Yajnesh Rai

Fed on Rate Hike: Not Yet | Realtor Magazine

The Federal Reserve voted Wednesday to continue to leave short-term rates alone, but hinted that a raise is still likely before the end of the year.

Read more: Fed Tightening Sparks a Yawn

Fed Chair Janet Yellen offered an upbeat report about a strengthening economy, while still acknowledging the sluggish first half of the year. Employment is increasing and household incomes are too, she said. While the case for raising rates has strengthened, Yellen said there was no need to raise rates quite yet because inflation remains below the Fed’s 2 percent target.

“We judged that the case for an increase had strengthened but decided for the time being to wait for continued progress toward our objectives,” Yellen said at a press conference following the Fed’s policy meeting.

The Fed has kept the short-term interest rate near zero since 2008. It moved the rate up a quarter percentage point late last year but has kept them flat ever since. Economists largely predict the Fed will make a move to push rates higher at its mid-December policy meeting.

What’s this mean for housing? Mortgage rates don’t exactly follow the federal funds rate, but are loosely tied to it. Mortgage rates follow mortgage bond yields and the U.S. 10-year Treasury. Treasury yields fluctuate based on several factors.

“As for the Fed moves, mortgage lenders like to price in all these expectations before the actual event happens,” CNBC reports in an article called “Why Housing Doesn’t Care About the Fed.” “That’s why mortgage rates rose last December in anticipation of the first rate hike and then fell after that due to other global economic issues.” 

Will mortgage rates keep rising then regardless of what the Fed does? Economists weigh in.

“I think rates are going to stay low, not as low as now, but lower than we are used to,” Jeremy Siegel with the Wharton School told CNBC. “We may get another half-point, three-quarter point in the next two years, on the mortgage rate that’s not going to kill the housing market.”

The 30-year fixed-rate mortgage is around a 3.75 percent national average currently.

A Lesson for Sellers on Disclosures | Realtor Magazine

Sellers may feel hesitant to reveal any minor problems with their home, afraid they’ll scare off buyers. But here’s a warning for your sellers: They may land in legal trouble if they fail to disclose.

“Most sellers think it is in their best interest to disclose as little as possible,” Rick Davis, a real estate attorney in Kansas, told realtor.com®. “I completely disagree with this sentiment. In the vast majority of cases, disclosing the additional information (especially if it is something that was previously repaired), will not cause a buyer to back out or ask for a price reduction.”

Disclosure laws vary from state to state, and sometimes even on a local level.

“In general, sellers should disclose any known facts about the physical condition of the property, existence of dangerous materials or conditions, lawsuits or pending matters that may affect the value of the property, and any other factors that may influence a buyer’s decision,” according to a recent article at realtor.com®.

This includes disclosing issues that have been previously repaired, Davis says. Also, disclose any inspection reports.

“It is much better to lose a buyer by clearly disclosing all known issues than it is to spend two years and tens of thousands of dollars in litigation,” says Adam Buck, a certified real estate specialist with the Frutkin Law Firm in Arizona.

Rest assured, sellers won’t be put on the hook for failing to disclose issues that they didn’t know about.

They should be careful not to make any guesses when prompted, particularly when it comes to the measurements of the home — one common problem area for disclosures. 

“Even if you’ve had an appraiser check out your home, you may have no idea how many square feet it truly is because, as it turns out, there’s no single agreed-upon way to measure a home,” the article states. “Three different appraisers can come up with three different measurements.” Don’t make a guess or buyers can come back and accuse you of misleading them.

Understanding the Basics of Escrow

Buying a house can involve big and scary terms, and “escrow” ranks near the top. So what is escrow, anyway?

The good news is that escrow is not as ominous as it sounds. In the home-buying process, escrow is a financial tool that allows you to set aside important items such as the buyer’s earnest money check and purchase agreement document in an impartial holding area, where it will stay until all of the details are worked out between a buyer and a seller, says Andy Prasky, a real estate professional with Re/Max Advantage Plus in Twin Cities.

The escrow officer is a third party—perhaps someone from the closing company, an attorney, or a title company agent (customs vary by state). How much does escrow cost? That varies too—as well as whether the buyer or seller (or both) pays—with the fee for this service typically totaling about 1% to 2% of the cost of the home.

How escrow works

The third party is there to make sure everything during the closing proceeds smoothly, including the transfers of money and documents. Escrow protects all the relevant parties by ensuring that no funds and property change hands until all conditions in the agreement have been met.

Along the way, proper documentation is filed with the escrow officer as each step toward closing is completed. Contingencies that might be part of the process could include home inspection, repairs, and other tasks that need to be accomplished by the buyer or seller. And every time one of those steps is completed, the buyer or seller signs off with a contingency release form; then the transaction moves on to the next step (and one step closer to closing).

 

Once all conditions are met and the deal is finalized, the money due to the sellers is transferred to them. Meanwhile an escrow officer clears (or records) the title, which means the buyer officially owns the home.

How escrow protects buyers and sellers

Escrow may seem like a pain, but here’s how it can work in your favor. Let’s say, for example, the buyer had a home inspection contingency and discovered that the roof needed repairs. The seller agrees to fix the roof. However, during the buyer’s final walk-through, she finds that the roof hasn’t been repaired as expected. In this case, the sellers won’t see a dime of the buyer’s money until they fix that roof. Talk about a nice safeguard for the buyer!

 

Sellers benefit from escrow, too: Let’s say the buyers get cold feet at the last minute and bail on the deal. This may be disappointing to the seller, but at the very least, buyers have typically ponied up a sizable chunk of change for their earnest money deposit. This money, often totaling 1% to 2% of the purchase price of a home, has been held in escrow. When buyers back out with no legitimate reason, they forfeit that money to the seller—a decent consolation for the sale’s failure.

Escrow, in other words, is the equivalent of bumpers on cars, keeping everyone safe as they move forward in a real estate transaction. Odds are, no one’s trying to swindle anyone. But isn’t it nice to know that if something does go wrong, escrow is there to cushion the blow?

4 Ways to Make a Home Show-Ready | Realtor Magazine

When a home hits the market, it needs to be show-ready. That doesn’t usually require spending a fortune on a remodel, however. Just targeting a few key areas in the home can go a long way.

The New York Times recently highlighted a few tips from real estate pros on preparing a home for sale, including:

Add three points of light. “Every room should have at least three points of light,” Alison Draper, a real estate professional with Halstead Property, told The New York Times. The three points could include a table lamp, floor lamp, and a task light. Or, it may include an overhead fixture and two table lamps.

Shine the floors. You likely can still salvage a worn floor with some polish or professional cleaning. “Unless your floors are severely damaged, it doesn’t make sense to have them refinished,” Pat Christodoulou, a home stager in Connecticut and New York, told The New York Times. She suggests hiring a handyman with a floor buffer, which might cost about $300 to wax and polish the floor of a small living room.

Tidy up the bathroom. The key: Make it sparkle. Re-caulk necessary areas. Investigate small upgrades that can have a big impact on brightening the space, such as swapping out an old faucet or even adding a new shower curtain, bath mat, and fresh towels. For a bathtub in need of some TLC, a professional refinisher can reglaze it, repairing any dents, rub out rust spots, and recoat it for about $500 for a standard-size bathtub, according to Homeadvisor.com.

Deep clean. The key: Make the home sparkle. Wash the windows, inside and out. Vacuum the dust in exhaust fans. “Deep cleaning is so important because while an apartment can show very neatly, it’s the details that people pick up on,” says Heather McMaster, an associate broker at the Corcoran Group. Get more deep-cleaning tips.

NAR Identifies Top 10 Markets in Dire Need of More Single-family Housing Starts | realtor.org

Single-family home construction is currently lacking in 80 percent of measured metro areas despite steady job creation and the low activity is creating a housing shortage crisis that is curtailing affordability and threatening to hold back prospective buyers in many of the largest cities in the country, according to new research from the National Association of Realtors®.

NAR’s study reviewed new home construction relative to job gains over a three-year period (2013-2015) in 171 metropolitan statistical areas¹ (MSAs) throughout the U.S. to determine the markets with the greatest shortage of single-family housing starts. The findings reveal that single-family construction is startlingly underperforming in most of the U.S., with markets in the West making up half of the top ten areas with the largest deficit of newly built homes.  

Lawrence Yun, NAR chief economist, says a large swath of the country continues to be plagued by inventory shortages exasperated by critically low homebuilding activity. “Inadequate single-family home construction since the Great Recession has had a detrimental impact on the housing market by accelerating price growth and making it very difficult for prospective buyers to find an affordable home – especially young adults,” he said. “Without the expected pick-up in building as job gains rose in recent years, new and existing inventory has shrunk, prices have shot up and affordability has eroded despite mortgage rates at or near historic lows.”

NAR analyzed employment growth in relation to single-family housing starts in the three-year period from 2012 through 2015. Historically, the average ratio for the annual change in total jobs to permits is 1.6 for single-family homes. The research found that 80 percent of measured markets had a ratio above 1.6, which indicates inadequate new construction in most of the country. The average ratio for areas examined was 3.4.

Using each metro area’s jobs-to-permits ratio, NAR then calculated the amount of permits needed in each metro area to balance the ratio back to its historical average of 1.6. The higher the number of permits required, the more severe the shortage was in each market.

The top 10 metro areas with the biggest need for more single-family housing starts to get back to the historical average ratio are:

• New York (218,541 permits required)
• Dallas (132,482 permits required)
• San Francisco (127,412 permits required)
• Miami (118,937 permits required)

• Chicago (94,457 permits required)
• Atlanta (93,627 permits required)
• Seattle (73,135 permits required)
• San Jose, California (69,042 permits required)
• Denver (67,403 permits required)
• San Diego (55,825 permits required)

According to Yun, most of the metro areas with the biggest need for increased construction have strong appetites for buying, home-price growth that outpaces incomes and common instances where homes sell very quickly. Their healthy job markets continue to attract an influx of potential homeowners, only fueling the need for more housing.

“Although a few small cities with high ratios did not make the national rank for absolute permit shortages, their supply shortages are still meaningful at the local level and could become a bigger issue if job gains hold steady and the current pace of construction remains at its nearly non-existent level,” adds Yun. 

Single-family housing starts are seen as adequate to local job growth (at a ratio of 1.6) in Pensacola, Florida; Huntsville, Alabama; Columbia, South Carolina; and Virginia Beach, Virginia.

“The limited number of listings in several markets means that many available homes are receiving multiple offers and going under contract rather quickly,” says NAR President Tom Salomone, broker-owner of Real Estate II Inc. in Coral Springs, Florida. “It’s important in this situation to remain patient and not get caught up offering more than your budget allows. Find a Realtor^® with experience serving clients in your desired area and rely on them to deploy a negotiation strategy that ensures success while sticking within budget.”

Looking ahead, Yun says the good news is that the ratio in many areas slightly moved downward in 2015 compared to 2014 as builders started to respond accordingly to local supply shortages. However, it’ll likely be multiple years before inventory rebounds in many of the markets because homebuilders continue to face a plethora of hurdles, including permit delays, higher construction, regulatory and labor costs, difficulty finding skilled workers and the exhausting process many smaller builders go through to obtain financing.

“Recent NAR survey data show an overwhelming consumer preference towards single-family homes, including among millennials, who are increasingly buying them in suburban areas,” concludes Yun. “A mix of new starter-homes for first-time buyers and larger homes for families looking to trade up is needed at this moment to ensure homeownership opportunities remain in reach to qualified prospective buyers at all ages and income levels.”

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing over 1.1 million members involved in all aspects of the residential and commercial real estate industries.

Owners Smarten Up Their Homes in Remodels | Realtor Magazine

Renovating home owners are reaching for more “smart” home technology, according to the 2016 Houzz Smart Home Trends Survey, conducted with CEDIA, of nearly 1,000 home owners planning or in the midst of a home renovation project.

Read more: The Safety Benefit of Smart Homes

Nearly half of renovating home owners say they’re incorporating smart home technology, such as systems or devices that can be monitored or controlled via a smartphone, tablet or computer. Renovated homes are more than twice as likely to include a smart system or device than prior to renovation, the study finds.

Nearly a third of upgraded smart home systems or devices can be controlled via a central hub, and a quarter included voice-controlled features, the survey finds.

The main motivations for outfitting homes with smarter home tech is for security/safety (25%); entertainment (18%); greater climate control (14%); and lighting (12%), survey respondents reported.

The top smart home security and safety devices being installed include fire and gas alarms, cameras, motion/glass breakage and door sensors; door locks; and video doorbells. About 12 percent of renovated homes include a smart thermostat and 11 percent have smart indoor lighting.

“Our data sheds light on how renovating home owners are embracing smart technology,” says Nino Sitchinava, principal economist at Houzz. “These home owners aim to improve the comfort, convenience, safety, and energy usage of their home during their renovations, and smart technology appears to address many of their needs. While many home owners report difficulty learning about and finding the right smart products to fit their needs, high levels of adoption and satisfaction among renovators are sound predictors of a wider reliance on these technologies among the general public in the near future.”

Just 1-In-20 Consumers Predicted Today’s Mortgage Rates

More U.S. Households Accepting Reality Of Low Rates

More U.S. consumers expect current mortgage rates to be available over the long term.

According to Fannie Mae’s most recent National Housing Survey, 56 percent of consumers think mortgage rates will stay the same or drop in the next twelve months.

The survey, which covers 1,000 households, measures changing consumer attitudes toward mortgages and housing nationwide.

Attitudes have shifted surprisingly since one year ago.

In August 2015, just 41 percent of respondents said low rates would hold, and five percent said mortgage rates would fall.

Just 1-in-20 consumers got it right.

Since the start of the year, 30-year mortgage rates have dropped 47 basis points (0.47%), representing nearly $100-per-month savings on a $300,000 mortgage.

The nationwide average 30-year mortgage rate now stands at 3.50%, marking a winning streak of twelve weeks at or below 3.5%.

According to Fannie Mae, only one of the past 45 surveys showed a higher number of consumers who said rates won’t rise. U.S. households might be coming around to the reality of a “new normal” for mortgage rates.

Continued rate-favorable news, both domestic and international, is putting a lid on higher home costs.

More than 8 million homeowners are potentially eligible to refinance, and households that choose to do so will save more than $5 billion collectively between now and next year, and those numbers are rising.

30-Year Mortgage Rates Extend Winning Streak

Twelve weeks.

That’s how long 30-year mortgage rates have been at or below 3.5%

It has happened only once before: from September 2012 to May 2013. That 19-week winning streak marked the longest, lowest stretch in history for mortgage rates.

And we’re not far from matching that record.

Currently, the 30-year fixed rate stands at the 3.5% threshold, stubborn to move upward. Can anything send rates higher?

Yes. The Federal Reserve will meet September 20-21 and decide to hold or raise its benchmark rate. While the Fed funds rate does not directly affect mortgage rates, Fed action certainly influences the wider interest rate market.

An unexpected decision could drive rates up in a matter of hours after the meeting adjourns on September 21 at 2:00 PM ET.

Should home buying and refinancing consumers lock now? It could prove wise. Rates are low, and an unknown variable is on the horizon.

Consumers Expect Rent Hikes To Outstrip Home Prices

Low mortgage rates are not the only thing spurring renters to become homeowners.

Rising rental prices are making the relative cost of owning a home lower each day.

According to Fannie Mae, 92 percent of consumers think home prices will rise or hold steady this year.

But rising home prices are not distinguishing renters’ desire to buy. Quite the opposite. Consumers expect home prices to rise at least 2% over the next twelve months. A $300,000 home will be worth six thousand dollars more one year from now, say survey respondents.

That’s one incentive to buy now. The other is the amount consumers expect rent to increase: 4.1% over the next year.

Renters can either be on the winning or losing side of rising costs. According to Fannie Mae’s survey, they are choosing to win.

Sixty-five percent of consumers say they would buy instead of rent, if they had to move today.

That would be a wise choice. Home sales remain near their strongest levels in eight years and home supply is scarce. Mortgage rates are touching all-time lows, and demand is expected to remain strong.

Mortgage Programs Help Buyers Secure Affordable Housing

Existing homeowners aren’t the only ones benefiting from low rates.

Home buyers are getting into homes for less money per month than they pay for rent. Near-record-low rates are increasing home affordability for first-time home buyers.

Maybe you’ve been thinking about buying a home, too. After all, the market looks ripe.

Mortgage rates are low, rents are rising nationwide, and mortgage lenders are approving more loans. Furthermore, there’s an abundance of low- and no-down payment mortgage loans for first-time home buyers and repeat buyers alike.

Among the most common low-downpayment mortgage options is the Conventional 97, which has a three percent downpayment requirement, and which allows downpayment funds to come from a gift.

Mortgage rates for the Conventional 97 are best for borrowers with strong credit. For buyers with lower credit scores, the FHA program is a low-cost and flexible option.

But FHA is not only for buyers with lower credit scores. Nearly 40 percent of all home buyers under the age of 37 — within any credit tier — select FHA.

The FHA home loan requires just 3.5 percent down, and that downpayment can come from a gift, or even an approved downpayment assistance program.

FHA allows homes with up to four units (e.g. a duplex, triplex, or four-plex) and the program allows a buyer to have its closing costs paid by the seller.

The HomeReady™ mortgage is another low-down payment option, allowing a down payment of just three percent for qualified buyers. HomeReady™ is generally reserved for low-to-moderate income households, but the program can be used by anyone.

Today’s home buyers have several no-money-down options, too.

The VA loan is one such loan, available to military borrowers and surviving spouses. The advantages of a VA loan are many, including the lack of mortgage insurance, and the fact that VA loans are assumable, which means that future home buyers may be eligible to “assume” your home’s existing mortgage rate.

In a rising mortgage rate world, assumable loans can be a giant sales benefit.

Another zero down payment loan is the USDA loan.

Available in less-densely populated neighborhoods, the USDA loan allows for 100% financing and very low rates of mortgage insurance. USDA mortgages are available as 30-year, fixed-rate home loans only.

Lastly, via down payment assistance programs, home buyers can receive a cash grant to cover their traditional home downpayment. Such programs don’t always require repayment, either. In many cases, you’re only required to maintain your residence for a period of up to 5 years.

This flowchart can help you decide which mortgage is best for your needs.

What Are Today’s Mortgage Rates?

Many consumers think mortgage rates will stay the same, or even drop in 2017. But many predict rising rates, too. Who’s right? What’s clear is that mortgage rates have defied expectations this year, and it seems almost nothing can lift them from recent depths.

Get today’s live mortgage rates now. Your social security number is not required to get started, and all quotes come with access to your live mortgage credit scores.

Painting Tips and Tricks | DIY Home Painting Tips | HouseLogic

A DIY painting job doesn’t have to equal crooked lines, besmirched floors, and ceramic sinks speckled with robin’s egg blue.

Use these simple painting tips and tricks from the pros to make the process faster and less messy — and ensure a gorgeous end result.

1. Soak Brushes in Fabric Softener to Keep Bristles Soft

Every DIY painter has been privy to the horrors of a day-old brush with stiff bristles that makes round two nearly impossible. To prevent your brushes from becoming hard and unusable, make sure to rinse thoroughly (no soap), and swish them in a mixture of fabric softener and warm water (half a cup of softener to a gallon of warm water) for 10 seconds or so.

Then lay them flat or hang them on a peg for overnight storage.

“That way, the bristles won’t develop a bend and will retain their usefulness for your next painting adventure,” says Artem Filikov, vice president of marketing and product development for home improvement website HomeYou. Also, there’s no need to rinse before using. The softener actually helps distribute paint more smoothly.

2. Use Plastic Wrap to Prevent Mishaps

When painting around a large, awkward item you want to keep clean, like a toilet or a standalone sink, surround it with plastic wrap to keep drips from destroying its finish.

For an extra tight wrap, choose a wrap with an adhesive backing — your hardware store will even carry special painter’s plastic wrap, if you really want to go all out — which will help it stick to the surface and prevent the odd drop from inching its way in. Once you’ve finished the job, just unwrap for a paint-free finish.

3. Look in Your Pantry to Reduce Paint Odor

Paint’s intense odor can get really old really fast. Overpower it with a little bit of vanilla. Although there are vanilla-scented products specifically designed to use with paint, you can get the same effect with what’s in your kitchen cabinet.

For darker paints, add a couple drops of vanilla extract (artificial is fine) per gallon to reduce the nasty smell and keep your room smelling sweet for weeks to come. Because you don’t want the tint of vanilla to ruin the color of your paint, swap it with lemon extract for light-colored paints.

4. Repurpose Old T-Shirts as Rags to Reduce Waste

Painting’s a messy job, but using roll after roll of paper towels is neither efficient nor environmentally-friendly. And while you could pick up a mega-pack of plain cotton towels to keep paint from splattering, why not use something you can find stuffed at the back of a drawer? Geoff Sharp, the owner of Sharper Impressions Painting Co., recommends cutting up old T-shirts to use as rags, saving money and resources (not to mention a trip to Goodwill).

“If paint runs down your roller or brush, it gets really messy, really quick,” he says. “Always have a rag in your pocket so you and your brush or roller stay clean.”

5. Keep Q-tips Handy for Emergencies

Oh no! A drop of Naples Sunset just splashed on your white window frame. You’ve only got a few minutes to clean up the mess before your mistake is sealed for eternity. That’s where Q-tips come in handy. Just stash some in your pocket for these types of emergencies.

Here’s another use for that pile of cotton swabs tucked in your jeans pocket: Use them to touch up imperfections on newly-painted walls without dirtying an entire paintbrush.

6. Apply Petroleum Jelly to Places You Don’t Want Painted

A little bit of Vaseline can go a long way toward keeping your paint job clean. Using a Q-tip (another reason to keep them handy), go over all the bits and pieces you don’t want painted, like screws or hinges. With the petroleum jelly applied, even an accidental slip won’t leave you heartbroken.

Here’s another tip for a hassle-free paint job: “Run petroleum jelly along the seals of your doors and windows to prevent them from sticking,” Sharp says.

7. Blow Dry Painter’s Tape for Easy Removal

Painter’s tape is supposed to make your paint job easier and stress-free. But when strips of perfect paint peel off along with the adhesive — or you just can’t get the darn tape to come off at all — you might feel like you wasted your effort.

To help stubborn painter’s tape get a move on, turn a hair dryer (low heat only) toward your handiwork. Holding it about three inches from the wall will help soften the adhesive and ensure an even line, making removal a stress-free affair — and ensuring you keep that dreamy, crisp paint line.

Mortgage Rates Are Moving on Up | Realtor Magazine

The 30-year fixed rate mortgage surged to its highest level since June.

“This is the first week since June that mortgage rates were above 3.48 percent, snapping an 11-week trend,” says Sean Becketti, Freddie Mac’s chief economist.

Freddie Mac reports the following national averages with mortgage rates for the week ending Sept. 15:

• 30-year fixed-rate mortgages: averaged 3.50 percent, with an average 0.5 point, rising from last week’s 3.44 percent average. Last year at this time, 15-year rates averaged 3.91 percent.
• 15-year fixed-rate mortgages: averaged 2.77 percent, with an average 0.5 point, rising from last week’s 2.76 percent average. A year ago, 15-year rates averaged 3.11 percent.
• 5-year hybrid adjustable-rate mortgages: averaged 2.82 percent, with an average 0.4 point, increasing from last week’s 2.81 percent average. A year ago, 5-year ARMs averaged 2.92 percent.

Housing Markets Move More Into Buy Zone | Realtor Magazine

he U.S. housing market is moving deeper into “buy territory,” which indicates that the majority of housing markets remain a sound investment, according to a newly released national index by Florida Atlantic University and Florida International University.

“Housing prices, in general, continue to slow and when considered in light of the recent trends in the Buy vs. Rent Index signal that ownership remains an excellent investment for the majority of Americans,” says Ken Johnson, a real estate economist and an author of the index, the Beracha, Hardin & Johnson Buy vs. Rent Index.

The index shows that owning a home trumps renting a comparable property as well as investing rent savings in a portfolio of stocks and bonds.

Fifteen of the 23 metro markets tracked in the index favored ownership over renting.

“Many of the hardest hit metropolitan areas during the real estate crash are showing signs of resilience as the cost of ownership relative to the cost of renting remains more in balance at this time,” says Eli Beracha, co-author of the index and an assistant professor of real estate at Florida International University.

Rents and home prices are rising across the country, which could impact housing affordability.

“Continuing near-record low mortgage rates, however, are providing a tailwind for ownership,” Johnson says. “There does not appear to be any interest in loosening underwriting standards or offering teaser loans as a panacea to the issue of affordability this time around. That’s another sign that we are learning how to deal with cyclical behavior in our housing markets.”