The Cost of Selling Without a Real Estate Agent

You’ve heard of buyer’s remorse; but without your market expertise and sales skills to back them up, sellers who choose to sell their home on their own just may experience “seller’s regret” when they see how much less they get for their properties. FSBOs earn an average of $60,000 to $90,000 less on the sale of their home than sellers who work with a real estate agent, according to the National Association of REALTORS®. Here’s the breakdown:

  • All agent-assisted homes: $250,000 (median selling price)
  • All FSBO homes: $190,000
  • FSBO homes when buyer knew seller: $160,300

Homeowners seem to be hearing the message: Only 8 percent of sellers last year—an all-time low—chose to sell their home themselves, according to NAR’s 2017 Profile of Home Buyers and Sellers. That figure has been falling since 2004, when 14 percent of homeowners sold their own homes.

Source: “Selling Your Home Solo to Save Money? You’ll Actually Make Less Than You Think,” National Association of REALTORS® Economists’ Outlook blog (July 9, 2018)

Delayed Ownership and Wealth Disparities

Millennials aren’t purchasing homes on the same timelines as previous generations, and that has some economists worried. The homeownership rate for millennials was 37 percent in 2015, which is about eight percentage points lower than Generation X and baby boomers when they were at the same age between 25 to 34, according to a new report released by the Urban Institute.

Economists point to several factors for millennials’ delay into homeownership, including their delays to get married (being married increases probability of owning a home by 18 percentage points), rising student debt, delayed child bearing, and increasing rents that are making it more difficult to save for a down payment.

But the Urban Institute’s report notes that such delays into ownership are sparking concern. Less educated young adults are falling further behind in homeownership, the report notes. The gap in homeownership rates between the more educated versus the less educated population has grown significantly, increasing from 3.3 percent to 9.7 percent between 1990 and 2015. “Less educated millennials could be falling behind homeownership because of their unstable incomes and rising rents,” the report notes.

Source: “Millennial Homeownership,” Urban Institute (July 11, 2018)

Will Driverless Cars Change Home Values?

The era of autonomous vehicles is coming, but what influence could that have on your home? Autonomous vehicles could usher in greater car sharing among families and neighbors. The car drops off a passenger and then goes to pick up another. Since the vehicles are self-driving and will come when called upon, they may not even need to be parked at home and could be parked in a remote lot. Ride sharing services may grow to become a normal option for homeowners.

“A decrease in car ownership/leasing will likely translate to a decrease in the need for garage space,” says Justin Thompson, a columnist at Forbes.com . “Two-car homes could become one-car homes, rendering the two-car garage obsolete.” “The impact of an increase of this magnitude on home values would certainly have far-reaching economic effects,” Thompson notes. “Increased living area square footage, a rise in home value, additional property tax revenue, and more revenue from permitting fees is an impressive list of benefits.”

Mortgage Rates Near Highest Averages of Year

Mortgage rates were back on the rise, increasing to their second highest level this year. The move follows the Federal Reserve’s vote on Wednesday to raise its federal fund rate by 25 basis points.

“The good news is that the impact on consumer budgets will be smaller than past rate hike cycles,” says Freddie Mac’s Chief Economist Sam Khater. “That is because a much smaller segment of mortgage loans in today’s market are pegged to short-term rate movements. The adjustable rate mortgage share of outstanding loans is a lot smaller now—8 percent versus 31 percent—than during the Fed’s last round of tightening between 2004 and 2006.”

Freddie Mac reports the following national averages with mortgage rates for the week ending June 14:

  • 30-year fixed-rate mortgages: averaged 4.62 percent, with an average 0.4 point, up from last week’s 4.54 percent average. Last year at this time, 30-year rates averaged 3.91 percent.
  • 15-year fixed-rate mortgages: averaged 4.07 percent, with an average 0.4 point, rising from last week’s 4.01 percent average. A year ago, 15-year rates averaged 3.18 percent.

Source: Freddie Mac

Is Break in Rate Hikes Significant to Buyers?

For the second consecutive week, mortgage rates decreased as the 30-year fixed-rate mortgage fell two basis points to average 4.54 percent, Freddie Mac reports. Rates had been on a steady incline for weeks before breaking trend.

Freddie Mac reports the following national averages for the week ending June 7:

  • 30-year fixed-rate mortgages: averaged 4.54 percent, with an average 0.5 point, dropping from last week’s 4.56 percent average. Last year at this time, 30-year rates averaged 3.89 percent.
  • 15-year fixed-rate mortgages: averaged 4.01 percent, with an average 0.4 point, falling from last week’s 4.06 percent average. A year ago, 15-year rates averaged 3.16 percent.
  • 5-year hybrid adjustable-rate mortgages: averaged 3.74 percent, with an average 0.4 point, falling from last week’s 3.80 percent average. A year ago, 5-year ARMs averaged 3.11 percent.

Source: Freddie Mac

Homeowner Equity Growth Streak Continues

Homeowners with a mortgage saw their equity rise 13.3 percent year over year, according to CoreLogic’s Home Equity Report for the first quarter of 2018, released Thursday. The average homeowner gained $16,300 in home equity between the first quarter of 2017 and the first quarter of 2018. That is the highest growth in home equity in four years.

Western states saw the largest uptick in home equity. California homeowners gained $51,000 on average in home equity, while Washington homeowners saw about $44,000 on average, in equity.

Source: “Homeowner Equity Report,” CoreLogic (June 7, 2018)

 

Mortgage Rates Retreat From 7-Year High

After climbing to their highest level in more than seven years, mortgage rates eased a bit this week. It was the first time they declined in four weeks, says Sam Khater, Freddie Mac’s chief economist. The 30-year fixed-rate mortgage fell 10 basis points to a 4.56 percent average this week.

“Extremely low inventory conditions in most markets are preventing sales from breaking out while also keeping price growth elevated,” Khater says. “Even if rates climb closer to 5 percent, sales have room to grow more—but only if current supply levels start increasing more meaningfully.”

Freddie Mac reports the following national averages for the week ending May 31:

  • 30-year fixed-rate mortgages: averaged 4.56 percent, with an average 0.4 point, down from last week’s 4.66 percent average. Last year at this time, 30-year rates averaged 3.94 percent.
  • 15-year fixed-rate mortgages: averaged 4.06 percent, with an average 0.4 point, dropping from last week’s 4.15 percent average. A year ago, 15-year rates averaged 3.19 percent.

Source: Freddie Mac

Home Loan Interest Rates Update!

“Mortgage rates so far in 2018 have had the most sustained increase to start the year in over 40 years,” says Sam Khater, Freddie Mac’s chief economist. “Through May, rates have risen in 15 out of the first 21 weeks (71 percent), which is the highest share since Freddie Mac began tracking this data for a full year in 1972.”

Freddie Mac reports the following national averages for the week ending May 24:

  • 30-year fixed-rate mortgages: averaged 4.66 percent, with an average 0.4 point, rising from last week’s 4.61 percent average. A year ago, 30-year rates averaged 3.95 percent.
  • 15-year fixed-rate mortgages: averaged 4.15 percent, with an average 0.4 point, rising from last week’s 4.08 percent average. A year ago, 15-year rates averaged 3.19 percent.

Source: Freddie Mac

Legislation to Ease Restrictions on Small Banks

The U.S. House passed a bipartisan bill on Tuesday that will roll back some of the strict rules placed on thousands of small- and medium-sized banks enacted as part of the 2010 Dodd-Frank law.

The Economic Growth, Regulatory Relief, and Consumer Protection Act contains several provisions that could ease mortgage credit through reduced regulatory burdens on smaller community banks and credit unions. The bill also contained several other provisions related to housing. For example, it would require Fannie Mae and Freddie Mac to evaluate and consider credit innovations, like adopting alternative credit scoring models. Currently, the mortgage giants’ credit scoring models do not take into account factors such as whether borrowers have paid their rent or utility bills on time. It also gives the Bureau of Consumer Financial Protection the authority to regulate Property Assessed Clean Energy, or PACE, loans and requires lenders to corroborate a homeowners’ ability to repay the loans that are levied as tax assessments on their homes.

The bill now heads to President Trump for his final signature.

Source: National Association of REALTORS® and “Congress Approves First Big Dodd-Frank Rollback,” The New York Times (May 22, 2018)

 

Best Tip to First-Time Buyers: Act Fast!

A shortage of homes for sale and rising home prices are making it challenging for first-time buyers, in particular, this spring. For those who want to land a home, urge them to move fast and be less picky.

The price of an existing home in March was about $250,000, up nearly 6 percent from a year ago, according to the National Association of REALTORS®. Homes are selling in about a month.

Home buyers needn’t wait for a 20 percent down payment. More than half of first-time buyers make down payments of 6 percent or less, according to NAR data from 2017. Both Freddie Mac and Fannie Mae support home loans to eligible buyers who put down as little as 3 percent on a home purchase, as does the FHA.

Source: “First-Time Home Buyers Learn to Move Quickly in Tight Markets,” The New York Times (May 11, 2018)