‘Tiny Homes’ May Have a Wider Buyer Pool

A new survey confirms that consumers are definitely intrigued by smaller homes, often described as less than 600 square feet. More than half of adults recently surveyed–or 53 percent—said “yes” or “maybe” when asked if they would ever consider the possibility of buying such a small home, according to a recent study by the National Association of Home Builders. That means a majority of adults would consider moving into a tiny home at some point in the future, the NAHB notes.

Younger generations tend to find tiny homes more appealing than older age groups. More than half of millennials and Generation X members said they were open to the idea of a tiny home. However, only 45 percent of baby boomers and 29 percent of seniors said they’d be willing to entertain the idea.

But local zoning laws may curtail the prevalence of just how big the tiny-home movement gets. However, there has been a recent momentum among some local jurisdictions to relax some of those restrictions.

Source: “Tiny Homes Have Potential Buyers,” National Association of Home Builders’ Eye on Housing blog (Feb. 7, 2018)

Is Market Volatility Giving Buyers Cold Feet?

It seems a 1,000-plus point drop in the stock market last week mixed with rising interest rates may have been enough to give homeowners and buyers the jitters. Overall mortgage applications last week dipped 4.1 percent week over week on a seasonally adjusted basis, the Mortgage Bankers Association reported Wednesday.

Broken out, mortgage applications for home purchases plunged 6 percent last week. However, that number is still 4 percent higher than last year. Home buyers complain of weakened affordability and lengthier home searches in research released this week by the National Association of Home Builders. Refinance applications dipped 2 percent last week, but they remain 2.8 percent higher than the same week a year ago.

Mortgage rates continue to move upwards. Last week the 30-year fixed-rate mortgage rose to its highest rate since January 2014, averaging 4.57 percent, the MBA reported.

Source: “Stock Jitters and Higher Interest Rates Drive Weekly Mortgage Applications Down 4.1%,” CNBC (Feb. 14, 2018)

Homes are a Better Investment than Retirement Savings

Americans want to buy homes and they want to buy them as an investment option. According to a study on homebuyers by NerdWallet, a personal finance website, 75 percent Americans say that buying a home was a priority for them. NerdWallet analyzed data of more than 2,000 adults surveyed, the company’s mortgage calculator, data from the Consumer Financial Protection Bureau (CFPB), and other sources to develop the study on current home buying sentiments, concerns, and outlook.

The study found that most Americans considered buying a home as a good investment with 64 percent of the people surveyed citing this as a reason to buy a home. And it’s not only the older generation that feels this way. Around 56 percent millennials felt that they would rather own a home that appreciated in value than have more money in retirement savings, reflecting the sentiment of 52 percent of the overall people surveyed.

In fact, according to the survey, 82 percent millennials said that buying a home was a priority compared with 75 percent of generation X and 69 percent of baby boomers. Millennials also aspired to buy more homes, on average throughout their lifetime and were most likely to say that they would like to buy a home to rent out for extra income.

Source: dsnews.com/daily-dose/02-01-2018

Don’t Panic Over Stock Market Mayhem

The housing market likely won’t be deeply affected by the sharp decline in stocks over the last two days because underlying economic fundamentals remain strong, says Lawrence Yun, chief economist for the National Association of REALTORS®. Jobs are being created, workers are seeing wage gains, and there’s no recession on the horizon.

The Standard & Poor’s 500 stock index fell by more than 4 percent Monday, and the Dow Jones Industrial Average declined nearly 5 percent. As of late Tuesday, the S&P was down by almost 1.2 percent since the first of the year, although that comes after a year of double-digit gains.

One metric to watch is long-term bond rates, which historically have gone up as stocks go down. That link, however, hasn’t been as strong in the past few years. Investors tend to increase demand in bonds as an alternative to stocks, driving up yields, which can lead to higher mortgage rates. Since the start of the year, the average rate on a 30-year mortgage has risen, from 3.95 percent to 4.22 percent, according to Freddie Mac. That’s still low by historical standards.

—REALTOR® Magazine

‘Hemp Homes’ Spark Building Industry Interest

Hemp structures date back to Roman times. But now, some builders want to bring it back to their markets, since it’s known for being a fast-growing, sustainable product.

“Mixing hemp’s woody fibers with lime produces a natural, light concrete that retains thermal mass and is highly insulating,” The New York Times reports. “No pests, no mold, good acoustics, low humidity, no pesticide. It grows from seed to harvest in about four months.”

To clarify, industrial hemp is not the same as the product that can give you a buzz. It contains only 0.3 percent of the substance THC, or tetrahydrocannabinol.

Hemp is more widely used across the globe as insulation to fill walls and roofs and under floors in wood-framed buildings. It becomes stucco-like in appearance, it’s more like drywall than concrete so it can’t be used for a foundation.

Source: “High Times Beckon for Using Hemp to Build Houses,” The New York Times (Jan. 29, 2018)

Cash Sales Soar to Post-Recession High

Cash sales accounted for 8 percent of new-home sales in the fourth quarter of 2017, matching a high that has not been seen since 2014, the National Association of Home Builders reports on its Eye on Housing blog. Cash sales make up an even larger share of existing-home sales—about 20 percent in December, according to the National Association of REALTORS®.

Cash hardly makes up the bulk of financing options for buyers, however. The share of new homes financed with conventional mortgages has dropped slightly from 73.2 percent to 72.7 percent. In the fourth quarter of 2017, 12.9 percent of new-home buyers used FHA loans. The share of sales financed with FHA-backed mortgages has dropped 4 percentage points since reaching a peak in the second quarter of 2015.

Source: “Cash Sales Tie Post-Recession High,” National Association of Home Builders’ Eye on Housing blog (Jan. 26, 2018)

Have We Seen the Last of 3% Mortgage Rates?

Average interest rates rose for the second consecutive week for the first time since last summer, the 30-year fixed-rate mortgage shot above 4 percent, Freddie Mac reports in its weekly survey.

“This is the highest weekly average for the 30-year fixed-rate mortgage since May of 2017,” says Len Kiefer, Freddie Mac’s deputy chief economist. “Inflation is firming, the Federal Reserve’s Beige Book indicates broad-based economic growth, and labor markets are tightening. This means upward pressure on long-term rates, like the 30-year fixed-rate mortgage, is building.”

Freddie Mac reports the following national averages for the week ending Jan. 18:

  • 30-year fixed-rate mortgages: averaged 4.04 percent, with an average 0.6 point, up from last week’s 3.99 percent average. Last year at this time, 30-year rates averaged 4.09 percent.
  • 15-year fixed-rate mortgages: averaged 3.49 percent, with an average 0.5 point, increasing from last week’s 3.44 percent average. A year ago, 15-year rates averaged 3.34 percent.

Source: Freddie Mac

Builders Reveal Top 10 Biggest Concerns

Homebuilding is still falling short in many markets in alleviating the shrinking inventories of homes for sale. But builders are blaming the construction shortfall on several factors.

Builders revealed the following top 10 “significant” increases in cost problems they expect to face in 2018, according to the National Association of Home Builders and Wells Fargo Housing Market Index:

  1. Cost/availability of labor: 84%
  2. Building material prices: 84%
  3. Cost/availability of developed lots: 62%
  4. Impact/hook up/inspection or other fees: 60%
  5. Local/state environment regulations and policies: 45%
  6. Inaccurate appraisals: 42%
  7. Federal environment regulations and policies: 42%
  8. Difficulty obtaining zoning/permit approval: 42%
  9. Gridlock/uncertainty in Washington making buyers cautious: 42%
  10. Development standards (parling, setbacks, etc.): 38%

Source: “Building Materials Prices and Labor Access Top Challenges for 2018,” National Association of Home Builders’ Eye on Housing blog (Jan. 16, 2018)

‘Aging in Place’ Begins Early: Report

Homeowners are getting older, and to continue on in their current house, improvements are necessary.

Homeowners at an earlier stage, aged 55-75, are also making modifications, but not necessarily due to aging concerns (though they are, fortuitously, ideal for just that). These include adding automated features like a programmable thermostat or voice activation, and, in bathrooms, grab bars and higher toilets. According to a HomeAdvisor report. The most common remodels, the report shows:

 

  • Add Lever-Style Doorknobs
  • Add Pull-Out Shelves
  • Add a Smart Fire Detection System
  • Add a Smart Security System
  • Replace Stone/Tile With Carpet/Wood

Other key improvements to consider, the report shows:

  • Lighting
  • Modifications in Shower (Bench, threshold)
  • Moving Master Bedroom to First Floor
  • Ramps
  • Wider Doorways

Source: HomeAdvisor

 

 

Retirees Still Face Years of Mortgage Payments

Fewer retirees own their home free and clear, as 32 percent of homeowners ages 60 to 70 say it will take them more than another eight years to pay off their mortgage, according to American Financing’s Retirement and Mortgages survey.

However, many say they intend to age in place, with 64 percent indicating they plan to remain in their current home. Seventy-one percent say they would prefer to make home renovations rather than move, even if a health issue affected their mobility and comfort at home. However, 48 percent say they are unsure what they would do if their retirement funds ran low, making modifications questionable?

“With so many older Americans carrying mortgage debt with them later in life—and many expressing uncertainty about their financial future—this could very well prove to be an increasing concern among retirees,” according to American Financing’s report. It highlights several options for retirees, such as refinancing a mortgage or reverse mortgages. The report showed that only 19 percent of respondents knew what a reverse mortgage is.

Source: “Does Your Mortgage Retire With You?” American Financing (2018)