After finding a house to buy and having your offer accepted, the home buying process really kicks into gear. There are several steps that have to be cleared before a pending sale is completed and your loan has closed. For example, this is the time when the home will be inspected and appraised. It is also the period during which the financial side of the transaction will be finalized. This takes time, as anyone who’s been through the process before knows. But what about first-time home buyers? How long should they expect between making an offer and getting their keys? According to Ellie Mae’s Millennial Tracker, the average time it took millennial borrowers to close conventional purchase loans in February was 44 days, which was slightly higher than the previous month. Joe Tyrrell, Executive Vice President of Strategy and Technology for Ellie Mae, says time to close is increasing as the share of home purchase loans grows. The percentage of purchase loans is on the rise with millennials continuing to enter the home buying market for their first or maybe even second purchase, Tyrrell said. The increase in days-to-close we saw in February is relative to the percentage increase in […]
Home builders are on the frontline of the housing market. Their business depends on knowing what buyers want and when they want it. That’s why the National Association of Home Builders (NAHB) tracks builder confidence in the market for newly built homes. When builders are optimistic about buyer demand they build more homes, which helps balance the market and makes conditions better for all homebuyers. The results of the NAHB’s most recent survey shows builders are confident in the market and reporting solid demand. On a scale where any number above 50 indicates more builders view conditions as good than poor, April’s Housing Market Index scored a 63. Despite the strong showing, Robert Dietz, NAHB’s Chief Economist, says a shortage of construction workers and buildable lots is causing housing costs to rise. Ongoing job growth, favorable demographics, and a low-interest rate environment will help to modestly spark sales growth in the near term, Dietz said. However, supply-side headwinds that are putting upward pressure on housing costs will limit more robust growth in the housing market. More here.
In a perfect world, we’d all be able to buy a home that is in great condition. Of course, that isn’t the way things work. Buying a house requires compromise, and in some cases, an otherwise perfect home might require some repairs. Fortunately, if recent data is any indication, today’s home shoppers understand this and are realistic about tackling renovation projects. For example, according to a new survey by realtor.com, nearly 60 percent of respondents said they’d consider a home that needs renovating. Also, more than half would be willing to spend more than $20,000 to get the job done. There are a number of reasons for the increasing number of home shoppers looking for a fixer-upper. For one, the limited number of entry-level homes for sale means buyers have to consider homes they may not have if they had more options. Beyond that, the popularity of home renovation TV shows, and the fact that those who are considering a fixer-upper believe they’ll see a return on their investment, also contribute to home buyers’ willingness to take on a project. More here.
Since your mortgage will likely be among your biggest monthly bills, you’ll want to give some thought to how much of your income you’d be comfortable putting toward it. Conventional wisdom says that you shouldn’t spend more than 30 percent of your income on housing. Historically, Americans’ mortgage payments have been closer to 21 percent of their income, according to Zillow. These days, it’s even lower. At the end of last year, the mortgage payment on a typical home required about 17.5 percent of the median income. Of course, that also depends on where you live. For example, the percentage of income you’d spend on a mortgage payment in Cleveland is about half of what the typical New Yorker spends. Wherever you are, you should consider your household expenses, income, and prospective payments before heading out to find a house. This will help you avoid buying more than you can comfortably afford. More here.
There are many ways to gauge the housing market. You can follow home prices, mortgage rates, home buyer traffic and sales, new home construction or access to credit. If you’re a potential homebuyer or seller, inventory is perhaps the best indicator of the housing market. That’s because it’s an easy way to determine if the market favors buyers or sellers. When there are too few homes for sale, home buyers have to compete for available homes, which leads to higher home prices. When there are too many homes for sale, the pressure is on the sellers, who have to make sure their home is attractively priced. Typically, inventory is measured by how long it would take to sell the homes currently for sale. A six-month supply is considered a balanced market. In the last few years, inventory has been low. However, new data from Pro Teck Valuation Services shows a dramatic improvement in housing inventory. The number of metropolitan areas with less than three months of available inventory has fallen to 3.1 percent from 12.6 percent last year. It also found that two-thirds of metros now have between four and eight months of remaining inventory, which is considered healthy. Overall, […]
Where you are in life will determine what type of home you shop for. For example, first-time homebuyers, because they tend to be younger and at the beginning of their careers, buy smaller homes and then trade up to a bigger house when they make more money or have more children. Societal changes affect your choice of home as well. A recent survey from the National Association of Realtors sheds light on this. Their 2019 Home Buyer and Seller Generational Trends study found that Gen X home buyers have recently surpassed younger baby boomers as the generation most likely to buy a multi-generational home. The majority of them did so because their adult children had either moved back in with them or never left home. This is likely because the high cost of rent and lack of affordable housing for younger adults. While it may seem like a negative development, it does provide younger millennials who live with their parents the ability to save for homeownership and gain some financial stability before buying their first house. More here.
New numbers from the National Association of Realtors (NAR) prove that homebuyers are excited to get the spring season started. With a nearly 12 percent increase in the number of existing homes sold compared to the month before, February had the largest month-over-month improvement since 2015. Lawrence Yun, NAR’s Chief Economist, says there’s a combination of factors helping push home sales upward. A powerful combination of lower mortgage rates, more inventory, rising income, and higher consumer confidence is driving the sales rebound, Yun said. Though home prices were 3.6 percent higher than they were at the same time last year, inventory was also up. If the improvement continues, it’ll help moderate future price increases. Yun says more new home construction is needed. For sustained growth, significant construction of moderately priced homes is still needed, he said. More construction will help boost local economies and more home sales will help lessen wealth inequality as more households can enjoy in housing wealth gains. According to Yun, the typical homeowner accumulated nearly $9,000 in housing equity over the past year. More here.
Among all the indicators that can be used to gauge the health of the housing market, few are as significant as new home construction. After all, home builders wouldn’t be building homes if they didn’t think there were interested home buyers. When new home construction is rising, there’s probably a good reason. Because of this, the January numbers recently released by the U.S. Census Bureau and the Department of Housing and Urban Development are encouraging. They show a 25.1 percent month-over-month increase in the number of new homes that began construction in January and a 30.2 percent increase in the number of completed new homes. That’s a significant improvement, and a pretty good indication that home builders expect a busy spring and summer. However, though the construction numbers are impressive, the number of permits to build homes were only up 1.4 percent. That could be a sign that the building boom will be short lived, but only time will tell. More here.
You can’t always pick and choose when it’s time to move. Maybe you found a job in another city, or you have a growing family and need more space. Whatever the case, buying a home isn’t something you necessarily do only when homes are cheap. Sometimes you just have to pack it up and find a new place regardless of what’s happening in the market. If you’re someone who has to make a move in the near future, you’ll be happy to hear that home buying conditions are improving. In fact, homebuyers’ purchase power is on the rise. According to new data from Black Knight’s Mortgage Monitor Report, buying a home has become more affordable over the past few months. Ben Graboske, president of Black Knight’s data & analytics division, says it is now more affordable than it has been since early last year. There is good news in these numbers for prospective homebuyers, though, Graboske said. Housing is now the most affordable it’s been since early in the 2018 home buying season. It currently requires 22.2 percent of median income to purchase the average home with a 20 percent down payment on a 30-year fixed-rate loan. In short, buyers […]
During times when the housing market has more buyers than homes for sale, the quickest remedy is to build more homes. Adding inventory to the market gives buyers more options, helps balance supply and demand, and keeps home prices in check. Essentially, new home construction plays a vital role in housing market health and affordability conditions. According to recent news, home construction is up. The U.S. Census Bureau and the Department of Housing and Urban Development show a 3.6 percent increase in the number of new homes that began construction in 2018. The year-over-year improvement put the number of completed new homes last year at nearly 1.2 million. Unfortunately, toward the end of the year, stock market volatility slowed the pace of new home construction. However, with buying conditions becoming more favorable and builder confidence on the rise, there is reason to believe new construction of single-family homes will begin to climb again this spring. That’s encouraging, not just for buyers interested in newly built homes, but for all potential home buyers. More here.