Gap Grows Between Owners and Appraisers

Gap Grows Between Owners and Appraisers

The disconnect between homeowner estimates and appraiser opinions when it comes to home values grew for the second consecutive month, according to Quicken Loans’ National Home Price Perception Index. The average appraisal value was 1.47 percent below what owners expected in January.

The shift comes after a six-month stretch where homeowner and appraisal value perceptions were moving closer to equilibrium.

“Having a good understanding of the conditions in their local housing market can be a valuable tool for consumers as they prepare for the home buying or mortgage process,” says Bob Walters, Quicken Loans’ chief economist. “Accurate expectations at the onset of the mortgage process not only makes it smoother, but can prevent unexpected changes in the amount of funds to bring to the closing table if the appraised value comes in lower than initially estimated.”

The perceptions of home prices between owners and appraisers differs greatly across the country. For example, appraisals in Western cities tended to outpace owner expectations. In Denver, appraised values were 2.98 percent higher than homeowners’ expectations. On the other hand, estimates in many eastern cities tended to be higher than appraised values. For instance, in Philadelphia, appraisals were 2.94 percent lower than homeowners’ estimates.

Source: Quicken Loans

Luxury Owners Rethink How They Use Space

Luxury Owners Rethink How They Use Space

Some luxury owners are scaling back the number of bedrooms in a home to leave more space for hobby rooms and other amenities that can raise the property’s value, The Wall Street Journal reports.

But some real estate experts warn that fewer bedrooms could turn into a risk at resale.

“There’s always going to be a narrower market” for a home with fewer bedrooms, Javier Vivas, economic research manager for realtor.com®, told The Wall Street Journal.

In a recent analysis, realtor.com® found that luxury homes with more living space and fewer bedrooms often were listed at higher sales prices than comparable listings in those markets. However, those homes tended to take longer to sell. (The analysis factored in homes valued in the top 10 percent of a region’s market in the 50 largest cities.)

In 2016, the median size of a luxury home for sale was 4,706 square feet with five bedrooms (or about one bedroom per every 1,000 square feet).

Homes that boasted an increase in living space to bedroom ratio (more than 1,500 square feet per bedroom), on average, spent 117 days on the market. That is 15 percent longer than a standard home.

Homes with less than 750 square feet per bedroom, which often meant there also were more bedrooms in the home, tended to sell the fastest at 91 days on the market, the realtor.com® analysis showed.

Still, homes that offset bedroom counts with desirable amenities, such as larger entertainment spaces, can sell for higher amounts, Vivas says. Larger spaces to fewer bedrooms sold, on average, for $1.42 million, 31 percent higher than a luxury home with a standard number of bedrooms at $1.08 million. That is also 55 percent higher than luxury homes that had extra bedrooms ($915,000).

Source: “Some Luxury Homeowners Scale Back on Extra Bedrooms,” The Wall Street Journal (Feb. 9, 2017) [Log-in required.]

Don’t Underestimate Power of Pets

Don’t Underestimate Power of Pets

Pets are having more of an influence in home buying and selling as well as renovation, a new study by the National Association of REALTORS® shows. Eighty-one percent of Americans say that animal-related considerations play a role when deciding on their next living situation, according to the 2017 Animal House: Remodeling Impact report.

“In 2016, 61 percent of U.S. households either have a pet or plan to get one in the future, so it is important to understand the unique needs and wants of animal owners when it comes to homeownership ” says NAR President William E. Brown. “REALTORS® understand that when someone buys a home, they are buying it with the needs of their whole family in mind; ask pet owners, and they will enthusiastically agree that their animals are part of their family.”

Indeed, a whopping 99 percent of pet owners say they consider the animal part of the family. Eighty-nine percent of respondents say they would not give up their animal because of housing restrictions or limitations. Home owners are willing to move for their pets too. Twelve percent of pet owners have moved to accommodate their animal; 19 percent would consider moving to accommodate their animal in the future.

Pets could cost you real estate deals. REALTORS® surveyed say that about one-third of their pet-owning clients often or very often will refuse to make an offer on a home because it is not a good match for their pet. Sixty-one percent of buyers, REALTORS® say, find it difficult or very difficult to locate a rental property or a homeowners association that accommodates pets.

Animals are having a say when it comes to the selling of a home too. Sixty-seven percent of REALTORS® say animals have a moderate to major effect on selling a home. About two-thirds of REALTORS® say that they advise pet-owning sellers to always replace things in the home damaged by an animal, have the home professionally cleaned to remove any animal scents, and to take animals out of the home during a showing or open house.

Pets are serving as guides to renovations too. Fifty-two percent of respondents say they had completed a home renovation project specifically to accommodate their pet. Twenty-three percent of those remodelers had built a fence around their yard; 12 percent added a dog door; and 10 percent installed laminate flooring.

Realizing the growing importance of pets in real estate matters, more real estate professionals are marketing themselves as pet friendly. Eighty percent of REALTORS® surveyed by NAR say they consider themselves animal lovers. Twelve percent of the REALTORS® say they volunteer for an organization that helps animals, and 21 percent plan to do so in the future.

Source: National Association of REALTORS®

Here Come 59 Million Buyers!

Here Come 59 Million Buyers!

One in four U.S. adults say they are considering buying a home this year, which extrapolates to a whopping 59 million people, according to a recent survey by Bankrate.com.

Minorities are expected to be big buyers this year. More than two in five black survey respondents said they were considering buying a home. That is more than double the percentage of potential white buyers.

“Black homeowners were harmed in greater numbers by the housing crash” and the foreclosure crisis, says Holden Lewis, a Bankrate.com mortgage analyst. “Now that the economy has improved and time has passed, maybe they’re ready to jump back in and own a home again.”

Also, older millennials and Generation X – which encompasses the ages of 27 to 52 – are showing more willingness to either become homeowners or trade up to a new home, the survey showed.

Young adults have mostly delayed homeownership. “They have been stymied by stagnant wages, student loans, and a lack of available starter homes,” Lewis says. “If enough affordable homes are put on the market, we might see a surge of first-time home buyers in their early to mid-30s.”

Lewis notes, however, what many people say is not always what they’ll be able to do. Rising mortgage rates and an uptick in home prices could prevent some would-be homebuyers from saving enough for a down payment and limited inventories could delay their efforts in finding a suitable home to buy.

About 6 million new and existing homes were sold last year, according to the National Association of REALTORS® and U.S. Census data.

Source: “Know Your Competition: 1 in 4 Adults Is Planning to Buy a Home,” realtor.com® (Feb. 9, 2017)

Consumers More Optimistic About Housing

Consumers More Optimistic About Housing

More Americans are showing optimism toward their personal finances and the housing market, a reversal to a five-month decline.

In particular, Americans are more upbeat about home prices, home selling, their rising household incomes, and they’re less scared about losing their jobs, according to Fannie Mae’s Home Purchase Sentiment Index, a survey of 1,000 Americans in January about their attitudes toward housing.

“Three months after the presidential election, measures of consumer optimism regarding personal financial prospects and the economy are at or near the highest levels we’ve seen in the nearly seven-year history of the National Housing Survey,” says Doug Duncan, senior vice president and chief economist at Fannie Mae. “However, any significant acceleration in housing activity will depend on whether consumers’ favorable expectations are realized in the form of income gains sufficient to offset constrained housing affordability. If consumers’ anticipation of further increases in home prices and mortgage rates materialize over the next 12 months, then we may see housing affordability tighten even more.”

Here’s a closer look at some of the findings from the latest survey:

• 42% of Americans believe home prices will increase, a month-over-month uptick of 7 percentage points in January.
• 69% of Americans say they are not concerned about losing their job, a 1 percentage point increase from December 2016.
• 15% of Americans say now is a good time to sell, a 2 percentage point month-over-month increase.
• 15% of Americans who say their household income is significantly higher than it was 12 months ago, a month-over-month increase of 5 percentage points.
• 29% of Americans who say now is a good time to buy a home, a 3 percentage drop from December 2016 and a new survey low from May and September 2016.

Source: Fannie Mae

From Boom to Bust? Farmlands Are In Trouble

From Boom to Bust? Farmlands Are In Trouble

Many farmers are facing higher debt as a multiyear drop in prices for corn, wheat, and other commodities plagues on. That is pushing more farmers out of business. The Farm Belt will soon have fewer than 2 million farms, the lowest in years.

Still, economists aren’t predicting the crisis to be as severe as the one that struck the Farm Belt in the 1980s, in which farmland values plummeted and interest rates soared.

Economists expect farmland values to fair much better this time around. After all, farm incomes reached record highs just in 2013. Many farmers still have significant cash reserves. Interest rates are still relatively low too, despite recent upticks.

“For some, the slump is an opportunity,” The Wall Street Journal reports. “Farmers with low debts and enough scale to profit from last year’s record harvests could be in a position to rent or buy up land from struggling neighbors.”

Nevertheless, lenders say farmers are going through their saving fast. They say  younger farmers – without sufficient reserves — and large growers – those who may have expanded too much during the boom years — may be the most vulnerable. Large growers may have accumulated too much debt in recent years as they expanded operations and also locked into multiyear land leases at high rents.

“The potential for a big crisis is real,” says farmer Less Scheufler, who has expanded his farm nearly 10-fold over the years. “If things stay similar to how they are now, you haven’t seen anything yet.”

Source: “The Next American Farm Bust Is Upon Us,” The Wall Street Journal (2017)