Mortgage Rates Dip

The 30-year fixed-rate mortgage reversed course this week and decreased to an average of 3.89%, Freddie Mac reports. However, with expectations of even higher inflation on the horizon, mortgage rates likely will resume their upward trek over the coming weeks, Nadia Evangelou, senior economist and director of forecasting at the National Association of REALTORS®, notes on the association’s blog.

Despite this week’s decline, mortgage rates have risen by more than a full percentage point over the last six months, says Sam Khater, Freddie Mac’s chief economist. “Overall economic growth remains strong, but rising inflation is already impacting consumer sentiment, which has markedly declined in recent months,” Khater says. “As we enter the spring homebuying season with higher mortgage rates and continued low inventory, we expect home price growth to remain firm before cooling off later this year.”

Freddie Mac reports the following national averages with mortgage rates for the week ending Feb. 24:

• 30-year fixed-rate mortgages: averaged 3.89%, with an average 0.8 point, dropping from last week’s 3.92% average. Last year at this time, 30-year rates averaged 2.97%.
• 15-year fixed-rate mortgages: averaged 3.14%, with an average 0.7 point, dropping slightly from last week’s 3.15% average. A year ago, rates averaged 2.34%.
• 5-year hybrid adjustable-rate mortgages: averaged 2.98%, with an average 0.3 point, unchanged from last week. A year ago, 5-year ARMs averaged 2.99%.

Freddie Mac reports average commitment rates along with average points to better reflect the total upfront costs of obtaining the mortgage. Source: Freddie Mac and “Instant Reaction: Mortgage Rates, February 24, 2022,” National Association of REALTORS® Economists’ Outlook blog

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Investment Firms Target Vacation Homes

Vacation homes have seen growing demand since the pandemic began, and investors are taking notice of the sector, largely the domain of individual homeowners until now.

Investors want to capture more of the bustling market for short-term rentals. Saluda Grade, a New York investment firm, has teamed up with AvantStay, a short-term rental operator, to buy about $500 million of homes. Saluda Grade, which is targeting homes within driving distance of major population centers, will buy the properties, and AvantStay will manage them for a fee, The Wall Street Journal reports.

“There’s a lot more yield available in the short-term market,” Ryan Craft, Saluda Grade’s chief executive, told The Wall Street Journal.

The startup reAlpha Tech Corp. is reportedly pooling money from small-time investors to buy short-term rental homes as well.

But buying properties one by one can take time and make it more difficult for investors to invest large sums all at once, The Wall Street Journal reports. Also, many cities have restrictions on the amount of short-term rental listings.

“Regulatory risk is a huge problem,” Sebastian Rivas, CEO of Andes STR, told The Journal.

But investors are eyeing how to take advantage of the growing interest in short-term rentals. Short-term rentals, such as those offered through Airbnb and Vrbo, have been growing in demand as remote work has allowed more people to work from anywhere. Read more: Short-Term Rentals Surge Among Remote, Hybrid Workers Source: “The Vacation Home Listed on Airbnb Might Be Owned by Wall Street,” The Wall Street Journal (Feb. 15, 2022) [Log-in required.]

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Moving More Stressful Than Breakups

Moving can be stressful. In fact, 38% of survey respondents said moving is more stressful than parting ways with a significant other, according to Move.org, a relocation resource.

Moves can be costly, often much more so than what many plan for. Seventy percent of Americans who used professional moving services say they were charged more than their initial quote. Thirty-one percent said they paid $100 to $300 more, and 32% of respondents said they paid $500 to $1,000 more. Thirteen percent of respondents said they paid $1,000 or more, according to the Move.org survey.

More than half of people who used professional moving services said they felt scammed for having to pay more than their initial quote.

Move.org researchers advise budgeting more than what you’re quoted as well as comparing quotes from multiple professional moving services. Also, “we recommend finding vetted professional movers with reliable customer service,” the study says.

Compounding issues on moving, people also say they’ve run into numerous shortages in the moving process. Sixty-one percent of respondents said they experienced a shortage of moving trucks. Sixty-three percent said they saw a shortage of packing materials. Sixty-four percent of respondents also said they found a shortage of professional moving services.

Moving takes time regardless of the shortages. Forty-one percent of respondents said it took them 15 to 40 hours to pack their belongings, and 27% said it took them 40 to 80 hours. Source: “Most Americans Hire a Mover, Here’s Why You Should Find the Right One,” Move.org (Feb. 9, 2022)

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Consumers Optimistic About Housing

More than 50% of prospective buyers recently surveyed say they feel optimistic about the housing market—despite headlines over rapidly rising costs that can feel discouraging. The new survey from the real estate tech company OJO Labs shows that many house hunters remain hopeful that the next three months will offer a good opportunity to buy a home, as buyers feel more urgency with the threat of rising mortgage rates.

Consumers have become more hopeful about their homebuying chances than they were last month. Slightly fewer than half of all respondents expressed a positive sentiment about homebuying the previous month, according to the OJO Labs survey. This latest survey was conducted between Jan. 25 and Feb. 14 with more than 900 respondents.

A separate survey by NerdWallet, released in January, showed 45% of millennials are optimistic about buying a home in 2022. They showed more optimism than Gen Z (35%), Gen X (24%), and baby boomers (31%). Millennials cited personal finances, savings, and higher incomes as reasons for their optimism. Source: “More Consumers Still Feel Positive About Buying in the Next Three Months,” OJO Labs (Feb. 17, 2022) and “Home Buyers Still Hopeful, Would-Be Sellers Less So,” NerdWallet (Jan. 25, 2022)

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Homes More Affordable Than Renting

Home prices are rapidly rising, but rental prices are as well, and at a faster pace. In more than half of the nation’s largest U.S. metros, Americans likely will find buying a starter home more affordable than renting, according to a newly released report from realtor.com®.

Median rental prices rose 19.8% year over year in January. That has outpaced monthly starter homeownership costs, despite a very competitive housing market, researchers say. For comparison, the monthly costs of buying a home with up to two bedrooms have seen an 11% year-over-year jump, according to realtor.com®. Meanwhile, apartment costs for all unit sizes continue to increase: Studios are up 21% annually, and one-bedroom and two-bedroom units are both up by 19.2%.

In January, the monthly cost of buying a starter home was more affordable than renting a similar-sized apartment in 26 of the 50 largest metros realtor.com® tracks.

“U.S. rental markets are more than making up for lost time, with January data showing national rents continued to surge by double digits over the last year and at a faster pace than for-sale home prices,” says Danielle Hale, realtor.com®’s chief economist. “So much faster, in fact, that even as monthly starter home costs increased in many of the markets that favored buying, rents for a similar-sized unit were 20% higher.”

Rental and homebuying costs are both climbing. But several factors may tip affordability in favor of first-time buying, Hale says. Rents are forecasted to outpace listing price growth in 2022. Also, the majority of property owners recently surveyed say they plan to raise rental asking prices this year.

However, “the buy-versus-rent decision ultimately depends on personal circumstances like where you live, your financial situation, and how long you want to live in your next home,” Hale says. “As mortgage rates continue climbing, those looking to buy their first home in 2022 are more likely to find lower costs now than later in the year, but home selection is expected to improve as we move toward spring when many homeowners target listing their home for sale.”

The following 10 areas topped realtor.com®’s list of metros that favor buying a starter home over renting.

Source: realtor.com®

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Sales Surged in January

Home buyers appeared in a rush to lock in mortgage rates ahead of further increases and to take advantage of any housing inventory they could find last month. Existing-home sales climbed 6.7% in January compared to the prior month, led by the strongest gains in the Southern region of the U.S., according to the National Association of REALTORS®’ latest existing-home sales report.

Sales rose even as housing inventories fell to an all-time low and home prices increased at a much swifter pace, NAR reports.

Existing-home sales—completed transactions for single-family homes, townhomes, condos, and co-ops—increased to a seasonally adjusted annual rate of 6.50 million in January. Sales, however, are down 2.3% compared to a year ago, NAR reports.

“Buyers were likely anticipating further rate increases and locking-in at the low rates, and investors added to overall demand with all-cash offers,” says Lawrence Yun, NAR’s chief economist. “Consequently, housing prices continue to move solidly higher.”

Meanwhile, “the inventories of homes on the market remains woefully depleted, and in fact, is currently at an all-time low,” Yun adds. Homes priced at $500,000 and below are vanishing from the market. Supply is rising at the higher price ranges. “There are more listings at the upper end—homes priced above $500,000—compared to a year ago, which should lead to less hurried decisions by some buyers,” Yun adds. “Clearly, more supply is needed at the lower end of the market in order to achieve more equitable distribution of housing wealth.”

5 Key Housing Indicators

Here’s a closer look at how existing-home sales performed in January, according to NAR’s latest report:

• Home prices: The median existing-home sales price increased at a stronger pace in January, climbing 15.4% annually to $350,300.
• Inventories: Total housing inventory at the end of January was 860,000 units, plunging nearly 17% from a year ago. Unsold inventory is at a 1.6-month supply at the current sales pace.
• Days on the market: Seventy-nine percent of homes sold in January were on the market for less than a month. Homes are selling faster than last year. Properties typically stayed on the market for 19 days in January, down from 21 days a year ago.
• First-time home buyers: First-time buyers accounted for 27% of sales in January, down from 33% in January 2021. As home prices increase and mortgage rates rise, first-time buyers could be getting priced out of the market, Yun notes.
• Investors and second-home buyers: Individual investors or second-home buyers purchased 22% of homes last month, up from 15% a year ago. They tend to account for the largest bulk of cash sales, which accounted for 27% of transactions in January.

Regional Breakdown

The South saw the largest uptick in home sales last month, but all four major regions of the U.S. posted gains. The following are how existing-home sales fared in the main regions of the U.S. in January.

• South: home sales climbed 9.3% in January compared to the prior month, reaching an annual rate of 2.94 million. That is an increase of 0.3% from a year ago. Median price: $312,400, an 18.7% increase compared to a year ago
• Midwest: sales increased 4.1% in January compared to the previous month and reached an annual rate of 1.51 million. That is equal to the level a year ago. Median price: $245,900, a 7.8% rise from January 2021
• Northeast: sales increased 6.8% in January, reaching an annual rate of 780,000. That marks an 8.2% decrease from a year ago. Median price: $382,800, up 6% compared to January 2021
• West: home sales rose 4.1% and reached an annual rate of 1.27 million in January, down 6.6% compared to a year ago. Median price: $505,800, up 8.8% from January 2021

Source: National Association of REALTORS®

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Disney to Build Themed Housing Development

The Walt Disney Company is bringing “Storyliving by Disney” to those who want to live out the Disney magic beyond the silver screen. It announced it will be building a housing development in Southern California—the first of what they plan to be many across the U.S.

The development, to be built in collaboration with DMB Development, will be located in Rancho Mirage, Calif., and will be constructed on a 24-acre “grand oasis featuring clear turquoise waters with crystal lagoons,” a release announces, adding in that will be built sustainably with low water consumption. The planned neighborhood will be called Cotino. No dates were provided for its opening.

According to the press release, Cotino will welcome homeowners of all ages, with one section of the development tailored to the 55-plus age group. The development will feature estates, single-family homes, and condos.

Disney cast members trained in the company’s guest service will operate the community association. Also, voluntary club memberships will be available to residents for accessing a waterfront clubhouse, club-only beach area, recreational water activities, and Disney programming and entertainment throughout the year, such as live performances, cooking classes, and more.

“For nearly 100 years, Disney has shared stories that have touched the hearts and minds of people all around the world,” Josh D’Amaro, chairman of Disney Parks, Experiences and Products, said in a release announcing the new development. “As we prepare to enter our second century, we are developing new and exciting ways to bring the magic of Disney to people wherever they are, expanding storytelling to storyliving. We can’t wait to welcome residents to these beautiful and unique Disney communities where they can live their lives to the fullest.”

Disney said additional locations for future developments are currently being explored.

Disney has gotten into residential real estate in the past. Disney has sold luxury vacation homes through a 980-acre gated Golden Oak community in Florida. Also, in 1996, Disney developed a 5,000-acre residential community known as Celebration, Fla., about 20 miles outside of Orlando. Disney has since divested most of its interest in the development, The Wall Street Journal reports. Source: The Walt Disney Company and “Disney Adults Never Have to Grow Up With New ‘Storyliving’ Residential Housing,” New York Post (Feb. 16, 2022)

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