Home Sellers Net Highest Profits in 8 Years

Home Sellers Net Highest Profits in 8 Years. Image courtesy of hywards / FreeDigitalPhotos.net

Rising home prices over the last few years are finally putting more money back into home sellers’ pockets. Home owners who sold during the third quarter saw an average price gain of $40,658 – or 17 percent – from the purchase price of their property – the highest average price increase for sellers since the third quarter of 2007, according to RealtyTrac’s Third Quarter 2015 U.S. Home Sales Report.

“An increasing number of home owners in 2015 have been cashing out the home equity they’ve gained during the housing recovery of the past three years,” says Daren Blomquist, vice president at RealtyTrac. “That may be a good decision because the data points to a plateauing market going forward. Home price appreciation is slowing, a trend that will continue if interest rates rise in the coming months as expected. Meanwhile the threat of rising interest rates combined with lowered premiums for buyers using FHA loans is spurring more demand.”

In its analysis of 171 counties nationwide, RealtyTrac found that the following counties saw sellers, on average, see some of the largest gains in the third quarter:

• San Francisco County, Calif.: 58.7% gain
• San Mateo County, Calif. (San Francisco metro area): 55.7%
• Santa Clara County, Calif. (San Jose metro area): 47.7%
• Alameda County, Calif.: 43.1%
• New York County, N.Y.: 41.6%

RealtyTrac’s report also showed the following counties posted the largest year-over-year increases in home prices:

• San Mateo County, Calif.: up 17.6%
• New York County, N.Y.: up 16.1%
• Santa Clara County, Calif.: up 15.7%
• Weld County, Colo. (Greeley metro area): up 14.6%
• San Francisco County, Calif.: up 13.3%

Source: RealtyTrac

More Home Buyers Bypass Banks for Loans

More Home Buyers Bypass Banks for Loans. Image courtesy of fantasista / FreeDigitalPhotos.net

Home buyers increasingly are turning to independent mortgage companies for their loans, not traditional banks.

According to data from the Federal Reserve, in 2014, nondepository independent mortgage companies originated 47 percent of completed home-purchase loans and 42 percent of refinance loans – up from 43 percent and 31 percent, respectively, from 2013. That also represents the largest share of the mortgage market held by non-banks since 1995.

Nonbank lenders include companies like Quicken Loans (which is now the second largest retail mortgage lender nationwide, behind Wells Fargo) and Loan Depot, and Finance of America Holdings. Blackstone Group’s Finance of America Holdings is expected to soon become one of the nation’s largest nonbank lenders after recently acquiring Gateway Funding Diversified Mortgage Services, Pinnacle Capital Mortgage, and some assets and operations of PMAC Lending Services Inc.

The largest majority of nonbank mortgage volume still comes from conforming mortgages, backed by Fannie Mae, Freddie Mac, and the Federal Housing Administration. However, nonbank lenders are also increasing trying to increase their market share of jumbo loans (mortgages that are above the conforming loan limits of $417,000 in most areas and $625,500 in high-priced markets), Guy Cecala, CEO and publisher of Inside Mortgage Finance, told The Wall Street Journal.

For example, Quicken Loans is allowing some jumbo mortgage borrowers with consistent income documentation to complete their transaction fully online. “In many cases, you don’t have to talk to a loan officer,” says Bob Walters, chief economist for Quicken Loans.

Some nonbank lenders are touting their speed as an advantage over traditional banks. For instance, company officials with Movement Mortgage, which operates in 42 sates and originated $4.24 billion in mortgages in 2014, tell conforming loan borrowers that they are able to close mortgages in seven business days and jumbo borrowers in only a few days more (even with new mortgage disclosure rules that took effect last month).

While nonbank lending is catching on, bank officials say they hold one big advantage: They tend to be able to offer lower rates and closing costs to customers based on length of account history and amount of holdings.

Source: “Home-Loan Borrowers Bypass the Banks,” The Wall Street Journal (Nov. 4, 2015)

Paint Mistakes Sellers Should Avoid

Paint Mistakes Sellers Should Avoid. Image courtesy of Master isolated images / FreeDigitalPhotos.net

The wrong paint color can be a big turn-off to potential home buyers. House Beautiful recently highlighted some of the worst mistakes home owners can make when it comes to painting their house, including:

1. Painting a ceiling a flat white color. “I never paint a ceiling dead white because all white paint has a bit of gray in it, and it takes the room down,” designer Athalie Derse told House Beautiful. Instead, she suggests choosing a cream shade.

2. Too many colors from room to room. Some home owners may opt for a different color scheme for each room. “Even when I don’t use the same colors everywhere, I still like the rooms to feel connected,” designer Mona Ross Berman says. “The bedroom should never feel like it’s in a completely different house than the living room. The whole house has to make sense as one.”

3. Using the same color palette for the entire house. On the flip side, home owners who only stick to one color palette may be making the home too bland. “A two-color scheme can be great, but there has to be some relief, or it comes across as too pat and makes everything seem stiff,” says designer Tom Scheerer.

4. Matching too much. “You never want to match your walls to a color in one of your fabrics,” designer Sallie Giordano says. “It will be too strong. Find a grayed-out version of the color.”

5. Use neutrals to balance out color. Some home owners may be tempted to go overboard with one color. “The biggest mistake people make when they’re trying to be colorful and exciting is to forget that you need to balance it with neutrals,” says designer Todd Klein. He adds that architectural elements in white or even a few gray throws can give visitors’ eyes a place to rest.

Source: “The 9 Paint Color Mistakes You Should Never Make,” House Beautiful (August 2015)

Amenities Trending With Buyers

Amenities Trending With Buyers. Image courtesy of photostock / FreeDigitalPhotos.net

Several home features are gaining momentum in real estate. Here are four that home shoppers are showing more desire for, according to a recent article at CBSHome.com. You may want to talk these features up in your listings.

• Energy efficiency. Bigger used to be better in real estate, but the cost of maintenance and particularly the heating of bigger homes has prompted some buyers to be less tempted to supersize their digs. Many buyers are being swayed with homes that are more economical to maintain and also have a warmer, cozier vibe.
• Modern, up-to-date kitchens. Remodeling a kitchen can be one of the costliest home improvement projects to take on. That’s why many buyers are looking for a kitchen that already has been updated. They’re looking for sleek, modern looking kitchen with stainless steel appliances.
• Smart home options. More buyers are looking for homes that they’ll be able to smarten up now, or down the road. For example, home buyers are showing greater desires for thermostats that can be adjusted with their mobile device to being able to unlock doors via Bluetooth. Smart home features can be a huge draw that makes a home more modern, according to CBSHome.com.
• Color pops. Neutrals can help home buyers envision the home as their own, but color has been shown to be a draw for younger buyers in particular. “With bright color making a design comeback, a brilliantly bold sink or appliance can be the type of risk that pays off and has the potential to sway the right kind of home seeker,” according to CBSHome.com.

Source: “The Top 5 Home Features That Buyers Are Hunting for This Fall,” CBSHome.com

Parents Struggling to Kick Adult Kids Out

Parents Struggling to Kick Adult Kids Out. Image courtesy of patrisyu / FreeDigitalPhotos.net

The job market for young adults has been improving gradually since 2010, yet the number of young professionals living with their parents is continuing to climb. At the beginning of this year, 26 percent of millennials – those aged 18 to 34 – are living with their parents, according to the Pew Research Center. The trend is most pronounced among 25 year olds.

Indeed, 30 percent to 50 percent of 25 year olds were living with their parents in 2013, depending on the state, according to a report by the Federal Reserve Bank of New York, released in September. The Northeast and West coast have seen the largest increases in millennials moving in with their parents.

But financial analysts warn that the growing number of young adults living with their parents threatens their parents’ retirement financially and psychologically. Fifty-two percent of baby boomer households that have children but don’t support them are retired. Yet, only 21 percent of baby boomers who do support adult children are fully retired, according to a March 2015 study by Hearts & Wallets, an investment and retirement research firm. What’s more, baby boomers who support adult children are 25 percent more likely than other baby boomers to report moderate to high financial anxiety, the survey shows.

That’s why financial planner Jeff Rose it’s time for baby boomers to show some “tough love.” Rose, founder of Alliance Wealth Management in Carbondale, Ill., says baby boomers shouldn’t allow their adult children to move back home, even when they struggle to find a job or manage their money. If they do absolutely have to move back home, Rose says they need to pay rent and the terms need to be inked on paper.

“No casual handshake — or hug — and hold them accountable,” he says. If they aren’t willing to sign the agreement, they shouldn’t be able to move back in, Rose says.

Source: “Kick Adult Kids From the Nest, Speed Your Retirement,” USA Today (Oct. 31, 2015)