Mortgage Rates Dip to Lowest in Month

Total mortgage applications – including for refinances and home purchases – were essentially flat last week, rising just 0.8 percent on a seasonally adjusted basis, despite mortgage rates at their lowest averages in a month. The Mortgage Bankers Association reported Wednesday that applications are now 14 percent lower than a year ago.

Refinance applications have been falling significantly over the last few weeks as interest rates have edged higher. However, refinance volume reversed course last week, increasing 7 percent for the week. The increase was largely driven by an announcement by HUD that FHA would lower its annual insurance premium by 25 basis points. MBA reported that the FHA share of total applications rose to 13.1 percent from 11.7 percent last week.

Still, “refi volume is down sharply from the end of last year, remaining 13 percent below the level from four weeks ago,” says Mike Fratantoni, MBA chief economist.

Home buyers also barely budged last week. Mortgage applications for home purchases dropped 5 percent last week and are down 1 percent from a year ago, MBA reports.

MBA reported that average 30-year fixed-rate mortgages averaged 4.27 percent last week, down from 4.32 percent the previous week.

Source: “FHA Premium Drop Ignites Mortgage Refinances, But Applications Overall Are Flat,” CNBC (Jan. 18, 2017)

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Hot New-Home Trends to Watch

Hot New-Home Trends to Watch

There were plenty of new ideas, features, and designs of interest to the real estate community at the 2017 International Builders’ Show and the Kitchen & Bath Industry Show, both held in Orlando, Fla. last week. We were there to gather the top trends and buzzwords you need to know about now.

Modernity in Moderation

It turns out designers, home builders, and consumers have different ideas of the meaning and salability of the term “modern,” and the industry is working to bridge that gap. Seth Hart of DTJ Design in Boulder, Colo. explained how “moderated modern,”—where asymmetrical windows and color and material combinations that provide high contrast—can be used on more traditional homes to provide an updated feel without breaking the bank or turning off buyers.

“It’s not about doing wild roof forms,” Hart told attendees. “It’s all about how you create a modern design in something that still has a broad market appeal and is done affordably.”

Eric Brown, a builder representative with Artisan Homes Realty, LLC in Phoenix uses the term “comfortable contemporary” to help identify the style. “It’s going to attract baby boomers,” he predicted, noting this style offers “something that reminds them of their old home, but it’s updated.”

Another twist on this trend comes in the form of the “modern farmhouse,” which was another popular buzzword at the show. Many of the winners of the National Association of Home Builders’ 2016 Best in American Living Awards featured farmhouse sinks, reclaimed wooden beams, and barn doors layered into modern designs. Even the farmhouse elements themselves are being updated, as is evident in cleaner, more minimalist designs made of contemporary materials.

The Secret Hideaway

Don’t we all want to turn a cluttered space into a fun design novelty? Another trending term at the show this year was “the messy kitchen,” which is a hidden space away from the gleaming center island where homeowners can prep food and stow Mr. Coffee far from guests.

Wayne Visbeen, president of Visbeen Architects, told attendees he also uses this technique to hide away the “home management space.”

“I put hidden rooms in offices a lot,” he said. “I think it’s a great place to hide the junk, and people think its sexy.” He notes that hidden space doesn’t have to be huge to work well, suggesting a four-by-eight foot space would be sufficient. Also, with all the easy-to-install sliding barn and pocket doors in the consumer market now, this is a project some homeowners can undertake themselves.

Fewer Bathroom Barriers

One trend that was heavily featured in Orlando last week was the idea of an open shower, or “wet room.” Some even contained both a shower and bath in one, which designers reported saves space in master baths where homeowners don’t want to skimp on a stall shower to fit in a pretty tub.

This is a good option to consider for anyone looking to add the element of zero-barrier entry to bathing, which is an important consideration for those with limited mobility. However, Mary Jo Peterson, a kitchen, bath, and universal design consultant in Brookfield, Conn., noted there are drawbacks.

“If I really want a hot, steamy shower, it’s hard to do in these open spaces,” she said. She also noted that it’s difficult to calculate ahead of time if the water will escape the intended area and make the whole bathroom into a “wet room.” She cautioned builders to avoid the temptation to put rain-style showers up too high, to minimize the spray’s radius.

Auto-Smart Homes

We’ve all heard the talk about how smart home devices are going to change our lives forever, but Dave Pedigo doesn’t think we’re quite there yet. Pedigo, vice president of emerging technologies at the Custom Electronic Design and Installation Association, told attendees that until we can move “away from using a mobile phone as remote control,” we won’t really have smart homes.

He said natural user interfaces, such as the voice commands consumers can use to control Amazon’s Alexa and other smart home devices, are only the first step toward creating a truly smart home that can anticipate residents’ needs ahead of time. For example, there are already sensors out there that “see” when a sleeper has gotten up at night and can automatically illuminate night lights to lead them safely to the bathroom.

“Ultimately, we are moving toward not having to deal with technology,” Pedigo said. “You shouldn’t have to tell the lights to turn off or tell the shades to go up.”

—Source REALTOR® Magazine

Millennials Are Missing Out on Home Equity

Millennials Are Missing Out on Home Equity

The delay of millennials into home ownership will likely affect their finances for years to come. Real estate wealth has proven to be a major contributor to the financial wealth of previous generations.

Indeed, “the most impactful contributor to consumer wealth since the great financial crisis has been growth in home equity,” says Brad Friedlander, managing partner at Angel Oak Capital Advisors. “Similarly, there has been a growing wealth gap between homeowners and renters, largely due to home equity.”

U.S. homeowners captured more than $12.7 trillion in home equity by the end of the second quarter of 2016, the highest since the end of 2006, according to the Federal Reserve.

Home values have been on the rise, but renters continue to miss out. Instead, renters are faced with rental payments that are about 20 percent more than what they were in September 2010.

Younger Americans are missing out on home ownership and they’re falling behind financially than older generations, economists note.

“The last few years have been an opportunity to make equity and grow wealth, but it’s not too late for millennials,” Friedlander says.

Underwriting standards for loans are easing somewhat, which could allow more to qualify for a mortgage. Lawrence Yun, chief economist of the National Association of REALTORS®, notes that FHA loans require only 3.5 percent down – or translated to about $8,750 on a $250,000 mortgage.

Younger home buyers who welcome the idea of a “starter home,” like previous generations did, may find more opportunities to enter the market than continue to wait until they can buy their dream home, Yun says.

“Maybe they need to lower their expectations of what that first home should be or settle for a smaller home in a different neighborhood,” Yun says.

Source: “Lack of Young Home buyers Fuels Generational Wealth Gap,” USA Today (Jan. 12, 2017)

21-Day Closing Window

21-Day Closing Window

In an era of bloated closing times, some lenders are looking to quicken the pace it takes to get a buyer to the settlement table. Some lenders are retooling operations and aiming to close a loan within 21 days.

For example, national retail lender CrossCountry Mortgage Inc. in Brecksville, Ohio, is committing its staff to aim to close a purchase loan from application to funding within 21 days.

“When you look at contracts, they are typically written for 30 days,” says Chief Operating Officer Jodi Hall. “Many of them have gone out to 45 and 60 day contracts because of the long turn times that have occurred within the industry. If you can deliver well ahead of a 30 day contract it’s very attractive to our REALTOR® partners and customers. That is the best practice.”

In 2016, closing times for purchase loans averaged 47 days, according to Ellie Mae, an information origination system provider.

CrossCountry tries to get its borrowers to commit to a timeline upfront.

“One of the first things that we coach our loan officers on, in terms of their engagement with the borrower, is to explain our loan process and turn times,” Hall says. “If the borrower commits, we can often close their loan in 21 days or less.”

In 2014, one wholesaler vowed to be “ready to close” qualifying loans within 15 business days of appraisal receipt. If they were unable to meet that goal, the lender would even apply a $500 closing cost credit to the loan at closing.

Today’s 21-day-close goal doesn’t include any such promises from lenders, however.

“We don’t guarantee the 21-day turn time because there are so many things that play into a guarantee,” Hall said.

Delays can happen, most notably from appraisals. A growing appraiser shortage threatens to lengthen timelines, says William Fall, chief executive officer of appraisal management company Valuation Partners. Appraisals are “much less predictable than title, credit or other parts of the process,” he says.

Lenders who adopt more technology may help to decrease time spent on certain steps like asset verification, says Jonathan Corr, president and chief executive officer of Ellie Mae.

“Lenders could eventually bring their closing times down under 30 days if they embrace technology and do everything perfectly,” says Corr. “Maybe you could even get it down to a couple of weeks.”

Source: “Why Lenders Are Shooting for a 21-Day Turn Time,” National Mortgage News (Jan. 9, 2017)

10 Safest Cities in the U.S.

10 Safest Cities in the U.S.

The safest cities in the country tend to also have strong employment, top-notch school districts, and a higher quality of living, according to a new report released by NeighborhoodScout.

“The same trend continues to play out across the country, one that highlights a contrast between coveted bedroom communities and struggling inner and industrial-satellite cities,” says Andrew Schiller, CEO and founder of Location Inc. and NeighborhoodScout. “These safe commuter towns, which exist between major cities like Boston, Chicago, and Dallas-Fort Worth, and smaller, high-crime satellite cities have residents who can afford access to opportunity. An easy commute to high-paying jobs in the city, combined with decent schools and quality of life in the suburbs, increases home values and lowers crime.”

The following 10 locales topped NeighborhoodScout’s safest list:

1. Oak Ridge, Tenn.
2. Shoreview, Minn.
3. Ridgefield, Conn.
4. Franklin, Mass.
5. Zionsville, Ind.
6. Bergenfield, N.J.
7. Lake in the Hills, Ill.
8. Lexington, Mass.
9. Bartlett, Ill.
10. Reading, Mass.

Source: “Top ‘Safe’ Cities: More Than Just Low Crime,” RISMedia (Jan. 9, 2017)

Things Your Buyers Are Stressed About

Things Your Buyers Are Stressed About

Do you know the pain points your buyers are most concerned about when it comes to purchasing a home? A new TD Bank survey of 135 real estate professionals nationwide reveals six stressors that are causing their clients the most anxiety:

• Confusion around paperwork required: 31.85%
• Unexpected costs: 22.22%
• Concerns over financing: 21.48%
• Appraisal and inspection: 11.85%
• Meeting and closing date: 6.67%
• Credit approval: 5.93%

To better support your clients through their toughest transaction issues, TD Bank recommends partnering with mortgage loan officers who can help your buyers — particularly first-timers — navigate the purchase process more smoothly. Nearly 80 percent of real estate professionals who responded to TD Bank’s survey say the traits they value most in a mortgage loan officer are efficient communication, ability to guide clients through the finance process, and expertise on managing the regulatory landscape.

Real estate pros also say the factors affecting their clients’ home search the most are limited inventory (45 percent), mortgage qualification (29 percent), and affordability (26 percent), according to the survey. But respondents still express optimism about the real estate market in 2017. Fifty-five percent say they expect home sales to increase this year, and 70 percent say they expect greater demand for single-family homes. Practitioners expect online real estate portals to continue to grow, with 44 percent saying realtor.com®, Zillow, and Trulia will be the biggest technology influences on the home buying process in 2017.

Source: TD Bank