Home prices are up sharply, and the average annual homeowner equity gains in the fourth quarter of 2020 reached the highest level since 2013, CoreLogic reports in its latest Home Equity Report. These gains among homeowners have helped to offset some of the financial difficulties from the pandemic.

“This growing bank of personal wealth that homeownership affords was noticed by many but in particular for first-time buyers who want a piece of the cake,” says Frank Martell, president and CEO of CoreLogic. “As a result, we may see more of those currently renting start to enter the market in the near future.”

In the fourth quarter of 2020, the average homeowner gained about $26,300 in equity during the past year. California, Idaho, and Washington saw the largest average equity gains at $54,500, $48,500, and $47,200 respectively.

Meanwhile, properties in a negative equity position—reflecting borrowers who owe more on their mortgages than their homes are currently worth—dropped to 2.8% of all properties with a mortgage in the fourth quarter of 2020, a 21% decrease compared to the previous quarter.

The increase in equity is enabling more families “to finance home remodeling, such as adding an office or study, further contributing to last year’s record level in home improvement spending,” says Frank Nothaft, chief economist at CoreLogic.

The housing market largely outperformed the rest of the economy throughout 2020. But the housing market’s recovery still remains more “lopsided than ever as the gap between buyer demand and supply widens,” according to a newly released report from realtor.com® about the pandemic’s impact on the housing market over the past year.

New listings remain well-below the pre-COVID-19 baseline. However, the housing market overall in sales is performing above pre-pandemic levels, according to realtor.com®’s Housing Market Recovery Index.

“The housing market bounced back so much faster than other sectors of the economy that many have forgotten that housing activity slowed to a crawl during the early days of the pandemic,” says Danielle Hale, realtor.com®’s chief economist. “One year later, the demand for housing remains strong, while supply remains limited.”

Realtor.com® reports there are 50% fewer homes available for sale now than a year ago. The homes that are on the market are selling quickly. During the week ending March 6, homes sold, on average, six days faster than a year ago. “Buyers not only have fewer homes to choose from, they need to act fast to succeed,” realtor.com® notes in its report.

But Hale cautions a turn may be ahead for the housing market. “We expect the vaccine’s rollout to alleviate some sellers’ anxieties, which could help the supply crunch,” she notes. “At the same time, although interest rates remain low, they’ve begun to increase, which could test buyer demand in the coming months.”

Home prices have surged to double-digit percentage gains over the past year, which means home buyers are having to either bring more to the closing table or borrow more. They’re doing both.

Down payments are at record highs, according to ATTOM Data Solutions’ fourth quarter 2020 U.S. Residential Property Mortgage Origination Report. The median down payment on a single-family home and condo purchased with financing in the fourth quarter of 2020 was $24,500, up 82% compared to the fourth quarter of 2019 ($13,441), according to the report, with records dating back to at least 2000.

The median down payment represents 7.7% of the median sales price for homes purchased with financing during the fourth quarter of 2020, up from 5.2% a year prior.

Home buyers are borrowing more to afford the higher home prices. The median loan amount was $280,000—another record high, according to ATTOM Data Solutions’ report. The amount buyers are borrowing for their mortgage jumped nearly 25% compared to the fourth quarter of 2019.

The National Association of REALTORS®’ latest existing-home sales report, reflecting January housing data, showed the median existing-home price for all housing types was $303,900, a 14% increase compared to a year prior.

A home often represents about 90% of the total wealth of a household. Homeownership often has long been pointed to as a way to build wealth over the long run. It also could help narrow racial income and wealth inequity gaps, writes Gay Cororaton, senior economist for the National Association of REALTORS®, at the association’s Economists’ Outlook blog.

But how much wealth potential can you gain over time? Cororaton offers the following scenario: Take a homeowner who purchased a single-family existing home 10 years ago at the median sales price of $170,567, with a 10% down payment. Then, they sold the home at the median sales price of $315,700 in the fourth quarter of 2020. They would have built up a home equity gain of $176,123. Over a 30-year period, that would jump to $307,979, Cororaton notes.

“Wealth accumulation takes time, so the earlier households start owning homes, the greater the wealth accumulation,” Cororaton writes.

In some metros, homeowners are accumulating equity over a decade faster than others. For example, the areas that saw the greatest wealth gains from homeownership between the fourth quarter of 2010 and the fourth quarter of 2020 were:

• San Jose-Sunnyvale-St. Clara, Calif.: $929,471
• San Francisco-Oakland-Hayward, Calif.: $761,204
• Anaheim-Sta. Ana-Irvine, Calif.: $509,806
• Los Angeles-Long Beach-Glendale, Calif: $430,196
• San Diego-Carlsbad, Calif.: $427,896
• Urban Honolulu: $412,986
• Naples-Immokalee-Marco Island, Fla.: $379,243

Phone calls are still good for business. They can leave both participants feeling more emotionally connected to the other than a simple text exchange can. Also, studies show that a phone call is better at detecting emotional nuances and misunderstandings than video calls, even though you’re relying on voice alone.

The study, conducted by researchers Amit Kumar and Nicholas Epley, shows that seeing the other person through a video call does not necessarily make the other person feel any more connected than simply talking with them over the phone. On the other hand, just being able to hear the other person’s voice tended to create more understanding and connection. Still, researchers didn’t discount text-based interactions or even email in several cases.

A phone call can seem like a nuisance to some. The interruption to the day may be one factor, as phone calls have earned the reputation of taking time. “There’s one more consideration often holding many of us back [from talking on the phone nowadays]—the difficulty of extracting yourself from the call once it’s begun,” writes Jessica Stillman for Inc.com. “Finding a graceful exit from a ‘just called to say hi’ conversation can be tricky, and most of us have experienced the agony of an acquaintance who won’t stop chattering away.”

Should You Text That Client Before Calling?

In a study conducted in the U.S., which recently appeared in the journal Proceedings of the National Academy of Sciences, researchers found that after analyzing thousands of phone conversations between family and friends and between strangers, usually one person wants to stop talking first. Politeness often keeps the other from interrupting. But as a result, conversations never ended when a participant was ready, which can hamper the effectiveness of a phone call.

“I’m hesitant to tell you that I’ve got 20 minutes to talk to you because I don’t want to appear rude, but actually it’s just going to make that conversation so much better for both of us because we know the rules; we know the terms of engagement,” Paul Dolan, a behavioral scientist at the London School of Economics, noted in a recent UK Guardian article, separate from the study.

Many workers want to continue to work from home, even when the pandemic is over. A new survey from JLL of 2,000 employees globally found that 72% want to be able to work from home more during the workweek, up considerably from 34% before the pandemic. Sixty-six percent are in favor of a hybrid model that mixes in office, home, and a co-working facility.

The idea of a 3-2-2 model is gaining popularity with workers. LinkedIn’s year-end roundup of 2020’s workplace trends called it a one to watch in the new year. The model would allow employees to work three days in the office, two days remotely, and two days off.

While many workers don’t want to return full-time to the office, they are missing the workplace. Fifty-two percent of professionals say they do not feel as productive at home, and 58% miss working at an office, according to a separate JLL survey. The 3-2-2 model could allow workers to balance remote and in-office work.

“The emergence of this new framework for the workweek confirms that people don’t just want to go back to the office—for many, they need to,” writes Kenny Kane, chief operating officer at Firmspace, for Forbes.com. “And commercial real estate agents will see this reflected in their quarterly reports as soon as the pandemic turns around.”

Still, a CBRE analysis cautions that the growth in remote work could cut the overall need for office space by 15% after the pandemic ends. As workplaces consider new leases, they’re demanding more flexible space options, shared meeting spaces, better indoor air quality, connected building apps, and touchless technology, CBRE notes. Also, about 50% of the workers surveyed by JLL consider socialization spaces crucial to their experiences in the office in the future. These spaces could include coffee and tea areas, lounges, terraces that offer more connection with nature, and more.

Peter Miscovich, managing director of strategy and innovation at JLL, told the Commercial Observer that some clients are wanting to decrease their office portfolios, open up satellite spaces in the suburbs, or retool their existing spaces to fit a new hybid workplace model.

Co-working spaces are increasingly being viewed as an alluring option to more workers. The JLL survey finds that 40% of workers would like to be able to work at a co-working space in the future.

Regardless, the office will remain a key role for companies as a collaboration space, Miscovich says. Only 10% of survey respondents said they would want to work from home exclusively. Seventy-four percent said they would be willing to return to the office at least part time; 24% would be willing to return on a full-time basis.

As more of the country breathes a sigh of relief as temperatures rise and the countdown to spring shortens, there’s a weather-related concern that remains. Melting snow followed by a cold snap—which is on the way for many parts of the country in the coming week—may cause ice dams to develop and bring a cascade of water into homes. Even if your house hasn’t faced this problem this year or in prior years, it’s still wise to think ahead to avoid the potential mess and repair costs, which can be significant.

Design, building, and remodeling experts at Orren Pickell Building Group in the Chicago area report that the company has been contacted by a number of homeowners who faced the challenge this year due to heavy snowfall and unusually cold temperatures followed by warm days.

How Ice Dams Form

“When we experience a polar vortex, where there’s a combination of heavy snow and then a dramatic decrease in temperature, it’s a situation that can create the perfect ice dam situation,” says Eric Pickell, head of sales and marketing. “That happened this year because of the amount of snow from several large storms and sustained cold, followed by a warming cycle.”

Ice dams build up this way. As heat rises from the house into an attic, it melts the snow on the roof, which drips into the cold gutters and, when cold enough, forms a block of ice—the ice dam. “As the dam enlarges, it may trap water behind it that gets pushed back under the shingles and into the attic as it melts, or into the house if there’s no attic,” Pickell says. Having a lower-pitched roof and poor insulation may exacerbate the problem.

What You Can Do

There are several steps homeowners can take to avoid ice dams. Advise them to consider these possibilities:

• Visually inspect the exterior of the house. Make sure ice and snow aren’t accumulating at the gutter line. If they do, the homeowner should hire a professional to clear the roof rather than try to tackle the problem on their own. “There are professionals who are licensed who know how to steam icicles and ice dams away,” Pickell says. These pros also may use roof rakes and shovels. However, Pickell notes that because of the accumulation this winter, many professionals were more difficult to hire.
• Be sure a gutter and downspout system is in tip-top shape. Gutters may contribute to the problem when snow and ice build up and cause water to back up. This is why a gutter inspection is key. On the other hand, gutters are important for the rest of the home’s good maintenance because they direct water from the roof, down through downspouts, and away from a house rather than remain at its base by the foundation.
• Take care of the roof and gutter system by having it regularly inspected. This also includes sealing all points where water can infiltrate an attic or conditioned spaces of the home through roof sheathing. More insulation may be needed in the attic if there are areas where the insulation has been removed or where it has settled. Additionally, if the home’s HVAC system and ductwork are located in the attic, these need to be properly sealed and insulated so warm air isn’t leaked into the space, which can prematurely warm the roof and create the right condition for an ice dam.
• Make any needed repairs promptly. Gutters and downspouts may need repairs and replacement, depending on the material used and how they were constructed. Generally, Pickell recommends five- or six-inch-width gutters and properly sized downspouts. These may be aluminum, galvanized, or copper. Aluminum is generally the most cost-effective, though copper and galvanized can last longer with proper maintenance. Where gutters and downspouts often fail is near their seams, which may wear out. These should be inspected and sealed regularly.

Homeowners may also consider adding de-icing cables along the length of eaves, in any valleys, and along downspouts in areas where ice dams have formed to prevent future problems. The downside of the cables, Pickell says, is that they can detract from a home’s aesthetics and require a power source. The cost can be about $1,000 to $2,500, depending on the size of the roof.

Home buyers may not be happy: The 30-year fixed-rate mortgage topped the 3% threshold, averaging 3.02% this week, Freddie Mac reports. Despite the uptick, economists note that mortgage rates remain near historical lows.

Since reaching an all-time low in January, mortgage rates have risen by more than 30 basis points, “and the impact on purchase demand has been noticeable,” says Sam Khater, Freddie Mac’s chief economist. “While purchase activity remains high, it has cooled off over the last few weeks and is currently on par with early March, prior to the pandemic.”

Still, Khater predicts that the rise in mortgage rates over the next couple of months will likely be more muted in comparison to the last few weeks. The National Association of REALTORS® agrees, forecasting the 30-year fixed-rate mortgage to average 3% for the first half of this year.

Job gains also may help lift buyer demand regardless of mortgage rate movement. The Commerce Department reported Friday that the country added 379,000 jobs in February, which could counterbalance rising mortgage rates, says NAR Chief Economist Lawrence Yun. “The [real estate] market will experience countervailing forces of the higher push from more jobs but also the pullback of higher mortgage rates,” Yun says. “We will have to wait to see which force will be stronger. Back in 2018, the economy roared with 2.3 million job creations, but home sales modestly declined because mortgage rates rose from 4% at the beginning of the year to 4.6% by the year’s end. This time, rate increases will be occurring but will be well below 4%.”

Freddie Mac reports the following national averages with mortgage rates for the week ending March 4:

• 30-year fixed-rate mortgages: averaged 3.02%, with an average 0.6 point, increasing from last week’s 2.97% average. Last year at this time, 30-year rates averaged 3.29%.
• 15-year fixed-rate mortgages: averaged 2.34%, with an average 0.7 point, unchanged from last week. A year ago, 15-year rates averaged 2.79%.
• 5-year hybrid adjustable-rate mortgages: averaged 2.73%, with an average 0.3 point, falling from last week’s 2.99% average. A year ago, 5-year ARMs averaged 3.18%.

Freddie Mac reports commitment rates along with average points to better reflect the total cost of obtaining a mortgage.