Is Buying Still More Affordable Than Renting?

Home prices have been increasing for a while now. And, with for-sale inventory still well below normal levels, they’ll likely continue to increase. So it’d be easy to get the impression that buying a home in 2021 would be far more expensive than renting a home. But, according to ATTOM Data Solutions’ newly released 2021 Rental Affordability Report, owning a median-priced three-bedroom home is still more affordable than renting a three-bedroom home in 63 percent of the counties included in the report. And that’s despite the fact that home prices have increased faster than rent in 83 percent of those counties over the past year. Todd Teta, chief product officer with ATTOM, says low mortgage rates are the difference. “Amazingly low mortgage rates … are helping to keep the cost of rising home prices in check,” Teta said. “It’s startling to see that kind of trend. But it shows how both the cost of renting has been relatively high compared to the cost of ownership and how declining interest rates are having a notable impact on the housing market and homeownership.” (source)

More Buyers Buying Homes Sight Unseen

How we buy homes has undergone a significant transformation in the past year. The proof is in newly released data that shows a record number of recent home buyers made an offer on a home without having ever visited it in person. The numbers, from an online real-estate portal, show 63 percent of buyers who purchased a home last year made an offer without having seen the property. That’s up from 32 percent one year earlier and 45 percent in July 2020. So what’s driving the trend? Well, mostly it’s the COVID-19 pandemic. The virus caused us all to change the way we do things, including buying a home. After its onset, home buyers became more comfortable using technology like virtual home tours to further explore listings that caught their eye online. It also meant more Americans working from home, which lead home shoppers to look for houses in areas that weren’t as easy to get to for an in-person walkthrough. The combination of pandemic, technological advancement, and remote work means an increasing number of us have had to – or have chose to – take our home search virtual. It remains to be seen, though, whether or not the trend will continue after the virus subsides. (source)

Mortgage Demand Rises 17% After The Holidays

According to the Mortgage Bankers Association’s Weekly Applications Survey, demand for mortgage applications was up 16.7 percent during the first week of January. The increase includes an adjustment for the holidays, but represents a significant spike from the previous week. Refinance activity was up 20 percent, while purchase demand rose 8 percent. Joel Kan, MBA’s associate vice president of economic and industry forecasting, says the numbers contain evidence that first-time home buyers are becoming more active in the market. “Sustained housing demand continued to support purchase growth, with activity up nearly 10 percent from a year ago,” Kan said. “The lower average loan balance observed was partly due to a 9.2 percent increase in FHA applications, which is a positive sign of more lower-income and first-time buyers returning to the market.” Also in the report, average mortgage rates were up slightly from the previous week, with increases seen for both 30-year fixed-rate mortgages with conforming loan balances and loans backed by the Federal Housing Administration. The MBA’s survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. (source)

Home Buyers Say They’re Open To Relocating

Remote work has Americans spreading out and the trend doesn’t look like it’s going anywhere any time soon. More and more, Americans are moving further from city centers and into suburbs and exurbs. In fact, according to one recent survey, two-thirds of participants said they either already had, or would like to, move somewhere within 50 miles of their current home. Some even wanted to move further, with 4 percent saying they moved more than 50 miles away and 10 percent said they’d like to in the future. In short, there are a lot of Americans who are using their newfound ability to work from home as a reason to move elsewhere – whether for extra space, privacy, or to save money. It’s not surprising. It’s also likely to continue. That’s because, just 17 percent of respondents said they thought their work-from-home arrangement would end when the pandemic subsides, while 72 percent said they expect it to be permanent. (source)

Will There Be A Buyer’s Market In 2021?

A buyer’s market means there are more homes available for sale than there are interested home buyers. When this happens, home shoppers have more negotiating power and time to choose – since sellers are less likely to have more than one offer to pick from. This was the case after the housing crash and financial crisis, when the market was flooded with homes but had few buyers, outside of real-estate investors looking to capitalize. So what should we expect from 2021? Well, most likely, not a buyer’s market. The number of homes for sale fell significantly last year and remains low. Conversely, home buyer demand is elevated and has been for a while. That means, more buyers than homes, which leads to competition and higher prices. But while home buyers aren’t likely to find a buyer’s market, they will find conditions softening from last year. With mortgage rates still at record lows and new-home construction improving, experts expect home-price increases to moderate and inventory to begin its recovery. In other words, the 2021 housing market won’t be a buyer’s market, but it should be better than last year. (source)

New Listings Improve As Inventory Falls

The number of homes for sale was already low at the beginning of 2020. It only got worse from there. The pandemic, along with surging buyer demand, led to fewer choices and higher prices for hopeful home buyers. Homes sold quickly as competition spiked. But where was for-sale inventory at the end of the year? Well, according to a new report from the National Association of Realtors’ consumer website, the number of homes for sale was down 39.6 percent year-over-year in December, hitting an all-time low. But there may be relief on the way. The number of new listings improved during the month and was just 0.8 percent lower than the year before. This hints at a possible improvement in the coming months. Danielle Hale, the website’s chief economist, says any gains will likely take until the second half of 2021. “While December’s data points to possible relief on the horizon, this figure has been impacted the most in areas with large COVID surges, and consistent improvement will be key in order to get out of this extreme shortage,” Hale said. “We eventually expect to see improvements in the supply of homes for sale, especially in the second half of the year.” (source)

Americans Cautiously Optimistic About Housing Market

Fannie Mae’s Home Purchase Sentiment Index measures Americans’ perception of the current housing market and their personal financial situation. The index serves as a gauge of how optimistic consumers are about buying or selling a home. In December, sentiment declined from the month before, with fewer Americans saying it’s a good time to enter the market. Doug Duncan, Fannie Mae’s senior vice president and chief economist, says the pandemic may be behind the decline. “The HPSI declined for the second consecutive month and fell to its lowest level since May 2020, as consumers adjusted to the worsening COVID-19 conditions of the first few weeks of December – the survey collection period,” Duncan said. But though the index fell from the previous month, 52 percent of respondents still feel it’s a good time to buy. Similarly, about half of respondents said it was a good time to sell a house. The results reflect the cautious optimism potential home buyers and sellers are feeling right now. On the one hand, favorable mortgage rates and pent-up demand are fueling interest; on the other, higher home prices, the pandemic, and low inventory are causing hesitation. (source)

New Year Starts With Rates At Record Lows

According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates declined during the last two weeks of 2020. In fact, 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 drop means mortgage rates remain at all-time survey lows. Joel Kan, MBA’s associate vice president of economic and industry forecasting, said record-low rates are good for fixed-rate borrowers. “The record-low rates for fixed-rate mortgages is good news for borrowers looking to refinance or buy a home, as around 98 percent of all applications are for fixed-rate loans,” Kan said. But while rates remains favorable, requests for mortgage applications fell 4.2 percent during the holiday season, mostly due to a 6 percent drop in refinance demand. The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. (source)

What We Want From Our Homes Now

Home design trends, by their nature, come and go. There’s always a hot new color or a must-have fashion. And just as quickly as they appear, they’re erased and replaced with the next hot new thing. But when you ask home buyers and homeowners what they want from their homes – beyond the aesthetics – their answers are remarkably consistent. In short, everyone wants their home to be comfortable, efficient, clean, and healthy. That doesn’t change. Home buyers and owners want things like smart thermostats, energy-star appliances, balanced ventilation, leak-detection systems, and other high-performance features that can help lower bills and improve the indoor environment. These have been popular features for years now and have only grown more popular since the onset of the coronavirus. This is no surprise. More time in the house has helped us focus on bettering our homes. And, more than likely, our desire for comfort and wellness at home will continue to live on well after the pandemic has subsided. (source)

Affordability Slips In Final Quarter Of 2020

Affordability conditions worsened during the final quarter of 2020, according to new numbers from ATTOM Data Solutions. Their fourth-quarter U.S. Home Affordability Report found that homes and condos were less affordable than their historical average in 55 percent of the 499 included counties. That’s up from 43 percent one year ago. Todd Teta, ATTOM’s chief product officer, says affordability has been slipping, but that can change. “Home prices have continued rising throughout 2020 and the housing market has remained remarkably resilient in the face of the brutal economic fallout from the coronavirus pandemic,” Teta said. “The future remains wholly uncertain and affordability could swing back into positive territory. But for now, things are going in the wrong direction for buyers.” The report compared average wage data with median home prices in order to determine whether or not a home buyer’s monthly expenses – including mortgage payment, property tax, and insurance – would require more than 28 percent of their monthly income. (source)