Author: yajneshkw

Home Improvement Projects Continue to Keep Owners Busy | Realtor Magazine

The pandemic has fueled a trend of home improvement projects as homeowners have spent more time at home. But to-do lists remain long. In the meantime, homeowners also have grown increasingly comfortable securing financing online for these projects, according to a new survey from Discover Home Loans.

The top motivators behind home improvement projects during the pandemic have been comfort, health, and safety, according to the survey, which was conducted last summer and released this week. Kitchen and bathroom updates remain the most popular renovation projects. But adding or remodeling home offices, replacing hard-to-clean surfaces, and installing air filtration systems also are making it on to more remodeling lists.

According to the survey, just over half of more than 1,100 homeowners surveyed—58%—said that they were planning home improvements within the next year, according to the Discover Home Loans survey. Eighty-three percent said they view home improvement projects as a way to improve their comfort while spending more time at home. Also, 62% are making improvements to add health and safety to their homes, the survey found.

“In light of the pandemic, homeowners are looking for new and better ways to improve their homes as they spend more time than ever in them,” said Nicole Straub, general manager of Discover Home Loans. “Mortgage rates are very low right now, and homeowners can take advantage by using the equity in their homes to pay for projects such as remodeling a home office, installing an air-filtration system, or even consolidating high-interest debt.”

To pay for these home remodeling projects, more homeowners are turning to home equity loans, particularly as home prices continue to surge and their equity position increases.

The COVID-19 pandemic has increased homeowners’ desire to use digital options during the mortgage and refinancing process to get access to these loans too. Fifty percent of homeowners said they prefer securing financing online compared to 43% prior to the pandemic. Homeowners reported digital preferences for several steps throughout the process, including a preference to filling out the application online, selecting loan options, and submitting documents and scheduling closings electronically.

“Our borrowers already appear to be comfortable with the digital mortgage process with more than 80% of applications initiated online,” Straub said. “With COVID-19, borrowers have been looking for ways to avoid in-person contact during the mortgage process. … We anticipate that post-COVID-19, this comfort with the convenience of digital processes will continue.”

Mortgage Rates Rise But Stay Near Historic Lows | Realtor Magazine

The 30-year fixed-rate mortgage came off its recent all-time lows to average near 3% this week. The 10-year Treasury yield, which mortgage rates closely follow, hit its highest level in the past year, prompting the increase in rates.

“As the economic recovery progresses, mortgage rates are expected to rise further in the upcoming months,” writes Nadia Evangelou, senior economist and director of forecasting at the National Association of REALTORS®, for the association’s Economists’ Outlook blog. “Nevertheless, the upcoming rise in mortgage rates should not be alarming to would-be home buyers. The Federal Reserve recently assured that it would keep interest rates unchanged for a long time.”

Rates continue to remain near historic lows, said Sam Khater, Freddie Mac’s chief economist. The all-time low for the 30-year fixed-rate mortgage was set in January, averaging 2.65%.

Freddie Mac reports the following national averages with mortgage rates for the week ending Feb. 25:

• 30-year fixed-rate mortgages: averaged 2.97%, with an average 0.6 point, up from last week’s 2.81% average. Last year at this time, 30-year rates averaged 3.45%.
• 15-year fixed-rate mortgages: averaged 2.34%, with an average 0.6 point, rising from last week’s 2.21% average. A year ago, 15-year rates averaged 2.95%.
• 5-year hybrid adjustable-rate mortgages: averaged 2.99%, with an average 0.1 point, rising from last week’s 2.77% average. A year ago, 5-year ARMs averaged 3.20%.

Freddie Mac reports average points along with average commitment rates to better reflect the total upfront cost of obtaining the mortgage.

The Biggest Hurdles Causing Closing Delays | Realtor Magazine

Financing and appraisals are the culprits causing the most delays in home sales or terminated contracts, according to the latest REALTORS® Confidence Index survey.

With little supply on the market, homes are continuing to sell quickly—typically within 21 days—and are garnering an average of nearly four competing offers, according to the report. Home prices have been rising by double-digit percentages over the past year, which could help explain some of the appraisal issues that are emerging.

The REALTORS® Confidence Index survey, conducted by the National Association of REALTORS®, is based on responses from more than 4,000 real estate professionals nationwide about their recent real estate transactions. The latest report reflects responses about January transactions.

Sixty-five percent of sale contracts were settled on time, but 29% faced a delay, the survey shows. Only 6% were terminated prior to settlement. The top issues that prompted a delay in settlement in January were:

• Issues related to obtaining financing: 22%
• Appraisal issues: 20%
• Home inspection/environmental issues: 11%
• Titling/deed issues: 11%
• Contingencies stated in the contract: 6%

It was rarer in January for contracts to be termination prior to settlement. But these were the top issues cited by REALTORS® for why a contract was terminated:

• Appraisal issues: 11%
• Issues related to obtaining financing: 9%
• Home inspection/environmental issues: 9%
• Titling/deed issues: 5%
• Contingencies stated in the contract: 3%

Most transactions, however, are resulting in quick sales. Fifty-six percent of REALTORS® surveyed report that the work-from-home trend has prompted more buyers to search for properties with an extra room, a finished basement, and more square footage, increasingly in suburban, small town, rural, or resort areas, according to the REALTORS® Confidence Index survey. The pandemic also has spawned a slew of new homeowners. REALTORS® reported that 45% of their transactions came from buyers who were renting an apartment or house prior to the sale and 12% came from those living with their parents, relatives, or friends.

New Rules for PPP Loans Open Funding Up to Smaller Businesses | Realtor Magazine

The smallest of businesses are getting more attention under the Paycheck Protection Program, the Biden administration announced Monday. New rules, taking effect this Wednesday, aim to extend the forgivable loan program to more minority-owned, smaller businesses, and sole proprietors. The PPP was implemented during the beginning of the COVID-19 pandemic to help businesses struggling financially.

Under the changes, small businesses with fewer than 20 employees will have an exclusive two-week window, beginning Feb. 24, to apply for PPP loans. The Biden administration says it hopes the exclusive window will offer smaller businesses a speedier application process. Larger businesses will be unable to apply for funds during that time.

PPP loans will also be calculated differently. Under the former model, PPP loans were calculated on the number of employees with a business. The Biden administration announced that sole proprietors, independent contractors, and the self-employed are eligible for more funding from PPP loans. They’re also opening PPP eligibility to more entities by eliminating restrictions around delinquent student loan debt and non-fraud felony convictions. Some non-citizen business owners also could be eligible to apply.

Ninety-eight percent of small businesses employ fewer than 20 people. However, only 45% have received PPP funding so far, according to the SBA, as reported by CNBC.

“It’s a great idea to make sure that we’re prioritizing small and minority-owned business owners because we saw that they were left out of the process,” Marvin Owens, the chief engagement officer of Impact Shares and former senior director of economic development at the NAACP, told CNBC. “What you saw in the beginning of PPP was really a revealing of the disparities around access to capital.”

Top Home Inspection Issues Revealed | Realtor Magazine

No home is perfect. About 86% of home inspections will find something that needs to be fixed, according to a study on home inspections from Porch.com, a home improvement website.

A home inspection can cost around $300 to $500, but studies estimate it could save the buyer an average of $14,000. A home inspector will evaluate the roof, ceilings, walls, floors, windows, doors, major appliances, heating and air conditioning systems, plumbing and electrical systems, and more, according to the Inspection Support Network, a software solution for the home inspection industry.

Yet, as bidding wars heat up in a hot housing market, more buyers are waiving home inspections in order to make their offer stand out. Last June, the real estate brokerage Redfin reported that nearly 20% of buyer offers submitted by their agents waived the inspection contingency.

The following are the most common issues found in home inspections, according to a survey of nearly 1,000 home buyers:

• Roofing: More than 19% of home inspections uncover roofing concerns. Home inspectors will check for leaks, venting, material condition, proper installation, and other visible issues with the roof, according to the Inspection Support Network.
• Electrical wiring: More than 18% of home inspections uncover electrical wiring issues, according to the analysis. The most common electrical issues, according to the Inspection Support Network, are reversed polarity, frayed insulation, DIY wiring, over-fusing, and mismatched wiring. About 51,000 fires each year are caused in homes by improper electrical wiring.
• Windows: More than 18% of home inspections uncover problems with windows. This can hamper energy efficiency and also cause issues with indoor air quality.
• Gutters: Nearly 17% of home inspections identified issues with gutters. Clogged gutters can cause water to back up and lead to damage.
• Plumbing: About 14% of home inspections reveal troubles with plumbing. The most frequent issues are a leaky faucet or clogged drain, according to the Inspection Support Network. DIY plumbing, cross-connection issues, and outdated pipes are also common problems found with a home’s plumbing.

Other concerns also found in a home inspection included branches overhanging roofs (13.3%); fencing issues (12.6%); water heater problems (12.2%); and air conditioning malfunctions (9.9%).

New-Home Sales Jump 19% Annually | Realtor Magazine

Sales of newly built, single-family homes in January moved 19% higher than a year ago, as home buyers sought more options under a lean number of existing homes for sale.

Newly built single-family home sales increased 4.3% last month over December 2020, reaching a seasonally adjusted annual rate of 923,000, the U.S. Department of Housing and Urban Development and U.S. Census Bureau reported Wednesday.

“Historically low mortgage rates and solid demand spurred an increase in new home sales in January,” says Chuck Fowke, chairman of the National Association of Home Builders. “However, rising affordability issues are looming this year, particularly increasing building material costs, including lumber, which is adding $24,000 to the price of a typical newly built home. Builders also cite rising regulatory issues as a potential concern.”

As existing-home inventory remains at all-time lows, more buyers are considering new home construction, says Robert Dietz, chief economist of the National Association of Home Builders. “Though rising building and development costs, combined with recent increases in mortgage interest rates, threaten to exacerbate existing affordability conditions,” he says. “Builders are exercising discipline to ensure home prices do not outpace buyer budgets.”

Inventories of new homes also remain tight at just a four-month supply at the current sales pace. New-home inventories are 6.3% lower than January 2020.

The median sales price for a new home was $346,400 in January, up 5.3% from a year earlier.

New-home sales rose by the highest amounts in the Midwest last month, up 12.6% annually. New-home sales also posted a 6.8% increase in the West and a 3% increase in the South. The only region of the U.S. to post a decline in new home sales in January was the Northeast, where new home sales fell 13.9% annually.

Contract Signings Retreat, Not Enough Homes for Sale | Realtor Magazine

Pending home sales dropped in January as inventory challenges continued to persist. Eager buyers are finding a lack of homes for sale. Contract signing fell 2.8% in January from December 2020, but is still 13% higher than a year ago, according to the National Association of REALTORS® reported Thursday.

NAR’s Pending Home Sales Index, a forward-looking indicator of home sales based on contract signings, surged to a reading of 122.8 last month—an all-time high for January. (An index of 100 is equal to the level of contract activity in 2001.) All four major regions of the U.S. saw contract transactions increase year-over-year.

The monthly sales dip was more an indication of lack of homes for sale than home buyers retreating, NAR notes. “Pending home sales fell in January because there are simply not enough homes to match the demand on the market,” says Lawrence Yun, NAR’s chief economist. “That said, there has been an increase in permits and requests to build new homes.”

The uptick in permits for single-family homes for eight consecutive months could help ease some inventory woes as soon as mid-2021, Yun says. “There will also be a natural seasonal upswing in inventory in spring and summer after few new listings during the winter months,” Yun says. “These trends, along with an anticipated ramp-up in home construction, will provide for much-needed supply.”

Also, the economy is showing signs of improvement, particularly as COVID-19 vaccination efforts step up, Yun says. However, Yun cautions that could mean longer-term interest rates may soon rise due to the improving economic prospects. He also noted rising inflationary expectations and higher budget deficits as challenges. Mortgage rates have been hovering near record lows over recent months, lowering borrowing costs for home shoppers. Last week, the 30-year fixed-rate mortgage averaged 2.81%.

Still, “I don’t see foresee mortgage rates jumping at an alarming level, but we should prepare for a rise of at least a decimal point or two,” Yun says.

 

 

 

 

 

Homebuilding Slows Due to Rising Construction Costs | Realtor Magazine

Despite a surge in buyer demand, fewer new homes were built in January. Builders blame rising material costs.

Housing starts fell 6% in January month over month to a seasonally adjusted annual rate of 1.58 million, according to a report released Thursday from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. The decrease was led by single-family starts, which were down 12.2%. However, the volatile multifamily sector, which includes apartment buildings and condos, increased 17.1% last month.

“Concerns over higher lumber prices produced softness for the housing market amid solid buyer traffic at the start of the year,” says Chuck Fowke, chairman of the National Association of Home Builders. “With the cost of building materials rising at a rapid pace, the challenge for builders is to keep home prices at an affordable level for buyers even as the regulatory policy environment may become more challenging.”

Lumber prices recently reached record highs. Those extra costs for lumber are forcing builders to have to increase the costs of their new homes and prompting construction delays. Read more: Lumber Prices Surge to Another Record High

“The big question is whether builders can navigate the opportunities of favorable demographics and mortgage rates against the challenges of rising materials, labor, and land costs,” says George Ratiu, senior economist at realtor.com®. “For housing, new construction is the answer to current supply constraints and the affordability crisis.”

There is hope for a turnaround. While home building was down in January, the pace of building permits was at the highest rate since 2006. Permits on single-family homes, a gauge for future construction, was nearly 10% higher in January than December and 28% higher than a year ago. Permits for both single-family and multifamily construction were highest in the Northeast last month, up 39.3% in January compared to December, followed by an 11.7% jump in the West, and an 8.3% increase in the South. The Midwest was the only major region of the U.S. to post a decrease in permits, down 0.8% month over month.

Land Is in Demand: Land Purchases Pick Up During Pandemic | Realtor Magazine

The nation’s leading land brokers report both an increase in business and an uptick in land values as rural land grew in demand last year, according to a new survey of more than 100 land brokers nationwide conducted by the National Land Realty, a real estate land brokerage. 2021 is poised to be another strong year for land purchases, the report says.

More than half of the surveyed brokers reported an increase in their business in 2020 over 2019. More than 60% of brokers reported seeing an increase in land values, particularly recreational land and farmland.

“Investors rediscovered a safe haven in land real estate in 2020, which made for a very good year for land sales, with record-breaking volume in the second half of the year,” says Jason Walter, CEO of National Land Realty. “And with all of the traumatic events of 2020, people are looking to not only invest in land outside of the city, but they are also wanting to live on the land they buy, to be able to breathe the fresh COVID-free air and reconnect with the great outdoors.”

Indeed, brokers reported that the majority of the most recent buyers of land are coming from urban or suburban areas.

Nearly 90% of the brokers surveyed believe that land sales will continue to perform strongly over the next year to 18 months, according to the survey. “And more than 75 percent of [land brokers] believe their business will grow at least 5 percent, if not more than 10 percent, in that same time frame,” adds Jason Burbage, president of National Land Realty.

The biggest challenges in 2021 moving forward, land brokers say, will center around geopolitical risk (nearly 24%), followed by financing or interest rate risk (20%) and COVID-related issues (17%).

Mortgage Rates Rise to 3-Month High | Realtor Magazine

The 30-year fixed-rate mortgage reversed course this week, moving up to a 2.81% average. That marks its highest point since mid-November, Freddie Mac reports.

“Economic spending has improved, due to the most recent stimulus, but supply chain shortages are causing downstream inflation, leading to higher mortgage rates,” says Sam Khater, Freddie Mac’s chief economist. “While there are multiple temporary factors driving up rates, the underlying economic fundamentals point to rates remaining in the low 3 percent range for the year.”

Indeed, mortgage rates continue to hover near record lows. The all-time low for the 30-year fixed-rate mortgage was 2.65%, set in January.

Freddie Mac reports the following national averages with mortgage rates for the week ending Feb. 18:

• 30-year fixed-rate mortgages: averaged 2.81%, with an average 0.7 point, rising from last week’s 2.73% average. Last year at this time, 30-year rates averaged 3.49%.
• 15-year fixed-rate mortgages: averaged 2.21%, with an average 0.7 point, increasing from last week’s 2.19% average. A year ago, 15-year rates averaged 2.99%.
• 5-year hybrid adjustable-rate mortgages: averaged 2.77%, with an average 0.2 point, dropping from 2.79%. A year ago, the average ARM averaged 3.25%.

Freddie Mac reports average points along with commitment rates to better reflect the total upfront cost of obtaining the mortgage.