Yajnesh Rai

Mortgage Rates Drop to Another All-Time Low | Realtor Magazine

The 30-year fixed-rate mortgage set a new record again this week as rates averaged 3.13%, the lowest average rate in Freddie Mac’s records, which date back to 1971.

The previous low for the 30-year fixed-rate mortgage was set just a few weeks ago at the end of May, averaging 3.15%.

“While the rebound in the economy is uneven, one segment that is exhibiting strength is the housing market,” says Sam Khater, Freddie Mac’s chief economist. “Purchase demand activity is up over twenty percent from a year ago, the highest since January 2009. Mortgage rates have hit another record low due to declining inflationary pressures, putting many home buyers in the buying mood.”

That said, Khater cautions that it will be difficult to sustain the momentum in demand as unsold inventory is at near record lows entering the pandemic and has dropped even lower since then.

Freddie Mac reports the following national averages with mortgage rates for the week ending June 18:

• 30-year fixed-rate mortgages: averaged 3.13%, with an average 0.8 point, falling from last week’s 3.21% average. Last year at this time, 30-year rates averaged 3.84%.
• 15-year fixed-rate mortgages: averaged 2.58%, with an average 0.8 point, falling from last week’s 2.62% average. A year ago, 15-year rates averaged 3.25%.
• 5-year hybrid adjustable-rate mortgages: averaged 3.09%, with an average 0.4 point, falling from last week’s 3.10% average. A year ago, 5-year ARMs averaged 3.48%.

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

Listings Fetched Nearly 3 Offers Each in May | Realtor Magazine

Homebuyers should expect to be in a multiple-offer situation.

In May, during the pandemic, there were about three offers on each home that sold, up from about two offers in April, according to the May 2020 REALTORS® Confidence Index Survey. The report is based on a survey of more than 4,000 REALTORS®, conducted June 1-10, about their monthly transactions.

REALTORS® reported a higher number of buyer offers, client tours, and listings in May as states began to reopen.

 

© National Association of REALTORS®

 

The report also showed a rising number of in-person home tours in May. Forty-five percent of REALTORS® surveyed also reported conducting virtual tours and showings.

Overall, REALTORS® are optimistic about the next three months and expect to see a pickup in business. Forty-three percent of REALTORS® surveyed say they expect stronger buyer traffic in the next three months. That is up significantly from April, when only 25% of REALTORS® said they expected stronger buyer traffic on the horizon.

REALTORS® surveyed also are mostly optimistic about the direction of home prices. They predict home prices to remain stable or increase over the next three months.

 

© National Association of REALTORS®

 

“Low mortgage rates and job creation in May are buoying home buying and expectations,” NAR notes on its Economists’ Outlook blog post reporting on the REALTORS® Confidence Index. Mortgage applications for home purchases have been rising since April 17; applications are up 25% on a year-over-year basis, as of June 12.

“Homeowning is now cheaper than renting,” NAR notes in its report. NAR estimates that the median gross rent for vacant units in April 2020 was $1,077. That is slightly higher than an estimated mortgage payment of $1,020 on a home purchased at the median sales price of $286,800 and with a 20% down payment on a 30-year fixed loan.

Mortgage Applications Surge to 11-Year High | Realtor Magazine

Home buyers are reemerging, and here’s the proof: Mortgage applications to purchase a home reached the highest volume in more than 11 years. Record low mortgage rates are tempting more buyers into the market.

Mortgage applications to purchase a home are 21% higher than the same week a year ago, the Mortgage Bankers Association reports. Applications for home purchases ticked up 4% week over week.

“The housing market continues to experience the release of unrealized pent-up demand from earlier this spring, as well as a gradual improvement in consumer confidence,” said Joel Kan, the MBA’s economist.

Record low mortgage rates certainly are helping. The MBA reports the average contract interest rate on a 30-year fixed-rate mortgage dropped from 3.38% to 3.30% last week.

More homeowners are taking advantage of the lower rates. Refinance applications last week increased by 10% during the week and are 106% higher than a year ago. “Refinancing continues to support households’ finances, as homeowners who refinance are able to gain savings on their monthly mortgage payments in a still-uncertain period of the economic recovery,” Kan said.

Builder Sentiment Has Never Risen by This Much in a Month | Realtor Magazine

Few thought the housing market would see this quick a turnaround in homebuyer demand. The COVID-19 pandemic dragged down the spring buying season as states and cities issued stay-at-home orders. But despite the lingering pandemic and subsequent economic recession, homebuilders are upbeat on housing heading into summer.

Builder sentiment surged 21 points in June, the largest monthly increase ever recorded by the National Association of Home Builders/Wells Fargo Housing Market Index. The reading in June is 58. Any reading above 50 indicates a positive market. In April, as the COVID-19 outbreak settled into the U.S., the builder sentiment index plunged by 42 points, a record drop, to a reading of 30.

A lot has changed since then. Builders are most bullish on current sales conditions, sales expectations in the next six months, and rising buyer traffic.

“As the nation reopens, housing is well-positioned to lead the economy forward,” says Dean Mon, chairman of the National Association of Home Builders. “Inventory is tight, mortgage applications are increasing, interest rates are low and confidence is rising.”

Mortgage applications to purchase a newly built home rose 10.9% annually in May, according to the Mortgage Bankers Association.

This is elevating home builders’ initial concerns that the pandemic would wreak havoc on sales. As the outbreak began in mid-March, some of the nation’s largest builders stopped housing starts and halted purchasing land due to concerns how the sector would fare in the pandemic.

“Builders report increasing demand for families seeking single-family homes in inner and outer suburbs that feature lower density neighborhoods,” says Robert Dietz, the NAHB’s chief economist. “At the same time, elevated unemployment and the risk of new, local virus outbreaks remain a risk to the housing market.”

The builder sentiment index showed the highest monthly uptick in the Northeast, with readings increasing by 31 points to 48. Other regions also posted increases, including the South, which rose by 20 points to 62; the Midwest posted a 19 point gain, to 51; and the West increased by 22 points to 66.

Sellers Willing to Cut Prices but Find No Need | Realtor Magazine

Nearly 70% of home sellers say they’d accept a purchase price lower than they desire in order to sell their home during the coronavirus pandemic, according to a new survey of about 1,000 home sellers from LendingTree. But, the same survey reveals, they may not need to.

So far, home prices have largely stood firm in the face of the pandemic. The National Association of REALTORS® reported that median existing-home prices for all housing types in April was $286,800—up 7.4% from a year ago. Home prices in every major region of the U.S. saw annual increases in April as well.

 

Still, the pandemic and its resulting economic recession have consumers concerned. Fifty-one percent of respondents say they are concerned about selling their home. Their biggest fears are having to accept a lower offer or being unwilling to sell in their desired time frame. The thought of having people tour their home during the pandemic also has them uneasy.

 

The concerns of some have prompted them to delay selling their home during this time. Forty-six percent of the 1,000 potential sellers surveyed by LendingTree say they’ve delayed listing their home. On the other hand, 28% say that the outbreak prompted them to list their home earlier than intended.

Mortgage Rates Drop to Another All-Time Low | Realtor Magazine

The 30-year fixed-rate mortgage set a new record again this week as rates averaged 3.13%, the lowest average rate in Freddie Mac’s records, which date back to 1971.

The previous low for the 30-year fixed-rate mortgage was set just a few weeks ago at the end of May, averaging 3.15%.

“While the rebound in the economy is uneven, one segment that is exhibiting strength is the housing market,” says Sam Khater, Freddie Mac’s chief economist. “Purchase demand activity is up over twenty percent from a year ago, the highest since January 2009. Mortgage rates have hit another record low due to declining inflationary pressures, putting many home buyers in the buying mood.”

That said, Khater cautions that it will be difficult to sustain the momentum in demand as unsold inventory is at near record lows entering the pandemic and has dropped even lower since then.

Freddie Mac reports the following national averages with mortgage rates for the week ending June 18:

• 30-year fixed-rate mortgages: averaged 3.13%, with an average 0.8 point, falling from last week’s 3.21% average. Last year at this time, 30-year rates averaged 3.84%.
• 15-year fixed-rate mortgages: averaged 2.58%, with an average 0.8 point, falling from last week’s 2.62% average. A year ago, 15-year rates averaged 3.25%.
• 5-year hybrid adjustable-rate mortgages: averaged 3.09%, with an average 0.4 point, falling from last week’s 3.10% average. A year ago, 5-year ARMs averaged 3.48%.

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

Baby Boomers Are Making Home Renovation a Priority | Realtor Magazine

Home renovation remains a popular activity for owners, particularly among older age groups. Baby boomers accounted for more than half of renovating homeowners in 2019, according to a newly released survey of more than 87,000 respondents by Houzz, a home remodeling and design website. Gen Xers (ages 40 to 54) trailed at nearly a third of home renovators and millennials (ages 25 to 39) were at about 12%.

Baby boomers tend to spend the most on their renovations—a median of $15,000 in 2019 on home renovation projects, the Houzz survey shows. Gen Xers spent $12,000 and millennials spent $10,000 on their renovation projects.

 

© Houzz

 

“Baby boomers, particularly those who have been in their homes for more than six years, are continuing to drive renovation activity and spend … as they pursue projects that will allow them to age in place for the next decade or more,” says Marine Sargsyan, Houzz senior economist.

Baby boomers were three times more likely to pursue a home remodeling project because, they say, they’ve intended to do so since being in the home. They also plan to stay in their homes for 11 years or more, which also might be guiding their desire to renovate and make it more comfortable or up to their tastes.

Among all generations, the most popular rooms to renovate remain kitchens and guest bathrooms. However, home offices are increasingly being added or upgraded by one in 10 homeowners in 2019. Millennials and Gen Xers were more likely to pursue a home office renovation project last year than baby boomers.

The Houzz & Home survey was conducted between Jan. 2 and March 5, before the coronavirus pandemic. When the survey was conducted, half of homeowners reported they planned to continue or start renovations this year at a median spend of $10,000. One-third of homeowners surveyed planned to make repairs.

 

© Hado Photo / Houzz

 

“Subsequent surveys have shown that over half of homeowners who were in the midst of a project at the start of the pandemic were able to continue with renovations,” Sargsyan says. “That said, some homeowners have opted to delay certain elective renovations due to implications related to social contact, labor, and material availability, and personal discretionary spending. Maintenance and repairs, on the other hand, are more likely to proceed, especially when the need is urgent. Deferred maintenance will accrue during this period, setting the stage for a renewed burst of activity following the pandemic.”

Some additional findings from the survey:

• Planning takes time: Homeowners took the most time to plan out kitchen renovations, averaging 8.3 months. Master and guest bathroom renovation planning took 5.4 and 4.8 months respectively. Entry, foyer or mudroom renovations—despite the small square footage—took an average of 6.6 months to plan.
• High-tech focus: Technology is being woven into more renovation projects. The majority of those projects involve smart technology, which can be monitored or controlled from a mobile device or computer. Light fixtures and smart lights are a popular update as are home assistants, smart thermostats, and smart alarms or detectors. Security cameras led outdoor technology purchases, according to the Houzz survey.
• Tapping savings: Using cash from savings was the most common form of home renovation payment, used by 83% of respondents. Cash was commonly used in pricey projects—up to $50,000. The next most common source of funding was credit cards, which tended to be used for less expensive projects of between $1,000 and $5,000.
• Big spenders: San Jose, Calif., led the nation as the most expensive metro area in which to renovate a home. Homeowners spend double the national median spend–$26,000. Other cities boasting some of the highest expenditures on home remodels: Boston ($21,000) and Los Angeles, Miami, San Diego, and San Francisco (all at $20,000 each).

Suburban Space Gains Popularity as Housing Recovery Begins | Realtor Magazine

The pandemic has caused more Americans to rethink where they want to call home. In many regions, suburban and rural areas are seeing stronger recoveries from the pandemic than their nearby urban areas, according to a new report from realtor.com®.

In May, online listing views at realtor.com® in suburban ZIP codes rose by 13%, nearly double the pace of growth of urban areas. More than half of the nation’s 100 largest metros are seeing rising interest in the suburbs, realtor.com® reports.

“This migration to the suburbs is not a new trend, but it has become more pronounced this spring,” says Javier Vivas, realtor.com®’s director of economic research. “After several months of shelter-in-place orders, the desire to have more space and the potential for more people to work remotely are likely two of the factors contributing to the popularity of the burbs.”

In recent years, suburban areas have started to outpace urban areas in growth in terms of views per property at realtor.com®. May data marks the second largest gap between suburban and urban views since realtor.com® began tracking such data in 2016. Listing views per property in rural and suburban ZIP codes were up an average of 16 and 13% annually, respectively. Views per property in urban areas, on the other hand, were up 7% year over year.

“Suburban interest typically peaks during the summer, as families look to move before the start of the school year,” says Vivas. “However, suburban interest in May outpaced last year’s July peak, which could indicate even stronger interest in the suburbs as summer homebuying season continues to heat up.”

Real Estate Continues Its Streak as Favorite Investment | Realtor Magazine

Real estate continues to rank at the top of the list of the best long-term investments for Americans, according to the latest annual poll from Gallup. About 35% of Americans picked it as their favorite investment, which has been the case since 2013.

Meanwhile, Americans are less likely to view stocks or mutual funds as the best long-term investment, particularly waning after the COVID-19 pandemic struck the economy this spring. Twenty-one percent of Americans picked stocks as the best investment, down 6 percentage points from a year ago and at the lowest reading since Gallup started collecting such data in 2012.

Only about one in six Americans view savings accounts or CDs (17%) and gold (16%) as their favored long-term investment.

During the subprime mortgage crisis in 2011 and 2012, real estate was viewed as more risky, and gold finished first as the best long-term investment during that time. But as real estate values continue to climb in recent years, gold has faded and real estate’s investment potential has steadily risen in popularity.

 

© Gallup

 

 

Homebuyer Interest in Single-Family Homes Jumps to Four-Year High – Redfin

Web searches for single-family homes have popped as the coronavirus pandemic has turned privacy into a hot commodity.

Online searches for single-family homes rose to the highest level in four years last month. This comes as the coronavirus pandemic drives buyers to seek out larger houses located farther away from dense urban areas.

In May, 36% of saved searches created by Redfin.com users filtered exclusively for single-family homes. That’s up from 33% in February—before the coronavirus was known to be widespread in the U.S.—and represents the largest share since March 2016. It also marks an increase from 28% in May 2019.

Meanwhile, the share of searches for other types of homes, such as condos, townhouses and multifamily listings, has declined. Last month, 7.5% saved searches on Redfin.com excluded single-family homes—the lowest level in three years.

“One of the biggest benefits of living in a condo or an apartment is sharing the cost of rooftops, pools and gyms, but many of these communal amenities have been roped off due to the pandemic,” said Redfin lead economist Taylor Marr. “People who were previously willing to share space with strangers in exchange for a nice view and a quick commute now want their own yards and home offices. Flexible work-from-home policies have made this dream achievable for many house hunters.”

During the first quarter of this year, the median size of new single-family homes climbed to 2,291 square feet from 2,252 in the prior quarter, according to the U.S. Census Bureau—and the National Association of Home Builders said it expects further gains in the future. 

Irma Jalifi, a Redfin agent in Houston, recently sold a single-family home to a couple who had moved to Texas due to the pandemic in order to escape their cramped apartment in New York City. In Houston, they were able to buy a house with his and hers offices and space for a gym.

Another one of Jalifi’s clients is in the process of moving to Texas from San Francisco, and is under contract to buy a house that’s much larger than their current home.

“Coming from San Francisco, they couldn’t get over the spaciousness of what, in my opinion, is a very average size home in Houston,” Jalifi said. “Everything’s bigger and better in Texas.”

Results by Metro

We also broke down our saved-search data by location to identify the areas that experienced the highest growth in web searches for single-family homes. Of the 28 metros in this analysis, Tampa saw the biggest uptick, with 44% of saved searches filtering for single-family houses in May—up about 10 percentage points from February. Las Vegas, Boston, Seattle and San Jose rounded out the top five, all around 6 percentage points higher. That compares with growth of 2.8 percentage points on a national level.

Seattle Redfin agent Shoshana Godwin said her clients are starting to expand their searches to neighborhoods they wouldn’t have considered in the past, as proximity to the workplace becomes less important. Specifically, she has seen a spike in interest in West Seattle—a neighborhood that has relatively low housing costs but was previously overlooked by many buyers due to the long commute and the closure of a key bridge to the city center. Now, that’s less of a factor, she said.