Homeowners Don’t Want Cookie-Cutter Lawns

Homeowners are focused on making changes to their front yards so they’re markedly different from their neighbors’ yards and easier to maintain, finds the 2017 U.S. Houzz Landscaping Trends Survey.

Homeowners want their yards to look distinct. Only 6 percent of homeowners reported front yards that were nearly identical to those in the neighborhood after their outdoor project, compared to more than a third before the update (36 percent), the Houzz survey shows. Two in five owners say they wanted to make a statement with a new front yard that was “very” or “extremely” different from others in the neighborhood following their update.

More homeowners are turning to low-maintenance plants to enhance their front yards, along with native plants and those that attract insects and birds. More than half of those who updated their front yard say that beds or borders, shrubs, and perennials were the most important to improving curb appeal.

Source: “2017 U.S. Houzz Landscaping Trends Survey,” Houzz (March 29, 2017)

Hispanics Are a Growing Home Buying Force

While the national homeownership rate decreases, ownership rates among Hispanics are defying the trend with steady rises.

The Hispanic homeownership rate grew to 46 percent last year, topping previous highs of 45.6 percent in 2015 and 45.4 percent in 2014, according to the National Association of Hispanic Real Estate Professionals’ 2016 State of Hispanic Homeownership Report.

More than 7.3 million Hispanic households owned their homes in 2016, 330,000 of which were from new households formed in 2016. That comprises 38 percent of all households formed, according to the report.

“The significance of a strong desire for homeownership cannot be overstated,” the report notes.

More information at: “Hispanic Homeownership Rate Rises for Second Straight Year,” RISMedia (March 28, 2017)

 

This Is the Worst ‘Housing Drought’ Ever

The number of homes for sale is at the lowest level on record, according to the National Association of REALTORS®, who began tracking inventory 18 years ago. That means many home buyers likely will find fewer options this spring, and the homes that are being listed tend to sell fast and at a premium.

The lack of new-home supply is one culprit. Housing starts are only at about 75 percent of their historical average. Builders are focusing on pricier segments of move-up buyers, leaving a big void in the demand for lower cost homes that appeal to first-time home buyers. Builders blame the higher costs for land, labor, and materials as forcing them to concentrate on the higher end of the market.

Builders aren’t the only ones to blame, however. Investors purchased about 4 million distressed properties—mostly in the lower-priced starter home segment—during the housing crash. They have been holding onto these properties, continuing to rent them out rather than selling.

Source: “This Is What’s Behind the Severe Housing Drought,” CNBC (March 23, 2017)

ARMs Rise in Popularity as Rates Increase

More borrowers are turning to shorter-term adjustable-rate mortgages as interest rates rise, but that may be a riskier move than your clients realize. While these mortgages offer lower interest rates, the rates reset after a certain preset time. Still, a five-year hybrid adjustable-rate mortgage averaged a 3.28 percent rate last week compared to 4.30 for the 30-year fixed-rate mortgage, according to Freddie Mac’s weekly mortgage market survey.

The share of ARMs in total mortgage application volume has doubled to 9 percent since November 2016. The highest level of ARM applications since October 2014. “Home buyers in a strong housing market are looking for ways to extend their purchasing power, and ARMs are one way to do that,” says Mike Fratantoni, chief economist for the Mortgage Bankers Association. “While the ARM share got as high as 35 percent pre-crisis, it is really unlikely it will get nearly as high now, given [new] regulations, which effectively prohibit many types of ARMs that were prevalent then.”

Source: “Mortgage Applications Fall 2.7%, as Borrowers Turn to Riskier Loans,” CNBC (March 22, 2017)

Mortgage Rates Retreat Slightly This Week

The 30-year fixed-rate mortgage decreased slightly, following two months of steady rises.

“The 30-year mortgage rate moved with Treasury yields and dropped 7 basis points to 4.23 percent. This marks the greatest week-over-week decline for the 30-year mortgage rate in over two months, a stark contrast from last week’s jump following the FOMC announcement.” says Sean Becketti, Freddie Mac’s chief economist.

Freddie Mac reports the following national averages for the week ending March 23:

  • 30-year fixed-rate mortgages: averaged 4.23 percent, with an average 0.5 point, falling from last week’s 4.30 percent average. Last year at this time, 30-year rates averaged 3.71 percent.
  • 15-year fixed-rate mortgages: averaged 3.44 percent, with an average 0.5 point, dropping from last week’s 3.50 percent average. A year ago, 15-year rates averaged 2.96 percent.

Source: Freddie Mac

Home Loan Interest Rates Hit 2017 High

For the first time in weeks, the 30-year mortgage rate moved with treasury yields and jumped 11 basis points to 4.21 percent. The strength of Friday’s employment report and the outcome of next week’s FOMC meeting are likely to set the direction of next week’s survey rate.

Freddie Mac reports the following national averages rates for the week ending March 10:

  • 30-year fixed-rate mortgage (FRM) averaged 4.21 percent with an average 0.5 point for the week ending March 9, 2017, up from last week when it averaged 4.10 percent. A year ago at this time, the 30-year FRM averaged 3.68 percent.
  • 15-year fixed-rate mortgage  (FRM) this week averaged 3.42 percent with an average 0.5 point, up from last week when it averaged 3.32 percent. A year ago at this time, the 15-year FRM averaged 2.96 percent.

Source: Freddie Mac

How Will Housing Fare In the Next Decade?

Housing demand over the next decade will be significantly higher than it is today, predicts Lawrence Yun, the chief economist of the National Association of REALTORS®, in his latest column at Forbes.com. Rising populations and a growth in the job market likely will release a pent-up demand in housing over the next 10 years, he says.

The ages you’ll need to watch for in the housing market over the next decade: those in their 30s and 40s. The population of people in their 30s is expected to grow by 5 million over the next decade, reaching 48 million. Yun says that 12 percent increase likely will lead to more first-time home buyers. Plus, the number of Americans in their 40s will increase by 3 million, and he predicts they’ll be looking to trade up in real estate.

Overall, Yun notes, “Within reasonable parameters of economic growth and interest rate movements, home sales should do well over the next decade, clocking in at around 6 million a year.” The ages we’ll need to watch for in the housing market over the next decade: those in their 30s and 40s. The population of people in their 30s is expected to grow by 5 million over the next decade, reaching 48 million. Or course, every region will vary, what’s predicted for your market?

Source: “Housing Demand Over the Next Decade,” Forbes.com (March 2, 2017)

 

Maybe Rethink That Retirement Age?

Workers over the age of 65 are staying active in the workforce, opting to push back retirement.

In the year 2000, about 13 percent of Americans 65 and over reported being employed full or part time. But, by May 2016, that percentage had increased to 18.8 percent. As such, nearly 9 million Americans who are age 65 and over are employed. Further, over the next five years, that percentage is expected to rise to 32 percent of the workforce.

However, workers still need to be practical and anticipate retiring one day, and you should plan for it.

Source: “Workers Are Working Longer—and Better,” The New York Times (March 2, 2017)

Home Buyers: Watch Out for Deed Restrictions

Deed restrictions can bring nasty surprises to homeowners looking to remodel or even when buying a home. These restrictions can limit a number of property features, such as the number of bedrooms in your home, the building height, the type of vehicles in your driveway, the fencing permitted, the type and number of trees that can be removed from a property, and even the style and color of construction materials used in a renovation (which often is intended to limit architectural variations).

During the escrow process or before making an offer, make sure you are aware of any deed restrictions—often called “restrictive covenants” — before buying to avoid problems later on. The property does not have to be part of a homeowners association to be limited by a developer rule included in a deed.

“Deed restrictions turn up during title searches and a careful reading of the current deed,” a realtor.com® article notes. Anyone who buys the property must abide by the restrictions, even if they were put in place on the land a century ago. Deed restrictions are known for being difficult to change and often take a judicial ruling to invalidate them.

Source: “Building, Buying, or Beefing Up a Home? Watch Out for Annoying Deed Restrictions,” realtor.com® (3/01/17)

Older Americans Face Challenges When Aging

Freddie Mac released today its Insight for February, which outlines challenges, costs and potential solutions of addressing the desire of older Americans to age in place. Survey data shows half of all 55+ Americans and three quarters of 75+ Americans are impacted by at least one physical functional limitation, heightening the growing demand for retrofitting.

Insight Highlights: 1)The Freddie Mac survey of the 55+ population indicates almost two-thirds of homeowners — 43 million people — wish to age in place. 2)Two-thirds of survey participants report their homes are not accessible for someone with arthritis, limited mobility, or in a wheelchair. 3)About 1.5 million older households today need some retrofitting, and that number rises to 2.0 million per year by 2030. 4)If a major retrofit is required, it can be 40 times more expensive than a simple retrofit such as adding some grab bars and new drawer handles. Retrofitting may be too expensive for many of those who wish to age in place.