Home buyers and sellers can have very different views when it comes to housing market conditions. Rising prices, for example, are bad news for buyers but good news for anyone thinking about putting their home up for sale. In other words, your perception of the current market will be determined by your position in it. One thing everyone can agree on, though, is volatility. No one wants to be active in the market when it’s unpredictable. That’s why Freddie Mac’s most recent forecast is encouraging. Because, not only are they calling for a steady market in 2020, they also predict that conditions will remain stable through 2021. Sam Khater, Freddie Mac’s chief economist, says housing will remain solid despite potential economic ups-and-downs. “The economy has see increased volatility in November as hopes for a favorable resolution to the trade dispute have recently waned,” Khater said. “However, given low interest rates, modest inflation, and a solid labor market, the U.S. housing market continues to stand firm, and, our forecast is for the housing market to maintain momentum over the next two years.” More here.
Each month, Fannie Mae conducts a survey asking respondents for their perception of the housing market, buying and selling a home, mortgage rates, their job, home prices, etc. Their Home Purchase Sentiment Index is meant to gauge Americans’ interest in buying a home. In November, the Index improved, with a significant increase in the number of participants who said they thought now was a good time to buy a house. In fact, the percentage of Americans who think it’s a good time to buy rose to 61 percent from 57 percent the previous month. That’s the highest it’s been since March 2018. Doug Duncan, Fannie Mae’s senior vice president and chief economist, says low mortgage rates have helped prospective home buyers, but inventory remains an obstacle. “Over the past year, a growing share of consumers say that they expect mortgage rates to remain steady,” Duncan said. “While low rates have helped boost housing affordability compared to last year, the HPSI has increased only moderately in that timeframe. This may be due in part to the ongoing challenge of tight housing supply, especially in the starter home market.” More here.
There are some rooms you’ll find in every house. Kitchens, bathrooms, and bedrooms come to mind. Libraries, on the other hand, aren’t as common. In short, some rooms are more essential than others. But these days, the list of essential spaces is expanding. And, according to a new survey from the National Association of Home Builders, buyers – and especially younger buyers – have strong feelings about which types of rooms they want in their next house. Among millennials home buyers, laundry rooms lead the list. In fact, 86 percent of millennial respondents said having a laundry room was either desirable or a must have. Other speciality rooms that were popular with large majorities of millennials included dining rooms, home offices, and great rooms. But naturally, millennials aren’t the only buyers who have a preference for speciality spaces. After all, older buyers likely also prefer to have a laundry room in the house. However, there are some generational differences in which rooms were deemed most important to which buyers. For example, the survey found younger buyers were much more likely than other generations to say their next house needed to have an exercise, media, or game room. More here.
Home buyers have a lot to consider. They have to think about the size and location of the house they’ll buy, how much storage it’ll have, the school district, how many bathrooms, the kitchen, mechanical systems, the roof, the neighborhood, etc. It’s a lot. But, if that weren’t enough, it’s also important to consider market conditions and what the financial side of buying looks like. So what can buyers expect to find when shopping for a house in 2020? Well, according to a new forecast from the National Association of Realtors’ consumer website, there’s good news and bad. More new homes, low mortgage rates, and slower price appreciation are all encouraging signs for hopeful home buyers. Add to that easier access to credit and it sounds like a good time to buy. However, challenges will remain. For example, low inventory remains a big issue for the housing market and, in areas where there are more buyers than homes for sale, it may take longer to find a home. This is especially true for first-time buyers. New home construction has largely been limited to higher-end homes, which means affordable homes in entry-level price ranges may be harder to come by. More here.
According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates were mostly flat last week from the week before. Only rates for 30-year fixed-rate loans with jumbo balances and loans backed by the Federal Housing Administration saw much movement, with each seeing slight increases. Despite flat rates, however,the refinance index fell 16 percent and brought overall demand down. Purchase activity, on the other hand, saw a 1 percent increase. Joel Kan, MBA’s associate vice president of economic and industry forecasting, said the purchase market looks healthy as the year comes to a close. “The purchase market overall looks healthy as we enter the home stretch of 2019,” Kan said. “The seasonally adjusted purchase index was at its highest level since July, as a combination of wage gains, slower home-price appreciation, and slightly easing inventory conditions continue to support increased activity.” The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. More here.
With the job market strong, mortgage rates low, and buyer demand up, the housing market seems ready for a boom. But because there’s been fewer homes for sale than normal, it hasn’t happened. Now, according to a new forecast from the National Association of Realtors, things may be starting to change. That’s because, the number of single-family homes expected to be built next year should total 1 million, which is the highest number since 2007. And, with more new homes being built and put on the market, buyers will have more choices, affordability will improve, and sales will increase. Lawrence Yun, NAR’s chief economist, says inventory has been the primary factor holding housing back. “All the factors that contribute to higher home sales like the job situation are terrific, and of course mortgage rates are critical to buying a home and those are favorable,” Yun said. “All the factors are lined up in a way that means we should be having gangbuster home sales.” Skyrocketing home sales could be just around the corner, though, if new home construction increases as expected. More here.
Though spring and summer are the housing market’s busiest time, winter may be the best time for buyers. In fact, according to a new analysis from ATTOM Data Solutions, winter buyers have the best chance of buying a home at a price below its estimated market value. The analysis found that December is the best month for buyers and the day after Christmas and New Year’s Eve are the days offering the biggest discounts. Todd Teta, chief product officer with ATTOM, says buyers willing to make a deal during the busy holiday season will be financially rewarded. “Closing on a home purchase the day after Christmas or on New Year’s Eve can be one of the most financially beneficial holiday-season gifts you can get,” Teta said. “While lots of folks are shopping the day-after Christmas sales or getting ready to ring in the New Year, our data shows that buyers and investors are buying homes on those days at a discount. That’s a far cry from buying during June, when they are likely paying about a 7 percent premium.” By comparison, December buyers pay about a 1.2 percent premium. More here.
In October, sales of newly built, single-family homes were relatively flat from the month before, according to a new report from the U.S. Census Bureau and the Department of Housing and Urban Development. But, despite a flat month, they’re now up 32 percent from last year at the same time. That’s because September’s sales estimate was revised upward and, combined with October’s results, the two months were the best for new home sales since 2007. So what’s driving the sales surge? Well, a couple of things. One is mortgage rates, which are significantly lower than they were last fall. Another is buyer demand. The number of interested home buyers has been elevated for a while now, in large part due to a strong job market. Additionally, new home prices are falling. In fact, according to the report, the median sales price of a new home is down 3.5 percent from last year. When you combine high demand and low borrowing costs with declining prices, it becomes pretty clear why prospective home buyers might be taking a longer look at buying new. More here.
The economy has many parts. And, naturally, the housing market plays a role. When its strong, it can add to economic growth. When it isn’t, it can drag the economy down. According to the latest forecast from Fannie Mae’s Economic and Strategic Research Group, it’s currently strong and adding to growth for the first time in a year and a half. Doug Duncan, Fannie Mae’s senior vice president and chief economist, says buyer demand is responsible and, if not for inventory issues, the market might even be stronger. “As we forecasted, housing supported the larger economy in the third quarter, and we expect it to continue to play a productive role through the first half of 2020,” Duncan said. “Of course, the housing market as a whole remains constrained by the persistent supply and affordability issues, which is particularly unfortunate given the current strength of consumer demand for reasonably priced homes.” Ultimately, how much the housing market contributes to economic growth next year will be determined by how well the number of homes for sale can keep up with demand from buyers. More here.
Owning a rental property can seem like a great investment and a good way to make additional income. But, if you aren’t a professional real estate investor with experience managing properties, it can be more difficult than it looks. You can also quickly find yourself paying multiple mortgages, if you have homes to rent but no interested tenants. Obviously, there are a lot of factors that play into how successful a rental property is but location probably tops the list. After all, some areas are more desirable than others. Some areas are also more likely to attract renters. So where in the country are the best places to own a rental property? Well, according to one recent analysis, cities in Florida are a good bet right now. Places like Orlando, St. Petersburg, and Tampa all ranked among the nation’s best places to own a rental. Other cities included Seattle, Denver, Atlanta, Colorado Springs, and Phoenix. The number one city, however, was Arlington, Texas. Wherever you’re looking, though, a good indicator is population growth. Buy in a neighborhood that people are moving to and, naturally, you’ll have an easier time attracting tenants. More here.