US existing-home sales climbed 3% in February

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WASHINGTON — U.S. sales of existing homes rebounded in February after declining for the previous two months, a sign that many Americans are still looking to buy despite rising prices and a shrinking number of homes available on the market.

The National Association of Realtors said Wednesday that sales rose 3% last month to a seasonally adjusted annual rate of 5.54 million. This increase after declining sales in January and December suggests that competition will be heated during the traditional spring home-buying season.

“The upward trend in home sales remains intact but there are headwinds in the way,” said Jennifer Lee, a senior economist at BMO Capital Markets.

The shortage of properties for sale is creating a challenge for would-be homebuyers. As sales listings have steadily declined, prices have been climbing at the same time as a stronger job market has elevated demand — and, also, competition — for purchasing homes. Higher mortgage rates this year might also cause even fewer people to list their homes for sale, which would make the current supply squeeze worse.

The median home sales price was $241,700 in February, a 5.9% increase over the past year.

Prices are climbing, in part, because the number of sales listings has dropped. The supply of homes for sale declined 8.1% from a year ago to 1.59 million.

In February, sales climbed in the South and West but fell in the Northeast and Midwest.

First-time buyers appear to face the greatest obstacles from the decline in listings, according to an analysis by the real estate company Trulia. Starter homes have seen the steepest price increases as well as sharp drops in inventory — and a greater proportion of them are fixer-uppers that require additional investment from buyers.

Mortgage rates have been rising after President Donald Trump signed tax cuts into law toward the end of last year. The average 30-year mortgage rate was 4.44% last week, up from an average as low as 3.78% in early September, according to mortgage buyer Freddie Mac.

Real estate experts warn that higher rates could prompt more existing homeowners to keep their properties off the market, since selling their homes would require them to then buy a new home and pay more in mortgage interest.

 source: https://www.usatoday.com/story/money/personalfinance/real-estate/2018/03/21/us-existing-home-sales-climbed-3-percent-february/445184002/
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A booming housing market has realtors in a bind

Making a living as a realtor, which has never been easy, is becoming increasingly difficult. A record numbers of them are scrambling to broker a dwindling number of available properties in a hot market as housing prices continue to rebound from recession-era lows.

Membership in the National Association of Realtors topped 1.3 million in 2017, its highest level since the real estate market bubble burst a decade ago (the association’s members are called realtors). At the same time, however, the supply of homes for sale has contracted for more than two years as millennials, now the largest generation, enter their prime home-buying years. According to real estate brokerage firm Redfin, 607,836 homes were for sale in February, down from 754,160 in September 2017.

Not surprisingly, tight supplies are pushing up prices.

Real median home prices surged 29 percent between 2000 and 2016 and remain on a tear. Data from Redfin shows median home prices were $286,000 in February compared with $263,000 in the year-earlier period. As a result, even veteran realtors like Eric Billetta of Coldwell Banker face increased competition to land every sale when multiple offers are commonplace.

“A lot of realtors jumped out when that bubble burst,” said Billetta, who works in the Philadelphia suburbs. “You’re seeing a lot of younger agents coming in. You’re seeing a lot more part-timers coming into the business and take business from you.”

One of those new faces is Daniel Goldstein, who transitioned to real estate from the media several years ago. He understands the lengths realtors go through to land a sale because he has experienced it himself: His mother regularly receives unsolicited pitches from realtors interested in selling her house in California.

“She’s very happy where she is,” said Goldstein of Re/Max Town Center in Potomac, Maryland, outside of Washington, D.C. “She’s using equity from her house to convert some of the space into a rental unit. … It’s my first real estate development deal.”

Nationally, the inventory of homes on the market is at about a three-month supply, less than half the seven months worth in a typical healthy market, according to Boomer Foster, president of Long & Foster, the nation’s fourth-largest real estate brokerage. In many hot local markets, houses are on and off the market rapidly. The median number of days nationally is now 29, according to Redfin. In Seattle, that number is nine.

One reason for the boon in realtors is the profession’s low barrier to entry, requiring the passage of a state license to become a real estate agent at the minimum age of 18.

Demand for real estate license exams at the for-profit Hondros School of Business more than doubled between 2012 and 2017, forcing the school to add more locations, additional instructors and an online program, according to Marketplace.

The Bureau of Labor Statistics says the median salary for real estate brokers in 2016 was $56,970, and for agents it was $44,090. The top 10 percent earned more than $112,570.

Like everything else, however, the real estate profession isn’t as easy as it looks, especially in the current market, and many newcomers wind up quitting, according to Foster of Long and Foster. He figures 80 percent “wash out” in their first 18 months.

“It’s pretty much how it’s always been,” Foster said. “People look at our industry, and say ‘I like looking at houses, and I see how much my real estate agent made,’ and they think it’s easy. For the true real estate professional, it’s not easy — and they earn every penny they make.”

source: https://www.cbsnews.com/news/so-many-realtors-so-few-homes-for-sale/

Mortgage Rates Focus Shifts from Fed News to Geopolitical Risk

After dipping by about 10 basis points in the middle of last week, mortgage rates recovered all of that drop and are now in line with where they stood a week ago, just shy of four-year highs. The average prime 30-year fixed mortgage rate quoted on Zillow stood at 4.29 percent on Wednesday.

Incoming economic news and Federal Reserve expectations have dominated market headlines in recent news cycles, but political/geopolitical developments once again seized markets’ attention this week. Growing uncertainty about the direction of U.S. trade policy has pushed up the near-term risks to the American economy. Abroad, the results of elections in Italy raise risks to the European economic outlook.

To be clear, Fed news was still in the background: In testimony to the Senate Banking Committee on Thursday, Fed Chair Jerome Powell moderated comments made earlier in the week implying a faster pace of interest rate hikes than had been expected, but Fed Gov. Lael Brainard gave a speech echoing Powell’s initial comments. In addition, reports of the likely candidates to fill the Fed’s currently open Vice Chair role point to a more hawkish tilt to the Federal Open Market Committee.

The main economic news due this week is Friday’s monthly jobs report. Absent a major disappointment, geopolitical news is likely to continue dominating the headlines.

The post Mortgage Rates Focus Shifts from Fed News to Geopolitical Risk appeared first on Zillow Research.

Many lenders are loosening requirements for prospective home buyers

Alex Fine for The Washington Post

Will I or won’t I? An essential concern shared by prospective home buyers who need to finance their purchase is whether they will qualify for a mortgage for the amount and terms they require.

Pushback against overly tight credit after the housing crisis, a shrunken proportion of first-time buyers and worry about affordability as home values rose led to some tweaks to guidelines that could ease financing pressures for home buyers this year. Unlike the too-loose standards during the housing bubble, today’s borrowers still need to prove they can handle the loan.

“We are seeing thoughtful underwriting of loans and a greater understanding that younger first-time buyers are in a growth phase of their careers,” said John Pataky, executive vice president of the consumer division of EverBank in Jacksonville, Fla. “The approach is measured and guided, so we know that people becoming homeowners have the wherewithal to repay the loan as their income and career grow.”

Among the main changes to mortgage loans in the past year or two are the availability of low down-payment loans, a loosening of the debt-to-income ratio requirements and easing of rules about how student loan payments are calculated.

“Our challenge is always to increase access to sustainable credit,” said Jonathan Lawless, vice president of customer solutions for the Federal National Mortgage Association (Fannie Mae) in Washington.

Since mid-2016, there has been marginal easing in every aspect of mortgage loans, said Jonathan Corr, chief executive of Ellie Mae in Pleasanton, Calif.

“We’ve seen a very slight drop in the credit scores of approved loans, a slight increase in the debt-to-income ratios and an increase in loan-to-value, which means people are taking advantage of low down-payment loan programs,” Corr said.

Still, borrowers with shaky finances should not expect a loan approval like the old days. People who are weak in some areas would need to compensate with stronger finances in other areas.

Borrower confusion over loan rules

In spite of the existence of low down-payment loans and down-payment assistance programs, a NeighborWorks America survey in 2017 found that, on average, consumers think that 17 percent is the minimum required down payment to own a home. Yet loans with zero, 3 or 3.5 percent minimum down payments are readily available now.

In some cases, unsubstantiated concern might be stopping people from even applying for a loan. According to the recent Ellie Mae Borrower Insights Survey, 29 percent of renters think a 700 to 749 credit score is needed to qualify for a loan. But lender guidelines say a minimum credit score of just 620 is required for many loan programs. Some lenders will approve loans with a lower credit score if the borrower has substantial resources or other compensating factors.


Low down payments and assistance programs make getting mortgage loan approvals easier. (Illustration Dwuan D. June and istockphoto/TWP)

The average credit score of a closed loan was 722 in the Ellie Mae Originations Insight Report in December. Although 82 percent of conventional loans had credit scores of 700 or higher, 13.6 percent had credit scores between 650 and 699, and 4.7 percent had scores below 650. Federal Housing Administration (FHA) loans were almost evenly split among borrowers with a credit score of 700 or above (34 percent), between 650 and 700 (35 percent) and under 650 (31 percent).

“There are lots of programs available to serve different needs, but, typically, if a loan requires a higher credit score, it’s because the lender is taking a chance on you in some other way, such as allowing a lower down payment or a higher debt-to-income ratio,” Pataky said.

Prospective home buyers might be concerned about a predicted increase in mortgage rates; the Mortgage Bankers Association predicts they could rise to 4.8 percent by the end of the year. Anticipated higher mortgage rates could actually benefit some borrowers, said Jeff Taylor, co-founder and managing director of Digital Risk, a provider of mortgage processing services and risk analytics in Maitland, Fla.

“The credit box is likely to expand a little bit because lenders will want to approve more loans when they can get a better yield from higher rates,” Taylor said. “We expect more purchase loans and fewer refinances this year, so lenders will be competing for borrowers.”

Loan applications are increasingly handled digitally, which can make the loan process itself less painful, Taylor said.

“Lenders can use digital tools to upload materials and provide loan approvals more quickly,” Taylor said.

A secondary benefit, according to Lawless, is that lenders can have more certainty over the validity of information, and therefore less concern about the consequences of potential errors.

“Making the loan application process simpler and more efficient makes it less costly, so consumers should anticipate a better and cheaper experience,” Lawless said.

Corr said greater clarity over regulations about the potential punishment for lender errors could lead to additional changes in loan programs.

Lower down-payment loans

FHA loans are popular with first-time buyers because they require a down payment of just 3.5 percent of the purchase price of a home. Now, conventional loans are also available with as little as 3 percent required for the down payment.

“Awareness of the availability of low down-payment loans and first-time buyer programs is essential, because many people don’t know about the opportunities for homeownership,” Pataky said. “Many of these borrowers have good jobs and can afford the mortgage payments, but they are not cash rich.”

Borrowers can search for down payment assistance programs at downpaymentresource.com.

Fannie Mae’s Home Ready mortgage program, which allows for a 3 percent down payment, is available to both repeat buyers and first-time buyers.

“We’ve found that some homeowners who bought their first home and then lost equity during the housing crisis haven’t recovered enough to rebuild their wealth, so they need low down payment loans, too,” Lawless said.

Guidelines from Fannie Mae and the Federal Home Loan Mortgage Corp. (Freddie Mac) previously required borrowers to have a maximum debt-to-income ratio of 45 percent, but last year, that ratio was increased to 50 percent. Your debt-to-income ratio compares the minimum monthly payment on all recurring debt, including your housing payment, with your gross monthly income.

“Debt-to-income ratios are important to understand a borrower’s ability to repay the loan,” Lawless said. “But not everyone reports all of their income. For instance, people may be getting help from other family members for some expenses, or they are applying for the loan without their spouse’s income. As long as we see another good compensating factor that shows us they will be able to sustain the payment, we think the higher ratio is justified.”

The lower debt-to-income ratio required in the past used to disqualify a lot of borrowers, especially if they had student loan debt, said Carolyn Sullivan, a senior mortgage consultant with American Financing in Aurora, Colo.

“A 50 percent debt-to-income ratio is the new high-water mark,” Pataky said. “But with each loan request, we look at factors and eligibility requirements on an individual basis. Not everyone can qualify at that 50 percent level, in which case a maximum of 45 percent or less is necessary. We just have to make sure all the components of the loan fit.”

FHA loans allow for debt-to-income ratios as high as 55 percent, provided the rest of your loan application demonstrates your ability to repay the loan.

“The looser debt-to-income ratio is a big deal, because it’s easy for a couple with two cars, a couple of credit cards and student loans to have a lot of debt,” Sullivan said. “But what’s important is that we still verify all income and assets, and look closely at all factors to make sure the borrowers can repay the loan.”

Student loan debt

Changes to the way lenders regard student loan debt is simply a common-sense revision, Lawless said.

In the past, lenders had to qualify borrowers based on a monthly payment of 1 percent of the balance, even if a different amount appeared on their credit report.

“Now we allow lenders to use the actual amount being paid on an income-based student loan repayment plan,” Lawless said. “And if a parent or an employer is making the student loan payments, we can even exclude that debt from the loan application, as long as we can see 12 months of documentation of those payments.”

Rising home values across the nation led to an increase in maximum loan amounts for conforming loans, which could make it easier for some borrowers to qualify for a loan this year.

The Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac, and the Federal Housing Administration both raised conforming loan limits for 2018 to a maximum of $453,100 in most counties, and up to $679,650 in high-cost housing markets. Borrowers who need to finance more than the conforming loan limit need a jumbo loan, which has different guidelines.

An estimated 2.8 million homes in the United States will now be eligible for a conforming loan instead of a jumbo loan, according to analysis by Zillow.

“A conforming loan can save borrowers money compared to a jumbo loan, because jumbo loans typically require a down payment of at least 10 percent and as much as 25 percent in some cases,” Taylor said.

Jumbo loans also can be harder to qualify for, requiring a higher credit score, a lower debt-to-income ratio and more cash reserves, Taylor said.

While tweaks to loan guidelines by the FHA, Fannie Mae and Freddie Mac offer opportunities to more borrowers, consumers with more complex financial circumstances or simply a lack of credit history can turn to “nonprime” lenders. “Subprime” loans, considered to be significant contributor to the foreclosure crisis, are now referred to as “nonprime” or “alternative” loans by some lenders to remove the stigma.

“Unlike the subprime loans of the past, we offer loan products not typically offered by banks but with reasonable mortgage rates and fees,” said Raymond Eshaghian, president and founder of GreenBox Loans in Los Angeles. “We offer special programs for people with lots of equity and high credit scores who can’t qualify for a traditional loan because they are self-employed and their accountants have used creative accounting that doesn’t show enough income.”

Tips for increasing your chances of getting mortgage approval

●Check your credit. Check for errors on your credit report long before you apply for a loan to give yourself time to fix mistakes and improve your credit profile.

●Do research online and then visit a lender for individualized information.

●Shop around for a lender and a loan.

●Pay down debt to 30 percent or less of your credit limit.

●Establish savings for a down payment.

●Be aware of available loans with low down payment requirements.

●Check for down payment assistance programs.

●Don’t overload yourself with too much debt. Balance your income, your housing payment and other expenses for a more comfortable budget.

Home sellers are making huge profits. So why aren’t more people selling?

Sellers profited about $54,000 on average at the end of 2017, according to Attom Data Solutions. That’s a 10-year high and means sellers were bringing in an average return on investment of nearly 30%.

But selling a home in this market is the easy part. Finding a home to move into? Not so much.

A dismally low supply of homes on the market has made house hunting difficult in many cities. The lack of available homes has driven up prices, leading to bidding wars and homes selling for well above asking prices. While that’s good news for sellers, it’s bad news when they become buyers.

“It is fun and exciting to see a huge appreciation in your home,” said Allie Howard, a Redfin real estate agent in Seattle. “But what scares [sellers] is not wanting to be stuck in a rental scenario when homes continue to appreciate and they get concerned they will be priced out.”

West Coast home sellers have seen the largest gains, with those in San Jose, California, experiencing a 91% return on investment at the end of 2017. San Francisco home sellers saw a 73% return.

Seattle is also a booming market for real estate sales.

Nicole Rendahl recently sold her four-bedroom Seattle home for $400,000 more than she paid for it in 2008.

She purchased the home for $1,199,000 and just sold it for $1.6 million in November. The sale closed in seven weeks.

“It went through multiple price reductions before we purchased it,” she recalled. “We were fortunate of the price reduction, we couldn’t afford it when it was originally listed.”

She and her family are now looking to upgrade, but they haven’t been able to find the perfect house.

They recently lost a bidding war, but Rendahl is hopeful that more inventory will hit the market soon. Her goal is to find and move into a place by the end of the summer.

Owners are staying in their homes for a little more than eight years, on average. From 2000-2008, the average tenure was four years.

And new homes just aren’t being built fast enough to keep up with demand. Only around one million new homes are currently hitting the market — that’s well below the historic norm of 1.5 million.

Not having a home to move into means more people are staying put, and that has ripple effects throughout the housing market.

“The longer home ownership tenure is a central piece to why the housing market is behaving as it is where home prices are rising fast and there is an inventory logjam,” said Daren Blomquist, ‎senior vice president, communications at Attom.

Historically, buyers in starter homes tend to trade up after a few years to a bigger house — frequently after starting a family. But if they can’t find a home to move into, they will stay in the starter home longer. The lack of buyers trading up makes it particularly tough for first-time buyers to break into the market.

“It is a bit of a chicken and egg situation. If builders built more homes, homeowners might move up, but because homeowners aren’t moving up, the builders aren’t seeing as much demand for new homes,” said Blomquist.

Buyers may also be facing higher borrowing costs this year since interest rates are expected to rise.

The average rate on a 30-year fixed mortgage has been below 4.5% since January 2014. Higher mortgage rates could also keep homeowners in their homes longer if they purchased when rates were at historic lows.

“It impacts the affordability equation,” said Cheryl Young, senior economist at Trulia.

source: http://money.cnn.com/2018/02/08/real_estate/home-selling-profit/index.html?iid=Lead

 

Mortgage Rates Approach Four-Year High

Mortgage interest rates were are moving up, though not to the point where they are expected to dampen the demand for home ownership or curtail the strength of the U.S. housing market.

The rate on a 30-year fixed mortgage climbed to 4.5% at the end of January, close to a four-year high, according to Capital Economics.

Mortgage Rates Approach Four-Year High
ILLUSTRATION: GETTY IMAGES/ISTOCKPHOTO

This comes as the yield on the 10-year U.S. Treasury has risen as well. On Friday it was at 2.83%, up from 2.50% a month ago, as investors have begun to discount stronger growth and higher inflation.

Mortgage rates have climbed steadily as the economy has improved. The housing market remains strong, supported by tight inventory, good job growth and favorable credit conditions.

True, rates for 30-year fixed mortgages were below 4% in 2016.

But Susan Maklari, an analyst at Credit Suisse, points out that over the past 20 years, the average for a 30-year fixed mortgage is just under 6%.

Maklari doesn’t expect that the higher rates will impede the housing market.

Consider that the monthly payment for a $200,000 mortgage at 4.0% is $955. At 4.5%, it’s about $55 a month higher – probably not enough to break the bank.

Mortgage Rates Approach Four-Year High

November Home Prices Marching Higher: Case-Shiller

The S&P CoreLogic Case-Shiller national home price index for November rose to 6.2% year over year to a non-seasonally adjusted (NSA) index of 195.94. The month-over-month percentage increase was 0.2%.
In all 20 U.S. cities included in the 20-city home price index, November house prices increased year over year, and 13 of 20 also posted NSA month-over-month increases. Seattle (12.7%), Las Vegas (10.6%) and San Francisco (9.1%) posted the largest year-over-year gains. San Francisco (1.4%) and Tampa (1.0%) posted the largest month-over-month increases, while Chicago and Cleveland posted 0.4% month-over-month declines, and Charlotte, Detroit and San Diego posted drops of 0.3% compared to October.
The S&P CoreLogic Case-Shiller NSA home price indexes for November increased by 6.4% year over year for the 20-city composite index and by 6.1% for the 10-city composite index.
Economists had estimated an NSA year-over-year gain in the 20-city index of 6.4%. The NSA monthly gain of 0.2% came in at the consensus estimate.
The index tracks prices on a three-month rolling average. November represents the three-month average of September, October and November prices.
Average home prices for November remain comparable to their levels in the winter of 2007.
The chairman of the S&P index committee, David M. Blitzer, said:
Home prices continue to rise three times faster than the rate of inflation. The S&P CoreLogic Case-Shiller National Index year-over-year increases have been 5% or more for 16 months; the 20-City index has climbed at this pace for 28 months. Given slow population and income growth since the financial crisis, demand is not the primary factor in rising home prices. Construction costs, as measured by National Income and Product Accounts, recovered after the financial crisis, increasing between 2% and 4% annually, but do not explain all of the home price gains. From 2010 to the latest month of data, the construction of single family homes slowed, with single family home starts averaging 632,000 annually. This is less than the annual rate during the 2007-2009 financial crisis of 698,000, which is far less than the long-term average of slightly more than one million annually from 1959 to 2000 and 1.5 million during the 2001-2006 boom years. Without more supply, home prices may continue to substantially outpace inflation.
Looking across the 20 cities covered here, those that enjoyed the fastest price increases before the 2007-2009 financial crisis are again among those cities experiencing the largest gains. San Diego, Los Angeles, Miami and Las Vegas, price leaders in the boom before the crisis, are again seeing strong price gains. They have been joined by three cities where prices were above average during the financial crisis and continue to rise rapidly – Dallas, Portland OR, and Seattle.
Compared to their peak in the summer of 2006, home prices on the 10-city and 20-city indexes remain down about 3.6% and 1.1%, respectively. Since the low of March 2012, home prices are up 49% and 52.3% on the 10-city and 20-city indexes, respectively. On the national index, home prices are now 6.1% above the July 2006 peak and 46.2% higher than their low-point in February 2012.
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November Home Prices Marching Higher: Case-Shiller

The S&P CoreLogic Case-Shiller national home price index for November rose to 6.2% year over year to a non-seasonally adjusted (NSA) index of 195.94. The month-over-month percentage increase was 0.2%.

In all 20 U.S. cities included in the 20-city home price index, November house prices increased year over year, and 13 of 20 also posted NSA month-over-month increases. Seattle (12.7%), Las Vegas (10.6%) and San Francisco (9.1%) posted the largest year-over-year gains. San Francisco (1.4%) and Tampa (1.0%) posted the largest month-over-month increases, while Chicago and Cleveland posted 0.4% month-over-month declines, and Charlotte, Detroit and San Diego posted drops of 0.3% compared to October.

The S&P CoreLogic Case-Shiller NSA home price indexes for November increased by 6.4% year over year for the 20-city composite index and by 6.1% for the 10-city composite index.

Economists had estimated an NSA year-over-year gain in the 20-city index of 6.4%. The NSA monthly gain of 0.2% came in at the consensus estimate.

The index tracks prices on a three-month rolling average. November represents the three-month average of September, October and November prices.

Average home prices for November remain comparable to their levels in the winter of 2007.

The chairman of the S&P index committee, David M. Blitzer, said:

Home prices continue to rise three times faster than the rate of inflation. The S&P CoreLogic Case-Shiller National Index year-over-year increases have been 5% or more for 16 months; the 20-City index has climbed at this pace for 28 months. Given slow population and income growth since the financial crisis, demand is not the primary factor in rising home prices. Construction costs, as measured by National Income and Product Accounts, recovered after the financial crisis, increasing between 2% and 4% annually, but do not explain all of the home price gains. From 2010 to the latest month of data, the construction of single family homes slowed, with single family home starts averaging 632,000 annually. This is less than the annual rate during the 2007-2009 financial crisis of 698,000, which is far less than the long-term average of slightly more than one million annually from 1959 to 2000 and 1.5 million during the 2001-2006 boom years. Without more supply, home prices may continue to substantially outpace inflation.

Looking across the 20 cities covered here, those that enjoyed the fastest price increases before the 2007-2009 financial crisis are again among those cities experiencing the largest gains. San Diego, Los Angeles, Miami and Las Vegas, price leaders in the boom before the crisis, are again seeing strong price gains. They have been joined by three cities where prices were above average during the financial crisis and continue to rise rapidly – Dallas, Portland OR, and Seattle.

Compared to their peak in the summer of 2006, home prices on the 10-city and 20-city indexes remain down about 3.6% and 1.1%, respectively. Since the low of March 2012, home prices are up 49% and 52.3% on the 10-city and 20-city indexes, respectively. On the national index, home prices are now 6.1% above the July 2006 peak and 46.2% higher than their low-point in February 2012.

 

source: http://247wallst.com/housing/2018/01/30/november-home-prices-marching-higher-case-shiller/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+typepad%2FRyNm+%2824%2F7+Wall+St.%29

2018’s Housing Market Looks Good Unless You’re A First-Time Millennial Buyer

The nation’s housing market for 2018 continues to look good, according to two recently released reports. But first-time millennial buyers will continue to struggle with affordability, especially in high-priced areas like Los Angeles, San Francisco, Boston, New York and Washington DC.

Listen to Ralph G. DeFranco, Ph.D, global chief economist, Mortgage Services, Arch Capital Services Inc.: “With interest rates and home prices both on the rise, first-time homebuyers – largely millennials – may want to consider making the jump from renting to owning sooner rather than late.”

Median price for homes currently listed in Boston is $735,000, according to Zillow.com. (Shutterstock)

DeFranco further said: “Our research shows few signs of a housing bubble because the typical warning signs aren’t present. Overall, the shortage of housing paired with a robust job market should keep the housing market strong and growing, short of an unexpected event and despite the contrary pressures that may be created by the tax bill.”

Arch Mortgage Insurance Co. (Arch MI) recently released its winter 2018 edition of The Housing and Mortgage Market Review® (HaMMRSM), authored by DeFranco. The chart below looks at a 6.2% increase in home prices in 2017 compared with the year before.

ARCH Mortgage Capital Services

The HaMMRSM also makes market predictions to 2020. Among them: Home prices will continue to increase around the country in most markets. Look to annual increases of 2-6%, with most housing markets currently at low risk for a downturn.

Mortgage rates will rise, causing people to move less often. According to the report, “rising rates give existing borrowers with fixed-rate mortgages a financial incentive to stay put.” In addition, “homeowners will have more incentive to seek second liens or home improvement loans rather than move to a new home or refinance.” Makes sense since a new mortgage would likely be a higher rate cutting into the key affordability factor.

Realtor.com also released its “State of the Housing Union,” “which shows the strong U.S. economy and unprecedented housing shortage pressuring potential home buyers striving to attain the American Dream.” Realtor.com’s analysis pointed to the fundamentals. “Strong buyer demand, constrained inventory, and ready-to-buy first timers are the key underlying dynamics driving today’s housing market. The macro-factors that have defined real estate in recent years – strong demand and weak supply – continue to set the tone for the industry,” said Joe Kirchner, senior economist for realtor.com.

Boston, a city millennials love continues to have inventory and affordability issues. According to Zillow, the median price for homes currently listed in Boston is $735,000.

“I pay attention to numbers and we don’t have enough good property on the market. There is big demand in Boston with companies moving to here either from outside of the city or from other states,” observes David Bates, broker associate at William Ravis Real Estate

“I would be surprised to see a slowdown. I see increasing demand and very good appreciation,” adds Bates who is also known for writing about the Greater Boston real estate market for Banker and Tradesman, Boston Magazine, The Boston Globe, Boston Herald and Boston.Curbed.com.

Clearly, getting your foot in the proverbial front door of your first house remains the key to achieving the American dream.

source: https://www.forbes.com/sites/ellenparis/2018/01/29/2018s-housing-market-looks-good-unless-youre-a-first-time-millennial-buyer/#12909d1d1885