July Marked a Big Month for Housing

DAILY REAL ESTATE NEWS | FRIDAY, AUGUST 05, 2016

The housing market heated up in July, with several factors favoring buyers this summer.

Jonathan Smoke, realtor.com®’s chief economist, says these factors have made this summer one of the best in a decade: we're seeing the highest consumer confidence for a July since 2007, we've also had the highest nominal home prices for a July on record, and we've had the lowest July mortgage rates on record.

Read more: Where Buying Beats Out Renting the Most

Millennials, aged 25 to 34, picked up their presence on the market this summer too. Realtor.com® reports that last July 75 percent of its 25- to 34-year-old users were looking to purchase a home. Fast-forward to July 2016, that percentage has bloomed to 81 percent.

Buyers are finding a few more choices later in the summer: There are 1 percent more homes for sale in July compared with June.

But hurdles do remain for buyers this summer: It’s tougher to get approved for a mortgage than last year, Smoke notes. In July 2015, 5 percent of first-time buyers reported that qualifying for a mortgage was a significant hurdle. This July, that percentage has increased to 9 percent, Smoke reports.

Also, repeat buyers say their major challenge is finding a home to buy. The share of repeat buyers who say “finding a home” is a problem rose to 25 percent this July, realtor.com® reports.

“The good news for would-be buyers who have struggled to find a home or have been outbid in prior attempts is that the balance of power shifts a bit more in your favor in late summer and fall,” Smoke writes in his column at realtor.com®. “This is the time of the year when sales slow down, but inventory is at its peak. That means there are more homes for sale per buyer now, and yet mortgage rates remain close to their all-time lows. The window to enjoy the best summer in a decade for real estate remains open for the well-qualified and those ready to act.”

Source: “Finally, a July to Remember – and to Buy a Home,” realtor.com® (Aug. 4, 2016)

Mortgage Rates Near 2016 Lows Again

DAILY REAL ESTATE NEWS | FRIDAY, AUGUST 05, 2016

After climbing for the last three consecutive weeks, mortgage rates reversed course this week, falling back near the lowest averages of the year.

Mortgage rates had moved up 7 basis points over the past three weeks. However, most of those gains were erased this week, as the 30-year fixed-rate mortgage fell 5 basis points to 3.43 percent, Freddie Mac reports.

“Mortgage rates have been below 3.5 percent every week since June 30,” says Sean Becketti, Freddie Mac’s chief economist. “Borrowers are taking advantage of these low rates by refinancing. The latest Weekly Applications Survey results from the Mortgage Bankers Association show refinance activity up 55 percent since last year."

Freddie Mac reports the following national averages with mortgage rates for the week ending Aug. 4:

• 30-year fixed-rate mortgages: averaged 3.43 percent, with an average 0.5 point, dropping from last week’s 3.48 percent average. A year ago, 30-year rates averaged 3.91 percent.
• 15-year fixed-rate mortgages: averaged 2.74 percent, with an average 0.5 point, falling from last week’s 2.78 percent average. Last year at this time, 15-year rates averaged 3.13 percent.
• 5-year hybrid adjustable-rate mortgages: averaged 2.73 percent, with an average 0.5 point, falling from last week’s 2.78 percent average. A year ago, 5-year ARMs averaged 2.94 percent.

Source: Freddie Mac

What 55-Plus Buyers Are Looking For

DAILY REAL ESTATE NEWS | FRIDAY, AUGUST 05, 2016

Baby boomers say first impressions count when they enter a new community. They are closely sizing up neighborhood amenities like the pool, clubhouse area, and walking trails. They're also looking at the location of the community, judging how near it is to shopping, dining, medical services, and entertainment.

Know Your Boomer Buyers

Baby Boomers Chart New Direction in Housing

Top Community Features for Baby Boomers

Help Clients Find a Home for Life

Hanley Wood and home builder Taylor Morrison identified what the 55-plus age group of home buyers are searching for in a home through surveys and focus groups. At 77 million strong, baby boomers are expected to continue to have a major impact on the housing market for years to come, and builders are closely paying attention to what they want in their home.

Baby boomers say that space is very important to them in their home-buying decision, and they seek a home with openness and flow. Just how big of a home do they want? The Home Buyer Study conducted by the Farnsworth Group found that:

• 18.1% want a house under 2,000 square feet
• 48.6% want a house between 2,000 and 2,999 square feet
• 20.8% want a house between 3,000 and 3,999 square feet

What’s more, 81 percent say they find more space in a less populated community more appealing than having less space in a more populated community.

Baby boomers also are looking for large common spaces with open floor plans, high ceilings, and natural light, the surveys showed. Integrated indoor and outdoor space also was important as well as sheltered areas, native plants, sustainable and energy efficient technology and materials, and sufficient storage space.

“Information gleaned from the focus group helps set the stage on what the 55+ home buyer desires in a new home and how the industry should be building its homes,” says John McManus, Editorial Director of Hanley Wood’s Residential Group. “These influential buyers want a fresh start in a vital, connected, accessible new-home environment. And, as millions of baby boomers across the country begin the next phase of their lives, buying the right home is top of mind for them.”

Source: “What Boomers Want Most,” BUILDER (Aug. 4, 2016)

Help Clients Get to Know the Neighborhood

DAILY REAL ESTATE NEWS | FRIDAY, AUGUST 05, 2016

As you go house-hunting, it’s important to know the features of your ideal home—the style, size, number of rooms, age, and special amenities are some of the most important. But you also need to consider the neighborhood. The people and places that surround a home can make a big difference to your living experience there.

Certainly, location is the biggest concern. You probably have your short list of areas that fit your needs. But even when you find the one that’s close to your job and quality schools, you need to do a bit more research to make sure your new neighborhood will fit well with your lifestyle.

- See more at: http://www.americanclassichomes.com/blog/what-to-look-for-in-a-new-neighborhood/#sthash.UtSlaccJ.dpuf

As you go house-hunting, it’s important to know the features of your ideal home—the style, size, number of rooms, age, and special amenities are some of the most important. But you also need to consider the neighborhood. The people and places that surround a home can make a big difference to your living experience there.

Certainly, location is the biggest concern. You probably have your short list of areas that fit your needs. But even when you find the one that’s close to your job and quality schools, you need to do a bit more research to make sure your new neighborhood will fit well with your lifestyle.

- See more at: http://www.americanclassichomes.com/blog/what-to-look-for-in-a-new-neighborhood/#sthash.UtSlaccJ.dpuf

As you go house-hunting, it’s important to know the features of your ideal home—the style, size, number of rooms, age, and special amenities are some of the most important. But you also need to consider the neighborhood. The people and places that surround a home can make a big difference to your living experience there.

Certainly, location is the biggest concern. You probably have your short list of areas that fit your needs. But even when you find the one that’s close to your job and quality schools, you need to do a bit more research to make sure your new neighborhood will fit well with your lifestyle.

- See more at: http://www.americanclassichomes.com/blog/what-to-look-for-in-a-new-neighborhood/#sthash.UtSlaccJ.dpuf

During a house hunt, helping your clients find a neighborhood where they can feel comfortable and satisfied long-term can be just as important as helping them find them a home with the right features.

Know Your Neighborhood

Questions to Ask About the Neighborhood

9 Neighborhood Features That Hamper Values

This is particularly important for younger buyers, who still want traditional single-family homes but are increasingly choosing neighborhoods that reflect their personality and lifestyle. Besides finding a neighborhood that reflects their interests, your clients will want to assess the neighborhood's proximity to their jobs, its safety, and if it has decent school options.

Here are steps your clients can take to properly assess a potential neighborhood:

Walk, Don't Drive

As more buyers are interested in living in neighborhoods with entertainment and outdoor amenities within walking or biking distance, the days of driving clients around the neighborhood in a car may be over. Also, as a recent blog post from Classic American Homes points out, getting out and walking around the neighborhood is also key in terms of assessing the noise and smell of a neighborhood.

Don't Be Afraid to Knock on Some Doors

Your clients can gain a lot of insight into a property by just asking the neighbors about the home's condition, how the homes in the area handle bad weather, and even find out more information about the homeowner's association, if there is one. If the buyers get a bad vibe from the neighbors, it might also be a sign that the area isn't the best fit for them.

Visit Multiple Times

Checking out a neighborhood at different times and during the week and also on the weekend can not be stressed enough. While a place might seem relaxed and quiet during the work-week, it could be party central on the weekend. Going at different times can also help assess if the area is kid-friendly and if the neighbors spend a lot of time outside.

Imagining Life There

Finally, your clients need to be able to picture themselves living in the neighborhood long-term. As Classic American Homes suggests, have them ask themselves these questions: How does it feel being there? Can they envision a happy life? What will it be like to relax in the yard? Is it close to plenty of amenities?

Imagine yourself driving into the neighborhood, into your driveway, and walking into your home. Picture yourself working and relaxing in your yard. Think about finding that favorite restaurant down the street. Consider that quick trip to the grocery store to pick up a few ingredients.

How does it feel? Can you see a happy life in this neighborhood?

- See more at: http://www.americanclassichomes.com/blog/what-to-look-for-in-a-new-neighborhood/#sthash.UtSlaccJ.dpuf

Source: "What to look for in a new neighborhood," American Classic Homes  (July 28, 2016)

‘Boomerang’ Buyers Are Slow to Return

DAILY REAL ESTATE NEWS | FRIDAY, AUGUST 05, 2016

Americans who lost their home to foreclosure are slow to return to home ownership, despite being eligible to do so, according to CoreLogic’s Senior Economist Kristine Yao.

Read more: Return Buyers: Housing's Next Boom

It's been seven years since the peak of the foreclosure crisis, and many of these boomerang buyers now have their blemishes erased from their credit histories. But that doesn’t mean they are ready to jump back into home ownership.

About 1.9 million of the 3.1 million home owners who lost their homes to foreclosure between 2007 and 2013 have passed the seven-year mark, the typical required wait period following a foreclosure.

But less than half are buying a home again, even some who are 16 years post-foreclosure, Yao notes.

About 150,000 boomerang buyers return per year – or 12,500 per month – to the housing market, she says. Of the 4.4 million foreclosures of owner-occupied residences completed since 2000, Yao says that less than one-quarter of owners have since returned to the housing market.

Economists had predicted that boomerang buyers would have a big impact on home ownership in the coming years due to their size.

Some states are seeing a pick up in boomerang buyers, mostly in states that saw the biggest foreclosure rates during the housing crisis. For example, returning home owners have been most pronounced in Arizona, Nevada, and Michigan, which each have seen 32 percent of foreclosed home owners purchase again. That is about 10 percentage points higher than the national buyer share. California has seen about 24.8 percent of foreclosed owners return while Florida posts a 20.3 percent return.

Source: “Buyers Not ‘Boomeranging’ Hastily,” Mortgage News Daily (Aug. 3, 2016)

Student Housing Investments May Hit Record

DAILY REAL ESTATE NEWS | FRIDAY, AUGUST 05, 2016

Investors are snatching up more student housing properties than ever before. Indeed, “Last year was the biggest year ever, investment sales-wise,” Fred Pierce, president and CEO of Pierce Educational Properties, told the National Real Estate Investor. But this year is on pace to be even bigger.

Read more: Student Housing Is Booming

Investors have purchased more than $3 billion in student housing properties from the start of 2016 through mid-May. That is up from $2.1 billion over the same time period in 2015.

“Interest in the student housing sector is as high as it’s ever been and is increasing,” says Doug Opalka, senior managing director for Holliday Fenoglio Fowler.

One giant deal recently is coming from a partnership of institutional investors – including the Canada Pension Plan Investment Board, GIC, and The Scion Group – which is about to close a $1.4 billion deal to buy University House Communities Group Inc. The company owns 13,000 student housing beds.

“That is going to create additional investment sales,” says Pierce, adding that big portfolio sales often lead to spin-off transactions.

What’s more, the private fund manager Harrison Street recently acquired Campus Crest for $1.9 billion. Campus Crest owned 38,000 student housing beds.

Student housing is typically viewed by investors as a stable investment with consistent yields and a sector that tends to be more resistant to any economic downfalls, the National Real Estate Investor reports on the draw.

Source: “Buy, Buy, Baby,” National Real Estate Investor (Aug. 3, 2016)

Renovation Ideas Owners May Want to Rethink

DAILY REAL ESTATE NEWS | THURSDAY, AUGUST 04, 2016

Home renovation television shows give home owners big ideas about how they can spruce up their property. But some of these projects can open up problems for owners whose big remodeling dreams may not have been well-thought out. Realtor.com® recently spotlighted a few renovation plans that often turn out badly:

Read more: Avoid Unapproved Renovation Problems

Tearing down walls: While some walls may not look like they’d be any big deal to tear down – even, say, a half wall -- they actually may be providing more support to a home than home owners realize. The walls may be holding up floors or framework. Also, those walls may contain electric and plumbing. Always ask a professional the implication of tearing down any wall and check what is required by your municipalities building code.

Modernizing a historic home: Removing some of the historic appeal or character of a home – such as removing original woodwork, built-ins, or claw-foot bathtubs – can be one of the worst mistakes remodelers make, says Matt Forcum, a real estate pro with Century 21 Realty Concepts in Effingham, Ill. The interior may no longer match the character of the exterior, and thereby bring down the value of the property.

Replacing worn-out wood floors: “Unless you’ve had significant water damage, it doesn’t take much to replace hardwood flooring,” says Luis Leonzo with TableLegsOnline.com. Tearing out old floors could potentially lower your home’s value too, Leonzo adds. “The older the home, the higher the quality of hardwood, which might have cost $20 a square foot when it was built. Replacing the flooring with laminate or carpet at $1 a square foot is like reupholstering your leather couch with canvas!”

Using the highest priced materials: Some of the priciest renovations rarely pay off at resale. For example, Morgan Franklin with United Real Estate Lexington in Kentucky suggests finding a nice granite for $35 to $50 instead of the marble for $100-plus a square foot. “In the eyes of the appraiser and the next buyer, there isn’t much difference,” Franklin says. 

Source: “The Worst Renovation Advice You Might Actually Try,” realtor.com® (Aug. 4, 2016)