Yajnesh Rai

Kitchen Remodels Offer Big Paybacks at Resale | Realtor Magazine

Homeowners looking for a remodeling project may be smart to tackle a kitchen renovation—that is, if they’re looking for projects with the strongest buyer appeal and high returns on their investment at resale.

Kitchen renovations and upgrades are among the top remodeling projects most likely to add value to a home at resale and most likely to appeal to home shoppers, according to the 2017 Remodeling Impact Report, conducted by the National Association of REALTORS®. The report takes a look at the cost of the most common exterior and interior remodeling and replacement projects and gauges how much appeal they have to buyers at resale.

Fifty-four percent of REALTORS® surveyed reported suggesting to sellers that they complete a kitchen upgrade before attempting to sell. Twenty-three percent of real estate pros also said a kitchen renovation helped to close a sale.

The Remodeling Impact Report estimates that homeowners stand to recover 57 percent—or $20,000—of the $35,000 or so of the cost to take on a kitchen upgrade. The kitchen upgrade might include adding new energy-efficient appliances, sink, faucet, and vinyl flooring; repainting the walls and ceiling; and refacing cabinets with cherry veneer and new hardware.

Kitchen upgrades don’t just offer the potential for some bang for your buck at resale but also have been found to make homeowners more happy. Eighty-one percent of remodeling consumers surveyed said they had a greater desire to be at home since completing their kitchen upgrade project, and 81 percent felt a major sense of accomplishment after the renovation.

The following interior projects REALTORS® ranked highest to lowest as remodeling projects that would appeal to home buyers (listed along with project estimate costs and the potential return on investment at resale): 

1. Complete kitchen renovation

• Cost estimate: $65,000
• REALTORS® estimated cost recovered: $40,000
• Percent of value recovered from the project: 62%

2. Kitchen upgrade

• Cost estimate: $35,000
• REALTORS® estimated cost recovered: $20,000
• Percent of value recovered from the project: 57%

3. Bathroom renovation

• Cost estimate: $30,000
• REALTORS® estimated cost recovered: $15,000
• Percent of value recovered from the project: 50%

4. New wood flooring

• Estimated cost: $5,500
• REALTORS® estimated cost recovered: $5,000
• Percent of value recovered from the project: 91%

5. Add new bathroom

• Cost estimate of project: $59,000
• REALTORS® estimated cost recovered: $29,750
• Percent of value recovered from the project: 50%

6. Hardwood flooring refinish

• Estimated cost: $3,000
• REALTORS® estimated cost recovered: $3,000
• Percent of value recovered from the project: 100%

7. New master suite/owners’ suite

• Cost estimate: $125,000
• REALTORS® estimated cost recovered: $65,000
• Percent of value recovered from the project: 52%

8. HVAC replacement

• Estimated cost: $7,475
• REALTORS® estimated cost recovered: $5,000
• Percent of value recovered from the project: 67%

9. Basement conversion to living area

• Cost estimate: $40,000
• REALTORS® estimated cost recovered: $25,000
• Percent of value recovered from the project: 63%

10. Closet renovation

• Estimated cost: $3,750
• REALTORS® estimated cost recovered: $2,000
• Percent of value recovered from the project: 53%

11. Insulation upgrade

• Estimated cost: $2,100
• REALTORS® estimated cost recovered: $1,600
• Percent of value recovered from the project: 76%

12. Attic conversion to living area

• Estimated cost: $75,000
• REALTORS® estimated cost recovered: $40,000
• Percent of value recovered from the project: 53%

New report reveals Bay Area home prices won’t roll back for at least a decade | abc7news.com

SAN JOSE, Calif. (KGO) —

If you’re waiting for our Bay Area housing prices to drop, a new report says don’t hold your breath.

You will not believe how many years UCLA says it’ll take for our housing prices to roll back.

 

The San Jose mayor told ABC7 News there’s no more land, and it’s time to build up. In downtown San Jose and in South San Jose, that’s what they’re doing, but really it’s just a drop in the bucket.

So much more is needed to see just a small drop in housing prices and that’s according to the latest UCLA Anderson Forecast.

Our media partner, the Bay Area News Group took a look at the housing data. Researchers found a 20-percent increase in the current level of home building that is needed to achieve even a modest 10 -percent drop in prices. That means Santa Clara County would need about 129,000 new housing units to reach that number.

The East Bay would need to build around 199,000 new homes, San Francisco would need to increase the housing supply by almost 77,000 units, and San Mateo County would need to increase by more than 54,000 units. All of this would take anywhere from 14 years to 36 years to do complete at the current pace.

A $4 billion housing bond measure will be on the ballot in 2018, but even if voters approve it that likely won’t change much for you in the short term.

New-Home Supply Up, But Not Enough | Realtor Magazine

Sales of newly built single-family homes did little to break out at the end of summer. New-home sales plunged 3.4 percent in August to a seasonally adjusted annual rate of 560,000, the lowest sales reading since December 2016, the Commerce Department reported Tuesday. That’s despite the fact that the number of new homes on the market was at its highest level since July 2014.

 

The disconnect may be more about the types of new-home construction favored by the industry at the moment. “This month’s report is another reminder that builders need to manage rising supply-side costs to meet consumer demand for affordably priced homes,” says Granger MacDonald, chairman of the National Association of Home Builders.

Sales last month dropped by the largest amount in the South, falling 4.7 percent month over month. Hurricane Harvey struck the Houston area last month, and Hurricane Irma’s damage to Florida likely will have an impact on sales over the next few months, the builder’s trade group says.

“We may see more volatility in the next few months as communities affected by the recent hurricanes experience construction delays and other economic disruptions,” says Robert Dietz, NAHB’s chief economist.

Still, new home sales were 7.5 percent higher than the same period a year ago. The inventory of new homes for sale in August was 284,000, a 6.1-month supply at the current sales pace. The median sales price of a new home in August was $300,200.

Builder Touts Mortgage to Pay Off Student Debt | Realtor Magazine

Building giant Lennar Corp. is debuting a mortgage program that promises to help young adults pay off outstanding student loan debt. The allocation toward the student loan debt by Lennar will not increase the price of the home or add to the mortgage loan balance. Here’s how it works: Borrowers who use Lennar’s new Eagle Home Mortgage Student Loan Debt Mortgage Program will be able to direct up to 3 percent of the home’s purchase price to pay down student loans when they buy a new home from Lennar.

The allocation toward the student loan debt will not increase the price of the home or add to the mortgage loan balance. Lennar will contribute up to 3 percent of the home’s purchase price to pay down the buyer’s student loans, which means the final amount the firm will pay depends on the sales price of the home. The maximum loan amount within the program is $424,100, which means the highest amount of student loan debt that will be paid by Lennar on any given home purchase agreement will be around $13,000.

“Americans are more burdened than ever by student loans, with $1.3 trillion in outstanding student loans spread out among 42 million borrowers,” says Jimmy Timmons, president of Eagle Home Mortgage, a full-service mortgage lender that is part of the Lennar family of companies. “Particularly with millennial buyers, people who want to buy a home of their own are not feeling as though they can move forward. Our program is designed to relieve some of that burden and remove that barrier to owning a home.”

Eagle Home Mortgage’s announcement comes on the heels of a new study released by the National Association of REALTORS® last week that showed young adults blamed their student debt for delaying their home purchase by an average of seven years.

Buyers interested in the Student Loan Debt Mortgage Program will be required to meet credit and income requirements. The program is first being offered on a trial basis with new Lennar homes across the country.

These 9 Things May Keep You From Getting a Mortgage | Business Markets and Stocks News | host.madison.com

Applying for a mortgage can be a daunting process for new homebuyers. The best way to prepare for it is to know exactly what lenders want from you — as well as what they don’t want. With that in mind, here are nine of the most common reasons mortgage applications are rejected.

1. Your credit score

Any prospective lender will run a credit check, and all lending programs have minimum credit score requirements that depend on how much you’re putting down, how much you have in savings, and other factors.

 

 

Conventional mortgages require a bare minimum FICO credit score of 620, and FHA mortgages require a 580 if you’re only putting 3.5% down. Some lenders impose higher standards than these minimums. It’s certainly worth checking your FICO scores before applying, and if your score isn’t stellar, check with your lender to find out their minimum requirements. If you don’t meet them, then it’s time to start working to improve your credit score. Even if you do qualify for a mortgage, it may be worth waiting a year or two while you raise your credit score; this will allow you to qualify for a lower interest rate, which could save you thousands of dollars throughout the life of the loan.

There are a number of reasons you could get a rejection letter from a mortgage lender. Image Source: Getty Images.

Be sure to check your FICO score from all three credit bureaus. Lenders typically pull all three and use the middle score. I’ve bought three homes in my life, one with an FHA mortgage and two with conventional loans, and this method was used all three times.

2. Black marks on your credit report

In addition to your FICO score itself, lenders take a closer look at the information on your credit report. If you have collection accounts or unpaid legal judgements, for example, your lender may require that you pay these off, or at least document a valid reason why they exist.

The same goes for things like foreclosures, bankruptcies, short sales, previous late mortgage payments, and any other information suggesting that you haven’t always kept up with your debts. Even if you qualify based on your FICO score, these things could get in the way of a smooth mortgage approval process.

3. Your income

As you might expect, lenders want to know that you earn enough money to afford your mortgage payments. Lenders will divide your expected mortgage payment — including principal, interest, taxes, and insurance — by your income. The result is known as the front-end ratio, and the industry standard is 28% or less, although many lenders will approve applicants with higher housing costs, especially in high-cost-of-living areas. If a mortgage would put your front-end ratio above 28%, then you should probably apply for a lower amount — or spend some time working to raise your income.

4. Excessive debt

In addition to your income, lenders will consider your other debts as well. Specifically, any monthly obligations, such as car loan payments, student loan payments, and the minimum payments on your credit cards will be considered, just to name a few.

This is added to your expected mortgage payment, and the sum is divided by your income to calculate your back-end ratio, a.k.a. your debt-to-income ratio. Lenders traditionally like to see a DTI ratio of 36% or less, but it’s possible to get approved with much higher DTI ratios. In fact, a recent rule change allows for DTI ratios of up to 50% in certain cases, specifically to allow consumers with high student loan debt to buy homes.

5. Your employment history

Your lender wants to know that you have a steady stream of income to make your payments with, and they also want to see a consistent employment history. Generally, a lender will want to see at least two years of continuous employment, preferably in the same field. In other words, if you’ve hopped between several different jobs over the past couple of years, or if there are significant gaps in employment (think a few months or more), then it could work against you.

Also, if you were in school more recently than two years ago, you’re typically exempt from this requirement, although your lender will want to see a steady employment history since you graduated.

6. New debts after you apply

This is one of the most common reasons you could be denied a mortgage after you’ve already been approved.

When you get a mortgage, your lender will typically pull your credit report and score at least twice — once when you initially apply for the loan, and again shortly before closing. Any significant discrepancies between the two can create a problem, especially if the recheck shows that you’ve opened new credit cards, charged large purchases, or done anything else that could significantly raise your debt-to-income ratio or lower your credit score.

There are several big expenses that typically come with buying a new house, such as furniture. Wait until after closing to finance any of them.

7. A too-small down payment

It’s a common myth that you need 20% down to buy a home. However, although you can qualify with a tiny down payment, paying 20% down can certainly make things easier for you in the long run. You can obtain a conventional mortgage loan with as little as 3% down or an FHA loan with as little as 3.5% down. However, unless you are planning to get a VA loan, USDA mortgage, or some other type of special loan, you’ll probably need to put something down.

Closing costs are another up-front expense that will typically cost anywhere from 2% to 5% of the home’s selling price, and a lender will want to see that you’ll have enough money for your required down payment and any closing costs. In addition, you may be required to show that you have some money in reserves — six months’ worth of mortgage payments is a common threshold.

8. A lack of documentation

Even if you have more than enough income, a rock-solid employment history, and tons of money in savings, none of those will help you obtain a mortgage unless you can adequately document them. If you work for an employer, and you keep your money in a savings account, this shouldn’t be an issue, but for self-employed individuals (especially who deal in cash often) and in certain other situations, it can be tough to thoroughly document everything.

9. Issues with the home itself

Finally, another common reason for mortgage denial is a problem with the home itself. Lenders want to make sure the home is actually worth what you’re paying for it so that in the unlikely event that you fall into foreclosure, the lender has an asset it can easily sell to recoup its money. Therefore, if the home doesn’t appraise for enough, it can create a problem. You may need to put more money down or try to negotiate a lower selling price that’s in line with the appraisal.

Condo buyers can be denied because of HOA concerns — specifically, when not enough of the units are owner-occupied. And if the property you plan to buy is simply in poor condition, it could be a cause for denial.

Borrowers May Find it Easier to Get a Mortgage | Realtor Magazine

Lenders reportedly are loosening their standards to qualify for a mortgage. Fannie Mae’s third-quarter 2017 Mortgage Lender Sentiment Survey shows the main reason behind the easing of credit has been the increased competition that lenders are feeling.

Across all loan types—GSE-eligible, non-GSE-eligible, and government—lenders reported easing credit standards over the last three months. Further, the net share of lenders who say they expect to ease credit over the next three months reached a survey high of 18 percent.

“Lenders further eased home mortgage credit standards during the third quarter, continuing a trend that started in late 2016,” says Doug Duncan, senior vice president and chief economist. “In particular, both the net share of lenders reporting easing on GSE-eligible loans for the prior three months and the share expecting to ease standards on those loans over the next three months increased to survey highs. Lenders’ comments suggest that competitive pressure and more favorable guidelines for GSE loans have helped to bring about more easing of underwriting standards for those loans. We believe that GSE attempts to relieve repurchase concerns and expand credit for creditworthy borrowers have contributed to the easing trend.”

Loan demand has been down in recent months, as fewer homeowners refinance their mortgages. As such, lenders are reporting negative net profit margins for four consecutive quarters.

“The share of lenders citing competition from other lenders as the key reason for a negative profit market outlook rose to a new survey high,” Duncan says.

6 Tips To Sell Your Property Quickly For The Highest Dollar Even During “Off” Season

Selling a house can be stressful, especially if you’re putting it on the market in the fall. Finding the right real estate agent to partner with to market your home is the first step and one that should not be taken lightly. But, the selling process shouldn’t be placed entirely in your agent’s lap.

 

There are several things that every homeowner can (and should) do to make their property standout since nobody wants a house for sale that rots on the market. Here are six tried and true tips to make sure your property stands out from its competition even in an over-saturated or off-season market that will ensure that you sell your home as quickly as possible for the highest possible price. Prepare yourself. None of these recommendations are easy, fun, or for the casual, uncommitted seller.

Clear Out Your Clutter & Get A Storage Unit: I get it. It’s hard not to accumulate stuff after being in a home for a few years. But, most people don’t have the vision to see past things like ill-sized furniture and clutter that makes the home look smaller then it actually is. And no one wants to step into a house that appears to be messy or disorganized. If you want to sell your house quickly do yourself a favor and clear out your space so the flow and square footage of the home is easily seen and highlighted. Also, remove personal items like photos or any highly valuable items since people want to envision their new lives in the home—not yours.

Clean everything out of the basement, the attic, and organize closets and pantries. What doesn’t go to storage either donate it or give it the heave ho. I know from very recent experience that a 10’ x 20’ storage unit will cost you less than $125/month (not including the sweat equity of moving everything out). It’s money well spent. Look at the exercise as an opportunity to streamline your life—believe me it will make your life easier when you actually move.

 

Fix Everything: Inspections aren’t just due diligence—they are re-negotiation leverage especially in a buyer’s market. Fixing everything before you list your property may sound like a daunting task with some houses but to every reasonable extent repair anything that’s broken especially the obvious eye catching ones like rotting wood on the exterior, peeling paint, stains on the floors and carpets, running toilets and dripping faucets, broken lights, cracked windows, electrical switches to nowhere, old termite damage in the attic, and leaks in your foundation or crawl space.

Any issues with the home will eventually be discovered by the buyer or during the inspection process and will most certainly cost you one way or another. If you are not handy or are unaware of the inspection process it might be a good idea to have an inspection before you list your property so there aren’t any big or expensive surprises. You don’t want to risk a deal falling apart over issues that could have been fixed right from the start.

Be Upfront About The Potential Shortcomings Of Your Property: Every home has its strengths and weaknesses some of which are undeniable. Knowing how to work with your agent to market and sell your property while acknowledging those weaknesses up front with potential buyers and other agents won’t waste anyone’s time (including your own), which will be appreciated by all parties. And beware of using superlatives in your listing like “immaculate”, or the often abused “gourmet chef’s kitchen”, unless your property truly offers buyers those characteristics. Your listing should be carefully written so that it is an honest portrayal of your home—especially since photos can be deceptive either in benefit of or detriment to the seller. There is nothing worse for a buyer then to be excited by the online presentation of a property only to being disappointed upon actually seeing the home.

Get Over Your Pride And Price Your Property Right: Nothing kills a real estate deal faster then an over-priced property. Don’t let your ego factor into the listing price. If you have chosen a strong real estate agent then trust them to guide you to the appropriate square footage cost. This is not to say that you shouldn’t participate in the price decision. However, in most American markets it’s still a buyer’s market and the days of bidding wars are mostly long gone for now. Choose a price that will get motivated buyers into the door quickly. If you price your home aggressively you may even create a bidding war and drive the overall sale price up to where you wanted it to be in the first place. If you and your agent can’t get comfortable with a number that works for you, perhaps you should sit tight and sell at a later time. One last note on price—buyers are more educated than ever these days so if you are going to ask for a premium over what your local square foot average is your house better be perfect.

Make it Experiential: Making your home a place that people don’t want to leave and must buy is the goal. As intrusive as it is to your life when people view your property you have one shot at making an impression. Take a play from the hospitality industry and make the showing experiential by stimulating all of the senses during a visit from potential buyers. Your home should be clean—that means no dirty fingerprints on doors or hair (human or otherwise) left behind for potential buyers to see. Your home should be uncluttered, and staged with fresh flowers, fresh paint, fluffed pillows, thoughtful décor, and overall be visually appealing. Turn on the music if you have surround sound. Light the fireplace. The small touches show that you care about your home and are often good indicators of how well kept the home is in less visible areas of the property.

Your home should smell appetizing too. No one wants to smell that you have three stinky dogs or like cooking venison stew in the fall. You could bake cookies, light candles, or run a diffuser with a clean smelling essential oil blend—whatever you decide choose something neutral and universally liked. Also don’t underestimate curb appeal. First impressions set a prospective buyer’s expectations before they even walk through the front door.

Put On Your PR Hat And Pitch Your House To The Media: Assuming that you have made your home picture perfect and you have the high-resolution photo assets to prove it, your home may be a good candidate for media exposure. If you have unique home whether it be architecturally or historically significant, someone notable has owned the property, or have any other unique hook, real estate writers are looking for stories like yours. You will have to do a little research to see what would be appropriate for your property as well as who to pitch the story to specifically if the publication does not offer a tip line or email contact. But on the high end you have outlets like the Wall Street Journal, Forbes, and the New York Times. There are also outlets that are architecturally driven like Curbed, Elle Décor, House Beautiful and many others. Even check your local paper to see if they spotlight properties for sale in your town or region.

As someone who not only writes about real estate but has also pitched properties to various media outlets with my former business, I know firsthand that media coverage has helped sell many properties. The more eyes that you get seeing your property making a positive impression the better chances of selling your home quickly and for the highest amount. Remember that just like in media—your window for staying front and center with your property is short. So make the most of it otherwise your wallet will take the hit.

Prices Rise Fastest in Disaster-Prone Cities | Realtor Magazine

The threat of natural disasters isn’t scaring buyers away from the most vulnerable cities. Home prices are rising twice as fast in areas with the highest risk of natural disasters compared to those with the lowest risk, according to a new study released by real estate data firm ATTOM Data Solutions.

Researchers analyzed more than 22,000 U.S. cities across 3,000 counties, factoring in six natural disaster threats: earthquakes, floods, hail, hurricane storm surge, tornadoes, and wildfires. The median home prices in cities in the top 20th percentile for natural disaster risk have increased an average of 65 percent over the past five years. On the other hand, median prices in cities within the bottom 20th percentile for natural disaster risk increased an average of only 32 percent in the same time period.

“Strong demand for homes in high-risk natural hazard areas has helped to accelerate price appreciation in those areas over the past decade, despite the potential for devastating damage, as evidenced by the recent hurricanes that made landfall in Texas and Florida,” says Daren Blomquist, senior vice president at ATTOM Data Solutions. “That strong demand is driven largely by economic fundamentals—primarily the presence of good-paying jobs, although the natural beauty that often comes hand-in-hand with high natural hazard risk in these areas is also attractive to many home buyers.”

But Blomquist adds that data shows more consumers in certain areas beginning to factor natural disaster risk—particularly floods—into their homebuying decisions. “Counter to the national trend, home price appreciation is slower in Florida and Louisiana cities with the highest flood risk than in cities with the lowest flood risk,” he says.

Housing Predictions for 2018 | Realtor Magazine

New homes are expected to be a “primary driver of sales in 2018,” as 1.33 million housing starts are predicted next year—up from 1.22 million in 2017, according to Freddie Mac’s September Outlook report, which gauges future real estate activity. Total home sales are expected to increase about 2 percent from 2017 to 2018, according to the report.

Economists also predict that the uptick in housing starts, coupled with a moderate increase in mortgage rates, will help slow the run-up in home prices next year. Freddie Mac forecasts a 4.9 percent increase in home prices in 2018, lower than the 6.3 percent growth seen so far this year. Mortgage rates also are up from near-record lows in 2016, prompting predictions that refinancings will fall to 25 percent of mortgage activity in 2018—the lowest share since 1990, according to Fannie Mae.

Still, homeowners likely will continue building equity next year. In the second quarter of 2017, the dollar volume of equity cashed out was $15 million, up $1.2 million from the first quarter. As home prices rise, cash-out activity has been rising, too.

“The economic environment remains favorable for housing and mortgage markets,” says Freddie Mac chief economist Sean Becketti. “For several years, we have had moderate economic growth of about two percent a year, solid job gains, and low mortgage interest rates. We forecast those conditions to persist into next year.”

Fed Hints at Looming December Rate Hike | Realtor Magazine

The Federal Reserve voted to leave its short-term rates unchanged on Wednesday but it did indicate that a rise to its short-term interest rates is likely on track for later this year.

“The basic message here is U.S. economic performance has been good,” Fed Chairwoman Janet Yellen said at a press conference following the Fed’s two-day policy meeting. “The American people should feel the steps we have taken to normalize monetary policy … are well justified given the very substantial progress we’ve seen in the economy.”

The Fed kept its key rates near zero for seven years. But since 2015, it has gradually raised rates by a quarter of a percentage point four times. Most recently it raised rates in June at a range of between 1 percent and 1.25 percent. Mortgage rates are only loosely tied to the Fed’s short-term rates, but the Fed’s actions do have some influence.

Mortgage rates, for example, have benefited from the Fed’s purchases of more than $1.7 trillion in mortgage-backed securities and rates have been near their lowest levels of the year, according to the Mortgage Bankers Association.

The Federal Reserve indicated after its meeting that it will start next month to unwind its purchases of mortgage-backed securities and U.S. government bonds. But any movements likely will be done so at a gradual pace.

 “That means that mortgage rates would rise up only modestly over time,” says Lawrence Yun, the chief economist of the National Association of REALTORS®. “Given the pace of unwinding asset purchases with the fewer rounds of anticipated short-term rate hikes over the next two years, it’s expected that mortgage rates should still remain at historically attractive levels.”

Yun predicts that the 30-year fixed-rate mortgage may rise to slightly above 4 percent by the end of the year, and may reach just 4.7 percent by the end of 2018.