Foreclosures Sink to 13-Year Low

Foreclosures are disappearing from most community listings. Foreclosure filings—default notices, scheduled auctions, or bank repossessions—fell 6 percent in the third quarter, dropping to the lowest level since the fourth quarter of 2005. Foreclosure activity in the third quarter is now 36 percent below the pre-recession average of 278,912 properties with foreclosure filings, according to ATTOM Data Solutions’ latest report.

Properties that were foreclosed in the third quarter are seeing a slightly shorter process. The foreclosure process is averaging 713 days, which is down from 899 days a year ago. The states with the longest average timelines for foreclosed homes are Hawaii (1,491 days); Indiana (1,295 days); Florida (1,177 days); Utah (1,170 days); New Jersey (1,137 days); and New York (1,092 days).

Buyers Should ‘Ask After a Home Inspection’

After an inspector has finished a home report, buyers may feel overwhelmed by any flaws that might have been found. That’s why it’s important they take the opportunity to learn more so that they can move forward confidently in the transaction.

A recent article at realtor.com® recommends home buyers ask their inspector clarifying questions like: “I don’t understand this; what does it mean?” or “Is this a major or minor problem?” and “Do I need to call in another expert for a follow-up?”

If the inspector identifies a potentially major problem, consumers will want to follow up whether they should call an additional expert in to investigate further. For example, consumers may need to bring in an electrician to take a closer look at potential electrical issues that were flagged or a roofer if a roofing problem is suspected. Those specialists can then give an idea of the cost to fix it, which the real estate agent can take to the seller to request a concession, if the seller doesn’t want to fix it prior to the sale.

Source: “Home Inspection’s Complete? Here’s What You Must Ask Afterward,” realtor.com® (Oct. 9, 2018)

Home Loan Interest Rates ‘Drop Slightly’

Borrowers saw a slight cool down in mortgage rates this week following last week’s seven-year high. The 30-year fixed-rate mortgage dipped for the first time after five consecutive weeks of increases.

“The strength in the economy has failed to translate to gains in the housing market as higher mortgage rates have contributed to the decrease in home purchase applications, which are down from a year ago,” says Sam Khater, Freddie Mac’s chief economist. “With mortgage rates expected to track higher, it’s going to be a challenge for the housing market to regain momentum.”

Freddie Mac reports the following national averages for the week ending Oct. 4:

  • 30-year fixed-rate mortgages: averaged 4.71 percent, with an average 0.4 point, falling slightly from last week’s 4.72 percent average. Last year at this time, 30-year rates averaged 3.85 percent.
  • 15-year fixed-rate mortgages: averaged 4.15 percent, with an average 0.4 point, decreasing from last week’s 4.16 percent average. A year ago, 15-year rates averaged 3.15 percent.
Source: Freddie Mac

Market Shifting to Home Buyers’ Favor

A housing market defined by rapidly rising home prices, bidding wars, a lack of inventory, and sellers with the upper hand in negotiations may be changing. “The signs are pointing to a market that’s shifting toward buyers,” says Danielle Hale, realtor.com®’s chief economist. “But in most places, we’re still a long way from a full reversal.”

After all, home sales aren’t exactly tanking. Prices for existing homes were up 4.6 percent from a year ago in the National Association of REALTORS®’ latest housing report. The median home list price in August was up 7 percent from last year.

While these numbers are still higher than last year, economists point to a slowing growth in the percentage jumps. Last year, median home list prices increased by 10 percent from the previous year and by 9 percent the year before that.

Housing Hurdles Taint Healthy Economy

As housing inventory increases and home prices begin to ease, the door to home ownership is opening for more buyers. But Freddie Mac economists aren’t optimistic that the real estate market will be able to break even with last year’s sales levels.

In their September forecast, Freddie’s economists point to a booming economy and job market, but point out a stalled housing market. They consider the main factors to be weaker housing affordability, constraints that are limiting home building, and ongoing supply and demand imbalances.

Economists predict that many prospective buyers will continue to have difficulty breaking into the market. They are forecasting home sales for both new and existing homes to fall 0.8 percent this year and for home price growth to moderate at 5.5 percent.

Source: “Freddie Mac September Forecast,” Freddie Mac (Sept. 24, 2018)

Home Loan Interest Rates Keep Increasing

For the fourth consecutive week, mortgage rates continued to climb as home buyers face higher borrowing costs. But, mortgage applications for home purchases have managed to increase.

“Mortgage rates are drifting upwards again and represent continued affordability challenges for prospective buyers—especially first-time buyers,” says Sam Khater, Freddie Mac’s chief economist. “Borrowing costs are moving right now for three main reasons: the very strong economy, higher U.S. government debt issuances, and global trade tensions.”

Freddie Mac reports the following national averages for the week ending Sept. 20:

  • 30-year fixed-rate mortgages averaged 4.65 percent, with an average 0.5 point, rising from last week’s 4.6 percent average. Last year at this time, 30-year rates averaged 3.83 percent.
  • 15-year fixed-rate mortgages averaged 4.11 percent, with an average 0.5 point, increasing from last week’s 4.06 percent average. A year ago, 15-year rates averaged 3.13 percent.
Source: Freddie Mac

Down Payments Jump to Record Highs

Home buyers are putting more money down on a home purchase than ever before. The size of down payments during the second quarter climbed to a median of $19,900, a record high, according to ATTOM Data Solutions’ research, which dates back to the first quarter of 2000. What’s more, this marks a 19 percent jump from $16,750 in this year’s first quarter.

The median down payment was 7.6 percent of the median sales price of homes purchased with finances during the second quarter, according to the report. That percentage is at a nearly 15-year high. California buyers tend to bring the highest down payments.
Source: “U.S. Refinance Originations Drop to Four-Year Low in Q2 2018,” ATTOM Data Solutions (Sept. 11, 2018

Labor Shortages Push Up Construction Costs

Builders are being forced to raise home prices and are having a more difficult time meeting project deadlines because of the ongoing labor shortage in the construction industry, according to the latest National Association of Home Builders/Wells Fargo Housing Market Index. Eighty-four percent of builders say they have had to pay higher wages to subcontractor bids, 83 percent say they have had to raise home prices, and 73 percent say they can’t complete projects on time without more manpower. The number of builders reporting labor and subcontractor shortages reached a record high in July.

“The steepest upward trend has been in the share of builders saying the labor/subcontractor shortages are causing higher home prices, which increased by 22 percentage points between 2015 and 2018—to the point where it is now nearly tied with higher wages/sub bids as the most widespread effect of the shortages,” NAHB reports on its Eye on Housing blog. The survey also shows other effects of the labor shortage, such as builders saying that, in some cases, they’ve been forced to turn down projects.

Source: “Housing Market Index (HMI),” National Association of Home Builders/Eye on Housing (September 2018)

Mortgage Interest Rates Jump to 6-Week High

A strong job market and consumer credit are driving up mortgage rates for the third consecutive week and now to their highest level in six weeks. Mortgage rates are 0.82 percent higher than a year ago—the largest year-over-year increase since May 2014, Freddie Mac reports.

Despite the higher rates, Sam Khater, Freddie Mac’s chief economist, expects buyer demand to remain high. “This spectacular stretch of solid job gains and low unemployment should help keep home buyer interest elevated,” Khater says. “However, mortgage rates will likely also move up, as the Federal Reserve considers short-term rate hikes this month and at future meetings.”

Freddie Mac reports the following national averages for the week ending Sept. 13:

  • 30-year fixed-rate mortgages: averaged 4.60 percent, with an average 0.5 point, up from last week’s 4.54 percent average. Last year at this time, 30-year rates averaged 3.78 percent.
  • 15-year fixed-rate mortgages: averaged 4.06 percent, with an average 0.5 point, climbing from last week’s 3.99 percent average. A year ago, 15-year rates averaged 3.08 percent.
Source: Freddie Mac

Most Buyers Seek Financing Before Showings

The first step buyers most often take in their home shopping pursuit is to check up on financing and to make sure they can even afford a home, according to a new survey of 1,000 recent buyers. The survey was commissioned by loanDepot and mellohome, a real estate services provider. The majority of these customers—nearly 74 percent—sought financing first in their homebuying journey before looking at homes. For first-time buyers, that percentage jumps to 85 percent.

“This is definitely a shift from 10 years ago,” says Chris Heller, CEO of mellohome. “It emphasizes how customers are changing their approach to home buying. In the past, they relied on a real estate agent to drive the entire process. Now the customer is taking charge and doing a lot of the groundwork before they even get an agent involved.”

Heller says that buyers are learning that getting their financing in check upfront can better prepare them to shop for a home “with confidence and puts them in a more advantageous, competitive position, especially in tight markets.” A preapproval letter for financing can help when they go to make an offer, he says.