Category: Real Estate

Most REALTORS® Confident That Home Prices Will Stand Firm | Realtor Magazine

Many real estate professionals don’t foresee a significant drop in home prices from the COVID-19 pandemic, and certainly not to the degree of the Great Recession’s impact on the housing market. For residential property prices over the next 12 months, 38% of more than 4,000 REALTORS® say they expect prices to increase and 23% expect prices to remain stable, according to the March 2020 REALTORS® Confidence Index Survey, a monthly survey of real estate transactions conducted by the National Association of REALTORS®. 

“Although the pandemic continues to be a major disruption in regards to the timing of home sales, home prices have been holding up well,” Lawrence Yun, NAR’s chief economist, said in a statement following a report on pending home sales in March. “In fact, due to the ongoing housing shortage, home prices are likely to squeeze out a gain in 2020 to a new record high.”

Home prices were still rising across the country as the pandemic widened in scope in the U.S. in March. As of March, the median home sales price increased 8% year over year to $282,500, according to NAR.

The following chart compares February to March 2020 REALTOR® member projections on home prices.

 

© National Association of REALTORS®

 

“Prices have held up due to a combination of measures under the $2.2 trillion CARES Act passed plus the additional $484 billion funding passed April 23 to pay for unemployment insurance benefit claims and payroll assistance for small businesses,” Scholastica Cororaton, a research economist for NAR, notes on the association’s Economists’ Outlook blog.

The median list prices in several markets are still up compared to a year ago, according to realtor.com® data. For example, in Los Angeles, the median list price is up 16% compared to a year ago, while in Las Vegas and Denver, median listing prices are up by 3.6% and 3.5%, respectively, compared to a year ago. In the New York-New Jersey area, which has accounted for the largest share of coronavirus cases in the country, median listing prices are still up from one year ago by 2.9%.

As of April 18, 58 of the 100 largest metros were still seeing higher median listing prices when compared to a year prior, according to realtor.com® data. Properties were staying on the market longer—six more days during the week of April 18 compared to April 2019.

But markets like Washington, D.C., were seeing median list prices up by 4.4% the week of April 18 compared to a year prior.

Many REALTORS® Report No Closing Delays | Realtor Magazine

Despite the pandemic, more than a third of real estate professionals recently surveyed say closings are occurring on time, according to a newly released report from the National Association of REALTORS®. Thirty-five percent of REALTORS® reported no delays to closings, according to the survey conducted April 26 and 27.

“Nearly 70% of Americans have secure employment, and those interested in purchasing homes are looking at the enticing mortgage rates,” says Lawrence Yun, NAR’s chief economist. “One in five potential buyers have dropped out of the market due to job loss concerns; hopes are the massive financial stimulus package can help replace a good portion of lost income until the economy steadily reopens. More home sellers are needed to relieve the acute inventory shortage.”

Home shoppers are still looking. An NAR survey conducted April 12 and 13 showed a quarter of REALTORS® had clients put contracts on homes that week without even physically seeing the property. Virtual tours online are growing more common, whether through video or 3D models, and agents are conducting private video showings via conferencing platforms.

 

 

Real estate professionals quickly adapted their businesses to follow social distancing protocols while combating the virus outbreak. About 30% of REALTORS® surveyed this week by NAR say they have been able to complete nearly all aspects of real estate transactions while complying with social distancing protocols.

Home prices are standing firm, too. More than 75% of REALTORS® working with sellers say their clients aren’t reducing listing prices to attract buyers, NAR’s survey shows. But 64% of REALTORS® working with buyers acknowledge that their clients are in search of discounts.

A Sign Buyer Confidence Is Shifting: Mortgage Applications Rise | Realtor Magazine

Mortgage applications for home purchases, a gauge of future home buying, saw a 12% uptick last week, reversing a month of plummeting activity due to the COVID-19 pandemic, the Mortgage Bankers Association reported. Housing experts say it could mark a sign that home buyers are returning.

Refinancing demand fell last week, which caused the overall volume to decline by 3.3% for the week, according to the MBA’s seasonally adjusted index. The overall mortgage application volume is still 20% lower than a year ago. But the increase in home purchase volume was the first uptick in weeks. Anecdotal reports from real estate firms point to an increase in buyer demand over the past two weeks, which is now starting to show up on purchase applications from buyers.

“The 10 largest states [by application volume] had increases in purchase activity, which is potentially a sign of the start of an upturn in the pandemic-delayed spring home buying season, as coronavirus lockdown restrictions slowly ease in various markets,” says Joel Kan, the MBA’s associate vice president of economic and industry forecasting. “California and Washington continued to show increases in purchase activity, with New York seeing a significant gain after declines in five of the last six weeks.”

One potential incentive for buyers to get moving: Borrowing costs remain near historical lows. The average contract interest rate for the 30-year fixed mortgage dropped from 3.45% to 3.43% last week, the MBA reports. (Points and the origination fee averaged 0.34 for loans with a 20% down payment.)

Meanwhile, applications for refinancing dropped 7% last week. Still, applications are 218% higher than a year ago as homeowners rush to take advantage of low rates in lowering their monthly mortgage payments. But some lenders reportedly are offering more limited refinancing products recently, working through capacity issues and navigating a wave of homeowners taking forbearance options that have hit bank profits. Refinance interest rates have moved slightly higher than have rates to purchase a home, CNBC reports.

Confidence Runs Higher on Unemployment Funding | Realtor Magazine

Independent contractors and the self-employed are now eligible for unemployment benefits under the CARES Act and the Pandemic Unemployment Assistance program. However, many are finding themselves stymied when trying to navigate their state’s application process. In a new video from the National Association of REALTORS®, two practitioners share their successful experiences, while employment law experts provide encouragement about how to prepare and what to expect.

 

 

“This is the largest relief package in the history of our country,” says Nia Duggins, NAR policy representative for business issues. “It’s fully federally funded but fully state-administered, and requirements will vary from state to state. It’s important to check your state’s unemployment agency website to find guidance.”

The CARES Act includes $2.2 trillion in programs and relief for workers whose employment has been adversely impacted by COVID-19. NAR advocated for the legislation that provides benefits to individuals who previously were ineligible. This includes many real estate professionals, who often are independent contractors.

The law provides up to 39 weeks of benefits, with the coverage period running from Jan. 27 to Dec. 31, 2020. States were required to enter into an agreement with the U.S. Department of Labor to offer the benefits; significant program implementation challenges occurred in states, however, causing delays in issuance of benefits. Some challenges that many states are facing include an influx in the number of applicants applying for unemployment including claims under the PUA program, older technology that is not able to accommodate new claims, and inadequate forms or systems in place to accept claims from independent contractors and the self-employed, among other issues.

No matter what state they reside in, PUA applicants should assemble all necessary information to give their applications the best chance of being approved—and prepare to be patient with the process.

Jonathan M. Linas, partner at the Jones Day law firm in Chicago, says that states have a lot of flexibility, both in the amount of benefits they will disburse and in what documents they require from applicants. He adds that states are doing a good job paying out the $600 Federal Pandemic Unemployment Compensation payments, which applicants can receive in addition to the state-administered benefit. Applicants don’t have to apply for the federal component separately; it’s factored into payments automatically.

The common question about whether an applicant can receive both PUA and a Paycheck Protection Program loan is complicated, and Linas advises individuals speak with a financial professional about whether it’s possible for them. But he’s more straightforward about concerns over whether PUA will run out of funding as the PPP did: “My belief is no,” he says. “There is no reason to believe that the funds will run out. There is 100% federal backing for the PUA benefit.”

A challenge in the application process is filling out a form that was set up for W-2 wage earners. Natalia O. Delaune, a Dallas-based partner also with Jones Day, offers tips on the types of documents to have on hand: 1099s, pay stubs, bank receipts, and billing statements or invoices. If applicants haven’t filed a 2019 tax return yet or if they’ve filed jointly with a spouse, they may be eligible to receive at least 50% of their state’s average unemployment benefit plus Federal Pandemic Unemployment compensation, depending on the state. An applicant’s individual income will be considered even if they’ve filed jointly.

Beware of Scams

Delaune also has a warning about scammers who call applicants asking for personal information and credit card numbers. Scammers have spotted an opportunity to take advantage of the public’s naivete about the program. Delaune urges people to use caution if they receive unsolicited offers of help with applications. “There’s no filing fee,” she says. “And never give out your credit card number over the phone. Always verify the identity of the caller, and if you have any doubts, hang up on the call, and contact your unemployment agency.”

NAR’s FAQs provide much more information about emergency assistance from the government atnar.realtor/coronavirusue.

Crystal Berglund, an associate broker with Keller Williams First in Marquette, Mich., relayed her circuitous path to obtaining benefits. She first applied for benefits in the last week of March, before her state’s PUA application system was ready.

She was initially denied traditional benefits but told that she wouldn’t need to reapply for PUA when the system opened. Then she was told she would have to reapply after all. On April 13, the Michigan unemployment application system crashed, preventing her reapplication. She was finally able to reapply on April 14 and was approved on April 23, and on April 27, her benefits were direct-deposited to her bank account.

For applicants currently waiting, Berglund offers encouragement: “These are new programs. Just be patient. Go on your state website; read the questions and answers. Watch the videos, read, and listen. Just be really patient.”

Austin Rowe, an associate with Captain and Co. Real Estate LLC in Memphis, Tenn., had an easier process, but he waited to start until his state’s PUA application system was ready. He applied on April 8, was approved about a week later, and received his first benefit payment a week after that. Rowe attributes his success, in part, to sheer persistence. “When I had a question, I sent a help desk ticket to the [Tennessee] Dept. of Labor and kept sending one in every day until I received an answer.”

He cites avideoon the Tennessee Labor and Workforce Development website as being helpful for applicants, regardless of their state, and offers some words of wisdom echoing Berglund’s experience.

“Be patient,” he advises. “The system is inundated with millions of unemployed people now, and the agencies have a skeleton staff as it is. Find as many things on the website as you can to help you with the application.”

Mortgage Rates Dip to New Record Low | Realtor Magazine

© REALTOR® MAGAZINE

 

Mortgage rates reached a new record low this week, with the 30-year fixed-rate mortgage falling to its lowest average ever since Freddie Mac began tracking such data in 1971. “The size and depth of the secondary mortgage market is helping to keep rates at record lows,” says Sam Khater, Freddie Mac’s chief economist. “These low rates are driving higher refinance activity and have modestly helped improve purchase demand from their extremely low levels in mid-April. While many people are benefiting from low mortgage rates, it’s important to remember not all people are able to take advantage of them given the current pandemic.”

Freddie Mac reported the following national averages with mortgage rates for the week ending April 30:

• 30-year fixed-rate mortgages: averaged 3.23%, with an average 0.7 point, falling from last week’s 3.33% average. The previous all-time low for the 30-year mortgage was 3.29%, set during the week ending March 5. A year ago, 30-year rates averaged 4.14%.
• 15-year fixed-rate mortgage: averaged 2.77%, with an average 0.6 point, falling from a 2.86% average. A year ago, 15-year rates averaged 3.60%.
• 5-year hybrid adjustable-rate mortgages: averaged 3.14%, with an average 0.4 point, dropping from a 3.28% average. A year ago, 5-year ARMs averaged 3.68%.

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

Pet Needs Are Top-of-Mind for Buyers | Realtor Magazine

Like people, pets have certain needs when it comes to the space where they live, and the National Association of REALTORS®’ latest Pet Survey proves they can be the deciding factor for buyers when choosing one home over another. In fact, REALTORS® are likely to be prepared to guide clients in the right direction—the study found that 81% of members surveyed consider themselves animal lovers.

When it comes to the house your pet-conscious clients are looking for, the most frequent requests are hardwood floors and a fenced backyard. According to NAR research, 43% of households would be willing to move to better accommodate their pet, and are prepared to get rid of carpet or install a gate if necessary.

It’s also important for the neighborhood to be convenient, with buyers prioritizing being near dog parks, accessible sidewalks and grass, and quality veterinarians.

Cheryl Nelson of Berkshire Hathaway HomeServices Premier Properties in Katy, Texas, keeps a list of animal-friendly parks and businesses on hand, including amenities that are conveniently located for her clients with children and pets. “I have clients who send their children to daycare and their dogs to doggy daycare,” she says.

Because animal policies, such as size limits or the prohibition of certain breeds, vary between housing developments and buildings overseen by homeowner associations, 68% of REALTORS®’ clients say these rules influenced their decision to buy or rent in a particular area. The annual pet fee can also be a determinant. The average fee for owners in single-family homes and condos in HOA communities is $300, and the average fee for renters is $400. Real estate pros should know the details of the area’s pet guidelines before their clients start looking, which will prevent hiccups along the way.

“Once, when I asked a client what kind of dog he had, he told me he had an American staffordshire, which is the real name of a pit bull. That was pretty simple to see through, and the landlord just did not allow it,” Nelson says. The result was losing the rental deal.

The policies for assistance animals should also be taken into consideration. While the Pet Report found that within the past year, a median of 38% of REALTORS®’ clients have owned a pet, companion animal, or service animal, landlords are becoming stricter in terms of the documents required to make accommodations for assistance animals.

“You have to be so careful because a lot of people can just go on the internet and download a certificate. But now, more and more landlords are requiring something like a prescription from a doctor,” Nelson says.

The Fair Housing Act states that a reasonable accommodation request to have a service animal in the household requires the buyer to have a disability, physical or mental, and a related need to have the animal. NAR offers information and guidance for members on how to approach these situations under “Accommodations for Service Animals in Housing.”

While just 13% of REALTORS® advertise themselves as pet-friendly, Steve Rodriguez of Davidson Realty Inc. in Jacksonville, Fla., finds it useful to use a profile picture on his website of himself with his dogs, which attracts fellow owners. He’s found this sparks conversation in a friendly way—sometimes even receiving photos of the clients’ pets—which transitions to them asking for assistance in finding a suitable home.

When helping sellers who have animals prepare their homes for showings, 80% of REALTORS® recommend removing pets to prevent any loud barking, allergic reactions, or injuries. If the pet can’t be removed during the time a showing, let the buyer’s agent know ahead of time so they are prepared.

Home Sellers Staying Firm on Asking Prices | Realtor Magazine

Nearly 75% of REALTORS® report that their sellers have not lowered listing prices to attract buyers during this time, according to a new survey conducted April 19-20 by the National Association of REALTORS®. This suggests home sellers are avoiding “panic selling” during the COVID-19 pandemic, the survey notes.

“Consumers are mostly abiding by stay-in-shelter directives, and it appears the current decline in buyer and seller activity is only temporary, with a majority ready to hit the market in a couple of months,” says NAR Chief Economist Lawrence Yun. “The housing market faced an inventory shortage before the pandemic. Given that there are even fewer new listings during the pandemic, the home sellers are taking a calm approach and appear unwilling to lower prices to attract buyers during the temporary disruptions to the economy.”

Sales are still happening. A survey released last week from NAR showed a quarter of REALTORS® reporting that their clients had put contracts on homes without physically seeing the property.

More than a quarter of REALTORS®—or 27%—report that they are able to complete nearly all aspects of transactions while respecting social distancing. The most common technology tools that REALTORS® report using to connect with clients during this time are e-signatures, social media, messaging apps, and virtual tours.

Agents to Sellers: Don’t Take Your House Off the Market | Realtor Magazine

Some prospective sellers may want to pull their home off the market and wait out restrictions reacting to the spread of COVID-19. But a growing number of real estate professionals are asking their sellers to rethink that decision, even in areas hit hard, such as New York City.

But real estate professionals told Forbes.com that, for the homes they have listed, they’re reporting unprecedented traffic. And with housing inventory low, sellers could get more attention for their homes than in traditional spring markets where competition can be stronger.

For example, during the week of March 16, the real estate market firm UrbanDigs reported a 279% increase in the number of listings removed from the Manhattan market. In the second week of April, there were only 52 new listings; 157 listings had been removed from the market.

Meanwhile, listing views online are reportedly on the rise, and video tours are growing in popularity as buyers want to view properties for sale online. The listing site StreetEasy reported that the number of listings with video tours—including links to video walkthroughs–doubled on its website in March as COVID-19 hit the nation in a bigger way.

Potential buyers may have more time to browse listings online, Barbara Fox, president of Fox Residential, told Forbes.com. “I think we will see a pent-up demand from buyers who were poised to move before the pandemic, and still need to move ahead with their plans,” Fox says. “Many buyers are going to look at this as a good buying opportunity, and sellers should keep their properties prominently in front of them.”

Fox isn’t advising her sellers to lower their price either. “Many prices were reduced before this happened, and as activity resumes, there will be bargain hunters,” Fox says. “But as activity intensifies, as was happening prior to the pandemic, we will see prices firming up.”

Could 2.9% Mortgage Rates Be Coming? | Realtor Magazine

Mortgage rates could be on a roller coaster ride over the next year, with the coming months looking to be particularly significant. In Fannie Mae’s Housing Forecast report, economists predict that the average 30-year fixed-rate mortgage for 2020 will drop to 3%, and then fall to 2.9% by 2021. Both would be all-time lows.

Many home owners with strong credit seeking to buy could see rates in the mid- or even low 2% levels, the mortgage industry predicts. “This would make buying or refinancing possible for many who can’t afford it right now,” according to The Mortgage Reports. A 2.9% mortgage rate instead of a 3.9% rate could raise homebuying power by $36,000.

The lowest average mortgage rate on record currently is 3.29%, which was set in March of this year amid COVID-19 fears, according to Freddie Mac. Mortgage rates have remained near historical lows ever since.

A year ago, mortgage rates averaged 4%. Homeowners and potential buyers can save thousands of dollars over the life of the loan from the drop in rates. For example, The Mortgage Reports uses an example of a $200,000 loan amount with a 4% versus 2.9% 30-year fixed-rate mortgage. Home buyers could potentially save $121 a month and $44,000 over the life of the loan.

“With a full year of record low mortgage rates, many homeowners would be able to refinance, reducing their monthly payments and overall loan interest,” according to The Mortgage Reports. “And prospective home buyers might be able to afford a house sooner than they thought—or buy a more expensive home than they’d be able to afford if rates were higher.”

The lower borrowing costs could help with housing affordability. Even with a slowdown likely in the housing market due to COVID-19, Fannie Mae economists are still predicting existing home prices to increase by 2.5% between 2019 and 2021.

More Americans Are Sprucing Up Their Homes | Realtor Magazine

While sheltering in place, more homeowners are taking on house projects. Stores that offer gardening supplies and building materials are weathering COVID-19, as retail sales of building materials, gardening equipment, and supply stores (paint and wallpaper stores and hardware stores) were up 7% in March compared to a year ago, according to U.S. Census Bureau data.

“This is a good time for home owners because gardening, yard improvements, and minor home renovation or simple do-it-yourself projects (deck) improve curbside appeal and reflect the kind of care and maintenance that home owners put into their homes, both external and internal,” notes Scholastica Cororaton, research economist for the National Association of REALTORS®, at the Economists’ Outlook blog. “Attractive gardens, a clean yard, freshly coated fences, mended pathways will make a home attractive to buyers, in the time of and after the coronavirus social distancing period.”

 

© National Association of REALTORS®

 

Past surveys show the importance of curb appeal when selling. Seventy-four percent of REALTORS® often suggest that their sellers complete a landscape maintenance program before selling, and 17% cited tending to the exterior as a selling point, according to NAR’s 2018 Remodeling Impact Report: Outdoor Features.

A landscape maintenance program could include applying mulch, mowing, pruning shrubs, and planting, with some 60 perennials and annuals to choose from. The 2018 NAR survey estimated a cost of $3,000, but expected a 100% recovery of that cost from resale.