State-by-State Breakdown of Fourth-Quarter Equity Gains

Rising home prices have brought rising equity gains for homeowners. In the fourth quarter, the average homeowner nationwide gained about $55,300 in equity over the past year, according to a new analysis released by CoreLogic, its latest quarterly “Homeowner Equity Insights” report.

Western state homeowners are continuing to see some of the largest equity gains by dollar value.

For example, Hawaii, California, and Washington saw the largest increases in average equity gains in the fourth quarter. Hawaii posted an average $128,300 annual gain, followed by a $117,000 increase in California, and $95,500 in Washington.

Source: “Homeowner Equity Insights,” CoreLogic (March 10, 2022)

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Mortgage Rates Rise to 3.85%

Following two weeks of declines, mortgage rates edged up, and economists say that consumers should expect further increases over the coming weeks.

The Federal Reserve will likely raise its short-term interest rates at its meeting next week. While the Fed’s benchmark rates do not have a direct effect on mortgage rates, they do often influence them and likely will lead to an increase, the National Association of REALTORS® notes on its Economists’ Outlook blog.

But even though mortgage rates are rising, consumers should bear in mind that rates remain near historic lows. For comparison, in 1982 when inflation was rising roughly at the same pace as it is now, mortgage rates were 16% on average, Nadia Evanelou, senior economist and director of forecasting at the National Association of REALTORS®, writs on the association’s blog. This week, the 30-year fixed-rate mortgage averaged 3.85%, as a comparison.

The latest increase in mortgage rates comes as Treasury yields increase, notes Sam Khater, Freddie Mac’s chief economist. “Over the long-term we expect rates to continue to rise as inflation broadens and shortages increasingly impact many segments of the economy. However, uncertainty about the war in Ukraine is driving rate volatility that likely will continue in the short-term.”

Freddie Mac reports the following national averages with mortgage rates for the week ending March 10:

• 30-year fixed-rate mortgages: averaged 3.85%, with an average of 0.8 points, rising from last week’s 3.76% average. Last year at this time, 30-year rates averaged 3.05%.
• 15-year fixed-rate mortgages: averaged 3.09%, with an average of 0.8 points, rising from last week’s 3.01% average. A year ago, 15-year rates averaged 2.38%.
• 5-year hybrid adjustable-rate mortgages: averaged 2.97%, with an average of 0.3 points, rising from last week’s 2.91% average. A year ago, 5-year ARMs averaged 2.77%.

Freddie Mac reports average commitment rates along with points to better reflect the total upfront costs of obtaining the mortgage. Source: Freddie Mac and “Instant Reaction: Mortgage Rates, March 10, 2022,” National Association of REALTORS® Economists’ Outlook blog

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Soaring Housing Costs Contribute to Highest Inflation in 40 Years

Housing costs are one of the top three categories causing inflation in the U.S. to surge, the U.S. Department of Labor announced Thursday. The largest items in households’ budgets—shelter, gasoline, and food—were the main culprits in February that fueled the highest inflation rates since 1982.

The Consumer Price Index, which measures price fluctuations in goods and services, increased 7.9% in February compared to a year earlier.

“There’s nowhere to hide,” Greg McBride, chief financial analyst for Bankrate, told CNBC. “This is hitting everybody … [with inflation] most pronounced on items that are necessities.”

Household grocery bills increased 8.6% over the last year; that is the fastest pace since 1981. Gasoline prices are up 38% compared to a year ago, although that statistic does not reflect the latest increases at the pump following Russia’s invasion of Ukraine.

Shelter costs such as rents are up 4.7% compared to last year. That is the highest since May 1991. “That comparatively benign increase … is likely to put the biggest squeeze on household budgets for the remainder of the year,” McBride told CNBC. Housing comprises more than a third of households’ average budgets.

Also, mortgage rates rose this week in response to higher inflation, averaging 3.85%, Freddie Mac reports.

“While it’s too soon to know how the war in Ukraine will affect the U.S. economy, it seems that it will continue to put upward pressure on inflation,” Nadia Evanelou, senior economist and director of forecasting at the National Association of REALTORS®, writes on the association’s blog.

In an attempt to try to tame inflation, the Federal Reserve is expected to start raising its short-term interest rates next week. Source: “There Is ‘Nowhere to Hide’ for Consumers as Inflation Hits Food, Gas, Housing,” CNBC (March 10, 2022) and “Instant Reaction: Mortgage Rates, March 10, 2022,” National Association of REALTORS® Economists’ Outlook blog

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Pandemic Led Many to New Home Dreams

Consumers continue to believe that homeownership is the American dream, and the pandemic may have provided consumers with more time to ponder what that dream would look like for them.

Over a quarter of Americans—29%—say they have been more likely to think about pursuing their dreams since the pandemic began, whether that is making a housing move, pursuing a passion project, making a career change, or expanding their family, according to a new survey commissioned by Coldwell Banker Real Estate LLC of 2,000 U.S. adults.

When it comes to finding a home, location and lifestyle tended to be top-of-mind. Eighty-seven percent of respondents said it’s important to them that the location of their home—whether rural, suburban, or urban—aligns with their lifestyle.

Not all Americans’ dream homes look alike. The top dream home locations, according to survey respondents, were split among:

• Locations with warm weather: 33%
• Suburban areas with ample space: 28%
• Remote and off the beaten path with a large plot of land: 25%

Is a Dream Home Practical?

Forty-six percent of homeowners surveyed say they are unsure of the current value of their homes. They may not know if the dream home is obtainable. Some are relying on real estate websites with a home value estimate calculator as a first step before contacting a real estate agent.

In fact, survey respondents say that if they were looking to sell, they would seek a real estate website with a home price estimate calculator as their initial step in the process, according to the survey. Still, 60% of respondents said they would trust a licensed real estate agent to accurately estimate the value of a home over an online valuation tool.

For those who do want to press ahead in their homebuying dreams, they are face a limited selection. Two-thirds of potential home buyers say they haven’t found their dream home; the percentage is highest among Gen Z and millennials.

Why Moving Dreams Remain High

Compared with a similar survey conducted last fall, respondents showed more willingness to take a pay cut or accept a new job with a lower salary if it meant they could move to a more affordable location, according to the Coldwell Banker survey. The “Great Resignation” could be a wild card for the real estate market, and housing affordability and cost of living are factors weighing on more Americans, the survey found.

Forty-four percent of American homeowners who plan to sell their homes in the future want to move to a different city or state. But they aren’t moving on a whim, the survey says. They’re prioritizing the following factors:

• Quality of life (lifestyle and environmental elements): 94%
• Housing affordability: 93%
• Cost-of-living affordability: 93%
• Job market strength: 70%

Coldwell Banker says it created the Move Meter with such criteria in mind. The tool allows consumers to compare various price points to evaluate a move from one place to another, such as weighing housing affordability, quality of life, job market strength, and living affordability. Source: Coldwell Banker

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Homes Worth $1 Million or More at Record High

Higher home prices mean that more are valued above the $1 million mark. The number of homes that are $1 million or more has nearly doubled since before the pandemic began, according to a new study released by Redfin.

Nationwide, 8.2% of homes—or 6 million—were valued at $1 million or more in February—a record high, Redfin reports. That is up from 4.8% prior to the pandemic just two years ago.

Anaheim, Calif., has seen the largest jump in that home price bracket, with 55% of its housing stock now worth $1 million or more—up from 27% two years ago, according to the study. That also is the first time Anaheim has passed the 50% threshold in its market for such prices. Meanwhile, San Francisco continued to have the most overall properties worth at least $1 million.

“The surge in housing values has turned many homeowners into millionaires, but has pushed homeownership out of reach for a lot of other Americans,” says Taylor Marr, Redfin’s chief economist. “Incomes have increased, but not as fast as home prices, which means many people are stuck renting or have to move somewhere more affordable if they want to buy a home.”

Home prices have climbed rapidly due to high housing demand and a limited number of homes for sale. During the four weeks ending Feb. 27, the number of homes for sale fell 50% compared to two years earlier and is at an all-time low.

Where $1 Million–Plus Homes Are the Most Prevalent

Seven of the top 10 metros for $1 million-plus homes are located in California, according to Redfin’s analysis. The housing markets where you’ll find the most homes worth $1 million or more are:

• San Francisco: 88.7% of homes were worth at least $1 million in February
• San Jose, Calif.: 85.9%
• Anaheim, Calif.: 55.3%
• Oakland, Calif.: 55.1%
• San Diego: 40.4%
• Los Angeles: 38.5%
• Honolulu: 37.1%
• Seattle: 36.5%
• New York: 32.1%
• Oxnard, Calif.: 31.2%

Source: “A Record 8% of U.S. Homes Are Worth at Least $1 Million,” Redfin (March 9, 2022)

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Will Multigenerational Living Lose Traction?

As home prices continue to rise, housing experts see an ongoing effort by extended family members to pool their money to combine households and save on costs. But data suggests that rising home prices do not correlate to multigenerational living, according to a new analysis from LendingTree. Some current multigenerational households may be temporary due to the pandemic, the study’s authors suggest.

LendingTree researchers defined multigenerational households as three or more generations who live in the same home.

“The long-term impact that the pandemic will have on multigenerational households is still unclear,” says Jacob Channel, LendingTree’s senior economic analyst. “With that said, while some people may have opted to move in with family during the height of the pandemic, that doesn’t mean that they planned on staying in a multigenerational home forever. … It does appear safe to assume that even with the disruption to usual housing arrangements caused by COVID-19, multigenerational households won’t suddenly become the norm in the U.S.”

Multigenerational households did increase during the onset of the pandemic. LendingTree’s analysis covered the timespan between 2014 to 2019, but data since the pandemic started has shown an uptick in demand. Eighteen percent of buyers between the ages of 41 to 65, many of whom fall within the Generation X age segment, purchased a multigenerational home during the past year, according to the Home Buyer and Seller Generational Trends report published in 2021 by the National Association of REALTORS®. The most common reason for those who purchased a multigenerational home was to take care of their aging parents.

Multigenerational living may be more common in certain states. For example, Arizona, Nevada, and Colorado have posted the largest increases in multigenerational households over the past five years, according to LendingTree’s analysis. Between 2014 to 2019, multigenerational households have risen by an average of 12.34% across the three states, according to LendingTree’s research.  https://e.infogram.com/_/gJCjHUk0336vL1VQc0Aq?parent_url=https%3A%2F%2Fmagazine.realtor%2Fdaily-news%2F2022%2F03%2F09%2Fwill-multigenerational-living-lose-traction&src=embed#async_embed Source: “Even in the Face of Rising Home Prices, Multigenerational Households Haven’t Spiked in Popularity,” LendingTree (March 8, 2022)

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