Category: Real Estate

Builder Sentiment Has Never Risen by This Much in a Month | Realtor Magazine

Few thought the housing market would see this quick a turnaround in homebuyer demand. The COVID-19 pandemic dragged down the spring buying season as states and cities issued stay-at-home orders. But despite the lingering pandemic and subsequent economic recession, homebuilders are upbeat on housing heading into summer.

Builder sentiment surged 21 points in June, the largest monthly increase ever recorded by the National Association of Home Builders/Wells Fargo Housing Market Index. The reading in June is 58. Any reading above 50 indicates a positive market. In April, as the COVID-19 outbreak settled into the U.S., the builder sentiment index plunged by 42 points, a record drop, to a reading of 30.

A lot has changed since then. Builders are most bullish on current sales conditions, sales expectations in the next six months, and rising buyer traffic.

“As the nation reopens, housing is well-positioned to lead the economy forward,” says Dean Mon, chairman of the National Association of Home Builders. “Inventory is tight, mortgage applications are increasing, interest rates are low and confidence is rising.”

Mortgage applications to purchase a newly built home rose 10.9% annually in May, according to the Mortgage Bankers Association.

This is elevating home builders’ initial concerns that the pandemic would wreak havoc on sales. As the outbreak began in mid-March, some of the nation’s largest builders stopped housing starts and halted purchasing land due to concerns how the sector would fare in the pandemic.

“Builders report increasing demand for families seeking single-family homes in inner and outer suburbs that feature lower density neighborhoods,” says Robert Dietz, the NAHB’s chief economist. “At the same time, elevated unemployment and the risk of new, local virus outbreaks remain a risk to the housing market.”

The builder sentiment index showed the highest monthly uptick in the Northeast, with readings increasing by 31 points to 48. Other regions also posted increases, including the South, which rose by 20 points to 62; the Midwest posted a 19 point gain, to 51; and the West increased by 22 points to 66.

Sellers Willing to Cut Prices but Find No Need | Realtor Magazine

Nearly 70% of home sellers say they’d accept a purchase price lower than they desire in order to sell their home during the coronavirus pandemic, according to a new survey of about 1,000 home sellers from LendingTree. But, the same survey reveals, they may not need to.

So far, home prices have largely stood firm in the face of the pandemic. The National Association of REALTORS® reported that median existing-home prices for all housing types in April was $286,800—up 7.4% from a year ago. Home prices in every major region of the U.S. saw annual increases in April as well.

 

Still, the pandemic and its resulting economic recession have consumers concerned. Fifty-one percent of respondents say they are concerned about selling their home. Their biggest fears are having to accept a lower offer or being unwilling to sell in their desired time frame. The thought of having people tour their home during the pandemic also has them uneasy.

 

The concerns of some have prompted them to delay selling their home during this time. Forty-six percent of the 1,000 potential sellers surveyed by LendingTree say they’ve delayed listing their home. On the other hand, 28% say that the outbreak prompted them to list their home earlier than intended.

Mortgage Rates Drop to Another All-Time Low | Realtor Magazine

The 30-year fixed-rate mortgage set a new record again this week as rates averaged 3.13%, the lowest average rate in Freddie Mac’s records, which date back to 1971.

The previous low for the 30-year fixed-rate mortgage was set just a few weeks ago at the end of May, averaging 3.15%.

“While the rebound in the economy is uneven, one segment that is exhibiting strength is the housing market,” says Sam Khater, Freddie Mac’s chief economist. “Purchase demand activity is up over twenty percent from a year ago, the highest since January 2009. Mortgage rates have hit another record low due to declining inflationary pressures, putting many home buyers in the buying mood.”

That said, Khater cautions that it will be difficult to sustain the momentum in demand as unsold inventory is at near record lows entering the pandemic and has dropped even lower since then.

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

• 30-year fixed-rate mortgages: averaged 3.13%, with an average 0.8 point, falling from last week’s 3.21% average. Last year at this time, 30-year rates averaged 3.84%.
• 15-year fixed-rate mortgages: averaged 2.58%, with an average 0.8 point, falling from last week’s 2.62% average. A year ago, 15-year rates averaged 3.25%.
• 5-year hybrid adjustable-rate mortgages: averaged 3.09%, with an average 0.4 point, falling from last week’s 3.10% average. A year ago, 5-year ARMs averaged 3.48%.

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

Baby Boomers Are Making Home Renovation a Priority | Realtor Magazine

Home renovation remains a popular activity for owners, particularly among older age groups. Baby boomers accounted for more than half of renovating homeowners in 2019, according to a newly released survey of more than 87,000 respondents by Houzz, a home remodeling and design website. Gen Xers (ages 40 to 54) trailed at nearly a third of home renovators and millennials (ages 25 to 39) were at about 12%.

Baby boomers tend to spend the most on their renovations—a median of $15,000 in 2019 on home renovation projects, the Houzz survey shows. Gen Xers spent $12,000 and millennials spent $10,000 on their renovation projects.

 

© Houzz

 

“Baby boomers, particularly those who have been in their homes for more than six years, are continuing to drive renovation activity and spend … as they pursue projects that will allow them to age in place for the next decade or more,” says Marine Sargsyan, Houzz senior economist.

Baby boomers were three times more likely to pursue a home remodeling project because, they say, they’ve intended to do so since being in the home. They also plan to stay in their homes for 11 years or more, which also might be guiding their desire to renovate and make it more comfortable or up to their tastes.

Among all generations, the most popular rooms to renovate remain kitchens and guest bathrooms. However, home offices are increasingly being added or upgraded by one in 10 homeowners in 2019. Millennials and Gen Xers were more likely to pursue a home office renovation project last year than baby boomers.

The Houzz & Home survey was conducted between Jan. 2 and March 5, before the coronavirus pandemic. When the survey was conducted, half of homeowners reported they planned to continue or start renovations this year at a median spend of $10,000. One-third of homeowners surveyed planned to make repairs.

 

© Hado Photo / Houzz

 

“Subsequent surveys have shown that over half of homeowners who were in the midst of a project at the start of the pandemic were able to continue with renovations,” Sargsyan says. “That said, some homeowners have opted to delay certain elective renovations due to implications related to social contact, labor, and material availability, and personal discretionary spending. Maintenance and repairs, on the other hand, are more likely to proceed, especially when the need is urgent. Deferred maintenance will accrue during this period, setting the stage for a renewed burst of activity following the pandemic.”

Some additional findings from the survey:

• Planning takes time: Homeowners took the most time to plan out kitchen renovations, averaging 8.3 months. Master and guest bathroom renovation planning took 5.4 and 4.8 months respectively. Entry, foyer or mudroom renovations—despite the small square footage—took an average of 6.6 months to plan.
• High-tech focus: Technology is being woven into more renovation projects. The majority of those projects involve smart technology, which can be monitored or controlled from a mobile device or computer. Light fixtures and smart lights are a popular update as are home assistants, smart thermostats, and smart alarms or detectors. Security cameras led outdoor technology purchases, according to the Houzz survey.
• Tapping savings: Using cash from savings was the most common form of home renovation payment, used by 83% of respondents. Cash was commonly used in pricey projects—up to $50,000. The next most common source of funding was credit cards, which tended to be used for less expensive projects of between $1,000 and $5,000.
• Big spenders: San Jose, Calif., led the nation as the most expensive metro area in which to renovate a home. Homeowners spend double the national median spend–$26,000. Other cities boasting some of the highest expenditures on home remodels: Boston ($21,000) and Los Angeles, Miami, San Diego, and San Francisco (all at $20,000 each).

Suburban Space Gains Popularity as Housing Recovery Begins | Realtor Magazine

The pandemic has caused more Americans to rethink where they want to call home. In many regions, suburban and rural areas are seeing stronger recoveries from the pandemic than their nearby urban areas, according to a new report from realtor.com®.

In May, online listing views at realtor.com® in suburban ZIP codes rose by 13%, nearly double the pace of growth of urban areas. More than half of the nation’s 100 largest metros are seeing rising interest in the suburbs, realtor.com® reports.

“This migration to the suburbs is not a new trend, but it has become more pronounced this spring,” says Javier Vivas, realtor.com®’s director of economic research. “After several months of shelter-in-place orders, the desire to have more space and the potential for more people to work remotely are likely two of the factors contributing to the popularity of the burbs.”

In recent years, suburban areas have started to outpace urban areas in growth in terms of views per property at realtor.com®. May data marks the second largest gap between suburban and urban views since realtor.com® began tracking such data in 2016. Listing views per property in rural and suburban ZIP codes were up an average of 16 and 13% annually, respectively. Views per property in urban areas, on the other hand, were up 7% year over year.

“Suburban interest typically peaks during the summer, as families look to move before the start of the school year,” says Vivas. “However, suburban interest in May outpaced last year’s July peak, which could indicate even stronger interest in the suburbs as summer homebuying season continues to heat up.”

Real Estate Continues Its Streak as Favorite Investment | Realtor Magazine

Real estate continues to rank at the top of the list of the best long-term investments for Americans, according to the latest annual poll from Gallup. About 35% of Americans picked it as their favorite investment, which has been the case since 2013.

Meanwhile, Americans are less likely to view stocks or mutual funds as the best long-term investment, particularly waning after the COVID-19 pandemic struck the economy this spring. Twenty-one percent of Americans picked stocks as the best investment, down 6 percentage points from a year ago and at the lowest reading since Gallup started collecting such data in 2012.

Only about one in six Americans view savings accounts or CDs (17%) and gold (16%) as their favored long-term investment.

During the subprime mortgage crisis in 2011 and 2012, real estate was viewed as more risky, and gold finished first as the best long-term investment during that time. But as real estate values continue to climb in recent years, gold has faded and real estate’s investment potential has steadily risen in popularity.

 

© Gallup

 

 

Homebuyer Interest in Single-Family Homes Jumps to Four-Year High – Redfin

Web searches for single-family homes have popped as the coronavirus pandemic has turned privacy into a hot commodity.

Online searches for single-family homes rose to the highest level in four years last month. This comes as the coronavirus pandemic drives buyers to seek out larger houses located farther away from dense urban areas.

In May, 36% of saved searches created by Redfin.com users filtered exclusively for single-family homes. That’s up from 33% in February—before the coronavirus was known to be widespread in the U.S.—and represents the largest share since March 2016. It also marks an increase from 28% in May 2019.

Meanwhile, the share of searches for other types of homes, such as condos, townhouses and multifamily listings, has declined. Last month, 7.5% saved searches on Redfin.com excluded single-family homes—the lowest level in three years.

“One of the biggest benefits of living in a condo or an apartment is sharing the cost of rooftops, pools and gyms, but many of these communal amenities have been roped off due to the pandemic,” said Redfin lead economist Taylor Marr. “People who were previously willing to share space with strangers in exchange for a nice view and a quick commute now want their own yards and home offices. Flexible work-from-home policies have made this dream achievable for many house hunters.”

During the first quarter of this year, the median size of new single-family homes climbed to 2,291 square feet from 2,252 in the prior quarter, according to the U.S. Census Bureau—and the National Association of Home Builders said it expects further gains in the future. 

Irma Jalifi, a Redfin agent in Houston, recently sold a single-family home to a couple who had moved to Texas due to the pandemic in order to escape their cramped apartment in New York City. In Houston, they were able to buy a house with his and hers offices and space for a gym.

Another one of Jalifi’s clients is in the process of moving to Texas from San Francisco, and is under contract to buy a house that’s much larger than their current home.

“Coming from San Francisco, they couldn’t get over the spaciousness of what, in my opinion, is a very average size home in Houston,” Jalifi said. “Everything’s bigger and better in Texas.”

Results by Metro

We also broke down our saved-search data by location to identify the areas that experienced the highest growth in web searches for single-family homes. Of the 28 metros in this analysis, Tampa saw the biggest uptick, with 44% of saved searches filtering for single-family houses in May—up about 10 percentage points from February. Las Vegas, Boston, Seattle and San Jose rounded out the top five, all around 6 percentage points higher. That compares with growth of 2.8 percentage points on a national level.

Seattle Redfin agent Shoshana Godwin said her clients are starting to expand their searches to neighborhoods they wouldn’t have considered in the past, as proximity to the workplace becomes less important. Specifically, she has seen a spike in interest in West Seattle—a neighborhood that has relatively low housing costs but was previously overlooked by many buyers due to the long commute and the closure of a key bridge to the city center. Now, that’s less of a factor, she said.

A Third of Employees Want to Work From Home Permanently | Realtor Magazine

As states begin to reopen, many workers are hesitating as their workplaces unlock their doors. About one-third of employees—35% recently surveyed—say they prefer to continue working from home permanently, according to a new survey conducted in late May by CreditCards.com.

Workers showed a preference for working from home even though they say it is costing them more. Remote workers surveyed say their regular expenses have increased by $108, reflecting an increase in groceries and utilities, even if they are saving on child care, gas or public transportation, and clothing and dry cleaning costs. Millennials found it even more costly—an increase of $208 above their regular monthly expenses.

“Surprisingly, average expenses have gone up for people working from home, but it’s a trade-off most are happy with,” says Ted Rossman, an industry analyst with CreditCards.com. “Most workers seem content to skip the commute and potentially work in their pajamas, even if it means spending more on food and utilities.”

As the COVID-19 pandemic first struck the U.S., about one-third of employed U.S. adults were estimated to have been able to work from home.

While 35% of survey respondents said they want to work from home permanently, according to the survey, the majority are in favor of a hybrid office and home setup. Eighty-two percent of employees said they would like to work from home at least two days per week (that includes respondents who mostly said they would like to work from home full-time). Twenty-one percent of respondents said they would like to work from home four days or more per week, and only 7% of respondents said they wanted to work from home just one day per week.

The commercial sector is working to predict what trends will surface in office space needs post-pandemic. Leasing and investment sales activity reportedly is gradually coming back in some areas as states reopen. Robert Cleary, senior vice president specializing in the office sector with Colliers International, told the National Real Estate Investor that he believes suburban office markets will see a pickup in activity. Satellite offices likely will grow in demand as an alternative to trekking to urban locales.

Jonathan Stravutz with SDB-BIOC Commercial says he expects employees will switch between working from home and the office, at least in the interim. He believes that typically only 30% of office space will be occupied at a time, and the trend likely will continue until a vaccine for the coronavirus is found. He expects more sublet space to come onto the market. But real estate pros also report some office tenants are leveraging an advantage in negotiating deals to still scoop up space in prime urban spots during the pandemic.

“Most occupiers are evaluating their current and future space needs to support both an increasingly remote workforce and less office density for health and safety reasons,” Dennis Hearst, senior vice president in the advisory and transactions services group with CBRE, told the National Real Estate Investor. He remains optimistic. “The unmatched value of a dedicated space for commercial innovation and professional collaboration will endure, even if some long-term design changes occur,” he adds.

Mortgage Rates Remain Low for Buyers Who Can Qualify | Realtor Magazine

© REALTOR® MAGAZINE

 

The 30-year fixed-rate mortgage continued to hover near its all-time low this week, averaging 3.21%, Freddie Mac reports.

“The rebound in home buyer demand continued this week, driven by mortgage rates,” says Sam Khater, Freddie Mac’s chief economist. “This turnaround in demand, particularly by those who have higher incomes than the typical household, also reflects deferred sales from the spring.”

Record Low Mortgage Rates for the Long Term?

Mortgage Applications Are 13% Higher Than a Year Ago

Freddie Mac reports the following national averages for the week ending June 11:

• 30-year fixed-rate mortgages: average 3.21%, with an average 0.9 point, rising slightly from last week’s 3.18% average. At the end of May, 30-year rates reached a record low average of 3.15%. A year ago, 30-year rates averaged 3.82%.
• 15-year fixed-rate mortgages: averaged 2.62%, with an average 0.8 point, unchanged from last week. Last year at this time, 15-year rates averaged 3.26%.
• 5-year hybrid adjustable-rate mortgages: averaged 3.10%, with an average 0.4 point, unchanged from last week’s average. Last year at this time, the 5-year ARM averaged 3.51%.

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

Americans Are Less Anxious About Paying Their Bills | Realtor Magazine

As states reopen, consumers are becoming less concerned about their financial situation. About 12.6% of Americans say they were worried about being able to make a minimum debt payment in May, down from a seven-year high in April (16.2%), according to a survey of consumer expectations released by the Federal Reserve.

The 12.6% figure is in line with percentages from December, prior to the pandemic that sent a shock wave through the economy. Consumers earning between $50,000 and $100,000 felt more relief in their finances in May as states began to reopen, according to the Fed survey. In that income bracket, the percentage of consumers who were worried about making the minimum debt payments dropped from 15.9% in April to 10.3% in May.

For consumers who earn more than $100,000 annually, the percentage of those concerned about paying their bills dropped from 7.2% in April to 6.7% in May.

The largest concern in paying bills is for those who earn under $50,000 a year. In April, 22.9% worried about making their debt payments, compared to 18.7% in May.

Broken out by age, consumers over the age of 60 appear to be the least worried about their financial situation, while people under 40 are the most concerned.

On Tuesday, the National Bureau of Economic Research declared the nation is in a recession and has been in one since February. That marks the official end to the U.S.’s longest economic expansion in history that spanned more than 10-and-a-half years. More than 42 million Americans have filed for unemployment benefits since February.

However, several economists are optimistic that this recession will be short-lived and was ignited by shelter-in-place measures that left many unable to work during the COVID-19 outbreak.

Already, the U.S. Bureau of Labor Statistics announced late last week that the U.S. had added 2.5 million jobs in May—the largest monthly gain since the agency began tracking in 1939.

Also, total personal income actually grew during the pandemic lockdown due to the passage of a massive stimulus package that rushed aid to consumers affected by closures. Americans were able to save around 8% of their income prior to the pandemic but saved 33% of their income in May. 

“With many economies advancing in phases of reopening, more money will be spent and more job additions will follow,” Lawrence Yun, chief economist for the National Association of REALTORS®, said in a statement last week following the jobs report.

As for the housing market, Yun is predicting a V-shaped recovery. However, “the broader economy will not be, and the double-digit unemployment rate will persist till the end of the year,” Yun says. “Still, the latest jobs data is showing much better recovery potential.”