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Which Areas Are Most Popular With Buyers?

Home buyer preferences are usually pretty consistent. What home shoppers are looking for in a house or neighborhood doesn’t change all that much from year to year. But, while that’s typically true, the pandemic caused a shift in what buyers are looking for and, two years after its initial onset, the effects are becoming more clear. One recent example can be seen in an analysis of home-price growth and inventory levels in more than 1,000 cities nationwide. The analysis – which aimed to pinpoint the country’s most popular markets – found that all of the top 10 most popular areas were suburban locations about a half-hour from the nearest city center. That’s a change from the pre-pandemic era when urban areas saw faster price growth and higher demand than neighborhoods outside cities. The reason for the shift is fairly easy to see. The pandemic led to an increase in remote work, and with more Americans able to work from home, buyers began looking to live further from city centers, where they could have more space and privacy. (source)

How Handy Do You Consider Yourself?

Homeownership has many benefits. It also comes with a fair amount of responsibilities. Among them, maintenance is a big one. It’s up to you to keep your home in good shape, fix things when they break, and make sure mechanical systems are in working order. Of course, you can hire contractors to do the work, but finding good, affordable help can be challenging and the costs definitely add up. So when shopping for a home to buy, it’s also good to have an idea of how handy you are around the house. Being able to handle some home improvement and maintenance projects can help save you money. It can also help widen your options, as you may be more comfortable buying a house that needs a little love and attention. But first, you need to assess your skill level. According to one recent survey, 47 percent of Americans consider themselves handy. Fewer say they’re extremely handy, with 18 percent of respondents ranking their skill level on the higher end of the handiness scale. How handy do you consider yourself? (source)

Outlook Sees Home Price Growth Slowing

Affordability is a hot topic these days. After two years of rapid home price growth and the recent spike in mortgage rates, prospective home buyers are increasingly wondering about the cost. That’s natural. When affordability conditions change quickly, it can lead to uncertainty. So what should home buyers expect in the coming months? Fannie Mae’s Economic and Strategic Research Group has answers. According to their latest outlook, the group believes the housing market is headed for a slowdown in sales and construction activity. That’s to be expected, especially while rates are rising. “Historically, rapid and substantial rises in mortgage rates have had the effect of slowing activity, which we reflect in our forecast,” Doug Duncan, Fannie Mae’s senior vice president and chief economist, says. But a slower market should also bring slower price growth – which could help offset higher rates. Recent price increases have largely been driven by a supply imbalance. More buyers than available homes has led to surging prices. When the market slows, and fewer buyers are active in the market, home prices should finally begin to calm down. (source)

Homes For Sale Still Selling Quickly

Homes for sale continue to sell quickly, according to new numbers from the National Association of Realtors. Data from April shows 88 percent of homes sold during the month were on the market less than 30 days and the typical property was on the market just 17 days. Lawrence Yun, NAR’s chief economist, says the housing market is a little unusual right now. “The market is quite unusual as sales are coming down, but listed homes are still selling swiftly …” Yun said. It’s true. Home sales in April fell 2.4 percent from the month before and are now 5.9 percent lower than they were at the same time last year. But despite buyer demand beginning to slow, the pace of sales remains fast. So what’s happening? Well, the inventory of homes for sale is still lower than normal, which is why good listings don’t last long. Even with fewer buyers active in the market, homes will continue to sell quickly until inventory improves. Luckily, relief may be on the way. In April, for example, the number of homes for sale spiked, rising 10.8 percent from the month before. That’s good news for spring buyers. (source)

Average Mortgage Rates Fall From Previous Week

According to the Mortgage Bankers Association’s Weekly Application Survey, average mortgage rates fell last week. Rates were down from one week earlier 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. But despite the decline, demand for mortgage applications also fell, with both refinance and purchase activity slowing from the week before. Joel Kan, MBA’s associate vice president of economic and industry forecasting, says affordability conditions may be to blame. “Prospective home buyers have been put off by the higher rates and worsening affordability conditions,” Kan said. “Furthermore, general uncertainty about the near-term economic outlook, as well as recent stock market volatility, may be causing some households to delay their home search.” The drop in mortgage applications was the first in three weeks. Conducted since 1990, the MBA’s weekly survey covers 75 percent of all retail residential mortgage applications. (source)

Home Builders React To Growing Challenges

Home builders are a reliable barometer of housing market health, since their business depends on being able to anticipate buyers’ needs. That’s why the National Association of Home Builders’ monthly Housing Market Index – which measures builder confidence – is a closely watched industry metric. The index is scored on a scale where any number above 50 indicates more builders view conditions as good than poor. In May, the index fell for the fifth straight month, dropping to 69. Though still a positive result, it’s an indication that builders are starting to feel the effects of numerous challenges facing the market, including higher mortgage rates. “The housing market is facing growing challenges,” Robert Dietz, NAHB’s chief economist, said. “Building material costs are up 19 percent from a year ago, in less than three months mortgage rates have surged to a 12-year high and based on current affordability conditions, less than 50 percent of new and existing home sales are affordable for a typical family.” But while the market has become more challenging, all three index components remain in positive territory, including the gauge of current sales conditions which scored a 78 in May. (source)

Mortgage Credit Tightens For Gov’t Loans

The standards lenders use to determine whether or not a borrower is approved for a loan aren’t fixed. That means there are times when it’s easier to get a mortgage and times when it’s more difficult. Because of this, the Mortgage Bankers Association tracks mortgage credit availability from month to month. An increase in the MBA’s index indicates that standards are loosening, while a decline means they’ve tightened. According to the most recent results, mortgage credit availability tightened in April. Joel Kan, MBA’s associate vice president of economic and industry forecasting, says the decline was mostly due to changes in refinance activity. “With the rate/term refinance business drying up, lenders have reduced the availability of government streamline refinancing programs, which are no longer as relevant of an option for many borrowers,” Kan said. This led to a 6.5 percent decline in the component measuring credit availability for government loans. Components measuring conventional loans, on the other hand, rose slightly from the month before. (source)

Affordability Improves Due To Income Gains

Whether or not buying a home is considered affordable depends on a number of factors. Home prices, mortgage rates, and income all play a role. That’s why, despite mortgage rate increases during the first quarter of the year, the share of homes considered affordable actually rose from the previous quarter. How’s that possible? Well, a closer look at the numbers shows it’s mostly due to Americans making more money. According to the National Association of Home Builders’ Housing Opportunity Index, 56.9 percent of new and existing homes sold between January and the end of March were considered affordable to families earning the U.S. median income of $90,000. That’s about $10,000 more than Americans were making one year earlier. Naturally, that made buying a home a little easier. But Jerry Konter, NAHB’s chairman, cautions that, with costs continuing to rise, affordability gains aren’t likely to continue. “The first quarter reading is a backward gauge, as surging interest rates, ongoing building material supply chain constraints and labor shortages continue to raise construction costs and put upward pressure on home prices,” Konter said. (source)

Share Of Equity Rich Homes Continues To Climb

One of the primary benefits of owning a home is equity. Put simply, equity is the difference between what you owe on your mortgage and what your home is worth. Which means, you build it as you pay down your loan each month. It also grows when your home’s value increases. It’s homeownership’s main financial benefit and, these days, homeowners have more of it than ever. In fact, according to ATTOM Data Solutions’ most recent U.S. Home Equity & Underwater Report, nearly half of all mortgaged residential properties are now considered equity rich – meaning the combined amount of loan balances secured by those properties is no more than 50 percent of their value. Rick Sharga, ATTOM’s executive vice president of market intelligence, says equity is at record levels. “Homeowners continue to benefit from rising home prices,” Sharga says. “Record levels of home equity provide financial security for millions of families, and minimize the chance of another housing market crash like the one we saw in 2008.” The share of mortgaged homes considered equity rich was at 44.9 percent in the first quarter of 2022, that’s up from 31.9 percent one year earlier. (source)

Buyers Push Mortgage Applications Higher

According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates increased again last week, with rates up from one week earlier 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. Despite the increase, though, home buyers remained active. In fact, demand for loans to buy homes was up 5 percent from the week before. Joel Kan, MBA’s associate vice president of economic and industry forecasting, says it looks like spring buyers aren’t deterred by higher rates. “Despite a slow start to this year’s spring home buying season, prospective buyers are showing some resiliency to higher rates,” Kan said. “Purchase activity has now increased for two straight weeks.” Demand for home purchase loans is now 8 percent below where it was last year at the same time. The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. (source)