Deeper Debt Isn’t Stopping Millennial Buyers

Millennials are taking out the greatest share of all new mortgages and buying homes across price ranges. But a new study also shows they’re going more into debt at an alarming rate.

Realtor.com®’s research team analyzed records for more than 3.2 million mortgages originated from January 2013 to October 2017 and divided it by age groups.

Compared to other generations, millennials are narrowing the gap in the price of homes they’re purchasing. In September, millennials obtained mortgages on homes with a median purchase price of $237,000. Generation Xers (born between 1965 and 1981) purchased homes with mortgages on a median price of $280,000, and baby boomers (born between 1946 and 1964) purchased at $258,000.

Millennials are making down payments nearly as high as Generation Xers. The average down payment for a millennial originated mortgage is 9.1 percent. Gen X buyers have been making down payments of 11 percent, since early 2013.

Source: “Millennials Are Taking Over Real Estate—But They’re Going Deeper Into Debt Too,” realtor.com® (Dec. 5, 2017)

Housing Trend to Watch: The ‘Surban’

Suburban and urban areas are combining to create a new kind of living style known as the “surban.” Many in the real estate industry are predicting it to be one of the hottest housing trends to watch heading into the new year.

A surban offers greater walkability to retail and restaurants from a home or apartment, but in a suburban area. It’s a blend of both suburbia and city life. Previously, urban planners dubbed these areas “mixed-use.”

The Urban Land Institute estimates that surban areas will draw at least 80 percent of new households and attract the most families over the next decade.

Source: “2018 Real Estate Trends to Watch: ‘Surban’—That Sweet Spot Between City and Suburb,” RISMedia (Dec. 4, 2017)

FHFA Raises Conforming Home Loan Limits

The Federal Housing Finance Agency announced it will raise its conforming loan limit on Jan. 1, 2018. Mortgage financing giants Fannie Mae and Freddie Mac will allow maximum conforming loan limits for mortgages in most parts of the U.S. to be $453,100.  “El Dorado County, CA.” will be $517,500.

For 10 years, the FHFA had set the conforming loan limit in most places at $417,000. But as home prices started rising, the FHFA bumped up the conforming loan limit in 2017 to $424,100. As prices continued to move higher this year, the FHFA has raised limits again for 2018.

The Housing and Economic Recovery Act requires the conforming loan limit of the government-sponsored entities to be adjusted each year to reflect any changes in the average U.S. home price.

Source: Federal Housing Finance Agency

Lift in Housing Starts Indicates Inventory Relief

Housing starts neared their postrecession high in October, with expectations that the new-home market will soon provide much-needed inventory relief, the Commerce Department reports.

Starts, which reflect combined totals within the single-family and multifamily sectors, jumped 13.7 percent in October to a seasonally adjusted annual rate of 1.29 million. That’s the highest reading for new-home production since October 2016, when starts had reached a high of 1.33 million.

Starts for single-family homes in October increased 5.3 percent last month, reaching a seasonally adjusted annual rate of 877,000. They are now up 8.4 percent from a year ago. Multifamily starts surged nearly 37 percent, reaching 413,000 units in October after a weak September production report.

 

Source: National Association of Home Builders

Rates Hit Pause, Consumers Rush to Lock In?

A slight dip in interest rates last week brought more homeowners and home buyers to the mortgage market. More homeowners were quick to refinance before interest rates rise again, and home buyers were able to lock in lower rates during the week.

The Mortgage Bankers Association reported that total mortgage application volume—which includes for refinancings and home purchases—rose 3.1 percent last week on a seasonally adjusted basis. Mortgage applications, however, still remain 8.5 percent below a year ago.

Additional data at: “Weekly Mortgage Applications Rise as Rates Briefly Fall Back,” CNBC (Nov. 15, 2017)

Home Loan Rates Jump to 3-Month High

Mortgage rates reached their highest averages since July this week.

“The 30-year mortgage rate followed suit, increasing 6 basis points to 3.94 percent. Today’s survey rate is the highest rate in three months,”  says Sean Becketti, Freddie Mac’s chief economist.

Freddie Mac reports the following national averages for the week ending Oct. 26:

  • 30-year fixed-rate mortgages: averaged 3.94 percent, with an average 0.5 point, rising from last week’s 3.88 percent average. Last year at this time, 30-year rates averaged 3.47 percent.
  • 15-year fixed-rate mortgages: averaged 3.25 percent, with an average 0.5 point, increasing from 3.19 percent last week. A year ago, 15-year rates averaged 2.78 percent.

Source: Freddie Mac

Survey: Buyers Leery of Online Mortgage Info.

Consumers trust real estate professionals and lenders more than online sources or family and friends when it comes to obtaining information about mortgages, according to a new Fannie Mae survey based on 1,000 responses. Recent home buyers surveyed, including younger age groups, say they consulted multiple sources of information about the mortgage process but found lenders and real estate agents to be more credible than mobile apps, websites, and social media.

Though survey respondents say online sources are more convenient, they indicated a higher level of confidence in getting information through person-to-person interaction. However, home buyers do report using online sources to shop for a home much more often than to shop for a mortgage, according to the survey.

Source: “Lenders and Real Estate Agents Still Beat Online Sources as Top Mortgage Influencers,” Fannie Mae National Housing Survey (Oct. 19, 2017)

Home Lot Sizes Shrink to New Low

Lot sizes on new single-family homes have reached a new record low. New homes sold in 2016 had a median lot size of 8,562 square feet, or slightly under one-fifth of an acre.

The median lot size fell to under 8,600 square feet in 2015, according to the Census Bureau’s Survey of Construction data. Lot sizes have continued to shrink since then.

Location plays a big role. For example, the median lot size in the New England region is nearly twice as large as the national median, exceeding a third of an acre.

On the other hand, the Pacific region—where densities are often high and developed land is more scarce—has the smallest lots. Half of the lots in the region are under 0.15 acres.

US regional differences map at: “Lot Size Is at a Record Low,” National Association of Home Builders’ Eye on Housing blog (Oct. 3, 2017)

Mortgage Rates Hit Highest Levels in 6 Weeks

The 30-year fixed-rate mortgage inched upwards this week, averaging 3.85 percent. It’s the highest average in six weeks, Freddie Mac reports. “After holding steady last week, rates ticked up this week,” says Sean Becketti, Freddie Mac’s chief economist.

Freddie Mac reports the following national averages for the week ending Oct. 5:

’30-year’ fixed-rate mortgages: averaged 3.85 percent, with an average 0.5 point, rising from last week’s 3.83 percent average. Last year at this time, 30-year rates averaged 3.42 percent.

’15-year’ fixed-rate mortgages: averaged 3.15 percent, with an average 0.5 point, rising from last week’s 3.13 percent. A year ago, 15-year rates averaged 2.72 percent.

Source: Freddie Mac

Home Loan Interest Rates Stuck in Holding Pattern

Mortgage  rates barely budged this week, staying well below the 4 percent mark. “Rates held relatively flat this week,” says Freddie Mac Chief Economist Sean Becketti. “The 10-year Treasury yield fell just 1 basis point, while the 30-year mortgage rate remained unchanged at 3.83 percent.”

Freddie Mac reported the following national averages for the week ending Sept. 28:

  • 30-year fixed-rate mortgages: averaged 3.83 percent, with an average 0.6 point, holding the same as last week. Last year at this time, 30-year rates averaged 3.42 percent.
  • 15-year fixed-rate mortgages: averaged 3.13 percent, with an average 0.5 point, also holding the same average as last week. A year ago, 15-year rates averaged 2.72 percent.

Source: Freddie Mac