5.4% Jolt for Home Prices for 2020

More home appreciation is likely to come in the new year. In a new report released by CoreLogic, economists predict home prices will spike by 5.4% from October 2019 to October 2020. That is even higher than the 3.5% annual appreciation in national home prices posted this October, the real estate data firm notes.

“We expect home prices to rise at least another 5% over the next 12 months,” says Frank Martell, president and CEO of CoreLogic. “Interestingly, this persistent increase in home prices isn’t deterring older millennials. In fact, 25% of those surveyed anticipate purchasing a home over the next six to eight months.”

The CoreLogic Home Price Index is a projection of home prices that is calculated using a variety of economic variables and state-level forecasts.

Home price increases by state is shown in ‘Table 2’ at article source: CoreLogic

Mortgage Rates Stay Steady

“This week the economy sent mixed signals, leaving mortgage rates unchanged,” says Sam Khater, Freddie Mac’s chief economist. “Survey data for manufacturing and service industries varied while construction spending fell modestly. However, homebuyer demand continued to improve, rising eight percent. Clearly, home buyers remain bullish on the real estate market.”

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

  • 30-year fixed-rate mortgages: averaged 3.68%, with an average 0.5 point, holding the same as last week. Last week at this time, 30-year rates averaged 4.75%.
  • 15-year fixed-rate mortgages: averaged 3.14%, with an average 0.4 point, falling slightly from last week’s 3.15% average. A year ago, they averaged 4.21%.
  • 5-year hybrid adjustable-rate mortgages: averaged 3.39%, with an average 0.4 point, falling from last week’s 3.43% average. A year ago, they averaged 4.07%.
Source: Freddie Mac

Drop in Mortgage Rates = Higher Home Buying Demand

Mortgage rates declined this week, After several weeks of increases, the drop in mortgage rates is a welcome sign for home buyers.

The housing market continues to steadily gain momentum with rising homebuyer demand and increased construction due to the strong job market, ebullient market sentiment, and low mortgage rates,” says Sam Khater, Freddie Mac’s chief economist. “Residential real estate accounts for one-sixth of the economy, and the improving real estate market will support economic growth heading into next year.”

Freddie Mac reports the following national averages for the week ending Nov. 21:

  • 30-year fixed-rate mortgages: averaged 3.66%, with an average 0.6 point, falling from last week’s 3.75% average. Last year at this time, they averaged 4.81%.
  • 15-year fixed-rate mortgages: averaged 3.15%, with an average 0.5 point, falling from last week’s 3.20% average. A year ago, 15-year rates averaged 4.24%.
Source: Freddie Mac

Double Master Suites = Growing Trend

Double master bedrooms are proving to be a growing trend in new luxury developments, Forbes.com reports.

Builders are responding by adding two master suites into more floor plans, whether it’s a single-family home or condo. K.Hovnanian Homes offers several townhouse communities with two master bedrooms. The rooms include large bathrooms attached and walk-in closets.

Some are adding a dual master bedroom on the main level with a separate entrance. “We include features like secondary master suites so that families and loved ones can maintain close connections as they grow,” Gregory Malin, CEO and founder of Troon Pacific, told Forbes.com. “These spaces also allow the owners to age in place, as they can maintain their independence while having their children just steps away.”

Home Loan Interest Rates Rise

“The modest uptick in mortgage rates over the last two months reflects declining recession fears and a more sanguine outlook for the global economy,” says Sam Khater, Freddie Mac’s chief economist. “Due to the improved economic outlook, purchase mortgage applications rose fifteen percent over the same week a year ago, the second highest weekly increase in the last two years. Given the important role residential real estate plays in the economy, the steady improvement of the housing market is a reassuring sign that the economy is on solid ground heading into next year.”

Freddie Mac reports the following national averages for the week ending Nov. 14:

  • 30-year fixed-rate mortgages: averaged 3.75%, with an average 0.6 point, rising from last week’s 3.69% average. Last year at this time, they averaged 4.94%.
  • 15-year fixed-rate mortgages: averaged 3.2%, with an average 0.5 point, rising rom last week’s 3.13% average. A year ago, 15-year rates averaged 4.36%.
  • 5-year hybrid adjustable-rate mortgages: averaged 3.44%, with an average 0.4 point, rising from last week’s 3.39% average. A year ago, they averaged 4.14%.
Source: Freddie Mac

“I Want to Buy a Home” Report

Many non-owners—those renting or living with someone else—are eager to buy a home. But their current financial situation is what is mostly holding them back.

The newly released “2019 Profile of Buyers and Sellers” report contained a new section this year, including a survey about non-owners and their views on home ownership. NAR released the report during the 2019 REALTORS® Conference & Expo in San Francisco this week.

But the main reason they aren’t buying yet is because they can’t afford to make the jump into ownership. “Making the largest financial purchase in one’s life relies on the financial strength to do so,” the report notes. Seventy-five percent of non-owners surveyed say they believe home ownership is part of the American dream. Eighty-one percent of non-owners say they want to own a home in the future.

Source: National Association of REALTORS®’

Re-Acceleration in Home Prices

Good news for sellers: Home prices are on the rise. But buyers should brace for higher prices.

Nearly all—93%—of the largest metros in the U.S. saw home prices rise in the third quarter over the past year. A shortage of homes for sale, combined with higher demand, continues to push home prices higher, according to the latest quarterly report from the National Association of REALTORS®, released Thursday.

While the majority of metros saw higher prices in the third quarter, a few markets did register lower prices, notably in areas long-known for high costs. Single-family median home prices moderated in the third quarter in markets such as San Jose-Sunnyvale-Santa Clara, Calif. (–4.6%); San Francisco-Oakland-Hayward, Calif. (–2.5%); and San Diego-Carlsbad, Calif. (–0.8%).

Home Design Trends for 2020

From shiny kitchen cabinets to wooden ceiling beams, several home design trends aim to liven up neutral interiors in the new year. Home remodeling website Houzz recently asked designers to chime in about what design trends they expect to grow more popular over the next few months. Here are a few of their trends.

High-gloss kitchen cabinetry. Flat-panel cabinets with a high-gloss finish are gaining popularity. The shinier finish bounces light around the space. Also, the flat-panel design gives a modern look that makes the cabinets appear like they’re receding.

Wooden beams. More attention in home design is being placed on dressing up the home’s fifth wall. Wood ceiling beams are one way to do that.

Brass accents. Kitchen designs are incorporating more black or dark kitchen cabinets paired with brass or gold hardware for a visual pop.

Source: “10 Design Trends Coming to a Home Near You,” Houzz.com (Oct. 29, 2019)

‘Zombie’ Foreclosures Lurking?

More than 1.5 million—or 1.5% of U.S. single-family homes and condos—were vacant in the fourth quarter of 2019 , according to a new report from ATTOM Data Solutions. Marking improvements, but so-called “zombie” foreclosures are still plaguing some markets.

Despite an ongoing housing shortage, several markets are still dealing with zombie foreclosures. These are homes that have been vacated by the owners and remain vacant while lingering in the foreclosure process. The percentage of zombie properties was at 2.96% in the fourth quarter, down from 3.2% in the third quarter.

Growth of the Backyard Bungalow

Accessory dwelling units are popping up in more backyards, CNBC reports. These standalone housing units are either serving as rentals to generate extra income for homeowners or extra space for aging parents or adult children who move back home. The growing interest in ADUs has sparked changes to local and state zoning rules to allow for more construction. Some communities are even pointing to ADUs as a solution for a lack of affordable housing.

“ADU is still, for the most part, an affluent homeowner product, meaning you have to have cash on hand to take this on,” Steve Vallejos, CEO of Prefab ADU, told CNBC. His company’s most popular ADU model is a 288-square-foot home that costs about $105,000 to build. ADUs are “addressing financing, it’s addressing standardizing products within cities, and then also it’s creating partner relationships with contractors, architects, and even other builders,” Vallejos says. “There are many different scenarios that people look into based on income, lot size, different zoning rules—so we build ADUs that start at about 150 square feet up to 1,200 square feet.”