Monthly Archives: April 2022

Nobody likes paying taxes. Just the thought of it can be stressful – especially if you’re among the filers who will owe money to the IRS. The good news, though, is the vast majority of us, rather than owing money, will receive a tax return. In fact, according to recent numbers, about 75 percent of us will get money back after filing our taxes. And the average return is pretty sizeable. In fact, it’s just over $3,500. So, if you’re among the tax filers who’s expecting a check from the IRS, what do you plan to do with it? One way to get the most out of your tax return is to put it toward buying a house. Coming up with a down payment can be difficult, and particularly in a housing market that’s seen home prices continue to climb. But with an average tax return, you could quickly get a lot closer to your goal. Think of it this way: If you’re buying a home at the current average price of around $375,000, a $3,500 tax return makes up about a fifth of what you’d need for a five percent down payment. That’s a pretty big boost to your down payment savings. Not to mention, if you use your tax return to buy a house, you’re investing the money and getting more out of it than you would’ve had you used it for a beach vacation or a luxury purchase. (source)

According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates increased last week. Rates moved higher for 30-year fixed-rate loans with both conforming and jumbo balances, loans backed by the Federal Housing Administration, and 15-year fixed-rate loans. But while increasing rates slowed refinance activity, demand for loans to buy homes still posted week-over-week gains. In fact, the purchase index rose 1 percent from one week earlier. Joel Kan, MBA’s associate vice president of economic and industry forecasting, said the improvement was a promising sign. “In a promising sign of strong purchase demand amidst affordability challenges, both conventional and government purchase applications increased,” Kan said. The MBA is forecasting slower mortgage originations this year, since inflation is likely to cause more aggressive action from the Federal Reserve. However, they still believe purchase originations will beat last year’s pace. In fact, according to their outlook, purchase loan demand will rise 4 percent this year. The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. (source)

It’s not surprising that home buyers would rank location as their top consideration when shopping for a home. After all, if your family, friends, and job are all in Dallas, finding the perfect house in San Diego doesn’t do you much good. In other words, few of us can say we don’t care at all where we live. So the fact that 88 percent of recently surveyed prospective home buyers said location was their most important criteria is no shocker. But what are some of the other factors that buyers listed as top priorities? Well, square footage was next on the list, with 73 percent saying they needed a house of a specific size. Similarly, the number of bedrooms and bathrooms also garnered a majority of respondents. Along with size and location, price was a popular choice. The list price of a house was named by 68 percent of home shoppers. Some of the remaining items participants cited included the style of the home, the size of the property, and utilities. Of course, any one of these factors could sway a buyer. They’re all fundamentally important. The real question for home buyers is where and how much you’re willing to compromise on any of them. (source)

There’s a frustratingly low number of homes for sale these days. Low inventory has been pushing prices higher and making it harder for home buyers to find a home to buy. It hasn’t, though, kept buyers from trying. In fact, buyer demand remains high. And fortunately for those hopeful home shoppers, it looks like relief may be on the way. Not only has new residential construction been increasing lately, a recently released survey from the National Association of Realtors’ consumer website shows there’s also an increasing number of homeowners who say they plan to list their home for sale, and soon. According to survey results, 64 percent of prospective sellers say they plan to sell within the next six months. Among them, many say they’re ready to make a move because they’re looking for a home with different features than their current home or because they no longer need to live near their job. However, a hot seller’s market is also a big motivator, with profit ranking as the number one reason homeowners say they’re planning to list this year. (source)

Your household budget is a reflection of your personal priorities. No two budgets are the same. That’s why it’s important to take a look at yours when thinking about how much house you can afford. Knowing how and where you’re spending money will give you a good idea of how a monthly mortgage payment will fit into your budget. But while your budget is specific to you, there are some common guidelines. For example, the 28 percent rule. According to the rule, a household should spend no more than 28 percent of its gross monthly income on total housing expenses. This is a common standard used to determine housing affordability. If a house requires more than 28 percent of your income, it’ll likely be a struggle for you to afford it. With that in mind, ATTOM Data Solutions recently looked at how affordable median-priced homes are around the country. The data shows that homeownership remains within the average workers’ financial means. In fact, a median-priced home required 26.3 percent of the average national wage in the first quarter of 2022. That’s higher than previous quarters but still less than 28 percent, which means homeownership remains within reach despite increasing prices and mortgage rates. (source)

Fannie Mae’s monthly Home Purchase Sentiment Index surveys Americans to gauge their feelings about the housing market and economy. The survey asks participants whether they think now is a good time to buy or sell a home, if they believe mortgage rates and prices will rise or fall, and how they feel about their job and income. In March, respondents said they feel now is a good time to sell a house, with 74 percent agreeing that the time is right for homeowners who are ready to make a move. Unfortunately, while the number of participants who think it’s an opportune time to sell continues to rise, the number who say it’s a good time to buy has been falling. Mark Palim, Fannie Mae’s vice president and deputy chief economist, says there are a few factors behind the decline. “The ‘Good Time To Buy’ component of the index reached yet another record low, with high home prices, rising mortgage rates, and macroeconomic uncertainty serving as consumers’ chief concerns,” Palim said. However, though Americans have concerns, they are also feeling more confident about their jobs and income. The survey found 86 percent of participants said they aren’t concerned about losing their job and the number who said their household income is higher than it was a year ago rose 2 percent from the month before. (source)

According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates continued their climb upward last week. In fact, rates were up from the week before 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. Joel Kan, MBA’s associate vice president of economic and industry forecasting, says rising rates haven’t slowed demand for loans to buy homes. “The hot job market and rapid wage growth continue to support housing demand, despite the surge in rates and swift home-price appreciation,” Kan said. “However, insufficient for-sale inventory is restraining purchase activity.” The lack of homes for sale is especially challenging for first-time home buyers. For example, though purchase loan demand was down 3 percent last week, it fell 8 percent for FHA loans, which are more popular with entry-level buyers. Overall, mortgage application demand was down 6.3 percent last week, mostly due to a 10 percent drop in refinance activity. The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. (source)

When choosing a place to live, you also have to choose whether you’re going to rent or buy. Of course, there are a number of reasons you might choose one over the other. For most of us, though, the decision will largely be financial. Buying a home requires a significant upfront investment and you need to have enough to cover a down payment, closing costs, etc., before you can buy. That may help explain a new analysis that found education level is a good predictor of whether or not a person will own a home. According to the data, among U.S. homeowners, 40 percent have attained a bachelor’s degree or higher and 30 percent have some college or an associate’s degree. By comparison, 23 percent of homeowners have a high school diploma and 7 percent have less than a high school education. That means the vast majority of homeowners have, at least, some higher education. But since the average income for a college graduate is more than twice that of those with a high school diploma or less, it seems income may ultimately be the best predictor of future homeownership. (source)

Success means different things to different people. There isn’t one fixed definition or measurement. But while that’s obviously true, there are certain hallmarks that have long been seen as key components of achieving the American dream. Owning a home is certainly one of them. And, according to a new survey, it continues to be. The survey found that homeownership was the symbol of economic prosperity Americans ranked highest, with 74 percent putting it above being able to retire, having a successful career, owning a car, having children, and getting a college degree. Its ranking was consistent across generations. In fact, it was the top choice among all respondents of any age, except those between the ages of 18 and 25, who ranked a successful career as their top choice. There are likely many reasons Americans continue to hold homeownership in such high regard. But the fact that 72 percent of homeowners said, if given the chance, they would buy their current house again is a pretty good indication stability, personal satisfaction, and happiness are as big a part of it as any financial or economic benefit. (source)

Every homeowner who’s selling their home wants it to attract buyers and sell for the highest possible price. That’s why they remove the clutter, fix any maintenance issues, plants some flowers and make sure their home looks its best before listing it. Makes sense. A good home won’t garner the same amount of interest if it’s presented poorly. But there are other considerations when selling a house. For example, the time of year matters. Homes sold in the winter may not sell as quickly, and for as much, as they would in the spring or summer. According to a recent analysis, even the day of the week makes a difference. In fact, the analysis found homes listed on a Thursday can sell for $1,100 more than if they were listed on a different day. Why? Well, busy buyers often don’t have time to go see available listings during the week. So, a home listed closer to the weekend, gives buyers time to arrange their schedule and plan a time to go out and see it. (source)