‘Tiny Homes’ May Have a Wider Buyer Pool

A new survey confirms that consumers are definitely intrigued by smaller homes, often described as less than 600 square feet. More than half of adults recently surveyed–or 53 percent—said “yes” or “maybe” when asked if they would ever consider the possibility of buying such a small home, according to a recent study by the National Association of Home Builders. That means a majority of adults would consider moving into a tiny home at some point in the future, the NAHB notes.

Younger generations tend to find tiny homes more appealing than older age groups. More than half of millennials and Generation X members said they were open to the idea of a tiny home. However, only 45 percent of baby boomers and 29 percent of seniors said they’d be willing to entertain the idea.

But local zoning laws may curtail the prevalence of just how big the tiny-home movement gets. However, there has been a recent momentum among some local jurisdictions to relax some of those restrictions.

Source: “Tiny Homes Have Potential Buyers,” National Association of Home Builders’ Eye on Housing blog (Feb. 7, 2018)

Climbing Mortgage Rates at 4-Year High

Mortgage rates continued to inch higher this week, marking the sixth consecutive week for borrowing cost increases for home shoppers.

“Wednesday’s Consumer Price Index report showed higher-than-expected inflation; headline consumer price inflation was 2.1 percent year-over-year in January, two-tenths of a percentage point higher than the consensus forecast,” explains Len Kiefer, Freddie Mac’s deputy chief economist.

Freddie Mac reports the following national averages for the week ending Feb. 15:

  • 30-year fixed-rate mortgages: averaged 4.38 percent with an average 0.6 point, rising from last week’s 4.32 percent average. Last year at this time, 30-year rates averaged 4.15 percent.
  • 15-year fixed-rate mortgages: averaged 3.84 percent, with an average 0.5 point, increasing from last week’s 3.77 percent average. A year ago, 15-year rates averaged 3.35 percent.

Source: Freddie Mac

Is Market Volatility Giving Buyers Cold Feet?

It seems a 1,000-plus point drop in the stock market last week mixed with rising interest rates may have been enough to give homeowners and buyers the jitters. Overall mortgage applications last week dipped 4.1 percent week over week on a seasonally adjusted basis, the Mortgage Bankers Association reported Wednesday.

Broken out, mortgage applications for home purchases plunged 6 percent last week. However, that number is still 4 percent higher than last year. Home buyers complain of weakened affordability and lengthier home searches in research released this week by the National Association of Home Builders. Refinance applications dipped 2 percent last week, but they remain 2.8 percent higher than the same week a year ago.

Mortgage rates continue to move upwards. Last week the 30-year fixed-rate mortgage rose to its highest rate since January 2014, averaging 4.57 percent, the MBA reported.

Source: “Stock Jitters and Higher Interest Rates Drive Weekly Mortgage Applications Down 4.1%,” CNBC (Feb. 14, 2018)

Housing Affordability to get ‘Worse in Spring”

As mortgage rates continue to inch higher, consumers are bracing for steeper homebuying costs this spring. Households earning the national median income of $68,000 a year could afford about 59.6 percent of new and existing homes that were sold in the fourth quarter of 2017, according to the National Association of Home Builders. The trade group’s latest report looks at home prices, mortgage interest rates, and median household income across 238 U.S. metros.

Mortgage rates have increased for the past five consecutive weeks. Lawrence Yun, chief economist for the National Association of REALTORS®, predicts that mortgage rates will reach 4.5 percent by the second half of the year. Inventory shortages along with high buyer demand, have prompted home prices to escalate, fueling bidding wars.

Source: “Will It Become Harder to Afford a Home? Experts Say Yes,” realtor.com® (Feb. 9, 2018) and National Association of Home Builders

Homes are a Better Investment than Retirement Savings

Americans want to buy homes and they want to buy them as an investment option. According to a study on homebuyers by NerdWallet, a personal finance website, 75 percent Americans say that buying a home was a priority for them. NerdWallet analyzed data of more than 2,000 adults surveyed, the company’s mortgage calculator, data from the Consumer Financial Protection Bureau (CFPB), and other sources to develop the study on current home buying sentiments, concerns, and outlook.

The study found that most Americans considered buying a home as a good investment with 64 percent of the people surveyed citing this as a reason to buy a home. And it’s not only the older generation that feels this way. Around 56 percent millennials felt that they would rather own a home that appreciated in value than have more money in retirement savings, reflecting the sentiment of 52 percent of the overall people surveyed.

In fact, according to the survey, 82 percent millennials said that buying a home was a priority compared with 75 percent of generation X and 69 percent of baby boomers. Millennials also aspired to buy more homes, on average throughout their lifetime and were most likely to say that they would like to buy a home to rent out for extra income.

Source: dsnews.com/daily-dose/02-01-2018

Home Loan Interest Rates are ‘Pressing Higher’

The 30-year fixed-rate mortgage reached its highest average since December 2016, Freddie Mac reports. This is the fifth consecutive week that mortgage rates have been on the rise, increasing borrowing costs for home shoppers heading into the spring buying season.

Following a turbulent Monday, financial markets settled down with the 10-year Treasury yield resuming its upward march. Mortgage rates have followed,” says Len Kiefer, Freddie Mac’s deputy chief economist. “Will higher rates break housing market momentum? It’s too early to tell for sure.”

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

  • 30-year fixed-rate mortgages averaged 4.32 percent, with an average 0.6 point, rising from last week’s 4.22 percent average. Last year at this time, 30-year rates averaged 4.17 percent.
  • 15-year fixed-rate mortgages averaged 3.77 percent, with an average 0.5, up from a 3.68 percent average last week. A year ago, 15-year rates averaged 3.39 percent.

Source: Freddie Mac

Don’t Panic Over Stock Market Mayhem

The housing market likely won’t be deeply affected by the sharp decline in stocks over the last two days because underlying economic fundamentals remain strong, says Lawrence Yun, chief economist for the National Association of REALTORS®. Jobs are being created, workers are seeing wage gains, and there’s no recession on the horizon.

The Standard & Poor’s 500 stock index fell by more than 4 percent Monday, and the Dow Jones Industrial Average declined nearly 5 percent. As of late Tuesday, the S&P was down by almost 1.2 percent since the first of the year, although that comes after a year of double-digit gains.

One metric to watch is long-term bond rates, which historically have gone up as stocks go down. That link, however, hasn’t been as strong in the past few years. Investors tend to increase demand in bonds as an alternative to stocks, driving up yields, which can lead to higher mortgage rates. Since the start of the year, the average rate on a 30-year mortgage has risen, from 3.95 percent to 4.22 percent, according to Freddie Mac. That’s still low by historical standards.

—REALTOR® Magazine

Fed Move Doesn’t Suppress Mortgage Rates

The Federal Reserve may have voted to leave its short-term interest rates unchanged this week, but that didn’t stop lenders from moving up mortgage rates. Average mortgage rates are continuing an upward trend in 2018.

“The Federal Reserve did not hike rates this week, but the market views future hikes as a near certainty,” says Len Kiefer, deputy chief economist at Freddie Mac. “The expectation of future Fed rate hikes and increased borrowing by the U.S. Treasury is putting upward pressure on interest rates.”

Freddie Mac reports the following national averages for the week ending Feb. 1:

  • 30-year fixed-rate mortgages: averaged 4.22 percent, with an average 0.5 point, rising from last week’s 4.15 percent average. Last year at this time, 30-year rates averaged 4.19 percent.
  • 15-year fixed-rate mortgages: averaged 3.68 percent, with an average 0.5 point, increasing from last week’s 3.62 percent average. A year ago, 15-year rates averaged 3.41 percent.

Source: Freddie Mac

Home Buyers Don’t Grasp ‘Mortgage Basics’

Many Americans begin looking for a home to buy without understanding the fundamentals of applying for a mortgage or what it takes to qualify for one, according to a new survey by Ally Home, a direct-to-consumer mortgage business.

Ninety-two percent of the more than 2,000 U.S. adults who responded to the survey admit they don’t know how much mortgage they can afford. Further, most say they’re confused about “rates” versus “points,” and only a third have a general idea of what their average closing costs might be. Only 8 percent are aware that the maximum debt-to-income ratio is usually 43 percent; most respondents believe it’s significantly lower or don’t know at all.

Ally Home is touting its free Mortgage Playbook, a resource that covers the basics of applying for a home loan. The book uses sports jargon to outline the mortgage application process, covering topics such as how to improve your financial fitness prior to applying for a loan, how to evaluate rate and points options, and how loan rates are determined.

Source: Ally Financial

‘Hemp Homes’ Spark Building Industry Interest

Hemp structures date back to Roman times. But now, some builders want to bring it back to their markets, since it’s known for being a fast-growing, sustainable product.

“Mixing hemp’s woody fibers with lime produces a natural, light concrete that retains thermal mass and is highly insulating,” The New York Times reports. “No pests, no mold, good acoustics, low humidity, no pesticide. It grows from seed to harvest in about four months.”

To clarify, industrial hemp is not the same as the product that can give you a buzz. It contains only 0.3 percent of the substance THC, or tetrahydrocannabinol.

Hemp is more widely used across the globe as insulation to fill walls and roofs and under floors in wood-framed buildings. It becomes stucco-like in appearance, it’s more like drywall than concrete so it can’t be used for a foundation.

Source: “High Times Beckon for Using Hemp to Build Houses,” The New York Times (Jan. 29, 2018)