Monthly Archives: December 2020

In the past, shopping for a house to buy involved calculating how difficult your commute to work would be. Whether it was measuring the distance to public transportation, the nearest highway, or timing the total drive, home buyers had to consider their daily routine before making an offer. Then, COVID hit and changed everything. Now, with more Americans working from home, commutes are becoming less of a factor in home buying decisions and it’s changing how and where we buy. For example, a recent survey found that 40 percent of Americans who have recently moved or plan to soon are relocating more than 100 miles away – half of them are moving over 500 miles away. Additionally, real-estate professionals report that they are seeing more city-to-suburb moves and are getting far fewer requests for homes close to transportation options. And now it’s looking like the change will be permanent. In fact, three out of four consumers who have moved or are planning a move say they don’t plan to return to the area where they lived pre-pandemic. (source)

According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates fell to new lows last week, with rates for 30-year fixed-rate mortgages with conforming loan balances, loans backed by the Federal Housing Administration, and 15-year fixed-rate loans down from the week before. Rates for loans with jumbo balances were flat from the previous week. Joel Kan, MBA’s associate vice president of economic and industry forecasting, says low rates spurred a bump in refinance applications. “Refinance activity increased last week in response to mortgage rates for 30-year, 15-year, and FHA and VA refinances, while conventional activity fell slightly,” Kan said. “The purchase market is also poised to finish 2020 on a strong note. Applications fell slightly last week but were around 3 percent higher than the two weeks leading up to Thanksgiving.” Overall, demand for mortgage loan applications was down 1.2 percent from the week before, with an adjustment for the holiday. The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. (source)

Typically, this is the time of year when buyers put a pause on house hunting and wait until spring. However, this year is different. Evidence continues to show that the housing market is defying seasonal trends as we head into winter. For example, according to one recent analysis, buyer demand is still surging in many markets across the country, with some seeing twice as many house showings per listing compared to the same time last year. In fact, several markets have recorded double-digit showings per listing – significantly higher than the current average of six per listing. In other words, there are still plenty of interested buyers. So why haven’t we seen a seasonal slowdown? Well, one factor is COVID-19. Delayed demand from spring has been pushed later into the year. Another factor is the combination of favorable mortgage rates and low for-sale inventory. Together, they’ve driven traffic 60.9 percent higher than it was last year at the same time – with the Northeast up 65.5 percent and the West seeing traffic 64.7 percent higher than one year ago. (source)

Each month, Fannie Mae’s Home Purchase Sentiment Index tracks how Americans feel about the housing market, buying and selling a home, mortgage rates, prices, their job, and income. The index is a monthly measure of home buying conditions and consumer confidence in the real-estate market. In November, the HPSI fell 1.7 points, marking the first decline after three consecutive months of increases. Doug Duncan, Fannie Mae’s senior vice president and chief economist, says consumer sentiment may have peaked for now. “The HPSI appears to have peaked for now as consumers continue to consider how COVID-19 impacts their ability to buy or sell a home,” Duncan said. “Drilling down a bit, home purchase confidence has recovered more for homeowners than renters, in part because homeowners have been less likely than renters to have had their jobs and finances impacted by the pandemic.” Among the results, the number of respondents who said now is a good time to buy a home fell 3 percent, while the number of participants who feel it’s a good time to sell remained unchanged from the previous month. (source)

The idea of packing up your things and moving somewhere new can be exciting – especially if your current living situation isn’t ideal. So it’s not surprising that a recent survey found nearly half of Americans say they’re considering a move in the next year. According to the results, 46 percent of respondents said they’re thinking about moving. Among them, 27 percent said they’re looking for a new place in their current area, 12 percent were hoping to find a home in another part of the state, and 8 percent said they’re considering moving out of state. But what are the main factors causing so many of us to think about starting fresh somewhere else? Well, most respondents said money. In fact, 44 percent of people who said they’re considering moving said they were doing so because their current home was too expensive. Other reasons participants offered included that their home was too small, they wanted different features, they’d rather live in a different part of town, and they’re unhappy with the management at the property they’re renting. (source)

After the coronavirus’ onset in March, remote work became much more widespread. With it, Americans began to realize the benefits of not having to commute to the office every day. Among them, the ability to move further away from city centers and live in less densely populated suburbs and exurbs was a favorite. Online home searches in locations outside of large metropolitan areas skyrocketed, as Americans looked to relocate to more affordable areas where they could have more space and privacy. Now, according to the National Association of Home Builders’ third quarter Home Building Geography Index, there’s evidence that the trend has continued into fall. In fact, during the third quarter, single-family home building saw its biggest growth in the suburbs , while large-metro urban cores saw the smallest gains year-over-year. That’s a good indication that buyers are continuing to show interest in smaller markets where they can get more for their money. A similar decline in apartment construction further supports the evidence that Americans’ preference continues to shift to the suburbs. (source)

According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates were mostly flat last week, with little or no change 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. Rates remain just above record lows and it continues to drive demand for home purchase loans. Joel Kan, MBA’s associate vice president of economic and industry forecasting, says demand is stronger than it’s been in over a decade. “Purchase activity continued to show impressive year-over-year gains, with both conventional and government segments of the market posting another week of growth,” Kan said. “Housing demand remains strong, and despite extremely tight inventory and rising prices, home sales are running at their strongest pace in over a decade.” Last week, the purchase index rose 9 percent from the week before and is now 28 percent higher than last year at the same time. The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. (source)

The ebb and flow of the housing market is hard to predict. Unforeseen events, like the COVID-19 pandemic, can come along and ruin all of the experts’ projections and forecasts. However, there are also times when a forecast is based on data that is hard to deny. For example, a recent analysis found Americans are forming households at a lower rate than they did before the Great Recession. That means, younger Americans are living with their parents or roommates longer than they did in years past. In fact, according to the analysis, if the rate of household formation remained at pre-crash levels, there would be an additional 5.7 million households today. In other words, there are a lot of Americans who’d like a home of their own but haven’t yet been able to buy one. Combined with the number of Americans reaching, or now at, peak home buying age, the data makes a strong case that there will be pent-up interest fueling home buyer demand in the years to come, regardless of world events or market conditions. (source)

During the time between when a contract to buy a home is signed and when the transaction is closed, the home’s sale is considered pending. The National Association of Realtors tracks pending sales because they’re a good way of forecasting future home sales numbers, since contract signings precede closings by several weeks. According to their most recent numbers, contract activity was down 1.1 percent in October from the month before, but remains 20.2 percent higher than it was last year at the same time. Lawrence Yun, NAR’s chief economist, says the market is still hot. “Pending home transactions saw a small drop off from the prior month but still easily outperformed last year’s numbers for October,” Yun said. “The housing market is still hot, but we may be starting to see rising home prices hurting affordability.” Home prices have been rising sharply in recent months, mostly due to the fact that there are fewer homes for sale but demand – motivated by low mortgage rates – is still high. (source)