Monthly Archives: March 2023

When there are too few homes for sale, the new home market can help fill the gap and give buyers more options. That’s certainly the case today, as the available inventory of existing homes for sale remains low. Which means, buyers who haven’t had success finding a previously owned home may consider buying new. And, according to the latest Housing Market Index from the National Association of Home Builders, that has home builders feeling more optimistic. “Even as builders continue to deal with stubbornly high construction costs and material supply chain disruptions, they continue to report strong pent-up demand as buyers are waiting for interest rates to drop and turning more to the new home market due to a shortage of existing inventory,” Alicia Huey, NAHB’s chairman, says. The NAHB’s index – which surveys home builders and scores their answers on a scale where any number above 50 indicates more builders see conditions as good than poor – found builder optimism up for the third consecutive month in March – though still low overall at 44. (source)

According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates fell last week from the week before. Rates were down for 30-year fixed-rate loans with both conforming and jumbo balances, 15-year fixed-rate loans, and 5/1 ARMs. Interest rates for loans backed by the Federal Housing Administration saw a small increase. Joel Kan, MBA’s vice president and deputy chief economist, says demand for loans to buy homes rose as a result. “Home-purchase applications increased for the second straight week but remained almost 40 percent below last year’s pace,” Kan said. “While lower rates should buoy housing demand, the financial market volatility may cause buyers to pause their decisions.” Market concerns over recent bank closures were partly responsible for rates falling last week. Whether it’ll slow buyer demand remains to be seen, but last week buyers pushed demand for home purchase loans up 7 percent 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 where Americans want to live by paying attention to where home builders are building the most homes. Builders respond to buyer demand – so if residential construction is rising in any particular area, the number of interested buyers is also likely increasing. That’s why the National Association of Home Builders’ Home Building Geography Index tracks building conditions and permits in various markets across the country. The data can be a good gauge of where Americans – and current housing trends – are moving. According to the most recent release, which covers the fourth quarter of 2022, home building slowed pretty much everywhere at the end of last year, but the index did find one area growing while others fell. Compared to pre-pandemic levels, rural markets showed growth while more densely populated areas in the core counties of large and small metro areas saw declines. In other words, there’s been a clear shift in buyer preferences toward more spacious, less populated areas further from city centers. (source)

A million dollar city – as defined by a recent analysis of home values – is any area where the typical home is worth $1 million or more. Last year, the number of million dollar cities hit a record high, reaching 522 in July when the housing market peaked. In subsequent months, though, the market has slowed and the number of million dollar cities has fallen. In fact, the most recent numbers show there are 58 fewer million dollar cities than there were last summer. Currently, there are 464 million dollar cities, with 190 of them in California alone. The drop is due largely to the fact that high-end housing markets have seen bigger price cuts than more affordable areas. In million dollar cities, for example, the typical home’s value has fallen 6.3 percent, equaling an average loss of $114,500. But while that means home sellers may not get as much for their homes as they would’ve had they sold earlier, qualified buyers looking for a house to buy in these areas may see it as an opportunity. (source)

Choosing the right neighborhood is important. Your neighborhood will be a big determiner of how happy you are in the home you buy. That’s especially true if you have children or are thinking of starting a family. Let’s face it: some communities are more family friendly than others. So what are the factors you should consider when choosing a neighborhood? Well, according to one new analysis of the best areas to raise a family, the list includes schools, crime rate, child care options, walkability, cost of living, and availability of family activities. Of course, no area is perfect and you’ll have to make some compromises. For example, smaller towns typically have better safety ratings than larger cities, but metropolitan areas will have more access to attractions like museums, amusement parks, and zoos. In other words, you’ll have to prioritize which neighborhood amenities are most important to you. As for the analysis, it determined the best place to raise a family was Cary, NC, followed by Frisco, TX, Naperville, Il, McKinney, TX, and Virginia Beach, VA. (source)

These days, home buyers are feeling a little cautious about the housing market. Its recent fluctuations have made them wonder whether now is the best time to buy a house. After all, where are things headed from here? Well, one recent survey of industry experts and economists tried to answer that question, specifically with regard to home prices. Their answer could help reassure hesitant home buyers. That’s because survey respondents expect prices to remain relatively flat this year. They don’t foresee a home price crash. In fact, the survey found participants believe prices will slow about 1.5 percent this year. Then, in 2024, home values will pick back up, but return to a more historically normal pace. Respondents said home prices should see an average increase of about 3.5 percent per year through 2027. That means the price volatility of the past few years is coming to an end and, for the foreseeable future, price increases should remain more consistent and stable. (source)

According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates rose again last week. Rates were up for 30-year fixed-rate loans with both conforming and jumbo balances, loans backed by the Federal Housing Administration, 15-year fixed-rate loans, and 5/1 ARMs. But despite higher rates, demand for mortgage loan applications still improved from one week earlier. In fact, measures of both refinance and purchase loan activity saw significant increases from the week before, with refinance activity up 9 percent and demand for loans to buy homes up 7 percent. Joel Kan, MBA’s vice president and deputy chief economist, says the increases are welcome but activity is still down from last year. “Even with higher rates, there was an uptick in applications last week, but this was in comparison to two weeks of declines to very low levels, including a holiday week,” Kan said. “Comparing the application indices from a year ago, purchase applications were still down 42 percent, and refinance activity was down 76 percent.” The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. (source)

Fannie Mae’s monthly Home Purchase Sentiment Index is based on a survey of Americans. The survey asks participants whether they think now is a good time to buy or sell a home, where they think prices and mortgage rates are headed, and how they feel about their job security and financial situation. According to the most recent release, Americans are feeling slightly more cautious than they were in previous months. In fact, the index fell for the first time in three months, with respondents expressing concern about home-selling conditions and their job. Doug Duncan, Fannie Mae’s senior vice president and chief economist, says consumers are feeling hesitant about the economy. “The decline was partly driven by a substantial decrease in consumers’ sense of home-selling conditions, with most respondents who indicated it’s a ‘bad time to sell’ citing unfavorable economic conditions and mortgage rates as the primary reasons for that belief,” Duncan said. “With home-selling sentiment now lower than it was pre-pandemic- and home buying sentiment remaining near its all-time low – consumers on both sides of the transaction appear to be feeling cautious about the housing market.” (source)

At some point, we’ve all fantasized about moving somewhere far from home. Whether it was after a particularly good vacation or a bout of bad weather, it isn’t uncommon to think about what it might be like to live in a different place. Truthfully, though, a lot of those fantasies involve moving some place more expensive than where we currently live. So, if you’re dreaming of moving away but would like some more affordable options, you may be interested in a recent analysis of the country’s most affordable states. The analysis based affordability on a number of factors, including median home prices, housing costs, grocery costs, utilities, inflation, and state income taxes. What it found was there are affordable places to live in all regions of the country. In fact, the top ten included North and South Dakota, Tennessee, Alaska, Texas, Florida, Washington, Nevada, and Wyoming. The most affordable state, though, was New Hampshire. That covers every area from the Northwest to the South and should provide some more realistic options next time you’re dreaming of getting away. (source)

It’s natural to look back on decisions you’ve made and wonder what might’ve been had you made different choices. So it’s not surprising that an overwhelming majority of recent home sellers say they wish they’d done something differently when they sold their home. It’s a major undertaking and a significant financial transaction, after all. But what is the top thing home sellers say they regret? Well, if you guessed it has to do with pricing their home, you’re correct. The most common answer in a survey of sellers who sold in the past two years was that they wish they had set their home price higher. In fact, 39 percent of participants named pricing their home too low as their top regret. But while home sellers during the frenzied market of the past two years may believe they could’ve gotten more for their house, today’s sellers may have the opposite experience. That’s because, in today’s market, setting your home’s price too high may mean it struggles to sell, as there are fewer active buyers than there were in 2021 and early 2022. (source)