Category: Real Estate

Mortgage Rates Recede After Last Week’s Uptick | Realtor Magazine

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September has proven to be the most volatile month for the 30-year fixed-rate mortgage since March. Average weekly movement on rates has fluctuated 11 basis points in that time, Freddie Mac reports. This week, mortgage rates fell after posting the largest uptick in nearly a year last week.

“With both unemployment rate and mortgage rates below 4% and near historic lows, it is no surprise that the housing market regained momentum in home sales and construction as or near decade highs,” says Sam Khater, Freddie Mac’s chief economist. “The fall housing market is poised to continue with steady gains in prices and solid sales activity.”

Freddie Mac reported the following national averages with mortgage rates for the week ending Sept. 26:

• 30-year fixed-rate mortgages averaged 3.64%, with an average 0.6 point, falling from last week’s 3.73% average. Last year at this time, rates averaged 4.72%.
• 15-year fixed-rate mortgages averaged 3.16%, with an average 0.5 point, falling from last week’s 3.21% average. A year ago, 15-year rates averaged 4.16%.
• 5-year hybrid adjustable-rate mortgages averaged 3.38%, with an average 0.4 point, falling from last week’s 3.49% average. A year ago, 5-year ARMs averaged 3.97%.

Redemption in New-Home Sales? | Realtor Magazine

Lower mortgage rates are prompting more home buyers to consider new-home construction, builders say. Sales of newly built single-family homes surged in August, rising 7.1% to a seasonally adjusted annual rate of 713,000 units, the Commerce Department reported Wednesday. This marked the second time in three months that new-home sales rose above 700,000. Further, new-home sales have now jumped 18% compared to a year ago.

The latest report follows on the heels of other positive housing data released last week. Housing starts and building permits surged to a more than 12-year high in August. Home resales also increased to the highest level in 17 months, the National Association of REALTORS® reported. (Read: Home Sales Up for Second Consecutive Month and More New Homes Are Entering the Pipeline)

“This positive data caps off a month of redemption for the housing market,” said John Pataky, executive vice president at TIAA Bank in Jacksonville, Fla. “If American consumers remain in good spirits, there is no reason this positive momentum can’t continue, so long as prices remain in check and housing supply does not get critically low.”

“With job growth continuing and lower interest rates in place, builders report rising confidence levels, and this is reflected in today’s solid sales report,” says Greg Ugalde, chairman of the National Association of Home Builders.

The 30-year fixed-rate mortgage has fallen about 120 basis points compared to last year’s highs. It has averaged about 3.73% in recent weeks, according to Freddie Mac data.

The median sales price of a new home sold in August was $328,400, which is slightly up from a $321,400 median a year ago. Only 10% of sales last month were priced below $200,000, the most sought after, analysts note. The inventory of new homes for sale in August was 326,000, about a 5.5-month supply, the Commerce Department reports.

On a regional basis, new-home sales rose by the highest amounts in the West, increasing 16.5%, followed by a 6% increase in the South in August. Sales fell 5.9% in the Northeast and posted a 3% drop in the Midwest.

 

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Older Home Buyers Are Opting to ‘Smart-Size’ Over ‘Downsize’ | Realtor Magazine

Retiring baby boomers are finding that downsizing is not always the answer. Empty nesters transitioning from their longtime houses are finding they still need plenty of space, The Washington Post reports.

“Older home buyers today are ‘smart-sizing’ rather than just downsizing,” Mollie Carmichael, a principal with the housing research firm Meyers Research, told The Washington Post. “Affordability is a big priority before and during retirement, so people think they need to downsize for financial security, but that’s not always true.”

Carmichael says her organization’s research has shown that 30% of people who have moved to age-restricted communities end up moving to a larger place within the community after they’ve lived there for a while. The average home size in active-adult communities—which are geared for ages 55 and older—is 1,500 to 1,800 square feet. “They just want a little extra space and yet want to stay in the neighborhood,” Carmichael says.

For example, Robin and Stefanie Wohnsigl told The Washington Post that it took them four years to find the right place for retirement. They sold an 8,000-square-foot home outside of Washington, D.C., four years ago to downsize into a 1,500-square-foot apartment. But then they realized they had downsized too much. “We wanted a backyard for our dog,” Robin Wohnsigl told The Washington Post. They have since upsized to a 3,700-square-foot single-family home.

Figuring out the type of home to buy for the preretirement-into-retirement phase can be difficult, Alison Bernstein, president and founder of Suburban Jungle, told The Washington Post. Bernstein recently opened a “ReSizer” division that is aimed at consumers in their 50s and 60s. She helps clients evaluate their financial situation and emotional goals as they try to decide whether to move to a smaller or larger home.

“The people we work with aren’t retiring yet, but they are in a ‘now what’ phase where they can choose where they want to be based on their lifestyle rather than on their kids’ schools,” Bernstein told The Washington Post. “We talk to them about what they want out of their next home and provide them with free advice and then recommend our partner real estate agents to help them find a specific home. … We take a personal inventory of what people hope to accomplish with their move, such as reducing their commute, eliminating home maintenance or downsizing to something less expensive so they can use their cash for something else.”

Sherwin-Williams’ 2020 Color Choice Harks Back to the ’20s | Realtor Magazine

Paint company Sherwin-Williams has announced its pick for 2020 color of the year: a deep navy blue. The firm’s design team predicts the hue will make a bigger splash across home interiors next year, from walls to kitchen cabinets.

PPG, another paint company, also chose a blue hue as its 2020 color of the year, although it’s abrighter cobalt tone called Chinese porcelain.

Sherwin-Williams’ choice, Naval SW 6244, serves as a nod to art deco influences and the “Roaring ’20s,” the company says. The color pairs best with a mix of natural materials and textures, such as marble and mixed metallic. For example, designers say, Naval SW 6244 can go with gold metallic accents that “bring warmth to navy’s boldness” or with shades of green for a “down-to-earth presence.”

“Pair Naval with natural materials, such as warm leather tones, vibrant greenery, and woven fiber rugs, to create a calming oasis in your home,” says Sue Wadden, director of color marketing at Sherwin-Williams. “Furniture and decor can be mixed and layered to build a look as minimalist or maximalist as you like.” The color can serve either as a neutral tone or a bold accent, she notes.

The use of color in interior design is changing, Wadden notes. “It’s not just changing what a space looks like anymore, but how it makes you feel. We’re predicting that the next decade in color is going to be bold. This year, we saw the return of the ‘70s, and next year, we think the vibrant energy and luxurious design of speakeasies will make a comeback. Naval merges the desire for rich, inspiring color with our yearning for relaxation and retreat. In the next 10 years, we’ll continue to move away from the omnipresent neutrals, and design will feel more personal again.”

Mortgage Rates Help Buyers Save on Monthly Payments | Realtor Magazine

Slower home price growth and lower mortgage rates mean home buyers are paying less on their monthly mortgage payment than a year ago. The principal and interest payment on a median-priced home—what the real estate data firm CoreLogic calls the “typical mortgage payment”—dropped in June year over year.

The U.S. median sales price in June was $235,433, up 3.3% year over year. However, the typical mortgage payment dropped 6.1%, CoreLogic reports. The decline was mostly due to decreases in mortgage rates. A year ago, the median sales price was up 5% year over year, and the typical mortgage payment surged 14% because of an increase in mortgage rates. In May, however, the typical mortgage payment posted its first annual drop in nearly three years, and home buyers started unlocking more savings.

The typical mortgage payment in June was nearly 32% lower than the all-time high of $1,287 set in June 2006.

CoreLogic forecasters predict annual gains in home prices to average about 4.5% on a monthly basis from July 2019 through June 2020. Factored in with falling mortgage rate forecasts, the typical mortgage payment likely will continue to dip and is forecasted to average a drop of 7.6% for the last few months this year, according to CoreLogic economists. “The trend is driven by the expectation that, on average, the rate on a 30-year fixed-rate mortgage during the July 2019 through June 2020 period will be about 0.7 percentage points lower than a year earlier,” researchers note at the CoreLogic Insights Blog.

Freddie Mac reported the average on a 30-year fixed-rate mortgage was 3.56% last week.

FICO Scores Surge to Record High | Realtor Magazine

Credit scores are rising, which bodes well for mortgage seekers desiring the lowest rates. The average FICO credit score, which is a widely used measure of a person’s creditworthiness, stands at 706, a record high, according to newly released FICO data.

For comparison, in 2009 at the end of the Great Recession, the average FICO score was 686. Scores averaged 690 in 2006 during the housing bubble.

A FICO score in the range of 670 to 739 is considered “good,” and between 740 to 799 is “very good,” according to FICO.

“Significant improvement in the overall population’s credit profile has been the key driver of the 20-point increase in the national average FICO score over the past decade,” writes Ethan Dornhelm, vice president of scores and predictive analytics at FICO, in a recent blog post. “These improvements are reflective of improving consumer financial health, as would be expected during a period of economic expansion.”

A stable and growing economy with low unemployment, higher wages, and greater financial health is behind the increase in FICO scores, he notes. But Dornhelm also notes that an increase in consumer awareness of FICO scores has also been leading to the higher numbers lately.

Also, consumers who had negative information on their credit profiles from the Great Recession have since seen them removed, allowing their scores to rise. “Consumers who suffered financial misfortune during the Great Recession have over the past few years had the associated missed payments from that time period purged from their credit file,” he notes.

One of the big factors contributing to higher scores is the growth of on-time mortgage payments, Dornhelm notes. In April, just 2.8% of consumers were 90 days or more late on a mortgage payment within the last two years, compared to 7.2% in 2009.

Millennials, who are between the ages of 23 and 38, have had less time to build up a credit history so they tend to have lower credit scores than older adults. The average FICO score for a millennial in the fourth quarter of 2018 was 665 compared to baby boomers’ 732 and the silent generation’s 756, according to data from Experian.

Mortgage Rates Post Biggest Jump in Nearly a Year | Realtor Magazine

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Mortgage rates jumped dramatically this week but stand to dip some in the near future after the Federal Reserve lowered interest rates Wednesday. The 30-year fixed-rate mortgage rose to a 3.73% average—its largest week-over-week increase since October 2018. However, despite the uptick, rates remain historically low, Freddie Mac reports. So tell your buyers not to panic in the face of this latest hike.

“Despite the rise in mortgage rates, economic data improved this week—particularly housing activity, which gained momentum with a noticeable rise in purchase demand and new construction,” says Freddie Mac Chief Economist Sam Khater. “Home buyers flocked to lenders with purchase applications, which were up 15 percent from a year ago, and residential construction permits increased 12 percent from a year ago to 1.4 million—the highest level in 12 years. While there was initially a slow response to the overall lower mortgage rate environment this year, it is clear that the housing market is finally improving due to the strong labor market and low mortgage rates.”

Freddie Mac reported the following national averages with mortgage rates for the week ending Sept. 19:

• 30-year fixed-rate mortgages: averaged 3.73%, with an average 0.5 point, rising from last week’s 3.56% average. Last year at this time, 30-year rates averaged 4.65%.
• 15-year fixed-rate mortgages: averaged 3.21%, with an average 0.5 point, rising from last week’s 3.09% average. A year ago, 15-year rates averaged 4.11%.
• 5-year hybrid adjustable-rate mortgages: averaged 3.49%, with an average 0.4 point, up from a 3.36% average last week. A year ago, 5-year ARMs averaged 3.92%.

Owners Are Miscalculating Home Improvement Budgets | Realtor Magazine

Homeowners are underestimating the cost of expensive remodeling projects, often by thousands of dollars. For example, homeowners’ estimate for the price of a kitchen remodel is off by more than $9,500, a difference of 48%, according to a new study from Discover Personal Loans based on a survey of 969 consumers. The kitchen renovation, one of several common remodeling jobs that researchers evaluated, was the most underestimated home project.

“People often incorrectly estimate some of life’s costs,” the researchers note. “From kitchen remodels to health care expenses or the cost of starting a business, many have trouble accurately estimating the cost of these expenses and many others that may come up.”

NAR’s Remodeling Impact Report

Many homeowners struggle to estimate how much money they will need for home improvement projects, the survey finds. On average, homeowners underestimated the surveyed renovation projects by an average of about 46%, making it difficult for owners to accurately budget. Researchers point to this as a reason why they’re not saving enough. Only 37% of homeowners surveyed set aside a part of their monthly budget to save for repairs and home improvements.

Consumers also underestimate smaller projects like cabinet re-facing, as many thought the price was 74% less than the actual cost, the survey found.

“One common budgeting pitfall is forgetting to account for the cost of the labor,” the survey notes. “Labor can account for over one-third of your total cost.” Further, a labor shortage is driving up costs even as the price of materials is rising.

 

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How Consumers Will Benefit From Latest Fed Rate Cut | Realtor Magazine

The Federal Reserve lowered its benchmark interest rate by another quarter of a percentage point on Wednesday to a range of 1.75% to 2%, citing concerns over a global economic slowdown. Mortgage rates aren’t directly tied to the Fed’s interest rate, but they do tend to be influenced by them.

Following its meeting, the Fed signaled that another rate cut is likely before the end of the year. It cited “uncertainties” about the economic outlook and vowed to “act as appropriate to sustain the expansion.”

“For consumers, mortgage rates may decline, or may not, since the global bond market influences the longer-term interest rates,” says Lawrence Yun, chief economist at the National Association of REALTORS®. “Rising government deficit and debt levels imply some upward pressure on bond yields. However, a softening economy and slack in aggregate demand points to a downward nudge to bond yields. Various competing forces are at work. One thing is clear: Mortgage rates currently are essentially at their lowest mark in modern history.”

Still, while mortgage rates remain low, the Fed’s actions Wednesday will likely have little impact, at least initially, in directly bringing rates down more, several economists said after the Fed’s announcement.

“I don’t expect that the Fed rate cut will have much of an effect on fixed rates, but it may help support lower rates on ARMs,” says Lee E. Ohanian, professor of economics and director of the Ettinger Family Program in Macroeconomic Research at UCLA. “The 10- and 30-year Treasury rates are still extremely low, even after moving up a bit from last week and those low rates will support relatively low fixed mortgage rates.”

The trend in mortgage rates right now is being driven primarily by the impact of trade policy and global economic pessimism on long-term treasuries, notes Ruben Gonzalez, chief economist at Keller Williams. “Recently, we have seen some stabilization of treasuries, and mortgage rates have risen slightly,” Gonzalez said in a statement. “However, without some genuine resolution to geopolitical tensions around trade, mortgage rates are likely to remain low for the remainder of the year.”

Some economists—as well as President Donald Trump–were expecting the Fed to take a bolder stance on Wednesday and cut rates much more to stave off a possible recession.

“It would have been better to get the economy going right away” with a greater cut at this week’s meeting of half a percentage point instead of just another quarter percentage point, says Yun. “The indication of another rate cut in a few months will simply hold back some consumer and business decisions until then,” Yun says.

Following its meeting, the Fed said that the U.S. economy is in “strong shape and unemployment remains low.” “If the economy does turn down, a more extensive series of rate cuts could be warranted,” Fed Chairman Jerome Powell said at a news conference following the Fed’s meeting.

3 Designs That Do the Master Bedroom No Justice | Realtor Magazine

A master bedroom is meant to be a peaceful place to relax and recharge. That’s why designers say a lot of attention needs to go into its look: to make sure it fulfills that purpose. Design experts also say an uninviting master retreat could negatively affect resale value, so there’s more at stake in the bedroom design than a restful sleep.

“One thing to keep in mind is that form follows function, meaning the visual appearance of your bedroom comes second to bedroom functionality—especially since roughly one-third of your life is spent in your bedroom,” Michael DiMartino, senior vice president of installations at Power Home Remodeling in Chester, Pa., told realtor.com®.

Design experts shared with realtor.com® some of the most common bedroom design mistakes they see, including:

Having too large an empty space. Spacious bedrooms are usually a plus, but you don’t need to go overboard. “Between a bed, nightstands, one or two dressers, and maybe an armchair, there’s only so much furniture that goes in a bedroom,” Nathan Outlaw, president of Onvico, a design and construction company in Thomasville, Ga., told realtor.com®. A room that is too large can feel empty and uninviting, he says.

Forgetting a TV. Most people want a television in the master bedroom, and it’s a good idea to at least stage one if selling. “We find about 70% of our clients want a TV in the bedroom,” says Thomas B. Wagner, a residential architect in Haddonfield, N.J. Jennifer Okhovat, a real state pro with Compass in Los Angeles, told realtor.com® that she fields a request for bedrooms with TVs often. “I’m selling a home right now with two guest bedrooms, and one of the biggest objections I am getting from buyers is that there is nowhere to put a TV,” she says.

Disregarding the closet size. “The design of closet space is quite important,” Amy Berglund with RE/MAX Professionals in Colorado told realtor.com®. “It’s a big turnoff to show a closet that is crammed with clothes and shoeboxes because the closet hasn’t been thoughtfully designed with proper shelving, baskets, etc.” Real estate and staging pros advise making sure there is enough hanging space for longer clothing pieces. Also, make sure the shelving isn’t so high that it isn’t accessible. In some cases, you may need to add a ladder to the design or show a stepstool.