The factors that influence a home buyer’s decision to buy a particular house in a particular neighborhood are very similar across demographic groups. After all, our lives are more similar than they are different. We all want to live in a safe neighborhood with access to things we want and need, like recreation and health care providers. However, depending on the age of the buyer, there are some are other neighborhood features, like schools, that may appeal more to a younger home buyer than an older one. For that reason, the National Association of Realtors’ Home Buyer and Seller Generational Trends study takes an annual look at who’s buying homes, what kind of homes, and for what reasons. Lawrence Yun, NAR’s chief economist, says the results show there is one factor that appeals to buyers of all ages. “The sense of community and wanting friends and family nearby is a major factor for many home buyers of all ages,” Yun said. “Similar to Gen X buyers who have their parents living at home, millennial buyers with kids may seek the convenience of having family nearby to help raise their family.” In short, proximity to family and friends was important to buyers of all ages, whether they were millennials or baby boomers. More here.
Archive for March 2018
Demand For Home Purchase Loans Picks Up
According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates were up and down last week, with rates rising for FHA and 30-year fixed-rate loans with conforming loan balances but down for jumbo loans and 15-year fixed-rate mortgages. But despite the movement, mortgage rates didn’t deter potential home buyers. In fact, purchase application demand was up 3 percent from one week earlier and also up 3 percent from last year. Joel Kan, an MBA economist, told CNBC that, though for-sale inventory remains an issue for home buyers, demand continues to push forward. “Although the purchase market continues to be constrained by a lack of supply, applications for home purchase loans increased to the highest level in over a month, as demographic and economic conditions remain favorable for housing demand,” Kan said. In short, though mortgage rates have trended higher in recent weeks, Americans still see an opportunity to buy and demand remains high. The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. More here.
Homeowner Equity Continues To Increase
When you buy a house, you’re not just purchasing a place to live. You’re also making an investment in the real estate market. Which means, as your home’s value grows, so does your equity. Equity, of course, refers to the amount a property is worth minus the amount still owed on the mortgage. Put simply, if your equity is growing, that’s good news. Which is why new numbers from the Board of Governors of the Federal Reserve System are encouraging. That’s because they show homeowner equity on the rise. In fact, the total value of homeowner equity has increased $1.2 trillion over the past year and reached $14.4 trillion in the fourth quarter of last year. In short, that means homeowners are seeing the value of their homes, and their investment, grow. Whether you’re a current homeowner or are about to become one, this is a positive sign – as it indicates that the real estate market is strengthening and offering Americans a good opportunity to find a place they can, not only call home, but also a good financial decision. More here.
Home Flipping Returns, Hits 11-Year High
The Best Markets For First-Time Home Buyers
Buying a house in a competitive market can be challenging, even for buyers that have been through it before. Getting into a bidding war with another buyer means possibly pushing your budget, or worse, losing the house you set your sights on. But finding and buying a house in a competitive market is especially intimidating for a first-time buyer, who may already be a little overwhelmed by the process. The good news is that, though there are generally fewer homes available to buy across the country, not all markets are equally competitive. For example, a recent analysis of housing markets looked for those that have available homes, smaller down payments, and a strong home appreciation forecast – in other words, areas that would be favorable for first-time buyers. According to the rankings, cities like Tampa, Orlando, Houston, Atlanta, and Las Vegas have more opportunities to buy an affordable, entry-level home than in other markets where inventory is tighter and there is higher demand. In short, there are still opportunities for buyers, so it’s a good idea to look into the dynamics of your desired neighborhood before talking yourself out of buying this year. More here.
Incomes Have Risen But Will It Lead To Home Sales?
A rising number of Americans surveyed for Fannie Mae’s monthly Home Purchase Sentiment Index say their income is higher than it was last year at this time. But has more money made them more likely to buy or sell a house? Well, according to February’s survey results, it’s hard to say. That’s because, after an increase in January, housing sentiment fell in February – with respondents expressing less confidence in a number of categories. In fact, the number of participants who said it’s a good time to buy a house was down, as was the percentage of participants who said it was a good time to sell. But if January saw increases in housing confidence, why the drop in February? Doug Duncan, Fannie Mae’s senior vice president and chief economist, says some of the uncertainty has to do with changing economic headlines. “Volatility in consumer housing sentiment continued in February, with the new tax law beginning to impact respondents’ take-home pay and the stock market creating negative headlines due to early-month turbulence,” Duncan said. In short, people have more money but they’re still a bit unsure of what lies ahead for the market. More here.
Mortgage Rates See Little Movement Last Week
According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates were mostly flat last week. In fact, the average contract interest rate for 30-year fixed-rate loans with both conforming and jumbo balances, as well as loans backed by the Federal Housing Administration, was largely unchanged from the week before. Only rates for 15-year fixed-rate mortgages saw any significant movement. Still steady rates didn’t lead to much change in overall demand, as a lack of affordable homes to buy means there are fewer Americans requesting mortgage applications. Joel Kan, an MBA economist, told CNBC fewer entry-level homes has also pushed up the average loan amount. “The average loan amount on purchase applications, at $320,100, was the highest since November 2017, as supply constraints likely continued to weigh down lower dollar purchase transactions,” Kan said. In other words, mortgage application amounts have drifted higher because inventory is tighter on the lower end of the market, which means demand is skewed toward higher-priced homes. The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. More here.
The Top Sacrifices Millennial Buyers Say They’ll Make
Buying a house is a major financial transaction and, for most Americans, the largest one they’ll ever undertake. So pulling the necessary resources together to be able to afford the upfront costs, in addition to the ongoing obligations, maintenance, and upkeep can be difficult. Especially for first-time home buyers who don’t have the benefit of being able to sell a home to help fund their down payment. For this reason, many millennials who aspire to homeownership have decided it’s worth making a few sacrifices in order to help save money to buy a house. In fact, according to a recent survey from ValueInsured, there are some common sacrifices young Americans say they are willing to make in order to buy their first home. For example, nearly 60 percent of respondents said they would cut down or give up eating out – which made giving up restaurants the most popular sacrifice among survey participants. Other common sacrifices included taking a second job, not going on vacations, moving back in with their parents, and giving up shopping for clothes. More here.
Contract Signings Fall In January
In January, there were more people looking to purchase homes but fewer people signing contracts to buy. The numbers, from the National Association of Realtors’ Pending Home Sales Index, show that pending home sales – which refer to contract signings, not closings – were down 4.7 percent from the previous month. But, rather than a drop in home buying interest, the data may reflect something else. According to NAR’s chief economist, Lawrence Yun, it shows that there are too few homes available for the number of interested buyers. “The economy is in great shape, most local job markets are very strong, and incomes are slowly rising, but there’s little doubt [January’s] retreat in contract signings occurred because of woefully low supply levels and the sudden increase in mortgage rates,” Yun said. But though low inventory is an ongoing issue for the housing market, Yun believes a potential slowing of rent increases could lead to investors putting more affordable single-family homes up for sale this year, which could add to the number of entry-level homes available for first-time buyers. More here.
Nearly 60% Of Homeowners Plan Home Improvements
If you’re a homeowner, you know the to-do list is never ending. And, if you’re a buyer, you’ll know soon enough. That’s because, owning a home means maintaining a home. Proof of that can be seen in the fifth annual LightStream Home Improvement Survey. According to the results, 58 percent of surveyed homeowners say they’re planning to spend money on home improvement projects in 2018. And the number who said they plan on spending $35,000 or more has doubled from last year. But though there are more homeowners planning projects this year, the list of projects hasn’t changed all that much. Once again, outdoor upgrades remain the most popular, with decks, patios, and landscape projects topping the list. Kitchen and bathroom remodels, of course, also rank high, coming second and third on Americans’ home improvement, to-do list. So how are these homeowners planning on paying for all these upgrades and renovations? Well, the vast majority said they were paying for their projects out of savings. However, another way homeowners are saving on their home improvement bills is by doing, at least, some of the work themselves. More here.
