A New ‘2017 Low’ Struck with Mortgage Rates

The 30-year fixed-rate mortgage moved lower for the third consecutive week and set a new low for the year, Freddie Mac reports. However, with this latest jobs report out of the way, the runway is now clear for the Federal Reserve to raise benchmark interest rates when it meets June 13 and 14. Even before the Labor Department’s release on Friday morning, the Fed had been sending firm signals that its members viewed the economy as strong enough to withstand another rate increase.

Freddie Mac reports the following national averages for the week ending June 1:

30-year fixed-rate mortgages averaged 3.94 percent, with an average 0.5 point, dropping from last week’s 3.95 percent average. Last year at this time, 30-year rates averaged 3.66 percent.

15-year fixed-rate mortgages averaged 3.19 percent, with an average 0.5 point, holding the same average as last week. A year ago, 15-year rates averaged 2.92 percent.

Source: Freddie Mac

Home Loan Interest Rates Hover Around 4%

For the fifth consecutive week, the 30-year fixed-rate mortgage remained around 4 percent.

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

’30-year fixed-rate mortgages’ averaged 4.02 percent, with an average 0.5 point, dropping from last week’s 4.05 percent average. Last year at this time, 30-year rates averaged 3.58 percent.

’15-year fixed-rate mortgages’ averaged 3.27 percent, with an average 0.5 point, falling from last week’s 3.29 percent average. A year ago, 15-year rates averaged 2.81 percent.

Source: Freddie Mac

Foreclosures Plunge to Lowest Level Since 2005

Foreclosure filings—which include default notices, scheduled auctions, and bank repossessions—are down 23 percent from a year ago and have hit their lowest level since November 2005, according to the April 2017 U.S. Foreclosure Market report, released Thursday by ATTOM Data Solutions.

A total of 34,085 properties started the foreclosure process in April, well below the pre-recession average of more than 77,000 foreclosure starts per month between April 2005 and November 2007, according to the report.

More details at ATTOM Data Solutions and source: RealtyTrac

Millennials Finally Flee Parents’ Homes

The pace of young adults leaving their parents’ homes is accelerating significantly, Fannie Mae’s Economic and Strategic Research Group notes in a new analysis.

Young adults aged 24 to 25 in 2013 and 26 to 27 in 2015 residing with their parents dropped by 7.6 percentage points. On the other hand, those who passed through that same age range between 2010 and 2012 saw a decline of only 5.4 percentage points, researchers note.

Millennials in their 20s or early 30s saw their income, adjusted for inflation, grow by at least 23 percent between 2013 and 2015 when compared to 2010 and 2012. Further, their incomes are at least 81 percent greater than between 2008 and 2010.

Also, millennials between 2013 and 2015 were getting married at a markedly faster rate than their predecessors did in that same age range during the recession and the recovery thereafter, Fannie Mae’s report notes.

Source: “Starting to Launch: Millennials Are Leaving Mom and Dad’s Basement,” Fannie Mae’s Housing Insights (2017)

Owners: Be Smart When Financing Renovations

The number of homeowners who are planning to take on home improvement projects or repairs this year is expected to increase 6.7 percent, according to the Joint Center for Housing Studies at Harvard University. As more owners look to remodel, they should be weighing how to fund their renovations.

Homeowners may be using credit cards, even though they intend to pay for the balance as soon as it’s due, because they want the benefits of getting airline miles or other rewards from using the credit card, says Todd Nelson LightStream’s business development officer. But for those who don’t intend to pay the credit card off right away should realize the interest rates are usually in double digits and is not tax-deductable.

An option is a home equity line of credit, the interest may be tax-deductible and there are few upfront frees. Another consideration may be a cash-out refinance is another option, where borrowers refinance for more than what they owe on the property and then take the difference out in cash. However, processing fees and closing costs are involved.

Source: “More Homeowners Pay for Repairs With Credit Cards,” realtor.com® (April 26, 2017)

More Homeowners Tackle Renovation Projects

Homeowners are sprucing up their properties and undertaking more remodeling and repair projects, according to a recent study.

The Leading Indicator of Remodeling Activity, released by the Joint Center for Housing Studies at Harvard University, shows an annual growth in home improvement and repair expenditure this year that will remain above its long-term trend of 5 percent. Index authors, however, foresee a steady decline from 7.3 percent in the first quarter to 6.1 percent by the first quarter of 2018.

The National Association of Home Builders’ Remodeling Market Index also showed an increase in the first quarter of 2017, marking the highest reading in activity since 2015. The NAHB’s index shows that more remodelers are reporting that activity is higher now compared to the prior quarter. “A milder than usual winter has led to increased remodeling activity and a positive outlook for spring,” says Dan Bawden, the chairman of NAHB Remodelers. “Remodelers are seeing stronger market conditions with customers more willing to spend money on both small and large projects.”

—Melissa Dittmann Tracey, REALTOR® Magazine

Survey: Outdoor Kitchens Making a Comeback

A few years ago, outdoor kitchens were considered a hot amenity. In a December 2015 survey by the National Home Builders Association, builders indicated that outdoor kitchens would be one of the least likely features to be added to new single-family homes in 2016. But now, architects say homeowners and prospective buyers are showing resurgent demand for outdoor cooking spaces, according to the American Institute of Architects’ most recent Home Design Trends Survey.

“Homeowners continue to find ways to add value to their homes by creating more functional space, which is apparent in the rise in popularity of outdoor kitchens,” says Kermit Baker, chief economist of the AIA. “Kitchens have become a hub for the home. Now homeowners want to bring some of that activity to their outside space.”

Many buyers will even pay a premium for outdoor kitchens, according to a realtor.com® survey last year. Researchers found that buyers were willing to pay up to 26 percent more for a home with an outdoor kitchen compared to a similar home without one in the same ZIP code.

When it comes to indoor kitchens, homeowners continue to eye certain upgrades, with the most desired being a charging station or computer area, a double island, high-end appliances, and sensory faucets, according to AIA.

Source: “Outdoor Kitchens: Still on the Way Out?” RISMedia (April 15, 2017) and “Are Outdoor Kitchens on the Outs?” RISMedia (March 17, 2016)

Owners Question Appraised Values: Too Low?

Homeowners say their homes are worth more than what appraisers say they’re worth, and the gap between the values is growing, according to Quicken Loans’ latest Home Price Perception Index.

Appraisals, on average, were 1.77 percent lower than what homeowners expected, according to the index. This marks the fourth consecutive month in which the gap between homeowner estimates and appraiser opinions has widened.

That said, appraisals are showing higher values than what homeowners expected in some of the hottest housing markets, mainly on the West Coast, according to the index reading for March.

Source: Quicken Loans

Loan Activity Constrained by Prices, Inventory

A decrease in refinancing activity—due to the uptick in mortgage rates since November 2016—has curtailed overall mortgage application activity in recent weeks. It’s again what was behind the 1.6 percent drop in total mortgage applications last week, says the Mortgage Bankers Association.

Applications for refinances dropped 4 percent last week and are now 33 percent below a year ago.

Meanwhile, applications for home purchases are performing much stronger, rising 1 percent last week and now 8 percent higher than a year ago. Housing analysts say that purchase activity could be much higher, if it weren’t for high prices and a tight supply of homes for-sale in many markets.

Mortgage rates haven’t fluctuated too much over the past few weeks, giving borrowers a temporary reprieve. The average 30-year fixed-rate mortgage was 4.34 percent last week, up slightly from 4.33 percent the week prior.

Source: “Mortgage Applications Fall 1.6%, But Average Loan Size Hits Record High,” CNBC (April 5, 2017)

Company Offers Workers a ‘Delocation’ Package

Companies commonly offer relocation packages for employees who must move for a job, but one firm is providing its workers a “delocation” package—in which they’ll pay employees to move anywhere.

Zapier, a company producing workflow automation tools, says it’s offering the package to new employees living in the San Francisco area in hopes of expanding into new markets in the near future. New employees can choose the city that best fits their needs, and the company will reimburse up to $10,000 in moving expenses incurred during the first three months of work.

“When we first started hiring, we simply hired the best people in our networks—which happened to be outside of Silicon Valley because we’re originally from the Midwest—and the remote aspect continued,” says Wade Foster, CEO of Zapier. The company now has 80-plus employees who all work remotely across 13 countries and 22 states, Foster says. “We found a business model that works for us and incentivizes the best talent to live and work anywhere in the world.”

Source: “This Company Will Pay You to Relocate Wherever You Want,” Forbes.com (April 2, 2017)