Loan Activity Constrained by Prices, Inventory

A decrease in refinancing activity—due to the uptick in mortgage rates since November 2016—has curtailed overall mortgage application activity in recent weeks. It’s again what was behind the 1.6 percent drop in total mortgage applications last week, says the Mortgage Bankers Association.

Applications for refinances dropped 4 percent last week and are now 33 percent below a year ago.

Meanwhile, applications for home purchases are performing much stronger, rising 1 percent last week and now 8 percent higher than a year ago. Housing analysts say that purchase activity could be much higher, if it weren’t for high prices and a tight supply of homes for-sale in many markets.

Mortgage rates haven’t fluctuated too much over the past few weeks, giving borrowers a temporary reprieve. The average 30-year fixed-rate mortgage was 4.34 percent last week, up slightly from 4.33 percent the week prior.

Source: “Mortgage Applications Fall 1.6%, But Average Loan Size Hits Record High,” CNBC (April 5, 2017)

Home Sellers See Highest Price Gains in Years

Most home sellers are seeing plenty of equity when selling their home. In March, sellers on average sold for $30,500 more than what they had paid for their home – a 17 percent gain, according to RealtyTrac’s March and First Quarter 2016 Home Sales Report. That marks the highest average price gain for sellers in any month since December 2007, the onset of the Great Recession.

“Home sellers in many markets are now seeing average price gains close to or above what home sellers experienced during the last housing boom,” says Daren Blomquist, RealtyTrac senior vice president. “That should encourage more home owners to take advantage of the prime seller’s market and list their homes for sale this year.”

Source: RealtyTrac

2015 Remodeling Cost vs. Value: ‘Less Is More’

With home-price gains slowing in most parts of the country, sellers will be looking for ways to get top dollar for their listing. Cleaning and staging make a big difference. But for some sellers — such as investors seeking to bring a property up to neighborhood standards before the sale — remodeling work may be the ticket.

As the 2015 Remodeling Cost vs. Value Report makes clear, large-scale jobs aren’t likely to return sellers their full cost. But there are improvements worth doing in anticipation of an upcoming sale. Some will return almost 100 percent of their cost. Others may not have as great a payback, but they can improve the market position of the property in relation to the competition. (Think about the impact of beautiful kitchen photos on online home shoppers.) In addition, several pricier projects can provide owners with a few years of enjoyment while still offering a decent payback down the road.

Find out which remodeling projects get you the most bang for your buck.

Housing Slowdown may be Good for First-Time Buyers

The growing signs of a slowdown in the housing market might be good news for home buyers. Slowing home prices—after the double-digit increases last year—mixed with still-low interest rates are making homes more affordable. Also, the supply of homes for sale today represents 5.8 months of demand, the most since October 2011, giving buyers more choices than they have had in the recent past, as inventory shortages have plagued many markets.

“From an individual perspective, the best investment you can make is to buy a primary residence,” John Paulson, who runs the hedge fund Paulson & Co., said in a statement recently. “Today, financing costs are extraordinarily low. You can get a 30-year mortgage somewhere around 4.5 percent.”

But despite low interest rates and slowing home prices, first-time home buyers have mostly been absent from the housing recovery so far. They made up 28 percent of existing-home sales in June, but typically take up 40 percent of the market, according to the National Association of REALTORS®.

“The first-time home buyer is just not the factor that it once was,” says Peter Boockvar, chief market analyst at the Lindsey Group, a D.C.-based economic advisory firm. “Without the first-time home buyer, and now with the reduction in the pace of investor purchases, the recovery will remain lumpy.”

Source: “Real Estate’s Epic Rebound Starts to Cool,” The Wall Street Journal (Aug. 2, 2014) [Log-in required.]