Money is the top factor when it comes time to decide whether to rent or buy. After all, buying a home comes with several upfront costs that can make it a challenge if you don’t already have some money set aside. So with recent gains in the economy and job market, it’d be natural to expect that Americans are feeling more financially secure and, therefore, also more ready to buy a house. But while buyer demand has been high recently, new research from Freddie Mac shows an increasing number of renters who say they’d prefer to keep renting. Why is that? Well, one reason is the perception that buying a home has become less affordable. “Perceptions of affordability and cost continue to play an outsized role in the choices of America’s renters, as they overwhelmingly see renting as more affordable and the right choice for them – right now,” says David Brickman, executive vice president and head of Freddie Mac Multifamily. In short, Americans who rent feel their economic situation has improved but are still hesitant to buy due to a perception that homeownership is out of their reach. More here.
Archive for April 2018
Most Counties More Affordable Than Historic Average
Pretty much anywhere you go there are parts of town that are more affordable than others. There are areas known for starter homes that attract young families and other parts where the homes come with higher price tags and significantly more square footage. Which part of town you end up buying a house in will be determined, in part, by what works for your lifestyle. But your budget and bottom line will ultimately have final say. Currently, with home prices and mortgage rates both trending upward, it may seem like there are fewer and fewer areas with affordable homes to choose from. This, however, is not entirely true. In fact, according to new numbers from ATTOM Data Solutions’ Q1 2018 U.S. Home Affordability Report, 59 percent of the 446 counties they analyzed were more affordable than their historic average. Furthermore, 27 percent of those counties actually posted a year-over-year increase in affordability – meaning prices were more affordable this year than last. Counties where this was true included Cook County (Chicago), Illinois; Harris County (Houston), Texas; Maricopa County (Phoenix), Arizona; Orange County, California; and Kings County (Brooklyn), New York. In short, though affordability conditions may have worsened generally, it’s always smart to look into what prices are doing in the neighborhoods that most appeal to you. More here.
Average Mortgage Rates Declined Last Week
According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates fell across all loan categories last week, including 30-year fixed-rate loans with both conforming and jumbo balances, loans backed by the Federal Housing Administration, and 15-year fixed-rate loans. But despite the decline in rates, demand for mortgage applications was down from the previous week and is now about even with where it was last year at this time. There are a number of reasons why this might be. First, a competitive spring market means buyers in some markets may be interested in purchasing a home but having a hard time finding one they want. Secondly, recent economic news and stock market volatility may have caused some potential buyers to temporarily halt their plans to buy. Finally, some of the drop in overall mortgage demand reflects the fact that fewer homeowners are refinancing their loans, since mortgage rates have recently risen from historic lows. The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. More here.
What Buyers Should Know About Home Inspections
After finding a house to buy and making an offer, one of the next steps in the process is to get the home professionally inspected. This is done for a couple of reasons. One, it provides the home’s buyer with necessary information about the health and upkeep of the home’s various systems. But, additionally, it can be used to negotiate a fair price for the home. For example, if you made an offer on a house, then discovered during the inspection there were issues that might mean costly repairs, your offer could then be renegotiated to account for the previously unknown problem. In short, getting the house inspected is an important protection for buyers, who likely don’t have the expertise to thoroughly evaluate things like the home’s plumbing and electrical systems. But more than just a checklist, the inspection is also a good opportunity for buyers to get to know the house they’re buying and learn more about the condition of the home and the steps they’ll need to take to maintain it. For that reason, it’s a good idea, if possible, for buyers to be present during the inspection, so they can ask questions and get tips on properly caring for their new home. More here.
Americans Say Now Is The Time To Buy
Every month, Fannie Mae surveys Americans to better understand how they view the housing market, their personal finances, and the overall economy. Their Home Purchase Sentiment Index is a measure of how people around the country feel about buying or selling a home. And, according to the most recent results, they currently feel like it’s time to buy. In fact, there was a 10 percent increase in the number of respondents who said they felt like it was the right time compared to February’s survey. Doug Duncan, Fannie Mae’s senior vice president and chief economist, says sentiment has been volatile lately. “The HPSI’s recent run of volatility continued in March, as it recovered last month’s loss and remained within the five-point range of the past twelve months,” Duncan said. “The primary driver of this month’s increase was the sizable rise in the net share of consumers who think it’s a good time to buy a home, which returned the indicator to its year-ago level.” Boosted optimism about buying a house may be due to the spring buying season or perhaps a feeling among potential buyers that affordability conditions may worsen if they wait. More here.
How Mortgage Rate Increases Affect Home Buyers
Mortgage rates have been increasing lately and there is an expectation that they will move higher this year. But while home prices get a lot of attention, rising mortgage rates are a little more difficult for buyers to calculate in terms of what it will cost them. Here’s some help. According to one recent model, a less than one percent increase in mortgage rates over the next year would result in a $100 increase to the typical monthly mortgage payment. But since the costs of homeownership are influenced by many different factors, this projection has to make certain assumptions about things like the rate at which home prices will increase, for example. In other words, any increase to mortgage rates will cost home buyers but just how much is difficult to calculate precisely. So what should home buyers expect? Well, since a stronger economy and improved job market make it more likely that the Fed will raise interest rates further this year, buyers should expect that mortgage rates will remain low by historical standards but continue to edge higher, taking monthly mortgage payments higher along with them. More here.
Analysis Finds Property Tax On The Rise
When considering the costs of homeownership, it’s sometimes easy to forget about property tax. Home buyers focus a lot of attention on their prospective mortgage payment and the potential cost of any remodels and renovations but often forget to think about how much taxes will run them each year. This is a mistake. Take, for example, new research from ATTOM Data Solutions. Their recent tax analysis found that the average property tax on a single family home last year was $3,399, a 3 percent increase from 2016. That’s nearly $300 a month. But property taxes can differ from one place to the next. As evidence, states like Hawaii, Alabama, Colorado, Tennessee, and West Virginia were found to have lower than average effective property tax rates. They can also vary from city to city. That’s why it’s a good idea to look into how much homeowners pay in property taxes in the areas where you’d most like to buy a home. It may not sway your decision on where you buy, but it will give you a more accurate assessment of how much it’ll cost to buy a house in a particular city. More here.
Stock Market Volatility Slows Mortgage Demand
Market Trend Means Gains For Homeowners
It’s said that there are two sides to every story. Well, there are also two sides to the housing market. For example, since the end of the recession in 2009, home prices have risen 37 percent, according to Freddie Mac’s most recent monthly outlook. But while those price gains mean there aren’t as many bargains on the market as there were eight years ago, it also means current homeowners have enjoyed a record rebound in home equity. Len Kiefer, Freddie Mac’s deputy chief economist, says the housing market is on the upswing. “Overall, U.S. housing markets have been on the upswing,” Kiefer said. “While housing market trends have been generally favorable, not everyone has shared equally in the gains. Existing homeowners have largely seen their properties increase in value, helping to build equity. In many parts of the country, home values have more than recovered from the Great Recession, reaching new peaks, and the share of underwater homeowners has dropped significantly.” More here.
How Photography Can Help Sell Your House
Increasingly, people rely on technology to simplify tasks that were once difficult or time consuming. These days, everything from grocery shopping to running a business can be done with an assist from a smartphone app. So it’s no surprise that home shoppers would also go to the internet to gather information on how, what, and where to buy a house. And it’s for that reason that photography has become an important tool for homeowners who are looking to sell a house. For example, a recent National Association of Realtors’ study found 89 percent of buyers who searched listings on the internet said photos were the most useful feature. That makes sense. After all, the photos that accompany online listings can offer home shoppers an idea of what the home looks like inside and out. And while it’s always best to see the house in person – as photography can sometimes give an inaccurate impression of what shape a house is in – good photos are clearly a must if you’re selling a home today. More here.
