Borrowing costs sank to the lowest amounts in more than a year as the 30-year-fixed rate mortgage averaged 3.97 percent this week, Freddie Mac reports in its weekly mortgage market survey. The 30-year fixed-rate mortgage is at its lowest average since the week of June 20, 2013, when it averaged 3.93 percent.
“Mortgage rates were down sharply following the decline in the 10-year Treasury yield for the second straight week,” says Frank Nothaft, Freddie Mac’s chief economist.
Freddie Mac reports the following national averages for the week ending Oct. 16:
- 30-year fixed-rate mortgages: averaged 3.97 percent, with an average 0.5 point, posting a big drop from last week’s 4.12 percent. A year ago, 30-year rates averaged 4.28 percent.
- 15-year fixed-rate mortgages: averaged 3.18 percent, with an average 0.5 point, dropping from last week’s 3.30 percent average. Last year at this time, 15-year rates averaged 3.33 percent.
- 5-year hybrid adjustable-rate mortgages: averaged 2.92 percent, with an average 0.5 point, dropping from last week’s 3.05 percent average. A year ago, 5-year ARMs averaged 3.07 percent.
Source: Freddie Mac
You might want to take a closer look at your listing’s curb appeal: Upgrading a home’s landscape from average to excellent can raise its overall value by 10 percent to 12 percent, according to research from Virginia Tech.
Researcher Alex X. Niemiera with the Department of Horticulture at Virginia Tech found that a $150,000 home with no landscaping could fetch an additional $8,300 to $19,000 by adding a landscape with color and large plants.
“The most preferred landscape included a sophisticated design with large deciduous, evergreen, and annual color plants and colored hardscape,” according to Niemiera. Adding different plant sizes to a front yard, for example, can boost curb appeal, as well as mixing fruit trees and flowers for added color.
“Survey results showed that relatively large landscape expenditures significantly increase perceived home value and will result in a higher selling price than homes with a minimal landscape,” Niemiera writes in the paper. “Design sophistication and plant size were the landscape factors that most affected value. The resulting increase in ‘curb appeal’ of the property may also help differentiate a home in a subdivision where house styles are similar and thereby attract potential buyers into a home. This advantage is especially important in a competitive housing market.”
Source: “Does Landscaping Increase Your Homes Value?” Realty Times (Oct. 13, 2014)
Condo sales have been on a roller coaster ride in recent years, as the recession hit the sector hard. But is the country ready for a condo revival?
“Condo sales moved sideways several years after the recession before picking up steam again in 2013,” CoreLogic Deputy Chief Economist Sam Khater writes on the company’s blog. “This year, it continues to rebound and currently accounts for 12.3 percent of all sales in 2014.”
As of June 2013, 22 of the 25 top condo markets reported rises in sales compared to prior years. But interest-rate rises in the second half of 2013 caused sales to cool off somewhat, similar to what occurred in the overall market. By June 2014, only 14 of those same markets were showing increases year-over-year, CoreLogic reports.
Housing analysts are optimistic the condo market is poised for a big rebound, particularly since the largest cohort in the U.S. is the 20-to-24 age group.
“This specific age cohort might currently be driving today’s rental market, but they will likely be driving the first-time home buyer and condo markets over the next five to 10 years, driving demand for newly built condos,” Khater notes. “That demand is heavily needed in the market now, given that newly built condos were hit harder in the last housing downturn than newly constructed homes overall.”
Source: “The Long-Term Rising of Condo Sales,” CoreLogic (Sept. 30, 2014)
Mortgage rates are falling, despite the cuts to the Federal Reserve’s monthly bond purchases that were expected to send long-term rates higher. The 30-year fixed-rate mortgage, the most popular choice among home buyers, averaged 4.19 percent this week, down from a 4.53 percent average at the start of the year, Freddie Mac reports in its weekly mortgage market survey.
Freddie Mac reports the following national averages for the week ending Oct. 2:
- 30-year fixed-rate mortgages: averaged 4.19 percent, with an average 0.4 point, dropping from last week’s 4.20 percent average. Last year at this time, 30-year rates averaged 4.22 percent.
- 15-year fixed-rate mortgages: averaged 3.36 percent, with an average 0.5 point, holding the same average as last week. A year ago, 15-year rates averaged 3.29 percent.
- 5-year hybrid adjustable-rate mortgages: averaged 3.06 percent, with an average 0.5 point, dropping from last week’s 3.08 percent average. Last year at this time, 5-year ARMs averaged 3.05 percent.
Source: Freddie Mac (Oct. 2, 2014)
Nearly 950,000 homes returned to positive equity in the second quarter, now bringing the total number of residential homes with equity nationwide to more than 44 million, according to CoreLogic’s Equity Report.
“The increase in borrower equity of $1 trillion from a year earlier is evidence that things are moving solidly in the right direction,” says Sam Khater, deputy chief economist for CoreLogic. “Borrower equity is important because home equity constitutes borrowers’ largest investment segment and, as a result, is driving forward the rise in wealth for the typical home owner.”
Still, home price rises are needed to help more home owners feel more confident in their equity position. Of the 44 million properties with positive equity, about 9 million – or 19 percent – have less than 20 percent equity (labeled “under-equitied”), and 1.3 million have less than 5 percent (considered “near-negative equity”), according to CoreLogic.
“Many home owners across the country are seeing the equity value in their homes grow, which lifts the economy as a whole,” says Anand Nallathambi, president of CoreLogic. “With more and more borrowers regaining equity, we expect home ownership to become an increasingly attractive option for many who have remained on the sidelines in the aftermath of the Great Recession. This should provide more opportunities for people to sell their homes, purchase a different home or refinance an existing mortgage.”
The share of home sales in the $200,000-and-below price range is down 9 percent from a year ago, while those above $200,000 have increased 10 percent in the same time period, according to the latest housing report from RealtyTrac, which reflects August housing data.
Broken down further, the share of sales between $500,000 and $1 million rose 18 percent from year-ago levels, and the share of sales higher than $1 million jumped 38 percent year-over-year.
Overall, RealtyTrac’s report shows that the share of sales above $500,000 rose 23 percent from a year ago.
“Higher-end properties are taking up a bigger share of a smaller home-sales pie, boosting the median home price nationwide higher, even as home-price appreciation slows to single digits in many of last year’s red-hot local housing markets,” says Daren Blomquist, vice president at RealtyTrac. “On the other hand, markets where large institutional investors and other buyers have not picked clean lower-priced inventory are continuing to see strong, double-digit increases in median home prices.”
A booming Hispanic population will be the key to the nation’s future residential real estate market, Julian Castro, the newly confirmed secretary of the Housing and Urban Development, told The Associated Press.
“The prosperity of the United States and the prosperity of the Hispanic community, as the fastest-growing community, are one and the same,” Castro told the Associated Press. “The destinies are one and the same.”
Nearly half of first-time homebuyers nationwide will be Hispanic in six years, according to a 2013 study from the National Association of Hispanic Real Estate Professionals. What’s more, Hispanics are forecasted to account for 40 percent of the estimated 12 million net new households nationwide within the next decade.
Castro says that an overhaul of federal immigration laws could further aid the U.S. housing market. Federal immigration law changes could add about 3 million home owners and generate more than $500 billion in sales, income, and spending into the housing economy, estimates the National Association of Hispanic Real Estate Professionals study.
Source: “Castro: Hispanics Key to U.S. Housing Sector Future,” Associated Press (Sept. 20, 2014)
The majority of millennials’ housing preferences may not be as different from previous generations as once believed, according to a new report released this week from The Demand Institute, Millennials and Their Homes: Still Seeking the American Dream.The report finds that the majority of millennials want to own a house in the suburbs as they look to raise families and they want more space, a veer from other studies that have shown twenty somethings will likely choose walkable urban neighborhoods when it comes time to buy.
“A fundamental question about millennials is whether their coming of age in the Great Recession has shaped their goals and aspirations to be different from those of previous generations,” said Louise Keely, president of the Demand Institute and senior vice president at Nielsen. “We found that, while this generation has many unique characteristics when it comes to their housing choices, they share many of the same intentions as young adults in previous decades.”
Like previous generations, they still have a big thirst for home ownership. Twenty-four percent of 1,000 households aged 18 to 29 surveyed say they already own their home while 60 percent say they plan to buy a home in the future. Seventy-five percent described home ownership as an “important long-term goal.”
What they want in their home isn’t that different, either. Sixty-two percent said their next home would be a single-family house, while 38 percent said they plan to have their next home be in the city.
Source: “Millenials’ ‘American Dream’ Not So Different From Anyone Else’s,” The Los Angeles Times (Sept. 16, 2014); “Millennials and Their Homes: Still Seeking the American Dream,” Demand Institute (September 2014); and “Millennials and the American Dream,” National Association of REALTORS® Economists’ Outlook Blog (Sept. 16, 2014)
Ordinarily under Proposition 13, the value of a home for property tax purposes is re-assessed to market level whenever achange in ownership takes place. This usually results in higher property taxes for the homebuyer.
In November 1988, the state‘s voters approved Proposition 90, which is designed to induce greater turnover of homes owned by senior citizens. The measure provides anyone over the age of 55 with relief from Proposition 13 by allowing them to move from one county to another without undergoing a change in their basic property taxes.
Proposition 90 is a “local-option” law; each county has the option of participating. If a county has adopted a Proposition 90 ordinance, it accepts transfers of property tax base assessments from other California counties. If the county that the homeowner is moving from does not have a Proposition 90 ordinance, this does not affect the eligibility of the homeowner.
El Dorado County is one of only a handful of counties participating in this tax saving program. However, Prop 90 is due to expire in February of 2015.
About 20 percent of households who would benefit from refinancing are not doing it — and they could be losing out on lessening their mortgage payments by thousands of dollars over the life of the loan, according to a new report from the National Bureau of Economic Research.
In analyzing a large random sample of outstanding mortgages from December 2010, researchers found that the median household could save $160 per month over the remaining life of the loan, amounting to a total savings of about $11,500.
“Despite the large stakes, anecdotal evidence suggests that many households may fail to refinance when they otherwise should,” according to the report. “Failing to refinance is puzzling due to the large financial incentives involved.”
The report found that borrowers may fail to refinance because they are unable to calculate the full financial benefit to them, they fail to see the benefits over time, or the high amount of upfront costs may deter them.
“Our results suggest the presence of information barriers regarding the potential benefits and costs of refinancing,” per the NBER. “Expanding and developing partnerships with certified housing counseling agencies to offer more targeted and in-depth workshops and counseling surrounding the refinancing decision is a potential direction for policy to alleviate these barriers for the population most in need of financial education.”
Source: “Here’s Why Some Home Owners Throw Away $11,500 a Year on Mortgage Payments,” HousingWire (Sept. 10, 2014)