FHA Strong Enough for MIP Cut, Analysis Suggests

Posted on February 24, 2017 by Debbie Prosser

Daily Real Estate News | Friday, February 24, 2017

Is now a good time for FHA to reduce hurdles to homeownership with a lower mortgage insurance premium? NAR says yes, but the Trump administration and some members of Congress aren’t so sure. On Inauguration Day, the U.S. Department of Housing and Urban Development suspended a planned reduction in the FHA premium saying in a letter to mortgage lenders that “more analysis and research are deemed necessary.”

The quarter-point reduction had been announced in the waning days of the Obama administration and was scheduled to go into effect on Jan. 27, 2017. It would have been the second premium reduction in two years, after five successive increases in the MIP, starting in 2010, put in place to shore up FHA’s flagging reserve fund.

During the housing crisis, higher-than-normal defaults drove the agency’s reserve fund below the congressionally mandated 2 percent. According to that mandate, the agency must have excess reserves of 2 percent in its mutual mortgage insurance fund to cover short-term losses in its portfolio. That’s over and above the 30 years of reserves FHA maintains on all the insurance in force in the fund. The requirement is much higher than the reserve requirement for private lenders. By January 2015, when FHA reduced the MIP by more than 35 percent, the excess reserve was back above 2 percent. It’s now above 2.3 percent.

Not everyone sees a healthier reserve fund as justification for lowering the premium. Rep. Jeb Hensarling (R-Texas), chair of the House Financial Services Committee, supported the suspension, saying that lowering the MIP “was a big mistake.”

Hensarling cited an analysis of HUD data by the Mortgage Bankers Association that found a 72-basis-point jump in 30-day delinquencies in December 2016.

But that concern is probably overblown, says Brian Chappelle, a Washington-based mortgage policy consultant. Taking the fourth quarter as a whole, the spike in delinquencies was 55 basis points, according to MBA, with no year-over-year increase. Plus, the agency’s latest data show delinquencies already heading back down.

In January, compared to the previous month, 30-day delinquencies were down by 31 percent, serious delinquencies by 2 percent, and total delinquencies by 38 percent, according a review Chappelle’s firm did on the agency’s performance data.

“The fundamental good news is, the serious delinquency rate is not volatile and it’s been steadily declining for the last five years,” Chappelle says.

He attributes much of the bump in short-term delinquencies last quarter to the typical snags that bedevil borrowers at year-end, including changes in servicers, which can lead to late payments, and holiday spending. “Short-term delinquencies are always more volatile,” Chappelle says. What’s more, historical trends suggest delinquencies will continue improving in the near-term.

“In the first quarter, delinquencies always go down,” he says. Last year, for example, delinquencies fell almost 140 basis points in the first three months, and there’s a good chance that will be repeated. That’s because 90 percent of the FHA portfolio is loans made since 2009, a period in which the average credit score of borrowers was 680, well above FHA’s minimum credit score of 580.

Chappelle’s analysis bolsters NAR’s position that a premium reduction is justified.

The planned quarter-point decrease would have saved buyers an average of $500 a year, reducing costs for 750,000 to 850,000 homebuyers, NAR President Bill Brown said in a Jan. 30 letter to Ben Carson, the Trump administration’s HUD secretary nominee. In the letter, Brown said suspension of the premium reduction had created uncertainty and confusion for borrowers, sellers, lenders, and underwriters.

Private mortgage insurers have opposed the MIP reduction on the grounds that it makes their products less competitive. Had the reduction gone into effect, it would have brought FHA premiums down nearly to their 2010 levels.

—By REALTOR® Magazine

“Copyright National Association of REALTORS®. Reprinted with permission.”

 

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Existing-Home Sales Jump in January

Posted on February 22, 2017 by Debbie Prosser

WASHINGTON (February 22, 2017) — Existing-home sales stepped out to a fast start in 2017, surpassing a recent cyclical high and increasing in January to the fastest pace in almost a decade, according to the National Association of Realtors®. All major regions except for the Midwest saw sales gains last month.

Total existing-home sales 1, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, expanded 3.3 percent to a seasonally adjusted annual rate of 5.69 million in January from an upwardly revised 5.51 million in December 2016. January’s sales pace is 3.8 percent higher than a year ago (5.48 million) and surpasses November 2016 (5.60 million) as the strongest since February 2007 (5.79 million).

Lawrence Yun, NAR chief economist, says January’s sales gain signals resilience among consumers even in a rising interest rate environment. “Much of the country saw robust sales activity last month as strong hiring and improved consumer confidence at the end of last year appear to have sparked considerable interest in buying a home,” he said. “Market challenges remain, but the housing market is off to a prosperous start as homebuyers staved off inventory levels that are far from adequate and deteriorating affordability conditions.”

The median existing-home price 2 for all housing types in January was $228,900, up 7.1 percent from January 2016 ($213,700). January’s price increase was the fastest since last January (8.1 percent) and marks the 59th consecutive month of year-over-year gains.

Total housing inventory 3 at the end of January rose 2.4 percent to 1.69 million existing homes available for sale, but is still 7.1 percent lower than a year ago (1.82 million) and has fallen year-over-year for 20 straight months. Unsold inventory is at a 3.6-month supply at the current sales pace (unchanged from December 2016).

Properties typically stayed on the market for 50 days in January, down from 52 days in December and considerably more a year ago (64 days). Short sales were on the market the longest at a median of 108 days in January, while foreclosures sold in 51 days and non-distressed homes took 49 days. Thirty-eight percent of homes sold in January were on the market for less than a month.

“Competition is likely to heat up even more heading into the spring for house hunters looking for homes in the lower- and mid-market price range,” added Yun. “NAR and realtor.com®’s new ongoing research — the Realtors® Affordability Distribution Curve and Score — revealed that the combination of higher rates and prices led to households in over half of all states last month being able to afford less of all active inventory on the market based on their income.”

Inventory data from realtor.com® reveals that the metropolitan statistical areas where listings stayed on the market the shortest amount of time in January were San Jose-Sunnyvale-Santa Clara, Calif., 43 days; San Francisco-Oakland-Hayward, Calif., 47 days; San Diego-Carlsbad, Calif., 55 days; Seattle-Tacoma-Bellevue, Wash., 57 days; and Nashville-Davidson-Murfreesboro-Franklin, Tenn., Vallejo-Fairfield, Calif., and Greeley, Colo., all at 58 days.

NAR President William E. Brown, a Realtor® from Alamo, California, cautions about another source that could possibly drag down inventory for would-be buyers in coming months. “Supply and demand imbalances continue to be burdensome in many markets, and now Fannie Mae is supporting a Wall Street firm’s investment in single-family rentals,” he said. “This will only further hamper tight supply and put major investors in direct competition with traditional buyers. Instead, the GSEs should lower overly burdensome fees (link is external) and help qualified borrowers become homeowners.”

First-time buyers were 33 percent of sales in January, which is up from 32 percent both in December and a year ago. NAR’s 2016 Profile of Home Buyers and Sellers — released in late 2016 4 — revealed that the annual share of first-time buyers was 35 percent.

According to Freddie Mac, the average commitment rate (link is external) for a 30-year, conventional, fixed-rate mortgage decreased slightly in January to 4.15 percent from 4.20 percent in December. The average commitment rate for all of 2016 was 3.65 percent.

All-cash sales were 23 percent of transactions in January, up from 21 percent in December but down from 26 percent a year ago. Individual investors, who account for many cash sales, purchased 15 percent of homes in January, unchanged from December and down from 17 percent a year ago. Fifty-nine percent of investors paid in cash in January.

Distressed sales 5 — foreclosures and short sales — were 7 percent of sales in January, unchanged from December and down from 9 percent a year ago. Five percent of January sales were foreclosures and 2 percent were short sales. Foreclosures sold for an average discount of 14 percent below market value in January (20 percent in December), while short sales were discounted 10 percent (unchanged from December).

Single-family and Condo/Co-op Sales

Single-family home sales grew 2.6 percent to a seasonally adjusted annual rate of 5.04 million in January from 4.91 million in December 2016, and are now 3.7 percent above the 4.86 million pace a year ago. The median existing single-family home price was $230,400 in January, up 7.3 percent from January 2016.

Existing condominium and co-op sales leapt 8.3 percent to a seasonally adjusted annual rate of 650,000 units in January, and are now 4.8 percent higher than a year ago. The median existing condo price was $217,400 in January, which is 6.2 percent above a year ago.

January existing-home sales in the Northeast jumped 5.3 percent to an annual rate of 800,000, and are now 6.7 percent above a year ago. The median price in the Northeast was $253,800, which is 2.5 percent above January 2016.

In the Midwest, existing-home sales decreased 1.5 percent to an annual rate of 1.29 million in January, and are 0.8 percent below a year ago. The median price in the Midwest was $174,900, up 6.5 percent from a year ago.

Existing-home sales in the South in January rose 3.6 percent to an annual rate of 2.31 million, and are now 3.1 percent above January 2016. The median price in the South was $201,400, up 9.2 percent from a year ago.

Existing-home sales in the West ascended 6.6 percent to an annual rate of 1.29 million in January, and are now 8.4 percent above a year ago. The median price in the West was $332,300, up 6.8 percent from January 2016.

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.2 million members involved in all aspects of the residential and commercial real estate industries.

# # #

NOTE:  For local information, please contact the local association of Realtors® for data from local multiple listing services. Local MLS data is the most accurate source of sales and price information in specific areas, although there may be differences in reporting methodology.

1 Existing-home sales, which include single-family, townhomes, condominiums and co-ops, are based on transaction closings from Multiple Listing Services. Changes in sales trends outside of MLSs are not captured in the monthly series. NAR rebenchmarks home sales periodically using other sources to assess overall home sales trends, including sales not reported by MLSs.

Existing-home sales, based on closings, differ from the U.S. Census Bureau’s series on new single-family home sales, which are based on contracts or the acceptance of a deposit. Because of these differences, it is not uncommon for each series to move in different directions in the same month. In addition, existing-home sales, which account for more than 90 percent of total home sales, are based on a much larger data sample — about 40 percent of multiple listing service data each month — and typically are not subject to large prior-month revisions.

The annual rate for a particular month represents what the total number of actual sales for a year would be if the relative pace for that month were maintained for 12 consecutive months. Seasonally adjusted annual rates are used in reporting monthly data to factor out seasonal variations in resale activity. For example, home sales volume is normally higher in the summer than in the winter, primarily because of differences in the weather and family buying patterns. However, seasonal factors cannot compensate for abnormal weather patterns.

Single-family data collection began monthly in 1968, while condo data collection began quarterly in 1981; the series were combined in 1999 when monthly collection of condo data began. Prior to this period, single-family homes accounted for more than nine out of 10 purchases. Historic comparisons for total home sales prior to 1999 are based on monthly single-family sales, combined with the corresponding quarterly sales rate for condos.

2 The median price is where half sold for more and half sold for less; medians are more typical of market conditions than average prices, which are skewed higher by a relatively small share of upper-end transactions. The only valid comparisons for median prices are with the same period a year earlier due to seasonality in buying patterns. Month-to-month comparisons do not compensate for seasonal changes, especially for the timing of family buying patterns. Changes in the composition of sales can distort median price data. Year-ago median and mean prices sometimes are revised in an automated process if additional data is received.

The national median condo/co-op price often is higher than the median single-family home price because condos are concentrated in higher-cost housing markets. However, in a given area, single-family homes typically sell for more than condos as seen in NAR’s quarterly metro area price reports.

3 Total inventory and month’s supply data are available back through 1999, while single-family inventory and month’s supply are available back to 1982 (prior to 1999, single-family sales accounted for more than 90 percent of transactions and condos were measured only on a quarterly basis).

4 Survey results represent owner-occupants and differ from separately reported monthly findings from NAR’s Realtors® Confidence Index, which include all types of buyers. Investors are under-represented in the annual study because survey questionnaires are mailed to the addresses of the property purchased and generally are not returned by absentee owners. Results include both new and existing homes.

5 Distressed sales (foreclosures and short sales), days on market, first-time buyers, all-cash transactions and investors are from a monthly survey for the NAR’s Realtors® Confidence Index, posted at Realtor.org.

“Copyright National Association of REALTORS®. Reprinted with permission.”

 

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Survey: Despite TRID, Closing Hiccups Persist

Posted on February 20, 2017 by Debbie Prosser

Daily Real Estate News | Friday, February 17, 2017

More than half of lenders last year gave loan estimates to home buyers that later had to be revised before closing, according to a new survey released by ClosingCorp, a provider of data on closing costs and technology related to residential real estate. Fifty-eight percent of recent home buyers say their initial loan estimates changed, citing closing costs, insurance costs, and taxes as the most common fees that needed to be adjusted.

The survey, which questioned 1,000 first-time and repeat buyers who purchased a home between Jan. 1, 2016, and Jan. 1, 2017, comes at a time when the year-old TILA-RESPA Integrated Disclosure (TRID) rule aims to help consumers better understand closing costs. The main reasons for adjustments in closing costs, according to the survey, were changes in the loan amount buyers could qualify for as well as inaccurate lender estimates. Twenty-three percent of survey respondents say closing costs changed because of a request on their part.

“As more and more millennials become first-time home buyers, TRID or ‘Know Before You Owe’ has made it easier for them to understand the costs and fees they’ll face at closing,” says ClosingCorp CEO Bob Jennings. “Yet there are still surprises during the closing process. Lenders and REALTORS® need to keep educating borrowers on the costs and fees associated with closing to alleviate surprises.”

Indeed, 35 percent of recent home buyers say their closing costs and fees were higher than they originally expected, according to the ClosingCorp survey. The top five closing costs that most surprised home buyers were mortgage insurance (24 percent), bank fee/points (23 percent), taxes (22 percent), title insurance (21 percent), appraisal fees (20 percent), and fees paid by the buyer versus seller (20 percent).

Nevertheless, the TRID rule, which took effect in October 2015, has helped buyers understand more of their costs prior to closing. Thirty-one percent of buyers say they were not surprised about their closing costs because their loan estimates and closing fees matched, according to the survey.

Source: ClosingCorp

“Copyright National Association of REALTORS®. Reprinted with permission.”

 

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Housing Crunch to Hold in Most Price Ranges

Posted on February 17, 2017 by Debbie Prosser

Daily Real Estate News | Friday, February 17, 2017

Home buyers at many income levels likely will see an inadequate amount of homes for sale in their price range in the coming months, according to a new housing affordability model created by the National Association of REALTORS® and realtor.com®.

The new Affordability Distribution Curve—which culls data from mortgages, state-level income, and listings on realtor.com®—examines how many listings are affordable to those in a particular income percentile. In January, it was below the equality line, and the gap was generally wider at lower incomes, which indicates tight supply conditions. For example, a household in the 35th percentile could afford 28 percent of all listings, while a household in the 50th percentile could afford 46 percent. A household in the 75th percentile could afford 74 percent of active listings.

“Consistently strong job gains and a growing share of millennials entering their prime buying years is laying the foundation for robust buyer demand in 2017,” says Jonathan Smoke, chief economist at realtor.com®. “However, buyers with a lower maximum affordable price are seeing heavy competition for the fewer listings they can afford. At a time of higher borrowing costs, this situation could affect affordability even more as buyers battle for a smaller pool of homes and bid prices upward.”

NAR and realtor.com®’s Affordability Score also accentuates the disjointed rate of accessible supply on the market across the country. Increasing price growth and higher mortgage rates caused January’s Affordability Score to shrink from a year ago, nationally as well as in many states.

“Home prices have ascended far past wage growth in much of the country in recent years because not enough homeowners are selling, and home builders have not boosted production enough to meet rising demand,” says NAR chief economist Lawrence Yun. “NAR and realtor.com®’s new affordability measure confirms that buyers aren’t exaggerating about the imbalance. Amidst higher home prices and now mortgage rates, households with lower incomes have been able to afford less of all homes on the market last year and so far in 2017.”

The following states last month had the highest Affordability Scores (a metric which ranges from zero to 2): Indiana (1.23), Ohio (1.22), Iowa (1.18), Kansas (1.17), and Michigan and Missouri (both at 1.14). The states with the lowest Affordability Score were Hawaii (0.52), California (0.60), District of Columbia (0.65), and Montana and Oregon (both at 0.67).

“This shortfall of inventory at a time of healthy job gains in most states is one of the biggest reasons for the depressed share of first-time buyers and the inability for the homeownership rate to rise above its near-record low,” says Yun. “The only prescription to reversing this adverse situation is to build more entry-level and mid-market housing that aligns with current household incomes.”

Source: National Association of REALTORS®

“Copyright National Association of REALTORS®. Reprinted with permission.”

 

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The Big Down Payment Myth

Posted on February 15, 2017 by Debbie Prosser

Daily Real Estate News | Wednesday, February 15, 2017

Having the spare capital to put 20 percent down on a home purchase is great, but it’s certainly not the norm. Still, many people think it is and that belief may be holding some would-be home buyers back, particularly young adults.

Indeed, 39 percent of non-owners say they believe they need more than 20 percent for a down payment on a home purchase. Twenty-six percent believe they need to put down 15 to 20 percent, and 22 percent say they need a down payment of 10 percent to 14 percent to buy, according to the National Association of REALTORS®’ 2017 Aspiring Home Buyers Profile report.

But now for the reality: The average down payment on a purchase mortgage was just 11 percent in 2016. And that’s just the average; often times down payments are much lower. For borrowers under the age of 35, the average down payment was just under 8 percent, according to NAR’s survey.

As such, “aspiring first-time buyers think it takes twice as much to buy a home than it really does,” writes Jonathan Smoke, realtor.com®’s chief economist, in his latest column.

How much a person truly needs for a down payment depends on their situation. Their financial circumstances, home location, and the price of the home are important factors.

But there are many mortgage options that offer the opportunity to make low or even no down payments. For example, the Department of Veterans Affairs and the U.S. Department of Agriculture offer no-money down loans to those who are eligible. In 2016, 16 percent of buyers under the age of 35 put no money down on their home purchase.

Further, the largest share of loans for buyers under age 35 last year were for people putting down less than 5 percent on a home purchase (or about $3,500). The 3 percent down payment programs backed by Fannie Mae and Freddie Mac, and the 3.5 percent FHA mortgage that primarily targets first-time buyers, are both helpful programs to consider. These loan programs don’t require unblemished credit either. The average FICO score was 713, but realtor.com® notes borrowers with a 639 were still getting approved.

As such, Smoke says the millennial dreaming about homeownership needs to get this message: They need a FICO score of at least 639 and enough for a 5 percent down payment (that is, if they don’t qualify for the other programs with lower payment options). In that case, they’ll need to save about $3,500 to buy in the typical American town.

Source: “Attention First-Time Buyers: Here’s the Key Stuff You Don’t Know About Mortgages,” realtor.com® (Feb. 9, 2017)

“Copyright National Association of REALTORS®. Reprinted with permission.”

 

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These Doors Can Modernize Your Listing’s Look

Posted on February 13, 2017 by Debbie Prosser

January 2017 | By Melissa Dittmann Tracey

Consider these simple yet elegant options for dividing a space that increase its functionality while scoring design points.

A front door with pizzazz has always had a starring role in a home’s curb appeal. But lately, the doors inside a home are getting a closer look for their ability to add style and address design challenges. Strategically placed doors can offer privacy in open floor plan environments or increase the usability of cramped spaces.

Real estate pros Helene Bonello-Strauss and Malte Strauss with Trust International Real Estate LLC in Orlando, Fla., who also manage the staging blog idesigntosell.com, have used barn doors hung on sliding tracks above door frames and pocket doors, which tuck inside a wall, in several remodel and staging projects. “We use [barn doors] all the time in master bathrooms where there is a vanity area that is separate from the tub [and] commode area,” says Bonello-Strauss, also a home stager. In some older homes, vanities are located in the master bedroom rather than in the bathroom, a style that quickly can date a home. “Now we just close those off with a barn door, and buyers love that solution.”

She also recently used two barn doors hanging from each side of an open door frame to solve an open floor plan’s privacy issue. The homeowners had built an addition off the living area that could be used as a guest bedroom, but they never installed a door to separate the bedroom from the main area. Bonello-Strauss added the double barn doors so the space could be used as a guest bedroom or opened to expand the living area when not in use by a visitor. “It truly makes the room and provides an architectural interest to an otherwise bland wall,” she says.

But don’t be thrown off by the word “barn.” Your listing doesn’t have to be country chic to benefit from this space saver. The concept works in many styles, from walnut barn doors for traditional homes to galvanized metal doors for urban lofts, says Lynn MacMillan, with Gem Home Staging & Designs in St. Catharines, Ontario. Pocket doors vary widely too, from all glass to all wood and from designs that stretch to the ceiling to those that are only waist-high. Sliding doors can attach to a kitchen island and can be used to close off areas to pets or children when needed.

“I prefer using sliding doors in all my projects,” says designer and architect Lilian Weinreich in New York. Sliding glazed doors, she says, help create enlarged, obstruction-free bathrooms and walk-in dressing areas.

Homeowners needn’t break the bank on these door styles. Costs vary, but barn doors start around $400 (with do-it-yourself installation). A pocket door can run about $550 (including installation and labor), according to the site homewyse.com.

But designers also point out the need for caution. “You don’t want overkill with this trend. A barn door is a statement piece. It’s artwork. You wouldn’t use it in every room,” says MacMillan. But in moderation, barn and double-pocket doors “instantly elevate a home’s style in a way that will make others take notice.”

“Copyright National Association of REALTORS®. Reprinted with permission.”

 

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Swift Gains in Fourth Quarter Push Home Prices to Peak Levels in Majority of Metro Areas

Posted on February 9, 2017 by Debbie Prosser

WASHINGTON (February 9, 2017) — The best quarterly sales pace of the year pushed available housing supply to record lows and caused price appreciation to slightly speed up in the final three months of 2016, according to the latest quarterly report by the National Association of Realtors®. The report also revealed that sales prices in over half of measured markets since 2005 are now at or above their previous peak level.

The median existing single-family home price increased in 89 percent of measured markets, with 158 out of 178 metropolitan statistical areas 1 (MSAs) showing sales price gains in the fourth quarter of 2016 compared with the fourth quarter of 2015. Twenty areas (11 percent) recorded lower median prices from a year earlier.

There were more rising markets in the fourth quarter compared to the third quarter of 2016, when price gains were recorded in 87 percent of metro areas. Thirty-one metro areas in the fourth quarter (17 percent) experienced double-digit increases — an increase from 14 percent in the third quarter.

For all of 2016, an average of 87 percent of measured markets saw increasing home prices, up from the averages in 2015 (86 percent) and 2014 (75 percent). Of the 150 markets NAR has tracked since 2005, 78 (52 percent) now have a median sales price at or above their previous all-time high.

Lawrence Yun, NAR chief economist, says home-price gains showed little evidence of letting up through all of 2016. “Buyer interest stayed elevated in most areas thanks to mortgage rates under 4 percent for most of the year and the creation of 1.7 million new jobs edging the job market closer to full employment,” he said. “At the same time, the inability for supply to catch up with this demand drove prices higher and continued to put a tight affordability squeeze on those trying to reach the market.”

Added Yun, “Depressed new and existing inventory conditions led to several of the largest metro areas seeing near or above double-digit appreciation, which has pushed home values to record highs in a slight majority of markets. The exception for the most part is in the Northeast, where price growth is flatter because of healthier supply conditions.”

The national median existing single-family home price in the fourth quarter of 2016 was $235,000, which is up 5.7 percent from the fourth quarter of 2015 ($222,300). The median price during the third quarter of 2016 increased 5.4 percent from the third quarter of 2015.

At the end of the fourth quarter, there were 1.65 million existing homes available for sale 2, which was 6.3 percent below the 1.76 million homes for sale at the end of the fourth quarter in 2015 and the lowest level since NAR began tracking the supply of all housing types in 1999. The average supply during the fourth quarter was 3.9 months — down from 4.6 months a year ago.

NAR President William E. Brown, a Realtor® from Alamo, California, says prospective buyers will likely see competition in their market increase even more this spring. “The prospect of higher mortgage rates and more home shoppers in coming months should be enough of an incentive for those serious about buying to start their search now,” he said. “There are fewer listings on the market, but also a little less competition than what’s expected this spring. Buyers may find just the home they’re looking for at a good price and without the possibility of having to outbid others.”

Total existing-home sales 3, including single family and condos, rose 3.3 percent to a seasonally adjusted annual rate of 5.57 million in the fourth quarter from 5.39 million in the third quarter of 2016, and are 7.1 percent higher than the 5.20 million pace during the fourth quarter of 2015.

Despite a meaningful increase in the national family median income ($70,831) 4, rising prices and the boost in mortgage rates at the end of the year slightly weakened affordability compared to a year ago. To purchase a single-family home at the national median price, a buyer making a 5 percent down payment would need an income of $51,017, a 10 percent down payment would require an income of $48,332, and $42,962 would be needed for a 20 percent down payment.

“Even a pick-up in wage growth may be insufficient to compensate the impact of higher mortgage rates and home prices. Increased homebuilding will be crucial to alleviate supply shortages and stave off the affordability hit,” added Yun.

Metro area condominium and cooperative prices — covering changes in 61 metro areas — showed the national median existing-condo price was $222,000 in the fourth quarter, up 6.1 percent from the fourth quarter of 2015 ($209,300). Nearly all metro areas (93 percent) showed gains in their median condo price from a year ago.

The five most expensive housing markets in the fourth quarter were the San Jose, California, metro area, where the median existing single-family price was $1,005,000; San Francisco, $837,500; Anaheim-Santa Ana, California, $745,200; urban Honolulu, $740,200; and San Diego, $593,000.

The five lowest-cost metro areas in the fourth quarter were Youngstown-Warren-Boardman, Ohio, $87,600; Decatur, Illinois, $92,400; Cumberland, Maryland, $94,000; Rockford, Illinois, $109,500, and Binghamton, New York, $109,700.

Regional Breakdown

Total existing-home sales in the Northeast jumped 10.5 percent in the fourth quarter and are now 6.4 percent above the fourth quarter of 2015. The median existing single-family home price in the Northeast was $254,100 in the fourth quarter, slightly lower (0.2 percent) from a year ago.

In the Midwest, existing-home sales climbed 2.3 percent in the fourth quarter and are 8.8 percent above a year ago. The median existing single-family home price in the Midwest increased 5.7 percent to $181,100 in the fourth quarter from the same quarter a year ago.

Existing-home sales in the South increased 2.6 percent in the fourth quarter and are 5.4 percent higher than the fourth quarter of 2015. The median existing single-family home price in the South was $210,500 in the fourth quarter, 7.9 percent above a year earlier.

In the West, existing-home sales rose 1.6 percent in the fourth quarter and are 9.1 percent above a year ago. The median existing single-family home price in the West increased 7.8 percent to $348,800 in the fourth quarter from the fourth quarter of 2015.

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing over 1.1 million members involved in all aspects of the residential and commercial real estate industries.

NOTE:  NAR releases quarterly median single-family price data for approximately 175 Metropolitan Statistical Areas (MSAs). In some cases the MSA prices may not coincide with data released by state and local Realtor® associations. Any discrepancy may be due to differences in geographic coverage, product mix, and timing. In the event of discrepancies, Realtors® are advised that for business purposes, local data from their association may be more relevant.

Data tables for MSA home prices (single family and condo) are posted at https://www.nar.realtor/topics/metropolitan-median-area-prices-and-affordability. If insufficient data is reported for a MSA in particular quarter, it is listed as N/A. For areas not covered in the tables, please contact the local association of Realtors®.

1 Areas are generally metropolitan statistical areas as defined by the U.S. Office of Management and Budget. NAR adheres to the OMB definitions, although in some areas an exact match is not possible from the available data. A list of counties included in MSA definitions is available at:  http://www.census.gov/population/estimates/metro-city/List4.txt (link is external).

Regional median home prices are from a separate sampling that includes rural areas and portions of some smaller metros that are not included in this report; the regional percentage changes do not necessarily parallel changes in the larger metro areas. The only valid comparisons for median prices are with the same period a year earlier due to seasonality in buying patterns. Quarter-to-quarter comparisons do not compensate for seasonal changes, especially for the timing of family buying patterns.

Median price measurement reflects the types of homes that are selling during the quarter and can be skewed at times by changes in the sales mix. For example, changes in the level of distressed sales, which are heavily discounted, can vary notably in given markets and may affect percentage comparisons. Annual price measures generally smooth out any quarterly swings.

NAR began tracking of metropolitan area median single-family home prices in 1979; the metro area condo price series dates back to 1989.

Because there is a concentration of condos in high-cost metro areas, the national median condo price often is higher than the median single-family price. In a given market area, condos typically cost less than single-family homes. As the reporting sample expands in the future, additional areas will be included in the condo price report.

2 Total inventory and month’s supply data are available back through 1999, while single-family inventory and month’s supply are available back to 1982 (prior to 1999, single-family sales accounted for more than 90 percent of transactions and condos were measured only on a quarterly basis).

3 The seasonally adjusted annual rate for a particular quarter represents what the total number of actual sales for a year would be if the relative sales pace for that quarter was maintained for four consecutive quarters. Total home sales include single family, townhomes, condominiums and co-operative housing.

Seasonally adjusted rates are used in reporting quarterly data to factor out seasonal variations in resale activity. For example, sales volume normally is higher in the summer and relatively light in winter, primarily because of differences in the weather and household buying patterns.

4 Income figures are rounded to the nearest hundred, based on NAR modeling of Census data. Qualifying income requirements are determined using several scenarios on downpayment percentages and assume 25 percent of gross income devoted to mortgage principal and interest at a mortgage interest rate of 4.0%.

“Copyright National Association of REALTORS®. Reprinted with permission.”

 

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10 Budget-Friendly Home Improvements for This Winter

Posted on February 6, 2017 by Debbie Prosser

Posted in Remodeling Adviser, by on January 30, 2017

While a lot of people use the New Year as a way to make improvements to their health or personal life, this is also a great time of year to make improvements to your home as well. The cold months of the year mean you’re spending more time indoors — perfect for tackling several areas of your home to make it healthier, happier, and more organized.

Take on these 10 budget-friendly home improvements to find a whole new look for your home this year.

1. Declutter

The first step to getting organized and discovering the potential in your home is to get rid of the clutter and junk that may be hiding in your closets and shelves. Out with the old. That is a frequent cry in the new year so it makes sense to take this time to declutter your home and either donate useable items or have a junk removal service come by to haul it away. Once you’re done, you’ll be in a better place to assess your home and what else needs to be done.

  • Cost: Some charities will remove old items for free, otherwise, junk removal services cost around $165 to $215 for a medium sized load.
  • Make the Most of the Job: Tackle this job first, before others. Then, you can really assess your home and see its true potential. Always call about donations before you begin so you can schedule a timely pick-up and a tax write-off for next year.

2. Deep Clean

Nothing feels quite as good as a freshly cleaned house. A clean home is also easier to maintain than one that’s accumulated dirt and disrepair over the years. Start the new year off right by hiring a cleaning service for a deep clean. You can have the whole house done, or just focus on those areas that really need it. A deep clean can help you determine if more work needs to be done, or if a good sprucing was all that was required.

  • Cost: The average cost of a single cleaning visit is $100 to $150.
  • Make the Most of the Job: Declutter first so the cleaning crew can tackle all areas of your home. Take this time to look at things like paint and woodwork to determine if it needs more help than a single cleaning.

3. Apply Some Paint

A fresh coat of paint can give new life to any room of your home, and the winter months are the perfect time to have this done. The low humidity in the air helps the paint dry more quickly, keeps odors down, and, therefore, helps to speed up the job. If a cleaning hasn’t saved the walls of your home, apply a few coat of paint to cover up the stains from last year.

  • Cost: The cost to paint a living room is between $370 and $950 depending on how high your walls are and the type of paint being used.
  •  Make the Most of the Job: DIY this job to save. While you’re at it, consider painting your old cabinets to dress them up at the same time and save even more.

4. Remove a Popcorn Ceiling

Nothing says you’re stuck in the past more than a popcorn ceiling. While popular 30 years ago, this textured ceiling now dates any room it’s in, lowering your home’s value and its aesthetics. Removing a popcorn ceiling is easy to do and can dramatically update the rooms of your home. Just make sure to have your ceiling first tested for asbestos before you begin to make sure it is removed safely.

  • Cost: The average cost to remove a popcorn ceiling is around $700 to $1,500 including finishing.
  •  Make the Most of the Job: If you have a spray bottle, a putty knife, and some patience, you can remove the old popcorn yourself for less than $50. 

5. Have Asbestos Removed

Many older homes have asbestos lurking in floors, pipes, ceilings, and siding. While harmless if you leave it alone, any damage to or work on these areas could release harmful asbestos fibers into the air. The best way to deal with this problem is professional abatement services. If you suspect asbestos in your home, make sure proper testing and abatement is done before you begin any home improvements.

  • Cost: The average cost of asbestos removal is $200 to $400 an hour.
  • Make the Most of the Job: Sometimes asbestos can be encapsulated beneath another material. If you find flooring or ceilings with asbestos, consider having a floating floor or acoustic ceiling installed over it to reduce the hazard.

6. Insulate Your Attic

The winter months can be brutal if your home doesn’t have enough insulation. Many homes lack adequate insulation in crucial areas like the attic. It can help prevent the energy you’re using to heat your home from flying right out the door. Attic insulation currently gets a return on investment of 110 percent, making this a fantastic improvement for the new year to improve your home’s value as well as your comfort level this winter.

  • Cost: The average cost to insulate an attic is around $400.
  • Make the Most of the Job: While you insulate your attic, take the time to insulate below your roof deck as well. This will help extend the longevity of your roof, while lowering energy bills at the same time.

7. Clean Your Ducts

During the winter months, your air ducts get a lot of work, pushing hot air through your home to warm it. Unfortunately, they could also be blowing dust, pollutants, and allergens through your home at the same time if your ductwork is dirty. Dirty ducts can also mean that your furnace is working harder, which could be raising your energy bills at the same time. Your ducts should also be cleaned right after any other home construction, as the dust has a tendency to collect there.

  • Cost: The average cost of a duct cleaning is $300 to $500.
  • Make the Most of the Job: Have your ducts inspected for leaks at the same time; leaky ducts can raise your energy bills by as much as 20 percent; having them fixed can lower your bills by the same amount. 

8. Install Some Crown Molding

There’s nothing quite like crown molding to make any room in your home look polished and complete. So if you’ve been feeling as though your home needs a little style boost, consider installing some crown molding this winter. Interior projects like this are best done during the colder months when carpenters and handymen aren’t as busy outdoors, and, of course, when you’re spending more time indoors yourself where you can admire them.

  • Cost: The average cost of installing crown molding is around $900 for professional installation.
  • Make the Most of the Job: If you have access to the right tools, install the crown molding yourself to save. Paint your walls at the same time to give each room a whole new look.

9. Install an Electric Fireplace

Fireplaces can have an immediate impact on many aspects of your home from aesthetics to value to comfort. This winter, install an electric fireplace to any of the rooms you spend the most time in. Electric fireplaces can help lower your energy bills by heating the room you’re in, rather than the whole house. They can also be placed anywhere, whether or not there is an existing fireplace in the room. You can add instant warmth and charm to any location.

  • Cost: The average cost of an electric fireplace is around $300.
  • Make the Most of the Job: Include a mantel in your design to give your room a focal point and additional style as well.

10. Refinish Your Floors

Winter takes a hard toll on hardwood flooring. The sand and salt used to make roads safer can wear away the finish on your flooring as well. Give your hardwood new life by having a stain applied to cover up old scuffs and stains from the previous years. Many new finishes don’t require sanding unless your floor is in very bad shape, so you can often get a whole new look in just a few days.

  • Cost: The average cost to restain a hardwood floor is around $535.
  • Make the Most of the Job: Look into durable, acrylic sealants with the stain that will hold up longer to the typical wear and tear of a hardwood floor, giving your floor

This post was contributed exclusively for REALTOR® Magazine.

“Copyright National Association of REALTORS®. Reprinted with permission.”

 

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Pending Home Sales Bounce Back in December

Posted on January 31, 2017 by Debbie Prosser

WASHINGTON (January 30, 2017) — Pending home sales picked up in December as solid increases in the South and West offset weakening activity in the Northeast and Midwest, according to the National Association of Realtors®.

The Pending Home Sales Index,* a forward-looking indicator based on contract signings, increased 1.6 percent to 109.0 in December from 107.3 in November. With last month’s uptick in activity, the index is now 0.3 percent above last December (108.7).

Lawrence Yun, NAR chief economist, says contract activity was mixed throughout the country in December but ultimately ended on a high note to close out 2016. “Pending sales rebounded last month as enough buyers fended off rising mortgage rates and alarmingly low inventory levels1 to sign a contract,” he said. “The main storyline in the early months of 2017 will be if supply can meaningfully increase to keep price growth at a moderate enough level for households to absorb higher borrowing costs. Sales will struggle to build on last year’s strong pace if inventory conditions don’t improve.”

According to Yun, a large portion of overall supply right now is at the upper end of the market. This is evident by looking at December data on the year-over-year change in single-family sales by price range. Last month, sales were up around 10 percent compared to December 2015 for homes sold at or above $250,000, while homes sold between $100,000 and $250,000 only increased 2.3 percent. Meanwhile, sales of homes under $100,000 were down 11.6 percent compared to a year ago.

“The dismal number of listings in the affordable price range is squeezing prospective first-time buyers the most,” said Yun. “As a result, young households are missing out on the wealth gains most homeowners have accrued from the 41 percent cumulative rise in existing home prices since 2011.”

Existing-home sales are forecast to be around 5.54 million this year, an increase of 1.7 percent from 2016, which was the best year of sales since 2006. The national median existing-home price in 2017 is expected to increase around 4 percent. In 2016, existing sales increased 3.8 percent and prices rose 5.2 percent.

Yun expects housing starts – which for another year undershot overall demand – to jump to around 1.26 million units, an increase of 7.9 percent from 2016 (1.16 million).

“Especially if construction-related regulations are relaxed, all eyes will be on the homebuilding industry this year to see if they can finally start making up lost ground on the severe housing shortages impacting much of the country,” added Yun.

The PHSI in the Northeast declined 1.6 percent to 96.4 in December, and is now 1.2 percent below a year ago. In the Midwest the index decreased 0.8 percent to 102.7 in December, and is now 3.4 percent lower than December 2015.

Pending home sales in the South rose 2.4 percent to an index of 121.3 in December and are now 0.5 percent above last December. The index in the West jumped 5.0 percent in December to 106.1, and is now 5.0 percent higher than a year ago.

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.2 million members involved in all aspects of the residential and commercial real estate industries.

* The Pending Home Sales Index is a leading indicator for the housing sector, based on pending sales of existing homes. A sale is listed as pending when the contract has been signed but the transaction has not closed, though the sale usually is finalized within one or two months of signing.

The index is based on a large national sample, typically representing about 20 percent of transactions for existing-home sales. In developing the model for the index, it was demonstrated that the level of monthly sales-contract activity parallels the level of closed existing-home sales in the following two months.

An index of 100 is equal to the average level of contract activity during 2001, which was the first year to be examined. By coincidence, the volume of existing-home sales in 2001 fell within the range of 5.0 to 5.5 million, which is considered normal for the current U.S. population.

“Copyright National Association of REALTORS®. Reprinted with permission.”

 

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