Feeds:
Posts
Comments

Archive for May, 2017

Source: New York Times

The median amount of time homeowners live in their home rose to about eight and a half years in 2016, the longest tenure since Moody’s Analytics and First American Financial Corporation began tracking such data in 2000. Mortgage rates may be the reason owners refuse to move, which is keeping inventory stubbornly low. And economists predict homeowners will continue to lengthen their stay in a home through the next decade.

Many homeowners refinanced their mortgages in recent years when interest rates were at historic lows—around 3.25 percent for a 30-year fixed-rate mortgage. Now that interest rates have increased, mortgage payments would jump significantly for homeowners, even if they find a similar home for the same price. For example, a $500,000 30-year fixed-rate mortgage for $500,000 with an interest rate of 5.5 percent would increase a monthly payment from $700 to $3,600, including estimated taxes and fees.

Advertisements

Read Full Post »

After increasing and leveling off in recent years, new single-family home size continued along a general trend of decreasing size during the start of 2017. This change marks a reversal of the trend that had been in place as builders focused on the higher end of the market during the recovery. As the entry-level market expands, including growth for townhouses, typical new home size is expected to decline.

According to first quarter 2017 data from the Census Quarterly Starts and Completions by Purpose and Design and NAHB analysis, median single-family square floor area was slightly lower at 2,389 square feet. Average (mean) square footage for new single-family homes declined to 2,628 square feet.

Since cycle lows, the average size of new single-family homes is 10 percent bigger at 2,624 square feet, while the median size is 14 percent bigger at 2,402 square feet.

Read Full Post »

Source: Market Watch

Homeownership’s biggest barrier to entry, the down payment, looms larger and larger all across the country. Student debt payments and high rents are formidable barriers to saving, and, while there are plenty of ways to buy a home with less than 20 percent down, all require some form of mortgage insurance, making them more expensive.

Some companies now are offering buyers money for a down payment in exchange for a share of equity in the home, to be paid back when the owner sells.

One company contributes up to 50 percent of the down payment, or 10 percent of the total cost of the home, and, then, when the owner sells, the company takes a share of the profit, usually 35 percent — or a share of the loss, also usually 35 percent.

Because the companies make money only when a home is sold, assumptions about lofty price gains must be met. (It’s also possible to buy out the equity stake before selling, according to the terms of the agreement between the company and the borrower.)

There are additional considerations that may apply to a mortgage on a home with an equity stake that aren’t an issue for most homeowners.

It’s also difficult to know how the shared equity relationship will withstand the normal milestones that make homeownership challenging enough with just one owner. One company notes that if a property has not been “properly maintained” at the time of sale, it may use a third-party appraiser or inspector to assess how much of the lost value is due to improper upkeep in order to allocate that lost appreciation to the homeowner, not the company.
Experts say borrowers may want to tread lightly with equity-sharing schemes

Read Full Post »

Housing inventory continues to drop amid tight credit and a growing tendency toward becoming a landlord.
The number of homes for sale in America has been falling steadily for the past year, but the situation is apparently getting much worse as spring demand heats up.

“The inventory is reaching historic lows. It’s never declined faster than it did last month. It’s freaking us out — it’s affecting our business; it’s limiting our sales,” said Glenn Kelman, CEO of Seattle-based Redfin, a real estate firm. “We’re going to be fine in terms of market share, but I think the overall industry for the first time is seeing sales volume really limited by the inventory crunch.”

Kelman considers Redfin more as a technology company and touts his ability to track closely the more than 80 metropolitan markets it covers. He blames the lack of inventory on a new dynamic in housing.

“It’s a new landlord nation where everybody is renting out their basement. When somebody moves up they don’t sell their old place, they rent it out to somebody else, and it’s because they want to keep that 30-year mortgage for 30 years, and it’s because they can easily find somebody on Airbnb who will take the place,” Kelman said.

Homes in April sold the fastest since Redfin began tracking the market in 2010. The typical home went under contract in just 40 days, 10 days faster than April 2016. As a result, 1 in 4 homes sold above their list price, which is the highest percentage Redfin has recorded.

Home prices continue to move higher as well, but, “It’s not a bubble,” said Kelman emphatically, who cites tight credit as keeping the bubble at bay.

Inventory of homes for sale fell about 7 percent nationally in March, compared with a year ago, according to the National Association of Realtors. Like most, Kelman blames the problem on a lack of new construction. On the single-family side, homebuilders are still putting up 18 percent fewer homes than the 25-year average.

“Cranes fill the sky in every town, but they’re building office buildings,” he said, noting that while employment is going up, there’s no commensurate increase in the number of houses. In fact, he added, when people do construct housing, they’re opting to build apartment complexes because tight credit is keeping many would-be buyers out of the market. “There is so much demand in terms of rent that it doesn’t make sense to build properties for sale.”

Read Full Post »

With warmer weather and longer days on the horizon, now is the perfect time to get your yard in shape for summer. Keep this year’s top five landscaping trends (according to the National Association of Landscape Professionals) in mind as you get started.

1. Going green (the color)

Combine different textures and shades of green for a more dramatic lawn. Think of mixing leaves of different size and shape as well as plants with a variety of verdant hues.

2. Going green (the earth-friendly strategy)

More sustainable landscape designs have been becoming more popular over the past few years. Why? They’re better for the planet and can reduce maintenance costs. For example, more homeowners are planting “smart” lawns – varieties of grass bred to stay green with less water.

3. Giving bees a chance

With bee populations in trouble, people are actually starting to welcome the stingers in their yard by planting native plants that provide the nectar they feast on. The efforts to save vital pollinators is another sign of consumers seeking more green, sustainable practices for their yards.

4. Going Danish

The Danish concept of hygge is about creating an atmosphere of coziness by embracing life’s simple pleasures. How do you implement hygge in your yard? Add features that promote mindfulness, such as water fountains or aromatic flowers, and arrange seating in a way that encourages conversation. And don’t forget to include spaces that inspire play – for kids and adults. The experts at Gardendesign.com note an uptick in requests for things like bocce courts, fireplaces and hammocks, features to help home owners relax and play outdoors.

Read Full Post »

Americans say now is a good time to buy

Many consumers grew more optimistic about the housing in April, rebounding from March’s dip in confidence, according to the Fannie Mae Home Purchase Sentiment Index.

The index increased 2.2 percentage points in April to 86.7, and five of the six components saw an increase.

Americans who said now is a good time to sell a home was the only component to decrease, dropping five percentage points to 26%, however those who said now is a good time to buy a home increased five percentage points to 35%.

Consumers were also more optimistic about the stability of their jobs, with that component increasing by seven percentage points to 77%. Respondents who reported a household income that’s significantly higher than 12 months ago increased by two percentage points to 13%.

Americans who said mortgage rates will go down over the next 12 months rose by three percentage points to -57% and the share of those who say home prices will increase jumped one percentage point to 45% in April.

“The Home Purchase Sentiment Index returned to its longer-term trend line after reclaiming ground lost last month,” said Doug Duncan, Fannie Mae senior vice president and chief economist. “This is aligned with our market forecast of about 3% sales growth in 2017.”

“Historically strong inflation-adjusted house price gains are tempering consumer sentiment, whereas consumer optimism regarding the ease of getting a mortgage reached a survey high,” Duncan said. “On balance, housing continues on a gradual growth track.”

Read Full Post »

HAL M. BUNDRICK, CFP

If you’re looking for a mortgage, there’s one less reason to walk into a bank these days. Alternative mortgage lenders — non-bank companies without customer deposits — are transforming the mortgage industry. Their goal: to offer mortgage rate transparency and help you complete the home loan process quickly, efficiently and mostly (if not completely) online.

The biggest banks, once major players in the $1.5 trillion mortgage industry, have backed away from a large portion of the business, citing low profit margins and high legal risks. It’s a result of the enhanced regulatory environment that followed the 2008 housing meltdown.

A number of new players jumped into the void — alternative lenders testing new business models and leveraging technology to improve the process of getting a home loan or mortgage refinance:

Marketplaces and brokers assist potential borrowers shopping for mortgages and the best mortgage rates.
Online mortgage lenders seek to shorten the home loan process.
Non-bank lenders offer solutions to credit-challenged consumers.
But the structure and capabilities of these alternative lenders vary widely. Here’s how to navigate the field.

The easiest way for tech startups to enter the mortgage market is by serving as a middleman. So that’s what you’ll encounter most in your search for an online mortgage.

Mortgage marketplaces, like LendingTree, Mortgage Hippo, Zillow and eLoan, are lead generators for loan originators. Here’s how that works: Their mortgage rate algorithms take your basic application info and present you a roster of potential lenders. You choose one, or several, of the rate options, and the referring marketplace site receives a fee for the lead. You then complete the process with the lender.

Online mortgage brokers offer another twist on the process. Companies like Sindeo provide a concierge service, with advisors guiding you through the home loan selection process. It’s more of a hands-on process, in which the broker works closely with you and the lender to complete your loan package.

Online alternative mortgage lenders streamline the process
Alternative lenders are online mortgage originators that are becoming more of a force in the industry. In fact, the largest of them, Quicken Loans, has become one of the largest mortgage lenders in the country. And the company is looking to become even more entrenched with its recent introduction of a “Rocket Mortgage” service, promising full mortgage or refinance approvals online in as little as eight minutes.

That kind of near real-time approval is an example of how radically the mortgage process is changing. Next-gen lenders strip away layers of delays built into the old system by using automated loan-decision algorithms, electronic document gathering and secure online communications.

Seeing an opportunity to shave off a sliver of the monumental home loan market, new players are making a move to mortgages. Online student-loan refinance service SoFi now offers mortgage loans. And in just five years, Loan Depot has grown to 5,000 employees, offering mortgages as well as consumer loans to residents in all 50 states.

Another example is Lenda, a recent addition to the home loan landscape, which so far serves only a limited number of states but is a direct online lender offering purchase and refinance loans.

Non-bank alternative lenders cater to those with less-than-perfect credit
In some ways, the mortgage industry is coming full circle, back to where it started. Wells Fargo, JPMorgan Chase, Bank of America and other huge lenders — battered by Justice Department fines, federal lawsuits and growing regulation as a result of the housing crisis — are shying away from mortgage lending, especially FHA loans, which have long catered to first-time homebuyers and borrowers with lower credit scores. As more of the large, national banks move to lending only to the most-qualified borrowers, community home lenders are filling the void.

Non-bank lenders are much like the original mortgage bankers; many are locally owned and family-run businesses serving their hometowns. These smaller lenders often face fewer federal regulations and still welcome borrowers with less-than-perfect credit, and they have bolstered the FHA-backed lending that big banks have been avoiding.

Credit unions also play a growing role. They originated more than 8% of U.S. mortgages in 2015, nearly double their amount in 2010, according to the CUNA Mutual Group.

There are non-bank mortgage lenders with national footprints, such as PennyMac, but just like their local counterparts, they are built more for phone and face-to-face transactions than for a strictly online loan process.

Alternative mortgage lenders now account for almost half (45%) of all home loans, according to the Federal Reserve — the largest share in 20 years. These originators are transforming the mortgage loan process with faster approvals plus online application and document processing, and they are powering a more competitive market.

But getting a mortgage online is not always strictly a keyboard- or smartphone-only transaction. While the paperwork process is moving more and more to e-documents, with some online services you’ll still have to visit a closing attorney or notary to finalize the loan.

Choosing whether to go with a mortgage middleman or a direct lender is a personal choice, based on your comfort and familiarity with the home loan process and how much guidance and advice you prefer.

But it’s empowering to know that when it comes to financing a home, you have more options than ever.

Read Full Post »

Older Posts »