Buyer Interest Is Growing among Younger Generations

 

Buyer Interest Is Growing among Younger Generations

The demand for homes this year is extraordinary as record-breaking numbers of hopeful buyers continue to shop for homes. In a normal year, the peak homebuying season comes to a close by early fall. However, 2020 is anything but a normal year, and the housing market is no exception. Lawrence Yun, Chief Economist for the National Association of Realtors (NAR), explains:

“Home sales traditionally taper off toward the end of the year, but in September they surged beyond what we normally see during this season…I would attribute this jump to record-low interest rates and an abundance of buyers in the marketplace, including buyers of vacation homes given the greater flexibility to work from home.”

What’s drawing so many buyers to the market?

As Yun mentioned, record-low interest rates are key. Today’s rates are strengthening purchasing power for buyers, too. Sam Khater, Chief Economist at Freddie Mac, emphasizes:

“Mortgage rates today are on average more than a full percentage point lower than rates over the last five years.”

If you’re a homebuyer right now, there’s no question that you want to take advantage of this opportunity – and you’re not alone. Competition among buyers is definitely increasing as more buyers enter the market and mortgage interest rates remain so low.

Who’s planning to buy a home right now?

Today’s affordability is appealing to all generations and seems to be especially attractive to younger buyers who want to begin growing their wealth through homeownership. There’s a distinct increase this year in the percentage of those in younger generations searching for homes. The National Association of Home Builders (NAHB) notes:

“Between the third quarters of 2019 and 2020, the share of Gen Z adults planning a home purchase rose three points to 14%. Millennials, however, are the generation most likely to be considering buying a home (22%).”

Here’s a graph showing the year-over-year increase in homebuying interest by generation:According to Mark Fleming, Chief Economist for First American, millennials are reaching their prime home-buying years, a likely driver in this increase:

“Record low mortgage rates and millennials continuing to age into their prime home-buying years has boosted demand, but a lack of housing supply remains a challenge.”

What’s the biggest challenge for today’s buyers?

Finding a home, however, as Fleming notes above, is clearly a challenge today. Yun also explains:

“There is no shortage of hopeful, potential buyers, but inventory is historically low.”

With so many buyers actively searching for homes this year and so few houses for sale, it’s more important than ever to work with a trusted real estate professional to navigate today’s market. From pre-approval to bidding wars and guidance on down payment assistance resources, having an agent by your side might make the difference in your ability to land your dream home.

Bottom Line

Let’s connect if you’re ready to buy a home. More buyers mean more competition, so you need an expert guide to help you stand out from the crowd.

New-Home Sales Slow Slightly

New-Home Sales Slow Slightly: Despite the sales drop, the market for newly built homes is up 32.1% compared to a year ago, according to the Commerce Department.

What Will Homes Be Worth in 10 Years?

What Will Homes Be Worth in 10 Years?: California's median price could top $1 million by 2030, a new study shows.

Selling Your House Is the Right Move, Right Now

 

Selling Your House Is the Right Move, Right Now [INFOGRAPHIC]

Some Highlights

• Demand from homebuyers has skyrocketed this year, which means today’s sellers are poised to win big. This ideal moment in time to sell your house won’t last forever, though.
• With more sellers coming to the market in the spring, waiting until next year means buyers will have more choices, so your home may not stand out from the crowd.
• Let’s connect today to discuss why now may be the right time to make a move on your terms.

Mortgage Rates Hit Record Low—Again

Mortgage Rates Hit Record Low—Again: The 30-year fixed-rate mortgage fell to an all-time low of 2.80%, according to Freddie Mac.

Are Low Mortgage Rates to Blame for High Home Prices?

Are Low Mortgage Rates to Blame for High Home Prices?: A rush of buyers and lack of inventory are also pushing up costs, realtor.com® reports.

Fall Home Sales Surge Ahead of Normal Patterns

Fall Home Sales Surge Ahead of Normal Patterns: Speedy home sales continue in all regions of the country, with the median home price up nearly 15% from a year ago, NAR reports.

Pros and Cons of Buying Repossessed Properties

 Oct 15, 2020

LaTasha Beal

Buying a house can be incredibly exciting and terrifying at the same time, especially if it’s your first or second home. For a lot of buyers today, the idea of getting a killer deal is the ultimate goal, one that you may have heard is possible with a bank-repossessed property (also known as a “real estate owned” property or simply “REO”). Real estate prices are only going up, after all, so what’s the scoop on these REOs?

Can You Get a Deal on Repossessed Properties?

It’s a tricky question with a lot of caveats. In some markets, it will almost certainly be easier to take advantage of REOs to find lower entry price points. Other markets may not offer a lot of financial benefit to the buyer. When market inventory is low in the property type and area you’re shopping for, prices will tend to trend higher, even for repossessed properties.

On the other hand, if you’re pretty flexible and aren’t overly concerned about neighborhoods, an area with a lot more inventory can be a difficult place for a seller, creating a super local buyer’s market. Even banks are sensitive to these pressures, and since they can be more flexible about their pricing, may discount REOs more sharply in order to unload them.

What Should You Know Before Making an Offer on Repos?

If you manage to find a steeply discounted property that you’re interested in, there’s still a lot to consider before making an offer. The caveats with repos are many, but they can still work for buyers who go into the transaction with their eyes wide open.

Be aware that:

• REOs are almost exclusively sold “as is”. Yes, that means you get what you get, and since there’s unlikely to be a good history, it may be a lot worse than you imagine. You could get lucky and totally win the REO lottery, but remember that many repossessed properties have been sitting vacant for extended periods with little to no maintenance or human interaction, which can encourage insect and animal infestations on top of problems you’ve been made aware of.
• Always get a home inspection with an REO. In most areas you can still back out of the transaction if the condition of the home is worse than you imagined, though be aware that these inspections are limited in scope, and surprises may still be hiding. Sold “as is” means just that, though. Banks aren’t generally interested in fixing anything, so if your inspector says the A/C is bad and the roof is leaking, you’ll need to figure that into your overall cost equation.
• REOs can be very competitive. Investors often really like buying REOs, which means you’re going to be competing against other buyers who have a lot of cash on hand. Cash deals close faster and there’s less risk they’ll fail to close because of lending issues, which makes them pretty nice for a seller. A good REO is likely to be a competitive buy, so be fully prepared, fully qualified for your loan, and ready to make your highest and best offer out of the gate. You may only get one shot.
• REOs can be difficult to finance. Some REOs and lending programs are meant to go to future homeowners, but most are not especially friendly to non-investor buyers. You’ll need a substantial down payment, high credit score, solid debt to income ratio, and reliable employment for a bank to take that level of risk on a home that may become a money pit. It can absolutely be done, but this is far from a basic first time homebuyer sort of process. Loans like the FHA 203(k) can sometimes be used, as well as conventional loans, depending on the condition of the property.
• REOs can be difficult to close. If you have to borrow to buy an REO, expect the process to take months. Even if you don’t have to borrow, there are layers of red tape to cut through, because you’re dealing with a corporate owner rather than an individual. Allow plenty of time to get through all the steps of the process and be prepared to have to pivot into a different loan program if things get dicey.

• Should I Buy a Repossessed Home?

  If you’ve thoroughly prepared yourself for owning a home with a poorly documented history and a higher than normal risk of unexpected problems, as well as the stressful buying process that can go with it all, then absolutely buy the REO if it’s right for you. Sometimes REOs are the only way to get into the right neighborhoods or even find a home in your budget, so there are definitely reasons to pull that trigger.

  Once you’ve closed, though, you’ll probably need a lot of expert help. Don’t forget to lean into your HomeKeepr community. Not only can you access all the best home pros in your area, they’re right at your fingertips, day or night. It’s the perfect place to be if you want to buy a project home!

Mortgage Rates Set Record Low for 10th Time

Mortgage Rates Set Record Low for 10th Time: Home buyers, as well as homeowners looking to refinance, may have been able to snag a 2.81% rate for a 30-year mortgage this week.

September Portland Market Action Report

 

Real Estate Continues to Show Unprecedented Strength This Year

 

Real Estate Continues to Show Unprecedented Strength This Year

The 2020 housing market has surpassed all expectations and continues to drive the nation’s economic recovery. The question is, will this positive trend continue throughout the rest of the year, especially given the uncertainty around the current health crisis, the upcoming election, and more?

Here’s a look at what several industry-leading experts have to say.

Lawrence Yun, Chief Economist, National Association of Realtors

“Home sales continue to amaze, and there are plenty of buyers in the pipeline ready to enter the market…Further gains in sales are likely for the remainder of the year, with mortgage rates hovering around 3% and with continued job recovery."

Frank Martell, President and CEO, CoreLogic

"Homeowners’ balance sheets continue to be bolstered by home price appreciation, which in turn mitigated foreclosure pressures…Although the exact contours of the economic recovery remain uncertain, we expect current equity gains, fueled by strong demand for available homes, will continue to support homeowners in the near term."

Zillow

“Zillow's predictions for seasonally adjusted home prices and pending sales are more optimistic than previous forecasts because sales and prices have stayed strong through the summer months amid increasingly short inventory and high demand.

The pandemic also pushed the buying season further back in the year, adding to recent sales. Future sources of uncertainty including lapsed fiscal relief, the long-term fate of policies supporting the rental and mortgage market, and virus-specific factors, were incorporated into this outlook.”

Bottom Line

Many economists are in unison, indicating the housing market will continue to fuel the economy through the end of the year, maintaining this unprecedented strength.

The Home Mortgage Refinance Process

 Oct 19, 2020

LaTasha Beal

When rates are low, it can seem like the ideal time to refinance your mortgage. After all, who doesn’t like a lower interest rate? There are lots of good reasons to refinance your mortgage, such as adding on or trying to streamline your expenses, but what’s really involved in the process?

Mortgage Refinancing: The Basics

Perhaps the best news any homeowner can get when it comes to a refi is that it’s not likely to be nearly as difficult as getting the original loan was. Breathe a big sigh of relief if you need to; this is the time for it.

For many homeowners, refinancing happens for a few specific reasons: reducing mortgage interest, dropping mortgage insurance, or cashing out for a remodeling expense. When rates are low and values are high, a refinance can provide a double whammy financially. Dropping any mortgage insurance you’re currently on the hook for can make a big dent in your house payment, especially if waiting for it to fall off naturally would take several more years. And, of course, a lower interest rate also means you’re paying less money towards interest over time. Combine the two and it can mean big savings on a home you plan to hold over the longer term. Remodeling is a valid and effective way of adding value, as well, which has a whole lot of other benefits that come with it. In short, there are tons of ways a refi can be helpful to your financial welfare.

The Refinance Process

Much like when you got your initial loan, your mortgage banker or broker will examine your financial history and your longer term prospects, which includes your work history, to ensure you’re financially stable. Your debt to income ratio will be reexamined as well. Although these are closely scrutinized, many banks will grant a bit more wiggle room than they did for initial mortgages, especially for homeowners who have a lot of equity already established.

Once approved for your loan, you’ll choose when to lock in your rate. Because interest rates can vary from day to day, it’s important to pay close attention to both the current rate being offered and your lender’s advice in the matter. If they have noticed rates are going up, locking right away makes a lot of sense, but if you’re the gambling sort and rates are trending down, you may want to float your rate a few days to see if you can do any better. Remember, though, this is a bet that you’re taking that the rate will drop, and it won’t always pay off.

Documents You’ll Need

Just like with the initial mortgage, you’ll need to prove you are who you say you are and that you have the income you claim, among other things. Your banker will almost certainly ask for the following types of paperwork:

• Proof of income. Tax statements and tax stubs are big favorites for proof of income. If you own a small business, you may also be asked for a profit and loss statement, so get to work on preparing that now.
• Credit score. Your lender will run your credit (and the credit of any co-applicants) in order to determine if you remain credit-worthy. Don’t worry, they can’t revoke your current mortgage if things have gotten a little rocky in that department; they just won’t write you a new loan. Pulling a credit report can also inform your lender about your debts.
• Asset information. If you have a retirement account like a 401(k), stocks, bonds, or even a checking or savings account, your lender will want to know about it. These accounts, plus the equity you have in your home and other assets, figure into the equation when lenders are trying to assess your risk of default. They can also serve as sources of collateral, should you need it.
• Other legal paperwork. Divorce decrees and support payment documentation are helpful for your lender to determine what liabilities you have, if any, in relation to those former legal relationships. If you receive support, it can sometimes be figured into your income calculation.

Once your lender has reviewed your paperwork and determined they’re willing to refinance your loan, they’ll order an appraisal of your home. Typically, an inspection won’t be needed, unlike with a purchase. In many cases, a drive-by appraisal will be adequate, especially if it’s very clear at a glance that you’ve maintained the property.

Closing the Loan

With all your paperwork in hand and your appraisal completed, your lender will be ready to send you and your loan to closing. Since there’s not a seller involved, you will be going to closing at a time that’s convenient for you, and it’ll be a very quick process. Make sure to double-check the terms of the loan to ensure you’re agreeing to the mortgage you believed you were signing up for. If you have any questions, your lender will be more than happy to clarify, but ask them before you sign the dotted line.

Following your closing day, you have a special period to change your mind and revoke the loan entirely. Thanks to your right of rescission, you can cancel the loan with no penalties and no modification to your previous mortgage within three days of closing. So, if you wake up the next day with cold feet, it’s not too late to turn back time!

What Rising Home Prices Mean for Your Clients

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Record-High Lumber Costs Drive Up New-Home Prices

Record-High Lumber Costs Drive Up New-Home Prices: More than 2.1 million U.S. households can’t afford a median-priced new home due to rising lumber costs, builders say.

High Home Prices Continue Beyond Summer Peak

High Home Prices Continue Beyond Summer Peak: Buyers aren't balking at rising prices, as homes continue to sell nearly two weeks faster than a year ago.

Are Mortgage Rates Finally Stabilizing?

Are Mortgage Rates Finally Stabilizing?: Don't expect the interest rate slide to continue, says Freddie Mac's chief economist.

Student Loans Versus Mortgages

 Oct 05, 2020

LaTasha Beal

According to the Brookings Institute, about 42 million Americans (one in eight) have a student loan, totaling about $1.5 trillion in student loan debt. Only 30 percent of Bachelor’s degree recipients graduating in 2011-2012 managed to escape without a student loan; another 30 percent accumulated $30,000 or more in student debt. All this adds up to a whole lot of potential borrowers who have to navigate the added complexities involved with buying a house with student debt.

What’s Your Student Loan Repayment Plan?

If you have student debt, you probably were initially given a standard repayment plan. Many students, however, found quickly that they weren’t able to pay those payments reliably and risked default. For 8.1 million borrowers, not quite 20 percent of all student loan holders, those standard repayment plans were traded in for income-driven repayment plans. Although income-driven repayment was meant to help students successfully keep their loans in good standing, they also can create complications for getting a traditional mortgage.

Calculated Student Loan Payments

For students in anything besides a standard repayment plan, it may be necessary for a lender to calculate an estimated loan payment as part of the debt to income calculation, rather than simply using the number from the student loan holder’s documents. This is where the rub really comes in.

For some loan programs, a $14 payment in an income based repayment plan is just that, $14 added to the calculation. However, in others, because the income-based repayment plans are only approved one year at a time, a calculated payment is substituted. This, in theory, sets up a worst case scenario for lenders when it comes to the risk of foreclosure due to housing affordability. For student borrowers, it can turn a long awaited home purchase into a huge disappointment.

Loan programs typically calculate the estimated payment in one of two ways:

• By simply using the amount equivalent to one percent of the outstanding loan balance (if you owe $30,000, your monthly payment is figured at $300), or
• Calculating how much of a payment it would actually take to pay your loan in full in the term that remains (if you owe $30,000 and your term remaining is five years, your calculated payment would pay that loan off in full at the end of the five years).

This also goes for loans that are in forbearance or deferment, so there’s really no way around it.

Student Loan Payments and Debt to Income Ratios

If you’ve never had a mortgage before, or you’ve only had limited exposure to the lending industry, it’s important to understand how debt to income ratios work. Lenders determine how willing they are to loan to someone not only based on their credit worthiness, but also on how much other debt they have. They want to see that borrowers have plenty of financial wiggle room for emergencies, since they really don’t want to get the house back.

For most loans, that means a debt to income ratio (DTI) under about 43 percent. Anything you’ve agreed to pay over a longer term, like your student loans, are added into this calculation and compared to your actual income. When your car loan, student loan, rent or current mortgage payment, and credit cards are all combined, does that or does that not exceed 43 percent of your income? This is the first and most basic question. Various loan programs will have ways to compensate for high DTIs, to a point, and there are different DTIs for different programs, though generally they’re in the same ballpark. So if your DTI is high, it’s not yet time to panic. However, you should be cautious about your next move.

This is why, if you have large student loans, it’s even more important to carefully consider the debt obligations you’re taking on as you take them. Student loans aren’t the only hurdle, but they are definitely a very large one for many students. Imagine having 10 percent or more of your income suddenly discounted because your deferred student loans are suddenly counted against you, even if you don’t have to make a payment! That’s the situation some borrowers find themselves in when they go to apply for a mortgage they believe they’re ready for.

All Isn’t Lost, Many Lenders Will Help

The good news is that lenders can help you sort your student loan woes out, even if it takes a little time to get you on the right path. Not only can they help you understand compensating factors that could help stretch your DTI a bit higher, they can also point to financial moves you can make to decrease your DTI, such as paying off those loans in their last legs or finding a co-borrower who can help even things out a bit.

If you don’t have a lender that you absolutely love, your HomeKeepr community can help! Just ask for a recommendation for a lender in your area who works with borrowers with student loan debt and you’ll be connected in almost no time to someone nearby!

Plant a Tree!

 Oct 01, 2020

LaTasha Beal

As fall approaches, a lot of people are looking for ways to prep their yards for both winter and the coming spring. One great way to do this is to plant trees on your property that will bloom and grow for years to come. If you aren’t sure whether the time is right to plant trees, or don’t know which trees you should plant, don’t worry; a wide variety of trees do well when planted this time of year. If you make sure that you plant them properly to give them a good start, most trees will be fine.

Why Plant in the Fall?

Not only will most trees do well when planted in the fall, but in many cases the fall may be a better time for planting than other times of the year. The weather tends to be milder during the fall, with less likelihood of drought or extreme highs that could damage your trees while they are still establishing their roots. Though cold weather will eventually set in, you’ll usually have enough time for roots to become well established before you have to worry about freezing temperatures or other problems from the cold. Add in a dormant period over the winter and you’ll have trees that are already established and ready to grow once spring arrives.

Which Trees to Plant

While there are some trees that might not handle a fall transplant, a lot of trees actually do very well when planted in the fall. More important than matching the trees to the time of year is making sure that you’re planting trees that grow well in your part of the country. Match trees to your planting zone, taking into consideration the cold-hardiness of the trees if you tend to see freezes in October or November. Check local nurseries or agricultural agents if you need help finding the right trees for your area.

Proper Planting Technique

When it comes time to plant, first stop to find out the specific needs of the tree you’re planting. In most cases you’ll have to dig a hole at least as deep as the tree’s root ball, but you may have to dig out three to five times its width to ensure that there’s enough loose soil around the tree for the roots to spread. Put the root ball in the center of the hole you dug, filling it in and tamping it gently, and then water it. If the ground settles during watering, leaving a divot around the tree, add more soil. You’ll also want to mulch over the area to help hold in moisture and keep the soil warm, but try not to crowd the mulch too close to the tree’s trunk. From there you’ll just need to water a few times per week depending on the tree’s specific watering needs.

Timing Your Fall Planting

Even though the fall is a good time to plant a lot of trees, you still need to make sure that you time your planting right, or you might end up with problems when winter moves in. Try to schedule your planting earlier in the fall rather than later; wait for summer’s heat to break, but choose a time that’s at least a few months before you start getting deep freezes. The air temperature should be cool but not cold, and soil temperatures should still be above 50 degrees Fahrenheit even if things are getting cool outside.

Prepping for Winter

Once your tree seems to be establishing roots and settling in to its new location, start thinking about how you’ll keep it protected that first winter. Most years will see the tree dropping its own roots and having grass or other ground coverings around as well. For the first year, though, the mulch you put down will be its main line of defense. Before the mercury drops too much, add some extra mulch above the roots to account for settling and to provide protection for the tree. You might also consider covering the tree with sheets or other coverings during early frosts to give it more time to get established during its first few months.

Need Some Help?

If this seems like a lot to take in, you’re not alone. HomeKeepr is here to help. Sign up for a free account today and we can help you find landscapers who can hook you up with the trees and other landscaping changes you want this fall.

August is Second Month of Increasing Nationwide Foot Traffic

August is Second Month of Increasing Nationwide Foot Traffic: August 2020 U.S. showings were up 20% over this time last year and represent the largest year-over-year increase in Sentrilock® showings since October 2017.