Though they didn’t move much, average mortgage rates were up again last week, according to the Mortgage Bankers Association’s Weekly Applications Survey. The survey found rates increased from one week earlier for loans backed by the Federal Housing Administration and 30-year fixed-rate mortgages with both jumbo and conforming balances. Mortgage rates were down slightly for 15-year fixed-rate loans. Increasing rates continue to have a negative effect on refinance demand – which is generally more sensitive to rate fluctuation. In fact, the refinance index fell 4 percent from the week before, while demand for loans to buy homes dropped 3 percent. At this time last year, refinance demand was 12 percent higher than it is now. Purchase applications, on the other hand, are still outperforming last year’s numbers, rising 2 percent higher than they were during the same week last year. The number of Americans requesting applications to buy homes may be falling because of higher mortgage rates, though it’s also likely due to a lower-than-normal number of homes available for sale and prices that have returned to their pre-crash peaks in many markets. The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. More here.
Archive for December 2016
Home Buyers Say The Bigger The Better
Owning a home is a big draw for buyers. In fact, recent data from the National Association of Realtors shows 31 percent of all buyers said they were purchasing a house because they wanted to own. Among first-time buyers, that number shoots up to 67 percent. Obviously, the dream of ownership is alive and well. But the second most common reason buyers cited when asked why they were purchasing a home was because they wanted something bigger. And the number of buyers who say they need a larger home is rising. According to economist Amanda Riggs, there are a couple of reasons for this. One is the number of homeowners who have been waiting to sell as home prices rebounded from the housing crash. These homeowners may have built up enough equity over the past few years to now afford something bigger. The other part of it is the fact that the largest share of home sellers last year were between the ages of 35 and 44. “We can speculate that the sellers probably had a child in the last few years and wanted a bigger home to expand their family,” Riggs writes in a post for the NAR’s Economists’ Outlook Blog. Whatever the reason – whether it’s boosted equity or a growing family – Americans have consistently shown that, when it comes to their homes, bigger is better. More here.
The Number Of Fixer-Uppers For Sale Rises
The number of homes for sale that are described as “fixer-uppers” is on the rise – which is good news if you’re a homeowner that hopes to sell your house “as is” or a buyer looking for a project. The analysis, done by Zillow, found that, over the past five years, there’s been a 12 percent increase in the number of homes on the market that’ll require some extra love from their new owners. They also found that the trend is more pronounced on the higher end of the market, with a 35 percent increase in the number of “fixer-uppers” among the top third of homes for sale compared to a 3 percent increase among more affordably priced homes. So why are more homes being listed “as is”? Simply put, the increase is due to low inventory. With fewer houses for sale, homeowners in many markets feel more comfortable listing their homes without having done every repair and renovation because buyers have fewer choices. Svenja Gudell, Zillow’s chief economist, says there are also more older homes out there. “Sellers are in the driver’s seat, with the freedom to list their home for sale ‘as-is’ without worrying about price cuts or the home sitting on the market,” Gudell said. “And without sufficient new construction, the housing stock has aged, so home buyers are finding more and more homes on the market in need of a little TLC.” More here.
Survey Asks Americans About Housing Market
Fannie Mae’s monthly Home Purchase Sentiment Index tracks Americans’ feelings about buying and selling a home, prices, mortgage rates, household income, etc. In November, the survey saw its fourth consecutive monthly decline, though it remains up slightly from where it was at the same time last year. Doug Duncan, Fannie Mae’s senior vice president and chief economist, says there was an uptick in consumer confidence and the number of respondents who said their income was higher than it was last year but, so close to an election, it’s hard to read too much into the results. “The November Home Purchase Sentiment Index outcome is difficult to interpret as the data collection period occurred across the presidential election timeline,” Duncan said. “The results are fairly evenly split between responses collected before and after the election, and there is evidence of an increase in consumer optimism in the immediate aftermath of the election. However, we caution readers against drawing conclusions about sustainable changes in consumer sentiment so soon after the election.” As an example, Duncan points to rising mortgage rates and how they could impact home purchase attitudes if sustained. However, because recent fluctuations in mortgage rates have been short lived, with rates returning to their prior position shortly after a spike, it may be too soon to say. In other words, Americans may feel uncertain but there isn’t yet reason to believe market conditions have fundamentally changed. More here.
Sellers May Want To Look At Listing In Winter
There are few real-estate truisms better known than the one about spring being the best time to sell a house. The reason it’s so widely known is that it is, for the most part, totally true. For a multitude of reasons, the housing market does heat up every spring. But does that automatically mean it slows down every winter, as is commonly assumed? Well, according to one study, no. In fact, an analysis found that, not only wasn’t winter the slowest time of the year, it was the next best thing to selling in spring. For example, among homes listed in spring, 18.7 percent sold for more than their asking price. In winter, 17.5 percent sold above asking. Additionally, 46.2 percent of homes listed in winter sold within 30 days – just 1.8 percent fewer than did in spring. So what accounts for winter’s unexpected popularity? Well, weather doesn’t seem to have anything to do with it. The analysis found the statistics pretty consistent from coast to coast – whether they looked at sunny California or snow belt states like Michigan. It may just be that buyers at that time of year are more motivated to move quickly and, since there are fewer sellers listing in winter, there is less competition for their attention. Whatever the reason, it may be time to reconsider your seasonal assumptions about the real-estate market. More here.
Rising Mortgage Rates Still Low Historically
According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates rose again last week. Rates moved up for all loan types except those backed by the Federal Housing Administration. Still, despite steadily increasing over the past month, mortgage rates remain low by historical standards. In fact, since 1980, mortgage rates have been as high as 18 percent – though they spent most of the past 40 years somewhere between 7 and 10 percent. In other words, mortgage rates are up from their all-time lows but remain far lower than they’ve typically been. The increases, however, have had an impact on refinance activity, which is more sensitive to rate fluctuations. “Refinances are almost entirely driven by mortgage rates, while purchase activity is a function of a broader set of variables including the state of the job market, demographics, and consumer confidence,” Michael Fratantoni, chief economist for the MBA, told CNBC. As proof, Fratantoni points to the fact that purchase application demand has actually risen 12 percent over the past month, while the group’s refinance index has fallen over the same period. The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. More here.
Smart Home Technology Beginning To Catch On
Though still new to most homeowners and buyers, smart home technology is starting to catch on. These days, you can find everything from smart thermostats to locks and light bulbs that use an Internet connection to allow you to control them from your phone or computer. These devices and home automation systems can add convenience, security, and energy efficiency to your home – in addition to the novelty of being able to dim all the lights in your house at once. Still, despite their seeming inevitability, a new report from the National Association of Realtors found that only 15 percent of real estate agents say they’re getting questions about the technology from their clients. That, however, is likely due to the products’ newness rather than their popularity. “More homeowners are adopting smart-home technology and that will likely impact buyers’ purchase decisions in the future,” NAR president, William E. Brown, says. “While consumer interest in this trend is still developing, Realtors are becoming well-versed in successfully marketing smart homes and their features, such as devices and appliances.” As home buyers become more aware of what’s possible, they will almost certainly add smart home features to their must-have list. More here.
How Life’s Milestones Affect The Housing Market
Some housing market trends are driven by economic factors, while others are driven by our lives. The job market, economic conditions, and wages can all affect whether or not we decide it’s a good time to buy or sell a house but, most often, that decision is made based on what is happening in our lives. Things like retirement or having a child are much more likely to influence a decision to move than the ups-and-downs of the market. Because of this, Realtor.com’s forecast for 2017 looks at some of the demographic changes that may affect the real estate market next year and beyond. Specifically, their forecast singles out baby boomers and millennials as two groups who will have a big impact. That’s because both are entering periods of their life when people typically change homes. Millennials because they are reaching the age when Americans typically buy their first home and baby boomers because they are at an age when their children have moved out and they may be looking to downsize or retire. When and where these groups decide to settle will help shape the real estate market next year and in the years to come. More here.
What 1st-Time Home Buyers Need To Know Now
It’s normal to feel a little bit of stress when buying a house. Whether it’s financial worry or just the logistics of moving all of your belongings to a new home, there’s a lot to think about and plan for. This is especially true for first-time home buyers. That’s because first timers have never navigated their way through the home buying process before and may be feeling some added fear, confusion, and concern about handling the responsibilities of homeownership. So what should younger buyers be watching for if they’re planning on buying a home soon? Well, according to Fannie Mae’s chief economist, Doug Duncan, mortgage rates and inventory will be key to determining whether or not there are enough affordable, entry-level homes available for new buyers next year. “Demand from first-time buyers has increased with household formation and is outpacing supply, leading to significant price increases and affordability challenges for entry-level buyers,” Duncan said in Fannie Mae’s most recent Economic & Housing Outlook. “Home purchase affordability will be constrained further if the recent pickup in mortgage rates persists, which would present a downside risk to our forecast of housing and mortgage activity.” In other words, if mortgage rates continue rising and inventory remains low, first-time buyers should expect higher prices and more competition in the year ahead. More here.
Contract Signings Inch Forward In October
The National Association Of Realtors’ Pending Home Sales Index measures the number of contracts to buy homes that are signed each month. Because it tracks contracts, and not closings, it is a good indicator of future sales of previously owned homes. In October, the index saw a 0.1 percent gain over the month before and is now 1.8 percent higher than the same time last year. Lawrence Yun, NAR’s chief economist, says pending sales are at their highest level since July. “Most of the country last month saw at least a small increase in contract singings and more notably, activity in all four major regions is up from a year ago,” Yun said. “Despite limited listings and steadfast price growth that’s now carried into the fall, buyer demand has remained strong because of the consistently reliable job creation in a majority of metro areas.” But Yun believes affordability conditions will begin to suffer in the months ahead if there isn’t an increase in the number of homes available for sale. With mortgage rates rising and inventory low, buyers could begin to feel the effects, especially in markets where prices have already largely recovered. More here.
