The Prime Time to List a Home for Sale?

Thursday and Friday are the most common days of the week when real estate professionals list a home, according to 2014 home sales data analyzed by the National Association of REALTORS®. Monday, Tuesday, and Wednesday follow in popularity in that order. The least popular days to post a new listing are Saturday and Sunday.

Also, “while home closings exhibit a strong tendency to get done at the end of the month, listings are much steadier throughout the course of the month, with a slight tendency to be posted earlier rather than later,” researchers write at NAR’s Economists’ Outlook blog.

Source: “EHS in 2014 by the Numbers – Part 3 – Popular Listing Dates,” National Association of REALTORS® Economists’ Outlook Blog (Jan. 14, 2015)

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.

Mortgage Rates Kick Off 2015 at 20-Month Low!

Borrowing costs moved even lower this week, with the 30-year fixed-rate mortgage averaging 3.73 percent, its lowest average since May 2013.

“Mortgage rates fell to begin the year as 10-year Treasury yields slid beneath 2 percent for the first time in three months,” says Frank Nothaft, Freddie Mac’s chief economist. “Meanwhile, the Fed minutes indicated ongoing discussion regarding the timing of the first rate hike.” Many housing economists have predicted that mortgage rates will rise sometime this year, with the 30-year fixed-rate mortgage likely reaching the upper 4 percent or 5 percent range by the end of the year.

Freddie Mac reports the following national averages for the week ending Jan. 8:

  • 30-year fixed-rate mortgages: averaged 3.73 percent this week, with an average 0.6 point, dropping from last week’s 3.87 percent average. The 30-year rate has not averaged this low since May 23, 2013, when it was 3.59 percent. A year ago at this time, 30-year rates averaged 4.51 percent.
  • 15-year fixed-rate mortgages: averaged 3.05 percent, with an average 0.5 point, dropping from last week’s 3.15 percent average. Last year at this time, 15-year rates averaged 3.56 percent.
  • 5-year hybrid adjustable-rate mortgages: averaged 2.98 percent, with an average 0.5 point, dropping from last week’s 3.01 percent average. A year ago, 5-year ARMs averaged 3.15 percent.

Source: Freddie Mac

Home Buyers Took a Break During the Holidays

Mortgage applications dropped sharply during the holidays, plunging 9.1 percent for the week ending Jan. 2 compared to two weeks earlier, according to the Mortgage Bankers Association’s mortgage activity index. The index reflects adjustments for New Year’s Day and Christmas Day when banks are closed.

Applications for refinancings dropped 12 percent from two weeks ago, while mortgage applications for home purchases, viewed as a leading gauge activity, dropped 5 percent.

“Beyond the seasonal slowdown, purchase application volume remains about 8 percent below last year’s level, indicating that home buyers are still cautious,” says the MBA’s chief economist, Mike Fratantoni.

Home shoppers have been slow to jump into the housing market, despite low mortgage rates. The 30-year fixed-rate mortgage fell to 4.01 percent for the week ending Jan. 2, according to the MBA. Lower bond yields this week are pushing rates even lower, with the average 30-year fixed-rate mortgage now a full quarter point lower than average rates available in the second half of December, the MBA notes.

Source: “Weekly Mortgage Applications Fall Sharply Over Holidays,” CNBC (Jan. 7, 2015)

Home Loan Interest Rates End 2014 Near Yearly Lows

Mortgage rates defied forecasts in 2014 by not inching up to 5 percent as predicted during the year. Instead, the 30-year fixed-rate mortgage is still hovering under 4 percent.

The 30-year fixed-rate mortgage, the most popular loan among home buyers, remained below 4 percent for every week except for two since Oct. 16, Freddie Mac reports.

Despite fixed-rate mortgages ticking up slightly this week, rates remain near 2014 lows, according to Freddie Mac’s weekly mortgage market survey. Freddie Mac reports the following national averages with mortgage rates for the week ending Dec. 31, 2014:

  • 30-year fixed-rate mortgages: averaged 3.87 percent, with an average 0.6 point, rising from last week’s 3.83 percent average. Last year at this time, 30-year rates averaged 4.53 percent. The 30-year fixed-rate mortgage reached a record low on Nov. 21, 2012, when it averaged 3.31 percent.
  • 15-year fixed-rate mortgages: averaged 3.15 percent, with an average 0.6 point, rising from last week’s 3.10 percent average. A year ago, 15-year rates averaged 3.55 percent.
  • 5-year hybrid adjustable-rate mortgages: averaged 3.01 percent, with an average 0.5 point, holding the same average as last week. Last year at this time, 5-year ARMs averaged 3.05 percent.

Source: Freddie Mac

Study: Buying Trumps Renting in Most Places

Buying is still more affordable than renting in the majority of U.S. housing markets, according to a new analysis. A study conducted by RealtyTrac factored in 2015 fair market rental data recently released by the U.S. Department for Housing and Urban Development for three-bedroom properties in 543 counties nationwide with populations of at least 100,000. Buying a median-priced home was found to be more affordable than renting a three-bedroom property in 68 percent of the counties tracked.

Overall, in 473 of the counties tracked, the fair market rent for a three-bedroom property in 2015 will require 27 percent of median household income, on average. For comparison, buying a median-priced home will require an average of 25 percent of median household income, based on median sales prices in November, the study found.

The study showed that in 25 of the counties with the biggest increases in the millennial population (for this study, those born between 1977 and 1992) – housing costs were among some of the highest. Between 2007 and 2013, fair market rents for a three-bedroom property in popular millennial markets will require 30 percent of the median household income, on average. Buying a median-priced home on the other hand, will only require 36 percent of median household income, on average.

“First-time buyers and potential boomerang home buyers are stuck between a rock and a hard place in today’s housing market: Many of the markets with the jobs and amenities they want have hard-to-afford rents and even harder-to-afford home prices; while the more affordable markets have fewer well-paying jobs and tend to be off the beaten path,” says Daren Blomquist, vice president at RealtyTrac. “Those emerging markets with the combination of good jobs, good affordability, and a growing population of new renters and potential first-time home buyers represent the best opportunities for buy-and-hold real estate investors to buy low and benefit from rising rents in the years to come.”

Source: RealtyTrac and “Renting Less Affordable Than Buying – Except for Where Millennials Are Moving,” RISMedia (Dec. 28, 2014)


Your Holiday Gift: Lower Gas Prices

You probablt use your car a lot and the recent drops in gas prices may equate to personal and business savings. That’s a gift this holiday season that’s likely to stick around well into the new year.

The average price of a gallon of gasoline in the U.S. has dropped 25 cents in the past two weeks, reaching its lowest level in more than five and a half years, according to the Lundberg survey.

Prices for regular-grade gas averaged $2.47 a gallon as of last Friday, down 25 cents from Dec. 5, according to the survey. In many areas, gas has fallen below $2.

Overall, gas prices have fallen more than $1.25 a gallon since their peak in May. Industry analyst Trilby Lundberg says that prices at the pump will likely continue to fall.

The U.S. Department of Energy recently released its predictions for the price of gasoline for 2015, estimating that gas prices will likely drop 35 cents to an average of $2.60 a gallon. That would be the lowest full-year average since 2009.

Source: “U.S. Gas Prices Fall to Lowest Since May 2009: Lundberg Survey,” Reuters (Dec. 21, 2014)

Home Renters Face ‘Affordability Crisis’

With increased competition for units, rents are shooting up, and the increases are biting renters’ wallets as they find themselves increasingly getting priced out of the market, with wages failing to keep pace.

Nationwide rents have risen about 6 percent from a year ago, due to rising demand and still-limited supply, CNBC reports. Renters in many areas are paying more than 30 percent of their wages on a two-bedroom rental, according to an analysis by Trulia. Financial experts often recommend spending no more than 30 percent of wages on housing expenses (mortgage interest, principal, taxes, insurance).

Rental demand is strong and likely will remain so for the foreseeable future, analysts note. Apartment vacancies rose slightly in the third quarter for the first time in four-and-a-half years, but was mostly attributed to more rental supply coming on the market, according to Reis analytics firm.

“Units brought online during tight market environments have a tendency to actually push rents upward, not downward,” says Ryan Severino, economist at Reis, told CNBC. “So landlords should still be able to push asking rent increases on to their tenants.”

Source: “Rents Skyrocket Well Beyond Wages,” CNBC (Nov. 6, 2014)

Don’t Blame Millennials for Ownership Drop

There are fewer home owners in the United States today than last year. The home ownership rate dropped to a 20-year low in the third quarter as more Americans became renters, another sign that the housing recovery is still mending. While millennials’ changing preferences often take the most heat for the decline in home ownership numbers, they can’t take the blame for the latest dip, per an article in The Atlantic.

Instead, it’s Generation X, those aged between 35 and 44, who have had the sharpest drop in home ownership since the recession. Home ownership among the 35 to 44 age group has dropped 9 percent since 1994.

Millennials, in the last 20 years, home ownership has fallen less for young people than for any other age group under 64, according to an analysis of  Census data by The Atlantic.

Why are Gen Xers shying away from home ownership? Employment may be key. Researchers note that employees in their forties once outnumbered the 55-plus cohort in the workforce by 16 million, but now there are actually more workers older than 55 than forty somethings.

Source: “Home Ownership in America Has Collapsed – Don’t Blame Millennials,” The Atlantic (10/28/14); “U.S. Home Ownership Rate Falls to 20-Year Low,” Reuters (10/28/14); and “Census Bureau: Home Ownership Continues to Drop,” HousingWire (10/28/14)

‘Small Lenders Bend’ for Risky Borrowers

Borrowers with minor imperfections on their credit applications — like a brief loss of employment or a temporary dip in their credit score — are starting to have better luck at snagging a loan with smaller lenders, Bloomberg reports. At least 15 smaller firms this year are offering slightly riskier mortgages, which in some cases come with higher interest rates and larger down payment requirements and aren’t backed by the government.

“Some lenders became afraid of their own shadows,” RPM Mortgage Inc. Chief Executive Officer Rob Hirt told Bloomberg. The bank started a program this summer for borrowers who have higher debt burdens or who had sold a home for less than the outstanding mortgage. “The market is beginning to realize that if you make smart and sound loans to people who don’t fit in the narrow box, it doesn’t make them a worse risk.”

On the other hand, larger banks, like Bank of America and JPMorgan Chase & Co., have generally tightened their credit standards over the last few years. The average score on mortgages that government-controlled Fannie Mae and Freddie Mac bought now stands at about 740 – well above the 660 level that is considered subprime.

“To us, it’s common sense,” says Jeff Seabold, chief lending officer at Banc of California. “There’s quite a few people who are boxed out that shouldn’t be.”

Source: “You Don’t Need to Be Perfect to Get a U.S. Loan Anymore,” Bloomberg Businessweek (Oct. 13, 2014)