Yajnesh Rai

Buyers Snatch Up New Listings as Quickly as They’re Available | Realtor Magazine

Home sales could easily be 20% higher if more homes were for sale, says Lawrence Yun, chief economist of the National Association of REALTORS®. Existing-home sales—completed transactions for single-family homes, townhomes, condos, and co-ops—rose 0.6% in January compared to December 2020 and are up nearly 24% over a year ago, the National Association of REALTORS® reported Friday. All four major regions of the U.S. recorded double-digit annual gains for home sales in January.

“Home sales continued to ascend in the first month of the year, as buyers quickly snatched up virtually every new listing coming on the market,” Yun says. Seventy-one percent of homes sold in January were on the market for less than a month, according to NAR’s report.

While most of the economy has felt the toll of the lingering COVID-19 pandemic, the housing sector has remained a bright spot, Yun adds. Sales remain high and home prices have continued to rise, adding equity to home sellers.

“Home sales are continuing to play a part in propping up the economy,” Yun says. “With additional stimulus likely to pass and several vaccines now available, the housing outlook looks solid for this year.” Yun predicts employment to increase, which could spur even more homebuying over the coming months. He predicts existing-home sales to reach at least 6.5 million in 2021.

Here’s a closer look at key indicators from NAR’s existing-home sales report, reflecting January sales data:

Home prices: The median existing-home price for all housing types in January was $303,900—a 14% jump over a year ago.

Inventory: Total housing inventory at the end of January was 1.04 million units, down nearly 26% from a year ago. Unsold inventory sits at a 1.9-month supply at the current sales pace.

Days on the market: Properties typically remained on the market for 21 days in January, down from 43 days a year prior.

First-time buyers: First-time buyers comprised 33% of sales in January, up slightly from 32% a year earlier.

Cash sales: All-cash sales accounted for 19% of transactions in January, down from 21% a year ago. Individual investors or second-home buyers tend to make up the biggest bulk of cash sales. They accounted for 15% of sales in January, down from 17% in January 2020.

Regional Breakdown

Here’s how existing-home sales fared in January across the country, according to NAR’s report:

• Northeast: Existing-home sales dropped 2.2% in January, but are up 24.3% compared to a year ago. Median price: $361,400—up 15.8% from January 2020
• Midwest: Existing-home sales rose 1.9% last month, a 22.7% jump from a year earlier. Median price: $227,800—a 14.7% increase from January 2020
• South: Existing-home sales increased 3.2%, up 25.1% from January 2020. Median price: $263,300—a 14.6% increase compared to a year ago
• West: Existing-home sales fell 4.4% compared to a month earlier but are still up 21.3% compared to January 2020. Median price: $461,800—up 16.1% from a year earlier

Why Are Credit Scores Soaring in a Recession? | Realtor Magazine

Credit scores have never been higher, positioning more Americans to qualify for some of the best mortgage rates ever. Yet, nearly 10.1 million Americans remain unemployed and have skipped mortgage or debt payments. How can this be?

“It’s been bizarre with this recession to see credit scores go up,” Matt Schulz, chief credit analyst at LendingTree, told MarketWatch.

At the beginning of 2020, FICO credit scores averaged 703. By October, the average FICO credit score rose to 711, Experian FICO credit score data shows. VantageScore credit scores—which factor mortgages in more heavily—rose an average of four points above 2019 scores to 690 in 2020. (In general, a FICO score above 660 and a VantageScore above 670 is considered good, MarketWatch notes.)

Government stimulus programs and relief measures during the pandemic may be helping. Studies have shown that many consumers used the stimulus checks to pay down their debts, which could have helped to boost their credit scores. Also, forbearance and deferment programs put in place during the pandemic for mortgages, student loans, and car payments may have freed up some money to allow borrowers to pay down some of their other bills. Under COVID-19 relief measures, lenders are required to report accounts as current or “paid as agreed” for borrowers who are delaying their payments due to financial struggles from the coronavirus.

“That means that consumers’ credit scores won’t be lowered if they didn’t have any preexisting delinquencies,” MarketWatch reports. “That would make it easier for these consumers to secure a loan or mortgage in the short- and medium-term.”

But credit scores won’t remain frozen. CARES Act provisions will remain in effect for 120 days after the national coronavirus emergency is terminated by the president or Congress. As borrowers are required to start repaying any frozen debts, they may start to see their credit scores decrease if they’re unable to make those payments.

The Most Popular Design Styles by State | Realtor Magazine

Which home style tends to be your state’s favorite? Over the past year, many Americans have been searching for home inspiration on social media—like Instagram or TikTok—and have been reaching for more nostalgic influences. Hashtags like #cottagecore and #grandmillennial styles have gained in popularity over the past year.

Joybird, a custom furniture and home decor company, analyzed Google Trends data over the past 12 months to find the most popular interior design style in all 50 states. Some regional differences surfaced. For example, the modern farmhouse trend was the top-searched interior design style in many of the western and heartland states, such as in South Dakota, Arkansas, Montana, and Idaho, the survey notes. The cottagecore trend—which is known for a more nostalgic style with crocheted pillows and floral wallpaper—was popular in places like Rhode Island and Hawaii.

 

Overall, the top three most searched interior design styles across the country are modern farmhouse, industrial, and cottagecore.

Buyers Undeterred by Increasing Bidding Wars | Realtor Magazine

Buyers are increasingly facing fierce bidding wars in their hunt for a home. Even as home prices surge and competition remain tight, house hunters are undeterred.

About 40% of potential buyers who’ve been searching for a home say they haven’t bought a house yet because they keep getting outbid, according to a new survey by the National Association of Home Builders. A year ago, the primary reason cited was unaffordable prices.

About 56% percent of Redfin real estate professionals reported facing a bidding war with their buyer offers in January. Bidding wars are occurring the most frequently with properties between $800,000 and $1 million, Redfin reports.

“With so few listings hitting the market, I expect bidding wars to become more common and involve even more potential buyers as we head into the spring homebuying season,” says Daryl Fairweather, chief economist at Redfin. “The best thing buyers can do is prepare: Prepare to see homes quickly as soon as they hit the market; prepare by talking to a lender and getting preapproved; and prepare by talking to your agent about how much a home you like is worth so you can go into a bidding war with your strongest offer tactics, but know when to back away if the price escalates more than you’re willing to pay.”

The areas facing the most bidding wars, according to Redfin’s survey of 24 markets, are Salt Lake City (90.2%); San Diego (78.9%); the Bay Area (77.1%); Denver (73.9%); and Seattle (73.8%).

Record low mortgage rates along with extra lean inventories are prompting the buying frenzy. The number of homes for sale was down 43% in January year over year, a record low, realtor.com® reports.

“Lower mortgage rates are making monthly payments for higher-priced homes more manageable,” says Danielle Hale, realtor.com’s chief economist. “But finding a home that checks the right boxes amid limited supply, and saving up for the larger down payment needed with higher home prices, continue to be challenging, especially for first-time home buyers who haven’t accumulated home equity as prices have gone up.”

New-Home Buying Rush Likely to Continue in 2021 | Realtor Magazine

More house hunters—particularly move-up buyers—are being drawn to new-home construction in the COVID-19 pandemic, so much so that it’s driving a surge in construction across the country.

Single-family starts ended 2020 with the best year in home building since the Great Recession, and 11% higher than 2019. Ultra-low mortgage rates and a shift in housing preferences—including a growing demand for larger spaces, home offices, and outdoor amenities—are driving the increase, said Robert Dietz, chief economist of the National Association of Home Builders, at a press conference Tuesday during the virtual 2021 International Builders’ Show.

Dietz says new-home construction will likely grow by 5% during 2021 and hit above 1 million housing starts for the first time in years. But building can only go so far in meeting the surge in buyer demand since the pandemic, added David Berson, chief economist for Nationwide Mutual. Existing-home sale inventories have been at record lows as homeowners delay selling due to the pandemic. Berson said that as the COVID-19 vaccine becomes more available and the economy improves, he predicts that more homeowners—realizing the equity gains in their homes—will list their existing homes and that could help alleviate some housing shortages. Economists on Tuesday predicted that both existing- and new-home sales will be higher in 2021 due to the rise in buyer demand.

Builders, however, are concerned about several challenges that could affect sales over the next few months, particularly related to rising construction costs. Lumber prices, up 169% since mid-April, are significantly adding to the costs of building a new home. Buyers are seeing the increases in home prices too: A median of $16,000 has been added to the cost of a newly built home from the increase in lumber prices alone, according to the National Association of Home Builders’ data.

 

 

 

Builder surveys show the biggest pandemic-related challenges facing the home building industry are:

• Shortages or delays in obtaining building materials: 96% of builders reported this being an issue
• Local jurisdiction having trouble processing approvals in a timely manner: 78%
• Difficulty in finding workers and subs willing to report to construction sites: 76%
• New ordinances making development and construction more difficult: 60%
• Lots not coming online due to prior suspension of development activity: 46%
• Inadequate public infrastructure in places where home buyers want to live: 34%
• Difficulty obtaining financing for development and construction: 30%

Frank Nothaft, chief economist at CoreLogic, says new-home sales are seeing the most increase in the South and West. New-home demand is highest where population growth has seen the largest growth: Texas, Florida, Arizona, and North Carolina. Texas and Florida accounted for more than half of the U.S. net population increases last year. By metro level, new-home sales levels were highest in Dallas; Houston; Atlanta; Phoenix; and Austin, Texas (based on an annual number of new homes from October 2019 to September 2020), according to CoreLogic data.

Another area of the new-home market seeing a rapid increase in demand: build-to-rent. Nothaft says there’s a growing shift away from interest in high-rise multifamily apartment structures to low-density single-family homes. Annual rent growth is down 3% over the past year for the multifamily market but up 3.5% for single-family rentals.

Dietz notes the build-to-rent market has comprised about 4-5% of single-family starts over recent years. But he predicts that share to jump to 5-6% over the next two to three years. “Builders are preparing to expand this sector,” Dietz says. “Not everyone has money for a down payment, even with low interest rates. So there could be a window of opportunity for this particular market to grow.”

Pandemic-Driven Demand for Vacation Homes Surges | Realtor Magazine

More buyers are eyeing a vacation home during the pandemic. Mortgage applications for second homes jumped 84% year over year in January. In September 2020, they surged by an even greater amount: 118% year over year.

“Although demand is down slightly from the fall peak, the fact that nearly twice as many second-home buyers submitted applications in January as the year before means the popularity of vacation towns is not a fad,” says Taylor Marr, an economist for real estate brokerage Redfin. “Many Americans have realized remote work is here to stay, allowing some fortunate people to work from a lakefront cabin or ski condo indefinitely.”

The annual rise in second-home applications is more than double the increase in applications for primary homes, according to an analysis of nationwide mortgage applications conducted by Redfin. In response, home prices in vacation hotspots are rising, with many seeing double-digit yearly growth. But inventory remains tight.

“There’s just as much desire for vacation homes as ever, but inventory is so low that fewer people are actually able to submit offers and apply for mortgages,” says Jaime Moore, a Redfin real estate pro in Las Vegas. “The market is still highly competitive, and almost all the buyers are people from the San Francisco area purchasing their second home. The only time I see a buyer looking to purchase a primary residence is when they already live here in a rental, and they’re looking for something more permanent.”

NAR: 88% of Metros See Double-Digit Price Gains | Realtor Magazine

Higher home prices nationwide are hitting buyers’ pocketbooks. Eighty-eight percent of 161 metros tracked by the National Association of REALTORS® posted double-digit price increases annually in the fourth quarter of 2020. That marks a jump from 115 metros that posted such growth in the third quarter.

The national median existing-home price jumped nearly 15% on a year-over-year basis in the fourth quarter to $315,900, NAR reports. All major regions of the country saw double-digit year-over-year price growth. The Northeast led with a 20.7% year-over-year hike, followed by the West at 15.5%, the Midwest at 15.1%, and the South at 14%.

The higher home prices may help sellers but are detrimental to buyers, says NAR Chief Economist Lawrence Yun. “The average working family is struggling to contend with home prices that are rising much faster than income,” he says. “This sidelines a consumer from becoming an actual buyer, causing them to miss out on accumulating wealth from homeownership.”

Yun says that low mortgage rates are helping to offset higher prices for some buyers. Freddie Mac reported Thursday that the 30-year fixed-rate mortgage averaged 2.73%, continuing to hover around record lows—and that’s driving buyer demand, Yun says. “At the same time, inventory levels also reached record lows, leading to grim inventory conditions of insufficient supply in the fourth quarter.”

The largest annual home price gains in the fourth quarter were in:

• Bridgeport, Conn. (39.2%)
• Pittsfield, Mass. (32.2%)
• Atlantic City, N.J. (30.0%)
• Naples, Fla. (29.9%)
• Barnstable, Mass. (28.9%)
• Crestview, Fla. (28.6%)
• Boise City, Idaho (27.1%)
• Binghamton, N.Y. (24.4%)
• Kingston, N.Y. (24.2%)
• Spokane, Wash. (23.6%).

Destination sites, such as Atlantic City, Barnstable, and Naples, along with small towns within driving distance from major cities, such as Binghamton and Kingston, all saw large price increases. NAR says there is strong demand for vacation homes and affordable homes during the pandemic. “Although tourism took a major hit overall throughout 2020, our data shows that vacation housing still did well in terms of sales,” Yun says. “Many people purchased in these areas because they found themselves with new work-from-home freedoms.”

Eight metros in the West and two in the East comprised the 10 priciest metros in the fourth quarter.

1. San Jose, Calif.: $1.4 million (median home price)
2. San Francisco: $1.14 million
3. Anaheim, Calif.: $935,000
4. Honolulu: $902,500
5. San Diego: $740,000
6. Los Angeles: $688,700
7. Boulder, Colo.: $661,300
8. Seattle: $614,700
9. Nassau, N.Y.: $591,600
10. Boston: $579,100

On average, families spent 14.8% of their income on mortgage payments based on a median family income of $84,313 in the fourth quarter (factoring in a 20% down payment). Due to higher home prices, average monthly mortgage payments increased to $1,040 from $1,020 a year ago.

In seven metro areas, NAR’s study found that a family needed more than $100,000 in annual income to purchase a house. Those markets were:

• San-Jose-Sunnyvale, Calif. ($222,989)
• San Francisco ($181,576)
• Anaheim, Calif. ($148,925)
• Honolulu ($143,748)
• San Diego ($117,865)
• Los Angeles ($109,694)
• Boulder, Colo. ($105,330)

Most, Least Desirable Home Features Right Now | Realtor Magazine

A quarter of Americans say the pandemic has changed their housing preferences, according to a newly released survey of about 3,000 recent home shoppers and buyers conducted last summer by the National Association of Home Builders. Growing demand for more square footage—particularly popular among those who work remotely—as well as home offices, touchless home entry, mudrooms, and flexible space are among the shifts in preferences.

Overall, 80% or more of survey respondents in NAHB’s 2021 What Home Buyers Really Want report indicate the following are the home features they consider most essential:

1. Laundry room: 87%
2. Exterior lighting: 87%
3. Ceiling fan: 83%
4. Energy Star-rated windows: 83%
5. Patio: 82%
6. Double kitchen sink (side-by-side): 81%
7. Walk-in pantry: 81%
8. Front porch: 81%
9. Energy Star-rated appliances: 81%
10. Hardwood flooring (in the living room on the main level): 81%
11. Full bath on the main level: 80%
12. Energy-efficient lighting: 80%

The survey also broke down desirable features by room. The five kitchen features survey respondents identified as most desirable are:

1. Double sink (side-by-side)
2. Walk-in pantry
3. Table space for eating
4. Central island
5. Water filtration

The most desirable outdoor features are:

1. Exterior lighting
2. Patio
3. Front porch
4. Rear porch
5. Deck

The most desirable accessibility features are:

1. Full bath on the main level
2. Doorways at least three feet wide
3. Hallways at least four feet wide
4. Non-slip floor surfaces
5. An entrance without steps

The highest-ranked technology features buyers want:

1. Programmable thermostat
2. Security cameras
3. Video doorbell
4. Wireless home security system
5. Multi-zone HVAC system

Meanwhile, home buyers also revealed features they consider to be turn-offs. Forty percent or more of survey respondents rated the following items as least desirable in a home or development complex:

1. Elevator: 56%
2. Glass walls: 54%
3. Daycare center in the development: 50%
4. Wine cellar: 48%
5. Pet washing station: 47%
6. Roof partially or completely covered by plants: 46%
7. Golf course: 46%
8. In-law suite: 42%
9. Cork flooring (in the living room on the main level): 41%
10. Dual toilets in primary bath: 40%

Average Mortgage Amounts Reach Record Highs | Realtor Magazine

The average purchase loan amount has reached a new record high: $402,200, the Mortgage Bankers Association reported Wednesday. The higher-priced segment of the housing market continues to perform strongly, the MBA says.

Mortgage amounts have been climbing to new record highs since April 2020, near the start of the COVID-19 pandemic.

Mortgage applications for home purchases were up 17% last week over last year, the MBA reports.

Home buyers are borrowing more as home prices rise by double-digit percentages over the past year. Also, mortgage interest rates have been hovering near record lows. “Since interest rates are lower, monthly payments are lower—even with higher loan balances,” says The Ascent, a Motley Fool financial publication. “This makes it easier for would-be borrowers to get approved for bigger loans.”

Mortgage credit availability is increasing, although still down significantly compared to historical levels, the Mortgage Bankers Association reports. “The growth in credit availability in January coincides with a housing market that is poised for a strong start to the year,” says Joel Kan, the MBA’s associate vice president of economic and industry forecasting. “Improvements were driven by the conventional segment of the mortgage market, as lenders added ARM loans with lower credit score and higher LTV requirements. Despite ARM loans accounting for a very small share of loan applications in recent months, lenders are likely looking ahead to a strong homebuying season by expanding their product offerings.”

While credit availability has improved over three of the past four months, Kan still warns that credit supply is at its tightest level since 2014.

17.8M Homes Are Now Considered ‘Equity-Rich’ | Realtor Magazine

Housing appreciation has grown over the last few months with the surging real estate market. Thirty percent—nearly one in three—of homes with a mortgage in the U.S. are now considered “equity-rich,” according to a new report from ATTOM Data Solutions, a real estate research firm.

A home being equity-rich means that the combined estimated amount of loans secured by the property is 50% or less of the estimated market value. In short, it means homeowners themselves have accumulated at least half of the equity in their homes.

ATTOM’s fourth-quarter 2020 U.S. Home Equity & Underwater Report shows that 17.8 million residential properties in the U.S. were considered equity-rich.

“The housing market kept booming despite damage caused by the virus pandemic to the broader economy—a surge that continued to boost the equity that most property owners have in their homes,” says Todd Teta, chief product officer with ATTOM Data Solutions. “As with many other housing-market metrics, the prospects for equity building even further in 2021 are wholly uncertain because of many questions surrounding the pandemic and the U.S. economy. But for now, homeowners are sitting pretty on a growing reserve of personal wealth.”

Comparing the fourth-quarter results with those of the third quarter, six of the 10 states with the largest gains in the share of equity-rich homes were in the West. In California, the percentage of mortgaged homes considered equity-rich grew to 46.1% in the fourth quarter (up from 39.7% in the third quarter). Other equity-rich states showing rapid growth are Idaho (up from 39.5% to 42.7%), Montana (up from 31.9% to 34.8%), Arizona (up from 29.4% to 32.3%), and Vermont (up from 45.1% to 47.8%).

Overall, the states with the highest levels of equity-rich properties in the fourth quarter were all in the Northeast and West, led by Vermont (47.8%), California (46.1%), Idaho (42.7%), Washington (41%), and Hawaii (40.4%).