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)

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

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

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)

Remodelers Worry Over Labor Shortages

Remodelers report that growing labor shortages are delaying projects and increasing the amount they have to charge homeowners, according to the National Association of Home Builder’s Remodeling Market Index survey for the third quarter of 2017. Those needing a carpenter may find the most trouble; 91 percent of remodelers reported shortages of labor in carpentry work.

More than half of remodelers surveyed reported shortages in 12 of the 15 remodeling jobs analyzed. The most difficult building professionals to find were carpenters, bricklayers, masons, drywall installers, and concrete workers. Overall, labor shortages have been growing in recent years, particularly in the homebuilding sector.

Source: “For Remodelers, Labor Shortages Resume Aggravating Trend,” National Association of Home Builders’ Eye on Housing blog (May 8, 2018)

FHA Borrowers Get Help Funding Solar Panels

A growing number of lending programs are helping homeowners pay the upfront costs of solar panels. One lender, Guild Mortgage, an independent lender, recently announced a program that allows home buyers to lump the costs of solar panels into an FHA loan. California residents will be the first to have access to the program.

Guild Mortgage’s FHA Solar program follows Federal Housing Administration loan requirements and offers down payment options as low as 3.5 percent. The down payment is based on the purchase of the home before the panels are added into the cost of the mortgage. “This program will give more options to home buyers looking for solar because it gives them the flexibility to purchase panels and add them to any home they choose,” says Guild Mortgage President and CEO Mary Ann McGarry.

Other programs are also available for financing solar, such as PACE loans. Also, some homeowners fund the purchase of solar panels through a second trust deed.

Source: Guild Mortgage

Foreclosed Homes Dip to 12-Year Low

Foreclosures hit a 12-year low in 2017, and the distressed properties remain increasingly difficult to find in many markets. Foreclosure filings in 2017—which include default notices, scheduled auctions, and bank repossessions—dropped to the lowest level since 2005.

Foreclosure starts are at a new record low nationwide. Lenders started the foreclosure process on 383,701 properties in 2017, down a whopping 82 percent from a peak of more than 2 million in 2009. That marks a new all-time low for foreclosure start data since ATTOM Data Solutions began collecting such data in 2006.

Source: DAILY REAL ESTATE NEWS | THURSDAY, JANUARY 18, 2018

New Way to Sell a Home: Arrange a Sleepover

One of the fun parts of searching for a home to buy is visualizing living in it. Will your furniture fit? Is the kitchen big enough for all of your kids? Imagining your belongings and your family living in the home can make the buying decision easier.

When checking out a house, some buyers take the extra step of spending the night. It’s a simple yet effective way to kick the tires and test-drive a prospective home. Along the way you’ll have an opportunity to check for noisy neighbors, test the water pressure, and inadvertently, for one couple — learn how concerned the neighbors are and even how quickly the police respond.

HGTV’s “Sleep On It,” which follows potential buyers as they stay overnight in two homes with the sellers’ approval before deciding which one to buy, hasn’t seemed to spark a national trend. But it has prompted such proposals to surface more often.

Source: “When Homebuyers Insist on Staying the Night,” U.S. News (2/3/14)