Buying a home means making an investment in the real estate market. While it may not be your main motivation for home buying, there’s a high chance that you’ll see a return on investment. It’s among the reasons that homeownership has retained its appeal over the years. New numbers from ATTOM Data Solutions show that an increasing number of homeowners are benefitting from their home purchase. Their Year-End 2018 U.S. Home Equity & Underwater Report shows that in the fourth quarter of 2018, more than 14.5 million properties were considered equity rich, which means that the loans used to purchase the property are 50 percent or less than the estimated value. In short, an increasing number of American homeowners are seeing their investment grow. Todd Teta, ATTOM’s Chief Product Officer, says that in addition to increasing values, homeowners are seeing their equity grow because they’re staying in their homes longer. With homeowners staying put longer, homeownership equity will most likely continue to strengthen, Teta said. The rise of equity rich homeowners also coincides with a dramatic decline in the number of seriously underwater properties, which have dropped from nearly 30 percent in 2012 to just 8.8 percent at the end […]
Over the year of 2018, compensation costs for private industry workers went up by 3.0 percent, according to the Bureau of Labor Statistics. The last time it was this high was over a decade ago June 2008. Government workers had a smaller but still significant gain in compensation at 2.6 percent. On a quarterly basis, compensation costs for all civilian workers increased by 0.7 percent from October to December 2018. Not only are employees earning more, but they are getting more healthcare coverage as well. Employer costs for healthcare-related compensation went up by 1.8 percent in 2018. Wages for private workers has been accelerating over the last few years, which continues to drive the economy, along with high employment. More here.
Last year’s housing market had its challenges. There was plenty of interest from home buyers, but too few homes for sale and high prices dampened some of the enthusiasm. This year, Americans may be feeling more optimistic, according to the most recent Home Purchase Sentiment Index from Fannie Mae. In addition to an 8 percent increase in the number of respondents who say their income is substantially higher than it was last year, there are also a declining number who feel home prices will keep rising. Essentially, consumers feel more confident in their money and see affordability conditions starting to improve. Doug Duncan, Fannie Mae’s senior vice president and chief economist, says the boosted optimism and more favorable conditions may help home sales this year. Overall, these results are in line with our forecast that, amid improving affordability conditions, home sales should stabilize in 2019 after declining last year for the first time in four years. More here.
Fannie Mae’s quarterly Mortgage Lender Sentiment Survey asks senior mortgage executives for their perceptions of the market and their forecast for the future. According to the most recent release, mortgage lenders point to an insufficient supply of homes available for sale as the primary reason for slow home sales growth last year. In fact, 48 percent of responding lenders said that too few homes for sale held home buyers back, while higher prices was also a commonly cited factor. Similarly, when asked for suggestions for what could be done to improve affordability, almost half said increasing the supply of housing stock. In short, mortgage execs see low housing inventory as the market’s biggest issue. This isn’t a surprise. There’s been a lower-than-typical number of homes for sale in recent years, which increases competition and pushes home prices upward. If more homes get built, it could help provide some relief to home buyers this year. More here.
Homeowners who sold a house in 2018 saw an average gain since purchase of $61,000, according to new numbers from ATTOM Data Solutions. ATTOM’s Year-End 2018 U.S. Home Sales Report found that home sellers averaged a 32.6 percent return on investment when comparing the price their home sold for with the original purchase price. The improvement was an $11,000 increase from the year before. While that’s good news for anyone selling a home, ATTOM’s chief product officer, Todd Teta, says changes may be on the way. The economy is still going strong and home loan rates remain historically low, Teta said. But there are potential clouds on the horizon. The effects of last year’s tax cuts are wearing off as limits on homeowner tax deductions are in place and mortgage rates are ticking up ever so slowly, so this could dampen the potential for home price gains in 2019. Though market conditions are beginning to change, home prices are still expected to rise this year. With home seller profits at a 12-year high, that means it’s still a good time to sell a house. More here.
There’s a fairly common misconception that you’ll need a 20 percent down payment before you can buy a house. It’s recommended since it’ll help you avoid paying mortgage insurance, reduce your monthly payment, and get you a lower mortgage rate. But, depending on the terms of your loan, the amount of money you need to put down is flexible. So, what do most home buyers put down and how do they get it? According to a recent report by Zillow, just 43 percent of home buyers nationally put down 20 percent or more, which means many homebuyers opt for a smaller down payment. Seventy percent of buyers said they used savings as part of their down payment. Proceeds from a home sale and gifts from family or friends were also popular sources for down payment funds. Other sources included investments and retirement accounts. In short, the amount and source of your down payment will be unique to your financial situation and the home you’re hoping to buy. It’s important to go over how much you can afford to put down and what costs will be associated with a smaller investment. Your down payment will have a long-term effect on your […]
A recent survey by Zillow asked real estate economists and experts for their predictions on the housing market. While they had varied views on topics like mortgage rates and home values, they strongly agreed on homeownership rates. The vast majority of respondents – 88 percent – said that they expect the homeownership rate to increase in the next five years. 84 percent said it will be improved in just two years. In addition, almost half of the panelists said that first-time home buyers would be more active. Less than a quarter predicted a decrease in first-time home buyer activity and the rest predicted no change. On the other hand, respondents were much more split when it came to home buying activity from repeat home buyers. One quarter of respondents said it would increase, another quarter said it would decrease, and the remaining half said that it wouldn’t change. In short, first-time homebuyers are becoming more involved in the housing market than they used to. Homeownership rate had dropped during the recession. Since then, it has started to rebound, as a stronger economy is helping first-time buyers to afford homes. https://www.prnewswire.com/news-releases/interest-rates-more-severely-impacting-home-values-but-not-first-time-buyers-according-to-experts-300776068.html?utm_source=AKZO+Media+Subscribers&utm_campaign=2ab3783f29-EMAIL_CAMPAIGN_2019_01_10_09_16&utm_medium=email&utm_term=0_134f701abc-2ab3783f29-276542805
New numbers from the U.S. Bureau of Labor Statistics showed that real hourly earnings, on average, increased by 1.1 percent in the year 2018. This is the largest year-over-year increase since September 2016 – over two years ago. The average workweek had little change, meaning that employees aren’t working any more or less than they did 1 year ago. As a result, the average weekly earnings increased about as much as the average hourly earnings did. Real average earnings are already adjusted for inflation, which means Americans are making 1.1 percent more money than they did last year and as a result are able to spend more. More here. However, those are just the yearly numbers, and say nothing of the monthly changes. Over the month of December 2018, real average hourly earnings went up by 0.6 percent, to $23.05 per hour. The average employee clocked in 33.7 hours, making the average weekly earnings $776.79. Source: www.bls.gov
Spring is the busiest season for home buyers. Naturally, there’s a lot of analysis of buying conditions as it approaches. Things like mortgage rates, the economy, prices, for-sale housing inventory, and home buyer demand can all be used to predict how busy or slow the season will be. One early sign came with this week’s Applications Survey from the Mortgage Bankers Association. The survey measures demand for refinance and home purchase loans. The most recent results show a significant surge in demand over the previous week. In fact, total mortgage loan demand was up 13.5 percent (seasonally adjusted) from one week earlier and requests for loans to buy homes was 11 percent higher than the same time last year. Mike Fratantoni, MBA’s senior vice president and chief economist, said the spike might be a hopeful sign. “Uncertainty regarding the government shutdown, slowing global growth, Brexit, a more patient Fed, and a volatile stock market continued to keep rates from increasing,” Fratantoni said. “The spring home buying season is almost upon us, and if interest rates stay lower, inventory continues to grow, and the job market maintains its strength, we do expect to see a solid spring market.” More here.
When surveyed, Americans who currently don’t own a home consistently say they’d like to buy one someday. For example, the National Association of Realtors’ Housing Opportunities and Market Experience survey asked non-homeowners whether homeownership is part of their American Dream, and 75 percent of respondents said it was. This means there are a lot of people who’d like to buy a home. What factors influence their decision to buy now or wait? It may come as no surprise that money leads the list. Most non-homeowners, when asked why they don’t currently own a home, said they couldn’t afford a mortgage. Other reasons included needing the flexibility that comes with renting and a lifestyle that wasn’t compatible with ownership. Similarly, when asked what might spur a future decision to buy, respondents said that having more money would motivate them to become a homebuyer. But an improved financial situation wasn’t the only thing that could encourage them to buy. An almost equal number of respondents said a lifestyle change like marriage or retirement might push them to pursue homeownership. More here.