Will ‘Granny Flats’ Resolve Housing Shortages?

Some housing economists believe that “granny flats” could be the key to alleviating housing shortages across the country, and they are calling on more municipalities to ease up the rules to allow such dwellings to be built on or into more single-family homes. Nicknamed “granny flats,” these accessory dwelling units tend to be separate, cottage-like structures, but may be a converted garage or basement that houses an extra living area.

In California, three new zoning laws in 2017 allowed for expanded development of granny flats. California has since seen a 63 percent increase in the number of building permits for these units—more than any other state, according to ATTOM Data Solutions, a real estate data firm. But many counties either still have zoning restrictions that don’t allow these units, or they are making the building permit process difficult.

Source: “Could ‘Granny Flats’ Be the Solution to America’s Affordable-Housing Crisis?” MarketWatch (March 26, 2018)

Home Loan Interest Rates Just Got Higher

“Optimistic testimony on Capitol Hill from Federal Reserve Chairman Jerome Powell sent Treasury yields higher as Powell stated his outlook for the economy has strengthened since December,” says Len Kiefer, Freddie Mac’s deputy chief economist.

“We think strength in the economy and pent-up housing demand should allow U.S. housing markets to post modest growth this year even with higher mortgage rates,” Kiefer says.

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

  • 30-year fixed-rate mortgages: averaged 4.43 percent, with an average 0.5 point, rising from last week’s 4.40 percent average. Last year at this time, 30-year rates averaged 4.10 percent.
  • 15-year fixed-rate mortgages: averaged 3.90 percent, with an average 0.5 point, rising from last week’s 3.85 percent average. A year ago, 15-year rates averaged 3.32 percent.

Source: Freddie Mac

Hispanics: ‘Helping Home Ownership Rates’

For the third consecutive year, the Hispanic population is driving growth in homeownership, according to the latest State of Hispanic Homeownership Report. Hispanics’ rising populations and household formation, as well as their increased workforce participation, is behind the uptick, according to the report by the Hispanic Wealth Project and National Association of Hispanic Real Estate Professionals.

The Hispanic population in the United States increased by 1 million last year and accounted for 51 percent of U.S. population growth. Hispanics increased their homeownership rate slightly from 46 percent to 46.2 percent, or a net increase of 167,000 new-owner households in 2017. Hispanics boasted the highest workforce participation rate among any other ethnic or racial demographic at 66.1 percent, according to the report.

The three biggest obstacles facing Hispanic homeownership: Lack of inventory, recent natural disasters, and the nation’s immigration policy, according to the report.

Source: National Association of Hispanic Real Estate Professionals

Mortgage Applications Finally Edge Up Again

A brief pause in the rise of interest rates helped buoy mortgage application volume last week, following several weeks of declines. Total mortgage applications for home purchases and refinancings rose 2.7 percent compared to the previous week, the Mortgage Bankers Association reported Wednesday. Applications, however, are 2.4 percent lower than a year ago.

The bulk of last week’s increase was driven by home buyers. Mortgage applications to purchase a home rose 6 percent during the week, and are 3 percent higher than a year ago, the MBA reports.

Meanwhile, refinance applications dropped 1 percent for the week and are down nearly 10 percent from a year ago. Interest rates were lower a year ago, and refinance applications tend to be more rate-sensitive.

Source: “Mortgage Applications Rise 2.7 Percent as Rates Take a Brief Breather From Surge,” CNBC (Feb. 28, 2018)

More Buyers Gamble With Sight-Unseen Offers

Thirty-five percent of home buyers who purchased a home in November and December said they made an offer on the home without seeing it first in person, according to a newly released survey of more than 1,500 home purchasers conducted by the real estate brokerage Redfin. That is up from 33 percent in May 2017 and from 19 percent in June 2016.

By age group, millennial home buyers are the most likely to make an offer on a home without visiting it first, at 45 percent, researchers found. Younger adults may be more comfortable with relying on information they find online about properties for sale and the neighborhoods, researchers note.

For buyers who can’t see the property in person first, some real estate professionals are relying on FaceTime video call tours or 3-D virtual tour programs to give them a better idea of the interiors.

Source: “Sight-Unseen in 2017: 35% of Homebuyers Bid on a Home Before Seeing it in Person,” Redfin (Feb. 26, 2018)

Higher Rates Could Raise Housing Costs 15%

If mortgage rate forecasts pan out, home buyers might see their mortgage payments grow by 15 percent this year, according to a new analysis by CoreLogic, a real estate data firm.

CoreLogic economists predict that mortgage rates will increase by about 0.85 percentage points between November 2017 and November 2018. The median sales price of a home is projected to increase 2.6 percent in real terms over that same period.

Based on that, CoreLogic researchers predict that the inflation-adjusted typical mortgage payment will increase from $804 in November 2017 to $910 by November 2018, a 13.3 percent year-over-year gain. In nominal terms, CoreLogic researchers say the typical mortgage payment’s year-over-year increase would be 15.5 percent.

Source: “Forecast Suggests Homeowners’ ‘Typical Mortgage Payment’ Could Rise Over 15 Percent this Year,” CoreLogic Insights Blog (Feb. 15, 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

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)