2 Trends Helping Keep Housing Affordable

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Two positive trends have started to emerge that impact the 2019 Spring Housing Market. Mortgage interest rates for a 30-year fixed rate loan have dropped to new lows, right as reports show that wages have increased at their highest rate in decades! These two factors have helped keep housing affordable despite low supply of houses for sale driving up prices. First American’s Chief Economist, Mark Fleming, explains the impact, “Ongoing supply shortages remain the main driver of the performance gap as the housing market continues to face an inventory impasse – you can’t buy what’s not for sale.  However, an unexpected affordability surge, driven primarily by lower-than-anticipated mortgage rates, rising wages and favorable demographics, has boosted housing demand.” Mortgage interest rates had been on the rise for most of 2018 before reaching their peak in November at 4.94%. According to Freddie Mac’s Primary Mortgage Market Survey, interest rates last week came in at 4.20%. Average hourly earnings grew at an annual rate of 3.2% in March, up substantially from the 2.3% average pace seen over the last 10 years. These two factors contributed nearly $6,000 worth of additional house-buying power for median households from February to March 2019, according to First American’s research. Fleming is positive about the […]

What Would Make You Sell Your House?

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There are many reasons why a homeowner decides to sell their house and move. The latest Generational Trends Report from the National Association of Realtors asked recent home sellers to share their reason for moving. The younger the respondents, the more likely their top response centered around needing a larger home (ages 29 to 53). Relocating for a job was the top reason for those ages 54 to 63 and the second most popular response for those under 53. The chart below shows the breakdown for these two reasons. For homeowners over the age of 64, wanting to be closer to friends and family served as the top motivator to move. Downsizing to a smaller home or moving due to retirement came in as a close second and third. Have you outgrown your current house? Are you a homeowner who can relate to wanting to be closer to family and friends? Is your house becoming a burden to clean now that the kids have moved out? Bottom Line Let’s get together to set you on the path to selling your current house and finding the home that fits your needs, today!

How Quickly Can You Save Your Down Payment?

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Saving for a down payment is often the biggest hurdle for a first-time homebuyer. Depending on where you live, median income, median rents, and home prices all vary. So, we set out to find out how long it would take to save for a down payment in each state. Using data from HUD, Census and Apartment List, we determined how long it would take, nationwide, for a first-time buyer to save enough money for a down payment on their dream home. There is a long-standing ‘rule’ that a household should not pay more than 28% of their income on their monthly housing expense. By determining the percentage of income spent renting in each state, and the amount needed for a 10% down payment, we were able to establish how long (in years) it would take for an average resident to save enough money to buy a home of their own. According to the data, residents in Kansas can save for a down payment the quickest, doing so in just over 1 year (1.12). Below is a map that was created using the data for each state: What if you only needed to save 3%? What if you were able to take advantage of one of Freddie Mac’s or Fannie Mae’s 3%-down […]

Existing Home Sales Slow to Start Spring

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Some Highlights: Existing Home Sales slowed to an annual pace of 5.21 million home sales in March. Low inventory levels are still impacting home sales! The current month’s supply of homes for sale is 3.9-months. Median home prices were up 3.8% over last March at $259,400. This marked the 85thconsecutive month with year-over-year price gains.

Renters Paying Substantially More While Owning Costs Less

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In a recent Insights Blog, CoreLogic reported that rent prices have skyrocketed since 2005. Meanwhile, the typical mortgage payment has actually decreased. “CoreLogic’s national rent index was up 36% in December 2018 compared with December 2005, while the typical mortgage payment was down 4% over that period.” Why the difference between the costs of renting versus owning? It makes sense that rents have risen. However, how did mortgage payments decrease? CoreLogicexplained: “It’s mainly because mortgage rates back in December 2005 were significantly higher, averaging 6.3% for a fixed-rate 30-year loan, compared with 4.6% in December 2018. The national median sale price in December 2005 – $190,000 – was lower than the $220,305 median in December 2018, but because of higher mortgage rates in 2005 the typical monthly mortgage payment was slightly higher back then – $941 – compared with $904 in December 2018.” Additionally, a recent report by the National Association of Realtors (NAR) showed that purchasing a home requires less of your monthly paycheck. According to the Economists’ Outlook Blog, NAR’s February 2019 Housing Affordability Index showed that the “percentage of income needed” to pay the typical mortgage has decreased the last three months. November – 17.3% December – 16.9% January – 16.2% February – 15.9% Bottom Line What does this […]

New Study Reveals One Surprising Reason for the Inventory Shortage

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There has been a great amount written on millennials and their impact on the housing market. However, the headlines often contradict each other. Some claim this generation is becoming the largest share of first-time home buyers, while others claim millennials don’t want to own a home, blaming them for the dip in homeownership rate. While it is true that millennials have achieved milestones like getting married, having kids, and buying homes later in life than their parents and grandparents did, they are not solely to blame for today’s housing market trends. Freddie Mac’s Insight Report explored the impact of the Silent and Baby Boomer Generations on the housing market. If millennials are unable to find a home to buy at a young age like their predecessors, then who is living in those homes? The answer: Seniors born after 1931 are staying in their homes longer than previous generations, instead choosing to “age in place.” Freddie Mac found that, “this trend accounts for about 1.6 million houses held back from the market through 2018, representing about one year’s typical supply of new construction, or more than half of the current shortfall of 2.5 million housing units estimated in December’s Insight. Older Americans prefer to age in place because […]

With Inventory Low: Will Your Dream Home Need Some TLC?

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According to a new survey from Move.com, the wave of first-time homebuyers hitting the market this summer has resulted in an interesting statistic. Nearly 60% of buyers searching for a home this spring are willing to consider buying a fixer-upper, with 95% believing that the projects needed will increase their new home’s value! Realtor.com’s Chief Economist, Danielle Hale, pointed to low-inventory at the entry-level price range for the increase in willingness to renovate. “The combination of rising home prices and limited entry-level homes for sale is prompting many home shoppers to consider homes that need renovating. Replete with inspiration at their fingertips – like Pinterest, Instagram, and various home renovation TV shows – some home shoppers are comfortable tackling home renovation jobs to find a home that balances their needs with their budget.” Just over half of all respondents who said they would be willing to buy a home in need of some TLC, would also spend more $20,000 to make the home fit their needs. The most common ‘expected’ renovation is a kitchen remodel which can run anywhere from $22,000 for a minor remodel to $66,000 for a major remodel. This isn’t a new trend by any means. According to the Joint Center for Housing Studies at Harvard University, home […]

Selling Your House: Here’s Why You Need A Pro In Your Corner!

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With home prices on the rise and buyer demand still strong, some sellers may be tempted to try to sell their homes on their own rather than using the services of a real estate professional. Real estate agents are trained and experienced in negotiation while, in most cases, the seller is not. Sellers must realize that their ability to negotiate will determine whether or not they get the best deal for themselves and their families. Here is a list of just some of the people with whom the seller must be prepared to negotiate if they decide to For Sale by Owner (FSBO): The buyer, who wants the best deal possible The buyer’s agent, who solely represents the best interests of the buyer The buyer’s attorney (in some parts of the country) The home inspection companies, which work for the buyer and will almost always find some problems with the house The termite company, if there are challenges The buyer’s lender, if the structure of the mortgage requires the sellers’ participation The appraiser, if there is a question of value The title company, if there are challenges with certificates of occupancy (CO) or other permits The town or municipality, if you need to get the CO […]

5 Reasons Why Millennials Buy a Home

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Some Highlights: “The majority of millennials said they consider owning a home more sensible than renting for both financial and lifestyle reasons — including control of living space, flexibility in future decisions, privacy and security, and living in a nice home.” The top reason millennials choose to buy is to have control over their living space, at 93%. Many millennials who rent a home or apartment prior to buying their own homes dream of the day when they will be able to paint the walls whatever color they’d like or renovate an outdated part of their living space.

Buyer Demand Surging as Spring Market Begins

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Last fall, some predicted that the 2019 residential real estate market would be a disaster. There was even belief we might experience a housing crash like the one that occurred during the last decade. However, according to two separate reports*, buyer demand dramatically increased over the last three months, leading into this spring buyers’ market (the March data is not yet available). Both the ShowingTime Showing Index and the National Association of REALTORS Buyer Traffic Index show that buyer demand has increased in each of the last three months. Why the increase in demand? Increased buying power. According to the National Association of Realtors’ Economists’ Outlook Blog, purchasing a home has become more affordable, which has led to increased demand. “Due to the combination of falling home prices and mortgage rates, the income needed to make an affordable mortgage payment (mortgage no more than 25% of income) on a median-priced home with 10% down payment and 30-year fixed rate mortgage decreased from $60,425 in June 2018 to $53,783 as of February 2019, and the difference of $6,642 represents a gain in buying power because one can afford a home purchase at a lower level of income.” Bottom Line It appears the spring buyers’ market is […]