Yajnesh Rai

Home Sellers Are the ‘Missing Link’ in the Recovery | Realtor Magazine

The lack of housing inventory continues to be buyers’ biggest hurdle. In June, the number of homes for sale plummeted nationwide, prompting realtor.com® to call home sellers the “missing link” to an otherwise strong summer housing market.

The nation’s housing inventory decline has accelerated since May, and housing inventory dropped 27.4% year over year in June, according to realtor.com®’s newly released housing report. That translates to about 363,000 fewer homes for sale this year.

“Our June data reinforces that buyers are out in force and serious about finding a home,” says Danielle Hale, realtor.com®’s chief economist. “Although the new listings trend has improved, inventory continues to decline, indicating that what is coming onto the market is selling.”

Hale says the housing market has demonstrated resilience during the COVID-19 pandemic, but conditions do vary widely by market.

 

© realtor.com

7 Summer Trends for Creating Cozier Backyards | Realtor Magazine

Homeowners and buyers are placing greater emphasis on yard appeal this year. Google Trends data reveals frequent internet searches for how to enhance outdoor space. Living Spaces, a home décor retailer, recently highlighted several outdoor trends that consumers are searching for the most on Google this summer. Here are some of the hottest.

1. Patio daybedssaw a 257% increase in Google searches over the last six months. “Patio daybeds completely fit in with the ‘indoors out’ theme of 2020, so it’s no wonder they’re on the rise,” Living Spaces notes. “Simplicity is key here to create a calm outdoor space. There’s no need for a large coffee table; an end table or small pouf works just fine.”

2. Searches for small-space outdoor furnitureare up 243% on Google over the last six months. “Years ago, the average homeowner would have overlooked a small-space patio or backyard,” Living Space notes. “Now people are doing double-takes.” Homeowners are incorporating rounded furnishings, which can soften and open up spaces. Round tables and stools as well as curved sofas for the outdoors are becoming popular.

3. Backyard bars have seen a 192% increase in Google searches over the past six months whileoutdoor kitchenssaw a 106% increase. “Think of your backyard as you would your indoor space, starting with a floor plan,” Living Spaces notes. “Arrange groups of seating, focal points, serving stations, and walkways for a trendy feel.”

4. Brighter colors are livening up outdoor spaces. Google Trends data shows that “lemon yellow” searches are up by 103% over the past six months, and coral is up by 50%. “In with bright colors, out with boring neutrals,” Living Spaces notes. “Spending more time in our homes and backyards means embracing more of our style personalities. What better way to do that than splashes of fun, playful, energizing color?”

5. Searches for outdoor tileshave jumped 174%. “Outdoor tiles are just another example of how consumers are choosing to ‘bring the indoors out’ to rethink and take hold of their outdoor spaces,” Living Spaces notes. “Tiles are also incredibly coastal chic.”

6. Planters and gardenshave become more popular and are being done in even the tightest of spaces, including a vertical wall of planters or containers. “If you’re trying to save space, think vertical,” Living Spaces notes. “Stack planters along shelves or window ledges. Hanging planters are also popular right now.” Searches for planters are up 172% in the last six months, with “planter walls” up 156%.

7. Fire pitsnever went out of style. “With so many of us spending time at home, fire pits are becoming more popular than ever,” Living Spaces reports. “As summer comes upon us, people are naturally drifting toward outdoor spaces. Slowing down, enjoying conversation, and life’s moments are a few of the life lessons we’ve all had to learn over the past few months.” Fire pits, therefore, are more than décor. Searches for fire pits are up 148% over the last six months, according to Google Trends.

New FICO Index May Help Expand Mortgage Lending | Realtor Magazine

Fair Isaac Corp., the creator of the widely used FICO credit score, released a new credit index this week that could help more borrowers qualify for a mortgage. The FICO Resilience Index, created to supplement the FICO score, is aimed at helping lenders assess a borrower’s ability to withstand an economic downturn, even if they have a low credit score.

The index culls personal financial information from before and after the Great Recession to measure a person’s chances of paying bills on time during economic volatility. Measuring on a scale of 1 to 99, lower scores indicate greater financial resilience in an economic downturn while higher scores indicate more sensitivity to economic shifts. “Our hope is that it will allow lenders to continue to be able to make prudent loans,” says Joanne Gaskin, vice president of scores and analytics at FICO. “Lenders are going to feel more comfortable continuing to approve borrowers rather than denying them.”

In the current economic environment, the FICO score alone may not be “a clear indicator of a consumer’s current financial health,” says George Ratiu, realtor.com®’s senior economist.

Fair Isaac’s new scoring tool places less weight on missed payments and greater emphasis on lower account balances and credit use. A traditional credit score evaluates the chances a borrower can meet their payment obligations based on their previous payment history. A higher FICO score indicates a person is less likely to default on their loans.

FICO says more resilient consumers in an economic downturn tend to have fewer credit inquiries in the last year, fewer active accounts, lower total revolving balances, and more experience managing credit. For consumers who have a low FICO score, the new index may help them look more creditworthy in the eyes of lenders, Jim Wehmann, executive vice president of FICO Scores, told Forbes.com. “Using this tool, lenders can have this visibility and lend confidently to millions of consumers that may have below-average FICO scores,” Wehmann says. “A robust 680 may perform better than an average 720 credit score.”

Mortgage Rates Approach 3% Mark | Realtor Magazine

 

 

The 30-year fixed-rate mortgage averaged 3.07% this week, the lowest ever recorded by Freddie Mac since it began tracking such data in 1971. “Mortgage rates continue to slowly drift downward, with a distinct possibility that the average 30-year fixed-rate mortgage could dip below 3% later this year,” says Sam Khater, Freddie Mac’s chief economist. “On the economic front, incoming data suggest the rebound in economic activity has paused in the last couple of weeks, with modest declines in consumer spending and a pullback in purchase activity.”

Freddie Mac reported the following national averages with mortgage rates for the week ending July 2:

• 30-year fixed-rate mortgages: averaged 3.07%, with an average 0.8 point, down from last week’s 3.13%—the previous all-time low average. Last year at this time, 30-year rates averaged 3.75%.
• 15-year fixed-rate mortgages: averaged 2.56%, with an average 0.8 point, falling slightly from last week’s 2.59% average. A year ago, 15-year rates averaged 3.18%.
• 5-year hybrid adjustable-rate mortgages: averaged 3%, with an average 0.3 point, falling from last week’s 3.08% average. A year ago, 5-year ARMs averaged 3.45%.

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

How Resilient Is the Housing Market? | Realtor Magazine

The housing market is recovering much faster than most other sectors in the economy in the current recession. But will it last?

Unemployment remains high—at around 13%—and economic forecasters predict unemployment likely will remain elevated for the remainder of the year. However, economists believe housing will be able to weather most of the economic storm.

The current housing shortage and homeowners’ strong equity positions will likely rescue real estate from any downturn that would be similar in scope to the 2008 financial crisis, economists said during the “Economic Outlook and Housing Trends” webinar Wednesday, hosted by Freddie Mac and the Down Payment Resource.

“Real estate demand has staged a remarkable comeback, and given the chronic supply shortage, the rebound in demand should provide support to home prices,” said Sam Khater, Freddie Mac’s chief economist.

So far, data suggests the economy hit its low point during the first two weeks in April and has been steadily improving since. Still, the economy is significantly below its pre-March levels when the COVID-19 outbreak took hold in the U.S. While real estate demand declined at similar rates to the broader economy, the housing market is making a much more pronounced recovery than most other segments of the economy, Khater said.

This Isn’t the 2008 Crisis

“The housing market has held up much better than expected,” Laurie Goodman, co-director of the Housing Finance Policy Center at Urban Institute, said during the webinar. “Homeowners have been much less affected by COVID-19 than renters.”

A big reason for that is because the housing market has been underbuilding and unable to keep up with population demand since 2009, Goodman said. The country is undersupplied by an estimated 2.5 million housing units. “The supply-and-demand imbalance is continuing to put upward pressure on home prices and is causing them to rise,” Goodman added.

Further, owners have accumulated a great deal of equity in their homes over the last decade—and still-rising home prices are only adding to that. “This has given the housing market a resiliency that it didn’t have back in the 2008 financial crisis,” Goodman said.

Deferred Sales Unleashed, But for How Long?

In recent weeks, mortgage applications for home purchases have posted a strong rebound, even surpassing levels well beyond what they were a year ago. Record low mortgage rates are enticing buyers who had been waiting on the sidelines prior to the pandemic to make a move as well as motivating renters, Khater said.

“It’s remarkable that in the last recession it took us 10 years to reach normal levels” again with purchase mortgage applications, Khater said. “In this recession, it took us less than 10 weeks.”

However, Khater cautioned that mortgage applications for home purchases will likely moderate after this current “bulge in deferred sales” subsides.

“The economic recovery is underway, but uncertainty is very high,” Khater said. Federal stimulus programs will expire in the coming weeks. “Stimulus is flowing through and sustaining consumer spending and balance sheets for now, but there is concern that a fiscal cliff is just around the corner and may put the brake on recovery,” he said.

Here are some additional housing indicators highlighted at Wednesday’s webinar:

Home prices stand firm. Home prices are rising, but growth is expected to moderate over this year and next. However, economists are not predicting any declines in home prices. The National Association of REALTORS® is projecting home prices to be up about 4% in 2020 and 2021; CoreLogic and Freddie Mac’s forecasts are more subdued but still have home prices rising at about 2.5% in 2020 and 2021. So far, home prices have not gone down during the pandemic and actually have increased. “This really speaks to the lack of inventory on the market,” Khater said. “It’s still a seller’s market—even in the worst recession since World War II.”

Personal income is rising. Despite surging unemployment numbers, incomes are rising. Personal income increased to a record $2 trillion in April. But that rise was entirely driven by the economic stimulus from the federal government, Khater said. “Money is flowing into the economy and supporting customers, but in July there could be a fiscal cliff,” Khater says. “The concern is that that the stimulus supported consumer spending, but that could go down again when it expires.”

Foreclosure wave unlikely. Khater does not anticipate a large uptick in foreclosures in 2020 or 2021. “Homeowners have record equity, home prices continue to rise, and there’s federal forbearance support,” Khater said. “Homeowners—at least so far—seem to be much less impacted by the recession.”

Some populations are being hit harder than others. Khater pointed to data that showed Hispanics and Asian populations in the U.S. have seen the largest declines in employment during the current recession. Their declines have been four times larger than the last recession. “There are longer-term concerns around the recession’s impact on inequality,” Khater said.

‘I’d Risk COVID-19 Exposure for My Ideal Home’ | Realtor Magazine

A surprising number of house hunters have declared just how important it is to find their dream home during the global health crisis, even at the risk of their own health.

In a recent survey conducted by Helitech, a foundation repair company, 37% of 980 buyers said they’d “risk COVID-19 exposure to obtain my dream home.” The consumers surveyed either are in the market to move, started their plan to do so prior to the pandemic, or recent purchasers.

But while buyers are ready to conduct a house hunt, they are finding they don’t need to risk their health. The real estate industry has placed several health and safety protocols since the pandemic, including more virtual tours and virtual open houses as well as social distancing measures during tours and closings. Some brokerages are also requiring buyers to sign disclosure forms prior to touring a home in person. Those forms verify the person does not have a fever and will maintain social distancing precautions during the tour.

Most survey respondents say they prefer to see a home they intend to buy in person than virtually, although a large percentage are still willing to entertain making sight-unseen offers. Nearly 57% of consumers said they were not willing to purchase a home without seeing it in person, but nearly 35% said they would be willing to buy a home without seeing it in person first.

Some respondents who had already purchased a home prior to the pandemic said they now wished they had bought later. Fifty-four percent of those recent buyers say they wish they’d waited in order to get a better mortgage rate. Mortgage rates have fallen to all-time low during the pandemic.

 

© Helitech

More Homes Are Being Built as Buyers Rush Back | Realtor Magazine

Single-family permits, a gauge of future housing production, posted a double-digit gain in May as the new-home market showed an increase in activity. The pandemic in March and April brought the sector to mostly a standstill as economies shut down in an effort to curb the spread of the coronavirus. But as states reopen, home buyers are coming back and builders are ramping up production to meet demand.

Permits to construct new houses in May rose 14.4% to a 1.22 million annual pace.

Total housing starts, which includes single-family and multifamily construction, rose 4.3% to a seasonally adjusted annual rate of 974,000 units, the Commerce Department reported Wednesday. Broken out, single-family starts moved just 0.1% last month, but builders were quick to point to the increase in permits as a positive sign that more activity is coming. Housing starts in the multifamily sector, including apartment and condo buildings, jumped 15% in May to a 299,000 pace.

“We are seeing many positive economic indicators that point to a recovery, including low interest rates, rising demand, and an increase in mortgage applications,” says Dean Mon, chair of the National Association of Home Builders. “Single-family and multifamily housing production are on an upward path while overall permits, which are a harbinger of future building activity, posted a double-digit gain.”

Further, “builders are bringing back thousands of workers laid off in March and April to meet renewed demand,” says NAHB Chief Economist Robert Dietz.

Mortgage Rates Remain at All-Time Low | Realtor Magazine

© REALTOR® MAGAZINE

The 30-year fixed-rate mortgage stayed at its record low this week, offering an opportunity for home buyers to lock in the lowest rate in Freddie Mac’s records dating back 50 years.

The 30-year fixed-rate mortgage averaged 3.13% this week.

The mortgage market has seen a resurgence in applications for home purchases in recent weeks. “The rebound in purchase demand partly reflects deferred sales as well as continued interest from prospective buyers looking to take advantage of the low mortgage rate environment,” says Sam Khater, Freddie Mac’s chief economist.

Freddie Mac reports the following national averages with mortgage rates for the week ending June 25:

• 30-year fixed-rate mortgages: averaged 3.13%, with an average 0.8 point, unchanged from last week’s all-time low average. Last year at this time, 30-year rates averaged 3.73%.
• 15-year fixed-rate mortgages: averaged 2.59%, with an average 0.8 point, rising slightly from a 2.58% average. A year ago, 15-year rates averaged 3.16%.
• 5-year hybrid adjustable-rate mortgages: averaged 3.08%, with an average 0.5 point, falling slightly from last week’s 3.09% average. A year ago, 5-year ARMs averaged 3.39%.

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