Thursday, August 10, 2017

HOW HOME BUYERS CAN OVERCOME TOUGH COMPETITION

Source: Kiplinger 

Redfin Chief Economist says to win in a hot market, home buyers should take advantage of technology to find homes as soon as they are listed.

Making sense of the story:
• Arm yourself with tech tools to find available homes quickly. With the variety of apps available today, you can receive listing alerts so that you're notified as soon as a home in your price range or search area hits the market.
• Buyers will gain an advantage from whatever concessions they can offer. Instead of a small earnest-money deposit, we've seen buyers put into escrow their entire down payment or even half of the purchase price.
• You needn't waive a contingency for inspection in the purchase contract. Rather, you can agree to pay the seller, say, $2,500, or next month's mortgage payment, if you walk away.
• Work with a local or reputable lender to get a preapproval for your mortgage that includes full documentation of your means to obtain a certain amount of financing in advance of a signed purchase contract. That may give you the confidence to waive a contingency for financing, and it’s almost as good as cash for closing a deal quickly.
• Because sellers can sell their homes in days but may take months to buy, you can gain leverage by offering to "rent back" their home to them for a certain number of months.

• Fall can be a good time to buy a home because prices generally peak in the summer and ease up in the fall. There's a bit less inventory, but many fewer buyers. Plus, sellers who list in the fall are serious because they must leave because of job relocation, divorce or something else that made them miss the top of the season.

Full story

http://www.kiplinger.com/article/real-estate/T010-C000-S002-how-home-buyers-can- overcome-tough-competition.html

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HOMEOWNERSHIP RATE JUMPS FROM 50-YEAR LOW

Source: The Wall Street Journal 

The U.S. homeownership rate may have finally bottomed out, as the share of Americans who own homes is steadily climbing. The ownership rate posted an increase in the second quarter, reversing a sharp downward trend that begun in the Great Recession.

The homeownership rate was 63.7 percent in the second quarter, the U.S. Census Bureau reported. That marks nearly a full percentage point increase from a year ago. Last year, the homeownership rate had plunged to a 50-year low of 62.9 percent.

“The addition of 1.2 million households being homeowners is clearly good news, as more households are participating in housing equity gains,” says Lawrence Yun, chief economist for the National Association of REALTORS®. “But let’s keep it in perspective: There are fewer homeowners today compared to a decade ago, while renter households have risen by 8 million. So it is still the case that the massive $7 trillion in housing wealth gains from the cyclical low point has been accumulated by a fewer number of families in America. Further advances in homeownership are required to strengthen and broaden the middle class.”

Full story

http://www.marketwatch.com/story/homeownership-rate-jumps-from-50-year-low-2017-07-27

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SELLERS NET HIGHEST PROFIT IN A DECADE

Source: RealtyTrac/ATTOM Data Solutions

Home sellers in the second quarter of this year sold their properties for an average $51,000 more than they paid for them when they bought them. That’s the highest price gain for sellers since the second quarter of 2007, when it was $57,000, according to a new report by real estate data form ATTOM Data Solutions. This represents an average return on investment of 26 percent.

The report also shows that homeowners who sold in the second quarter had owned an average of 8.05 years, up from 7.85 years in the previous quarter and up from 7.59 years in Q2 2016 to the longest average homeownership tenure as far back as data is available, Q1 2000.

All-cash sales represented 28.9 percent of all single family and condo sales in Q2 2017, down from 31.3 percent of all sales in the first quarter, but up from 27.3 percent of all sales in Q2 2016 — the first annual increase in the share of cash sales since Q1 2013.

Out of 118 metro areas with at least 1,000 homes sales in the second quarter, ATTOM Data Solutions found that San Jose (75 percent), San Francisco (65 percent), Seattle (63 percent), Modesto (62 percent), and Denver (62 percent) had the highest percentage of sales in which sellers got top dollar.

Full story

http://www.realtytrac.com/news/home-prices-and-sales/q2-2017-home-sales-report/

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LOW RISK OF A U.S. HOUSING CORRECTION

Source: CNBC


Sales and prices are moving so quickly that appraisals are not keeping up. If the appraisal doesn't match the contract price, the buyer doesn't get the mortgage, and the deal dies. 

New research from JPMorgan examining historic data found that the risk of a dramatic decline in prices is low, despite current fears of a correction in the U.S. and Canada.

Using data from 14 developed countries dating back to 1950, JPMorgan's research found that sharp price corrections have been relatively uncommon, even following large price increases.

"The data show that sustained increases in real house prices have been the norm rather than the exception in the post-World War II era, as rising populations and incomes have pushed up land prices," Jesse Edgerton, U.S. analyst from the investment bank's economic and policy research team, said in the report entitled "Quantifying housing correction risk in Canada and the U.S."

The research comes as fears grow over a housing bubble forming in the West, particularly in countries like the U.S., Canada and Australia. Since the beginning of the global housing boom around the year 2000, real U.S. housing prices are up 29 percent and Canadian prices up 138 percent, Edgerton noted.

Full story

https://www.cnbc.com/2017/07/26/jpmorgan-points-to-low-risk-of-a-us-housing-correction.html

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Saturday, June 24, 2017

WAYS HOMEBUYERS CAN LEAP THE DOWN PAYMENT HURDLE

Source: Associated Press 

Saving up for a down payment is the biggest hurdle for many would-be homebuyers, particularly those looking to make the leap from renting to owning.

More than two-thirds of renters consider setting aside money for a down payment the No. 1 obstacle to buying a home, according to a recent survey by real estate data provider Zillow. That edged out other concerns, including job security and a thin supply of homes on the market.

While there are home loans that require as little as 3 percent down, rising home prices, especially in expensive coastal states, keep driving up the amount of money buyers need to come up with for a down payment.

Making sense of the story

• Start saving now. Renters may want to calculate what their extra monthly costs would be as a homeowner and then set aside that amount, minus rent and utilities. This accomplishes two goals: Saving money for a down payment and getting you accustomed to the financial constraints of living with the costs of homeownership.
• The type of home loan you get may determine how much of a down payment you need. For many years, buyers sought to put down 20 percent of the purchase price. That would lower their monthly mortgage payment and allow them to avoid having to pay for private mortgage insurance, or PMI. But as home prices have risen, that trend has waned. Loans that require as little as 3 percent up front have become more common. As a result, the median U.S. down payment has declined to 10 percent the past four years, according to the National Association of REALTORS®.
• Borrowers with low or moderate income, and teachers, firefighters or other public service job holders may also qualify for down payment assistance through thousands of federal, state or local programs aimed at helping homebuyers.
• There are more than 2,100 funded programs, many of which help cover the down payment and closing costs through loans that can sometimes be forgiven over time, or paid back only once the buyer sells the home, according to Down Payment Resource, a tracker of homebuyer assistance programs.

Full story

https://apnews.com/959488b475a042babc570ee21110c5fc/Ways-homebuyers-can-leap-the-down- payment-hurdle

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WHAT YOU SHOULD KNOW

• Mortgage applications increased 7.1 percent from one week earlier, according to data from the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey for the week ending June 2, 2017. This week's results included an adjustment for the Memorial Day holiday. 

 The Market Composite Index, a measure of mortgage loan application volume, increased 7.1 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 15 percent compared with the previous week. The Refinance Index increased 3 percent from the previous week. The seasonally adjusted Purchase Index increased 10 percent from one week earlier to its highest level since May 2010. The unadjusted Purchase Index decreased 14 percent compared with the previous week and was 6 percent higher than the same week one year ago.
 The refinance share of mortgage activity decreased to 42.1 percent of total applications from 43.2 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 7.4 percent of total applications.
 The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($424,100 or less) decreased to its lowest level since November 2016, 4.14 percent, from 4.17 percent, with points increasing to 0.34 from 0.32 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate decreased from last week.
 The average contract interest rate for 15-year fixed-rate mortgages decreased to its lowest level since November 2016, 3.39 percent, from 3.42 percent, with points increasing to 0.43 from 0.39 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

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MILLENNIALS ARE POWERING THE HOUSING MARKET

Source: NBC News 

Millennials were the largest group of home buyers (34 percent) for the fourth consecutive year, according to NAR's 2017 Home Buyer and Seller Generational Trends study. By comparison, baby boomers were 30 percent of buyers.

"Millennials have been fairly slow to get into the market, but we are seeing an uptick in millennial buyers this year — which is a good sign, because as home values rise, we want a wider number of people to participate in this housing recovery," said Lawrence Yun, chief economist at the National Association of REALTORS® (NAR). "There's a pent-up demand and as the economy continues to improve, we expect to see more people in their early thirties, adults who are still living with their parents — clearly not their idea of the American dream — begin to look for their own housing units."

Research done by the National Association of Homebuilders found that more than 90 percent of millennials say they eventually want to buy a house.

Full story

http://www.nbcnews.com/business/real-estate/who-s-powering-housing-market-surprise-it-s-millennials- n768196

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