Monthly Archives: October 2020

If you made a chart comparing the number of home sales to the number of new homes being built they’d follow a similar path. After all, when homes are selling, builders build more. So when buyer demand rises, so does new home construction. However, there are times when the two become disconnected. For example, during the housing boom of the early 2000s, home construction outpaced sales and caused an inventory overage that became a factor during the housing crisis. These days, however, we have the opposite problem. Home sales are far exceeding housing starts. So what does that mean for home buyers and sellers? Well, it means the market is imbalanced and will remain so until buyer demand slows or new home construction ramps up. In the meantime, you should expect homes to sell quickly, prices to rise, and competition to be significant. The good news is, according to the National Association of Home Builders, current housing conditions all point to increasing new home construction in the months ahead. And, if this happens, it will help realign sales and starts, which will bring balance and improved affordability to the market. (source)

According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates set another record low last week. Rates were down for 30-year fixed-rate loans with both conforming and jumbo balances, though 15-year fixed-rate loans and those backed by the Federal Housing Administration remained unchanged from the week before. Joel Kan, MBA’s associate vice president of economic and industry forecasting, says record low rates have kept mortgage demand running high. “Refinance and purchase activity continue to run well ahead of last year’s pace, fueled by record low rates and strong home buyer demand,” Kan said. “Housing supply is a challenge for many aspiring buyers, but activity should continue to stay strong the rest of the year.” Demand for loans to buy homes is now up 24 percent over the same week one year ago. Refinance activity is 44 percent higher year-over-year. The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. (source)

Anyone who’s been on a great vacation knows how a beautiful spot can get the imagination going. Sunny beaches, mountain views, and seaside towns often lead to daydreams about packing up and starting over somewhere new, far from home. But while these are just fantasies most of the time, one online real-estate portal says the pandemic has more of us looking into making them a reality. According to the analysis, the number of page views of listings in vacation metros is up over last year. In fact, views of vacation listings are up nearly 50 percent from one year ago. Compared to a 37 percent increase in overall views nationally, that’s significant. But what does it mean? Well, it could mean Americans are shopping for a second home, just dreaming of a new life, or actually making one happen. The pandemic has caused us to reconsider where and how we’d like to live – and remote work has opened up possibilities that weren’t available in the past. Whatever the case, views in places like Myrtle Beach, S.C., Key West, Fla., Lake Tahoe, Nev., Cape Cod, Mass., and Park City, Utah are spiking and pending sales numbers indicate so are sales. (source)

Lending standards aren’t fixed. There are times when it’s easier to get a mortgage and times when getting approved to borrow requires you to be in better financial standing. For prospective home buyers, that means having a higher credit score, more money in the bank, a bigger down payment, etc. The Mortgage Bankers Association tracks how available mortgage credit is with their monthly Mortgage Credit Availability index. The index measures whether standards are becoming tighter or loosening. In short, it gauges how easy it is for buyers to get approved for a loan. In September, the index found that standards have tightened. Joel Kan, MBA’s associate vice president of economic and industry forecasting, says the market is strong, but uncertain. “Across all loan types, there continues to be fewer low credit score and high-LTV loan programs,” Kan said. “The housing market overall is on strong footing, but the data show that lenders are being cautious, given the spike in mortgage delinquency rates in the second quarter, as well as the ongoing economic uncertainty.” (source)

Typically, there are fewer home buyers in the fall. Because of this, homeowners who sell after summer have to work a little harder to attract attention. This year, however, things are different. According to a new analysis from the National Association of Realtors’ consumer website, the housing market hasn’t cooled and there’s been little drop off in the number of interested buyers. Which means, anyone with a home to sell should be eager to take advantage, since the summer sales season seems to have extended into autumn. But while the number of buyers give sellers an advantage right now, homes for sale are still much lower than last year. During the first week of October, for example, for-sale inventory was down 38 percent nationally. And while that’s a slight improvement from the previous week, it’s not enough to meet demand, slow competition, and moderate home prices. That means, fall home buyers should expect summer-like conditions will linger, since the number of interested buyers continues to outpace the number of homes available for sale. (source)

Americans’ confidence in the housing market has bounced back, according to the results of the most recent Housing Market Index from Fannie Mae. The index – which asks Americans how they feel about buying and selling a home, mortgage rates, prices, their jobs, and financial security – showed consumer sentiment improved in September and has now recovered more than half of the losses suffered in the early days of the pandemic. In particular, the components gauging perceptions of selling a house, job security, and home prices saw gains over the month before. Doug Duncan, Fannie Mae’s senior vice president and chief economist, says market dynamics will be determined by the number of homeowners who decide to list their homes in the months ahead. “Going forward, we believe the wild card to be whether enough sellers enter the market to continue to meet the strong home buying demand,” Duncan said. “The home purchase market requires the proper mix of home price growth and continued economic recovery to achieve sustainable levels of housing activity.” The net share of survey respondents who said it was a good time to sell rose 14 percent in September. (source)

According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates fell last week from the week before. 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. The decline helped push overall demand upward, with refinance activity seeing an 8 percent improvement week-over-week. Joel Kan, MBA’s associate vice president of economic and industry forecasting, says favorable rates are also keeping purchase demand strong. “Continuing the trend seen in recent months, the purchase market is growing at a strong clip, with activity last week up 21 percent from a year ago,” Kan said. “The average loan size increased again to a new record at $371,500, as activity in the higher loan size categories continues to lead growth.” Average loan size has been growing recently, mostly due to inventory and affordability issues in lower-price tiers. The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. (source)

You don’t need to be able to define exactly what makes a home green to know you’d like a home with energy-efficient features. All you really need to know is that an eco-friendly home can help lower your bills and improve your quality of life. That’s why green features consistently rank high on home buyer wish lists. So if you’re shopping for a house and aren’t sure what to look for, here are a few easy things to check. Start with insulation. A house with good insulation holds heat and conserves energy. Try to learn as much as you can about what’s in the home’s walls. Also check the doors and windows. If they aren’t fit properly or have a cracked seal, it can put stress on the home’s heating and cooling systems. Naturally, Energy Star windows are best, but the newer the better. Additionally, you’ll want to look at which direction the house is facing. How a home is situated and the amount of natural sunlight it gets will have an impact on its efficiency. Of course, there are standards and certifications that can be verified to determine how green a home is but, outside of those, just asking about the age and maintenance of the home’s HVAC system, windows, and insulation can help you choose a home that operates more efficiently and keeps your utility bills low. (source)

Buying a house is a commitment. After all, it’s a major financial transaction, so it’s not something you do on a whim. It’s also not something you do every six months. Which means, when you’re shopping for a house to buy, you should probably think about how the house will fit your lifestyle over the long term. But how long should you expect to stay? Well, that depends. There are an almost limitless number of factors that could cause you to want to make a move somewhere down the road – everything from starting a family to just not having enough space in the kitchen. In other words, it’s hard to predict. However, there are some numbers that might help give you an idea. For example, according to ATTOM Data Solutions’ most recent U.S. Home Sales Report, homeowners who sold in the second quarter of 2020 had been in their homes 7.95 years on average. And that’s been fairly consistent since, at least, the fourth quarter of last year, when the average homeownership tenure was 7.96 years. Which means, if you’re buying a house today, you should probably expect to be there somewhere between five and 10 years. (source)

The housing market has a pattern to it. Typically, it starts to get busier in early spring and continues to build through the summer. But, then in fall, when the school year starts and the weather cools, the housing market slows down a bit. That’s why September is said to be the best month to buy a house. It has the higher inventory levels of the summer market but with fewer interested buyers and less competition. This year, though, that’s changed. Like everything else, the coronavirus has thrown off the market’s typical pattern. In short, the busy summer market looks like it’s going to roll right into autumn. In fact, according to the National Association of Realtors’ consumer website, there are 25 percent more buyers in the market now than at the start of the year. By comparison, a normal September would see 9 percent more buyers. Danielle Hale, the site’s chief economist, says it’s a perfect storm. “Many buyers tend to put their home search on hold after the start of the school year, but remote learning and the desire for more space continued to fuel buyer interest in September,” Hale said. “Unseasonably high buyer interest coupled with historically low inventory and favorable mortgage rates are creating a perfect storm in the housing market.” (source)