Yajnesh Rai

Mortgage Rates Rise After Record All-Time Lows Last Week | Realtor Magazine

The 30-year fixed-rate mortgage jumped to an average of 2.79% this week, increasing after last week’s record low of 2.65%, Freddie Mac reports in its weekly mortgage survey. Upticks over the last couple of weeks in 10-year Treasury notes—a key benchmark for mortgage rates—will prompt mortgage rates to rise, economists note.

“As Treasury yields have risen, it is putting pressure on mortgage rates to move up,” says Sam Khater, Freddie Mac’s chief economist. “While mortgage rates are expected to increase modestly in 2021, they will remain arguably low, supporting homebuyer demand and leading to continued refinance activity. Borrowers are smart to take advantage of these low rates now and will certainly benefit as a result.”

Freddie Mac reports the following national averages with mortgage rates for the week ending Jan. 14:

• 30-year fixed-rate mortgages: averaged 2.79%, with an average 0.7 point, rising from last week’s all-time low of 2.65%. A year ago, 30-year rates averaged 3.65%.
• 15-year fixed-rate mortgages: averaged 2.23%, with an average 0.7 point, increasing from last week’s 2.16% average. A year ago, 15-year rates averaged 3.09%.
• 5-year hybrid adjustable-rate mortgages: averaged 3.12%, with an average 0.4 point, increasing from last week’s 2.75% average. Last year at this time, 15-year rates averaged 3.39%.

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

The National Association of REALTORS® forecasts that the 30-year fixed-rate mortgage will average 2.9% and 3% in the first and second quarter of 2021, respectively.

Poll: Consumers Expect Even Hotter 2021 Market | Realtor Magazine

Sixty percent of home buyers and sellers say they’re optimistic about the housing market in 2021, a leap above 2020’s numbers, according to a new survey commissioned by Redfin. High earners and homeowners are the most upbeat, shows the survey of more than 1,400 people, which was conducted in November and December.

Nearly three-quarters of respondents who earn more than $150,000 say the housing market will fare better in 2021 than 2020, the highest of any other income group. Also, 64% of homeowners believe the housing market this year will outperform last year. Sellers express more optimism than buyers; recent double-digit gains in home prices likely explain seller enthusiasm.

 

 

 

“Most homeowners are well aware that their home value has increased and they’ve become wealthier on paper over the last year, and they’re optimistic it will continue this year,” says Daryl Fairweather, Redfin’s chief economist. “That belief is well-founded. I expect price growth to continue throughout the year as remote work culture drives interest in moving to bigger homes in rural and suburban areas.”

Fairweather says current homeowners are likely to benefit the most from the hot market, while first-time buyers will “have a hard time breaking into the market this year.”

Nevertheless, half of renters express optimism about the housing market in 2021, according to Redfin’s report. Renters may be drawn to record low mortgage rates and the possibility of greater inventory this year, Fairweather says. “But renters hoping to become first-time home buyers are also more discouraged by rising prices and competition because they don’t get to use the proceeds from selling their current home to buy a new one.”

Building Boom: Homes Are Being Built Exclusively as Rentals | Realtor Magazine

A growing number of single-family homes under construction around the country will not be listed to consumers but only made available for rent. These growing numbers of build-to-rent homes could pose greater competition for house hunters, particularly in the entry-level price points where housing shortages already abound.

Investors are building tens of thousands of homes intended to be used as rentals, believing rentals will stay in high demand in suburban locations as home prices continue to rise, The Wall Street Journal reports.

Landlords in the suburbs with single-family housing have been reporting record occupancy and fast-rising rents since the start of the COVID-19 pandemic. That’s prompting build-to-rent projects to surge nationwide. Build-to-rent giants like American Homes 4 Rent, which has built 2,500 houses in more than 60 neighborhoods and has dozens more under development, and firms like Tricon Residential Inc. have been drawn to the space over the last few years. Landlords say renters are willing to pay premiums for brand-new homes.

“Every institutional investor is considering this space,” Trevor Koskovich, who leads investment sales at NorthMarq, a property deal adviser, told The Wall Street Journal. The company is involved in several build-to-rent projects in the Phoenix area, including 943 one- and two-bedroom single-family houses.

Builders are teaming up with investors to build neighborhoods of single-family rental homes. Taylor Morrison Home Corp. predicts an increasing share of new U.S. homes—about 5% over the next few years—will be sold directly to investors. Usually, that percentage hovers around 1% for the company. LGI Homes Inc. told The Wall Street Journal that build-to-rent homes likely comprised up to 10% of its 2020 sales, or 900 homes.

Over the 12 months ending Sept. 30, 2020, more than 50,000 homes had been built specifically as rentals, according to John Burns Real Estate Consulting.

How Will COVID-19 Vaccine Rollout Affect Housing Markets? | Realtor Magazine

As COVID-19 vaccines roll out, real estate experts are considering their impact on the trajectory of the housing market.

“We’re going to settle somewhere in between where we were before COVID and where we were during COVID,” Danielle Hale, realtor.com®’s chief economist, recently said.

Many real estate forecasters are predicting that more inventory will arrive over the coming months as vaccine distribution gains momentum. Some would-be home sellers may be choosing to delay listing their homes due to the pandemic. (Read more: Sellers More Cautious as COVID-19 Cases Spike)

“As the risk of serious illness declines because more people are vaccinated, we expect to see more sellers,” Hale said. That could be welcome news for home buyers who are finding limited choices. Realtor.com® reported last week that housing inventories hit an all-time low in December as buyer demand continued to be elevated.

Robert Dietz, chief economist of the National Association of Home Builders, predicts that builders will construct as many as 1 million single-family homes and townhomes over the next year to help with tight inventories.

An increasing supply of housing could take pressure off prices. Home prices have posted annual double-digit gains over recent months.

Realtor.com® reports: “As the economy picks back up and people are no longer afraid to be within 6 feet of one another, they’ll get new jobs, promotions, and raises. That will give them the cash they need to become homeowners or trade up to a larger abode.”

Real estate experts say cities are likely to recapture losses in population. The pandemic has been blamed for an exodus from big cities to the suburbs, where space is more plentiful. In cities, “there’s a dramatic reset in affordability,” Jonathan Miller, a real estate appraiser based in New York City, told realtor.com®. “It’s starting to trigger interest from younger renters who were priced out and unable to enter the market.” (Read more: Exodus to the Suburbs Appears to Be Reversing)

Still, the suburbs remain a hot choice for homeowners looking for more space for less money. “Single-family homes in the suburbs will clearly be favored over the condominiums in downtown, city centers,” Lawrence Yun, chief economist of the National Association of REALTORS®, told realtor.com®. “People may seek out more distant suburbs.”

Greater Kitchen Storage Is in Demand | Realtor Magazine

Kitchen storage is a top priority among renovating homeowners, finds the 2021 U.S. Houzz Kitchen Trends Study, based on a survey of more than 2,000 homeowners planning or in the midst of a kitchen remodel. Renovators are paying closer attention to their cabinet and pantry storage.

Many of the surveyed homeowners turned their attention to upgrade their kitchen cabinets, either replacing them or refacing the ones they already have. Also, the percentage of homeowners adding or upgrading a pantry space is on the rise. Nearly half of homeowners upgraded their pantry cabinets, and one in eight added a walk-in pantry—both up compared to last year, the survey finds.

 

Becki Peckham © Houzz

 

“Storage has really come into focus as people have spent more time at home during the pandemic,” says Liza Hausman, Houzz vice president of industry marketing. “We’re seeing an increase in the amount of cabinetry added in renovations, and more homeowners are reaching out to professionals on Houzz for help making their kitchens work better, most often within the same layout and square footage.”

The focus remained heavily on adding storage in the kitchen, while other upgrades like kitchen light fixtures and appliances decreased have over this past year, the study found.

 

Margaret Wright Photography © Houzz

 

Here are additional highlights from Houzz’s kitchen study:

• Bolder island colors: Forty-one percent of renovators differentiated their island cabinet color from the colors in the rest of the kitchen. Blue and gray are the top choices for nearly half of homeowners with contrasting island cabinets. However, only 13% chose these colors for their main wall cabinetry.
• Trending cabinetry: Shaker-style and white cabinet doors continue to be the top choice among renovators, despite decreasing in favor by five percentage points compared to last year.
• Added built-ins: Renovations for cabinetry also tended to include built-in specialty organizers, drawers, or trays. The most popular organizers in the kitchen installed are for cookie sheets and spices, the study finds. The most common specialty drawers included are pullout waste or recycling drawers. More than a third of kitchen renovations also included specialty shelving trays, such as revolving trays (such as Lazy Susans) or pullout or swing-out trays.
• Not so open: The number of homeowners renovating their kitchen spaces that created an open concept floor plan by opening up their kitchen to other spaces in the home has dropped significantly over the past year (53% in 2019 to 43% in 2021). But one in five homeowners is opening up their kitchen to outdoor space (22%).
• Appliances added to the island: Nearly two-thirds of homeowners renovating their kitchens add in an island, and more than half added an appliance to the island. The most popular appliances to include within the island are a dishwasher and microwave.
• Hardwood appeal wanes: Hardwood flooring dropped from the top-choice for flooring to number 2, behind ceramic or porcelain tile this year. Vinyl continues to grow more popular; 19% of renovators chose vinyl or resilient flooring last year, up 5 percentage points compared to 2019.
• Neutrals dominate: Neutral tones like gray, white, and beige on wall surfaces continue to dominate. Owners are adding in some color but reserving those color punches for multicolored backsplashes or blue walls.
• High-tech faucets and appliances: More than half of homeowners who upgraded their faucets and appliances sought more high-tech models. Wireless controls for appliances are gaining popularity.
• Median expenditures: The median expenditure on a major kitchen remodel—in which all the cabinets and appliances are replaced—was $35,000 last year. The median spend for a minor remodel is about $8,000.

One of the Largest MLSs Announces Record-Setting Sales Year | Realtor Magazine

The Midwest Real Estate Data (MRED), one of the nation’s largest multiple listing services covering much of Illinois and parts of Wisconsin and Indiana, announced 2020 was a record year in sales from its subscribers. Agents through MRED’s marketplace conducted more than $43 billion of business in 2020, the most since MRED was founded in 2008.

That also marks a 14% increase over the previous record set in 2018 ($37.7 billion).

Many real estate professionals have been reporting their best production numbers ever in 2020. Despite the COVID-19 pandemic, a buying frenzy for a limited number of homes for sale nationwide has prompted home prices to rise rapidly.

“The real estate professionals in our market proved their incredible resilience beyond a doubt in the unprecedented year of 2020,” says Rebecca Jensen, MRED’s president and CEO. MRED serves more than 46,000 real estate professionals from more than 7,500 offices.

Other MLSs across the country are still tallying their 2020 numbers but are poised to report escalated sales for 2020, too. For example, the MLS of the Houston Association of REALTORS®, which services 40,000 REALTORS®, reported homes selling at a record-setting pace toward the end of the year. In November, the Houston MLS reported a 25.6% increase year-over-year in single-family home sales with homes priced at $750,000 or higher jumping 88.4% annually in sales.

“In my 50 years in the real estate business, I have never seen a market defy supply and seasonality the way Houston has—amid a pandemic, no less,” HAR Chairman John Nugent said in a statement.

MRED says 2020 was marked by a record year for median home prices, a record number of sales, and near-record selling times, as well as the tightest housing inventories ever. MRED subscribers closed a record-high 139,000 residential listings, a 4% increase over the previous record set in 2017 of 133,000. Also, the median sales price for residential properties in MRED’s connectMLS system was $248,000 in 2020—the highest median sales price recorded in the last decade. Properties sold in an average of 81 days in the MRED database—the second-lowest annual number since MRED was founded (just behind 2018’s average of 79 days).

Inventory Hits All-Time Low as Buyer Demand Explodes | Realtor Magazine

Home buyers’ choices are increasingly limited. The number of homes for sale sank to an all-time low in December, dipping below 700,000 for the first time ever, according to realtor.com®’s Monthly Housing Trends Report. Home buyer demand remains high, causing bidding wars for the few homes on the market. Home prices are up by double-digit numbers compared to a year ago.

“The shortage of homes for sale has been an ongoing issue for the last couple of years, but in December, the combination of the holiday inventory slowdown and the pandemic buying trend caused it to dip to its lowest level in history,” says Danielle Hale, realtor.com®’s chief economist. “Looking forward, we could see new lows in the next couple of months as buyers remain relatively active, but a surge of new COVID-19 cases may slow the number of sellers entering the market.”

Hale says more inventory will eventually come, especially in the second half of the year. “Until then, finding a home will continue to be a top challenge for buyers across all price ranges,” she says.

The number of listings has dropped nearly 40% from a year ago. That equates to about 449,000 fewer homes for sale in December 2020 compared to December 2019, according to realtor.com® data.

The metros with the largest declines in new listings compared to a year ago are Nashville (-19.9%); Memphis, Tenn. (-18.5%); and Charlotte, N.C. (-16%).

On the other hand, San Jose, Calif., and San Francisco saw a significant year-over-year uptick in new listings in December 2020, up 123.8% and 98.9%, respectively. Several tech companies in both markets have expressed a long-term commitment to remote work, which could be prompting more residents there to move.

Overall, list prices continued to increase in December 2020. The median listing price rose 13.4% year-over-year in that month to $340,000. However, that is a slight decrease from its previous peak of $350,000 earlier in the year. The metros seeing the largest list price gains were: Austin, Texas (up 20%); Riverside-San Bernardino, Calif. (up 17.2%); and New Orleans (up 16.8%).

 

 

 

 

Sellers More Cautious as COVID-19 Cases Spike | Realtor Magazine

Americans are showing more angst about selling their homes, according to Fannie Mae’s latest Home Purchase Sentiment Index, which is based on a poll of 1,000 consumers. The drop in home selling sentiment, posted in December, came as consumers faced worsening COVID-19 infections across the U.S., says Doug Duncan, Fannie Mae’s senior vice president and chief economist. The index’s “good time to sell” and “good time to buy” components dropped “significantly” as respondents noted concern over economic conditions, he added.

The seller-side component dropped for the first time since April—and by 18 points, reversing most of the increases over the previous three months. It implies that “at least temporarily, potential home sellers might wait to list their homes,” Duncan says. “If so, this could have the effect of perpetuating already-tight inventory levels and supporting additional—albeit lesser—home price growth, which could contribute to a further moderating of home sales.”

 

The index is based on Americans’ perceptions of the housing market, including home buying and selling as well as personal finances and jobs. The index’s reading in December dropped for the second consecutive month and fell to its lowest level since May 2020.

Here’s a closer look at data from December’s Home Purchase Sentiment Index:

• Buying outlook:52% of consumers say now is a good time to buy a home, down from 57% in November.
• Selling outlook:50% of consumers say now is a good time to sell a home, falling from 59% the month prior. The percentage of consumers who say now is a bad time to sell rose to 42%.
• Home price expectations: 41% of consumers say they expect home prices will go up over the next 12 months; 16% expect home prices to go down.
• Mortgage rate expectations:43% of consumers expect mortgage rates to rise over the next 12 months; 39% believe rates will decrease, and 8% expect them to stay the same.
• Job concerns:75% of respondents say they are not concerned about losing their job over the next 12 months, down slightly from 76% the previous month. But 25% express concern about losing their job over the next year.
• Household income: 20% of consumers say their household income is significantly higher than it was 12 months ago; 18% say their income is significantly lower. The percentage who say their household income is about the same rose to 61% in December.

New Year, New Record Low for Mortgage Rates | Realtor Magazine

Mortgage rates started the year with a new record low. The 30-year fixed-rate mortgage dropped to a 2.65% average this week, the lowest since Freddie Mac began tracking such records more than 50 years ago.

“Despite a full percentage point decline in rates over the past year, housing affordability has decreased because these low rates have been offset by rising home prices,” says Sam Khater, Freddie Mac’s chief economist. “However, the forces behind the drop in rates have been shifting over the last few months, and rates are poised to rise modestly this year.” That could prompt a decline in housing affordability and squeeze home buyers during the spring selling season, Khater cautions.

The National Association of REALTORS® has forecasted mortgage rates to average 3.1% in 2021.

Freddie Mac reports the following national averages with mortgage rates for the week ending Jan. 7:

• 30-year fixed-rate mortgages: averaged 2.65%, with an average 0.7 point, dropping from last week’s 2.67% average. Last year at this time, 30-year rates averaged 3.64%.
• 15-year fixed-rate mortgages: averaged 2.16%, with an average 0.6 point, falling slightly from last week’s 2.17% average. A year ago, 15-year rates averaged 3.07%.
• 5-year hybrid adjustable-rate mortgages: averaged 2.75%, with an average 0.3 point, rising from last week’s 2.71% average. A year ago, 5-year ARMs averaged 3.30%.

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

Housing Construction Ramps Up in Second-Home Markets | Realtor Magazine

As remote work has grown and more Americans are no longer bound down to a long commute, more people are being drawn to the idea of a second home. Builders are responding to the uptick in interest.

Single-family construction in second-home markets rose at a 13.6% average rate in the third quarter annually compared to a 10.5% pace in other counties, according to data from the National Association of Home Builders.

Multifamily development in second-home markets is also on the rise. Multifamily development increased 11.1% in second-home counties while it declined by 0.9% in other areas during the third quarter, according to the NAHB.

The NAHB identified high-concentration second-home counties as those where the majority of the local housing stock is not classified as the taxpayer’s principal residence and a big portion consists of non-rental properties.

As of 2018, Americans owned about 7.4 million second homes—about 5.6% of the nation’s housing stock, according to the NAHB.

“In addition to generating a suburban shift, the COVID-19 pandemic also produced demand changes that benefited second-home communities,” the NAHB notes on its Eye on Housing blog. Many of these communities are located in less densely populated areas, such as small towns or rural areas. Nearly 70% of second-home counties are located in rural areas, the research shows.

“Remote work arrangements have made it possible for some wealthier Americans to move to alternate locations that are not just small, suburban shifts from within their current metro area,” the NAHB notes on its blog. “More fundamentally, second-home demand may also be benefiting by an acceleration of retirement plans, as well as stock market gains.”