For the second consecutive week, mortgage rates were on the rise. “As expected, the [Federal Reserve’s Federal Open Market Committee] announced its first rate hike of 2017 and hinted at additional increases throughout the remainder of the year,” says Sean Becketti, Freddie Mac’s chief economist. “Although our survey was conducted prior to the Fed’s decision, the release of the February jobs report all but guaranteed a rate hike and boosted the 30-year mortgage rate 9 basis points to 4.30 percent this week. Increasing inflation, continued gains in the labor market and the Fed’s intentions for further rate increases—all three will keep pushing mortgage rates up this year.”
Freddie Mac reports the following national averages with mortgage rates for the week ending March 16:
30-year fixed-rate mortgages averaged 4.30 percent, with an average 0.5 point, rising from last week’s 4.21 percent average. A year ago, 30-year rates averaged 3.73 percent.
15-year fixed-rate mortgages averaged 3.50 percent, with an average 0.5 point, increasing from last week’s 3.42 percent average. Last year at this time, 15-year fixed-rate mortgages averaged 2.99 percent.
5-year hybrid adjustable-rate mortgages averaged 3.28 percent, with an average 0.4 point, increasing from last week’s 3.23 percent average. Last year at this time, 5-year ARMs averaged 2.93 percent.
What you really need to know about buying — from the people who house hunt for a living.
Take the long view when you’re buying, says Chicago agent Pekarsky. He plans to start a family in a few years, so he set his sights on a single-family with plenty of bedrooms. Image: Jacob Hand for HouseLogic
It’s not every day that you buy a home and make decisions about the next three, five, or 10 years of your life. Since you can’t exactly take a home on a test drive, how do you decide? That got us to thinking about real estate pros. When they’ve seen practically everything on the market, how do they choose?
Four pros who’ve seen it all share their advice and their stories of hunting for just the right home.
Be Willing to Compromise for Your Priorities
Veteran real estate agent Nancy Farkas knew exactly what she wanted in her home: ranch style, three bedrooms, high ceilings. But you know what she bought? A two-story Colonial.
Huh?
For Farkas, an associate partner with Coldwell Banker Heritage REALTORS®, in Dayton, Ohio, the home’s location and price trumped style. “I had a dog I had to go home and walk at noon, and the house was close [to work] and the right price,” she says.
Her advice: Make sure your practical and functional priorities don’t get lost in all the home buying hoo-ha (sparkling granite counters, new hardwood floors, a steam shower!). Remember, you can always add the hoo-ha, but you can’t make a home fit all priorities, such as location and price.
Dig Into the Details
When Grigory Pekarsky, co-owner and managing broker with Vesta Preferred Real Estate in Chicago, was looking for his first home, one of his priorities was to minimize his maintenance costs. He made sure to find out if the house had a newer roof, good siding, and a newer furnace. But he recommends you go even deeper to uncover a home’s not-so-obvious maintenance costs:
Scope out the sewer line — especially if you’re interested in an older home — to make sure there aren’t any tree branches or other debris clogging up the works. Otherwise, you might find some nasty sludge in the basement.
Look at the trees. How mature are they? Roots from older trees can invade the sewer line; untrimmed branches can pummel your gutters during storms.
Know what’s not covered by homeowners insurance. “I learned seepage isn’t covered. Shame on me,” he says.
Ask how old the appliances are. You might need to budget for something new in a few years. Sellers are only required to fix what the inspector finds is broken; they’re not going to upgrade working appliances for you.
Focus on Lifestyle
Having lived the high-rise apartment life as a renter, Pekarsky knew a single-family home was just what he wanted. He was tired of living in a relatively small space with no yard. He wanted a house he could “grow into in the next three to five years.” That meant multiple bedrooms and bathrooms for the family he plans on having. So what he bought — a three-story, single-family with a finished attic bedroom on Chicago’s North Side — suits his lifestyle perfectly.
In addition, “you get the biggest value from owning the land,” he says. “In a single-family [home], people aren’t telling you what to do with the investment.”
On the other hand, Matt Difanis wished he’d bought a condo when he bought his first home, a small bungalow ranch in a charming, historic neighborhood in Champaign, Ill. It was first-home love — until it rained.
“If I didn’t clean out the gutters before every rainstorm, the basement would leak,” says the broker-owner of RE/MAX Realty Associates in Champaign. He didn’t realize that taking care of a single-family home wouldn’t be his cup of tea. “I should have opted for a condo without gutters to clean and a lawn to mow,” he says.
Agent Amy Smythe Harris of Urban Provision REALTORS®, in Woodland, Texas, bought a home with a sizable downstairs suite her parents could use now (and she could use years from now). She says her millennial clients aren’t forward-thinking about their lifestyles. Some are childless and say they don’t care about schools, pools, and tennis courts. Then they become parents a few years later and have to move.
“Once they have kids, the first question [they] ask is about school districts, and the second is about where the parks and pools are,” she says.
The pros’ bottom-line advice: Think of your lifestyle preferences and how those might change in the next few years. After all, the typical homeowner lives in a house for a median of 10 years before selling, NATIONAL ASSOCIATION OF REALTORS® data shows.
Filter Your Choices Through the Lens of Resale
All the real estate pros we talked to — no surprise here — emphasized resale. Take appraiser Michelle C. Bradley of Czekalski Real Estate Inc. in Natrona Heights, Pa. When she built her current home — a 2,200-square-foot ranch — she included a full, unfinished basement, even though she has no use for one and rarely ventures into it.
Why would she do that? Because basements are standard in her southwest Pennsylvania market. But Bradley’s not going to finish the basement until she’s ready to sell. That way, she avoids having to clean it and ensures she’ll install the most fashionable bathroom fixtures at sell time.
Her advice: “Don’t buy or build something unique that you can’t resell. If you’re not in an area with log homes, don’t choose a log home. If you’re not in an area with dome homes, don’t choose a dome home.”
Likewise, If you buy a home priced higher than average for the area, it’ll be difficult to resell at a higher price. Don’t buy a home that’s not in line with the neighborhood’s average price . When you go to resell, you’ll find yourself in an uphill battle to maintain your higher price.
Other advice from the pros: Watch out for unfixable flaws that could affect resale, like:
What’s next to the home, such as vacant land that could be developed, high-traffic businesses, noisy power generation stations, a cell tower, etc.
Lot issues, such as a steep driveway that could double as a ski slope in winter, or a sloped yard that sends water special delivery to your foundation.
Of course, a home isn’t just about resale. It’s just one factor to consider. Remember the first point: Be willing to compromise for your priorities. If the home meets your priorities and you’re going to stay there awhile, then resale might be where you compromise.
“Visit HouseLogic.com for more articles like this. Reprinted from HouseLogic.com with permission of the NATIONAL ASSOCIATION OF REALTORS®.”
Just how large a house really is may depend on whom you ask, The Wall Street Journal reports. That’s because appraisers, developers, builders, real estate professionals, tax assessors, and architects all measure spaces differently. No universal standard exists for calculating a home’s square footage. Further, it can also vary regionally.
For example, some calculate space on only the interior dimensions of finished living spaces. Some industry insiders may count the garage or finished basement in the square footage; others may not. Whether to count the square footage of balconies, basements, garages, or even wall thickness can vary too.
Fifty-eight percent of 400 consumers recently surveyed by Houzz.com said estimates of their home’s square footage varied among real estate professionals.
Square footage is an important number when it comes to buying real estate, however. Buyers may even narrow their home search online and compare homes based on price per square foot.
“People want more space and have become very sensitive to that number,” says Robert Edelstein, a real estate and business professor at the University of California, Berkeley.
Real estate professionals, however, are not required to verify the square footage cited in the listings database, says Quincy Virgilio, chairman of the board of directors at MLS Listings. Real estate pros often draw from several sources, such as county records, developer floor plans, and previous sale listings.
Buyers who want to know more about the home’s true size need to ask more about how the size was computed. For example, they should ask the source of the measurements and what is included in that number, such as private outdoor terraces, the garage, basement, utility closets, or even staircases.
“Developers tend to say, ‘We are selling you this much square footage.’ But is it really living area?” says Chip Wagner, a real estate appraiser based in Naperville, Ill. Wagner told The Wall Street Journal that he spots size discrepancies of more than 50 square feet about 20 percent of the time in the homes he appraises.
Encourage your buyers to look past the “big number” and instead focus on the dimensions of individual rooms, suggests home builder Brian Hoffman, a principal with Red Seal Homes, based in Northbrook, Ill.
The escalating costs of renting are making it a better time to purchase a home in most cities across the country, according to the Florida Atlantic University and Florida International University’s Buy vs. Rent Index.
“This is great news for homeownership and the financial returns to ownership,” says Ken Johnson, a real estate economist and one of the index’s authors. “We are not where we were in 2012, when nearly any purchase was a sound financial decision. However, overall, we are now in a situation where aggressive marketing from sellers combined with due diligence and sound negotiation from buyers is creating a housing market that’s more in line with what we’ve seen historically.”
Fifteen of the 23 cities in the Buy vs. Rent Index are solidly in “buy” territory. Another five are only marginally in rent territory, the authors note. But, three cities were flagged in the latest report.
“The scores for Dallas, Denver, and Houston have worried us for some time now,” says Eli Beracha, co-author of the index. “The last time we saw scores of this magnitude, housing market crashes soon followed.”
The super-simple (and fun) way to separate needs from nice-to-haves.
This article was contributed by Mandi Gubler, a DIYer and home decor blogger, who writes “Vintage Revivals” and believes “your house should look like you and no one else.”
When you embark on the home-buying process, your heart is filled with all the dreams in the world. It’s really easy to get caught up in the “I have to have ___________, so I’ll cut back somewhere else ” game, even when you don’t actually know where that somewhere else is or if you can realistically cut back there.
This post will show you how to pare down the excess and make sure to get the things you really NEED.
Make a List of Wants
Start by making a list of everything you want in your house. If you love it, jot it down. Have your spouse or partner do the same thing in a separate document.
Once you and your partner have everything down, start sorting your wants by order of importance. What’s your No. 1? Do you need large windows? How about a sunroom? Double sinks in the master? You get the idea.
Come up with your top 10, and then compare your list to your partner’s top 10. What things appear on both lists? Those items should carry more weight because you both want them in your home.
Highlight the Important Stuff
Next, look at your list and consider:
The things that can’t be changed without a massive investment. I’m talking things like square footage, window size, and number of bedrooms. This is your heavyweight list. These things should take priority in your home-buying decision.
Features that are purely cosmetic, especially things that can be DIYed. These items should be moved waaay down the list or taken off entirely. Backsplash tile, paint color, and lighting can all be changed inexpensively and after you’re living in your house. You don’t want to pass up a fantastic house because you can’t see past a red accent wall.
At this point, you should have a combined list of 10 or so items.
My last tip is to figure out the priority of each one of the items. Ask yourself, would you be willing to give up item number 4, say, to have item number 5? Would you be willing to give up hardwood floors for a home theater room? This is the hardest question to answer, but it’ll put your must-haves in the right order.
I always picture this activity like an eye appointment when the doctor says, “1 or 2? OK, now 2 or 3?” Do that with your list! Pool or flooring? Flooring or yard size? Yard size or square footage? Make sense?
Bring Your List When You Look at a Home
As you’re out looking at houses, keep your list handy. Maybe you’re not willing to give up hardwood floors for a jetted tub, but would you be willing to compromise for a jetted tub and extra square footage? Refer back to your must-haves list often. It’s easy to get distracted.
Here’s a quick checklist that I use when searching for a home. If you answer “yes” to all of these, then a “want” may be worth the splurge — that is, if you can be sure that you’ll be able to afford the feature (in terms of your monthly mortgage payments and living expenses).
Is it on both of your lists?
Is it something that’ll be extremely expensive and difficult to change or add?
Would you be willing to sacrifice something else to have it?
Would you feel like your house would be incomplete without it?
Happy house hunting!
“Visit HouseLogic.com for more articles like this. Reprinted from HouseLogic.com with permission of the NATIONAL ASSOCIATION OF REALTORS®.”
Your 10-year outlook: Expect business to get busier, but be ready for some major demographic shifts in housing.
Housing demand over the next decade will be significantly higher than it is today, predicts Lawrence Yun, the chief economist of the National Association of REALTORS®, in his latest column at Forbes.com. Rising populations and a growth in the job market likely will release a pent-up demand in housing over the next 10 years, he says.
The population is rising and more housing will be needed to meet demand, Yun says. About 325 million people currently live in the U.S., and population projections forecast a 27 million increase to 352 million in 10 years.
However, not all age groups are expected to see an increase. Notably, the number of young adults in their 20s is expected to drop, Yun says.
“This demographic are mostly renters, and hence, rental demand will flatline,” Yun says. “Real estate investors should be mindful that even though there is good rent growth today, that certainly will not be the case in a few years, especially given the ramp-up in apartment construction over the past few years.”
The ages you’ll need to watch for some of the most activity in the housing market over the next decade: those in their 30s and 40s. The population of people in their 30s is expected to grow by 5 million over the next decade, reaching 48 million. Yun says that 12 percent increase likely will lead to more first-time home buyers. Plus, the number of Americans in their 40s will increase by 3 million, and he predicts they’ll be looking to trade up in real estate as their finances improve.
On the other hand, the number of Americans in their 50s is forecast to drop by nearly 4 million, which could signal a lower demand for second homes, Yun notes.
Meanwhile, “those in their early 60s, before the commonly recognized retirement age of 65, are a stable bunch with no change in their number of the next decade,” Yun writes. “The population of those aged 65 and over is rising big time: Expect an increase from the current 51 million to 69 million, a growth of 35 percent.”
Housing demand in warm weather areas, and income tax–free states like Florida, Tennessee, and Texas are set to boom over the next decade, Yun says.
Overall, Yun notes, “Within reasonable parameters of economic growth and interest rate movements, home sales should do well over the next decade, clocking in at around 6 million a year.” The national median home price likely will go from $234,000 in 2016 to $330,000 by 2027.
Mortgage rates broke a monthlong holding pattern and inched lower this week.
“The 10-year Treasury yield remained relatively flat this week, while the 30-year mortgage rate fell 6 basis points to 4.1 percent,” says Sean Becketti, Freddie Mac’s chief economist. “Since the beginning of the year, the 10-year Treasury yield has covered a 22 basis point range. The range of movement for the 30-year has been half that, just 11 basis points.”
Freddie Mac reports the following national averages with mortgage rates for the week ending March 2:
30-year fixed-rate mortgages: averaged 4.10 percent, with an average 0.5 point, dropping from last week’s 4.16 percent average. A year ago, 30-year rates averaged 3.64 percent.
15-year fixed-rate mortgages: averaged 3.32 percent, with an average 0.5 point, falling from last week’s 3.37 percent average. Last year at this time, 15-year rates averaged 2.94 percent.
5-year hybrid adjustable-rate mortgages: averaged 3.14 percent, with an average 0.4 point, falling from last week’s 3.16 percent average. A year ago, 5-year ARMs averaged 2.84 percent.
Daily Real Estate News | Wednesday, March 01, 2017
In his address to Congress on Tuesday night, President Donald Trump renewed his pledge to rebuild the country’s infrastructure, replace the Affordable Care Act, and reform taxes for businesses and individuals—all issues of importance to real estate.
Infrastructure
The National Association of REALTORS® sees investments in roads, bridges, dams, and other projects as critical to supporting property values. Trump said he will ask Congress to approve legislation to get $1 trillion in public and private capital invested in these projects. “Crumbling infrastructure will be replaced with new roads, bridges, tunnels, airports, and railways gleaming across our beautiful land,” he said.
He provided no details on where the federal contributions will come from, but during his 2016 presidential campaign, he talked about using federal tax credits to attract private investment. Learn about the key legislative issues NAR is tracking.
Health insurance
Trump said he wanted to repeal the Affordable Care Act and replace it with something that would “expand choice, increase access, lower costs, and, at the same time, provide better health care.”
Under the replacement program, people with pre-existing conditions should continue to have access to coverage; there would be tax credits and expanded health savings accounts for those who need financial help; states would be given the flexibility and resources to expand Medicaid if they want; and there would be legal reforms to bring down the costs of drugs and medical care and reduce lawsuits. Trump also said he wants people to be able to buy insurance across state lines. Get health insurance information from NAR.
Tax reform
Trump provided little detail on his tax reform plan except to say he wanted to cut tax rates for businesses and individuals. One detail he provided on the business side is the levy of a tax on imports, which he said would help even the playing field for American businesses.
He gave no details on how reform would apply to individuals, saying only that his plan “will provide massive relief for the middle class.” Get tax reform information from NAR.
Deregulation
Trump also mentioned his executive orders to reduce regulations on businesses, including his order requiring federal departments to eliminate two regulations for every regulation they propose. Get information on deregulation guidance from NAR.
Daily Real Estate News | Monday, February 27, 2017
The typical American commute continues to get longer and longer. The average commute time grew to 26.4 minutes, according to the latest numbers from the U.S. Census Bureau. Multiplied out, the average American spends about three hours and 20 minutes longer getting to and from work than they did in 2014.
Even longer commutes than that are the norm for many workers. The number of workers with 45-minute commutes increased to 3.5 percent and the number of hour-long commutes increased to 5.1 percent. Workers with extreme commutes — 90 minutes or more — grew by the fastest rate of all, to 8 percent.
The sprawl of suburban and exurban areas has led to the lengthening of commutes, according to a Brookings report. The number of jobs within a standard commute distance shrank by 7 percent between 2000 and 2012.
“We continue to see specific metro areas either grow outward, or just outright add population,” says Adie Tomer, an infrastructure researcher at the Brookings Institution. The growth of suburban, low-density housing “is pulling housing and jobs farther apart.”
One potential future bright spot for workers faced with longer commute times is the gradual growing acceptance of remote working. About 4.6 percent of workers, or 6.8 million, worked from home in 2015, according to U.S. Census data. That is a 5 percent increase since 2014.
