For home buyers financing a home purchase, they should expect about 45 days to close, according to the latest Origination Insight Report from Ellie Mae. Last month the average closing time was 44 days.
VA loans rose from 48 days in April to 49 days in May, according to the report.
The closing rate for all loans in May rose to 70 percent. Purchase closing rates were 75 percent and refinancing closing rates rose to 67 percent.
Borrowers’ continued to have high credit scores. For conventional loans, 82 percent of the borrowers had credit scores over 700. On the other hand, only 39 percent of borrowers with FHA loans had credit scores higher than 700.
Overall, mortgages for home purchases are accounting for more originations. Purchase mortgages rose to 62 percent of all closed loans in May, marking the first time since August 2015 it reached over 60 percent.
Indeed, inventory of homes priced between $500,000 to $750,000 increased nearly 16 percent in March compared to a year ago, according to data from NAR. What’s more, inventory for real estate priced more than $1 million increased 12.6 percent year-over-year.
As more expensive homes linger on the market, buyers are finding more bargaining power.
For sellers, this may be a tough realization that the power is shifting. Shannon Baird, a broker with Living Room Realty in Portland, Ore., says that a major challenge is changing the mindset of home sellers who are hearing news of quick sales and bidding wars. But that’s not the case in the upper price bracket in many markets.
Stock market volatility has made some wealthy buyers more cautious to jump into a big home purchase at the moment. Also, fewer foreign buyers are on the market as the dollar strengthens, says Lawrence Yun, NAR’s chief economist.
“The stock market has come back up, but we don’t know yet if that means the upper-end home buying market will begin to return,” Yun says.
Fannie Mae’s Home Purchase Sentiment Index zoomed to an all-time high in May as consumers get more upbeat about their paychecks and home selling. In May, the index reached a reading of 85.3, which follows an 18-month low reached in March.
Three of six components the index measures registered increases last month, led by a 7 percentage point increase in the number of consumers reporting significantly higher income than a year ago. Also, the number of consumers who expect home prices to increase over the next 12 months rose 5 percentage points. Consumers were also upbeat that mortgage rates would decrease over the next year as well.
That said, the index indicator on whether it’s a “good time to buy” dropped 1 percentage point to an all-time survey low in May.
“Continued home price appreciation has been squeezing housing affordability, driving a two-year downward trend in the share of consumers who think it’s a good time to buy a home,” says Doug Duncan, senior vice president and chief economist at Fannie Mae. “The current low mortgage rate environment has helped ease this pressure, and fewer than half of consumers expect rates to go up in the next year. While the May increase in income growth perceptions could provide further support to prospective home buyers as the spring/summer homebuying season gains momentum, the effect may be muted by May’s discouraging jobs report.”
Here’s a closer look at additional findings from Fannie Mae’s latest index reading:
29 percent of Americans say now is a good time to buy a home, a drop of 1 percentage point from March and an all-time survey low for the second consecutive month.
52 percent of consumers believe now is a good time to sell a home – an all-time survey high.
42 percent of Americans believe that home prices will go up.
72 percent of Americans say they are not concerned with losing their job, a drop of 2 percentage points from March.
18 percent of Americans say their household income is significantly higher than it was a year ago, up 7 percentage points from March and at an all-time survey high.
Sellers Happy, But Home Buyers Are Frustrated- WHY?
Sellers Happy, But Home Buyers Are Frustrated
DAILY REAL ESTATE NEWS | TUESDAY, MAY 10, 2016
The number of home buyers who say now is a good time to buy dipped to an all-time survey low in Fannie Mae’s latest Home Purchase Sentiment Index. Meanwhile, home owners who say now is a good time to sell soared to an all-time survey high.
The disconnect in the market is likely partially due to the limited number of homes for sale in many markets, allowing sellers to face less competition and ask for higher home prices. On the other hand, home buyers are having fewer choices and stuck paying higher prices, sometimes in multiple-bid situations.
Indeed, “we can partially attribute the sizable gain in April in home selling optimism both to a correction for last month’s unexpected dip and to typical seasonal strength in housing activity in the spring and summer,” says Doug Duncan, senior vice president and chief economist at Fannie Mae. “Even after accounting for these factors, continued tight housing supply has led to renewed strength in home price appreciation, making selling a home a more attractive prospect this year in particular. This improved sentiment could provide an extra boost of much-needed supply for the spring selling season.”
Some highlights from Fannie Mae’s latest Home Purchase Sentiment Index:
30% of Americans say now is a good time to purchase a home, a drop of 3 percentage points from the previous month and now at an all-time survey low.
15% of Americans say now is a good time to sell a home, now at an all-time survey high.
More consumers think home prices will rise over the next 12 months compared to March, and slightly fewer consumers also expect mortgage rates to go up over the next year.
The percentage of respondents who say they are not concerned with losing their job increased 6 percentage points to 74%, nearly a 7 percentage point decrease in March.
The percentage of respondents who say their household income is significantly higher than it was 12 months ago held at 11%.
One of our favorite things about Atlanta is that it is always changing. There is always a new restaurant to try, a new neighborhood to explore, a new neighbor to meet. Real estate in Atlanta is no different, with new construction and renovations happening constantly. Despite the changing nature of Atlanta as a city, we have identified four trends in Atlanta real estate that show no signs of stopping.
1- Multifamily developments thrive Intown: Homebuyers seeking a single family home might want to focus their search outside of the Perimeter. New construction Intown is, and will continue to be, primarily condo and townhome focused. Luckily, homebuyers looking for Intown single family homes can look to the huge inventory of renovation-ready homes, or look to Intown suburbs, such as Brookhaven or South of I-20, for new construction Intown.
2- Buyers love South of I-20: Buyers are flocking to neighborhoods like Kirkwood, Adair Park, Capitol View, Edgewood and West End for the affordable housing and vibrant communities. Redevelopment in the area has made South Atlanta an incredibly desirable area for buyers looking for high walkability and who are drawn to perks of the area, such as the Beltline. With Georgia State University’s redevelopment of Turner Field, the sky is truly the limit for the neighborhoods south of I-20.
3- Millenial homebuyers: Millenials were slow out of the gate to buy homes. High unemployment and student loan debt have prevented Gen Y from buying where their older counterparts were able. However, Atlanta is well known for being millennial-friendly. Realtor.com sites Atlanta as the number one location for millennial homebuyers thanks to the availability of jobs and affordability of the housing market in Atlanta.
4– Mixed use developments OTP: Live, work, play developments are hot, hot, hot! The developments that have now become a staple of Intown Atlanta life (hello, Ponce City Market, Atlantic Station, etc.) have officially made their way OTP, most notably with Alpharetta’s wildly popular The Avalon. Suburban residents have spoken and developers have taken note; there are plenty of mixed-used developments planned for 2016 outside of I-285.
Buyers say they need more lending information
Buyers Say They Need More Lending Info
DAILY REAL ESTATE NEWS | WEDNESDAY, APRIL 27, 2016
A new survey of home buyers shows a greater need for information about the lending process to help ease buyer stress.
Home Buyers and Lending
The TD Bank survey also revealed some of the following findings on the homebuying process:
14% of home buyers researched their lenders through social media, double the number two years ago.
More than half of home buyers put down less than 20 percent when purchasing their first home.
32 percent of respondents financed their home with a mortgage affordability program, including 56 percent of millennials.
Nearly a quarter of home owners share a mortgage with someone other than a spouse (42 percent, among millennials).
26% percent of home owners purchased a home with their significant other before marriage.
Overall, Americans are ranking recent homebuying experiences higher — “very good” or “excellent,” according to a new poll conducted by TD Bank of more than 1,300 American home owners. The percentage of more satisfied home buyers has grown nearly 10 percent in the past years, even though the mortgage process has adopted new rules that has made it more time-consuming for applicants. Respondents identified the most positive aspects of a home purchase as getting approved for a mortgage, finding a good REALTOR®, and finding the right lender.
However, the lending process remains a significant stress factor for home buyers. Respondents identified the following areas where mortgage lenders need to improve: adding more information online, training front-line staff, and offering home financing seminars or workshops.
Sixty-seven percent of millennial respondents said the best way banks could educate them on the mortgage process was to add additional online information and resources.
They also want to be better prepared for the settlement table. Sixty-two percent of respondents say they spent close to $2,000 in unexpected costs during the mortgage process, while nearly half of millennials say they faced up to $5,000 in unexpected costs.
"Our data demonstrates that homebuying sentiment is improving, but lenders still need to adopt a more omnichannel approach to providing financial guidance and expertise," says Kevin Gillen, senior vice president of mortgages at TD Bank. "Consumers should find a lender who can educate and support them on all aspects of the mortgage process. By understanding the process, they will enjoy a more positive homebuying experience."
There is no inflation, says the federal government. The consumer price index rose by only 0.4 percent in 2015 so there will be no cost-of-living adjustment to Social Security checks this year. However, as most real estate professionals know, housing costs are still climbing. Rents rose at their highest pace in seven years and home prices nationally increased by 6 percent. That would be three times the pace of average wage growth. Housing costs are expected to keep rising in 2016 simply because not enough homes are being built.
From 2009 to today, new construction of single-family homes, condominiums, and apartment units totaled 5.6 million. Over the same period, approximately 1.7 million housing units were deemed uninhabitable or obsolete and were demolished and removed from the housing stock. These two figures result in a net addition of 3.9 million housing units to the country’s stock. Is that adequate in light of 17.3 million additional people living in the country over the same period?
Clearly, the answer is no. Given the average household size of 2.5 persons, a total of 6.9 million new housing units would be needed to accommodate the country’s rising population. The 3.9 million units that were actually created fall far short of the demand—by some 3 million homes.
That explains why rental vacancies are falling and housing inventories are shrinking. Of course, local market conditions vary. States with declining populations, including Connecticut, Illinois, and West Virginia, may have a less pressing need for additional home construction. But those places are exceptions. Housing shortages are the rule in most states and there’s no reason to expect anything to change this year.
There are essentially two major consequences of a persistent housing shortage: a continuing steep rise in housing costs and people needing to double or triple up to afford a home. Young adults may have to find multiple roommates or else live with their parents.
That latter scenario is probably not what most young people dream about, but it’s what the American dream of home ownership could turn into if we don’t spur more housing development in the country soon.
Owners Offered Mortgage Principal Reductions
Owners Offered Mortgage Principal Reductions
DAILY REAL ESTATE NEWS | FRIDAY, APRIL 15, 2016
About 33,000 seriously delinquent borrowers will likely be eligible for a new program under the mortgage giants to have mortgage balances reduced. The new plan – long rumored – was announced by the Federal Housing Finance Agency on Thursday. To qualify, the borrowers must owe more on their home than it is currently worth and meet other criteria.
FHFA, the regulator to Fannie Mae and Freddie Mac, said its principal reduction program “could well be their final opportunity to [help these borrowers] avoid foreclosure,” says Melvin L. Watt, the agency’s director.
To qualify, home owners must have an outstanding balance of more than $250,000 on their mortgage and be more than 90 days delinquent on their mortgage payments as of March 1. After the principal reduction by the FHFA, borrowers still will owe 15 percent more than their homes are worth, The Wall Street Journal reports.
“The national housing market has significantly improved in recent years but there are still areas of the country where home values have not recovered and negative equity remains a real problem,” Watt says. This program will “allow an opportunity for delinquent, underwater borrowers in these areas to avoid foreclosure and save their homes.”
Watt has called the decision to allow principal reductions “the most challenging evaluation the agency has undertaken during my time as director.”
The program has been met with some criticism. Some consumer advocates argue the program doesn’t go far enough in helping enough struggling home owners and others says it comes too late, following about five years after the housing crisis. And some critics say the breaks unfairly treat owners who have remained current on their loans.
By the end of 2015, about 4.3 million borrowers owed more than their homes were worth, according to CoreLogic data. That is down from 12 million in 2009.
Over the next 10 years, expect functionality, accessibility, and sustainability to be major themes guiding the look of homes. That could include everything from embracing healthier building materials and furnishings to homes that are designed to be more resilient to bad weather.
More than 500 residential architects offered their insights into what will be the most significant home design elements over the next 10 years. From the American Institute of Architects Home Design Trends Survey, here are the 10 residential design trends to watch for over the next decade:
1. Smarter homes: Technology will become more prevalent in the operation of homes, including via automated controls for temperature, security, and lighting.
2. Healthier homes: Consumers are becoming more aware of environmental health issues that will likely lead to greater use of low or no volatile organic compounds of paint and composite wood, natural fiber upholstery, carpets without polyvinyl chloride backing, and air purification systems.
3. Disaster-proof: Home owners will call for homes that can hold up better against natural disasters, which may mean elevating residences, windows with impact glazing, dedicated safe rooms, and backup power generation.
4. Energy efficiency: Sustainable design elements that increase a home’s energy efficiency — such as solar panels, water reclamation systems, and tankless water heaters –- will likely grow in demand.
5. Age-in-place: Universal design elements will grow in popularity to help an aging population stay in their homes longer. These design elements will likely include wider hallways, added handrails, and one-level living spaces.
6. All about the kitchen: Kitchens will be the focal point of the home, fueled by open design concepts that allow it to stay front and center.
7. Outdoor living spaces: More home owners will look to invest in sprucing up their outdoor living spaces, beyond just outdoor grills or decks. Instead, look for more home owners adding outdoor kitchens and fully furnished outdoor rooms.
8. Home offices: Home owners, due to changing work patterns and a growth in telecommuting, will likely place a greater emphasis on the need for a space devoted to a home office.
9. Smaller but better designed homes: As home owners demand to be closer to jobs and public transportation, architects will have to build in more accessible locations that are typically more pricey. This will likely bring about smaller but more innovative designs and more personalized design features.
10. Urban influence: With growing calls for an urban lifestyle from younger adults, architects will adopt some of these urban characteristics into their projects, such as with a focus on higher-density development that offer more amenities to residents and offer closer to commercial.