Category: Real Estate

Foreclosed Homes Dip to 12-Year Low | Realtor Magazine

Foreclosures hit a 12-year low in 2017, and the distressed properties remain increasingly difficult to find in many markets. Foreclosure filings in 2017—which include default notices, scheduled auctions, and bank repossessions—dropped to the lowest level since 2005.

In total, foreclosure filings were reported on 676,535 U.S. properties in 2017. That represents just 0.51 percent of all housing units in the country. Filings were down 76 percent from a peak of nearly 2.9 million in 2010, ATTOM Data Solutions, a real estate data firm, reports in its newly released 2017 U.S. Foreclosure Market Report.

“Thanks to a housing boom driven primarily by a scarcity of supply, which has helped to limit home purchases to the most highly qualified—and low-risk—borrowers, the U.S. housing market has the luxury of playing a version of foreclosure limbo in which it searches for how low foreclosures can go,” says Daren Blomquist, senior vice president at ATTOM Data Solutions. “There are a few notable local market exceptions playing a different version of foreclosure limbo in which a backlog of legacy foreclosure activity left over from the last housing crisis is still winding its way through a labyrinthine foreclosure process, resulting in incongruous jumps in various stages of foreclosure activity in markets such as New York, New Jersey, and D.C.”

Foreclosure starts are at a new record low nationwide. Lenders started the foreclosure process on 383,701 properties in 2017, down a whopping 82 percent from a peak of more than 2 million in 2009. That marks a new all-time low for foreclosure start data since ATTOM Data Solutions began collecting such data in 2006.

But a few markets are countering that trend. For example, the District of Columbia and five states posted year-over-year increases in foreclosure starts in 2017, which include Washington, D.C. (up 54 percent); West Virginia (up 32 percent); Vermont (up 27 percent); Oklahoma (up 23 percent); Illinois (up 2 percent); and Louisiana (up 2 percent).

Loan Demand Jumps Over Fears? | Realtor Magazine

Mortgage applications for refinancings and home purchases surged 4.1 percent last week on a seasonally adjusted basis, even as interest rates rose, the Mortgage Bankers Association reported Wednesday. Volume is now up 5.6 percent over a year ago.

More consumers are growing concerned that the long run of record low rates may be coming to an end. As such, they’re rushing to lock in rates before any more upticks.

Applications to purchase a home increased 3 percent last week and are now 7 percent higher than the same week a year ago. Refinance applications rose 4 percent last week. Typically, refinance applications drop when interest rates rise so applications diverted from normal patterns last week.

The MBA reports that the average 30-year fixed-rate mortgage rose last week to 4.33 percent, from 4.23 percent the previous week. Interest rates across the board rose last week, including the 5/1 adjustable-rate mortgage, which rose to its highest level since April 2011.

“Treasury yields moved higher on average last week, based on news that both Japanese and European economic growth is strengthening, along with concern that China may reduce U.S. Treasury holdings in the near future,” explains Joel Kan, an MBA economist. “Despite the increase in rates, applications increased both for purchase and refinance. These increases were partly due to an upswing following the holiday season lull and potentially more borrowers trying to refinance before mortgage rates increase further.”

Owners Get Real About Home Values | Realtor Magazine

The gap between homeowners’ and appraisers’ perceptions on the value of properties is continuing to close. Homeowners, in general, still tend to slightly overestimate the price of their home, but not by nearly as much as they did a year ago.

Home appraisals were, on average, 0.5 percent lower than what owners expected in December, according to the latest National Quicken Loans Home Price Perception Index. The gap is closing; a year ago, homeowners were overestimating their property values by a full 1 percent more than appraisers.

Home values are increasing, which helps value estimates align. Quicken Loans’ index showed the average appraisal value increased 0.65 percent from November to December 2017. This is 6.17 percent higher than a year ago.

“Appraisers and real estate professionals evaluate their local housing markets daily,” says Bill Banfield, Quicken Loans executive vice president of Capital Markets. “Homeowners, on the other hand, may only think about their housing market when they see For Sale signs hit front yards in the spring or when they think about accessing their equity. This is reflected in the [index]. The housing markets that are rising quickly, like those in the West, are having appraisal values increasing above owner estimates because owners don’t realize just how quickly those markets are advancing.”
 

 

 

 

 

Employers Can Now Add to Down Payments | Realtor Magazine

A new program allows employers to help workers’ down payment on a home, similar to how companies contribute to a 401(k). 

HomeFundMe, a Fannie Mae and Freddie Mac-approved down payment crowdfunding platform, allows borrowers to crowdfund their down payment from several sources, including their employer. CMG Financial, a mortgage banking firm, created the HomeFundMe program. Employers can contribute directly to employees’ HomeFundMe accounts to help raise funds for a down payment on a home.

HomeFundMe explains: “The HomeFundMe Affinity Portal allows employers to add HomeFundMe to their benefit packages, with the option to elect to match donations in any amount. Employers simply have to share the customized crowdfunding platform with employees, and HomeFundMe will provide all the materials necessary to communicate the benefit.”

Some loans may also be eligible for a lender contribution of $2 for every $1 crowdfunded, up to $2,500 or 1 percent of the purchase price. Buyers who have incomes above the average median income can receive a lender contribution of $2 for every $1 crowdfunded, up to $1,000 or 1 percent of the purchase price.

HomeFundMe loans are also eligible for a buyer or listing agent contribution of 1 percent toward the down payment.

All crowdfunded money is held in escrow until settlement.

“More than ever, employers are looking for ways to retain and attract the best and brightest talent and millennials are looking for the lifestyle perks that will help them achieve their goal,” says Chris George, president of CMG Financial. “The Affinity Portal helps to bridge that gap by giving employers the ability to give their employees the benefits that matter most to them.”

Buyers Betting on Bigger Down Payments | Realtor Magazine

With steep competition, some buyers are scrambling to come up with larger down payments to gain a competitive edge.

“In many purchase situations, there are multiple offers, and the buyers who have the bigger down payment are more likely to win out,” Daren Blomquist, ATTOM Data Solutions’ senior vice president, told The Wall Street Journal. 

The median down payment for home purchases that were financed in the third quarter of 2017 soared to a high of $20,000, or 7.6 percent of the median sales price of $263,000, according to ATTOM, a real estate data firm. That is up from 6.1 percent in the third quarter of 2016.

On luxury homes, buyers are bringing even more money to closing. In the third quarter of 2017, the median down payment on a financed home purchase over $1 million was $385,500, or 28.2 percent of the median sales price.

“If you want to play in the high-end market, you have to be able to pony up a bigger down payment,” Blomquist told The Wall Street Journal. 

Not all jumbo-mortgage lenders require large down payments, however. For example, BBMC Mortgage in Chicago allows qualified borrowers to put down as little as 5 percent on a jumbo mortgage up to $650,000. For loans up to $1 million, the lender has programs available that allow 10 percent down.

Mortgage rates are expected to increase in 2018 and that will impact how much buyers can afford. Lawrence Yun, chief economist at the National Association of REALTORS®, predicts the 30-year fixed-rate mortgage rate will rise to 4.5 percent by the fourth quarter of 2018—and to 4.8 percent by the end of 2019.

San Jose will be the nation’s hottest housing market in 2018, Zillow says

Maybe you thought it couldn’t get any worse — that housing prices would finally cool off in 2018 after years of record-breaking appreciation.

Think again. A new report from Zillow projects that the San Jose metropolitan area will be the hottest housing market in the nation in 2018, with home values rising dramatically: another 8.9 percent on a year-over-year basis. The San Francisco metropolitan area, which includes the East Bay, will be the fifth hottest market with a 3.8 percent increase in home values, according to Zillow’s new report.

“Over the past five years, San Jose home values have appreciated 78 percent,” the report said, putting the area’s housing crisis into perspective. Its analysis “highlights just how strong the San Jose market really is. While San Francisco home values have recently started to cool, San Jose is off to the races.”

The San Jose area’s median home value right now is $1,128,300, making it the nation’s most expensive market, according to Zillow. The median home value in the San Francisco metropolitan area — San Francisco, Marin, San Mateo, Alameda and Contra Costa counties — is $893,100, the second highest in the U.S. The Seattle metro area is third most costly, with a median home value of $463,800.

Why do prices keep rising in these markets? It’s largely because “the tech industry continues to roar,” said Zillow senior economist Aaron Terrazas, “attracting thousands of new residents per year to tech-dominant markets” including San Jose, San Francisco, Seattle and Denver.

Aside from San Jose and San Francisco, the 10 hottest markets in the nation this year will include two metros in the Northwest (Seattle and Portland), two in Texas (Austin and Dallas), two in North Carolina (Raleigh and Charlotte), one in Colorado (Denver) and one in Tennessee (Nashville), according to the report.

Zillow, the online real estate database company, based its projections on six factors: its home value and rent forecasts for the 12 months of 2018; income growth; population growth; unemployment rates; and the number of job openings per person in each metro.

Realtor Magazine

The majority of homeowners recently surveyed prioritized storage over all other functions of their kitchens, according to the 2018 U.S. Houzz Kitchen Trends Study of more than 1,700 homeowners. Storage, at 63 percent, trumped other priority uses for homeowners in the kitchen like easy to work, play, and live (38 percent), to entertain (32 percent), or to clean (32 percent). 

Homeowners are remodeling their kitchens to add more storage and organization, such as with recycling baskets, cookie sheet and tray organizers, revolving corner trays, deep drawer organizers, and pull-out or swing-out trays and shelves. 

Homeowners want to show off their countertops. It’s the most common major feature upgraded during a kitchen renovation and most commonly splurged-on item, the Houzz survey finds. Further, engineered quartz has become the most popular countertop material choice, overtaking granite, 43 percent versus 34 percent, respectively. 

To add more storage and counter space, nearly two in five homeowners surveyed said they are adding kitchen islands. 

“Our annual kitchen trends surveys reveal that consumer preferences for products, design, and technology vary not only across urban, suburban, and rural areas, but also evolve over time,” says Nino Sitchinava, principal economist at Houzz. “Countertops in particular are having a real moment today as homeowners focus on decluttering surfaces for a sleek and tidy kitchen post-renovation.”

The average amount spent on a major kitchen remodel—which includes replacing at least all of the cabinetry and appliances—for a 200-square-foot or greater kitchen is $42,000, according to Houzz. A major remodel of a smaller kitchen averages $25,800.

Rates Rose at End of 2017 But Buyers Undeterred | Realtor Magazine

Mortgage rates rose to the highest average in months at the end of 2017, but home buyer applications still posted an uptick.

Mortgage applications for home purchases rose 1 percent in the final two weeks of the year. Home purchase applications ended the year 3 percent higher than at the end of 2016, the Mortgage Bankers Association reported Wednesday.

However, the increase in applications for home purchases was not enough to lift the overall index. Total mortgage application volume—which reflects for home purchases and refinancings—on the MBA’s index dropped 2.8 percent in the last two weeks of 2017.

Applications to refinance plunged 7 percent during that time period. However, refinance applications did end the year 1.8 percent higher than the end of 2016, the MBA reports.

The average on a 30-year fixed-rate mortgage closed the year at 4.25 percent, the MBA reported. That marks the highest rate since April.

“With the passage of the tax reform bill, there were increased expectations of stronger economic growth, which pushed rates higher,” says Joel Kan, an MBA economist.

New Financing Helps Investors Grow Portfolios | Realtor Magazine

Mortgage financing giants Fannie Mae and Freddie Mac have announced programs to provide long-term financing at competitive interest rates that could encourage more investors to acquire single-family rental properties, the National Real Estate Investor reports. 

“Folks who dipped their toes in the market in 2015 or early 2016 and bought one or two single-family rentals are now buying more,” says Daren Blomquist, senior vice president of property data firm ATTOM Data Solutions.

Fannie and Freddie have launched lending programs to allow owners of smaller portfolios to find financing with competitive, fixed interest rates and loan terms as long as 10 years. Prior to this, SFR investors often had to rely on bank loans with shorter loan terms with higher interest rates. 

“It should help lower mortgage rates for single-family rental operators, helping them to increase their rate of return on current rentals without having to raise the rent, and also opening up more potential rental acquisition opportunities that may not have penciled out previously with higher mortgage rates,” says Blomquist. “Fannie and now Freddie’s backing of the single-family rental market is a game changer,” he adds.

How Much Buyers Put Down on Their Home | Realtor Magazine

The majority of buyers who obtained a mortgage last year made a down payment of less than 20 percent, according to the National Association of REALTORS®’ 2017 Profile of Home Buyers and Sellers. The median down payment in 2017 was 10 percent, according to the report.

The bulk of buyers’ down payments came from their personal savings, but a fraction also came from the sales proceeds of a previous residence or assistance from family or friends. Among first-time buyers, 61 percent made an average down payment of zero percent to 6 percent, according to the November 2017 REALTORS® Confidence Index Survey.