joel Kan, MBA’s associate vice president of economic and industry forecasting, said rates fell due to uncertainty about the coronavirus. “Market uncertainty around the coronavirus led to a considerable drop in U.S. Treasury rates last week, causing the 30-year fixed rate to fall and match its December 2012 survey low …,” Kan said. “Homeowners rushed in, with refinance applications jumping 79 percent – the largest weekly increase since November 2008.” Kan says rates should remain low for, at least, the near future and will help Americans who hope to refinance their home or purchase a house this spring. The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. (source)

There’s usually a long checklist of items to go through before selling a house. After all, you want to maximize your profit and make sure your home is attractive to buyers. That’s why, in addition to cleaning up clutter, planting some flowers, and touching up chipped paint, you may be considering a renovation project. But not all renovations have the same return on investment. That’s why the Appraisal Institute suggests hiring an appraiser to estimate your property’s value before and after a potential upgrade. “Real estate appraisers have the local market knowledge required to gauge how an improvement may affect a home’s value,” Jefferson L. Sherman, president of the Appraisal Institute, says. “While they can’t make guarantees, appraisers can use their expertise and experience to help homeowners make wise decisions about which improvement projects to take on.” For example, projects like a garage door replacement, a minor kitchen remodel, or replacing old windows and siding provide a bigger return on investment than some other projects. Getting a professional opinion before doing any work can help give you confidence that you’re making the smartest choice for your home and finances. (source)

A lot of what you look for in a home has to do with the particulars of your day-to-day life. For example, a home buyer who has young children would be more likely to prioritize living in a good school district than a buyer who doesn’t have kids. That makes sense, after all. So you’d probably think that the buying preferences of younger buyers are much different than those of older buyers. And yet, the latest Home Buyer and Seller Generational Trend report from the National Association of Realtors found some surprising results. In fact, it found that buyers between the ages of 22 and 29 had some of the same priorities as buyers between 74 and 94, including living close to loved ones. “The silent generation – older Americans who are typically grandparents and great-grandparents – for years have prioritized living near family and other loved ones,” Lawrence Yun, NAR’s chief economist, says. “But it was surprising to see younger millennials with home buying preferences and ideals similar to older segments of the population.” The survey found that 53 percent of buyers between the ages of 22 and 29 said that proximity to friends and family was a high priority when deciding where to live. (source)

According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates fell to their lowest level in more than seven years last week. Rates were down 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. Michael Fratantoni, MBA’s senior vice president and chief economist, said the decline was due to concerns about the coronavirus. “The 30-year fixed-rate mortgage dropped to its lowest level in more than seven years last week, amidst increasing concerns regarding the economic impact from the spread of the coronavirus, as well as the tremendous financial market volatility,” Fratantoni said. “Refinance demand jumped as a result, with conventional refinance applications increasing more than 30 percent.” Refinance activity is now 224 percent higher than it was at the same time last year. Purchase activity is also up from last year, rising 10 percent above year-before levels. The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. (source)

You don’t have to be an economist to understand supply and demand. When there are more buyers than there are sellers, prices rise. This is true for any market, including the housing market. When there are too few home buyers, homeowners have to price their homes low enough to attract the buyers that are active. When there are too many buyers, the opposite is true. This is why prices have been increasing now for several years. Many housing markets across the country are suffering from a lack of homes for sale. But why? Well, according to Freddie Mac, the issue has its roots in the financial crisis and housing crash. After the crash, many small home builders went out of business and have not returned. That’s led to fewer new homes being built and especially in the affordable price ranges that are most in demand. Freddie Mac estimates that the market is now 3.3 million homes short of where it should be. Fortunately, recent trends point to an uptick in new residential construction and, as the rate of new home building increases, it should help bring balance to the market and keep prices in check. (source)

The National Association of Realtors’ Pending Home Sales Index tracks the number of contracts to buy homes that are signed each month. The index is a good indicator of where home sales are headed because contract signings precede closings by a number of weeks. In January, the PHSI rose 5.2 percent from the month before and is now up 5.7 percent over last year at the same time. Lawrence Yun, NAR’s chief economist, says conditions are favorable for home buyers right now and it may lead to an increase in buying activity as we approach the spring sales season. “With housing starts hovering at 1.6 million in December and January, along with the favorable mortgage rates, among other factors, 2020 has so far presented a very positive sales climate,” Yun said. “Moreover, the latest stock market correction could provide exceptional, even lower mortgage rates for a few weeks, and that would help bring about a noticeable upturn in the coming months.” (source)

Spring is traditionally thought of as the start of home buying season. Harsh winter weather begins to fade and interested buyers become more active. Because of this, homeowners who hope to sell often wait for spring to list their home. But what is the best time to put your home up for sale, if you want to get the best price for it? Well, it depends on where you are in the country. Naturally, in warmer parts of the country, it comes earlier than in others. For example, late March is the best time for selling in San Diego, but Cincinnati homeowners do better in early July. Generally speaking, though, the first two weeks of May brings the highest premium for homeowners with a house for sale. In fact, according to one recent analysis, sellers who list their home during the first half of May get $2,100 more for their house. Of course, the right time for you will likely depend on your particular circumstance but, if you’re able to time it, you might want to consider listing your home in early May. (source)