Finance

9 Housing Trends To Expect Nationwide In 2019

 

It's hard to believe another year has come and gone so soon. As we're preparing to welcome 2019 there are some national real estate trends you should be aware of. The challenge of low inventory is likely to continue, however we're starting to see an uptick in builders constructing more entry-level homes which will be a great asset to first time buyers. 

Here are nine housing and mortgage trends to watch for in 2019.

1. ISO: More homes for sale

Real estate has been a seller’s market for more than six years, meaning that there are more would-be buyers than homes for sale, sliding the balance of negotiating power in sellers’ direction. It's looking like that will remain the case through 2019 as well. 

Now, while a seller's market isn't ideal for buyers, there is hope on the forecast as we expect to see more homes hit the market than we have in the past several years. 

Freddie Mac, a government-sponsored enterprise that provides capital to the mortgage market, estimates that 370,000 fewer homes were built in 2017 than were needed to satisfy demand resulting from population growth. “Until construction ramps up, housing costs will likely continue rising above income, constricting household formation and preventing homeownership for millions of potential households,” Freddie Mac concludes.

2. Home prices are expected to rise

This is great news for current homeowners, but may prove to be a challenge to buyers entering the market for the first time. Don't panic, though, prices are not expected to rise as dramatically as we've seen over the past several years.

“Home price appreciation will slow down — the days of easy price gains are coming to an end — but prices will continue to rise,” says Lawrence Yun, chief economist for the National Association of Realtors. NAR predicts that existing home prices will rise 2.5% in 2019, to a median of $265,200, compared with a 4.7% rise in 2018, to $258,700.

CoreLogic and Realtor.com also predict a slowdown in sale prices of existing homes in 2019.

Home price appreciation has slowed in 2018, says Frank Nothaft, chief economist for CoreLogic. “Rising prices and interest rates have reduced home buyer activity and led to a gradual slowing in appreciation,” he wrote in a market commentary.

3. Mortgage rates will rise

We've been extremely fortunate the last few years that interest rates have remained quite low, allowing many new buyers to purchase their first home relatively easily. From the beginning of 2018 to mid-December, 30-year fixed mortgage rates went up a little less than three-quarters of a percentage point, to around 4.75%. Forecasters expect mortgage rates to rise again in 2019 — but at a slower pace.

Freddie Mac expects the 30-year fixed mortgage rate to rise half a percentage point in 2019, and the National Association of Realtors predicts a rise of 0.4 percentage point. Fannie Mae’s forecast is for an increase of just 0.1 percentage point.

Keep in mind that these are predictions about where mortgage rates will end this year and end next year. In between, mortgage rates can bounce up and down.

4. Affordability 

As always, finding affordable housing is a concern for As home prices and mortgage rates rise in tandem, home buyers find it harder to afford homes. Nationwide, areas with lower inventory will of course see higher prices and more competitive markets. 

5. Smaller Homes

From a home buyer’s perspective, most markets need more houses for sale, and they need to be on the affordable end of the price scale. After all, many first-timers buy starter homes instead of forever homes, with prices below the area’s median. There are signs that home builders are responding by building smaller, more affordable homes.

“Continuing a multiyear trend, new single-family home size decreased during the third quarter of 2018,” wrote Robert Dietz, chief economist for the National Association of Home Builders, in a November blog post. “New home size has been falling over the last three years due to an incremental move to additional entry-level home construction.”

According to the U.S. Census Bureau, the median size of single-family homes started in the third quarter of 2018 was 2,320 square feet. That’s 4.9% smaller than the median size of new homes three years earlier, at 2,440 square feet.

Hopper says Navy Federal’s members typically shop for homes costing less than $300,000 — and they like to buy new homes. He says he’s encouraged that builders are focusing on these customers.

“I think for many years, the builders were focused on that $500,000-and-up market because the margins were healthier,” he says. “But they’re starting to find now that there’s so much pent-up demand in the lower-end-priced market that they can sustainably offer communities and new construction, and we’ve seen a lot of growth in that space.”

Year-over-year median prices for new homes began decelerating in spring 2018. At $309,700, the median price of a new home in October was 3.1% lower than the median new-home price 12 months earlier. But Fannie Mae and NAR predict that new-home prices will rise in 2019.

6. First-time buyers dominate

The mortgage and real estate industries are focused on serving first-time home buyers, and for good reason: “First-timers have dominated the mortgage market for the past 10 years, and their share today is still high," according to an Urban Institute report published this summer, which adds: “We don’t see this changing anytime soon."


Before the housing crisis, first-time home buyers took out about 40% of purchase mortgages, according to the institute. Lately the first-timer share has been about 60%.

Tian Liu, chief economist for Genworth Mortgage Insurance, says 80% of the growth in home sales in the past three years has come from first-time buyers, and the reason is simple: They represent years of pent-up demand.

“Between 2007 and 2015, our estimate is that roughly 3 million first-time home buyers delayed buying a home, and they’re reaching that age when they can no longer delay,” Liu says. “Their housing needs are really catching up with them. It doesn’t feel right to be raising a family in a rental apartment. They want to own their place. So I think those drivers will be very significant for the next few years.”

7. Lending standards ease a little

Mortgage lenders learned an enduring lesson in the housing crisis a decade ago: Make sure borrowers can repay their loans. So lenders tightened mortgage standards, partly on their own and partly in response to a regulatory crackdown on risky mortgages. These changes made it harder to get a home loan.

The Urban Institute’s Housing Finance Policy Center has argued that lenders overcorrected after lending too freely in the two or three years preceding the financial crisis of 2008.

There is evidence that lenders agree. Gradually, they have been relaxing lending standards.

“Not drastically, but looser than it was a year ago,” says Matt Hackett, operations manager for Equity Now, a mortgage lender in New York City. “It’s not a floodgate scenario where people just start changing guidelines drastically.”

He says he has observed that the relaxed standards come in the form of reduced documentation requirements, lower credit scores and bigger loan-to-value ratios (smaller down payments, basically).

Mortgage data provider Ellie Mae shows that the relaxation of credit standards indeed has been gradual. Average credit scores for home purchases slipped a bit in October (the latest data available) compared with 12 months earlier. Debt-to-income ratios, which measure borrowers’ debt loads, nudged upward over the same period. That means they have higher debt and less flexibility to withstand financial emergencies.

8. More borrowers choose ARMs

It’s almost as predictable as May flowers following April showers: Whenever rates on fixed-rate mortgages go up, you’ll see more borrowers opting for adjustable-rate mortgages. It happened in 2018 and it could continue into 2019.

Borrowers choose ARMs because the initial rates on adjustables are lower than the rates on fixed-rate mortgages. This gives borrowers lower monthly payments in the first few years. ARM borrowers take the risk that their rates and monthly payments could climb when the rate-adjustment period begins.

More borrowers have been accepting the risk. In October, 8.2% of mortgages were ARMs, according to Ellie Mae; 12 months earlier, ARMs had a 5.5% share of mortgages.

Rising rates on fixed-rate mortgages aren’t the only reason for adopting ARMs. Adjustables are most popular in the highest-priced housing markets, such as San Jose, according to CoreLogic.

Taking out an ARM as rates rise, like now, could be a bad idea because borrowers might face higher mortgage payments once the annual loan adjustments kick in.


But getting an ARM can be a good strategy for borrowers who don’t plan to overstay the initial interest rate. A 3/1 ARM, for example, has a lower introductory rate that lasts three years and then adjusts annually afterward. Someone getting, say, a 5/1 ARM is betting that they’ll refinance or sell the home within five years or so, before the rate potentially adjusts upward.

9. Overconfident sellers could struggle

As mentioned before, 2019 will remain a seller’s market, where would-be buyers outnumber the supply of homes they can afford. But that doesn’t mean home sellers can expect bidding wars from desperate buyers.


That’s especially the case with people who are selling homes that are priced above the median for their local market, Realtor.com economist Hale says. First-time buyers dominate most markets, and they tend to shop for homes priced below the median. As a seller, Hale says, “if you’re in that above-median price point, you’re going to have to price competitively and offer incentives for buyers.”

Hale adds: “Surprisingly, it’s going to be more difficult for buyers and sellers in 2019.” Especially for buyers looking for less expensive homes and sellers selling more expensive ones.

 

More information Here. 

Are you financially ready to buy your first home? Let's find out!

 

 

 

If you're wondering whether you're ready to stop renting and purchase your first home, we are here to help!

With current interest rates still being low, and the cost of rent in our area increasing year over year, now might be the ideal time for you to take the plunge into homeownership. Some might wonder if it makes sense to purchase a house before they are married and have a family, others might think they are too young, and still, others might think their current income would never enable them to qualify for a mortgage. Not to worry, we are here to help you navigate those questions, and any others that may arise. 

We want to share what the typical first-time homebuyer actually looks like based on the National Association of REALTORS most recent Profile of Home Buyers & Sellers. Here are some interesting revelations on the first-time buyer:

Bottom Line

You very well may be ready to purchase your first home, and start building equity! Every situation is unique, and we are always available to answer questions for you.

8 Costly Home Selling Mistakes To Avoid

The housing market is on an upswing as spring ushers in a new batch of homes for sale. Before you list your property for sale, take a look at this list and avoid these common pitfalls. 

 

1. SELLING YOUR HOME ALONE. 

There are a plethora of details involved in selling a property...there's a reason Real Estate Professionals are licensed! Trying to navigate the complexities on your own is a recipe for disaster. The facts don't lie; homes listed without licensed representation spend more time on the market and sell for less. Save yourself the stress, and get every penny you can for your home...enlist professional help.

2. MISPRICING YOUR HOME.

Finding the correct asking price without overpricing or underpricing your home is crucial. You want to attract potential buyers without selling yourself short. Your agent will go over comparable homes in the area that are currently on the market, as well as ones that have recently sold, to help set the ideal price for your home. 

3. NEGLECTING NECESSARY REPAIRS.

Take care of repairs before potential buyers have the chance to notice them. If you wait, you run the risk of recieving lower offers, or having buyers ask for credits to complete the repairs before closing. Your home will be more attractive if buyers don't see it as a project. Your realtor can assist you in pointing out any potential problems and giving you contact information for specialists to assist.

4. NOT KEEPING YOUR HOME IN "SHOW" CONDITION.

Buyers want to picture themselves living in your home and unfortunatley, your family photos and knicknacks take that ability away. Pack up anything that creates clutter to create more open space in your home. You want buyers to think back and remember what your home looked like, not the pile of dirty laundry or the dishes in the sink.

5. LISTING A VACANT HOUSE.

While your space shouldn't be cluttered, it also shouldn't be completely bare. If you've already moved, consider leaving a few pieces of furniture behind to set the stage of how the home could look. 

6. LETTING YOUR EGO GET IN THE WAY.

When it comes to negotiating, keep your head in the game. Buyers will most likely try to bargain...do not take it personally. Remember, this is a business transaction and both parties are looking for the best possible outcome. Look for a win-win scenario.

7. NOT DISCLOSING EVERYTHING.

Many sellers have lost big money by not being forthcoming about all property imperfections. Being upfront with potential issues will prevent many potential issues that could arise later in the transaction. You don't want a deal to fall apart at the last minute because of something simple that could have been taken care of early on.

8. USING SUB PAR LISTING PHOTOS.

Too many listings are uploaded with dark, crooked, blurry or otherwise unappealing listing photos. With over 90% of buyers beginning their home search online, it is CRITICAL that your home looks picture perfect on the web. You and your agent need to work together to take the best listing photos possible; as a seller, make sure to have your home spotless and neat before photos are taken. Take a look at your agent's current listing photos and examine the quality. If you have concerns, bring them to your agent's attention! Showcasing your home in the best possible light is of the utmost importance. 

Home Buyers Series: How To Avoid Paying Too Much Vol. 5

 

Shop with your head, not with your heart.

What type of home is right for you? This is one question you need to begin answering before you step foot into a home for sale.

Remember the 'Wants' and 'Needs' list you made a few weeks back? It's time to pull that back out and look at it after each home you visit. Check off what items the home fulfills and soon enough you'll find the most logical choice. Be sure to go over this list with your agent as well - the unbiased feedback from a third party can often times help resolve uncertainties. As you begin looking for homes, don't forget the purpose of your list. Shopping for a home is an emotional process. Following your heart will cost you money; using your head will save it.

Home Buyers Series: How To Avoid Paying Too Much Vol. 2

 

Shop for a mortgage before you shop for a home.

 

Being pre-approved for a home loan before hitting the market is the smart way to shop for a home. It tells sellers that you're a serious prospect, and you know in advance the maximum mortgage you can afford. Make sure you get a commitment in writing. Many buyers make the mistake of learning what they qualify for without getting a written pre-approval letter from their lender. The good news is that it's easier than ever to qualify for a home loan, and there are many good loans to choose from. Visit our Concierge Page for a list of respected mortgage lenders in our area who would be happy to get you started.

Home Buyers Series: How To Avoid Paying Too Much Vol. 1

Needs V Wants

Know what you're shopping for before you start.

Before you begin shopping for your next home, you should understand that there are two homes out there vying for your interest--the one that meets your needs and the one that fulfills your 'wants'. Ideally, you'd find a home that satisfies both. But, in reality you're going to find yourself confronted with choices. Do you choose the three-bedroom home with room for your family to grow, or the one with the big backyard and deck that's perfect for entertaining? Is having a big kitchen more important to you than a few extra rooms?

When you start shopping, you're going to find homes you fall in love with for different reasons. That's why you should list the features you want before you start shopping. Make a list with two categories--"Needs" and "Wants"--and prioritize the items you come up with. Understanding what you really need as opposed to what you'd like to have will help you keep your priorities straight as you shop around.

Don't let emotions cloud your judgment. Satisfy your needs first. If you find a home that meets your needs and fulfills some of your desires, great! Jump on it. The important thing is to know the difference before you get caught up in the excitement of the hunt.

VA Loans Provide Accessible Financing For Veterans

 

If you are a Veteran, you should know about the special mortgage benefits available to you through the VA Financing Program. Take advantage of this program! It's designed to make purchasing a home as affordable, and accessible as possible.

Here are the four biggest benefits of financing with a VA loan:

1. No Down Payment! This is HUGE, and certainly the defining benefit of the VA program. Instead of having to pony up the usual minimum down payment of 3.5-5% Veterans are given the opportunity to finance the entire cost of their home.

2. No Mortgage Insurance. Conventional borrowers who cannot afford at least a 20% down payment will be required to purchase mortgage insurance which can easily tack a couple hundred dollars onto their monthly mortgage payments. VA loans do not require mortgage insurance as they do not require a down payment. There is an upfront fee, however, that can be completely financed. If you were wounded during service that fee will be waived entirely.

3. Flexible Requirements. The VA program is designed to get Veterans into homes. With that in mind, normal requirements are suspended or made much more achievable. For example, a Veteran will receive full financing even with a credit score 100 points lower than what a normal borrower could get away with. Veterans can even secure financing if they have very recently gone through bankruptcy, foreclosure or a short sale. If you think you're situation puts you in too tough a spot to receive financing - think again! Please visit a lender to find out how they can help.

4. Closing Cost Limits. Unfortunately closing costs can never go away entirely, but the VA puts a cap on what Veterans are allowed to pay. They even make it possible for sellers to pay ALL of the buyers closing costs AND up to 4% of the loan amount in concessions. Keep that in mind when you and your Realtor negotiate the contract!

Thank you for your service. Visit our Concierge Page for a list of lenders we trust and work with regularly to help guide you through the mortgage process.

What A Buyers Agent Will Do For You

Whether you're an old hat at buying homes, or you're just starting the process, you've probably wondered at some point what an real estate agent could do for you. Of course, part of an agents job is to answer questions for you, but there is so much more to it than that. A seasoned professional will take the guesswork out of the process and the stress off of your shoulders.

When you work with Signature Properties, you can expect a higher level of personalized service.

Here are some of the many services we offer our home buyers:

  1. First off, a buyers agent will ask if you've been pre-qualified by a mortgage lender and what amount you are pre-approved to borrow. If you have not yet been pre-approved, an agent will be able to explain the process and point you in the right direction. See Why you need a pre-approval letter for more in depth information.
  2. Listening to your wants and needs, we will work to find the best matches currently on the market in your desired location and in your price range. A knowledgeable agent will be able to provide details on any property that you are interested in, or be willing to communicate with the listing agent to find out any information that is not readily available.
  3. Provide you honest feedback on homes that may seem appealing, but could pose potential problems (such as diminishing resale value).
  4. A buyers agent will help you place an informed offer and negotiate with the seller until you both agree to terms you are comfortable with, or advise you how to proceed if the deal does not come together. This is the time to ask your agent for perspective, as they've worked through hundreds (if not thousands) of contracts.
  5. You should expect advice when it comes to working with your mortgage lender and how the process will work.
  6. Your agent will be a liaison between you, the sellers, your attorney and your mortgage lender. They will be responsible for sharing the contract and any attached documents, as well as coordinating any necessary meetings and, when the time comes, your closing.
  7. You can expect your agent to assist in coordinating inspections and any testing on the property that may be needed. They will review the results of the tests and interpret them for you. If necessary, they will work with you to create a list of items that need to be corrected in order to keep the deal on track, and deliver that to the seller's agent.
  8. If there are documents, such as those from a Home Owners Association, your agent will review them and explain any important points to you.
  9. When the time comes, your agent will explain all closing documents, the amount you will need at closing and how the process works. Coordinating the closing is one of the biggest tasks of any transaction, and a well qualified agent will make sure that you are in the loop and under the least amount of stress possible.
  10. Possibly most importantly, a buyers agent will make themselves available to you at any time to answer questions, concerns and provide advice. They will work as your advocate to ensure you receive the best deal possible and make your transition into your new home as easy as can be.

Are you interested in buying a home? Please give one of our Signature Agents a call - we are more than happy to answer any and all questions, or just point you in the right direction!

 

Cost Vs. Value Study Finds Remodeling Really Pays Off

 

If you are considering a home improvement project to boost the quality and appeal of your  home, this list of top 10 midrange and upscale projects will give you the biggest return on your effort when it comes time to sell!

Top 10 Midrange Projects

1. Entry Door Replacement (steel) Job Cost: $1,162 Resale Value: $1,122 Cost Recouped: 96.6%

2. Deck Addition (wood) Job Cost: $9,539 Resale Value: $8,334 Cost Recouped: 87.4%

3. Attic Bedroom Job Cost: $49,438 Resale Value: $41,656 Cost Recouped: 84.3%

4. Garage Door Replacement Job Cost: $1,534 Resale Value: $1,283 Cost Recouped: 83.7%

5. Minor Kitchen Remodel Job Cost: $18,856 Resale Value: $15,585 Cost Recouped: 82.7%

6. Window Replacement (wood) Job Cost: $10,926 Resale Value: $8,662 Cost Recouped: 79.3%

7. Window Replacement (vinyl) Job Cost: $9,978 Resale Value: $7,857 Cost Recouped: 78.7%

8. Siding Replacement (vinyl) Job Cost: $11,475 Resale Value: $8,975 Cost Recouped: 78.2%

9. Basement Remodel Job Cost: $62,834 Resale Value: $48,777 Cost Recouped: 77.6%

10. Deck Addition (composite) Job Cost: $15,437 Resale Value: $11,476 Cost Recouped: 74.3%

Top 10 Upscale Projects

1. Siding Replacement (fiber-cement) Job Cost: $13,378 Resale Value: $11,645 Cost Recouped: 87.0%

2. Garage Door Replacement Job Cost: $2,791 Resale Value: $2,315 Cost Recouped: 82.9%

3. Siding Replacement (foam-backed vinyl) Job Cost: $14,236 Resale Value: $11,124 Cost Recouped: 78.1%

4. Window Replacement (vinyl) Job Cost: $13,385 Resale Value: $10,252 Cost Recouped: 76.6%

5. Window Replacement (wood) Job Cost: $16,798 Resale Value: $12,438 Cost Recouped: 74.0%

6. Grand Entrance (fiberglass) Job Cost: $7,305 Resale Value: $5,163 Cost Recouped: 70.7%

7. Deck Addition (composite) Job Cost: $35,158 Resale Value: $22,881 Cost Recouped: 65.1%

8. (tie) Bathroom Remodel Job Cost: $51,374 Resale Value: $32,660 Cost Recouped: 63.6%

(tie) Major Kitchen Remodel Job Cost: $109,935 Resale Value: $69,973 Cost Recouped: 63.6%

9. Roofing Replacement Job Cost: $34,495 Resale Value: $21,731 Cost Recouped: 63.0%

10. Bathroom Addition Job Cost: $72,538 Resale Value: $43,936 Cost Recouped: 60.6%

The data used in the Cost vs. Value Report was collected with the help of REALTOR® Magazine in an online survey between August and October 2013. More than 4,500 NAR members participated from 101 U.S. cities, up from 81 cities included in last year's survey.

Construction cost estimates were generated by RemodelMAX.

Rental Payments Could Soon Affect Credit Scores

Renters who have never been late with a rent payment will find that their stellar record wont do anything to lift their credit scores when it comes time to shop for a mortgage. But that may soon change: Two of the main credit reporting agencies, Experian and TransUnion, reportedly are starting to incorporate verified rental payment data into credit files and using it to compute the consumers' credit scores when they apply for a mortgage.

"At a time when record numbers of first-time buyers are missing in action in the home-purchase market -- many of them in part because their credit scores don't make the grade -- the non-reporting of key credit records is costly to them and the economy as a whole," The Columbus Dispatch reports.

Some companies also are stepping in to ensure renters get their on-time payment histories included when applying for a mortgage. ECredable, an alternative credit data company, says it will verify renters' payment histories that haven't been reported to the major credit bureaus, and then generate a credit report and score. Potential home buyers are then urged to present the report to mortgage loan officers and ask that the information be considered in their application for a mortgage (which the lender is required to do under federal credit regulations).

{Source: "Credit Scores Might Soon Reflect Rental Payments," The Columbus Dispatch (June 29, 2014)}