Category: Real Estate

Desperate Buyers Snag Homes Sight Unseen | Realtor Magazine

Some home shoppers are feeling hopeless this spring and making competitive moves in order to get a home. They’re reportedly rushing to making offers without seeing homes first, bidding well above the asking price, or waiving inspections entirely to get sellers to find their offer the most alluring. 

“For home buyers, this is shaping up to be one of the most difficult years in recent memory,” says Ralph McLaughlin, chief economist of Veritas Urbis Economics, a firm that researches the housing market. 

Record low supplies of homes for sale are driving up prices across the country.

As for sellers, they may find some big profits when they do sell. “It’s going to have the feel of a hot market” with multiple offers and bidding wars, says Lawrence Yun, the chief economist for the National Association of REALTORS®. 

Still, Yun expects sales to be flat compared to a year ago due to the shortage of homes for sale as well as reduced affordability for many house hunters. 

There was a 3.4-month supply of existing homes nationwide in February—the lowest on record for a February, NAR reports. The median home price, meanwhile, was up 5.9 percent from a year earlier to $241,700, according to NAR. Yet, average yearly income growth has held at about 2.5 percent. 

San Francisco Prices Surged $100k in 3 Months | Realtor Magazine

San Francisco homeowners and buyers are seeing some of the biggest price jumps in recent months. The median price for a single-family home in the city increased $100,000. Prices have reached an all-time high of $1.6 million, according to the Paragon Real Estate Group in San Francisco. For comparison, the median home price nationwide was $279,900 on March 1, according to realtor.com®.

Home prices in San Francisco increased nearly 24 percent in the first quarter of this year compared to a year ago. 

“We didn’t see this coming,” says Patrick Carlisle, Paragon’s chief marketing analyst. “I don’t think I’ve ever seen this kind of jump.” 

Housing analysts say the big jump in San Francisco prices is due to the limited number of homes for sale. Plus, the city is on a peninsula, so builders don’t have much more room to build on to add inventory. Existing homeowners are showing some reluctance to sell. 

“There’s just a trickle of new listings coming on the market, and they’re snapped up almost immediately,” Carlisle says. “We’ve had situations where there are 10 to 20 offers on a new listing, sometimes even more. Multiple offers are the norm, and sometimes there are frenzied bidding wars.”

And for $1.6 million, buyers need to keep their expectations in check. In San Francisco, the median price for a single-family home will buy you a moderately sized home with a few bedrooms and two bathrooms—nothing too prestigious, housing analysts say. 

Home Buyers Are Blowing Their Budgets | Realtor Magazine

A recent survey found that buyers are spending more on their home purchase than they intended. A third of homeowners recently surveyed say that they blew through the upper limit of their home purchase budget by an average of $16,510, according to a new survey released by Owners.com of 1,214 Americans who purchased a home in the last four years. 

A big part of the problem is the increasing costs of buying, particularly for starter homes. “Clearly, we’re in an environment of rising prices,” Daniel Maloney, national head of sales for real estate brokerage Owners.com, told USA Today.

Millennials are the most likely to overspend on their home purchase. Maloney says that is because they tend to be first-time home buyers and the least knowledgeable about setting a realistic price target that they can meet. Here’s how much the different age groups tended to overspend on their home purchases:

• 40% of millennials went over budget by an average of $24,545;
• 34% of Generation X members went over budget by an average of $13,996;
• 19% of baby boomers went over budget by an average of $8,024

The Owners.com survey also found that Generation X members tend to be the most self-directed when purchasing a home, while millennials tend to be the most reliant on their real estate agents for direction. Nearly one in five of millennials—or 19 percent of those surveyed—admitted they can be indecisive at times and rely on their agent to tell them what they should be considering and touring. 

Are Prepaid Property Taxes Deductible? | Realtor Magazine

April 17 is the tax deadline, and tax advisers still can’t agree on whether prepaid 2018 property taxes can be deducted in full. Congress passed a tax reform bill late last year, capping write-offs for state and local taxes at $10,000 per return for single filers and married couples. 

The move set off a rush of homeowners at the end of the year to prepay their property taxes for 2018 ahead of the tax bill taking effect this year. 

The overhaul “barred deductions for many prepayments of 2018 state and local income taxes, but it was silent on deductions of prepaid property taxes,” The Wall Street Journal reports. 

On Dec. 27, the IRS had warned prepaying owners that not all prepayments of 2018 property taxes would be deductible on 2017 returns. To be eligible for a write-off, the owners must have known their tax liability at the time of payment, the IRS stated. 

But some tax specialists disagreed with the IRS’ assessment that you can only deduct the portion that was known or determined at the time. Others argued you could still make the prepaid deductions as long as they were based on reasonable estimates. They assert that prior tax rulings and regulations support this argument too. 

“If the amount is a reasonable estimate made in good faith, it’s deductible,” asserts Stephen Baxley, who heads tax planning for Bessemer Trust, a multifamily office.

But other tax officials say they’re closely following the IRS’ guidance. “We think the amount due must be determined for a prepayment to be deductible,” says Brian Lovett, a certified public accountant with WithumSmith+Brown in New Jersey. 

Some accountants say they’re doing both. David Lifson, a CPA with Crowe Horwath, says he recommends clients deduct prepayments of known amounts. But he will allow a deduction of an estimate “if I feel the client understands the risk that the IRS will disagree.”

Mortgage Rates Ease This Week | Realtor Magazine

 

 

Borrowers found some relief for the second consecutive week with lower mortgage rates. 

“After dropping earlier this week on trade-related anxiety in financial markets, the benchmark 10-year Treasury stabilized on Wednesday, but at a level slightly lower than from the start of last week,” explains Len Kiefer, Freddie Mac’s deputy chief economist. “Mortgage rates followed and fell for the second consecutive week. … Though rates on the 30-year fixed mortgage are up 0.3 percentage points from the same week a year ago, a robust labor market is helping home purchase demand weather modestly higher rates.”

The Mortgage Bankers Association reported in its latest Weekly Mortgage Applications Survey that its index for home purchase applications is up 5 percent from a year ago “indicating that this spring is on track for a modest expansion in purchase mortgage activity,” Kiefer adds.

Freddie Mac reported the following national averages for the week ending April 5:

• 30-year fixed-rate mortgages: averaged 4.40 percent, with an average 0.5 point, dropping from last week’s 4.44 percent average. Last year at this time, 30-year rates averaged 4.10 percent. 
• 15-year fixed-rate mortgages: averaged 3.87 percent, with an average 0.4 point, dropping from last week’s 3.90 percent average. A year ago, 15-year rates averaged 3.36 percent.
• 5-year hybrid adjustable-rate mortgages: averaged 3.62 percent, with an average 0.4 point, falling from last week’s 3.66 percent average. A year ago, 5-year ARMs averaged 3.19 percent. 

Banks Help Qualify Self-Employed Buyers | Realtor Magazine

Self-employed borrowers have struggled to qualify for mortgages with tightened lending rules over the last few years. This has made a lot of people unable to qualify. As lenders face an overall decrease in refinancing originations due to higher interest rates, they are looking to make up the shortfall in business through purchase applications. Doing so may motivate more lenders to look for ways to increase their share of borrowers. 

The self-employed sector may be one major area of growth. The number of self-employed workers in the U.S. is on the rise, increasing to 40.8 million people in 2017. That equates to 31 percent of the private work force. The number of self-employed workers earning $100,000 or more rose nearly 5 percent last year. But their ability to get a mortgage is still challenged due to their nontraditional income status.

Citadel Servicing Corp. is offering multiple options for income qualifications to help more self-employed workers qualify for a loan. One of their areas of qualification includes a one-month bank statement program aimed at self-employed individuals.

“This program was designed for the self-employed borrower with excellent credit who simply doesn’t have time to gather two years’ worth of business and personal tax returns or 24 months of bank statements,” says Will Fisher, senior vice president, national sales and marketing director at Citadel Servicing Corp. “They are putting down a substantial down payment or have an exceptional equity position. Our historical data shows that this borrower can assess and manage their responsibilities.” 

Citadel Servicing Corp., which specializes in non-prime loan products, was the first lender to re-enter the subprime market in 2012, HousingWire reports. 

Homeowner Equity Is Hitting a Record High | Realtor Magazine

Homeowners are getting richer, thanks to rising home values. The amount of equity that homeowners can tap into is now at the highest level on record, according to Black Knight Financial Services, a mortgage and finance industry solution provider. 

The amount a borrower can take out of a home—while still leaving 20 percent in it—increased by a collective $735 billion during 2017. That is the largest annual increase by dollar value on record, according to Black Knight. The collective amount of tappable equity now stands at $5.4 trillion, 10 percent more than the prerecession peak in 2005. 

“There’s no question that a majority of homeowners have amassed considerable equity gains since the downturn,” says Lawrence Yun, chief economist of the National Association of REALTORS®. “Home prices have grown a cumulative 48 percent since 2011 and are up 5.9 percent through the first two months of this year.”

Homeowners are being more conservative, and lenders are much stricter when it comes to tapping into home equity. Homeowners took out $262 billion in cash-out refinances or home equity lines of credit last year, which is less than 1.25 percent of all available equity and is at a four-year low. 

“While rising rates tend to dampen utilization of equity in general, the market is poised for a strong shift toward HELOCs, as they allow borrowers to take advantage of growing equity while holding on to historically low first-lien interest rates,” says Ben Graboske, executive vice president of Black Knight Data & Analytics. “Over half of all tappable equity—approximately $2.8 trillion—is held by borrowers with credit scores of 760 or higher and first-lien interest rates below today’s prevailing rate, which creates a large pocket of low-risk HELOC candidates.”

The amount of homeowner equity varies depending on location. Thirty-nine percent of the nation’s total tappable equity is in California alone. Seattle and Las Vegas have also seen large increases in home equity, Black Knight notes. 

Spring Buyers Want This Type of House | Realtor Magazine

The typical spring home buyer this year is on the hunt for a three-bedroom, two-bathroom house with a garage and updated kitchen, according to a new realtor.com® survey of more than 1,000 home shoppers. Forty-four percent of respondents say they want a three-bedroom home, and 93 percent say they want a home with at least two bathrooms. But the garage is becoming increasingly important to home shoppers, too, with 27 percent rating it as one of the most important home features, even above an updated kitchen (24 percent) and open floor plan (20 percent). 

Privacy is driving the purchase decisions of many older buyers, with more than 20 percent of those 55 and older saying that having a space of their own is their main goal, followed by the physical comforts and stability of homeownership. On the other hand, 17 percent of millennial buyers placed the highest weight on family needs when house hunting, followed by stability (14 percent) and personal expression (13 percent). Only 12 percent of buyers younger than 55 cited privacy as their chief priority. 

Realtor.com®’s survey also shows that increasing rental costs are pushing more young adults toward homeownership, with 23 percent of buyers between the ages of 18 and 34 reporting rising rents as a trigger for their recent home purchase. “Although record-low inventory and high prices make this housing market unique, some classic features still top most shoppers’ wish lists,” says Danielle Hale, chief economist for realtor.com®. “At the same time, we found some clear differences in priorities. For instance, older buyers are concerned with privacy and being able to age comfortably, while millennials place more emphasis on family needs, stability, and personal expression.”

The survey also finds some differences among the generations when it comes to architecture preferences. Millennials desire contemporary and colonial homes, while older buyers prefer ranches. Only 6 percent of millennials favored ranch homes. 

Markets Where Prices Hit Record Highs Again | Realtor Magazine

Inventory shortages are helping home prices continue to break record highs, according to an analysis by realtor.com®. “Never in history have there been more eyes on fewer homes than today,” says Javier Vivas, director of economic research at realtor.com®. “The price gains observed in the last days of March tell us the market is on pace to see half of the homes listed above $300,000 this summer. This means buyers are not just having to pay more for the same home—they’re also seeing the mix of what’s available change more rapidly.”

Listing prices zoomed to a median of $280,000 in March, surpassing last summer’s high of $275,000 in July 2017. March’s listing prices also mark an 8 percent increase year over year. Of the 100 largest markets in the country, 36 are seeing homes sell at least a week faster than a year ago.

Realtor.com®’s “hot list” for March reflects the metros garnering the most listing views on the site, as well as those where homes spend the fewest days on the market. California continues to dominate the list. The hottest markets in March, according to realtor.com®, are:

1. San Francisco
2. Vallejo, Calif.
3. Colorado Springs, Colo.
4. San Jose, Calif.
5. Midland, Texas
6. Santa Cruz, Calif.
7. Boston
8. Stockton, Calif.
9. Columbus, Ohio
10. Sacramento, Calif.
11. Denver
12. Chico, Calif.
13. Boise City, Idaho
14. San Diego
15. Modesto, Calif.

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Mortgage Rates Ease Slightly This Week | Realtor Magazine

The 30-year fixed-rate mortgage fell 1 basis point to an average 4.44 percent this week, Freddie Mac reports.

“Treasury yields fell from a week ago, helping to drive mortgage rates modestly lower,” explains Len Kiefer, Freddie Mac’s deputy chief economist. “The yield on the 10-year Treasury dipped below 2.8 percent for the first time since early February of this year. The decline in Treasury yields comes as investors move into safer assets amid increased trade tensions. Following Treasury yields, mortgage rates fell slightly.”

Freddie Mac reports the following national averages with mortgage rates for the week ending March 29:

• 30-year fixed-rate mortgages: averaged 4.44 percent, with an average 0.5 point, dropping from last week’s 4.45 percent average. Last year at this time, the 30-year fixed-rate mortgage averaged 4.14 percent.
• 15-year fixed-rate mortgages: averaged 3.90 percent, with an average 0.5 point, dropping from last week’s 3.91 percent average. A year ago, 15-year rates averaged 3.39 percent.
• 5-year hybrid adjustable-rate mortgages: averaged 3.66 percent, with an average 0.4 point, dropping from last week’s 3.68 percent average. A year ago, 5-year ARMs averaged 3.18 percent.