Monthly Archives: December 2021

According to the Mortgage Bankers Association’s Weekly Applications Survey, demand for loans to buy homes rose 1 percent last week from the week before. The improvement included a nearly 2 percent increase in demand for conventional loan applications. Despite the increase, however, overall demand was down 4 percent due to a 6 percent decline in refinance activity. Joel Kan, MBA’s associate vice president of economic and industry forecasting, says loan balances remain high. “The strength in conventional purchase activity continues to support higher loan balances, which moved back over $400,000,” Kan said. “Housing demand remains strong as the year comes to an end amidst tight inventory and steep home-price growth.” Also in the report, average mortgage rates were relatively flat from one week earlier, with interest rates for 30-year fixed-rate mortgages with conforming loan balances unchanged from the week before. The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. (source)

You can tell a lot about your local housing market by paying attention to where new homes are being built. Home builders don’t build in areas people don’t want to live. So the locations with the most building activity are likely the most desirable to home buyers. During the early days of the pandemic, there was a shift in buying patterns that led more Americans to search for homes further away from city centers. That suburban shift was well documented and, according to a new analysis from the National Association of Home Builders, has continued through 2021. In short, new-home construction is still growing fastest in the suburbs and exurbs. But as things have gotten back to normal and more remote workers have returned to the office, there’s also been a return of single-family home building in high-density markets. For example, in 2020, home building in exurbs grew at twice the rate it did in large metro areas. This year, the gap between the two has narrowed significantly. What does this mean? Well, it means more Americans are looking to buy near big cities and, if you’re among them, you likely find more new homes available for sale. (source)

Work has a big impact on how and where we live. It determines what we can afford and where we need to be on a day-to-day basis. So when the pandemic began and more Americans started working remotely, it also led to some significant changes in home buying patterns. Where buyers previously valued proximity to their jobs and a short commute, they now were placing more importance on space, affordability, and proximity to family and friends. In short, more freedom to work from anywhere meant more freedom to live anywhere. But, according to the National Association of Realtors’ chief economist, Lawrence Yun, it’s too soon to say whether those patterns are here to stay. “We are only in the first innings of work-from-home options,” Yun said. “People have not fully digested the work-from-home flexibility model yet in determining home size and locational choice.” It’s true. With many workplaces still weighing whether their employees should come back to the office full time, have a hybrid schedule, or stay totally remote, there are many Americans who are waiting to see what options they have. As those decisions get made and become permanent, it’ll impact where and what home buyers are looking for in their next home. (source)

Some of homeownership’s benefits are constant. Stability and the freedom to customize your living space, for example. Others depend a lot upon the ups and downs of the market. Equity is one of them. And these days, because of the market’s continuing strength, homeowners are reaping the benefits in a big way. In fact, according to Black Knight Financial’s most recent Mortgage Monitor, surging home values have increased the average mortgage holder’s equity stake by $53,000, for an average of more than $175,000 in available equity per homeowner. Ben Graboske, Black Knight’s president, says the gains are astonishing. “Home price growth in the third quarter – while less than half that of Q2’s history-making rate – added more than $250 billion to Americans’ already record levels of tappable equity,” Graboske said. “The aggregate total of $9.4 trillion is up an astonishing 32 percent from the same time last year and nearly 90 percent higher than the pre-Great Recession peak in 2006.” Increasing equity has also driven the average homeowner’s loan-to-value ratio to the lowest level on record, meaning their home’s value now far exceeds the amount they owe on it. (source)

Whether you just bought a house or are thinking about buying a house, home improvement projects may be on your mind. After all, unless you’re moving into something newly built, there are bound to be things about your home you’d like to fix or change. It’s natural. We all want our homes to fit our needs and have the features that make us feel most comfortable. But what are the most common projects homeowners are undertaking right now? Well, according to one recent survey, bathrooms lead the list. Renovating a bathroom was named by 52 percent of respondents when asked what topped their to-do list. Kitchens came in second, which isn’t surprising. The kitchen, in many ways is the heart of the home, and an area most of us would like to customize to fit our needs. Home offices are also a popular project these days, with 31 percent of participants saying they were going to add one or improve an existing space. The rest of the list included finishing a basement or attic, adding a room, and building a separate dwelling. But whatever job you’re considering, the first step is finding a reliable contractor and making sure you know how the cost of the job will fit into your budget. (source)

According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates fell last week for the first time in a month. Rates were down for 30-year fixed-rate mortgages with conforming loan balances, loans backed by the Federal Housing Administration, and 15-year fixed-rate loans. Jumbo loans were up week over week. Joel Kan, MBA’s associate vice president of economic and industry forecasting, says government loans saw the biggest decrease. “Mortgage rates declined for the first time in a month, prompting a pickup in refinancing, with government refinancing increasing more than 20 percent over the week,” Kan said. “While the 30-year fixed mortgage rate and the 15-year fixed mortgage rate both declined only one basis point, the FHA rate fell 7 basis points, driving the surge in government refinances.” But while refinance activity was up, purchase-application demand fell from the week before. Still, buyer activity remains near its highest level since March. The MBA’s weekly survey covers 75 percent of all retail residential mortgage applications and has been conducted since 1990. (source)

Americans are concerned about the economy, according to Fannie Mae’s most recent Home Purchase Sentiment Index. But while concerns about economic conditions have reached a 10-year high, they haven’t diminished perceptions of the housing market. In fact, Fannie Mae’s index – which measures Americans’ feelings about home buying and selling conditions, mortgage rates, home prices, their jobs, and financial situation – was virtually unchanged from the month before. Among respondents, 74 percent said now is a good time to sell a home, while 29 percent said it was a good time to buy. Participants also expect home prices and mortgage rates to rise over the next year but feel more secure with their jobs and income. Mark Palim, Fannie Mae’s vice president and deputy chief economist, says housing sentiment remains stable. “Even though consumers are reporting broader macroeconomic concerns – with much of it likely tied to inflation – so far any negative sentiment tied to the economy has not translated into a meaningful decrease in actual purchase mortgage demand,” Palim said. (source)

Coming up with a down payment is among the biggest challenges for prospective home buyers, especially if it’s their first time. While move-up buyers can use the money made from selling their current home, first-time buyers have to save the money from scratch. The good news is, depending on the terms of your loan, you’ll have options, regardless of whether it’s your first or fifth time buying. For starters, you don’t necessarily have to come up with a full 20-percent down payment. In fact, the average down payment is around 6 percent. However, with home prices rising, so have down payments. And, according to newly released numbers from ATTOM Data Solutions, the median down payment is now at its highest level in more than 15 years. Their data shows that, during the third quarter of this year, the median down payment on a single-family home reached $27,500 – that’s up from $26,000 during the second quarter and $19,502 last year at the same time. But where you’re looking to buy will make a big difference in how much you’ll need to save. For example, the highest down payment amounts were found on the coasts, with half of the top 10 in California. (source)

The housing market has been out of balance for a while now. Too many home buyers have been active in a market with too few homes for sale. That’s the reason prices have been rising. It’s also the reason homes have been selling so quickly. It’s a problem with no quick solutions. Adding to the housing stock requires more new homes to built and more current homeowners to put their homes on the market. But while there aren’t any easy answers, there are encouraging signs that next year will be a little better than this year’s been. For one, the number of building permits for single-family homes has been rising and home builder confidence is high. Another positive sign is the number of forecasts predicting an increase in the number of existing homes that will be listed for sale in the coming year. For example, the National Association of Realtors’ consumer website just released an outlook saying that existing-home inventory will actually show a slight increase in 2022, after suffering steep declines in 2021. Danielle Hale, the site’s chief economist, says the market will remain competitive but should improve. “With more sellers expected to enter the market as buyer competition remains fierce, we anticipate strong home sales growth at a more sustainable pace than in 2021,” Hale said. (source)

The list of things home buyers consider important when deciding to move stays fairly consistent. Years go by without much change to buyers’ wish lists. But like most everything else, the pandemic has led buyers to reconsider the things they’re looking for in their next neighborhood. Not surprisingly, the quality of the neighborhood still ranks highest. Everybody wants to live in a nice area. The second slot, however, saw a change, as proximity to family and friends surpassed commute to work and affordability, which both ranked higher on last year’s list. The data, from the National Association of Realtors’ annual Profile of Home Buyers and Sellers, shows the pandemic’s impact on how we think about where we want to live and the type of house we’re looking to buy. “Home sellers have historically moved when something in their lives changed – a new baby, a marriage, a divorce, or a new job,” Jessica Lautz, NAR’s vice president of demographics and behavioral insights, said. “The pandemic has impacted everyone, and for many this became an impetus to sell and make a housing trade.” (source)