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)

 

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)

 

Seniors’ Growing Debt Casts Retirement Doubts

The percentage of families in which the head of household is 75 or older and carrying debt grew by 60 percent between 2007 and 2016, according to the Employee Benefit Research Institute. In 2016, nearly 50 percent of such families had debt; the average debt was $36,757. Meanwhile, the average monthly Social Security check is $1,404, and more than 40 percent of single adults receive more than 90 percent of their income from Social Security alone, according to government data. Many may find Social Security payouts aren’t sufficient to maintain their lifestyle and pay off debt.

“To pay off the debt, you’re going to have to give up some living standards,” says Craig Copeland, a senior associate with the Employee Benefit Research Institute. For some homeowners, that may mean having to relocate to a place where the cost of living is less expensive. “They may be able to move into a retirement community, where there may be a better social aspect than living in a house in the suburbs with a bunch of young people,” Copeland says. “Or they may have to move in with a relative or friend to share living expenses.”

Source: “Growing Debt Among Older Americans Threatens Their Retirement,” CNBC (April 4, 2018)

Household Net Worth Reaches Record High

Americans are feeling richer. Household net worth neared $100 trillion in the final quarter of last year, falling into record territory, according to new data released by the Federal Reserve on Thursday. Rising stock markets and property prices were attributed to the jolt in the fourth quarter. (Household net worth is the value of all of a consumer’s assets, like stocks and real estate, minus any liabilities like mortgage and credit card debt.)

Household net worth increased more than $2 trillion last quarter to a record $98.7 trillion in the final three months of last year, according to the report. Households in the U.S. saw their net worth increase to nearly seven times their disposable personal income in 2017.

More at source: “U.S. Household Net Worth Pushes Further Into Record Territory,” The Wall Street Journal (March 8, 2018) [Log-in required.] and “Stock Market Lifts U.S. Household Wealth to $98.7 Trillion,” The Associated Press/USA Today (March 8, 2018)

Survey: Home Owners Worried, Buyers Excited

Consumer sentiment is following an unusual trend for a seller’s market: Home buyers are upbeat, but homeowners are less so, according to ValueInsured’s latest quarterly survey of about 1,600 consumers. Why the divergence between buyers and owners? Some homeowners may feel stuck, while buyers are anxious to jump into real estate before home prices and mortgage rates rise further.

Fifty-eight percent of homeowners surveyed say they want to sell but are holding off because they don’t want to purchase again at today’s higher prices. Fifty-nine percent of owners say they believe buyers in their area are overpaying for a home, according to the survey.

Buyers still have plenty of concerns, such as saving for a down payment and eroding housing affordability, particularly in the nation’s hottest housing markets. Some say they are ready to make some sacrifices to afford their first home.

We suggest you view charts and data at: ValueInsured Modern Homebuyer Survey

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

 

 

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)