The 20 Markets Dominating in August

Daily Real Estate News | Thursday, August 24, 2017

Half of the 20 hottest housing markets in August were located in California. Vallejo, Calif., held on to its top spot in realtor.com®’s “hot list” this month. Realtor.com® ranks the top 20 medium-to-large metro markets where homes are selling the fastest and where buyers are searching the most on realtor.com®.

Detroit also made a comeback on realtor.com®’s list this month, entering the top five for the first time since October 2013. New metros added to the list for August include Grand Rapids, Mich.; Oxnard, Calif.; and Nashville, Tenn.

Realtor.com®’s 20 hottest housing markets in August are:

  1. Vallejo, Calif.
  2. San Jose, Calif.
  3. San Francisco
  4. Detroit
  5. Stockton, Calif.
  6. Kennewick, Wash.****
  7. Fort Wayne, Ind.
  8. Columbus, Ohio
  9. San Diego
  10. Sacramento, Calif.
  11. Dallas
  12. Modesto, Calif.
  13. Waco, Texas
  14. Santa Rosa, Calif.
  15. Fresno, Calif.
  16. Grand Rapids, Mich.
  17. Colorado Springs, Colo.
  18. Denver
  19. Oxnard, Calif.
  20. Nashville, Tenn.

Source: “America’s 20 Hottest Real Estate Markets for August 2017,” realtor.com® (Aug. 24, 2017)

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HARP Extended Through 2018

Daily Real Estate News | Wednesday, August 23, 2017

The Federal Housing Finance Agency announced that it is extending HARP, a popular government refinancing program, through Dec. 31, 2018. The Home Affordable Refinance Program was to expire on Sept. 30. While the FHFA has once again extended the deadline by another 15 months, this time it plans to introduce a new loan program to eventually take HARP’s place.

HARP, which was introduced during the housing crisis, helps homeowners refinance their mortgages when they may be current on their mortgage payments but have little to no equity in their homes. Through HARP, more than 3.4 million homeowners have refinanced their mortgages. The FHFA says that more than 143,000 homeowners could still benefit from HARP.

The FHFA extended HARP in order to “create a bridge” to a new refinancing product that it plans to launch in October. Fannie Mae and Freddie Mac are to implement a new streamlined refinance offering that is aimed at borrowers with high loan-to-value ratios.  The High LTV Streamlined Refinance Program would provide liquidity for borrowers who are current on their mortgage but unable to refinance because their loans have LTV ratios that exceed Fannie and Freddie’s maximum limits. The program—which the FHFA says will “appropriately balance continuing to offer assistance to underwater borrowers with protecting taxpayers”—will be available for loans originated on or after Oct. 1.

Source: Federal Housing Finance Agency

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Are Open Floor Plans Losing Appeal?

Daily Real Estate News | Monday, August 21, 2017

Open floor plans, which typically combine the kitchen, living room, and dining room in one large, open area, have dominated home design trends in recent years. But now, buyers may be starting to shun this type of layout, The Wall Street Journal reports.

“While [the open floor plan] was successful in allowing multiple generations to congregate, it also led to consolidated visual chaos,” New York-based designer Phillip Thomas told the Journal. Some designers say the “helicopter” parenting style—parents seeking to keep a more watchful eye over their children—may have led to the open floor plan’s popularity. But some parents may find they need more personal space.

Jen Altman, a child and family psychologist in Ho-Ho-Kus, N.J., says the pendulum is beginning to swing away from helicopter parenting, with many of her adult clients saying, “I just need 10 minutes to myself.” Such an attitude may be influencing a rise in the “broken floor plan,” which London architect Mary Duggan describes as large spaces with an element such as a three-quarter height wall to section off areas.

Some designers may also use barn doors or pocket doors (sliding doors that tuck inside walls) to close off an open floor plan when needed. Pivoting glass and curtains are other ways to section off space.

“It’s hard to get away from the open plan because of the way we live,” says Los Angeles-based designer Karen Vidal, who converted her family’s detached garage into a “mom cave.” “It’s the space where everyone congregates—meals are prepared, kids do their homework.” But she has found that cordoning off an area for her mom cave is critical for her peace of mind. “It’s a bit of separation from being on top of one another. It helps me focus.”

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New Program to Help Buyers Bypass Appraisals

Daily Real Estate News | Monday, August 21, 2017

Mortgage giant Freddie Mac has announced a new program allowing some home buyers to skip a traditional appraisal, which could lower the fees the buyers pay and speed up the closing process. Freddie’s Automated Collateral Evaluation (or ACE) will determine a property’s collateral risk by culling data from multiple listing services, public records, and historical home values, and then assess whether a buyer needs a traditional appraisal or an automated one. Borrowers who are refinancing may also be eligible for the program.

Those who qualify for an automated appraisal could save up to $500 in fees and make it to settlement up to 10 days sooner, Freddie says. “By leveraging big data and advanced analytics, as well as 40-plus years of historical data, we’re cutting costs and speeding up the closing process for borrowers,” says David Lowman, Freddie Mac’s executive vice president of single-family business. “At the same time, we’re providing immediate collateral representation and warranty relief to lenders. This is just one example of how we are reimagining the mortgage process to create a better experience for consumers and lenders.”

Lenders will be able to assess whether a property is eligible for ACE by submitting data through Freddie’s Loan Product Advisor. The program will factor in credit, capacity, and collateral to assess the quality of the loan and determine whether the estimated value of the home provided by the lender is acceptable. ACE will be available for home purchases beginning Sept. 1; it has been available for qualified refinances since June 19.

Source: “Freddie Mac Extends Appraisal-Free Mortgage Program to Purchase Loans,” HousingWire (Aug. 18, 2017) and Freddie Mac 

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Home Prices Jump 6.2% in 2nd Quarter; Eclipse 2016 High

WASHINGTON (August 16, 2017) — The headstrong supply and demand imbalances in much of the country slightly tempered the pace of sales and caused home prices to maintain their robust growth in the second quarter, according to the latest quarterly report by the National Association of Realtors®.

The national median existing single-family home price in the second quarter was $255,600, which is up 6.2 percent from the second quarter of 2016 ($240,700) and surpasses the third quarter of last year ($241,300) as the new peak quarterly median sales price. The median price during the first quarter increased 6.9 percent from the first quarter of 2016.

Single-family home prices last quarter increased in 87 percent of measured markets, with 154 out of 178 metropolitan statistical areas1 (MSAs) showing sales price gains in the second quarter compared with the second quarter of 2016. Twenty-three areas (13 percent) recorded lower median prices from a year earlier.

Lawrence Yun, NAR chief economist, says home prices in most metro areas continued their fast ascent in the second quarter because supply remained at pitiful levels. “The 2.2 million net new jobs created over the past year generated significant interest in purchasing a home in what was an extremely competitive spring buying season,” he said. “Listings typically flew off the market in under a month2 — and even quicker in the affordable price range — in several parts of the country. With new supply not even coming close to keeping pace, price appreciation remained swift in most markets.”

Added Yun, “The glaring need for more new home construction is creating an affordability crisis that needs to be addressed by policy officials and local governments. An increasing share of would-be buyers are being priced out of the market and are unable to experience the wealth building benefits of homeownership.”

Twenty-three metro areas in the second quarter (13 percent) experienced double-digit increases, down from 30 areas in the first quarter (17 percent). Overall, there were slightly more rising markets in the second quarter compared to the first quarter, when price gains were recorded in 85 percent of metro areas.

Total existing-home sales3, including single family and condos, slipped 0.9 percent to a seasonally adjusted annual rate of 5.57 million in the second quarter from 5.62 million in the first quarter, but are still 1.6 percent higher than the 5.48 million pace during the second quarter of 2016.

At the end of the second quarter, there were 1.96 million existing homes available for sale4, which was 7.1 percent below the 2.11 million homes for sale at the end of the second quarter in 2016. The average supply during the second quarter was 4.2 months — down from 4.6 months in the second quarter of last year.

Last quarter, a rise in the national family median income ($71,529)5 was not enough to offset weaker affordability from the combination of higher mortgage rates compared to a year ago and rising home prices. To purchase a single-family home at the national median price, a buyer making a 5 percent down payment would need an income of $56,169, a 10 percent down payment would require an income of $53,213, and $47,300 would be needed for a 20 percent down payment.

“Mortgage rates have subsided in recent months, which has only somewhat helped take away some of the sting prospective buyers are experiencing with the deteriorating affordability conditions in many areas,” added Yun. “Household incomes may be rising and giving consumers assurance that now is a good time to buy, but these severe inventory shortages will likely continue to be a drag on sales potential the second half of the year.”

The five most expensive housing markets in the second quarter were the San Jose, California, metro area, where the median existing single-family price was $1,183,400; San Francisco, $950,000; Anaheim-Santa Ana, California, $788,000; urban Honolulu, $760,600; and San Diego, $605,000.

The five lowest-cost metro areas in the second quarter were Youngstown-Warren-Boardman, Ohio, $87,000; Cumberland, Maryland, $98,200; Decatur, Illinois, $107,400; Binghamton, New York, $109,000; and Elmira, New York, $111,600.

Metro area condominium and cooperative prices — covering changes in 61 metro areas — showed the national median existing-condo price was $239,500 in the second quarter, up 5.4 percent from the second quarter of 2016 ($227,200). Eighty-seven percent of metro areas showed gains in their median condo price from a year ago.

Regional Breakdown

Total existing-home sales in the Northeast rose 1.3 percent in the second quarter and are 0.4 percent above the second quarter of 2016. The median existing single-family home price in the Northeast was $282,300 in the second quarter, up 3.2 percent from a year ago.

In the Midwest, existing-home sales increased 4.2 percent in the second quarter but are 0.5 percent below a year ago. The median existing single-family home price in the Midwest increased 6.6 percent to $204,000 in the second quarter from the same quarter a year ago.

Existing-home sales in the South dipped 3.0 percent in the second quarter but are 2.5 percent higher than the second quarter of 2016. The median existing single-family home price in the South was $229,400 in the second quarter, 6.7 percent above a year earlier.

In the West, existing-home sales decreased 3.7 percent in the second quarter but are 3.1 percent above a year ago. The median existing single-family home price in the West increased 7.5 percent to $372,400 in the second quarter from the second quarter of 2016.

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing over 1.2 million members involved in all aspects of the residential and commercial real estate industries.

# # #

NOTE:  NAR releases quarterly median single-family price data for approximately 175 Metropolitan Statistical Areas (MSAs). In some cases the MSA prices may not coincide with data released by state and local Realtor® associations. Any discrepancy may be due to differences in geographic coverage, product mix, and timing. In the event of discrepancies, Realtors® are advised that for business purposes, local data from their association may be more relevant.

Data tables for MSA home prices (single family and condo) are posted at http://www.realtor.org/topics/metropolitan-median-area-prices-and-affordability/data. If insufficient data is reported for a MSA in particular quarter, it is listed as N/A. For areas not covered in the tables, please contact the local association of Realtors®.

1Areas are generally metropolitan statistical areas as defined by the U.S. Office of Management and Budget. NAR adheres to the OMB definitions, although in some areas an exact match is not possible from the available data. A list of counties included in MSA definitions is available at:  http://www.census.gov/population/estimates/metro-city/List4.txt (link is external).

Regional median home prices are from a separate sampling that includes rural areas and portions of some smaller metros that are not included in this report; the regional percentage changes do not necessarily parallel changes in the larger metro areas. The only valid comparisons for median prices are with the same period a year earlier due to seasonality in buying patterns. Quarter-to-quarter comparisons do not compensate for seasonal changes, especially for the timing of family buying patterns.

Median price measurement reflects the types of homes that are selling during the quarter and can be skewed at times by changes in the sales mix. For example, changes in the level of distressed sales, which are heavily discounted, can vary notably in given markets and may affect percentage comparisons. Annual price measures generally smooth out any quarterly swings.

NAR began tracking of metropolitan area median single-family home prices in 1979; the metro area condo price series dates back to 1989.

Because there is a concentration of condos in high-cost metro areas, the national median condo price often is higher than the median single-family price. In a given market area, condos typically cost less than single-family homes. As the reporting sample expands in the future, additional areas will be included in the condo price report.

2According to NAR’s Realtors® Confidence Index, homes typically went under contract in 28 days during the second quarter.

3The seasonally adjusted annual rate for a particular quarter represents what the total number of actual sales for a year would be if the relative sales pace for that quarter was maintained for four consecutive quarters. Total home sales include single family, townhomes, condominiums and co-operative housing.

4Total inventory and month’s supply data are available back through 1999, while single-family inventory and month’s supply are available back to 1982 (prior to 1999, single-family sales accounted for more than 90 percent of transactions and condos were measured only on a quarterly basis).

Seasonally adjusted rates are used in reporting quarterly data to factor out seasonal variations in resale activity. For example, sales volume normally is higher in the summer and relatively light in winter, primarily because of differences in the weather and household buying patterns.

5Income figures are rounded to the nearest hundred, based on NAR modeling of Census data. Qualifying income requirements are determined using several scenarios on downpayment percentages and assume 25 percent of gross income devoted to mortgage principal and interest at a mortgage interest rate of 4.0%.

“Copyright National Association of REALTORS®. Reprinted with permission.”

 

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Loan Demand Gets a Lift From Rate Drop

Daily Real Estate News | Wednesday, August 09, 2017

Interest rates dropped last week, giving homeowners and home buyers more incentive to lock in a lower rate as they apply for a mortgage. Total mortgage application activity for home buying and refinancing rose 3 percent on a seasonally adjusted basis compared to the previous week, the Mortgage Bankers Association reported Wednesday. Applications, however, are still down by 25 percent from a year ago.

Refinance applications saw the most activity last week, increasing 5 percent week over week. Still, refinance applications are down 44 percent from a year ago when mortgage rates were lower.

“Mortgage rates decreased last week, which led to the highest volume of refinance applications since mid-June,” says MBA chief economist Mike Fratantoni.

The 30-year fixed-rate mortgage averaged 4.14 percent last week, down from 4.17 percent the week prior, the MBA reports.

Meanwhile, mortgage applications for purchasing a home saw a 1 percent increase compared to the previous week.

“With rates trading in a narrow range, the purchase market continues to show strength, with application volume running about 7 percent ahead of last year,” Fratantoni says.

Source: “Drop in Rates Boosts Weekly Mortgage Applications 3 Percent,” CNBC (Aug. 9, 2017)

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Mortgage Rates Aren’t Budging

Daily Real Estate News | Friday, August 04, 2017

Mortgage rates have mostly held steady the past few weeks, with the 30-year fixed-rate loan still averaging below 4 percent.

“The 10-year Treasury yield was relatively flat this week, as was the 30-year mortgage rate, which rose 1 basis point to 3.93 percent,” says Sean Becketti, Freddie Mac’s chief economist. “Despite a strong advance estimate for second-quarter GDP, markets are erring on the side of caution.”

Freddie Mac reports the following national averages with mortgage rates for the week ending Aug. 3:

  • 30-year fixed-rate mortgages: averaged 3.93 percent, with an average 0.5 point, rising from a 3.92 percent average. Last year at this time, 30-year rates averaged 3.43 percent.
  • 15-year fixed-rate mortgages: averaged 3.18 percent, with an average 0.5 point, dropping from last week’s 3.20 percent average. A year ago, 15-year rates averaged 2.74 percent.
  • 5-year hybrid adjustable-rate mortgages: averaged 3.15 percent, with an average 0.5 point, falling from last week’s 3.18 percent average. A year ago, 5-year ARMs averaged 2.73 percent.

Source: Freddie Mac

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Sellers Net Highest Profit in a Decade

Daily Real Estate News | Monday, July 31, 2017

Home sellers in the second quarter of this year sold their properties for an average $51,000 more than they paid for them when they bought them. That’s the highest price gain for sellers since the second quarter of 2007, when it was $57,000, according to a new report by real estate data form ATTOM Data Solutions. This represents an average return on investment of 26 percent.

The sellers had owned their homes an average of eight years, which is the longest tenure of homeownership since the first quarter of 2000, when ATTOM Data Solutions began tracking such data. However, “potential home sellers in today’s market are caught in a Catch-22,” says Daren Blomquist, senior vice president at ATTOM Data Solutions. “While it’s the most profitable time to sell in a decade, it’s also extremely difficult to find another home to purchase, which is helping to keep homeowners in their homes longer before selling. And the market is becoming even more competitive, with the share of cash buyers in the second quarter increasing annually for the first time in four years.”

Out of 118 metro areas with at least 1,000 homes sales in the second quarter, ATTOM Data Solutions found that these cities had the highest percentage of sales in which sellers got top dollar:

  • San Jose, Calif.: 75%
  • San Francisco: 65%
  • Seattle: 63%
  • Modesto, Calif.: 62%
  • Denver: 62%
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Fed Votes to Leave Key Rate Alone

Daily Real Estate News | Thursday, July 27, 2017

The Federal Reserve said on Wednesday that it will hold off on making any increases to its short-term interest rate, at least for a while longer. The Federal Open Market Committee voted to keep the federal funds rate at its current range between 1 percent and 1.25 percent.

“In view of realized and expected labor market conditions and inflation, the Committee decided to maintain the target range for the federal funds rate at 1 to 1 1/4 percent,” the committee said in a statement on Wednesday. “The stance of monetary policy remains accommodative, thereby supporting some further strengthening in labor market conditions and a sustained return to 2 percent inflation.”

Fed Chair Janet Yellen recently indicated to Congress that Fed officials will continue to closely monitor inflation and hinted at a third rate hike sometime this year. Yellen has said that the Fed will continue to use its short-term rate as its main tool for controlling inflation or stimulating the economy.

“The Committee continues to expect that, with gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace, and labor market conditions will strengthen somewhat further,” the committee released in a statement on Wednesday.

The Fed has raised its benchmark rate so far twice this year (in March and June).

Mortgage rates aren’t directly tied to the Fed’s short-term interest rates but they do tend to follow them.

Source: “Fed Elects to Hold Off On Interest Rate Hike,” HousingWire (July 26, 2017) and “Fed Stands Pat on Rates, Signals Sept. Cut in $4.5T Balance Sheet,” USA Today (July 26, 2017)

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