Loan Demand Recedes Again

Loan Demand Recedes Again

Total mortgage application volume – which encompasses applications for refinancings and home purchases – nudged down 3.4 percent week-to-week on a seasonally adjusted basis, the Mortgage Bankers Association reported Wednesday. The decrease came as interest rates edged slightly higher last week.

Nevertheless, total mortgage application volume still remains 14 percent higher than a year ago when mortgage rates were at about the same average. MBA reported that refinance demand has seen the biggest downfall in recent weeks, dropping 6 percent last week. Still, that demand is 15 percent higher than a year ago.

“Refinance activity decreased for the second-straight week because fewer borrowers have an incentive to refi at the current level of rates,” says Michael Fratantoni, MBA’s chief economist. “But there are still some who respond to the small changes we have seen in recent weeks.”

Mortgage applications for home purchases remained mostly flat last week. However, applications are about 13 percent higher than a year ago. The average on the 30-year rate mortgage rose to 3.87 percent from 3.85 percent, MBA reported.

Source: “Mortgage Applications Down 3.4% on Another Slight Rate Gain,” CNBC (May 4, 2016)

Renovation Mistakes to Avoid

Renovation Mistakes to Avoid

Home renovations can be costly. Add a mistake to it, and the costs can skyrocket even more.

Emerick Architects has taken on dozens of commercial and residential renovation projects over the last 16 years, and their architects recently shared some of the most common renovation mistakes in an interview with Curbed.com.

1. Succumbing to “fashion architecture”: The architects point to home owners who try to be too trendy with their renovations. “People try to treat architecture like fashion,” Melody Emerick told Curbed.com. “And architecture takes a long time to build, uses a lot of resources, and needs to last a while.” Trends can quickly fade. Instead, she says it’s important to stay true to the character of the house and be careful when updating the home’s structure. “You can change out a countertop or tile, but it’s a lot harder to re-do windows and doors,” she says. “Make these the highest quality that you can and it will be money well spent.”

2. Ignoring proportions: Too often, home owners just focus on the results but fail to consider the process enough. “People will just want to add on and say, ‘I want a family room that’s 12 by 18 feet,’ rather than seeing if that fit is right for the character of the house and how it flows,” says Emerick. She recommends keeping a close eye on proportions, such as the size of windows and doors as well as ceiling height, to make sure the renovation fits the home.

3. Rushing the renovation: Renovations take time and shouldn’t be rushed, she says. “It takes longer than you think,” says Emerick. “And that’s because it usually takes home owners a while to process the changes.” Talk to experts early on to understand the deadlines involved. Add 10 percent more time to a project than originally anticipated, she suggests.

Source: “8 Renovation Mistakes – and How to Avoid Them,” Curbed.com (May 2, 2016)

Ways to Remove Smelly Odors

Ways to Remove Smelly Odors

Whether it’s a pet odor or yesterday’s pungent dinner, you can take steps to remove bad odors from a home prior to a showing.

“If you enter a home and immediately encounter a smell, that is generally all people focus on, and all they will remember,” says Debra Johnson, a home cleaning specialist with Merry Maids.

Realtor.com® recently offered the following tips for banishing common odors from a home.

1. Pet urine: Use a spray with enzymes that breaks down odor molecules. Soak the area with the spray and let it seep into the carpet.

2. Dinner: Open the windows and turn the range hood fan on to high when cooking high odor items, like fish. If smells still linger, fill a shallow bowl with white vinegar or coffee grounds and place it on the counter. It’ll absorb the smells overnight.

3. Paint: Slice an onion in half. Place each half on a dish on opposite sides of the room. It will neutralize paint smells. (The smell of the onion should only linger for an hour.)

4. Kitchen sink: Check your drain and garbage disposal to make sure something isn’t stuck. Then, place two or three slices of lemon or orange into the disposal. Turn on the water. Flip the switch.

Source: “Tricks to Banish Bad Smells From Your Home—Forever,” realtor.com® (April 28, 2016)

Home Ownership Rate Nears Record Lows

Home Ownership Rate Nears Record Lows

The home ownership rate made gains in the second half of 2015, but that progress was muted in the latest report from the U.S. Census Bureau. The first quarter of this year saw the home ownership rate back on the decline, plummeting to 63.6 percent, the third lowest on record.

For comparison, in 2004, home ownership soared to a high of 69.4 percent.

The nation continues to wait on younger Americans to make a move. Home ownership among those aged 25 to 34 years old is nearly 10 percentage points lower than it was a decade ago.

One factor in the drop in home ownership is the burden of student loan debt.

“The rising student loan debt is holding back first-time buyers, still hovering around 30 percent of all home buyers rather than the typical 40 percent,” says NAR’s Chief Economist Lawrence Yun in his most recent column for Forbes. “That is why the home ownership rate still remains at near 50-year lows at 63.6 percent in the first quarter. Among those aged under-35 the ownership rate fell even more markedly and was 34.2 percent in the latest quarter.”

Many would-be home owners are also faced with rental stress due to a four year streak of rents outpacing wage growth.

“Rental affordability remains a big problem in many places, and that makes it harder to save for a down payment,” Jed Kolko, an independent economist and senior fellow at the Terner Center for Housing Innovation at University of California, Berkeley, told CNBC. “We’re still seeing relatively few first-time home buyers because young people are buying homes later than they used to. Some of this is a long-term shift toward marrying and having children later in life. Some of this is that the recovery has been slow among young adults.”

However, home ownership rates among older Americans is on the rise, the data shows.

Household formation is also increasing. But two-thirds of the uptick is due to renters while one-third is from new households in owner-occupied homes, according to the Census data.

The data showed that the home ownership rate is highest in the Midwest, where homes tend to sell at the lowest prices. The home ownership rate is then lowest in the West, where homes tend to be sold at some of the highest prices in the country.

Source: “First Quarter Housing Market Trends,” Forbes (April 29, 2016), “Homeownership Rate Falls to Third Lowest on Record,” MarketWatch (April 28, 2016) and “Home Ownership Near Its Lowest in History,” CNBC (April 28, 2016)

Fed Votes to Leave Interest Rates Alone

Fed Votes to Leave Interest Rates Alone

The Federal Reserve’s Open Market Committee voted this week to not increase the federal funds rate, which should help keep mortgage rates low during the busy spring home buying season.

The federal funds rate will hold at its current 0.25 percent and 0.5 percent rates, at least for now. The FOMC next meets in June to decide again whether to increase rates at that time.

The FOMC noted that the labor market has “improved further” but economic activity growth has slowed.

“A range of recent indicators, including strong job gains, points to additional strengthening of the labor market,” the FOMC said in its official statement. “Inflation has continued to run below the Committee’s 2% longer-run objective, partly reflecting earlier declines in energy prices and falling prices of non-energy imports.”

The committee went on to note that it expects “economic conditions will evolve in a manner that will warrant only gradual increases in the federal funds rate; the federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run. However, the actual path of the federal funds rate will depend on the economic outlook as informed by incoming data.”

Source: “As Expected, Fed Holds Off Interest-Rate Hike,” HousingWire (April 27, 2016)

Open Houses Showcase High-Priced Artwork

Open Houses Showcase High-Priced Artwork

Real estate and staging professionals of luxury listings are turning to high-priced, original artwork to dress up their open houses and offer up another pull for potential home buyers to visit.

Some professionals are coordinating with art galleries to rent original art pieces to hang during home showings. The pieces then are for sale too.

Real estate professionals and the art galleries “say it’s a win-win: The pieces make the homes feel more luxurious and one-of-a-kind, and the art is more likely to be sold if it’s brought to a place where wealthy buyers are sure to pass through,” the Los Angeles Times reports.

For example, in staging a renovated estate in Pacific Palisades in the Los Angeles area, developers hung Picasso sketches, artwork by David Hockney and Donald Sultan, a Vija Clemins ocean lithograph, and two Ethan Murrow drawings. Nearly all of the pieces “reference California or classic Western imagery,” Janus Cercone, principal of Jaman Properties in Los Angeles, told the Los Angeles Times. Cercone says the galleries usually offer the artwork to lend for free, but she then spends thousands of dollars on insurance, professional art packers, transporters, installers, and around-the-clock armed security.

“It adds up,” Paul Lester, principal partner at the Agency, told the Times. “But it definitely creates a secondary level of depth and gives more credibility to the house itself because there’s a richness to it, a fullness you don’t get from a lot of the staging art you see.”

Source: “Elite Home Stagers Decorate with Gallery, Museum Art,” Los Angeles Times (April 23, 2016)