Considering the popularity of home renovation shows, it’s easy to see why home buyers might be tempted to buy a fixer upper. After all, on TV, renovating a house can be budget-friendly, quick, and even fun. But prospective home buyers, who think they may want to look for a house that needs some work, need to first be realistic. Not everyone has the skills or time to take on a renovation themselves and hiring a contractor can get expensive. Not to mention, all the little details reality TV shows edit out that can cause stress and frustration for an inexperienced do-it-yourselfer. So before you buy a project, be sure you have a good idea of how much work the house will need, how much you’ll be able to do yourself, how much it’ll cost to hire contractors, and what the time frame will be. While a fixer-upper can be a good option for some buyers, it’s not for everyone. Being realistic about whether or not it’ll work for you can help you avoid taking on something that ends up costing you more time, money, and energy than originally anticipated.
Typically, if you’re buying a house, you’ll be required to have it appraised before your loan closes. Part of the reason for this is to ensure you’re paying a fair price for the property. Another is to protect your lender’s investment – since they’re going to be assuming most of the risk. Either way, it’s a good idea to have a third-party, unbiased, professional assessment of the property. Appraisal Institute president, Stephen S. Wagner MAI, SRA, AI-GRS, certainly thinks so. He says it’s important that anyone getting an appraisal know the purpose of having one. “When hiring a valuation professional, clients should first understand the role of an appraiser,” Wagner said. “The appraiser’s role is to provide objective, impartial, and unbiased opinions about the value of real property – helping those who own, manage, sell, invest in, and lend money on the security of real estate.” Wagner suggests asking certain questions to make sure your appraiser is highly qualified. For example, asking about an appraiser’s experience, licenses, certification, and clientele can help you avoid any potential issues that could affect the closing of the loan. More here.
There are several reasons new homes tend to be more expensive than previously owned homes. One is that they’re new. You’re going to pay more for any house that has updated fixtures and features, let alone one where everything in it is brand new. But though new homes generally go for a higher price, new data from the U.S. Census Bureau and the Department of Housing and Urban Development shows they’re currently more affordable than they’ve been in years. In fact, the median price of new homes sold in September was $299,400. That’s 8.8 percent lower than they were last year at this time and the lowest new-home prices have been since February 2017. But while that’s good news for home buyers who want to buy new, it didn’t lead to a significant sales bump. In September, sales of newly built single-family homes were down 0.7 percent, with only the Midwest seeing an increase from the previous month. Still, despite the slight decline, sales are 15.5 percent higher than they were last year. More here.
According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates spiked last week from the week before. And though they remain low, rates increased 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. Naturally, the increase led to a drop in refinance activity, with week-over-week numbers showing a 17 percent decline. Purchase demand was also down, though just 4 percent from one week earlier. Mike Fratantoni, MBA’s senior vice president and chief economist, says interest rates have been volatile lately. “Interest rates continue to be volatile, with Brexit votes and ongoing trade negotiations swinging rates higher or lower on any given day,” Fratantoni said. But while rates have been volatile, they remain low by historical standards. They also continue to be a motivating factor for potential home buyers. In fact, purchase demand, though down from the previous week, remains 6 percent higher than 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. More here.
The supply of available homes for sale is limited. So, when you find one that fits your needs and budget, you generally want to move quickly. After all, there could be other buyers, with similar taste, who get an offer accepted before yours is even on the table. These days, that’s especially true. In many markets, there are fewer homes available for sale than is typical. That means, more competition and less time to deliberate before making a decision to buy. But while that’s true, new numbers from the National Association of Realtors show the end of the summer season has provided a little breathing room to interested buyers. According to the NAR’s existing-home sales report the number of days the typical property remained on the market rose to 32 in September. That’s an improvement from August, though no change from year-before levels. Still, while it’s an improvement, 32 days isn’t all that long. And, considering nearly half of all homes sold in September were on the market for less than a month, prospective home buyers still need to make sure they’re prepared and ready to move when they find a house they like. More here.
When a homeowner refinances their mortgage, they’re replacing their original mortgage with a new one. The reason to do this is to secure better terms on their home loan. So naturally, the right time to refinance a loan is when mortgage rates are lower than they were when the house was purchased. That’s why it’s no surprise that a recent report from Ellie Mae shows that, in September, refinances made up a larger share of total mortgage loan activity than they had in any previous month dating back more than four years. After all, mortgage rates have been trending downward ever since spiking last winter. In fact, they’re now hovering just above historic lows and it’s fueling the increasing interest in refinancing among current homeowners. “The continued decline in interest rates is driving the refinance revitalization that is now accounting for almost 50 percent of all closed loans in the month,” Jonathan Corr, president and CEO of Ellie Mae, said. And with rates expected to remain low for the foreseeable future, homeowners will likely continue to benefit from refinancing their loans and locking in a lower rate. More here.
The most recent forecast from Fannie Mae’s Economic and Strategic Research Group says the housing market may be an economic bright spot going into 2020. While other economic indicators are pointing to uncertainty and downside risk, real estate looks strong and may help contribute to economic growth after nearly two years of being a drag on the economy. But while a strong housing market is a positive for the economy, what does it mean for the average home buyer? Well, Doug Duncan, Fannie Mae’s senior vice president and chief economist, says not that much. “While consumer spending, supported by a healthy labor market and gains in household wealth, remains the current expansion’s economic engine, the housing sector appears poised to offer meaningful near-term contributions to growth,” Duncan said. “Unfortunately, expectations for a stronger housing market through the early part of next year are unlikely to offer prospective home buyers much respite from the longstanding affordability issues.” In other words, market conditions will see little change for the foreseeable future. Mortgage rates are expected to stay low, prices will likely continue to increase, and available inventory will depend on whether or not there’s a significant bump in new home construction. More here.
Supply and demand have a lot to do with how much it costs to buy a house. When there are more homes than buyers, prices fall and buying becomes more affordable. When there are more buyers than homes, it gets more expensive. That’s why the new home market is so important. After all, new home construction is a big part of the supply side of that basic equation. That’s why a new survey from the National Association of Home Builders is encouraging. Their Housing Market Index asks builders for their opinion of the new home market and scores their responses on a scale where any number above 50 indicates more builders view conditions as good than poor. In October, the index hit 71, its highest score since February 2018. In short, home builders are feeling good about the market for newly built homes and it could help affordability levels. Greg Ugalde, NAHB’s chairman, says there are a few factors that are boosting confidence in the market. “The housing rebound that began in the spring continues, supported by low mortgage rates, solid job growth, and a reduction in new home inventory,” Ugalde said. If builders’ confidence in the market leads to more new home construction, it could have a balancing effect on the market which will help moderate future price increases and overall affordability. More here.
According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates rose slightly last week, with increases for 30-year fixed-rate loans with conforming loan balances and loans backed by the Federal Housing Administration. Jumbo loans were unchanged from the week before. But, despite the week-over-week rate increase, demand for loans to buy homes remains higher than last year at the same time. Joel Kan, MBA’s associate vice president of economic and industry forecasting, says the purchase environment is stronger than last year. “While near-term economic uncertainty is still a factor, other fundamental issues, such as a lack of housing inventory in many markets, is preventing purchase activity from meaningfully rising,” Kan said. “However, purchase applications were still much higher than a year ago. This is a reminder that the purchase environment in 2019 continues to be stronger than in 2018.” The year-over-year improvement pushed purchase application demand 12 percent higher than last year, despite a week-over-week week decline. The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. More here.
Young Americans’ financial health is an important factor in the housing market. After all, first-time home buyers historically have accounted for almost half of all home sales. So whether or not younger Americans are ready to buy has an impact on home sales, inventory, prices, etc. That’s why new data from the National Association of Realtors’ consumer website is illuminating. The research shows that the average student loan borrower owes $34,500, which is $8,500 more than the typical down payment of $26,000. In other words, millennials – who hold most of that debt and are at, or approaching, the age when Americans normally buy their first home – may be delaying homeownership due to their student-loan debt. George Ratiu, senior economist with the NAR’s consumer website, says the cost of a college education is having an impact on the financial decisions of young adults. “Student debt has ballooned to an all-time high as the price of education continues to outpace wage growth, and this is holding back many potential buyers from being able to purchase a home,” Ratiu said. “Student debt is already impacting borrowers’ ability to buy a home and education debt is expected to hamper consumers’ financial decisions for many years down the road.” More here.