OWNERS OVERVALUE HOMES by LARGER MARGIN

   

For the seventh consecutive month, the gap has widened between what home owners say their home is worth compared to what appraisers say, according to Quicken Loans’ August 2015 Home Price Perception Index.

Home owner estimates now stand 2.65 percent higher than appraiser opinions, the largest gap in more than a year, according to the index.

“The perception trend of most of this year suggests home owners may be assuming that home values have been in a steady, linear path upward,” says Bob Walters, Quicken Loans chief economist. “In reality, home values have remained mostly flat this year, and this false assumption may be leaving home owners disappointed when their appraisals come in.”

The chart below gauge home owners' versus appraisers' value perceptions by metro.

















Source: Quicken Loans

 

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6 Key Housing Stats to Gauge the Market

Existing-home sales were back on the rise in July, marking the third consecutive month of increases, while low inventories of homes for-sale and rising prices were the reason behind first-time buyers falling to their lowest share since January, according to a new report from the National Association of REALTORS®.

Total existing-home sales – which include single-family homes, townhomes, condos, and co-ops – rose 2 percent in July to a seasonally adjusted annual rate of 5.59 million. Sales are at the highest pace since February 2007, and are 10.3 percent above a year ago.

"The creation of jobs added at a steady clip and the prospect of higher mortgage rates and home prices down the road is encouraging more household to buy now," says Lawrence Yun, NAR’s chief economist. "As a result, current home owners are using their increasing housing equity toward the down payment on their next purchase."

Here's a look at five main indicators from NAR's latest housing report:

1. Home prices: The median existing-home price for all housing types was $234,000 in July – 5.6 percent above a year ago. "Despite the strong growth in sales since this spring, declining affordability could begin to slowly dampen demand," says Yun. "REALTORS® in some markets reported slower foot traffic in July in part because of low inventory and concerns about the continued rise in home prices without commensurate income gains."

2. Housing inventories: At the end of July, the inventory of homes for-sale fell 0.4 percent to 2.24 million existing homes available for sale. The inventory now is 4.7 percent lower than a year ago and at a 4.8-month supply at the current sales pace.

3. First-time home buyers: The percentage of first-time home buyers fell for the second consecutive month, reaching 28 percent in July – the lowest share since January. Last year at this time, first-time buyers comprised 29 percent of all buyers.

"The fact that first-time buyers represented a lower share of the market compared to a year ago even though sales are considerably higher is indicative of the challenges many young adults continue to face," says Yun. "Rising rents and flat wage growth make it difficult for many to save for a down payment, and the dearth of supply in affordable price ranges is limiting their options."

4. Days on the market: Properties stayed on the market for an average of 42 days in July, below the 48 days average from a year ago. Forty-three percent of homes were on the market for less than a month in July. Short sales were on the market the longest at a median of 135 days while foreclosures were on the market for 49 days and non-distressed homes sold in 41 days.

5. All-cash sales: The percentage of all-cash sales rose to 23 percent of transactions in July, down from 29 percent a year ago. The share of individual investors – who account for the bulk of cash sales – was 13 percent in July, down from 16 percent a year ago.

6. Distressed sales: The percentage of foreclosures and short sales declined to the lowest share since NAR began tracking it in October 2008. Distressed sales fell 7 percent in July month-over-month and are 9 percent below a year ago. In July, 5 percent of sales comprised foreclosures while 2 percent were short sales. On average, foreclosures sold for a discount of 17 percent below market value while short sales sold for an average discount of 12 percent.

"Five years ago, distressed sales represented 33 percent of the market in July," says Chris Polychron, NAR's president. "For many previously distressed homeowners throughout the country, rising home values in recent years have helped recover equity and the vast improvement in several local job markets means fewer are falling behind on their mortgage payments."

Source: National Association of REALTORS®

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47% of Homes Are Selling in Less Than a Month (Call Me Now!!!)

In some cities across the country, homes are selling faster than ever.

Nationally, properties typically stayed on the market for 34 days in June, the shortest number of days since the National Association of REALTORS® began tracking in May 2011. Short sales spent the most time on the market with a median of 129 days, foreclosures sold in 39 days, and non-distressed homes were on the market for 33 days. NAR reports that 47 percent of homes sold in less than a month in June.

The real estate brokerage Redfin's barometer is showing the median time on the market dropped to just 26 days in June, the shortest time on record. In some hot housing markets, homes were falling under contract in 11 days or less.

Denver homes sold in six days or fewer in June; Seattle's median was nine days; Portland was 10 days; and Boston was 11 days, according to Redfin.

But some cities are seeing longer selling times. For example, the median time on the market for homes in Brownsville, Texas was 122 days; Myrtle Beach, S.C., was 105 days; Miami was 75 days; and metro New York 68 days, according to June data from realtor.com®, which is based off of information from local MLSs nationwide.

The strength of the local economy, employment and income growth, and low inventories of homes for sale compared to demand are all factors that lead to faster selling times, according to economists.

Source: "Selling Times Reaching New Lows," The Seattle Times (July 28, 2015) and "Home Prices Reach an All-Time High," REALTOR® Magazine Daily News (July 23, 2015)

 

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First-Time Buyers Fuel Latest Sales Boost

Existing-home sales rose in May to their highest pace in nearly six years, largely attributed to a big rise in the number of first-time home buyers, according to the National Association of REALTORS®' latest housing report, released Monday. All major regions saw sales increases in May, with the Northeast seeing the most notable rise.

Existing-home sales – measured as completed transactions of single-family homes, townhomes, condos, and co-ops – climbed 5.1 percent to a seasonally adjusted annual rate of 5.35 million in May. Sales are 9.2 percent above last year at this time.

The market share of first-time home buyers rose to 32 percent of transactions in May, matching the highest share since September 2012. A year ago, first-time buyers represented 27 percent of all buyers, NAR reports.

"The return of first-time buyers in May is an encouraging sign and is the result of multiple factors, including strong job gains among young adults, less expensive mortgage insurance and lenders offering low down payment programs," says Lawrence Yun, NAR's chief economist. "More first-time buyers are expected to enter the market in coming months, but the overall share climbing higher will depend on how fast rates and prices rise."

As the supply of homes remain tight, homes are selling fast and price growth in many markets continues to teeter at or near double-digit appreciation, Yun notes. "Without solid gains in new home construction, prices will likely stay elevated – even with higher mortgage rates above 4 percent," Yun says.

5 Stats to Gauge the Market

Here's an overview on key market conditions from NAR's latest existing-home sales report:

1. Inventory: Total housing inventory rose 3.2 percent to 2.29 million existing homes available for sale by the end of May. That is 1.8 percent higher than a year ago. Unsold inventory currently is at a 5.1-month supply at the current sales pace, down from 5.2 months in April.

2. Home prices: The median existing-home price for all housing types was $228,700 in May – nearly 8 percent above May 2014 home prices.

3. Days on the market: Properties typically stayed on the market for 40 days in May, up from 39 days in April. Still, that marks the third shortest time since NAR began tracking days on the market in May 2011. Forty-five percent of homes sold in May were on the market for less than a month.

4. All-cash sales: All-cash sales comprised 24 percent of transactions in May, down considerably from a year ago when they made up 32 percent of transactions. Individual investors, who account for the  bulk of cash sales, purchased 14 percent of homes last month, down from 16 percent a year ago. Sixty-seven percent of investors paid cash in May.

5. Distressed sales: Foreclosures and short sales remained at 10 percent for the third consecutive month in May. Distressed sales are below the 11 percent share a year ago. Seven percent of May sales were foreclosures and 3 percent were short sales. Foreclosures sold for an average discount of 15 percent below market value in May while short sales were also discounted 16 percent.

Regional Breakdown

The following is a snapshot of how existing-home sales fared across the country in May:

• Northeast: existing-home sales rose 11.3 percent to an annual rate of 690,000. Sales are now 11.3 percent above a year ago. Median price: $269,000, up 4.8 percent above May 2014 levels.
• Midwest: existing-home sales rose 4.1 percent to an annual rate of 1.27 million in May. Sales are 12.4 percent above May 2014. Median price: $181,900, up 9.4 percent from a year ago.
• South: existing-home sales increased 4.3 percent to an annual rate of 2.18 million in May, and are 6.9 percent above year ago levels. Median price: $198,300, up 8.2 percent from a year ago.
• West: existing-home sales increased 4.3 percent to an annual rate of 1.21 million in May, and are 9 percent above a year ago. Median price: $324,000, up 10.2 percent above May 2014.

Source: National Association of REALTORS

 

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Pending Home Sales Climb in April to Highest Level since May 2006

WASHINGTON  — Pending home sales rose in April for the fourth straight month and reached their highest level in nine years, according to the National Association of Realtors®. Led by the Northeast and Midwest, all four major regions saw increases in April.

The Pending Home Sales Index,* a forward-looking indicator based on contract signings, increased 3.4 percent to 112.4 in April from a slight upward revision of 108.7 in March and is now 14.0 percent above April 2014 (98.6) — the largest annual increase since September 2012 (15.1 percent). The index has now increased year-over-year for eight consecutive months and is at its highest level since May 2006 (112.5).

Lawrence Yun, NAR chief economist, says the steady gains in contract activity each month this year highlight the fact that buyer demand is strong. "Realtors® are saying foot traffic¹ remains elevated this spring despite limited — and in some cases severe — inventory shortages in many metro areas," he said. "Homeowners looking to sell this spring appear to be in the driver's seat, as there are more buyers competing for a limited number of homes available for sale."

Adds Yun, "As a result, home prices are up and accelerating in many markets."

Following April's decline in existing-home sales, Yun expects a rebound heading into the summer, but the likelihood of meaningful gains will depend on a much-needed boost in inventory and evidence of moderating price growth now that interest rates have started to rise.

"The housing market can handle interest rates well above 4 percent as long as inventory improves to slow price growth and underwriting standards ease to normal levels so that qualified buyers — especially first-time buyers — are able to obtain a mortgage."

After falling four straight months, the PHSI in the Northeast bounced back solidly (10.1 percent) to 88.3 in April, and is now 9.4 percent above a year ago. In the Midwest the index increased 5.0 percent to 113.0 in April, and is 13.3 percent above April 2014.

Pending home sales in the South rose 2.3 percent to an index of 129.4 in April and are 14.8 percent above last April. The index in the West inched 0.1 percent in April to 103.8, and is 16.4 percent above a year ago

Total existing-home sales in 2015 are forecast to be around 5.24 million, an increase of 6.1 percent from 2014. The national median existing-home price for all of this year is expected to increase around 6.7 percent. In 2014, existing-home sales declined 2.9 percent and prices rose 5.7 percent.

The National Association of Realtors®, "The Voice for Real Estate," is America's largest trade association, representing 1 million members involved in all aspects of the residential and commercial real estate industries.

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5 Upgrades That Sell Your Home

Selling your home isn't easy, especially if you live in a very competitive or saturated market. How can you make your home stand out? Fortunately, some home improvements hold universal appeal for potential buyers. To get the best bang for your buck, put your money into these upgrades before putting your house on the market.

Start with the most basic requirements

It might not seem glamorous, but it's necessary: Fix the things that need to be done. If your pipes are leaking, no one is going to care what the kitchen looks like. If the furnace doesn't work, buyers might not bother looking at the awesome master suite. Replacing things like the roof or siding have consistently shown up at or near the top of the list for projects that allow homeowners to recoup a majority of their investment upon a home sale, according to Remodeling Magazine's Cost vs. Value report.

Begin with a list of upgrades that would matter most to you if you were the one buying a new house. Could you handle those old, drafty windows? Would you be willing to live with a damp basement? Would you agree to move into a house that had a serious roof issue? If the answer is no, replace those things first.

Update the kitchen

Once necessary repairs are completed, turn to the kitchen. The kitchen is the heart of the home, and it is also what sells the home to many buyers. A great kitchen layout, complete with modern, energy-efficient appliances and lots of good lighting, can make anyone pause for a second look. Now is the time to turn to upgrades like refacing those old cabinets (assuming the cabinet boxes are sound), investing in new countertops, and springing for a shiny faucet -- a hands-free one if you really want to impress.

You can do these things without much of a financial hit, but if you really want to sink some cash into the kitchen upgrades, look to a minor kitchen remodel. Remodeling Magazine reports that for a national average cost of just over $19,000, you could have a complete cabinet refacing, new countertops and flooring, a mid-priced sink and faucet, and all new paint and trim. This might lead to a return on investment of about 79% -- not a big money-maker, but perhaps enough to sell your home to impressed buyers.

Refresh the bathroom

The bathroom should be an oasis. If yours is something much less, consider improving it with new lighting, fresh caulking around the tub and shower, and bright new faucets that draw the eye. If things are really rough in there, consider replacing the vanity with something more modern (including a nice new granite or marble countertop), laying new tile, and painting or wallpapering the walls with something fresh and attractive.

A minor bathroom remodel doesn't cost as much as the aforementioned kitchen remodel, according to Remodeling Magazine, but it also doesn't return as much on your investment. A bathroom remodel could set you back a national average of almost $17,000, and includes replacing the tub and shower, installing all new faucets, a new vanity and standard toilet, fresh wallpaper, and ceramic tile flooring. The recoup is about 70%.

Dig into the landscaping

Curb appeal matters, so make it count. Take good care of your trees and shrubs, keep the lawn looking nice, and sweep the driveway on a regular basis. If serious upgrades are called for, consider adding new flower beds, resealing the driveway, lighting up the walkways and adding a deck or patio. An easy way to enhance curb appeal is with a new door, made of steel or solid wood core, in a color that makes the house "pop."

When it comes to making money on your investment, landscaping can carry a big bang for your buck. For instance, a new steel entry door can cost about $1,200 but can return over 101% on investment, while a new deck can cost about $10,000 and return 80% on investment. Even a garage door replacement, at about $1,500, can bring back over 88% of what you put into it, according to Remodeling Magazine.

One final investment: a home stager

No matter how carefully you invest in home improvements, you might need some help in showing it off. A home staging expert can carefully arrange the furniture, art and other decor to create a look that will draw in potential buyers. These experts can also give you a firm idea of what you need to work on inside the home, such as reglazing that old tub or adding more lighting to a particular room.

Keep in mind that home staging is not a field that requires any particular credentials, so in-depth research into the home stager's work history and experience is a must. Insist on seeing a portfolio of previous work. Expect to pay $200-$500 for an in-home consultation -- the cost depends upon the size of your home, according to Cost Helper. If you choose to use a home stager throughout the time your home is on the market, you might spend up to $8,000 or more, depending upon where you live.

When selling your home, having an edge over the competition can mean the difference between a quick sale and a long languish on the market. By choosing the upgrades that suit your budget and your home's needs, you can enhance your chances of closing the deal.

The original article: 5 upgrades that sell your home and additional kitchen remodeling articles can be found on ImproveCenter.com.

About the Author
Shannon Lee is a freelance writer and occasional novelist with a serious weakness for real estate

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Over 80% of New Rentals Are Luxury Projects

The majority of new multifamily construction is focusing on the luxury market, and it's causing rents to soar across the country. In fact, the Wall Street Journal reports that of the 370,000 multifamily rental units built between 2012 to 2014 in 54 U.S. metropolitan areas, 82 percent were in the luxury sector.

This emphasis on high-end rentals is causing an affordability gap for renters in many metro areas. A new report released by the National Low Income Housing Coalition found that there isn't a state in the country where someone earning either the state or federal minimum wage could afford a market-rate one-bedroom apartment. This echoes a recent study by the National Association of REALTORS® that found the gap between rental costs and household income is widening to unsustainable levels in many parts of the country.

It doesn't appear than rental costs in major cities will go down any time soon. In some areas, including Denver, Tampa, Baltimore and Phoenix, a staggering majority of new multifamily construction targets high-end renters. Around 95 percent of new apartments build in Atlanta are in the luxury category.

"I don't believe there ever has been a time where we have produced so much luxury rental housing," says Susan Wachter, professor of real estate at The Wharton School of the University of Pennsylvania. Low rental inventory in many cities means that middle-class and young renters have no other choice but to rent these luxury units simply because there aren't other options.

The high cost of rent in many cities has housing advocates concerned that the middle class is getting priced out. Cities have previously offered tax breaks and incentives to try to get developers to focus on building moderate-and lower-priced units. But now, experts say, the federal and local governments may need to consider targeting more subsidies not just to low-income, but also to middle-income renters.

"If cities become places where only the very high-income households can afford to live…that’s going to be a problem for the businesses that want to locate in those cities," Ingrid Gould Ellen, faculty director of New York University's Furman Center told the Wall Street Journal.

Source: "New Luxury Rental Projects Add to Rent Squeeze," The Wall Street Journal (May 20, 2015)

 

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Single-Person Households Are on the Rise

A century ago, fewer than six percent of all households consisted of people who lived alone. By 2013, that percentage has jumped to 28 percent, with single-person households now making up the second most common household type just behind married couples without minor children (at 29 percent), according to U.S. Census Bureau data. What's more, single households have now surpassed married households with minor children (19 percent).

These single households – once mostly dominated by men – have shifted to a rise in the number of women living alone. Women now head 54 percent of all single-person households.

"In the past, when living alone might have been a short-term condition, for many it is now a long-term situation, the result of a number of broad demographic and economic forces at work over the past half century: greater affluence, longer lives, later ages of marriage, higher divorce, smaller family sizes, greater labor force participation and financial independence of women, and stronger government safety nets across a wide spectrum of social programs," writes George Masnick, senior research fellow at The Harvard Joint Center of Housing Studies.

In large cities, single person households account for 45 percent of all households. Some neighborhoods in Manhattan and Washington, D.C., in particular, have single-person households that approach two-thirds of its households.

Single-person households aren't dominated by one generation either. About 28 percent of all single-person households are under the age of 45; another 36 percent are between the ages of 45 and 64; and 36 percent are over the age of 65.

Many of these single-person households are also home owners. Fifty-four percent of single-person households are owner-occupied, according to the 2013 American Housing Survey. Between 2003 and 2013, owners comprised 55 percent of the growth in single person households.

Source: "The Rise of the Single-Person Household," Harvard Joint Center for Housing Studies' Housing Perspectives Blog (May 20, 2015)

 

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What Millennials Want in a Home

Millennials make up the largest share of home buyers at 32 percent, according to a recent generational trends report by the National Association of REALTORS®. While older generations sought out homes with luxury amenities and rooms with one specific purpose, younger buyers are seeking affordable, efficient homes that can be customized to suit their changing needs.

"When it comes to homes today, millennials want something creative, something different," says James Roche, CEO of Houseplans.com. "They want something that better suits the times. For example, fine china and living rooms that nobody ever sets foot in are considered desires of the past. Dining rooms are being converted into home offices. Family rooms are being transformed into media centers. And, homeowners are now leveraging smartphones and tablets to adjust the temperature, or turn on outdoor lights and security systems."

These are the top five millennial home desires, according to Boyce Thompson, former editor of Builder Magazine:

1. Affordability. Many millennials want a home that is affordable, yet "move-in ready," with all the bells and whistles, including an updated kitchen, high-tech amenities, and open, versatile spaces with an indoor-outdoor flow.
2. Efficiency. Millennials tend to be conscious of not being wasteful, and will do what it takes to save on the use of electricity and water. "One [Florida] home I worked on featured one of the earliest disappearing window walls in production housing," says Thompson. "You walked through a short entry vestibule to the main living area, and you looked right through the home, to the pool deck, and out into the Orlando night. The architect, Mike Woodley, and I sat on a couch in the family room and watched the delighted expression of visitors as they entered the space and discovered that a corner of the roof was suspended on a post in the pool."
3. Flexibility. Since millennials see their homes as an extension of the rest of their lives, not just as a refuge from work, they prefer casual, flexible spaces. They want home offices that can convert to a game room and large attic spaces that could eventually be transformed as a play space. Customization of the home is important, even if it means spending extra money. "An ideal floor plan might include an "away" room, especially if you needed to 'get away'  to do yoga, practice the guitar, or, even if you want to isolate your child’s latest Lego creation," says Thompson. "Then, later on, this space could eventually be converted into a bedroom."
4. Going Green. A recent study from NAR revealed that 10% of millennials seek out new-home construction for green/energy efficient reasons. As a group, young buyers prefer green building and homes that use sustainable, recycled materials. They want housing that's smaller and energy-efficient (think LED lighting), and they appreciate good engineering.
5. Entertaining. It should be no surprise that the younger generation wants a home that they can show off to their neighbors and friends and use as an entertainment space – from fire pits to open floor plans to game rooms. They also have a deep appreciation for versatile outdoor spaces that extend living space.

 
Source: "Houseplans.com," (May 21, 2015)

 

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10 Most Active Markets for New-Home Sales

New-home sales nationwide remain way below historical averages, but there are pockets of strength across the country, particularly in the South, like in Texas and the Carolinas, according to an analysis conducted by CoreLogic.

Eight of the 10 fastest growing new-home sales markets are located in the South. The fastest growing new-home sales market is Nashville, Tenn., where new home sales have risen 17 percent year-over-year.

Meanwhile, El Paso, Texas, has the highest new-home sales share nationwide, where 22 percent of all sales were new construction, compared to 8 percent across the country, according to CoreLogic.

"Looking forward, southern markets with strong demographic growth will exhibit robust new home sales activity," according to CoreLogic’s analysis. "In many of the remaining metros with solid job growth, the reality of very low inventory of unsold new homes, declining vacancies and rapid price appreciation will lead to more construction in the next few years that will lift many more markets above their current new home sales trajectory."

CoreLogic reports the following 10 markets had the highest new-home sales share (new home sales as share of total sales):

1. El Paso, Texas
2. Raleigh, N.C.
3. Charleston-North Charleston, S.C.
4. Houston-The Woodlands-Sugar Land, Texas
5. San Antonio-New Braunfels, Texas
6. Austin-Round Rock, Texas
7. Charlotte-Concord-Gastonia, N.C.-S.C.
8. Jacksonville, Fla.
9. Colorado Springs, Colo.
10. Orlando-Kissimmee-Sanford, Fla

The following are the 10 markets that have seen the highest new-home sales growth in the past year (based on percent change from a year earlier):

1. Nashville-Davidson-Murfreesboro, Tenn.
2. San Jose-Sunnyvale-Santa Clara, Calif.
3. Atlanta-Sandy Springs-Roswell, Ga.
4. Jacksonville, Fla.
5. Greenville-Anderson-Mauldin, S.C.
6. North Port-Sarasota-Bradenton, Fla.
7. Fort Worth-Arlington, Texas
8. Portland-Vancouver-Hillsboro, Ore.-Wash.
9. San Antonio-New Braunfels, Texas
10. Miami-Miami Beach-Kendall, Fla.

Source: "What Are the Most Active New Sales Markets?" CoreLogic (May 16, 2015)

 

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12 Most Popular New-Home Amenities in 2015

Master bedroom walk-in-closets and a laundry rooms are the top features that builders are most likely to include in a new home this year, according to a survey of builders conducted by the National Association of Home Builders.

"Both features speak to improving organization and storage characteristics of new homes," according to NAHB on its Eye on Housing blog.

Greater energy efficiency amenities also were ranked more important, with low-E Windows coming in No. 3 on the most likely amenity list on new homes. Energy-Star rated appliances and windows as well as a programmable thermostat also rated high.

The following were ranked as the most likely features and amenities to be included on an average single-family home in 2015:

1. Walk-in closet in master bedroom
2. Laundry room
3. Low-E windows
4. Great room (kitchen-family room-living room)
5. Energy-Star rated windows
6. Ceiling height on the first floor of 9 feet or more
7. 2-car garage
8. Programmable thermostat
9. Granite countertop in the kitchen
10. Central island in the kitchen
11. Bathroom linen closet
12. Front porch

On the other hand, the features identified in the survey as the most unlikely to be included in new homes this year are:

1. Outdoor kitchen (cooking, refrigerators and sinks)
2. Laminate countertops in the kitchen
3. Outdoor fireplace
4. Sunroom
5. Two-story family room
6. Media room
7. Two-story foyer
8. Walking/jogging trails in the community
9. Whirlpool in the master bathroom
10.  Carpeting as the flooring on the main level

Source: "What Builders Are Building," National Association of Home Builders Eye on Housing Blog (May 13, 2015)

 

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Study: Student Loans Don't Hinder Mortgages (Let's Get You Pre-Approved)

Young buyers are not being held back from obtaining a mortgage due to their student loan debt, according to a new report released from TransUnion.

Consumers between the ages of 18 and 29 with a student loan in repayment are "generally able" to qualify for new loans and, not only that, tend to perform as well or better on those new loans as similarly aged consumers without student loans, the report says. For its analysis, TransUnion researchers studied borrowers with student loans who entered repayment from three different timeframes, the fourth quarter of 2005; fourth quarter of 2009; and fourth quarter of 2012.

The report showed that in only three to six years, student loan consumers in their 20s are able to pass similarly aged consumers without a student loan in overall loan participation rates on mortgages, auto loans, and credit cards.

"Going to school impacts young consumers' access to credit; while in school, students may be less likely to have a job and generate the income necessary for loan approval," says Steve Chaouki, executive vice president and head of TransUnion’s financial services business unit. "However, most catch up once they leave school – and their ability to catch up has not changed over the past decade. Our study demonstrates that consumers in their 20s with student loans in repayment – that is, once they finish school – are in fact able to access credit at levels similar to or better than their peers who do not have student loans."

The study found that the changing economy between 2005 and 2012 did impact young consumers' access with credit, with the percentage of consumers aged 18-29 with mortgages, credit card, or auto loans dropping significantly. But the study showed that the drop impacted consumers with student loans and those without in similar ways.

"This is especially important finding, because it shows the dramatic rise in student loan balances has not materially impacted young consumers in gaining access to mortgages, auto loans, or credit cards, or in their ability to successfully manage their new credit obligations," says Charlie Wise, co-author of the study and vice president in TransUnion’s Innovative Solutions Group.

Source: "TransUnion: Student Loans Do Not Impact Housing," HousingWire (May 13, 2015)

 

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Will this "Affect" your business? Lenders to Get Stricter With Reverse Mortgages

As of April 27, the federal government will be imposing tougher credit standards that are expected to make applying for a reverse mortgage a lot more difficult.

Reverse mortgages, which are only available to those 62 and older, are a way for home owners to get equity out in their homes and convert it to cash. The borrower does not face any repayment requirements until they sell the house, move out, or die. The borrower, however, is required to stay current on property taxes, insurance fees, and keep the home in a reasonable condition.

But the ease of getting these loans, which usually was just based on age and equity, is about to change. In the aftermath of the recession, many borrowers defaulted on their reverse mortgages, failing to pay the required property taxes and hazard insurance premiums. Also, due to fallen real estate values at the time, some home owners faced foreclosure, which amounted to huge losses for the Federal Housing Administration, one of the main insurers of reverse mortgages nationwide.

That has prompted the changes that will take effect as of April 27. Lenders will now scrutinize borrowers' income and financial assets, and applicants will be required to demonstrate upfront that they have both the willingness and capacity to meet the loan obligations. Lenders will pull borrowers' credit reports, and applicants will have to show they've paid their real estate taxes, homeowner association fees, and other property charges for at least 24 months. Lenders may also now require some applications to create a "life expectancy set-aside," where they have an account with part of their loan proceeds.

Reza Jahangiri, chief executive of American Advisors Groups, the nation's highest volume reverse mortgage lender, says the company expects a decline in reverse mortgages due to the changes. The company is expecting an 8 percent to 10 percent decline.

Maggie O'Connell, who originates FHA-insured reverse mortgages for the Federal Savings Bank from offices in Reno and Danville, Calif., says in the long-term the tougher rules for reverse mortgages is probably a good thing for the market because it will prevent financially weak borrowers from taking out loans they can’t handle and that eventually winds up in default.

Source: "Applying for Reverse Mortgages Will Get Tougher," The Los Angeles (April 12, 2015)

 

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Rent vs. Buy: How to Overcome Buyer Concerns

New research shows that home ownership tends to be a smarter decision than renting for many Americans, particularly now when rental costs are skyrocketing.

The monthly payment on a median priced home is more affordable than the monthly fair market rent on a three-bedroom property in 76 percent of the U.S. counties, according to RealtyTrac’s Residential Rental Property Analysis, which encompassed 461 counties nationwide with populations of at least 100,000.

Home ownership may not be for everyone. But for many, it makes sense.

Lawrence Yun, NAR's chief economist, says that families with home ownership tend to have a much higher net worth overall than renters. Home owners have the benefit from equity and long-term price appreciation.

At NAR's Economists' Outlook blog, the following chart is shown in responding to buyers concerns over "I can’t afford to buy!"

After all, the "home owner with a 30-year mortgage payment has a paid-off home after 30 years; the renter has a nice stack of 360 rental receipts," analysts note at NAR’s Economists' Outlook blog. Housing analysts also note the lifestyle and social benefits to home ownership, with studies showing that home ownership tends to lead to better education achievement by children and an increase in community involvement.

Source: "Using NAR Research to Address Prospective Buyer Concerns 'Why not rent? I Can’t Afford to Buy!'" National Association of REALTORS® Economists' Outlook blog (April 10, 2015)

 

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Fed: Interest Rate Hikes Likely in June

The Federal Reserve is signaling that it will likely take action on increasing interest rates in two months, despite recent data that shows a weakened economy. This would be the first rate increase since 2006.

Two central bank officials said Wednesday that disappointing job growth, manufacturing activity, and retail sales over the winter had pushed rate hike expectations to later in the year. For more than six years, the Fed has held rates near zero. But June is being viewed as the likely month for the Fed to start its rising of rates.

"I could imagine circumstances where a June rate hike could still be in play," says William Dudley, New York Fed president, and a voting member on the Fed's policy committee. "If the economy's strong, the unemployment rate is dropping, wages are rising, and the outlook is good, you could conceivably get to that point. The bar is probably a little bit higher" for a June hike given recent data.

The minutes from the Fed's mid-March policy meeting, which were released Wednesday, also indicated that June would be a likely start time for Fed officials to start hiking rates. The Fed also indicated that once they did start raising rates, they would do so gradually.

But even a slight rate hike could have ripple effects throughout the economy. The most obvious impact to the housing market would be a rise to mortgage rates. Rates have been near historical lows for years. An average 30-year fixed-rate mortgage averaged 3.70 percent last week, according to Freddie Mac. "The Fed cut rates to historic lows in 2008 in part to reboot the housing market, which collapsed when the housing bubble popped," CNNMoney reports. "When the Fed likely raises rates this year, it will push mortgage rates and auto loans up. That said, it’s uncertain if that will cause home or car buying to slow down."

Source: "Fed Officials Say June Rate Hike Still in Play, Hinges on Data," Reuters (April 9, 2015) and "What an Interest Rate Increase Means for Real People," CNNMoney (March 19, 2015)

 

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Why Home Owners Need to Get Moving

Do potential sellers in your market need convincing? An article in CNNMoney recently highlighted several reasons why this spring would be the perfect time for home owners to get off the fence. After all, many markets across the country are still tilting in sellers’ favor. Here’s why:

• Less competition: A limited number of homes on the market will help sellers nab top dollar, and may even spur bidding wars and multiple offers. The National Association of REALTORS® reports that inventory levels nationwide were at a 4.6-month supply in February. A balanced market is considered to fall between a five- to seven-month supply.

• Mortgage rate hikes loom: Mortgage rates are still sitting near historical lows, with the 30-year fixed-rate mortgage hovering under 4 percent. The low rates have helped push more buyers into the marketplace, but they could also be a good thing for sellers who are looking to rebuy. However, rates aren’t expected to remain this low for too much longer, which may prompt a rush this spring. "When interest rates are thought to be escalating, we see a wave up activity with people getting off the sidelines," says Budge Huskey, president and CEO of Coldwell Banker Real Estate.

• Soaring rental costs: Also spurring more potential home buyers off the sidelines: Rising rental costs. Rental prices have increased 15 percent nationwide in the past five years in 70 metro areas across the U.S., according to NAR research. "Every time there's an increase, it triggers the decision processes on whether [renters] should go into the market and buy," Huskey told CNNMoney. "It allows others to move up the chain in the market."

Source: “4 Reasons to Sell Your Home Now,” CNNMoney 

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A Growth in Housing Counseling

Before becoming home owners, some buyers are undergoing counseling first. A new survey shows a rising number of Americans are taking housing counseling courses, which could be a sign that more educated, prepared first-time buyers are ready to step off the sidelines in the coming months.

More than 73,000 people received housing counseling from the National Foundation for Credit Counseling member agencies during 2014. That marks the highest number in the past five years.

"Seeing that more people are realizing the value of housing counseling is a sign that the next wave of home buyers will be better prepared to preserve home ownership," says Bruce McClary, a spokesman for NFCC.

Housing counseling may help some buyers even save money by learning the process, McClary says. A recent Consumer Financial Protection Bureau survey showed that 47 percent of home buyers do not compare lenders when shopping for a mortgage – which means they may not be getting the best rates. Potential buyers who undergo housing counseling are more likely to review multiple mortgage offers and find possible savings, according to the NFCC.

Source: "New Trend Shows Positive Signs for Homebuyers," RISMedia (March 16, 2015)

 

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Mortgage Rates Edge Higher This Week

Mortgage rates inched upward this week, with fixed-rate mortgages returning to averages at the start of the year, which follows several weeks of dips, Freddie Mac reports in its weekly mortgage market survey.

Still, the 30-year fixed-rate mortgage continues to average below 4 percent, a threshold it has remained below since the week ending Nov. 13, 2014, Freddie Mac reports.

Freddie Mac reports the following national averages with mortgage rates for the week ending March 12:

30-year fixed-rate mortgages: averaged 3.86 percent, with an average 0.6 point, rising from last week’s 3.75 percent average. Last year at this time, 30-year fixed-rate mortgages averaged 4.37 percent.

15-year fixed-rate mortgages: averaged 3.10 percent, with an average 0.6 point, rising from last week’s 3.03 percent average. A year ago, 15-year rates averaged 3.38 percent.

5-year hybrid adjustable-rate mortgages: averaged 3.01 percent, with an average 0.5 point, rising from last week’s 2.96 percent average. Last year at this time, 5-year ARMs averaged 3.09 percent.

1-year ARMs: averaged 2.46 percent, with an average 0.4 point, rising from last week’s 2.44 percent average. A year ago, 1-year ARMs averaged 2.48 percent.

 

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LOW DOWN PAYMENTS MAKE A COMBACK

 

Borrowers who have steady income and good credit, but not much money in the bank, will find that it recently became easier to buy a home.

Down payment requirements, which rose after the subprime mortgage crisis, are easing again as lenders and mortgage backers try to draw in new buyers.

"It's one of the things that's inhibiting first-time homebuyers," said Rob Chrane, president of Down Payment Resource. "There are a lot more people who can qualify for a home that don't realize that they can."

FHA cuts insurance costs

The Federal Housing Administration has long backed loans for borrowers with lower credit scores and with down payments as low as 3.5%, but until this year it also required hefty insurance payments.

FHA annual insurance premiums dropped dramatically at the beginning of 2015. The change, from 1.35% to only 0.85%, will make FHA loans a better choice for some borrowers after years of prohibitively high premiums, said Anthony Hsieh, chief executive officer of LoanDepot, one of the largest FHA lenders in the country.

"We're starting to get back to what's reasonable," said Hsieh. "The crisis has shaken the market so much that there is no doubt there was an overreaction."

Fannie and Freddie

Fannie Mae and Freddie Mac guarantee more than half the country's mortgages. At the end of 2014, the two government-backed companies announced plans to slash minimum down payments from 5% to 3%.

The new program from Fannie Mae went into effect in December, and the one from Freddie Mac will begin in March. Both are for first-time homebuyers or those refinancing their mortgage, and the Freddie Mac program is restricted to low-income borrowers.

Loans backed by the two mortgage giants still require private mortgage insurance for down payments below 20%.

And just because Fannie and Freddie are willing to buy loans with looser requirements doesn't mean the lenders themselves will change their standards.

"It's a phenomenon of the post-recession where lenders learned their lesson," said David Stevens, president of the Mortgage Bankers Association. "They learned that simply because the investor will allow it, the lender may still not feel comfortable doing it."

"Rural" and VA loans

Other types of low-down payment loans have also become far more popular since the recession.

Despite its name, loans from the Department of Agriculture are available to borrowers in many locations that are hardly rural, and they include no-money-down financing. To be eligible for USDA loans, a borrower must have dependable income and decent credit, and can't already own a home, exceed certain area median income thresholds or live within certain urban areas.

Department of Veteran Affairs loans are also booming, coming close to outnumbering FHA loans. Although not available to the average American homebuyer, VA mortgage backing allows veterans and surviving spouses to purchase property with no money down, no outside insurance and limited closing costs.

Average VA interest rates are lower, and credit and income requirements are also more flexible than conventional loans

A return to easier credit

The shift toward loans with lower down payments has drawn criticism from some politicians -- after all, easy loans with little money down contributed to the crisis that led to the Great Recession.

Stevens said that new rules for qualified mortgage loans and more diligent underwriting by lenders will protect the lending market.

"Down payment has become the single largest barrier to home ownership," said Stevens. "Quite frankly, it's going to be a lot safer and sounder this time than it was in the past."

CNN Money (New York

 

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20 Housing Markets That Are Heating Up

Just in time for spring selling season to start, sellers are finally starting to put their homes on the market, upping the selections for buyers, according to the latest analysis from realtor.com®. Higher inventories and buyer demand are expected to boost closings this month, according to realtor.com®.

"The biggest macro trend is that we're finally seeing inventory grow," says Jonathan Smoke, realtor.com®’s chief economist. "This is a very important trend for many reasons – in particular, because it will help keep prices at a more moderate level down the road."

Affordability had become a chief concern recently in the housing market. So what's changed and why are more sellers putting their homes on the market?

Smoke says home owners are being encouraged by the current higher prices. But Smoke says those will level out as supply rises to meet demand.

According to realtor.com®'s February data, 20 markets are already showing a big upswing based on the ratio of listing views at realtor.com® to the number of listings for-sale. Those 20 markets are:

1. Waco, Texas
2. Dallas-Fort Worth-Arlington, Texas
3. Santa Rosa, Calif.
4. Denver-Aurora-Lakewood, Colo.
5. Vallejo-Fairfield, Calif.
6. Ann Arbor, Mich.
7. Fort Wayne, Ind.
8. Santa Maria-Santa Barbara, Calif.
9. Charleston, W.Va.
10. San Luis Obispo et al, Calif.
11. Columbus, Ohio
12. Boulder, Colo.
13. Detroit-Warren-Dearborn, Mich.
14. Hartford-West Hartford et al, Conn.
15. Manchester-Nashua, N.H.
16.  San Francisco-Oakland et al, Calif.
17. San Diego-Carlsbad, Calif.
18. Charleston-North Charleston, S.C.
19. Toledo, Ohio
20. Boston-Cambridge-Newton, Mass.-N.H

Source:"Spring Is Coming, and These 20 Markets Are Heating Up," realtor.com® (March 6, 2015)

 

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