The national median existing single-family home price rose to a new high in the second quarter of this year, reaching $269,000, according to the National Association of Realtors’ (NAR) quarterly report, on the housing market released on Wednesday. And this new peak for home prices is about the only new thing NAR had to report for the quarter.
Other than that, things look quite the same as the previous quarter—rising prices, scant inventory, waning affordability.
After prices rose 5.3 percent over the year in the second quarter, NAR Chief Economist Lawrence Yun said, “The ongoing supply crunch affecting most of the country worsened for most of the second quarter, as the growing number of interested buyers in many markets overwhelmed what was already a meager level of available listings.”
And he stated, “Solid economic growth, a healthy labor market, and the large millennial population should be driving home sale much higher.”
So just how bad is this persistent supply/inventory crunch? In the second quarter of the year, there was 4.1 months’ supply of homes on the market, down from 4.2 months’ supply a year earlier. A balanced market holds six months’ supply.
NAR reported 1.95 million existing homes for sale in the second quarter, 0.5 percent above the amount recorded a year earlier.
With supply tight, prices rose in 90 percent of major metros, increasing in 161 out of the 178 markets NAR tracks. Of those, 24 recorded double-digit gains.
These climbing prices amid increasing mortgage rates are dampening affordability, particularly for middle-class Americans, according to NAR.
What can be done? Yun said: “Homebuilders, facing higher costs and labor shortages, are simply not producing enough affordable homes to satisfy demand. Local governments need to acknowledge this glaring issue and ease some of the zoning laws, permitting processes and regulations that are slowing construction.”
After the second-quarter price gains, two metros now chart median home prices in the $1 million range—San Jose, California, at $1.4 million and San Francisco-Oakland-Hayward, California at $1.1 million. The other most expensive metros in the nation were Anaheim-Santa Ana-Irvine, California, $830,000; urban Honolulu, $795,200; and San Diego-Carlsbad, $645,000.
At the other end of the spectrum, Youngstown-Warren-Boardman, Ohio, charted the lowest median single-family home price at just $94,400, followed by Cumberland, Maryland, $94,900; Decatur, Illinois, $96,900; Elmira, New York, $106,300; and Erie, Pennsylvania, $121,700.
Yun did offer a little hope for home sales moving through the second half of the year; however, it is hinged on an increase in supply. “As long as economic conditions maintain current levels, there’s still a chance for sales to break out this year. However, with mortgage rates trending higher, it will only happen if supply levels improve enough to cool the speedy price growth in a majority of the country,” he said.
Posted on August 15, 2018 at 6:00 AM
|Posted inReal Estate|
Most mornings, Margarita Dreyer wakes up around 7 a.m. and gets right to her exercises—stretches, strengthening reps, and pushups. She golfs at least twice a week, skis in Vail, CO, each winter, and regularly parties with her friends. Did we mention the retired furniture import business owner is 85?
“I never even think of age. … I take care of myself,” says Dreyer, who credits her good health to a lifetime of positive thinking, a mostly plant-based diet, plenty of exercise, great friendships—and perhaps most of all, the town of Tiburon, in California’s Marin County, where she’s lived the past 30 years.
“In Marin, usually you find people who are very interested in theater, and opera, and exercise and entertaining. It’s all part of what is important in life.”
In America, the median life span is nearly 79 years, according to the U.S. Centers for Disease Control and Prevention. But that’s not universal. There are pockets of the Deep South and the Dakotas where a storm of socioeconomic factors lowers life expectancy to 68 years or less. But then there’s the other side of the equation: the special places where people regularly blow right past 80, healthy and active, and just keep on going.
The data team at realtor.com® set out to find these American fountains of youth. We located the 10 counties where people are living the longest, and then took a deep dive to find out what differentiates them from the rest of the country.
“If you want to live a long time, the best thing you can do is move to a place where people are verifiably living the longest,” says Dan Buettner, founder of Blue Zones, an initiative that works with communities to help set up wellness policies to increase the life span of residents.
Buettner has spent his career researching the places around the world where people live the longest. The five so-called blue zones are Okinawa, Japan; Sardinia, Italy; Nicoya, Costa Rica; Icaria, Greece; and Loma Linda, CA.
He found certain commonalties, ranging from a tradition of veggie-rich diets and exercise, to highly social or faith-based communities. So Buettner and his team set out to make America more blue—helping towns work toward Blue Zone certification, for which residents, schools, grocery stores, restaurants, and workplaces institute healthier practices. The project was piloted in Albert Lea, MN, in 2009 and has since spread to other states.
Buettner contends that our habits—destructive or healthy—are shared by fellow community members. So if your neighbors are hiking on weekends or cycling to work, you’re more likely to do the same. By the same token, “if you drive into a neighborhood and you see McDonald’s and KFC billboards … you shouldn’t live in that neighborhood,” Buettner says.
To come up with the longevity list, we used data from the Institute for Health Metrics and Evaluation at the University of Washington, in Seattle, which looked at death certificates in every U.S. county in 2014 to calculate the life expectancy from birth. We also added population data from the Census Bureau and home price data from realtor.com.
Then we interviewed health experts, residents, business owners, and real estate experts to figure out why life expectancies stretch so long in these places. (The ranking was limited to just one county per state to for geographic diversity.)
Our places run the gamut in income, real estate value, population size, and scenery. But most of them are friendlier places where people tend to know your name. Get used to it.
Population: 30,585 Notable city: Breckenridge, CO Median life span: 86.8 years Median home list price: $930,500
The first time Jeff Carlson visited the ski town of Breckenridge, CO, in 2001, he was smitten with the backcountry skiing, hiking, and the glorious Rocky Mountains. Within days he decided to decamp from New York, and he hasn’t looked back since. These days when Carlson, now 37, isn’t at work as general manager of Mountain Outfitters, a ski equipment store, you can find him fly fishing with his dog, Takoda.
“People move to Summit County because they value recreation and outdoors,” Carlson says, adding that people here “value [outdoor] minutes over money.”
An active, outdoorsy lifestyle coupled with healthier diets may be the county’s secret to longevity. There isn’t a single fast-food joint in the county’s main city of Breckenridge, 2½ hours northwest of Aspen.
Population: 940 Notable city: Medora, ND Median life span: 84 years Median home list price: $331,200
Billings County is a small ranching community in the most rural reaches of western North Dakota, where the Great Plains joins the Badlands. It’s an outdoorsy kind of place where most folks hunt and fish in their spare time.
The county’s main attraction is the Old West town of Medora, population 132, a tourist destination that’s very much a blast from the past.
“Long life is not unusual here,” says Douglas Ellison, 55, who owns a bookstore and an inn with his wife in Medora. He notes there are active residents in their 90s and one rancher who’s now over 100.
“The ranchers still do the physical labor,” he says. “The townspeople walk a lot. Everyone stays physically active.”
The clean air and lack of common stressors found in big cities may also be factors.
“We’re not fighting traffic every day,” Ellison adds. In fact, there’s not even a single grocery store in town. Locals travel about a half-hour west to Dickinson to do their shopping.
Much of the county is made up of federal- or state-owned land—it’s home to Theodore Roosevelt National Park, where the former president famously hunted bison.
But the county’s more progressive laws—such as its 2015 ban on wood-burning heaters, which pose health risks, and prohibiting public smoking a year later—are a testament to the area’s commitment to healthy living. There’s also an abundance of doctors here, with one primary care physician for every 630 residents and one mental health care provider for every 140 residents.
“Marin has policies that make the healthy choice the easy choice,” Buettner says.
The area’s close proximity to San Francisco, top-notch schools, and low crime rate—as well as its breathtaking vistas and world-class biking and hiking— are big draws for new residents, says Jonathan Marks, a real estate agent at Alain Pinel Realtors. But buyers need to pony up for those perks: The median home list price is well over $1 million.
Population: 1,148,433 Notable city: Herndon, VA Median life span: 83.7 years Median home list price: $608,700
The Washington, DC, suburb of Fairfax County has gone bike-crazy. With miles of new cycling lanes added over the past few years, more and more residents are increasingly choosing to pedal to work.
“There ‘s been a big boom in riding,” says Bernard Etherly, a manager at Performance Bicycle, a shop in Springfield, part of Fairfax County. He says bike commuters quickly realize the health benefits: “They start to lose weight; their blood pressure and cholesterol goes down.” What’s not to love?
But biking isn’t the only reason folks are healthier here. The county is home to many affluent, well-educated residents. Nearly two-thirds have completed a bachelor’s degree or higher, compared with 34% nationally, according to the U.S. Census Bureau. More educated folks often make healthier choices—and may be able to afford to eat better.
Population: 3,370 Notable city: King Cove, AK Median life span: 83.7 years Median home list price: $226,500
Modern life has passed Aleutians East Borough by in many ways. The only way on or off these sparsely inhabited islands, stretching far from mainland Alaska to the Pacific, is by boat or plane. And a plane trip from Anchorage can cost more than $3,000. Maybe it’s not surprising that some of the Alaska Natives, whose ancestors settled here thousands of years ago, have never left the islands.
“They do not have a newspaper, or any of the standard city features,” says real estate agent Linda Friday of Jack White Real Estate, based in Anchorage. She’s had a listing for a three-bedroom home on an acre lot in the main town of King Cove sit on the market for two years due to a lack of buyers. “You have a very hardy people who live and work there.”
Peter Pan Seafoods has a processing facility on King Cove where many of the locals work. There are a few small food stores, but most of the locals also hunt and fish for their dinner.
“They’re living off the land,” says Jimmy Sparks, a real estate agent at Real Estate Brokers of Alaska, based in Anchorage. “It’s a whole other lifestyle.”
Population: 7,156 Notable city: Marfa, TX Median life span: 83.7 years Median home list price: $297,000
Texas’ Presidio County, which sits along the U.S.-Mexico border in the Chihuahuan Desert, is one of the more puzzling counties on our list. It’s rural with a median household income of just $33,453—not a combo most would associate with longevity.
“Lots of beans and tortillas, I guess,” jokes Brad Newton, executive director of the Presidio Municipal Development District, an economic development group in the city of Presidio.
Like many of the locals, Newton lives in an adobe home that keeps temperatures cooler in the summer. “We’re so far from a hospital, we can’t afford to get sick,” he says.
The predominantly Hispanic families and communities in Presidio County are extremely close-knit—an important factor in personal well-being.
And, like most of the places on this list, there’s a strong outdoor appeal to Presidio. The largest park in Texas, the 300,000-acre Big Bend Ranch State Park, offering about 240 miles of hiking, biking, and horseback riding trails, is within its borders.
The county is also home to the small, artsy town of Marfa. It attracts tourists from all over the world who visit the Chinati Foundation, a contemporary fine art museum.
“It’s being out in a really wild place and keeping people close to you,” says Mary Farley, a real estate agent at Marfa Vista Real Estate. “That helps with longevity.”
Population: 16,715 Notable city: Friday Harbor, WA Median life span: 83.7 years Median home list price: $774,400
Those looking for proof that there’s something really special about the islands of San Juan County should note that Oprah Winfrey reportedly bought an $8 million retreat on the county’s Orcas Island last month. North of Seattle, scenic San Juan is known as a vacation retreat for rich buyers seeking a bit of peace and tranquility, some of Washington’s natural beauty, and just maybe the secret to living long.
Buyers may come for the beauty, but they stay for the county’s civic-mindedness, another factor that may contribute to longer lives. Many residents are involved with local nonprofit groups such as the San Juan Preservation Trust. And being in a seaside community may help residents and visitors to unplug and relax.
“When you’re out kayaking or out on the boat shrimping or fishing, you aren’t stressed out,” Simonson says.
Population: 18,738 Notable city: Los Alamos, NM Median life span: 83.5 years Median home list price: $384,400
The nuclear weapons used during World War II were designed by physicists in Los Alamos. Today, this New Mexico county still has a large research presence, including the Los Alamos National Laboratory. And as a result of this highly skilled economy, locals tend to be well-off, never a bad thing when it comes to life spans.
This year, Los Alamos County was ranked the fourth healthiest community in the nation by U.S. News & World Report. The numbers tell the tale: Only 11.2% of residents smoke, just 5.8% have no health insurance, and nearly 88% are active in their leisure time. That’s compared with national rates of 17.3%, 12.9%, and 75.5% respectively.
It’s not hard to stay active, with skiing just a hop away at Pajarito Mountain, and two national parks right outside the county: Bandelier National Monument and the Valles Caldera National Preserve.
“Many of the scientists and researchers who are attracted to work at the laboratory are equally attracted to this kind of healthy lifestyle,” says Julie Habiger, spokesperson for Los Alamos County.
Population: 23,265 Notable city: Jackson, WY Median life span: 83.5 years Median home list price: $1,305,200
Every year millions of tourists flock to Teton County to visit Jackson Hole, one of the world’s most popular ski resorts, and Yellowstone National Park, which is partly located in the county. The combo of wealth, mountain air, and outdoor activities may be the reason that residents are in such good shape.
After graduating from Presbyterian College 17 years ago, Andrew Ellett came to Jackson Hole. He figured he’d spend the summer backpacking before heading off to grad school. But he enjoyed the lifestyle so much that, after meeting his future wife, he decided to stay put.
“People are here for the beauty, the serenity, a simpler life outside of the city,” says Ellett, who is now a real estate broker at Engel & Völkers Jackson Hole. Once a year, he and a friend do a three-night canoe and camping trip in the county. They don’t get cellphone service and go days without seeing a single person. And that’s just fine. “More than anything [we’re here for] the lifestyle,” he says.
Population: 372,880 Notable city: Naples, FL Median life span: 83.4 years Median home list price: $479,400
Retired advertising executive Steve Calabrese, 70, and his wife hope to soon call Collier County home. The couple are betting that the warm weather and the programs provided by the Parkinson’s Association of Southwest Florida in Naples will help her battle the disease. Naples is the largest city in the county on the western coast of Florida across from Miami.
The Calabreses are just waiting to sell their single-family home in Nantucket, MA, before downsizing into a three-bedroom condo near the beach in Naples.
Choosing Collier County as a place to get healthier isn’t a far-fetched idea. Of all of the counties with the highest life expectancies, only Collier County is up for consideration to become a Blue Zone. That’s partly due to NCH Healthcare System in Naples.
“The hospital [system] is one of the best in the country. Especially for older residents, access to health care becomes really important,” says Buettner, adding that NCH even does the little things right, like offering better-quality food in its cafeterias. “Not the usual hamburgers, hot dogs, or mashed potatoes.”
“I always thought of Florida as a place where old people went to wait around and die,” says Calabrese, who looks forward to the beach and the fitness centers in Naples. “But now I see it as a place to be as active as you want.”
Clare Trapasso contributed to this report.
Posted on August 9, 2018 at 12:52 PM
|Posted inReal Estate|
If you’ve ever sold a home, you know it takes money to make it happen. You’ve got to fix and freshen it up to attract buyers. Then there are closing costs. And moving brings its own set of expenses.
But perhaps the biggest chunk that comes out of your pocket is the real estate agent commission, which traditionally runs around 6%. For the typical “For Sale by Owner” (FSBO) home—which sold for $185,000 last year, according to data from the National Association of Realtors (NAR)—that’s $11,100. Ouch!
With that kind of cash, it’s no wonder that many sellers fly solo in an effort to save a few bucks. But is it worth it?
Would You Rather Save $5,550or Make $60,000?
Your home is a big investment, and you want to make the most of it. Keeping the agent commission all to yourself seems like an easy way to do that. The problem is you’re leaving even more money on the table by opting out of a pro.
How much more?
According to the NAR, the typical home sold by an agent last year fetched $245,000. That’s a $60,000 difference!
But wait . . . there’s more! Selling your home on your own doesn’t necessarily mean an agent-free transaction. You still owe it to the buyer’s agent to pay their commission. After all, they worked hard to get their buyer into your home. If they get 3% of the sale, you can cut your $11,100 in savings in half, leaving you $5,550.
The numbers alone paint a pretty compelling picture. But let’s explore two reasonssmart sellers go pro.
There’s Power in Numbers
If you’re selling your home, you’ve got to go where the buyers are. A recent NAR report found that 89% of buyers used a real estate agent to purchase their home in 2016.
Want to know the top method FSBO sellers used to market their home? A yard sign.
Last we checked, yards signs don’t exactly have their finger on the pulse of the market. Think about how many people drive by your home on a given day. Then stack that up against an agent’s pool of buyers. There’s no comparison!
With a real estate agent, you get instant access to thousands of potential buyers through the Multiple Listing Service (MLS). A true pro has a proactive plan for exposing your home to as many buyers as possible and works with you to ensure your home gives a great first impression.
There’s No Substitute for Experience
Let’s set the sugarcoating aside and cut to the chase. Going it alone guarantees one thing: You’ll make mistakes. Some will be small—but some will come with zeroes on the end. You’ve worked too hard to let that happen!
Research from the NAR shows that FSBO sellers struggle most with paperwork, pricing and preparing their home for the sale. A real estate agent can help you with all of those things (and more!) and will advise you based on experience, not emotion.
Here are just a few ways a pro makes selling your home a cinch:
Advising you on home repairs or updates
Pricing your home based on the latest market data
Actively marketing your home to buyers
Scheduling showings with potential buyers
Negotiating to get the best price on your home
Handling all the required paperwork
Look at it this way: A top agentsold more homes last week than you’ll probably sell in your lifetime. They eat, drink and sleep real estate. Doesn’t it stand to reason that they can help you achieve the most gain with the least pain?
Don’t Give Up Big Bucks Just to Save a Few
Can you save money by going FSBO? Sure. But you could lose out on so much more! Do yourself a favor and partner with a high-performance pro who knows what it takes to get top dollar for your home in the least amount of time.
The average real estate agent sold 11 homes last year, according to a recent NAR survey. But why settle for average?
Check out Dave’s real estate Endorsed Local Providers (ELPs). You can trust an ELP to give you the same helpful advice you’d hear from Dave. Why? Because ELPs are Dave fans too!
If you’re planning to sell your home, why not work with the best of the best!
Posted on July 29, 2018 at 12:15 PM
|Posted inReal Estate|
Baby boomers have long accounted for a significant portion of the housing market, so how will the market be impacted by the aging of this large generation? Are we heading toward a “generational housing bubble?”
Currently, baby boomers, those born between 1946 and 1964, live in 46 million owner-occupied homes with a total combined value of $13.5 trillion, according to the research.
As baby boomers enter their 70s, the report said, “we can expect many to leave the housing market for rentals, senior care facilities, or even death.”
“With the oldest boomers now in their early 70s, the beginning of a mass homeownership exodus looms on the horizon, fueling fears of a ‘generational housing bubble’ in which homeownership demand from the younger generations is insufficient to fill the void left by multitudes of departing older owners,” stated Dowell Myers of the University of Southern California and Patrick Simmons of Fannie Mae in their report that was published on the Fannie Mae blog.
Examining historical and recent homeownership trends among older Americans, the researchers sought to predict how many older homeowners would leave the market over the next two decades.
Between 2006 and 2016, 9.2 million Americans who reached age 65 or older during the decade transitioned out of homeownership, the report indicated. Over the next 10 years, from 2016 to 2026, the researchers anticipate another 10.5 million to 11.9 million homeowners exiting their homes. Over the following decade, between 13.1 million and 14.6 million older Americans will exit the housing market.
“The number of older homeowners ‘at risk’ of attrition due to advancing age will balloon as the large baby boomer generation moves full-force into the 65-and-older age group where homeowner retention rates drop substantially,” Myers and Simmons explained.
The researchers pointed out some possible ways to “ease the market impacts of the coming wave of older homeowner departures,” such as offering home improvement financing and social services for those who wish to age in their homes instead of moving.
Another way to ease the impact is by helping the millennial generation to replace some of the boomers as they exit the market by ensuring “sustainable” financing options for first-time buyers.
The report pointed out that “immigration policy will also likely play a role in determining the adequacy of replacement demand for the homes vacated by boomers” because “immigrants contribute substantially to homeownership demand.”
“Fostering a smooth intergenerational handoff of housing assets will likely require approaches that span the age spectrum and that seek to forge a bond of mutual housing market interests between old and young,” Myers and Simmons said.
Posted on July 18, 2018 at 1:09 PM
|Posted inReal Estate|
Amid nationwide shortages in supply, homebuyers in June had more options, but their choices were fast-moving and pricey, according to data from realtor.com®. The average home was listed for a median $299,000 and sold in 54 days—both new realtor.com.
On an annual basis, inventory in June sunk 4 percent, which is a departure from the average decline of 8 percent observed in the past year, the data show. List prices rose 9 percent year-over-year, which is in line with trend.
Homes are moving quicker out West, according to the data—in fact, of the 100 largest markets, there were six with days on market at a month or less, and five in the West: San Jose-Sunnyvale-Santa Clara, Calif. (23 days); Seattle-Tacoma-Bellevue, Wash. (24 days); San Francisco-Oakland-Hayward, Calif. (25 days); Omaha-Council Bluffs, Neb. (26 days); Salt Lake City, Utah (26 days); and Colorado Springs, Colo. (30 days).
For buyers entering the market, the dynamic is troubling.
“The pace of sales in the early days of summer continues to be as fierce and unforgiving as it’s ever been, especially for entry-level buyers,” says Javier Vivas, director of Economic Research for realtor.com. “On the bright side, buyers saw more new listings hit the market than they saw last June, causing inventory to drop at a slower rate.
“However, much of the new inventory is composed of higher-priced, newer and larger homes, forcing a very hungry pool of buyers to adjust their budgets,” Vivas says.
On Wednesday, the Federal Reserve raised its short-term interest rate by a quarter percentage point, a move that is most likely to impact home equity lines of credit (HELOCs) immediately. The rate hike, that was widely anticipated by the industry, come on the back of a strengthening labor market and an economy that has been growing at “a solid rate,” according to a statementreleased by the Fed. The increase points to a target range of 1.75 percent to 2 percent federal funds rate, while “supporting strong labor market conditions and a sustained return to 2 percent inflation.”
The statement also pointed to at least two more rate hikes during the year, which will bring the total number of rate increases to four in 2018.
According to Sam Khater, chief economist at Freddie Mac, the Fed rate hikes are less likely to impact long-term mortgage loan borrowers this time around. “The Federal Reserve announced their decision to raise the federal funds rate by 25 basis points,” he said. “One thing to point out is that there are fewer consumers today whose debt is tied to short-term rates, and because the majority of consumer debt is from mortgages, this means the recent short-term rate hikes will be less impactful than what was seen in the mid-2000s.”
However, the impact of these hikes is most likely to be felt on HELOCs immediately. “With the Fed increasing the federal funds rate, the interest rates on credit cards and HELOCs will rise within a billing cycle or two,” said Holden Lewis, Research Analyst at NerdWallet.
Since adjustable rate mortgages (ARMs) and HELOCs are based on short-term rates, they’re most likely to get impacted immediately according to Tendayi Kapfidze, Chief Economist at LendingTree. “The prime rate [for these loans] is a bank lending rate set as a spread to the Fed funds rate,” Kapfidze explained. “It will increase with the Fed hike, and since most HELOCs are tied to this rate, borrowers will see immediate increases in their interest rates.”
An analysis by NerdWallet indicated that the central bank had raised short-term rates twice so far this year for a total of half a percentage point. “But the average rate on the 30-year fixed rate mortgage has gone up more than that. It has risen almost three-quarters of a percentage point,” Lewis said. “This larger rise in mortgage rates is a sign that mortgage lenders expect the inflation rate to settle at a higher level over the next few years. Meanwhile, the Fed is expected to keep raising the federal funds rate to capture and hold the inflation rate near its target of 2 percent.”
Thus homebuyers looking for a mortgage for the first time are likely to be impacted too. “Homebuyers who have been able to take advantage of the previous uncertainty over rates to lock lower mortgage rates are likely to be satisfied with their decision,” said Danielle Hale, Chief Economist, Realtor.com.
However, according to Lewis, homebuyers shouldn’t rush in to buy homes because of this hike in interest rates. “Interest rates on auto loans and mortgages have been going up, responding to market forces,” he said. “Even if rates continue to rise, that’s not a reason to rush into ownership of a car or home before consumers are ready.”
Posted on June 15, 2018 at 1:16 PM
|Posted inReal Estate|
The House of Representatives on Tuesday voted in favor of S. 2155, the Economic Growth, Regulatory Relief and Consumer Protection Act. The bill seeks to evolve and streamline regulations put in place by the 2010 Dodd-Frank Act. The final vote in the House was 258-159.
“This is a moment years in the making, and I thank my colleagues in the Senate and the House of Representatives for their partnership and contributions to this effort over the years,” said Sen. Mike Crapo (R-ID), Chairman of the Senate Banking Committee. “This step toward right-sizing regulation will allow local banks and credit unions to focus more on lending, in turn propelling economic growth and creating jobs on Main Street and in our communities. This is an important moment for small financial institutions, small businesses, and families across America.”
Jim Nussle, President and CEO of Credit Union National Association, said in a statement, “From the moment a group of bipartisan Senators unveiled this bill, credit unions told them loud and clear that this is an essential piece of regulatory relief legislation that will improve access to mortgage lending, real estate loans, and other products and services, while putting focus on senior abuse and cyberthreats.”
“With the passing of this legislation, millions of consumers who were underserved by the current mortgage finance system may soon have a fairer shot at the American dream of sustainable homeownership. Today’s models are more predictive and more inclusive and they should be put to work. We thank the members of Congress for recognizing this problem and seizing on an opportunity to create a better system,” said Barret Burns, President and CEO of VantageScore Solutions. “We look forward to working with all the stakeholders to ensure that a future marketplace is fair, inclusive, and fosters competition.”
Not everyone welcomed the bill’s passage, however. Center for Responsible Lending (CRL) Senior Legislative Counsel Yana Miles said in a statement, “This bill puts out a welcome mat for many of the same reckless financial practices that caused the Great Recession. The bill increases the risk of another bank bailout, facilitates lending discrimination against communities of color, and weakens key consumer protections in the mortgage market—which was the epicenter of the 2008 economic collapse.”
S. 2155 was advanced by the Senate in mid-March, by a vote of 67-31, after several weeks of debate, amendments, and negotiation. The bill then passed back to the House, who had previously voted on a different Dodd-Frank reform bill prior to the Senate’s modifications.
The bill enacts numerous reforms and changes regulations pertaining to lenders. One of the primary changes was increasing the threshold for enhanced regulatory standards from $50 billion to $250 billion, a change designed to exempt some smaller and mid-sized banks from regulations that would still apply to the larger banking entities. The affected regulations pertain to capital and liquidity rules, risk management standards, and stress testing requirements, among other things.
Former Sen. Barney Frank, one of the authors of the Dodd-Frank Act, told Scotsman Guide in March, “I think [the asset threshold] should be $125 [billion to trigger FSOC oversight]. So, I would vote against it on those grounds. I would hope to try and change it. But, as far as [non-qualified] mortgages are concerned, I think allowing the smaller banks to make those loans as long as they keep them in portfolio is a perfectly good idea.”
The bill also exempts banks with less than $10 billion in assets from the Volcker Rule, which limits risky trading by U.S. banks, and dials back restrictions on small and regional banks when it comes to restrictions on mortgage lending.
Sen. Elizabeth Warren (D-Massachusetts), who has been a longtime opponent of weakening Dodd-Frank, said of the Senate bill, “We’ll be paving the way for the next big crash. It’s time for the rest of us to fight back and demand that Washington work for us, not the big bank lobbyists.”
The bill did have plenty of Democratic defenders in the Senate, however, several of whom argued that the reforms could help community banks flourish and help revitalize rural economies. Sen. Heidi Heitkamp (D-North Dakota), a supporter of the legislation, said, “When you don’t respond to these kinds of legitimate concerns from small lenders, there’s a resentment to the overall policy. We tend to throw the baby out with the bathwater with that kind of frustration.”
Posted on May 22, 2018 at 10:39 PM
|Posted inReal Estate|
With inventory levels at record lows, strong buyer demand prompted home prices to rise at a faster pace in the first quarter of this year, according to the latest report by the National Association of REALTORS®.
The national median existing single-family home price in the first three months of this year was $245,500. That is up 5.7 percent compared to a year ago.
Further, single-family home prices rose in 91 percent of the measured markets in the first quarter—162 out of 178 tracked metro areas, according to NAR. Fifty-three metro areas, or 30 percent, posted double-digit increases, which is up from 15 percent in the fourth quarter of 2017.
“The worsening inventory crunch through the first three months of the year inflicted even more upward pressure on home prices in a majority of markets,” says Lawrence Yun, NAR’s chief economist. “Following the same trend over the last couple of years, a strengthening job market and income gains are not being met by meaningful sales gains because of unrelenting supply and affordability headwinds.”
Real estate professionals in areas with strong job markets are reporting that consumers are getting frustrated, Yun says. “Home shoppers are increasingly struggling to find an affordable property to buy, and the prevalence of multiple bids is pushing prices further out of reach,” he adds.
At the end of the first quarter, 1.67 million existing homes were available for sale, which is 7.2 percent below the number of homes for sale in the first quarter of 2017.
As home prices rise, more consumers are getting priced out of the market, even though their incomes are rising too. The national family median income increased to $74,779 in the first quarter. However, housing affordability fell from a year ago due to rising mortgage rates and increasing home prices, NAR reports. To buy a single-family home at the national median price, a buyer making a 5 percent down payment would need to earn an income of $55,732; a 10 percent down payment would require an income of $52,779; and a 20 percent down payment would need a $46,932 income, NAR reports.
“Prospective buyers in many markets are realizing that buying a home is becoming more expensive in 2018,” Yun says. “Rapid price gains and the quick hike in mortgage rates are essentially eliminating any meaningful gains buyers may be seeing from the combination of improving wage growth and larger paychecks following this year’s tax cuts. It’s simple: Homebuilders need to start constructing more single-family homes and condominiums to overcome the rampant supply shortages that are hampering affordability.”
The five priciest housing markets in the first quarter were San Jose, Calif. ($1,373,000—the median existing single-family home price); San Francisco-Oakland-Hayward, Calif. ($917,000); Anaheim-Santa Ana-Irvine, Calif. ($810,000); urban Honolulu ($775,500); and San Diego-Carlsbad, Calif. ($610,000).
On the other spectrum, the five lowest-cost metros in the first quarter were Decatur, Ill. ($73,000); Cumberland, Md. ($86,200); Youngstown-Warren-Boardman, Ohio ($91,300); Elmira, N.Y. ($100,800); and Binghamton, N.Y. ($103,000).
Foreclosure starts rose 12 percent from February to a total of 52,100 in March as later-stage hurricane-related delinquencies began to roll over into active foreclosure starts. This, according to the First Look report on Mortgage performance released by Black Knight on Thursday. The report noted that over two-thirds of these foreclosure starts were in hurricane-impacted areas of Texas and Florida. Foreclosure starts continued to show a decline of 13.6 percent on a year-over-year basis, the report said.
Despite this uptick, national delinquency rates were pushed to a 12-month low of 3.73 percent, in March on the back of seasonal effects and continued improvements in hurricane-related delinquencies according the report.
Delinquencies declined 13 percent during March, which is typically a calendar-year low for delinquencies. The impact of the tax bill was also felt as many borrowers used refunds from their tax filings to bring their mortgages current. The report noted that serious delinquencies fell by 65,000, and by nearly 20,000 in areas impacted by the hurricanes last year.
Nationally, though, active foreclosures declined by 10,000 and were at the lowest level seen since late 2006, the report indicated, with only 321,000 loans in active foreclosure during the month.
The report noted that the number of properties that were 30 or more days past due, but not in foreclosure fell 286,000 to around 1.9 million. Properties that were 90 or more days past due but not in foreclosure declined 65,000 from February to 632,000 in March. Pre-sale inventory of properties in foreclosure also fell by 10,000 from February to 321,000. The number of properties that were in foreclosure fell by 296,000 to around 2.2 million in March.
Mississippi, Louisiana, Florida, Alabama, and West Virginia were the top five states by non-current percentage, while, North Dakota, Minnesota, Washington, Oregon, and Colorado were in the bottom five category.
Posted on April 19, 2018 at 12:09 PM
|Posted inReal Estate|
There are many economic variables to consider when selling your home when interest rates are rising. If that’s the only changing economic variable, you’re generally going to see a negative impact on both home sales and home prices. This means as interest rates rise, the buyer pool for your home is going to shrink.
In 2008, the Federal Reserve set rates at 0.25 percent because of the recession and the lack of buyer confidence or demand. Since then, buyer confidence and buyer demand have risen. In December 2015, rates climbed to 0.5 percent and continued to rise to where they are today at 1.5 percent. The Fed has noted rates will rise to 2 percent in 2018 and then 3 percent by 2020.
What Happens to the Ability to Sell Your Home With These Rises in Interest Rates?
If interest rates rise 1 percent and all other economic factors remain the same, purchasing power for homebuyers will decrease by just over 11 percent; therefore, every quarter-percent (0.25 percent) rise of interest rates reduces homebuyer purchasing power by 3 percent.
That means for a home purchase of $300,000, a 1 percent interest rate rise reduces buying power to just under $267,000. So, someone who potentially may have been able to purchase your home may no longer have the buying power to do so. This creates a smaller buyer pool and less demand for your home. It’s also likely to increase supply as fewer people are able to purchase homes.
If mortgage rates rise, it becomes more probable for indecisive buyers to rush into the market, and the short term will likely see a decent boost; however, it could add extra pressure if rates continue to rise without leveling out.
While interest rates play a role in the housing market, there are a variety of personal and economic factors to consider, as well.
What Other Economic Factors Play a Role?
Supply and demand play crucial roles in determining the movement of home prices. If supply goes up, home prices go down. If supply goes down, home prices will probably go up. If demand increases, home prices mostly likely will as well; however, if fewer people are looking to buy homes, then prices will most likely decrease. As a seller, these are important factors to consider when putting your home on the market.
The sale of new homes is another factor to consider alongside rising interest rates because supply and demand will always play a factor in the home-buying process. Supply increases when new homes are created. Assuming that interest rates don’t rise too rapidly, paying attention to new-home inventory levels will give you an indication of what to expect as a seller.
Monthly income, as it relates to monthly mortgage payments, is a more important variable to gauge than interest rates alone. Your debt-to-income ratio plays a larger factor in your ability to qualify for a mortgage than interest rates alone. When monthly income rises, your ability to absorb higher interest rates does, as well. This means that as long as people are making more money, they’ll also be able to pay off any increase in debts.
When the real estate market crashed in 2007-2008, monthly payments of principal and interest were nearing 25 percent of the U.S. median family monthly income. Even with a rise in interest rates, Americans are currently seeing the highest monthly median income in the last 35 years. Because of this, the percentage of monthly income going toward monthly payments is still well below levels that analysts consider dangerous.
Overall, we seem much more hesitant to take out mortgages than we have been in the past.
One of the largest surprises is the percentage of all-cash transactions for home purchases. Even with interest rates at historic lows, the percentage of all-cash transactions is higher than normal because we’re more cautious about taking on debt than we have been in recent decades.
High stock market valuations allow people to diversify their percentage of assets, cash out and reinvest in real estate to keep their portfolio balanced.
The number of distressed properties is a result of a strong job environment. This allows folks to pay their mortgages without defaulting, while also helping to keep prices up even with a rise in interest rates.
While interest rates play a large factor in selling your home for top dollar, they’re in no way the only deciding factor. All of the factors mentioned above should be taken into consideration before you rush into selling your home because of high interest rates.
Posted on April 9, 2018 at 1:27 PM
|Posted inReal Estate|