Tuesday, September 13, 2016

A Generation of Buyers Is Getting Left Behind

The home ownership rate among those who are under 35 will continue to drop through 2025, according to a new report released by John Burns, a real estate consultant.
In 2004, the home ownership rate peaked at just under 70 percent for all age groups. Americans born in the 1970s were 25 to 34 years old at the time and were forming new households at a fast rate with nearly 50 percent owning a home then. That is 5 percent higher than the average rate since 1981, according to Burns’ study.
But it's tougher to qualify for mortgages for now and young adults, many saddled with more student debt than previous generations, are taking longer to move out of their parents’ homes. The home ownership rate among 25 to 34 year olds now stands at 39 percent.
Meanwhile that same generation born in the 1970s, which is now 35 to 44 years old, has seen a 7 percent drop in home ownership, now at 59 percent. That is the lowest rate for a 35 to 44 year old age group since tracking began in the early 1980s, Burns says.
Source: “Millennials Will Be Renting for a Lot Longer,” CNBC (Sept. 9, 2016)

10 Metros With the Most Vacant Homes

Though the number of vacant properties decreased 3 percent in the last quarter and 9 percent from a year ago, there are still nearly 1.4 million homes in this country standing empty, according to the Q3 2016 U.S. Residential Property Vacancy and Zombie Foreclosure Report released by ATTOM Data Solutions. The properties, defined as residential buildings of one to four units, made up 1.6 percent of the total market.
The majority of these vacant properties (1.1 million or 76 percent of the total) are investment or vacation homes. About 4.3 percent of all investment properties were vacant during the third quarter, according to the report. The states with the highest vacancies among investment property were Michigan (10.3%), Indiana (9.8%), Alabama (6.9%), Mississippi (6.6 percent), and Kansas (6.5%).
Here are the U.S. cities with the highest percentage of vacancies overall:
  • Flint, Mich.: 7.1% vacancy rate
  • Youngstown-Warren-Boardman, Ohio-Pa.: 4.6%
  • Detroit-Warren-Dearborn, Mich.: 4.2%
  • Beaumont-Port Arthur, Texas: 3.9%
  • Mobile, Ala.: 3.7%
  • Port St. Lucie, Fla.: 3.5%
  • Atlantic City-Hammonton, N.J.: 3.5%
  • Montgomery, Ala.: 3.4%
  • Toledo, Ohio: 3.3%
  • Birmingham-Hoover, Ala.: 3.2%
On the other hand, the following cities have the fewest number of vacancies:
  • San Jose-Sunnyvale-Santa Clara, Calif.: 0.2%
  • Fort Collins, Colo.: 0.2%
  • Lancaster, Pa.: 0.3%
  • San Francisco-Oakland-Hayward, Calif.: 0.3%
  • Manchester-Nashua, N.H.: 0.3%
  • Provo-Orem, Utah: 0.4%
  • Oxnard-Thousand Oaks-Ventura, Calif.: 0.4%
  • Vallejo-Fairfield, Calif.: 0.4%
  • Fayetteville-Springdale-Rogers, Ark.-Mo.: 0.4%
  • Los Angeles-Long Beach-Anaheim, Calif.: 0.4%
Source: RealtyTrac

Monday, September 12, 2016

New-Home Prices Are Going Up: Here’s Why

A shortage of new home lots – currently at record lows -- will likely prompt home prices to accelerate, according to the National Association of Home Builders.
Sixty-four percent of home builders are reporting the supply of new-home lots in their markets was “low” or “very low,” the highest percentage since NAHB began tracking such data in 1997.
“As long as the supply remains constrained and demand remains strong, new-home prices will continue to rise,” says David Brown, regional senior vice president at Metrostudy, a housing data supplier.
The average price of a new home in April was $379,800 – up 13.5 percent from a year ago, according to NAHB data.
“The lack of availability of buildable lots has quickly become one of the biggest issues facing our members,” says Ed Brady, NAHB chairman. “While labor shortages and regulatory burdens remain struggles as well, lot shortages are preventing our builders from responding to the growing demand for housing.”
The lot shortages are most evident out West. Thirty-nine percent of builders in the region reported lot supplies “very low” compared to 23 percent in the South and 18 percent in the Midwest and Northeast.
Metrostudy identified the following markets as seeing the biggest problems surrounding lot shortages – with less than a two-year supply of available lots:
  • Austin, Texas
  • Boise, Idaho
  • Colorado Springs, Colo.
  • Dallas-Fort Worth
  • Denver
  • Houston
  • Maryland suburbs of Washington, D.C.
  • Nashville
  • New Jersey and New York suburbs of New York City
  • Northern Calif.
  • Portland, Ore.
  • Raleigh-Durham, N.C.
  • Salt Lake City
  • Seattle
  • Southern Calif.
Source: “Shortage of New-Home Lots Promises to Drive Up Home Prices,” RISMedia (Sept. 7, 201

Optimism Grows Among Sellers, Buyers

Consumers have a fairly optimistic 12-month outlook on housing at the end of the summer home-buying season, says Doug Duncan, chief economist at mortgage giant Fannie Mae. The optimism is being buoyed by confidence in the job market and more favorable expectations regarding their personal finances compared to a year ago.
Fannie Mae’s Home Purchase Sentiment Index, overall, showed a slight upward trend during the spring and summer of this year. That falls in line “with our forecast, which calls for 4 percent growth in home sales in 2016 to the best level since 2006 and continued improvement for 2017,” Duncan says.
Fannie’s HPSI dropped 1.5 points in August but is up 4.2 points compared to a year ago. Four of the six HPSI components dropped last month, with the share of consumers who expect home prices to go up in the next 12 months and those who say now is a good time to sell seeing a 6 and 5 percentage point, respectively, decrease in August.
However, more consumers are reporting a positive employment outlook from the previous month, up 4 percentage points month-over-month in August.
For the third consecutive month, the share of Americans who say now is a good time to buy a home rose 1 percentage point to 34 percent in August. The share of Americans who say now is a good time to sell dropped 5 percentage points from an all-time survey high in July to 15 percent.
The share of Americans who say they are not concerned with losing their job increased 4 percentage points to 73 percent.
Source: Fannie Mae

Housing's Most Wanted: Construction Workers

The new home market is struggling as builders say there's currently 200,000 unfilled construction jobs in the U.S.
The National Association of Homebuilders reports that the number of unfilled construction jobs has soared 81 percent in the past two years alone, causing new home construction to fall way behind the huge demand for homes.
Escalating labor costs and a shift in focus to construction of more expensive, and thus more profitable homes, is dampening the overall economy.  As a result, entry-level homes are increasingly difficult to find, shutting out may would-be first-time buyers at a time when mortgage rates are near historic lows, and hitting debt-addled millennials particularly hard.
Less than a decade after the housing crisis drove 30 percent of construction workers into new fields, according to NAHB, contractors across the country are now scrambling to find workers, some going as far as handing out flyers at sporting events, churches and schools. Carpenters and electricians are often listed as the most in-demand specialties and some municipalities are even offering state-funded training courses, though they struggle to fill all of the seats.
Intense demand for newly constructed homes has led to a nine-year sales high in July, meaning something has to give or companies will be forced to turn down future projects as they struggle to keep up with economic growth.

10 Top Neighborhoods for Green Homes

Homes with green features tend to sell for 7.2 percent more than homes without them, according to a new study by the real estate brokerage Redfin. “Green” features helped to bump up sales prices by an average of $33,894 compared to other homes in 2015, according to the study.
Building is Going Green
Home buyers may be drawn to green features for the promises of lower utility bills, but also for the linked health benefits too.
“Green building doesn’t just help lower utility bills, it’s about health too,” says Alex Dews, executive director of the Delaware Valley Green Building Council. “In the last 10 years, people have become more aware of how the materials used in home construction – including the drywall, flooring, and paint – can impact interior air quality and health. We spend a lot of our time in our homes, so it’s no surprise that home owners are prioritizing materials that keep the interior environment as healthy as possible.”
Redfin’s research team analyzed real estate listings of homes sold in 2015 in 83 major metro areas. It looked for homes that had one or more green features and then compared them to the median price of homes sold last year.
They identified the following top 10 neighborhoods for green homes in 2016:
1. Villanova in Philadelphia
Green homes: 57%
2. Villages of Irvine in Irvine, Calif.
Green homes: 56%
3. Downtown Santa Monica, Calif.
Green homes: 51%
4. Newton Centre in Newton, Mass.
Green homes: 49%
5. Tremont in Cleveland, Ohio
Green homes: 49%
6. Terramor Village/Ladera Ranch in Orange County, Calif.
Green homes: 48%
7. Belltown in Seattle, Wash.
Green homes: 45%
8. Kerrigan Ranch in Yorba Linda, Calif.
Green homes: 45%
9. Downtown in Dedham, Mass.
Green homes: 41%
10. Del Sur in San Diego
Green homes: 39%
Source: “The Top 10 Neighborhoods for Green Homes,” Redfin (Sept. 7, 2016)

Women Better Than Men at Paying Mortgages

Women are less likely than men to miss a mortgage payment, according to a new study from the Urban Institute. Yet, they tend to pay higher interest rates.
A single male borrower had a 6 percent probability of default while a comparable female-only borrower had an expected default rate of 5.8 percent, the study showed.
“This is the first step in saying the barometer is consistently not accurately predicting whether women are able to pay their mortgages,” says Sheryl Pardo, a spokesperson for the Housing Finance Policy Center at the Urban Institute.
Even though women show a higher tendency to pay their mortgages on time, they tend to pay higher interest rates. Why? The study posits that women tend to get higher interest rates because they comprise a higher percentage of subprime loan borrowers and their credit profiles don’t tend to be as good as men’s.
But the study’s authors argue that lenders need to reassess predictors in determining how likely a person is to default on the loan. 
Women’s predictors are lower, which suggests she’s not going to do as well, but lenders aren’t “predicting accurately,” Pardo told Credit.com. “Women do better than their characteristics say they should do. And, in fact, they perform better than men.”
Women tend to pay higher interest rates than men – 5.48 percent versus 5.41 percent, the study found. Women borrowers tend to have more debt to income, which lowers credit scores, and they tend to have less income than men ($68,000 versus $95,000 for men).
“Given that more than one-third of female-only borrowers are minorities and almost half of them live in low-income communities, we need to develop more robust and accurate measures of risk to ensure that we aren’t denying mortgages to women who are fully able to make good on their payments,” Pardo says.
Source: “Women Are Better Than Men at Paying Their Mortgages,” Credit.com (Sept. 8, 2016)

Lenders Go After the ‘Zombie’ Homes

Banks want to get rid of “zombie” foreclosures and prevent them from haunting housing markets. At the end of the third quarter, 18,304 residential properties in the foreclosure process were vacant (dubbed “zombie foreclosures), a 9 percent drop from a year ago.
That represents about 4.7 percent of all residential properties in foreclosures in the third quarter, according to ATTOM Data Solutions’ Q3 2016 U.S. Residential Property Vacancy and Zombie Foreclosure Report.
“A strong seller’s market along with political pressure has likely motivated lenders to complete the foreclosure process over the past year on many vacant properties that were lingering in foreclosure limbo for years,” says Daren Blomquist, senior vice president at ATTOM Data Solutions. “While that has reduced the number of vacant properties in the foreclosure process — so-called zombie foreclosures — it has also resulted in a corresponding rise in the number of vacant bank-owned homes. Assuming that the foreclosing lenders are maintaining these properties and paying the property taxes, they pose less of a threat to neighborhood quality than zombie foreclosures, but they still represent latent inventory in an inventory-starved housing market.”
Overall, nearly 1.4 million residential properties were vacant by the end of the third quarter.
The following markets had the highest number of vacant REOs:
  • Florida: 5,880
  • Michigan: 4,661
  • Ohio: 3,585
  • Illinois: 2,652
  • Georgia: 2,626
At a metro level, the areas with the most vacant REOs were: Detroit, Chicago, Miami, Philadelphia, and New York, according to the report.
Meanwhile, the states with the highest number of vacant foreclosures – or zombies – were in New Jersey (3,698), New York (3,556), Florida (2,528), Illinois (1,018) and Ohio (999). At a metro level, zombie foreclosures were highest in New York (3,590), Philadelphia (1,525), Chicago (783), Miami (694), and Tampa (603).
Source: RealtyTrac

Court Agrees Rent Hike Was Too Much in LA

A jury recently sided with a family in East Los Angeles who refused to pay rent when their landlord issued a 63 percent rent hike. The court says the family can stay put in their two-bedroom apartment, at least for a while longer.
The court found the rent increase was excessive. The landlord wanted the family to pay $2,000 per month for the apartment. However, the court deemed $1,050 as more reasonable, which is actually $200 less than what the tenants were charged prior to the rent increase.
The court said that until the building’s owner Winstar Properties Inc. makes necessary repairs to the apartment the family wouldn’t have to pay any rental increases and only the $1,050. The jury said the landlord’s rent hike seemed unjustified since the jury found the unit’s condition “uninhabitable.”
Winstar has not commented on the case.  
"We have a lot of roaches. Some of our doors are practically falling down ... it was 1,2,3,4,5, like 8 outlets were messed up, my cabinets in my kitchen were falling apart, the rug is old, my walls were peeling. They never did any maintenance," one of the tenants, Carolina Rodriguez, told Curbed.com. "The floor in the restroom is soft, it feels like one of these days you’re going to sink in."
But the tenants won’t be totally immune from rental increases. Once the landlords do fix the unit, the court said they then will be allowed to increase the rent.
The family’s attorney said his latest focus will be to challenge the rent increase to eliminate it permanently. He says he is attempting to do that in federal court with a lawsuit that accuses Winstar of violating the Federal Fair Housing Act, alleging the company only served rent increase notices to tenants who were born outside of the U.S.

Home Owners Rush to Lock in Lower Rates

The latest drop in fixed-rate mortgages this week is spurring a boom in refinancing activity among home owners.
"The 30-year fixed-rate mortgage fell 2 basis points to 3.44 percent this week,” says Sean Becketti, Freddie Mac’s chief economist. “As mortgage rates continue to range between 3.41 and 3.48 percent, many are taking advantage of the historically low rates by refinancing. Since the Brexit vote, the refinance share of mortgage activity has remained above 60 percent."
Freddie Mac reports the following national averages with mortgage rates for the week ending Sept. 8:
  • 30-year fixed-rate mortgages: averaged 3.44 percent, with an average 0.6 point, falling from last week’s 3.46 percent average. A year ago, 30-year rates averaged 3.90 percent.
  • 15-year fixed-rate mortgages: averaged 2.76 percent, with an average 0.5 point, dropping from last week’s 2.77 percent average. Last year at this time, 15-year rates averaged 3.10 percent.
  • 5-year hybrid adjustable-rate mortgages: averaged 2.81 percent, with an average 0.4 point, falling from last week’s 2.83 percent average. A year ago, 5-year ARMs averaged 2.91 percent.
Source: Freddie Mac

Wednesday, September 7, 2016

Where Millennials Won't Leave the Nest

Nearly a third of all U.S. millennials still live with their parents. But in some states, the trend is particularly paramount. 
New research from Stateline, using 2014 Census Bureau data, offers a close look at which states have the greatest percentage of millennials still living at home.
According to their research, young adults in New Jersey may be having the toughest time moving out of their parents’ home. The state has the highest percentage of millennials who still live with their parents at 44 percent of its millennial population.
Here are the states that have the highest percentage of millennials still living at home:
  • New Jersey: 43.9%
  • Connecticut: 38.8%
  • New York: 37.4%
  • Florida: 37.2%
  • California: 36.7%
These results aren't too surprising, since these states have some of the highest priced rental markets and have a general shortage of housing, particularly around their urban centers.
On the other hand, researchers found the following states had the lowest concentration of millennials living at home: North Dakota (15.6%); Wyoming (18.7%); South Dakota (19.7%); and Nebraska and Iowa (both 20.7%).

5 Home Buying Myths: Set Your Clients Straight

Home buyers get a lot of advice from friends and family – some good, some bad. A lot of myths can pop up and negatively guide their home purchasing experience. Make sure your clients don’t fall for one of these common buying falsehoods.
1. The only upfront cost is the down payment.
Buyers need to be prepared for several expenses – everything from fees, taxes, costs for inspections, credit reports, insurance, and others. Closing costs can be anywhere from 3 percent to 6 percent of the purchase price. Those costs can fluctuate greatly depending on the state you live in too.
2. Just looking for a house casually is not a big deal.
Some people may want to just start looking at homes to get a feel for the area, before they even sit down with a REALTOR®. But they could be setting themselves up for major heartbreak. “A buyer might be viewing homes that are in a higher or lower price range than what they are qualified for,” Connie Antoniou, a broker associate in Barrington, Ill., told realtor.com®. Home shoppers – even at the earliest stages – should get pre-approved for a mortgage so they know their budget from the get-go and don’t waste time looking at homes that are out of their price range.
3. You must have a 20 percent down payment.
A 20 percent down payment will help a buyer avoid paying private mortgage insurance. But 20 percent down isn’t required. Many lenders will still qualify a buyer for home loans with 10 percent or 5 percent down. Some buyers can even qualify for only 3.5 percent down with a Federal Housing Administration loan. There are many options for down payment assistance that lenders can explore with a buyer who has a limited amount to put down.
4. Schools shouldn’t matter if you don’t have kids.
“The neighborhood you choose matters – both now and later when you might consider selling,” notes the realtor.com® article. “Even if you don’t have children, good schools are a sign of a good neighborhood.” Buyers should explore all factors with their REALTOR® on items that could influence their homes appreciation and desirability so they don’t run into trouble later on one day when they try to sell.
5. You don’t need a home inspection.
When the housing market is extremely competitive, some home shoppers may be willing to waive the home inspection in order to get the home they want. “But beware: sellers are banking on your skipping this crucial step,” the realtor.com® article notes. “It means you’ll get the home as is, including any and all problems that come with it. And sometimes those problems aren’t exactly visible.”
Source: “9 Home-Buying Myths You Need to Stop Believing Immediately,” realtor.com® (Sept. 6, 2016)

Loan Demand Mostly Flat, But…

Mortgage application volume barely budged last week, rising just 0.9 percent, as mortgage rates mostly held steady. But a different story emerges when looking at mortgage activity—both for refinancings and home purchases—compared to a year ago. On that scale, loan applications are up nearly 28 percent over the past 12 months.
Most of the increases from this year have been due to an uptick in refinancing applications, the Mortgage Bankers Association reports. These rose 1 percent last week, but are 43 percent higher than a year ago. Meanwhile, applications for home purchases – viewed as a gauge for the housing sector – increased 1 percent last week and are 7 percent higher compared to a year ago, MBA reports.
“Although the pace of job growth slowed in August, purchase volume continues to run strong,” says Mike Fratantoni, MBA’s chief economist. “This strength is broad based, with growth at both the high and low ends of the market.”
MBA reports the average 30-year fixed-rate mortgage averaged 3.68 percent last week, up slightly from 3.67 percent the week prior.
Overall, closed mortgage volume in the second quarter posted a strong finish. Lenders originated $518 billion in first-lien mortgage originations during the second quarter, which marks the highest volume since the second quarter of 2013, according to new data released by Black Knight Financial Services.
“While purchase originations jumped more than 50 percent from Q1, refinances saw only an eight percent increase over that period, and were actually down from the same time last year, despite the number of potential refinance candidates outpacing 2015 by over 1 million in every month since March,” says Ben Graboske, vice president at Black Knight Data & Analytics. “That said, refinance lending has risen for three consecutive quarters, and accounted for $221 billion in originations in Q2.”

Your Need to Know Guide to Buying a New Home

If you’ve been following along, you know that last time around we covered a lot of the important things you should be thinking about when b...