Why Buyers May Lose If They Don’t Act Now

Why Buyers May Lose If They Don’t Act Now

Rising mortgage rates could have a big impact on the direction your buyers choose when shopping for real estate, economists warn. “Every time the interest rates go up, you eliminate a group of people who can no longer afford to buy a house,” Don Frommeyer, a mortgage broker at Marine Bank in Indianapolis, told realtor.com®. “Some people may have to rent for a period of time until they make more money—or buy a smaller house.”

To avoid further complications in their plans, your buyers may want to speed up their home search this spring, as interest rates are forecasted to move higher in the coming months. Forty-four percent of home buyers say rate increases likely will force them to settle for a smaller, less expensive home that requires a longer commute to their jobs, according to a realtor.com® survey. First-time buyers may be most affected by rising costs, as increasing home prices and interest rates price some out of the market.

Mortgage rates are at their highest levels in more than four years. The 30-year fixed-rate mortgage averaged 4.46 percent last week, according to Freddie Mac, and that’s largely expected to increase since the Federal Reserve said it is likely to raise its short-term interest rates this year. That could prompt mortgage rates to move higher at least three times this year, starting this month.

“For the bulk of buyers, it’s not going to kill their decision to purchase a home,” Rick Palacios Jr., director of research at John Burns Real Estate Consulting, told realtor.com®. “If anything, it will get them off the fence by creating a sense of urgency.” Higher rates are “a kick in the pants for you to start thinking seriously [about buying].”

Rate increases—even minor ones—can add up over time. Realtor.com® offers this example: On a $300,000 house with a 30-year fixed-rate mortgage and 20 percent down payment, the difference between a 4 percent and 5 percent mortgage rate is $142 a month. Calculated over the life of the loan, that is more than an extra $51,000. “Buyers thought they could wait forever because rates were going to stay low forever,” says Palacios. “They’re starting to realize that if they’re going to buy, they should probably buy now.”

Home buyers who are concerned about rising rates may want to lock in with a lender, which guarantees the current rate for a set period of time. Still, don’t let your clients linger on making a decision. It typically costs several hundred dollars to lock in a rate.

Source: “Is It Last Call for Low Mortgage Rate? Why Home Buyers Should Act Now,” realtor.com® (March 7, 2018)

Is the Market Suddenly Softening?

Is the Market Suddenly Softening?

The housing market may not be as robust this spring as some originally predicted, and real estate professionals are pointing to the main culprits as rising mortgage rates, a new tax law, and growing affordability problems among first-time buyers.

The spring market will be the true judge of whether the housing market has hit a slowdown. About 40 percent of the year’s sales tend to occur from March through June, according to the National Association of REALTORS®.

“It’s still going to be a tight market, but we’re moving from an extremely tight market to one that has some wiggle room around the edges for buyers,” Daren Blomquist, senior vice president at ATTOM Data Solutions, a real estate research firm, told The Wall Street Journal.

NAR’s Chief Economist Lawrence Yun is forecasting home sales to be mostly flat this spring and for most of 2018 compared to a year ago. Yun points to ongoing inventory shortages and housing affordability concerns from rising home prices and mortgage rates.

NAR reported that existing-home sales in January posted their largest annual drop in three years. Also, pending home sales, based on contract activity, slowed 4.7 percent in January, also to the lowest level in more than three years. Median home prices, on the other hand, rose 5.8 percent compared to a year ago.

Housing analysts caution that a new tax bill may also prompt a slowdown in the top end of the housing market. The tax bill capped the mortgage interest deduction and state and local tax deductions, which are expected to mostly affect the higher end of the market. Read more about what the new tax law means for real estate.

Meanwhile, mortgage rates continue to be on the rise since the start of the year. The 30-year fixed rate averaged 4.46 percent this week, its highest average since January 2014, Freddie Mac reports.

Source: “Spring Home Sales Could Be the Weakest in Years,” The Wall Street Journal (March 7, 2018) [Log-in required.]

4 Activities That Waste Your Time

4 Activities That Waste Your Time

You may attempt to optimize your work time by hiring assistants or support staff, upgrading tools and equipment, and improving your systems. Even so, you may not be taking advantage of every minute in the day. What activities are wasting your time at work? Business news website SmallBusinessTrends.com flags the top time-wasters.

1. Email. Consider the amount of time you and your coworkers spend every day wading through emails that drone on with very little meaningful information. Many workers are careless in how they are organize, write, and send emails, which eventually adds up to hours of wasted time. Use an analytics tool such as Gmail Metrics to see your company’s email usage and take further action for improvement.
2. Social media. Two-thirds of American employees log into social media accounts at least once per day while at work, according to a recent survey. Twenty percent of respondents reported spending an hour or more of their workday on social media. You probably don’t want to block social media sites on your company’s internet—it’s an essential lead generation tool. But you may be able to set boundaries around social media usage while in the office.
3. Meetings. At first, meetings may not immediately seem like time-wasters. But they require advanced prep time and include multiple people at once. Sometimes, meeting discussions can be had in a short email exchange, or fewer attendees may be necessary. Reduce your total attendee number and your meeting time, and start with a clear agenda beforehand to get more control. For many, meetings are a “necessary evil,” so try working to make them as productive as possible rather than getting rid of them completely.
4. Talking and texting. People often chat and gossip with others at work or talk and text with friends and family members. You don’t want to stop communicating with others, and you don’t want to damage teamwork dynamics. But chit-chat unrelated to work is another time-sucker: 50 percent of respondents in a recent survey say “talking and texting” is the leading cause of wasting time, followed by “gossiping” (42 percent).

Although these time-wasters are important to curb, don’t micromanage your office or team. You may feel tempted to start policing people’s habits to ensure productivity, but studies have shown that micromanagement has a negative effect on morale. Taking moments in the workday to use social media may actually help relieve stress and feel closer to family and friends.

Source: “Time Wasters are Your Business’s Worst Enemies, Here are 4 to Watch,” Small Business Trends (Feb. 25, 2018)

Manufactured Homes to Ease Housing Shortages?

Manufactured Homes to Ease Housing Shortages?

The federal government may increasingly be eyeing manufactured housing as one potential solution to ease shortages of affordable homes across the country. Mortgage financing giants Fannie Mae and Freddie Mac announced plans in January to purchase more manufactured housing loans over the next three years. Further, the U.S. Department of Housing and Urban Development recently announced it is reviewing regulations surrounding manufactured housing.

Manufactured homes are built in a factory and then relocated to a home site. They differ from prefab homes, which have parts made in a factory but are then mostly constructed on-site. Manufactured homes, once referred to as mobile homes, often cost a fraction of median price of a new single-family home, such as $45,000 versus $323,000, respectively.

Manufactured housing saw a major growth in the mid-1990s when credit was looser, but has since seen production plummet.

“There’s clearly an affordable housing gap that’s growing and growing and growing,” Laurie Goodman, vice president of the Housing Finance Policy Center at the Urban Institute, told Curbed.com. “Manufactured housing is every bit as good as site-built housing in most cases. Why has the number of manufactured housing units not gone up to where it was before?”

Financing a manufactured housing has grown more difficult since the 1990s. Defaults on manufactured housing loans piled up in previous years, and lenders faced the difficulty of repossessing a manufactured home. The sector has largely struggled to recover ever since.

Mobile homes are classified as either a real estate property or personal property. Buyers can finance a purchase through a traditional mortgage if the property is classified as real estate. However, the majority of manufactured loans are financed as personal property with a chattel loan, which usually come with high rates and shorter loan terms.

Further, a challenge of mobile homes is that they tend to depreciate in value, unlike site-built homes. Also, zoning restrictions and the “not in my backyard” attitude hampers the growth of these communities.

Fannie Mae plans to purchase around 30,000 manufactured housing mortgage loans over the next three years. It is also working on developing a pilot program for purchasing chattel loans and supporting the financing of manufactured housing communities.

Daniel Mandelker, a professor of land use law at Washington University in St. Louis, also believes HUD’s review of building regulations with manufactured housing could play a role in possibly helping to destigmatize the housing sector.

“If they start working on a model state [zoning] law and start funding pilot projects, that would bring some attention,” Mandelker told Curbed.com. “I think that would be very helpful.”

Source: “Can Manufactured Housing Ease America’s Affordable Housing Crisis?” Curbed.com (March 2, 2018)

Robots Suit Up for Bigger Roles in Real Estate

Robots Suit Up for Bigger Roles in Real Estate

Several new companies are introducing robots that could reshape how property is rented and sold. Robots are showing properties, creating floor plans, and shooting videos of homes and freeing the time of agents to focus on other tasks in a transaction.

The Wall Street Journal recently featured several examples of where exactly the robots are heading into real estate. For example, Zenplace captured headlines in recent months when it started conducting property tours using a robot guide, which is controlled remotely by a licensed agent. A brokerage in Woodland Hills, Calif., called REX is using robots inside sellers’ homes that can answer property questions as well as collect data from the people who tour the home. VirtualAPT launched a robot that can create three-dimensional property videos.

The companies say they’re seeing interest grow rapidly. VirtualAPT told WSJ it expects to film 10,000 residential units within the next 12 months. Zenplace says it plans to expand outside of just select California markets to New York, Texas, Washington, and Florida this year. REX says its robots were inside a house per day in 2017 in Southern California and the New York area. With a recent $15 million boost in its latest round of funding, REX plans to expand its offerings in San Francisco, Austin, Denver, and Dallas by the end of the year.

Robots may be entering more jobs within real estate, but the industry doesn’t view them as a threat of one day replacing their roles. “I believe that agents are critical to transactions and always will be,” Robert Reffkin, chief executive of Compass, a real estate brokerage in New York, told WSJ.

Source: “Why Your Next Real-Estate Deal Might Involve a Robot,” The Wall Street Journal (March 1, 2018) [Log-in required.]