Monday, May 23, 2016
Monday, January 11, 2016
Tuesday, November 10, 2015
Why Buyers Need to Buy That New Home Now
Your client has decided on new-home construction, but they're dragging their feet. Need to give them extra motivation to get that contract signed this fall or winter?
“Fall and winter are a great time to start working with a builder and do much of the upfront planning and legwork that goes into a new-construction home,” says Brian Brunhofer, president of Meritus Homes. “Plus, there are some definite advantages to beginning that process before the end of the year that buyers might not be aware of.”
Read more: Build or Buy?
BUILDER online recently highlighted some of those advantages, including:
1. Low interest rates: The 30-year fixed-rate mortgage is still under a 4 percent average, according to Freddie Mac. But most economists are predicting that interest rates will soon be on the rise, and when rates do rise that will deflate buyers’ purchasing power.
2. Buffering in more time: Many buyers fail to take into account the length of the permitting and approval process, which has to take place before the actual construction. “The reality is that after a buyer signs a contract with us, it takes anywhere from 60 to 90 days to get architectural plans submitted and permits approved before we actually start construction,” Brunhofer says. “Buyers who begin that process in the fall or winter can relax knowing they have plenty of time to get all those details taken care of and be 100 percent ready to roll when the early spring construction season starts. And if we have a mild enough winter, we might be able to get a jump on construction for them even earlier in the year.”
3. Taking advantage of the financial benefits: Before the end of the calendar year, builders will have secured their 2016 contract prices for labor and building materials. As such, they’ll adjust their home prices to reflect any increased costs. Buyers who decide to sign a contract with a builder this fall rather than waiting until next spring may see some cost savings by taking advantage of 2015 pricing.
4. Timing the market right: Many families prefer to be able to move into their new-home prior to the beginning of a school year. Buyers who work with builders in the fall and winter will likely be ready to move into their new home by next summer. “Buyers should expect anywhere from five to six months of actual construction time,” Brunhofer says. “That means if we get all the upfront approvals and permitting taken care of during the fall and early winter, we’ll start work the minute the ground thaws and we’ll be wrapped up in time for a summer move-in date.” Also, for buyers with an existing home to sell, they will be able to sell their current home then during the spring time, which is traditionally a busier housing market.
Source: “Give Customers Four Reasons to Buy Now,” BUILDER (Sept. 30, 2015)
Wednesday, June 24, 2015
Slight Drop in Rates Pushes Loan Demand Up
A drop in mortgage rates last week helped to push mortgage applications higher, the Mortgage Bankers Association reports. Total applications – for both refinancing and home purchases – increased 1.6 percent week-to-week on a seasonally adjusted basis for the week ending June 19. Overall volume is nearly 11 percent higher than one year ago.
Broken out, refinance applications increased 2 percent last week and are up about 4 percent from a year ago, MBA reports. Meanwhile, applications for home purchases—viewed as a strong indicator of future home buying activity—rose 1 percent from the previous week, and are 18 percent higher than they were a year ago.
"The 18 percent [annual] gain in purchase application volume is yet another sign of growing strength in the housing market following this week's stronger numbers on new and existing home sales," says Michael Fratantoni, MBA’s chief economist.
Mortgage rates offered a slight relief to borrowers last week. MBA reports the average 30-year fixed-rate mortgage last week dropped to 4.19 percent; it was averaging 4.22 percent the week prior. But the drop was likely short-lived and there were signs of lenders moving rates higher Tuesday, CNBC reports.
Source: “Weekly Mortgage Applications Rise 1.6%,” CNBC.com (June 24, 2015)
Thursday, June 18, 2015
Developing Affordable Housing for Millennials
Cities across the country are having to adapt to the needs of the millennial generation, who make up the largest share of home buyers, according to a generational trends report by NAR. Due to the recent economic climate, millennials don't mind making sacrifices, often choosing compact housing and not owning a car, as long as they can live in a vibrant city with a lot of perks.
Read more: The 8 Fastest-Growing Cities for Millennials
"They [millennials] seem more willing than other cohorts to trade space for access to transit and a walkable, mixed-use lifestyle," says Stockton Williams, executive director of the Urban Land Institute's Terwilliger Center for Housing in Washington, D.C. "It doesn't necessarily mean they're all saying they want to live in downtown central cities. It can be smaller towns or suburban towns that have these features."
To meet the need for affordable housing options, many cities are being proactive. In Austin, Texas, which is a hotspot for young professionals, builders are catering to millennials by offering homes that are much smaller than the national average and close to public transportation and local attractions.
"The demand for the smaller homes was enormous, and millennials bought them," says REALTOR® Scott Turner, owner of Riverside Homes in Austin, Texas and broker-owner of Turner Residential. "Millennials are much more willing to make the location-over-space trade-off than prior generations. They're happy with less space and less stuff. We found that 850 square feet with two bedrooms and one bath is fine if it’s in a good location."
Housing affordability remains a huge issue in Manhattan, and builders are going a step further by offering up micro housing as a solution. Micro housing is loosely defined as an apartment less than 350 square feet with a functioning and accessibility compliant kitchen and bathroom. Micro housing projects are also cropping up near Washington D.C. and Seattle.
"In places like Seattle, more micro housing units are popping up, and that does seem to be a viable option," says says Matt Kelly, a policy analyst and researcher at Florida State University in Tallahassee. "Smaller and smaller square footage seems to be viable for short-term year apartment leases because there needs to be a low-income housing alternative."
In the past, many cities had zoning regulations that banned small housing. New York City, for example, only recently waived a requirement that housing must be larger than 400 square feet. San Francisco recently allowed housing as small as 220 square feet, and two cities on the forefront of the micro housing trend, Seattle and Portland, have no minimum size requirement.
As housing affordability is outpacing income growth for many across the country, it continue to be important for cities to think out of the box and develop accessible and affordable options, not just for millennials, but for everyone.
Source: "Reducing Everyday Costs for Affordable Neighborhoods," On Common Ground (June, 2015)
Thursday, June 11, 2015
Why Renters May Be Losing Out
Americans are better off buying than renting in the majority of places across the U.S., but the number of renters continues to be at record highs.
Realtor.com® finds that it's cheaper to buy rather than rent in 80 percent of the counties in the U.S. That's because renters continue to face sharp price increases. A record number of renting households are leading to fewer apartment vacancies, which in turn is continuing to push rents upward, notes Jonathan Smoke, realtor.com®'s chief economist, in recent commentary at realtor.com®.
But many renters – with home ownership aspirations – are struggling to break into the housing market. Indeed, 81 percent of renters indicate they would prefer to own a home if they could afford to do so, according to the Federal Reserve's Survey of Household Economics and Decisionmaking. Fifty percent of renters reported that they lack the funds for a down payment and 31 percent of renters say they could not qualify for a mortgage. Other reasons given for renting included 27 percent of renters saying it was cheaper for their household; 25 percent who thought renting was more convenient; and only 12 percent said they rented because they preferred it over owning.
Read more: Renter, Home Owner Gap Grows
The amount of income renters may have influenced their responses for why they choose to rent. For example, for renters earning less than $40,000 year, their top responses on why they rent were because they were unable to save for a down payment (52%) or qualify for a mortgage (35%). On the other hand, for renters who earn more than $100,000 a year, their top responses for renting were because they believed renting was more convenient (39%) or they preferred renting to owning (17%). Twenty-nine percent in the $100,000 and up earner group said they plan on moving in the near term.
Source: "Federal Reserve Report on Household Economic Well-Being," National Association of Home Builders Eye on Housing Blog (June 10, 2015) and "Midyear Report: The Housing Market Is on Track for Its Best Year Since 2006 (and it Ain’t a Bubble," realtor.com® (June 10, 2015)
Wednesday, June 10, 2015
The Most Common Delays Toward Closing
The majority of contracts – 64 percent -- are settled on time with no delays to closing, but some REALTORS® acknowledge facing delays or even having contracts terminated for numerous reasons, according to the latest REALTORS® Confidence Index Survey, a survey of more than 1,500 REALTORS®. Twenty-six percent of REALTORS® surveyed identified a delay to settlement, while 10 percent said they have even had a contract terminated prior to closing.
Read more: Don't Get Thrown by Doc Overhaul
About 60 percent of REALTORS® reported some type of issue on their contract in April. For example, 12 percent of REALTORS® identified a financing issue; 8 percent had home inspection problems surface; and 7 percent had an appraisal issue. Three percent of REALTORS® also identified issues buying/selling distressed property; titling and deed issues; or with contingencies stated in the contract.
"It is surprising that in a 'tight' and 'difficult' credit environment, only 12 percent of contracts that were reported to have settled or terminated had financing issues," economists at the National Association of REALTORS® report. "One explanation may be that potential home buyers are deciding to sit on the sidelines for now, so these buyers were not captured in the data."
Source:"64 Percent of Contracts Are Settled on Time," National Association of REALTORS® Economists' Outlook Blog (June 8, 2015)
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