Category: Real Estate

Sellers Brace for Stiffer Competition as Buyers Retreat | Realtor Magazine

A shift is occurring in many housing markets. Affordability may be prompting more potential buyers to pause due to rising mortgage rates over the last few weeks, and home sellers are now facing more competition. Homeowners may no longer be able to expect the quick sale they’ve seen their neighbors get in the past.

The number of For Sale signs is starting to increase across the country. Unsold inventory is at a 4.4-month supply at the current sales pace. Inventories were at 1.88 million in September, up slightly from 1.86 million a year ago, according to the National Association of REALTORS®’ latest housing report, released Friday.

“There is a clear shift in the market with another month of rising inventory on a year-over-year basis, though seasonal factors are leading to a third straight month of declining inventory,” says Lawrence Yun, NAR’s chief economist. “Homes will take a bit longer to sell compared to the super-heated fast pace that we saw earlier this year.”

Existing-home sales declined in September, with all four major regions of the country seeing no gains in sales activity last month, according to NAR’s report. Total existing home sales—completed transactions for single-family homes, townhomes, condos, and co-ops—dropped 3.4 percent in September compared to August, and are now at a seasonally adjusted annual rate of 5.15 million. Sales are down 4.1 percent from a year ago.

“This is the lowest existing home sale level since November 2015,” says Yun. “Decades-high mortgage rates are preventing consumers from making quick decisions on home purchases. All the while, affordable home listings remain low, continuing to spur underperforming sales activity across the country.”

The 30-year fixed-rate mortgage has jumped from an average of 3.99 percent in 2017 to an average of 4.63 percent in September. Freddie Mac reported this week that rates are averaging 4.85 percent.

“Rising interest rates coupled with increasing home prices are keeping first-time buyers out of the market, but consistent job gains could allow more Americans to enter the market with a steady and measurable rise in inventory,” Yun says.

Here’s a closer look at some key housing indicators from NAR’s latest report:

• Home prices: The median existing-home price for all housing types was $258,100 in September, a 4.2 percent increase compared to a year ago.
• Days on the market: Forty-seven percent of homes sold in September were on the market for less than a month. Properties stayed on the market an average of 32 days in September, down from 34 days a year ago.
• All-cash sales: All-cash transactions comprised 21 percent of real estate sales in September, up from 20 percent a year ago. Individual investors tend to make up the biggest bulk of cash sales. They purchased 13 percent of homes in September, down from 15 percent a year ago.
• Distressed sales: Foreclosures and short sales made up 3 percent of sales in September, which is the lowest since NAR began tracking such data in October 2008. Broken out, 2 percent of sales in September were foreclosures and 1 percent were short sales.

Borrowers Finally See Some Relief With Mortgage Rates | Realtor Magazine

 

 

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Following weeks of gradual increases, the 30-year fixed-rate mortgage dipped slightly this week, possibly offering a slight window of opportunity at lower borrowing costs to some would-be buyers.

“The modest decline in mortgage rates is a welcome respite from the rapid increase in rates the last few weeks,” says Sam Khater, Freddie Mac’s chief economist. “While the housing market has clearly softened in reaction to the rise in mortgage rates, the economy and consumer sentiment remains very robust and that will sustain purchase demand, particularly in affordable markets and neighborhoods.”

Freddie Mac reports the following national averages in mortgage rates for the week ending Oct. 18:

• 30-year fixed-rate mortgages: averaged 4.85 percent, with an average 0.5 point, dropping from last week’s 4.90 percent average. Last year at this time, 30-year rates averaged 3.88 percent.
• 15-year fixed-rate mortgages: averaged 4.26 percent, with an average 0.4 point, falling from last week’s 4.29 percent average. A year ago, 15-year rates averaged 3.19 percent.
• 5-year hybrid adjustable-rate mortgages: averaged 4.10 percent, with an average 0.3 point, rising from last week’s 4.07 percent average. A year ago, 5-year ARMs averaged 3.17 percent.

Bay Area housing market cooling off, but prices still expected to rise in 2019 | abc7news.com

SAN JOSE, Calif. (KGO) —

In the Bay Area, homes are taking longer to sell and aren’t getting as much money as they did just a few months ago. After years on the up, the red-hot housing market appears to be cooling off.

“This is a more normal market and I hope it stays like this,” said Gustavo Gonzalez, president-elect of the Santa Clara County Association of Realtors. “People are still coming to this area and they’re still working here and they’re making good money and they want homes, so there’s a limited supply (and) lots of demand.”

RELATED: American Dream of buying a home may be unattainable for majority of Bay Area residents, study finds

 

The California Association of Realtors recently shared a somber forecast for the state housing market in 2019. Officials expect rising interest rates and a lack of affordable housing to stall some of the record-setting prices the Bay Area has seen in recent years.

“There’s more inventory online today than there was a year ago, and that’s partially because as home prices get more expensive, it’s harder and harder for buyers to scrape together that down payment,” said Zillow economist Sarah Mikhitarian.

RELATED: Report: $117,000 a year considered ‘low income’ in some Bay Area counties

Bucking the trend, Anna Machado-Wang sold her Almaden Valley home three days after it went on the market. She has no plans to leave the area anytime soon.

“My husband is an engineer and this is where the jobs are,” Machado-Wang said. “I mean, we could go to Austin, Texas, but why? We like California.”

 

In Sunnyvale, luxury property specialist Sherdin Betbabasi just lowered the price of a home on Windsor Terrace by about $250,000. However, it isn’t necessarily a bad thing for the seller. In fact, Betbabasi thinks it will help him generate some buzz.

RELATED: 100-year-old foundry closes to make way for Google transit village

“Look at the quality of what you buy, not just the price. If you’re looking at a nice home to buy, in the right school district, with a good commute that you want to have, then go for it, understanding that the market will fluctuate,” Betbabasi said.

The California Association of Realtors expects home prices to go up by about 3 percent next year, but total sales are expected to go down. Because of our strong economy, experts say those who are looking for a home should buy as soon as they feel comfortable to do so.

On the Watch List: 10 Housing Markets Poised for Appreciation | Realtor Magazine

Homeowners in the majority of housing markets across the country should expect to see home prices continue to appreciate by about 4.5 percent over the next 12 months, and, in a handful of western markets, owners likely will see their prices soar well past that, according to a new report from Veros, a valuation and analytics firm.

 

Pellinni – Morguefile

 

Western states hold the top 10 spots in forecasts of appreciation, with home price predictions ranging from 9 to 12 percent over the next 12 months, according to Veros. But other metros outside of the West will see appreciation too. For example, metros within South and North Carolina as well as within some Midwestern state like Michigan and Indiana are expected to perform strong in housing appreciation over the next year. For example, Indianapolis-Carmel, Ind., metro area property values are projected to appreciate at 8.5 percent over the next 12 months.

Veros predicts the following housing markets will appreciate the most through August 2019:

1. Bremerton-Silverdale, Wash.: 11.7%
2. Boise-Nampa, Idaho: 11.2%
3. Las Vegas-Paradise, Nev.: 10.8%
4. Bellingham, Wash.: 10.6%
5. Olympia, Wash.: 10.3%
6. Carson City, Nev.: 10.1%
7. Reno-Sparks, Nev.: 10%
8. San Francisco-Oakland-Fremont, Calif.: 9.6%
9. Denver-Aurora-Broomfield, Colo.: 9.5%
10. Seattle-Tacoma-Bellevue, Wash.: 9.3%

Rising average interest rates that are nearing 5 percent, however, remain a chief concern for housing affordability and could start to cool some markets. Eric Fox, vice president of statistical and economic modeling at Veros, says that for many of the markets interest rates do appear to be “softening the third quarter’s forecasts by one to two percent over what would have been in a flat interest rate environment of the past several years continued.”

In some markets, home buyers may get relief from the higher home prices. Markets like Farmington, N.M.; Vineland-Milville-Bridgeton, N.J.; and Danville, Ill., are expected to see home prices ease by 1 to 2 percent over the next 12 months, according to the report.

“Housing supply is a key discriminator between the forecasted top- and bottom-performing markets,” Fox says. “Where the housing supply is very low, as in our top markets, prices are expected to increase significantly. In contrast, for many of the bottom markets, which are in very slow growth metros, housing supply is projected to remain high.”

Hot or Not? Redfin Tests the Temperature of January’s Hottest Neighborhood Predictions – @Redfin

In January, we published our annual Hottest Neighborhoods report, identifying the 10 neighborhoods in the country that we predicted would see fast growth in home values this year, based on Redfin.com user data and insights from local Redfin agents. Nine of the 10 neighborhoods in the January report are in San Jose.

Now we’re checking back to see if these California neighborhoods outperformed in home value growth as predicted. We’re also identifying the hottest three neighborhoods in the largest metro areas to close out the year.

To assess the accuracy of our predictions, we calculated median home sale price growth in each neighborhood between December 2017 and July 2018. If home prices grew, the neighborhood was confirmed “hot.” If home prices declined, the neighborhood was deemed “cool.”

Rank	Neighborhood	City	Metro Area	Median Sale Price  (July 2018)	Median Sale Price (December 2017)	Percent Change	Temperature	Avg Sale-to-List Price Ratio*	% of Homes Sold Above List Price*
1	Bucknall	San Jose	San Jose	$1,661,500	$1,565,000	6.2%	Hot	100.1%	89.0%
2	Cambrian	San Jose	San Jose	$1,320,000	$1,244,000	6.1%	Hot	108.3%	73.7%
3	White Oak	Campbell	San Jose	$967,500	$1,010,000	-4.2%	Cool	109.0%	75.0%
4	Ortega	Sunnyvale	San Jose	$1,237,000	$1,920,000	-35.6%	Cool	110.8%	86.2%
5	West Santa Clara	Santa Clara	San Jose	$1,400,000	$1,237,500	13.1%	Hot	112.4%	82.4%
6	Sunnyvale West	Sunnyvale	San Jose	$2,106,500	$1,945,000	8.3%	Hot	114.3%	89.2%
7	Lakewood	Sunnyvale	San Jose	$1,355,000	$1,200,000	12.9%	Hot	100.1%	87.0%
8	Sunnyside	San Francisco	San Francisco	$1,387,750	$1,272,500	9.1%	Hot	100.3%	91.0%
9	Blacow	Fremont	San Jose	$1,060,999	$1,005,000	5.6%	Hot	107.6%	81.0%
10	Rex Manor	Mountain View	San Jose	$1,670,000	$1,500,000	11.3%	Hot	100.2%	100.0%
Median sale price growth between December 2017 and July 2018.

Eight of our 10 picks for the Hottest Neighborhoods in 2018 were spot on with price growth above 5 percent between December 2017 and July 2018. Our top pick, Bucknall (San Jose), saw prices grow 6.2 percent during that period, and 89 percent of homes sold above their asking price. Our second pick, Cambrian (San Jose), saw 6.1 percent price growth.

Redfin Silicon Valley agent Kalena Masching is not surprised that these neighborhoods saw strong price growth. Masching believes that both Cambrian and Bucknall will continue to be hot neighborhoods.

“Especially as buyers are priced out of the peninsula areas, many of these neighborhoods offer relative price savings,” said Masching. “Bucknall offers a great community vibe. It’s very walkable and also has a desirable commute. Homes in Cambrian are more affordable relative to Bucknall and the nearby areas with similar amenities. New tech campuses moving into downtown and West San Jose provide Cambrian homeowners an easy commute without being right in the middle of the city.”

West Santa Clara (Santa Clara), Lakewood (Sunnyvale), and Rex Manor (Mountain View) all experienced price growth above 10 percent.

Masching explains, “Lakewood has been hot for years, especially with home prices about a million dollars less than nearby Sunnyvale West. Similarly, Rex Manor is significantly more affordable than the surrounding parts of Mountain View. It’s a great place to get your foot in the door if you’re under a $2 million budget and want to be in Mountain View.”

White Oak and Ortega were the two predicted hottest neighborhoods, where prices actually declined between December and July.

“I’ve noticed in Ortega that single family homes are staying on the market a lot longer. Additionally, almost all of the sales from May and June were townhomes and condos, which has a lowering effect on the prices” said Masching.

What Neighborhoods Are Hot in your Metro Area?

Below we’ve ranked the top three hottest neighborhoods in each major metro area so you can see what places in your city are likely to be the most popular among buyers for the remainder of 2018. These places were identified using our Hottest Neighborhoods algorithm, which ranks neighborhoods based on increases in favorites and visits to home listings on Redfin.com.

Is Using Equity to Delay Social Security a Good Strategy? | Realtor Magazine

Consumers between the ages of 62 and 70 can earn up to 8 percent more in Social Security for every year they delay taking disbursements. Therefore, some homeowners in this age bracket are borrowing against their properties’ equity to fund their daily living expenses, hoping to push off taking Social Security benefits—a tactic some lenders even tout for retirees. But the Consumer Financial Protection Bureau warns that the costs and risks of such a financial strategy are too great.

 

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The CFPB says the cost of a reverse mortgage tends to exceed its lifetime benefits, and withdrawing home equity could limit a person’s options when moving or experiencing a financial setback. “A reverse mortgage loan can help some older homeowners meet financial needs but can also jeopardize their retirement if not used carefully,” according to former CFPB Director Richard Cordray. “For consumers whose main asset is their home, taking out a reverse mortgage to delay Social Security claiming may risk their financial security because the cost of the loan will likely be more than the benefit they gain.”

However, some financial experts say it’s a more plausible option than people may think. Jamie Hopkins, co-director of the American College’s New York Life Center for Retirement Income, wrote in a past column for Forbes that the CFPB’s conclusion is wrong. “The CFPB’s analysis, misrepresentations, and inaccurate conclusions fail to provide a comprehensive review of potential benefits of Social Security deferral and proper use of home equity,” Hopkins wrote. “Instead, the report unleashed an overly broad and inaccurate censure that could hamper meaningful discussion.”

Tom Dickson, an adviser at Reverse Mortgage Funding, told HousingWire that the organization still considers this a strategy for some retirees. “We found that while financial advisers are interested in the idea, they have a very, very, very difficult time persuading their clients to defer their benefit,” Dickson says. “It’s certainly a solid idea. It’s just that in the marketplace, it’s not one that advisers have had a lot of success with in terms of client adoption.”

Foreclosures Sink to 13-Year Low | Realtor Magazine

Foreclosures are disappearing from most community listings. Foreclosure filings—default notices, scheduled auctions, or bank repossessions—fell 6 percent in the third quarter, dropping to the lowest level since the fourth quarter of 2005. Foreclosure activity in the third quarter is now 36 percent below the pre-recession average of 278,912 properties with foreclosure filings, according to ATTOM Data Solutions’ latest report.

 

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“A decade after poorly underwritten mortgages triggered a housing market crash, it’s clear that the foreclosure risk associated with those problem mortgages has faded—average foreclosure timelines have dropped to a two-year low, and the share of foreclosures tied to 2004-to-2008 loans has dropped well below 50 percent,” says Daren Blomquist, senior vice president at ATTOM Data Solutions. “The biggest foreclosure risk in today’s housing market comes from natural disaster events such as the twin hurricanes of a year ago. Foreclosure starts spiked in the third quarter in many local markets impacted by those hurricanes.”

Blomquist also notes they’re seeing modest but widespread foreclosure risk associated with Federal Housing Authority loans originated in 2014 and 2015. Areas like New York, Chicago, Atlanta, Miami, San Antonio, and Dallas-Fort-Worth, Texas, are seeing some of the biggest increases in foreclosures from such FHA loans originated in 2014 or 2015.

Overall, the metro areas with the highest foreclosure rates in the third quarter were Atlantic City, N.J. (1 in every 152 housing unit received a foreclosure filing); Trenton, N.J. (1 in every 236); Fayetteville, N.C. (1 in every 253); Peoria, Ill. (1 in every 299); and Philadelphia (1 in every 326).

Properties that were foreclosed in the third quarter are seeing a slightly shorter process. The foreclosure process is averaging 713 days, which is down from 899 days a year ago. The states with the longest average timelines for foreclosed homes are Hawaii (1,491 days); Indiana (1,295 days); Florida (1,177 days); Utah (1,170 days); New Jersey (1,137 days); and New York (1,092 days).

Mortgage Rates Jump to 7-Year High | Realtor Magazine

 

 

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The 30-year fixed-rate mortgage hasn’t averaged this high since 2011, as it inches closer to the 5 percent threshold.

“Rising rates paired with high and escalating home prices is putting downward pressure on purchase demand,” says Sam Khater, Freddie Mac’s chief economist. “While the monthly payment remains affordable due to the still low mortgage rate environment, the primary hurdle for many borrowers today is the down payment and that is the reason home sales have decreased in many high-priced markets.”

Freddie Mac reports the following national averages with mortgage rates for the week ending Oct. 11:

• 30-year fixed-rate mortgages: averaged 4.90 percent, with an average 0.5 point, rising from last week’s 4.71 percent average. Last year at this time, 30-year rates averaged 3.91 percent.
• 15-year fixed-rate mortgages: averaged 4.29 percent, with an average 0.4 point, rising from last week’s 4.15 percent average. A year ago, 15-year rates averaged 3.21 percent.
• 5-year hybrid adjustable-rate mortgages: averaged 4.07 percent, with an average 0.3 point, rising from last week’s 4.01 percent average. A year ago, 5-year ARMs averaged 3.16 percent.

Millennials: Homebuying, Retiring Prioritized Over Marriage | Realtor Magazine

First comes the house and then maybe marriage or children, according to surveyed millennials detailed in Bank of America’s 2018 Homebuyer Insights Report, which was culled from 2,000 consumer responses. The survey finds that 23- to 40-year-olds value homeownership above nearly everything else: 72 percent call it a top priority compared to 50 percent who say getting married or 44 percent who say having children are top priorities. “Being able to retire” topped homeownership in the survey at 80 percent.

© Bank of America

 

Most millennials equate homeownership with personal and financial success, the survey finds. They also say buying a home makes them feel mature (47 percent); act like an adult (47 percent); and feel independent (36 percent).

“Younger generations tell us that owning a home has become a milestone that defines their success, and it’s promising to see them aspiring to homeownership,” says D. Steve Boland, head of consumer lending at Bank of America.

Renters seem to be upbeat about buying, too, but several obstacles are delaying their plan. Nearly 50 percent of renters surveyed say they believe renting long-term will prove to be more expensive than buying a home, and 69 percent believe their rent will continue to increase every year or every other year. Renters acknowledge that their finances, however, are the top barrier to homeownership, citing the lack of down payment funds or not being able to afford the home they want as the biggest obstacles. Also, some myths to homeownership may be preventing renters from taking the plunge into homeownership. Forty-nine percent said they believe they need a 20 percent down payment to buy a home and nearly one in four believe they need a “perfect” credit score to qualify for a mortgage.

What Buyers Should Ask After a Home Inspection | Realtor Magazine

After an inspector has finished a home report, buyers may feel overwhelmed by any flaws that might have been found. That’s why it’s important they take the opportunity to learn more so that they can move forward confidently in the transaction.

 

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A recent article at realtor.com® recommends home buyers ask their inspector clarifying questions like: “I don’t understand this; what does it mean?” or “Is this a major or minor problem?” and “Do I need to call in another expert for a follow-up?”

Home inspectors are bound to uncover something in a home; no home is perfect. But the majority of the problems they uncover will likely be minor. Have the home inspector clarify which problems fall within the “minor” or “major” categories.

Keep in mind: “The inspector can’t tell you, ‘Make sure the seller pays for this,’ so be sure you understand what needs to be done,” Frank Lesh, executive director of the American Society of Home Inspectors, told realtor.com®.

If the inspector identifies a potentially major problem, consumers will want to follow up whether they should call an additional expert in to investigate further. For example, consumers may need to bring in an electrician to take a closer look at potential electrical issues that were flagged or a roofer if a roofing problem is suspected. Those specialists can then give an idea of the cost to fix it, which the real estate agent can take to the seller to request a concession, if the seller doesn’t want to fix it prior to the sale.

Also, Lesh says that the list of items a home inspector identifies are issues the new buyer may need to address as soon as they move in. He says it’s like a “to-do list” for those items that did not get repaired by the seller prior to the sale.