Yajnesh Rai

FHFA Raises Conforming Loan Limits for 2020 | Realtor Magazine

The Federal Housing Finance Agency approved a higher conforming loan limit that will take effect Jan. 1, 2020. The cap on loans purchased or acquired by Fannie Mae and Freddie Mac during 2020 will increase to $510,400, the FHFA said Tuesday. That marks an increase over the $484,350 limit for 2019.

This is the fourth consecutive year that the FHFA has raised conforming loan limits.

Conforming loan limits can stretch even higher in areas with high median home values. High-cost areas will be capped at $765,600, or 150% of $510,400, starting in January.

The maximum conforming loan limit will be higher in 2020, except for 43 counties in the U.S.

Higher limits are available for properties that contain two, three, or four units. The baseline limits for multiunit properties range from $653,550 to $981,700.

The FHFA’s home price index showed an annual gain in single-family home prices over the previous four quarters at an average of 5.38%. The percentage is reflected in the new baseline limit for conforming loan limits.

FHA and VA loan limits have not yet been announced for 2020.

Strong Economy Boosts Home Sales; Upward Trend to Hold | Realtor Magazine

Low mortgage rates and a strengthening economy propelled home sales in October, the National Association of REALTORS® reported Thursday. Total existing-home sales, which include completed transactions of single-family homes, townhomes, condos, and co-ops, rose 1.9% month over month to a seasonally adjusted annual rate of 5.46 million, NAR’s latest existing-home sales report shows. Sales are up 4.6% from a year ago.

“Historically low interest rates, continuing job expansion, and higher weekly earnings are undoubtedly contributing to these higher numbers,” says NAR Chief Economist Lawrence Yun. “We will likely continue to see sales climb as long as potential buyers are presented with an adequate supply of inventory.”

Regionally, the existing-home sales data painted a mixed picture. The Midwest and South saw a growth in home sales last month, while sales in the Northeast and West dropped, NAR reports. Here’s a closer look at key indicators from NAR’s October housing report.

·Home prices: The median home price among all housing types was $270,900, up 6.2% from a year ago.

·Days on the market: Forty-six percent of homes sold were on the market for less than a month. Properties typically remained on the market for 36 days, which is consistent with year-ago numbers.

·Cash sales: These deals comprised 19% of transactions, down from 23% a year ago. Individual investors and second-home buyers made up the bulk of cash sales: They accounted for 14%, down from 15% a year ago.

·Distressed sales: Foreclosures and short sales comprised just 2% of sales, down from 3% a year ago.

·Inventory: Total housing inventory at the end of October was at 1.77 million units, down 2.7% from September and 4.3% from a year ago. Unsold inventory is at a 3.9-month supply at the current sales pace, down from 4.1 months in September and from 4.3 months a year ago.

New-home sales are picking up, which is a welcome sign, Yun says. “The issuance of more housing permits is a very positive sign and a good step toward more inventory. In order to better counter and even slow the increase in housing prices, home builders will have to bring additional homes on the market.”

Double Master Suites Are a Growing Trend | Realtor Magazine

Double master bedrooms are proving to be a growing trend in new luxury developments, Forbes.com reports.

As more homeowners want to live near their families and multigenerational households become more common, relatives and adult children move in together; as a result, more household members want to call dibs on the owners’ suite, which is often the largest bedroom in the house with an attached bathroom.

Builders are responding by adding two master suites into more floor plans, whether it’s a single-family home or condo. K.Hovnanian Homes offers several townhouse communities with two master bedrooms. The rooms include large bathrooms attached and walk-in closets.

First-floor master suites are growing more popular, Chris McGrath, community manager for K.Hovnanian’s Hilltop at Cedar Grove in New Jersey, told Forbes.com. “It gives adults the option of a separate living space and allows for children to have more flexible space on the second floor,” McGrath says. “Two owner suites … give owners the option to fill a current need or a possible future need.”

Some builders are adding a dual master bedroom on the main level of the home with a separate entrance. “We include features like secondary master suites so that families and loved ones can maintain close connections as they grow,” Gregory Malin, CEO and founder of Troon Pacific, told Forbes.com. “These spaces also allow the owners to age in place, as they can maintain their independence while having their children just steps away.”

The Best Way to Triumph in a Bidding War | Realtor Magazine

Cash offers are overwhelmingly the top way for home shoppers to emerge as a victor in a bidding war. An all-cash offer tends to double a buyer’s odds of getting their offer accepted when in a competitive buying situation for a home, a new study from the real estate brokerage Redfin shows.

Followed by cash offers, writing a personal letter to the seller is the second most effective strategy to winning a bidding war, the brokerage found. Writing a personal letter to the seller can increase a buyer’s odds by 59%. Waiving the financing contingency can increase a buyer’s chances by 20%, which is down from 58% in 2017, the study finds.

Researchers found that waiving the inspection contingency did not significantly improve a buyer’s chance of making the most competitive offer in a bidding war.

Redfin researchers analyzed the most popular bidding war strategies among thousands of offers Redfin agents wrote on behalf of their homebuying customers over the last two years.

 

© Redfin

 

“A couple years ago, the market was much more competitive than it is now,” says Daryl Fairweather, Redfin’s chief economist. “Sellers might have had multiple cash bids to choose from, and the offer price more often ended up being the determining factor. Now that bidding wars are less common, an all-cash offer is often enough to make an offer the winning bid. Sometimes, financed offers fall through because the lender decides the buyer can’t afford the purchase or the buyer is too risky a customer. Especially in a less competitive market, sellers value an offer they know isn’t dependent on financing.”

Overall, bidding wars have fallen to a decade low. Only 13% of Redfin offers faced competition from January through September of this year, down from 55% during the same period in 2017.

Low Inventories Are Pushing Single-Family Rental Prices Up | Realtor Magazine

It’s good to be a landlord: National rents on single-family homes rose 3% in September, as low rental housing inventories compared to demand continues to push up prices, according to CoreLogic’s Single-Family Rent Index.

“Low rental supply coupled with ongoing demand pushed up rents in September,” says Molly Boesel, principal economist at CoreLogic. “Vacancy rates have fallen moderately on the national level over the last quarter—with a 0.3% decrease in the third quarter of 2019 compared to a year earlier—and more significantly in select metro areas. Of the metros analyzed in the CoreLogic Single-Family Rent Index, Phoenix experienced the largest decrease in vacancy rates at 2.6%, which helped drive its rent growth to the top of the nation in September.”

Overall, the metro areas with limited new construction, low rental vacancies, and strong economies are attracting new employees and reporting the strongest rental growth, researchers note. Phoenix’s rental growth was driven by an annual employment growth of 2.4% (nationwide employment growth averaged 1.4%, for comparison). Seattle saw a 3.3% annual growth in its employment, which also was a big factor in its above average year-over-year rent increase in September, CoreLogic notes.

 

© CoreLogic

 

Rent prices in the lower tier—properties with rent prices less than 75% of the regional median—are seeing the largest spikes in prices, up 3.8% year over year in September, CoreLogic reported Tuesday. On the other hand, high-end rentals—those with rent prices greater than 125% of the region’s median rent—rose 2.9% in September.

Housing Could Buoy Economy in 2020 | Realtor Magazine

Fannie Mae economists have upgraded the economic outlook for the coming year, and a big reason behind that is expected growth in the housing market. Housing added to economic growth in the third quarter for the first time in more than a year and a half. That momentum will likely continue in the fourth quarter and the first half of 2020, according to the latest forecast from Fannie Mae’s Economic and Strategic Research Group.

While consumer spending will be the primary driver of economic growth, housing should continue to function as a positive contributor in the near term, economists say. Both new and existing single-family home sales rose in the third quarter, as did pending home sales, housing permits, and starts, the paper notes.

That said, researchers note that challenges persist in housing, particularly the supply and affordability constraints that are holding back household formations and inhibiting some market activity.

Other risks to the economy include ongoing trade tensions between the U.S. and China as well as ongoing political uncertainty abroad. Still, Fannie Mae economists are predicting one more rate cut from the Federal Reserve in early 2020 before a pause for the remainder of the year.

“Even as global uncertainties mount, we continue to expect the domestic economy to produce solid, if not spectacular, growth,” says Doug Duncan, Fannie Mae’s senior vice president and chief economist. “As we forecasted, housing supported the larger economy in the third quarter, and we expect it to continue to play a productive role through the first half of 2020. Positive contributions from single-family housing construction, home improvements, and broker fees pushed residential fixed investment growth to a robust 5.1 percent annualized pace this past quarter, and we forecast continued but moderating strength as construction activity and home sales growth continue at a slower pace.”

With mortgage rates normalizing, Duncan says they expect a decline in refinance activity in 2020. The refinance share of mortgage originations will likely drop from a projected 37% in 2019 to 31%.

Drop in Mortgage Rates to Drive Higher Buyer Demand | Realtor Magazine

Mortgage rates declined this week, with the 30-year fixed-rate mortgage averaging 3.66%, Freddie Mac reports. After several weeks of increases, the drop in mortgage rates is a welcome sign for home buyers.

“The housing market continues to steadily gain momentum with rising homebuyer demand and increased construction due to the strong job market, ebullient market sentiment, and low mortgage rates,” says Sam Khater, Freddie Mac’s chief economist. “Residential real estate accounts for one-sixth of the economy, and the improving real estate market will support economic growth heading into next year.”

Freddie Mac reports the following national averages with mortgage rates for the week ending Nov. 21:

• 30-year fixed-rate mortgages: averaged 3.66%, with an average 0.6 point, falling from last week’s 3.75% average. Last year at this time, 30-year rates averaged 4.81%.
• 15-year fixed-rate mortgages: averaged 3.15%, with an average 0.5 point, falling from last week’s 3.20% average. A year ago, 15-year rates averaged 4.24%.
• 5-year hybrid adjustable-rate mortgages: averaged 3.39%, with an average 0.4 point, falling from last week’s 3.44% average. A year ago, 5-year ARMs averaged 4.09%.

How to Experience a Neighborhood Before Moving In | Realtor Magazine

Before purchasing a car, many consumers like to give it a test drive to make sure the vehicle is the right fit for them. Likewise, some house hunters are asking for a “test stay” at a home before signing the sale contract. While that’s not always possible, Tim McMullen, a sales associate with Kinoko in San Francisco’s luxury market, recently offered some tips in a realtor.com® article to accommodate as much of your buyers’ request as possible.

• Book an Airbnb or other short-term rental. Your clients should aim for at least a three-day trip over a Thursday, Friday, and Saturday. This will give them a chance to scout out the neighborhood on a weekday and weekend.
• Check real-time crime updates in the area. Your clients can use apps such as Citizen, which crowdsources crime reports.
• Do a run-through of the commute. Suggest that your clients drive the route they would take between home and work, as well as the most convenient avenues to accommodate their shopping routine and other regular errands.
• Visit local happy hours and weekend festivities. This will give your clients more of a feel for the neighborhood they’re considering. “Your goals should be to see as many venues as you possibly can, to get a sense of the ambiance and demographics of the local nightlife and social scene,” McMullen writes.

1 in 4 Properties Are ‘Equity Rich’ | Realtor Magazine

It’s a good time to be a homeowner: The share of equity-rich residential properties zoomed to a total of 14.4 million, shows the 2019 U.S. Home Equity & Underwater Report from ATTOM Data Solutions. Nearly 27% of all properties with a mortgage in the U.S. are now considered “equity rich,” meaning the combined estimated amount of loans secured by those properties was 50% or less of their estimated market value.

“There are notable equity gaps between regions and market segments,” says Todd Teta, chief product officer with ATTOM Data Solutions. “But as home values keep climbing, homeowners are seeing their equity building more and more, while those with properties still worth a lot less than their mortgages represent just a small segment of the market.”

The highest levels of equity-rich properties are all in the Northeast and Western regions of the U.S. The metros with the highest shares are in San Jose (62.7%), San Francisco (51.1%), Los Angeles (46.6%), Santa Rosa, Calif. (46.5%), and Honolulu (39.4%), the report finds. In the Northeast, the equity leader was Boston (at 35.4% of properties). In the south, Dallas had the most equity-rich properties at 38.2%, while Grand Rapids, Mich., led in the Midwest at 27.8%.

 

 

Bidding Wars Hit a 10-Year Low | Realtor Magazine

Good news for home buyers: Bidding wars are at the lowest point in a decade. But that could be short-lived.

In one closely watched industry index measuring bidding wars, just 10% of offers written by real estate professionals with the brokerage Redfin faced competition from other buyers in October, down from 39% a year earlier.

However, economists point to low mortgage rates and a shortage of homes for sale that will likely heat up buyer competition for properties and usher back bidding wars next year.

“Right now, there are fewer homes for sale than we usually see this time of year, and sales are picking up thanks in part to low mortgage interest rates,” says Daryl Fairweather, Redfin’s chief economist. “All of the pieces are in place for bidding wars to become more common and for the housing market to shift back toward the seller’s favor next year. Now may be the last chance in the foreseeable future for buyers to win a home without facing a bidding war.”

Bidding wars were the most common in October in California markets, led by San Francisco (34.8% of offers faced a bidding war), San Jose (20.5%), San Diego (15.6%), and Los Angeles (13.7%). Philadelphia rounded out the top five at 13.8% of offers last month.

While nationally bidding wars are down, they did hit new highs for the year in San Francisco and San Jose markets. Bidding wars rose in these metros at a time of year when usually the market cools, Redfin economists note. Still, both markets’ bidding war rates are well-below a year ago, in which they stood at 58.1% in San Francisco and 64.9% in San Jose.

© Redfin