Category: Real Estate

Must-Do May Checklist for Homeowners | Realtor Magazine

May marks a golden opportunity for homeowners to assess their home and ensure everything is in tip-top shape before the summer months begin. HouseLogic recently provided a checklist that your clients can use to save both time and money. 

For smart homeowners, these four tasks are essential for the month of May:

1. A new refrigerator. If your current fridge is leaky, not cooling enough, or tight on storage space, consider buying a new model this month. May is pre-summertime—which is when new fridges will hit the sales floor—and stores will need to clear out old models to make room. If your home needs a stove or other kitchen appliances, HouseLogic advises to wait until fall when they’ll be going on sale.
2. Exterior painting. Buff up your home’s outer coat of paint to revive its color after winter’s drab weather. In most areas, May temperatures range from 50 to 80 degrees Fahrenheit, which is prime weather for painting your home’s exterior. HouseLogic also suggests making touch-ups to your home’s trim and siding while you’re repainting.
3. A new mattress. How old is your current mattress? Over time, mattresses collect more dust and mites so be sure to upgrade yours if it’s needed. Stores will offer a good mattress deal in May before new stock comes in, helping you save hundreds of dollars.
4. Overflowing closets. Be on the lookout for deals on storage materials at Memorial Day sales, and start tidying up those closets! According to HouseLogic, experts estimate that only 20 percent of what’s in peoples’ closets are actually worn. This month, trim down and store the 80 percent of your wardrobe that’s left: put sentimental clothes (college sweatshirts, t-shirt memorabilia) and those pieces you need but rarely use (formalwear) in storage containers and under-the-bed bins.

Highest Rates in 5 Years Prompt Pullback | Realtor Magazine

Would-be home buyers and refinancing homeowners both receded from the mortgage market last week as mortgage rates surged to their highest averages in nearly five years. The Mortgage Bankers Association’s seasonally adjusted index showed that total application volume, which includes home purchases and refinances, dropped 2.5 percent last week and are now 3.3 percent lower than a year ago. 

Refinance volume took most of the hit, dropping 4 percent last week compared to the previous week. Refinance volume is now 15 percent below a year ago. Borrowers who wish to refinance tend to be more rate-sensitive than home shoppers. 

Applications to buy a home still dropped 2 percent last week. Purchase applications, however, remain 5 percent higher than a year ago. 

The average for a 30-year fixed-rate mortgage was 4.80 percent last week, the highest level since September 2013, the MBA reports. The share of adjustable-rate mortgages continues to rise in the lending market. ARM activity rose to 6.7 percent of the total applications. ARMs offer lower introductory rates, usually for a set time period, before rising. 

The market will closely be watching the Federal Reserve’s meeting on Wednesday. 

“While the Fed is not even remotely expected to hike rates again at this meeting, investors are always tuned in to the verbiage of the announcement in case it offers clues about the future policy path,” Matthew Graham, chief operating officer at Mortgage News Daily, told CNBC. 

March Home Prices Up 8.9%, the Biggest Increase in Four Years – @Redfin

The median home sale price increased 8.9 percent in March from a year ago, the highest price growth in four years. The median home sale price in March was $297,000 in the 174 markets that Redfin tracks.

The lack of homes for sale, down 11.9 percent year over year, continued to constrain sales, which declined 3.7 percent. The number of homes newly listed for sale in March fell 5.6 percent compared to a year ago.

“The Easter holiday fell early this year, which may have played a role in the decline in new March listings. Sellers are slow to list this year and we aren’t seeing enough new construction homes to fill the gap,” said Redfin chief economist Nela Richardson. “If we don’t see the new listings number turn around next month or a pickup in new housing starts, inventory will be a persistent drag on sales for the remainder of the year.”

Though seller enthusiasm is waning, buyer demand is strong, making for a highly competitive market. The typical home went under contract in 43 days, eight days faster than a year earlier and faster than any March on record. Among homes that sold last month, 23.9 percent sold above their list price, up from 22.3 percent last March. One in five (20.5%) homes that sold in March went under contract within two weeks of their debut, compared to 18.4 percent last year.

Seattle was the fastest-moving market for the second month in a row, joined by Denver. Homes in these metros were on the market for a median of just seven days in March.

Market Summary	March 2018	Month-Over-Month	Year-Over-Year
Median sale price	$297,200	4.4%	8.9%
Homes sold	230,300	34.5%	-3.7%
New listings	326,100	26.3%	-5.6%
All Homes for sale	636,800	2.2%	-11.9%
Median days on market	43	-10	-8
Months of supply	2.8	-0.8	-0.2
Sold above list	23.9%	2.8%	1.7%
Median Off-Market Redfin Estimate	$281,300	-0.8%	6.1%
Average Sale-to-list	98.6%	0.8%	0.6%

Strong price growth was not limited to hot coastal markets like San Jose, CA (32.3%) and San Francisco (16.7%). Places like Allentown, PA (21.8%), Detroit (20.6%) and Las Vegas (16.5%) are also experiencing strong price appreciation.

Inventory declined in 65 of the 73 most populous metros Redfin tracks below. In 48 of those metros, inventory fell more than 10 percent compared to last year. Baton Rouge, Washington, D.C., and Allentown bucked the declining inventory trend, respectively adding 26.6 percent, 11.8 percent and 11.4 percent to housing supply from last year.

More Americans Are Homeowners in 2018 | Realtor Magazine

Over the last year, more Americans became homeowners as the number of renters continued to decrease. The homeownership rate in the first quarter was unchanged at 64.2 percent, higher than last year’s 63.6 percent, the Census Department reported Thursday. This is also the fifth consecutive quarter of yearly increases in the ownership rate. 

The homeownership rate has been gradually climbing back since hitting a 50-year low in 2016. The rate peaked in 2004 at 69.2 percent, but despite recent climbs, it still remains below the 25-year average rate of 66.3 percent. Meanwhile, the number of renters has dropped.

More young Americans are buying homes. The ownership rate for Americans under age 35 was 35.3 percent in the first quarter, which is a full percentage point higher than a year ago.

The homeowner vacancy rate dropped to 1.5 percent in the first quarter—the lowest vacancy rate since 2001, the Census Department reports. 

 

 

Buyers Stretch Budgets to Be More Competitive | Realtor Magazine

Buyer demand is high but the number of homes for sale is low. This is prompting more shoppers to stretch their budgets, put less money down, or turn to adjustable-rate loans to prevail in a bidding war for a home. 

“The frustration with the lack of inventory is, so many of the houses are going in bidding wars, and so you know you really have to step up to the plate and you have to do your homework to be a competitive buyer,” Patrick Clark, a real estate professional with Long & Foster in Philadelphia, told CNBC. 

Higher mortgage rates and escalating home prices are prompting more home buyers to consider adjustable-rate mortgages, which offer lower initial rates for a set time before rising. Borrowers are being tempted on low down payment loan options, such as Fannie Mae- and Freddie Mac-backed 3 percent down payment loans. They’re also being lured to private lenders offering “nonprime loans” (the reimagined subprime loans). Read more: ‘Nonprime’ Loans Expand Mortgage Options

Buyers are feeling confident enough in their own finances to put more at stake to break into homeownership.

“When they’re more confident they are willing to stretch a little further,” says Mike Graff, a mortgage consultant with Prosperity Home Mortgage. “I think that some people realize, look, they’re not going to be in this house for 30 years, so moving to an ARM, when the rate is fixed for a period of time, they’re definitely more comfortable with something like that to lower their payment or to kind of stretch their budget a bit, so we have seen an uptick in that.”

Banks are showing more willingness to take on greater risk in jumbo loans, too.

Mortgage Rates Surge to 4-Year High | Realtor Magazine

 

 

Mortgage rates continued their climb this week, reaching their highest level since 2013. 

“Higher Treasury yields, driven by rising commodity prices, more Treasury issuances, and the steady stream of solid economic news are behind the uptick in rates over the past week,” says Sam Khater, Freddie Mac’s chief economist. “Despite the increase in borrowing costs, demand for home purchase credit remains solid.” The Mortgage Bankers Association reported that mortgage applications were up 11 percent from a year ago. 

Freddie Mac reports the following national averages with mortgage rates for the week ending April 26:

• 30-year fixed-rate mortgages averaged 4.58 percent, with an average 0.5 point, rising from last week’s 4.47 percent average. Last year at this time, 30-year rates averaged 4.03 percent. 
• 15-year fixed-rate mortgages averaged 4.02 percent, with an average 0.4 point, rising from last week’s average of 3.94 percent. A year ago, 15-year fixed-rate mortgages averaged 3.27 percent. 
• 5-year hybrid adjustable-rate mortgages averaged 3.74 percent, with an average 0.3 point, increasing from last week’s 3.67 percent average. A year ago, 5-year ARMs averaged 3.12 percent. 

Housing Costs Up 9% for Entry-Level Buyers | Realtor Magazine

The monthly payment for an entry-level home is on the rise. And the rising costs may be one reason why first-time buyers are making up a lower share of buyers this spring. First-time buyers comprised 30 percent of existing-home sales in March, which is down from 32 percent a year ago, according to data from the National Association of REALTORS®. 

Monthly housing costs for an entry-level buyer increased $136 to $1,641 nationwide, a 9 percent increase from last year, according to data from John Burns Real Estate Consulting. The higher costs means more consumers must be willing to make trade-offs to buy a home, compromising on size, attached versus detached, and location.

 

“First-time buyers continue to make up an underperforming share of the market because there are simply not enough homes for sale in their price range,” NAR President Elizabeth Mendenhall said in a statement. “Supply conditions improve in higher-up price brackets, which means those trading up should see considerable interest in their home, as well as more listings to choose from during their own search.” 

The table below from John Burns Real Estate Consulting shows monthly housing costs for an entry-level home in March 2018 as well as the increase over the last year. 

 

Why, Where Buyers Get Denied Mortgages | Realtor Magazine

Nearly one in 10 borrowers get denied a mortgage, according to a new analysis by LendingTree, based on a review of 10 million mortgage applications. The company found that the top reasons home shoppers face this rejection is poor credit history and credit score, too high a debt-to-income ratio, too low an appraisal, and an incomplete application.

Credit history and debt-to-income ratios are the chief barriers for denial, accounting for 26 percent each of denied loans. The debt barrier is biggest issue for borrowers living in California, according to the analysis. Three California cities—Los Angeles, San Francisco, and San Jose—had the highest share of borrowers who were denied a mortgage because of their debt-to-income ratio. On the other hand, credit histories are proving the biggest obstacle in Louisville, Ky.; Memphis, Tenn.; and Philadelphia. 

“The current housing market is particularly competitive,” says Tendayi Kapfidze, LendingTree’s chief mortgage economist. “The key for home buyers is being well-educated on the homebuying process, enabling them to be well-prepared when they enter the market. Understanding the key reasons mortgages are denied can help borrowers avoid missteps and compete effectively to secure their dream home.”

In some cities, denial rates were as low as 5 percent, while others saw denial rates at more than double that rate, according to LendingTree’s study. Overall, borrowers in Birmingham, Ala., are the most likely in the nation to be denied a mortgage. The denial rate is 13 percent in the metro area, with poor credit histories being the most common culprit. Twelve percent of borrowers in both New Orleans and Memphis, Tenn., are denied mortgages, which took the number two and three spots, respectively, in LendingTree’s rankings.

The following cities have the highest mortgage denial rates:

1. Birmingham, Ala.
2. New Orleans
3. Memphis, Tenn.
4. Oklahoma City
5. Miami
6. Orlando, Fla.
7. Providence, R.I.
8. Tampa, Fla.
9. Houston
10. Hartford, Conn.

On the flip side, these cities have the lowest mortgage denial rates and borrowers there are the least likely to be denied a mortgage:

• Minneapolis
• Salt Lake City
• San Jose, Calif.
• Milwaukee
• Cincinnati
• San Francisco
• Portland, Ore.
• Columbus, Ohio
• Kansas City, Mo.
• Louisville, Ky.

Home Sales Overcome Inventory, Price Woes | Realtor Magazine

Inventory shortages and pressing affordability issues didn’t suppress home sales activity in March. Total sales of existing homes, including single-family homes, townhomes, condos, and co-ops, increased 1.1 percent last month to a seasonally adjusted annual rate of 5.6 million, according to the National Association of REALTORS®. However, home sales are still 1.2 percent below a year ago. 

“Robust gains last month in the Northeast and Midwest—a reversal from the weather-impacted declines seen in February—helped overall sales activity rise to its strongest pace since last November,” says Lawrence Yun, NAR’s chief economist. “The unwelcoming news is that while the healthy economy is generating sustained interest in buying a home this spring, sales are lagging year-ago levels because supply is woefully low, and home prices keep climbing above what some would-be buyers can afford.”

Here’s a closer look at some key indicators from NAR’s latest existing-home sales report for March:

• Home prices: The median price for existing homes of all types was $250,400, up 5.8 percent from a year ago. “Although the strong job market and recent tax cuts are boosting the incomes of many households, speedy price growth is squeezing overall affordability in several markets, especially those out West,” Yun says. 
• Inventories: Total housing inventory rose 5.7 percent to 1.67 million existing homes available for sale, but that’s still 7.2 percent lower than a year ago. Inventories have fallen year over year for 34 consecutive months. At the current sales pace, unsold inventory is at a 3.6-month supply.
• All-cash sales: Cash transactions comprised 20 percent of sales, down from 23 percent a year ago. Individual investors tend to account for the bulk of all-cash sales. They purchased 15 percent of homes on the market last month, down from 18 percent a year ago. 
• Distressed sales: Foreclosures and short sales made up 4 percent of home sales. Broken out, 3 percent of sales were foreclosures and 1 percent were short sales. 
• Days on the market: Fifty percent of homes that sold in March were on the market for less than a month. Properties stayed on the market for an average of 30 days, down from 34 days a year ago. 

“REALTORS® throughout the country are seeing the seasonal ramp-up in buyer demand this spring—but without the commensurate increase in new listings coming onto the market,” Yun says. “As a result, competition is swift, and homes are going under contract in roughly a month, which is four days faster than last year and a remarkable 17 days faster than March 2016.” 

3 Steps for Unmarried Couples Looking to Buy | Realtor Magazine

Homebuying dreams can become real for shoppers in unmarried but committed relationships. According to Jessica Lautz, the National Association of REALTORS®’s director of survey research and communication, a report from NAR found that the highest share of first-time buyers who are unmarried couples was in 2017—the highest on record since 1981. Of course, there are significant risks when buying a home with an unmarried partner. But there are precautionary steps your partnered clients can take to ensure they can deal with the posed risks throughout the home planning and shopping together. A recent article in the Seattle Times gives details on three crucial steps:

1. Sign a prenup for the home. Renee Bergmann, a real estate attorney and owner of Bergmann Law in Westmont, N.J., says couples must have a conversation about potentially breaking up if they want to be co-homeowners. Using help from a legal professional, she says coupled clients should establish a co-ownership contract before closing day. Do not “wait and see what happens”—without a written agreement, Bergmann says, things could get messy very quickly.
2. Choose the right title. Ownership titles are different in various states, but usually these titles include: sole ownership (one person has the full ownership), joint tenancy (a 50-50 split ownership, with one tenant’s share transferring to the other in the case of death), and tenants in common (allows unequal ownership, such as a 75-25 split). All three approaches have pros and cons, but Bergmann says your clients should consider revising the deed to reflect their new legal status, using a “quitclaim deed,” if they decide to get married after buying. 
3. Leave parents out of it. Younger couples often get their parents involved during the stressful homebuying process and final transaction. But doing so may cause more confusion, so it may be best to leave the parents at home, says Danielle Moy, an agent with Coldwell Banker Residential Brokerage in Orland Park, Ill. When parents show uncertainty about the situation, it causes “a bit of an emotional roller coaster when they’re looking at homes,” according to Moy. The chosen home and the final decision will ultimately be left in the clients’ hands, Moy says, so be sure to help your partnered clients become aware of what they can agree on and what they want for their homeowning future.