Consider Adding a ‘Granny Flat’

Home improvement professionals say they’re fielding more inquiries from homeowners about adding accessory dwelling units—often nicknamed “granny flats.” A fifth of remodeling contractors say they undertook projects over the last year to create an ADU by converting an existing space, and a similar number say they created an ADU by building a new addition to a property, according to a new survey released by the National Association of Home Builders.

ADUs are smaller units added to a property, and they can be pricey to build. Only 6 percent of remodeling contractors report completing an ADU project for less than $25,000. Three-fourths say ADU projects cost at least $50,000, and 28 percent report projects costing at least $150,000.

Source: “Many Remodelers Are Now Creating ADUs,” National Association of Home Builders’ Eye on Housing blog (May 22, 2019)

Who Needs to Downsize?

A growing number of baby boomers are choosing not to downsize in retirement. Instead, they’re opting to remain in the homes where they raised their children, USA Today reports. But their reluctance to move is contributing to low inventory across the country, says realtor.com® Chief Economist Danielle Hale.

Baby boomers “have refused to follow what the traditional expectations were,” Barbara Risman, a sociology professor at the University of Illinois at Chicago, told USA Today. Baby boomers, mostly between the ages of 54 to 73, are working longer and, therefore, putting retirement off longer than previous generations. Their millennial children increasingly are living at home with them and staying well into adulthood.

For baby boomers who do plan to move, 43% say they want their next home to be the same size as their current one. Twenty-two percent say they want their next home to be even larger, according to a January surveyof 50- and 60-year-olds by Del Webb.

Homeowners’ Top Neighborhood Gripes

The wrong neighborhood can make for an unhappy homeowner.

A new survey from Porch.com, a home remodeling website, surveyed about 1,000 consumers to find the biggest neighborhood turnoffs. Noise, traffic, and crime were the chief concerns of buyers. Noise topped the list of neighborhood turnoffs, with 41% of respondents citing it as their top gripe, according to the survey. In fact, noise proved to be an even bigger deterrent than a high crime rate.

More details on illustrations at source: “Moving Matters,” Porch.com (May 2019)

Mortgage Rates ‘Drop This Week’

Mortgage rates are showing signs of moderating this month, following increases in April. Borrowers are discovering much lower rates compared to a year ago.

“A combination of low mortgage rates, a strong job market, and modest wage growth should spur home buyer interest and also serve as an incentive for homeowners looking to refinance this spring,” says Sam Khater, Freddie Mac’s chief economist.

Freddie Mac reports the following national averages with mortgage rates for the week ending May 9:

  • 30-year fixed-rate mortgages: averaged 4.10%, with an average 0.5 point, falling from last week’s 4.14% average. Last year at this time, rates averaged 4.55%.
  • 15-year fixed-rate mortgages: averaged 3.57%, with an average 0.4 point, falling from last week’s 3.60% average. A year ago, 15-year rates averaged 4.01%.
Source: Freddie Mac

Owning Is Easier Than Renting

Survey: A majority of homeowners recently surveyed say they believe owning a home isn’t as difficult as renting, according to a new survey from LendingTree, an online loan marketplace. Only 15% of homeowners believe renting is easier than owning a home, compared with 67% of more than 2,000 homeowners who said owning is easier.

The longer homeowners have been in their homes, the more likely they are to believe owning is easier, according to the study. For example, nearly 72% of homeowners who have spent seven to nine years in their home say owning is easier than renting.

Multiple Refinance Problems

It can be financially harmful to borrowers and investors to repeatedly refinance their mortgages, warns Ginnie Mae, a government-backed firm that guarantees government mortgage bonds. That’s why the institution is taking steps to crack down on the practice of “churning,” where lenders push borrowers to refinance their home loans over and over again. Homeowners may be drawn to the idea of lowering their monthly mortgage payments, but multiple refinances can lead to more lender fees and a higher bill in the end.

Ginnie Mae started to take action against individual lenders last year when their activity suggested they were pushing refis on borrowers, even when they wouldn’t benefit from it. Ginnie Mae is honing in on mortgages where borrowers pull cash out of their home during a refinancing. The loan then results in more than 90% of value.

Source: “Ginnie Mae Moves to Crack Down on Repeated Refinancers,” The Wall Street Journal (May 3, 2019) [Log-in required.]

 

2019 Employee Relocation Report

Corporate relocation volumes and budgets are increasing, helping employees to more easily make a move for a job. In particular, 60% of mid-size firms with 500 to 4,999 salaried employees reported relocation budget increases, according to national moving company Atlas Van Lines’ Corporate Relocation Survey. About 40% of small firms (fewer than 500 salaried employees) and 40% of large firms (5,000-plus) saw employee relocation increase over the past year.

Companies are optimistic that 2019 will be a good year for relocations.  About 50% of firms say they plan to restructure their relocation policy, withhold taxable relocation benefits, and streamline relocation processes to reduce costs, the survey showed.

Source: “Corporate Relocation Survey,” Atlas Van Lines (May 2019)

 

Mortgage Rates ‘Drop This Week’

Following four weeks of rate increases, fixed-rate mortgages posted a drop this week. Rates remain well below their averages from a year ago, and Freddie Mac predicts that will be a boon to home sales over the next couple of months. This comes after the Federal Reserve voted Wednesday not to increase its benchmark rate.

“Moving into summer, we expect rates to be about a quarter to half a percentage point lower than where they were last year, which is good news for the housing market,” says Sam Khater, Freddie Mac’s chief economist.

Freddie Mac reports the following national averages for the week ending May 2:

  • 30-year fixed-rate mortgages: averaged 4.14%, with an average 0.5 point, falling from last week’s 4.20% percent average. Last year at this time, 30-year rates averaged 4.55%.
  • 15-year fixed-rate mortgages: averaged 3.60%, with an average 0.4 point, dropping from last week’s 3.64% average. A year ago, 15-year rates averaged 4.03%.
Source: Freddie Mac

Retirees Aren’t Downsizing?

All the buzz about retirees downsizing and putting down roots in urban areas may be overrated. After all, neither practice is all that popular among millennial’s, who are usually the trendsetters.

Contrary to many projections, about 87 percent of boomers and Gen Xers don’t plan to make a beeline for urban down towns, instead choosing a suburban or rural setting where they can slow down and enjoy some peace and tranquility. “Data from our most recent survey clearly indicates that true urban living appeals to only a limited number of future retirees,” says Jay Mason, vice president of market intelligence for PulteGroup. “Both Gen Xers and baby boomers nearing retirement are looking for a different quality of life when considering their next move.”

 

 

Has the 2017 Tax Overhaul Hurt Home Sales?

The Tax Cuts and Jobs Act, an overhaul of the U.S. tax code enacted in 2017 that puts a cap on some deductions for homeowners, has “negatively impacted the housing market” by tamping down sales volume, according to a study by the New York Federal Reserve.

The 2017 tax law placed a $10,000 cap on deductions of state and local taxes, increased the standard deduction, and placed a $750,000 limit on the amount of mortgage debt that qualifies for interest write-offs.

Lawrence Yun, chief economist for the National Association of REALTORS®, said in NAR’s March existing-home sales report that tax policy changes continue to impact some markets. “The lower-end market is hot while the upper-end market is not,”

Source: “Overall, 2017’s Massive Tax Overhaul Hasn’t Hurt Home Values,” The Washington Post (April 27, 2019) and “Is the Recent Tax Reform Playing a Role in the Decline of Home Sales?” Federal Reserve Bank of New York (April 15, 2019)