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)

Kitchens Dethroned as Top Remodeling Project

Bathrooms overtook kitchens as the most popular remodeling project, according to a new NAHB survey. NAHB has released the results highlighting the most common remodeling projects to kick off National Home Remodeling Month in May.

While remodeling is commonly associated with kitchens and baths, demand for green upgrades continues to swell as home owners seek to save on utility costs, improve air quality and increase the value of their homes. An additional survey by NAHB Remodelers showed that high-performing, low-emissivity (Low-E) windows are the most common green-building product installed by residential remodelers.

Source: National Association of Home Builders

 

Home Sales Should Be Higher—But They’re Not

Following population trends, the U.S. should be adding more than a million households each year for the next few years, economists note in Freddie Mac’s April Outlook report. But higher housing costs and a delay in younger adults’ buying are prompting an uptick in shared living arrangements, multigenerational households, and delayed household formation.

A shortage of homes for sale continues to press on many markets across the country. The number of single-family homes available for sale in the U.S. in February was 1.41 million units, less than half of the inventory peak in 2007, according to data from the National Association of REALTORS®.

Researchers predict that home sales will rise from 6.12 million in 2017 to 6.3 million in 2018, and to 6.44 million in 2019. They are forecasting that new home sales will be a significant driver in home sales over the next few months.

Source: “Nothing Draws a Crowd Like a Crowd: The Outlook for Home Sales,” Freddie Mac Outlook (April 2018)

Warning of Russian Cyberattacks to Private Homes

The U.S. and Britain have issued a warning about Russian cyberattacks that could extend to individual homes. The warning was the first of its kind, The New York Times reports. The warning extends to possible cyberattacks to government and private organizations in both countries as well.

The countries are asking the public to upgrade passwords and computer security to make themselves less vulnerable. U.S. and U.K. officials are warning that Russians are tapping into internet-connected devices in homes and businesses. Hackers allegedly could secretly inserting themselves into the exchange of data between a computer or server to eavesdrop, collect confidential information, misdirect payments, etc.

The officials said that the full extent of Russia’s ability to penetrate Western computer networks is still unknown.

More information at source: “U.S.-U.K. Warning on Cyberattacks Includes Private Homes,” The New York Times (April 16, 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)

Home Loan Payments Up 13% This Year

Monthly mortgage payments have risen an average of nearly 13 percent nationwide over the last year—or an extra $168—as buyers grapple with both higher home prices and increasing mortgage rates, according to a realtor.com® analysis. Luxury buyers are feeling the worst sticker shock, paying double the rate. In the top 10 percent of the market, owners are now paying an average $241 more per/mo.

Mortgage interest rates are about a half of a percentage point higher than they were at the beginning of the year, and the Federal Reserve has signaled there are more hikes to come.

Different generations of home buyers may have varying tolerance levels for mortgage rate fluctuations. Millennials are pursuing homeownership at a time when interest rates are at historic lows, averaging in the 4 percent range, while older buyers remember when they were in the double digits. So for millennials, “even a minor upswing [in interest rates] may seem significant,” The Wall Street Journal reports.

Source: “Rising Interest Rates Squeeze Homeowners’ Budgets,” The Wall Street Journal (April 4, 2018) [Log-in required.]

Will ‘Granny Flats’ Resolve Housing Shortages?

Some housing economists believe that “granny flats” could be the key to alleviating housing shortages across the country, and they are calling on more municipalities to ease up the rules to allow such dwellings to be built on or into more single-family homes. Nicknamed “granny flats,” these accessory dwelling units tend to be separate, cottage-like structures, but may be a converted garage or basement that houses an extra living area.

In California, three new zoning laws in 2017 allowed for expanded development of granny flats. California has since seen a 63 percent increase in the number of building permits for these units—more than any other state, according to ATTOM Data Solutions, a real estate data firm. But many counties either still have zoning restrictions that don’t allow these units, or they are making the building permit process difficult.

Source: “Could ‘Granny Flats’ Be the Solution to America’s Affordable-Housing Crisis?” MarketWatch (March 26, 2018)

Flood Insurance Premiums Are About to Go Up

Many homeowners and buyers in flood-prone areas will see higher flood insurance premiums starting April 1. The premium hikes, which are required by law, will be as little as 2 percent for some properties and as high as 24 percent for others. On average, the increase will be about 8 percent.

“The National Flood Insurance Program requires premiums to rise on certain classes of properties over a period of years until they’re paying the full actuarial rate on their risk,” say analysts with the National Association of REALTORS®. “The 8 percent average increase is right in the range of increases for the last couple of years, so there’s nothing unusual here. It’s just the standard rate increase.”

Learn more about the rate changes in a bulletin released by the Federal Emergency Management Agency, which administers the National Flood Insurance Program.

More Homeowners, Appraisers Agree on Values

Homeowners and appraisers are seeing more eye-to-eye when it comes to home values. Appraised values in February were, on average, just 0.53 percent below homeowner estimates—the fifth consecutive month where the gap between the two groups has been less than 1 percent, according to the National Quicken Loans Home Price Perception Index.

When shopping for a home—or even refinancing a current mortgage—consumers should always keep the changes in their local market in mind before estimating a home’s value.”

The Home Price Perception Index chart and other data at article source: Quicken Loans