Calculating your Debt-To-Income ratio (DTI) is one of the simplest ways to get a handle on your financial health. With the help of myself and Katy Sychterz of RoundPoint Mortgage, (NMLS# 183951 – 484.534.5107) we can explore homebuying options to help you meet your goals. #RealEstate #Realtor #HomePurchase #BuyersMarket #PlymouthMeetingRP 

Mortgage Applications Are Falling

The housing market is showing more signs of slowing. Purchase applications fell 1% last week compared to the previous week and volume is now 14% lower than a year ago, the Mortgage Bankers Association’s latest index shows.

Overall, mortgage demand, which includes applications for refinancings and home purchases, has fallen to its lowest level since December 2018.

Mortgage rates have been moving higher over recent weeks, leading to the softening demand, analysts say. The average contract interest rate for 30-year fixed-rate mortgage loans with a 20% down payment was 5.33% last week, the MBA reports.

Rising interest rates and home prices have been dampening housing affordability, at least for some price segments. “Demand is high at the upper end of the market, and the supply and affordability challenges are not as detrimental to these borrowers as they are to first-time buyers,” says Joel Kan, an MBA economist.

The average contract interest rate for a 30-year fixed-rate mortgage with a jumbo loan balance—that is, greater than $647,200—fell to 4.93% last week from 5.02%, the MBA reports.

Source: 

“Mortgage Demand Falls to the Lowest Level Since the End of 2018, Even as Interest Rates Ease a Bit,” CNBC (June 1, 2022)

©National Association of REALTORS® Reprinted with permission

Zones With the Greatest Price Increases

Opportunity zones are booming. From the first quarter compared to the fourth quarter of 2021, 55% of qualified opportunity zones saw a jump of at least 20% in median single-family home and condo prices, according to a new report from ATTOM Data Solutions. Home prices in distressed neighborhoods nationwide continue to keep up with the gains in the broader national housing market, the report notes.

Opportunity zones, established by Congress in the Tax Cuts and Jobs Act of 2017, offer investors tax breaks in exchange for making long-term investments in the revitalization of low-income federally designated neighborhoods nationwide.

Despite recent gains, typical home values in opportunity zones remain lower than those in most other neighborhoods across the country in the first quarter. The median price is less than the national median of $320,500 in 76% of the opportunity zones analyzed, according to the report. Of the zones tracked in the report, 35% had median prices less than $150,000 and another 15 percent had medians ranging from $150,000 to $199,999.

But some areas are seeing a large increase in opportunity zone prices. In the first quarter, the states with the largest portion of zones where median prices increased annually were in the West, led by Utah (median prices up, year over year, in 97% of zones), Arizona (97%), Nevada (93%), Oregon (88%) and Florida (87%).

The ATTOM Data Solutions report uncovered the following 10 opportunity zones based on median home prices above the national median of $320,500 and the greatest quarterly increases.

Source: 

ATTOM Data Solutions

©National Association of REALTORS® Reprinted with permission

Sellers Dropping Asking Prices

Some homeowners may need to reset their price expectations. Signs of a slowing real estate market are growing across the country—existing-home sales and new-home sales are falling as well as pending home sales. Pending home sales fell for the sixth consecutive month in April and are now at the slowest pace in nearly 10 years, the National Association of REALTORS® reported last week.

Homes are still selling fast but a slowdown is evident in many markets. Amid rising mortgage rates that are pricing more buyers out, some home sellers are having to revisit their asking price.

Price drops are particularly more common in migration hotspots, places that have been relatively affordable but saw home values surge as more people have migrated in from coastal areas since the pandemic began, a new report from Redfin says. For example, in Boise, Idaho, home prices are up 62% over the past two years. In April, 41% of home sellers dropped their prices, the largest of 108 metro areas tracked by Redfin.

More than 20% of home sellers dropped their price in April in seven of the 10 most popular migration destinations, the report says. Other areas that are seeing a rise in price drops include Cape Coral, Fla. (at 33% in April); New Orleans (32%); Baton Rouge, La (31%); and Sacramento, Calif. (30%).

“Many places like Boise or Sacramento that saw a surge in migration and a sharp increase in home prices over the past two years have now seen an abrupt drop-off in demand, leading sellers to drop their prices with increasing frequency,” says Daryl Fairweather, Redfin’s chief economist. “When mortgage rates were at or below 3%, both local and out-of-town home buyers were more willing and able to tolerate high prices, but at 5%, many are priced out. A home’s price is driven by the balance of supply and demand, and when demand drops off and supply increases like it is now, rapid price increases evaporate quickly.”

Lawrence Yun, NAR’s chief economist, said in a recent release on the latest housing data that higher mortgage rates have increased the cost of purchasing a home by more than 25% compared to last year. In many cases, that could mean the higher mortgage payments are leading up to $500 more per month for borrowers. Further, higher home prices add another 15% to that figure, Yun says. Also, households are facing rapid inflation that is increasing everyday costs, like fuel and food.

Source: 

“Home Sellers in Migration Hotspots Increasingly Turn to Price Drops,” Redfin (May 27, 2022)

©National Association of REALTORS® Reprinted with permission

Contract Signings Hit Slowest Pace in Nearly a Decade

The housing market is slowing: Pending home sales fell 3.9% in April, marking the sixth consecutive month for declines and the slowest pace in nearly 10 years. NAR’s Pending Home Sales Index—a forward-looking indicator of home sales based on contract signings—was down 9.1% in April compared to a year earlier.

Lawrence Yun, NAR’s chief economist, attributes the slowdown to the recent sharp rise in mortgage rates, which are adding considerably to buyers’ borrowing costs. Higher mortgage rates have increased the cost of purchasing a home by more than 25% compared to last year. In many cases, that could mean the higher mortgage payments are leading up to $500 more per month for borrowers. Further, higher home prices add another 15% to that figure, Yun says. Also, households are facing rapid inflation that is increasing everyday costs, like fuel and food.

While buyers face headwinds, current homeowners are seeing significant increases in equity. “The vast majority of homeowners are enjoying huge wealth gains and are not under financial stress with their home as a result of having locked into historically low interest rates, or because they are not carrying a mortgage,” Yun says. “However, in this present market, potential home buyers are challenged and thus may attempt to mitigate the rising cost of ownership by opting for a 5-year adjustable-rate mortgage or by widening their geographic search to more affordable regions.”

Also, Yun says home sales could stabilize in the coming months if mortgage rates moderate at the current level of 5.3% and job gains continue.

If rates climb to 6%, Yun forecasts that existing-home sales to slow by 9% in 2022. He predicts home price appreciation to moderate to 5% by the end of the year.

“Home prices appear in no danger of any meaningful decline,” Yun says. “There is an ongoing housing shortage, and properly listed homes are still selling swiftly—generally seeing a contract signed within a month.”

Source: 

National Association of REALTORS®

©National Association of REALTORS® Reprinted with permission

Over 10 Years, Homeowners Obtained $240K in Equity

As prices climb, homeowners who’ve owned their homes for a while have seen a boost in appreciation.

Over the past decade, a homeowner who purchased a single-family existing home would have gained $229,400 in home equity if the home were sold at the median price in the fourth quarter of 2021, according to a new analysis by the National Association of REALTORS®, as reported on the association’s Economists’ Outlook blog.

In the past five years, home prices have notably climbed—rising at an annual pace of nearly 10%, NAR reports. A homeowner who purchased a typical home five years ago would have gained $125,300 from just price appreciation alone.

The Western region of the U.S. has had the most areas of the country where homeowners have built up the largest amount of home equity, led by San Jose-Sunnyvale-Santa Clara, Calif.; San Francisco-Oakland-Hayward, Calif.; Anaheim-Santa Ana-Irvine, Calif.; and urban Honolulu, Hawaii.

Source: 

“Homeowners Typically Built Housing Wealth of $240,200 Over 10 Years,” National Association of REALTORS® Economists’ Outlook blog (May 25, 2022)

©National Association of REALTORS
®Reprinted with permission

Vacation Rental Listing Scams Grow

A new article at CNBC is warning vacationers to make sure the short-term rental they’re booking on popular platforms is really not a scam.

“Summer plans can quickly melt if consumers aren’t careful when they book their getaway,” New York State Attorney Letitia James wrote in a statement in issuing a recent warning about rental properties. “Vacation fraud happens every year, but there are ways to avoid it and protect yourself from getting burned.”

For example, those looking to book a rental should find it a red flag if they are asked to leave a listing platform, such as Vrbo or Airbnb, to provide payment. The scammer may ask a person to send their online payment using another platform, like Zelle, Michelle Couch-Friedman, executive director of the nonprofit consumer advocacy organization, Elliott Advocacy, told CNBC. She advises using credit credits to make a payment because there is some protection against fraud from the Fair Credit Billing Act. Also, she advises using well-known websites and staying on the platform from start to finish–from payment to deposit.

Also, she notes another red flag for a fake listing is ones that are brand new with no reviews or several reviews that repeat the same phrases. The photos may be grainy too—which could mean they were pulled as a screenshot online.

Couch-Friedman also suggests to avoid being scammed users should message the owner before they commit, using the listing site only for that correspondence.

Source: 

“That Vacation Rental Listing Could Be a Scam. These Are the Warning Signs to Look Out For,” CNBC (May 24, 2022)

©National Association of REALTORS
®Reprinted with permission

New-Home Sales Post Double-Digit Drop

Rising prices in the new-home market prompted buyers to take a step back in April. The sale of newly built, single-family homes fell 16.6% in April, dropping to their weakest pace in two years, the Department of Housing and Urban Development and the U.S. Census Bureau reported Tuesday. Rising mortgage rates are worsening affordability conditions, builders say.

New-home sales are down nearly 27% compared to a year earlier, the report shows.

“The volume of signed sales contracts significantly declined in April as the cost of purchasing a home increased in 2022 as interest rates surged higher,” says Jerry Konter, chairman of the National Association of Home Builders. “Higher construction costs fueled by rising material prices and supply-side constraints along with limited existing home inventory are pricing many potential home buyers out of the market.”

The entry-level market is experiencing the largest drops in sales, as affordability conditions particularly worsen there, builders say. A year ago, 25% of new-home sales were priced below $300,000. In April, just 10% of homes were under $300,000.

The median price of a newly built, single-family home rose 19.7% year over year. The median sales price increased to $450,600 in April. Builders said the higher costs are primarily due to surging building materials costs.

“The combination of higher prices and increased interest rates are generating a notable slowing of the housing market,” says Robert Dietz, NAHB’s chief economist. “While the nation needs additional housing, home sales are slackening as tightening monetary policy continues to put upward pressure on mortgage rates and supply chain disruptions raise construction costs.”

On a year-to-date basis, new home sales only posted an increase in the Northeast last month with a 6.5% increase. New home sales were down on a year-to-date basis by 16.8% in the Midwest, 19.3% in the South, and by 0.6% in the West.

Source: 

National Association of Home Builders

©National Association of REALTORS
®Reprinted with permission

Homeowners May Be Underinsured

Homeowners’ insurance premiums have climbed by 34% in some states, according to a new study by QuoteWizard, a site operated by LendingTree. What’s more, increases in home prices and building material costs may have made many homeowners underinsured.

The cost of rebuilding a home is about $36,000 more now than in 2020, the LendingTree study finds.

“The last two years have been a tumultuous time in nearly every aspect of life,” the QuoteWizard study says. “This is also true for homeowners insurance. There’s no way to tell exactly how many of the nation’s 85 million homeowners are currently underinsured.” But the study urges homeowners to check their policies because rising home prices and building material costs, as well as inflation, may mean owners need to recalculate the amount of coverage needed for their home.

Overall, home insurance premiums are up 2% nationwide. Idaho saw the largest increase in home insurance premiums at 34%, the study finds.

States in the Midwest and South pay the highest costs for home insurance. In Oklahoma, for example, homeowners face the highest premiums at nearly $3,800 a year, according to the study. Texas, Nebraska, and Kansas also rank among the states with the highest premiums in the country. On the other hand, Hawaii has the least expensive home insurance, with an average price of about $400 annually.

Homeowners may find that shopping around for homeowners insurance can make a big difference. The QuoteWizard study found that, depending on the insurance carrier, the same home insurance policy could vary by up to $2,000.

Source: 

“The State of Home Insurance in 2022,” QuoteWizard (2022)

©National Association of REALTORS
®Reprinted with permission

Thinking about making changes to your home? With the help of myself and Katy Sychterz of RoundPoint Mortgage, (NMLS# 183951 – 484.534.5107) we can explore homebuying options to help you meet your goals. #RealEstate #Realtor #HomePurchase #BuyersMarket #PlymouthMeetingRP 

Reality TV Skew Buyers’ Perceptions

Reality TV shows may try to capture the glitz and glamor of the real estate market and what it takes to work in the profession. But Bess Freedman, CEO of Brown Harris Stevens, called the rise of reality TV shows featuring real estate “horrible” for the industry and alarming because of the image she says it portrays of brokers.

Freedman took aim at shows like Netflix’s “Selling Sunset” and Bravo’s “Million Dollar Listing” for their portrayal of the real estate industry. The hit TV series document personal dramas involved in high-end real estate transactions.

“This is not who we are,” Freedman said in remarks at The Real Deal’s NYC Showcase + Forum last week, as quoted by CNBC. “We want to make sure that we maintain the integrity of our business.” Freedman says some of the reality shows make it look like female agents show up in “gala gowns to open houses.”

Reality stars fired back at the comments. Ryan Serhant, who stars in “Million Dollar Listing New York,” said traditional real estate agents need to embrace the media and technology. “The old way of selling real estate has completely changed,” Serhant said on stage in response, as quoted by CNBC. Serhant, founder of the Serhant brokerage in New York City, trains agents to produce videos, boost their social media followers, and grow their personal brands. His brokerage netted more than $2 billion in sales in 2021.

Read more about the exchange at CNBC.com.

Source: 

“Reality TV Shows Based on Real Estate Are ‘Horrible’ for the Industry, Says Brokerage CEO,” CNBC (May 19, 2022)©National Association of REALTORS®Reprinted with permission

Fixed-Rate Mortgages Dip but ARMs Rise

The 30-year fixed-rate mortgage fell slightly this week, a temporary retreat after weeks of steady increases. The 30-year fixed-rate mortgage averaged 5.25%, Freddie Mac reports. Rates dropped following the 10-year Treasury yield trend this week. Last week’s average was 5.30%.

“Economic uncertainty is causing mortgage rate volatility,” says Sam Khater, Freddie Mac’s chief economist. “As a result, purchase demand is waning, and homebuilder sentiment has dropped to the lowest level in nearly two years. Builders are also dealing with rising costs, meaning this posture is likely to continue.”

NAR’s Yun: ‘The Market Is Quite Unusual’

Freddie Mac reports the following national averages with mortgage rates for the week ending May 19:

• 30-year fixed-rate mortgages: averaged 5.25%, with an average 0.9 point, dropping from last week’s 5.30% average. Last year at this time, 30-year rates averaged 3%.
• 15-year fixed-rate mortgages: averaged 4.43%, with an average 0.9 point, falling from last week’s 4.48% average. A year ago, 15-year rates averaged 2.29%.
• 5-year adjustable-rate mortgages: averaged 4.08%, with an average 0.2 point, rising from last week’s 3.98% average. A year ago, 5-year ARMs averaged 2.59%.

Freddie Mac reports commitment rates along with average points to better reflect the total upfront cost of obtaining the mortgage. Source: Freddie Mac and “Instant Reaction: Mortgage Rates, May 19, 2022,” National Association of REALTORS® Economists’ Outlook blog

©National Association of REALTORS®
Reprinted with permission