May Prices Reached Record Highs

U.S. prices surged to an all-time high and homes sold faster than they ever have in May, according to a new report released by realtor.com®. Home prices averaged $297,000 in May, and homes sold in just 55 days.
Despite recent upticks, however, the market is showing a few signs of slowing momentum, according to the report.
“We’re in the thick of the hottest homebuying season of all time,” says Javier Vivas, director of economic research at realtor.com®. “The pace of U.S. home sales has officially reached a seasonal and historical high, but we’re also beginning to see slight signs of deceleration.”
More listings are coming onto the market, which may offer some hope to frustrated home buyers who have faced limited choices, Vivas says. The inventory of homes for sale rose 6 percent in May compared to April.
“Even as inventory recovers, the mix of what’s available versus what shoppers are looking for could become an even more pronounced mismatch,” he says. “Total listing volume remains highly dependent on new construction, much of which is still out of the price range of first-time buyers—the largest segment of buyers.”
Rising home prices also show few signs of slowing. “Unfortunately for buyers, median list prices continue to show strong yearly growth and fail to hint that home values will stall any time soon,” Vivas says.

Source: Move Inc.

Daily Real Estate News | Thursday, May 31, 2018

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This is a truly remarkable home! Beautifully updated and carefully maintained! Includes: 4 bedrooms; 1.5 Bathrooms; very spacious living room, dining room, and kitchen; den/sun room; bonus room and large hallway closet on upper level; poured, dry basement; 2 stall insulated heated/cooled finished garage w/ workshop area; new 1 stall garage with yard and alley access; and a beautiful large empty lot next door! Other features include: new furnace, sidewalks, garage openers and steel roofs on both garages! A very special property!

3 Questions Clients Should Ask Before Buying a Vacation Rental

If you have buyers interested in purchasing a vacation property as an investment and for extra cash flow, now is a great time, according to finance expert Rob Stephens, co-founder and general manager of Avalara MyLodgeTax, a tax solutions provider. Sites like Airbnb and HomeAway have contributed to the explosive growth in the number of travelers seeking to rent private homes for comfort, privacy, and sometimes lower costs.
“There’s no question that the vacation rental business is booming,” Stephens says. The short-term rental market in the United States alone is approaching $18 billion in revenue, with a projected annual growth rate of 6.6 percent, he says.
However, before your buyers decide to take on a short-term rental, Stephens advises that you pass on these three questions to help ensure their success:
1. Is a vacation rental a smart investment for you? Buying a vacation property can certainly be exciting, especially if it’s in a destination where the buyers love to spend time themselves. However, your clients need to be confident that they can cover all the costs involved. In addition to the transaction costs, make sure they understand what it will take to operate the rental. Do your clients plan to manage the property themselves or hire a professional (possibly you)? A vacation rental only generates income when it’s occupied, so your client needs to figure out how many renters they need each month and how much to charge to cover the cost of the property, and then decide whether it’s realistic or not.
Beyond the Mortgage: Explore Ownership Expenses With Investors
2. What are the laws governing short-term rentals in the community? Before you put in that offer on behalf of your investor clients, make sure the community or homeowners association allow short-term rentals. “Many communities prohibit owners from renting out their homes for fewer than 30 days,” Stephens says. Even some cities and states are starting to impose regulations on vacation rentals, he adds. Help your clients investigate short-term rental laws and regulations, including fines and other penalties if the property doesn’t comply. Call the HOA property management company, visit the city hall website, and have conversations with local agents who also handle vacation rentals.
3. Which taxes and fees are you required to collect from guests? “Many real estate investors overlook the fact that lodging or occupancy taxes need to be paid in order to rent the home in compliance with city and state tax agencies,” Stephens says. State and local lodging taxes vary widely, and can change with little notice, Stephens says. Your buyers need a lodging tax compliance tool or software if they’re planning to handle the rental themselves. “The right tool will offer a full range of solutions, including determining the vacation rental taxes and reporting requirements as well as calculating and filing returns on a monthly or quarterly basis,” Stephens says.

Source: Rob Stephens, Avalara MyLodgeTax

Daily Real Estate News | Friday, May 25, 2018

Spike in Rates Dampens Loan Applications

A rise in interest rates last week may have prompted would-be refinancers and home buyers to pause. Mortgage applications—for both refinancings and home purchases—dropped 2.6 percent last week on a seasonally adjusted basis, the Mortgage Bankers Association reported Wednesday. Mortgage volume is now 10.5 percent lower than a year ago.
The 30-year fixed-rate mortgage rose to its highest level since April 2011 last week—a 4.86 percent average, MBA reports. The higher rates gave homeowners less incentive to refinance. Refinance volume dropped another 4 percent last week and is now at the lowest level since December 2000. Refinance applications are 27 percent lower than a year ago.

That’s caused lenders to put more weight behind their home-purchase business, but the higher rates—mixed with a severe shortage of homes for sale—appear to be limiting the buyer pool there, too. Mortgage applications to purchase a home dropped 2 percent for the week. However, volume is still 3 percent higher than a year ago.
“Purchase applications decreased over the week, while the average loan amount for purchase loans increased to over $320,000 after averaging around $317,000 for the past four weeks—likely a sign that inventory for lower-priced homes remains low and the mix is still skewed toward larger loan balances,” says Joel Kan, an MBA economist.

Source: “Weekly Mortgage Refinances Drop to an 18-Year Low as Rates Jump,” CNBC (May 23, 2018)

Daily Real Estate News | Wednesday, May 23, 2018

Did Buyers Just Miss Their Final Chance for Low Rates?

Mortgage rates are edging noticeably higher this week, and would-be home buyers and refinancing homeowners may have missed out on a chance to lock in a lower rate.
Mortgage application volume for refinancings and home purchases dropped 2.7 percent last week on a seasonally adjusted week-to-week basis, the Mortgage Bankers Association reported Wednesday. Mortgage application volume is 4.5 percent lower than the same week a year ago.
Applications for refinancings posted the biggest drop last week. Volume plunged 4 percent to the lowest level since August 2008. Refinancing applications tend to be more rate sensitive than applications for home purchases. Refinancing applications are nearly 17 percent lower than a year ago when interest rates were much lower.
Mortgage applications to buy a home dropped 2 percent last week, but volume remains 4 percent higher than a year ago.

The 30-year fixed-rate mortgage dropped to 4.77 percent last week, the MBA reports. But on Tuesday, interest rates jumped to a seven-year high, following a major sell-off in the bond market, CNBC reports. The average 30-year fixed-rate averaged 4.875 percent for the highest creditworthy borrowers and 5 percent for the average borrower, according to Mortgage News Daily.
More buyers are turning to adjustable-rate mortgages, which offer lower introductory rates for a set period before rising. But ARMs are on the rise too. “Jumbo and 5/1 ARM rates increased, with the 5/1 ARM rate increasing to its highest in our survey at 4.09 percent,” says Joel Kan, an MBA economist.
“Homebuyer demand has remained positive and shaken off the higher rate environment so far this year,” says Sam Khater, Freddie Mac’s chief economist. “However, after years of very low mortgage rates, the symbolic risk of a 5 percent mortgage, on top of higher gas prices, may cause a slowdown in homebuyer demand, particularly in western states and exurbs that are affected more by gas prices than the typical consumer.”

Source: “Weekly Mortgage Applications Fall 2.7% Even Before Rates Spike,” CNBC (May 16, 2018) and “Mortgage Rates Are Surging to the Highest Level in 7 Years,” CNBC (May 15, 2018)

Daily Real Estate News | Wednesday, May 16, 2018

What Makes Homeowners Tackle a Remodel

The chief reasons homeowners undergo a remodel are because they desire better and newer amenities or they feel compelled to repair or replace old components in their home, according to the National Association of Home Builders’ Remodeling Market Index. These two reasons have tended to drive most remodels in recent years, but other reasons are growing in popularity among homeowners.
Remodeling Impact: Which Remodel Projects Offer the Biggest Paybacks
Notably, three reasons to remodel are on the upswing: a “desire and need for more space,” “wanting to avoid moving/buying another home,” and “desire to be able to age in place.”
“An increased desire to avoid moving to another residence could in part be a reason to higher construction costs for new homes and a low inventory of existing homes available on the market,” the NAHB notes on its blog, Eye on Housing, in reporting the survey’s findings. “The uptick in aging in place is not entirely surprising, given the ongoing growth in the nation’s older population.”
The chart below reveals homeowners’ top reasons for remodeling:

 

Source: “Aging in Place on the Rise as a Reason to Remodel,” National Association of Home Builders’ Eye on Housing blog (May 15, 2018)

Daily Real Estate News | Wednesday, May 16, 2018

4 Hot Trends for Outdoor Spaces

Regardless of its size, a home’s outdoor space should be a showpiece in a listing.
Read more: How to Make a Big Statement With a Small Yard
“This year it’s really about making your outdoor space function like an interior space for all things fun, lounging, and entertaining,” Gretchen Kennelly, a San Diego interior designer, told realtor.com®.
Designers offered up some of their trend insights to realtor.com® for homeowners or sellers trying to maximize a home’s outdoor potential, including:
Alternative flooring options
Outdoor rugs have been common in recent years, but more flooring options are emerging, such as porcelain. Porcelain is known as being durable and simple to install, which is adding to its popularity. “Porcelain pavers can create this beautiful transition without creating a huge divide between the two living spaces,” says Joe Raboine, national design and training specialist with Belgard. Ikea’s beechwood deck tiles are another way to enhance a patio or balcony’s flooring without spending a fortune, says designer Christina Harmon.
Vertical gardens
A garden can fit in any space outside; just go up instead of out. Vertical gardens maximize the available space by growing herbs and veggies upwards. Arbors, arches, pergolas, and gazebos can help enhance a vertical garden. “They’ll create the ambience of an outdoor garden ‘room’ and give a sense of height and depth to an otherwise small space,” Raboine says. Read more: The Hot Home Trend of Vertical Gardens
Attention-getting lighting
“This year is the time to brighten up the exterior of your home in unexpected ways,” Michael Amato, creative director at the Urban Electric Co., told realtor.com®. “If you have an all-white painted brick or stucco home, adding lighting in a fun color like blue with gold hardware creates interest. If your house is already painted a fun color, lighting presents a great opportunity to work in a contrasting color for a striking statement.” Hanging stringed Edison-styled bulbs along an outdoor space can create a festive flair to a backyard too.
Blues and greens
Deep blues and greens are on trend this season in outdoor spaces. Fabric cushions and umbrellas are showcasing the color. “This year, it’s all about outdoor spaces that feel luxurious rather than cheesy,” Harmon says. “Think lots of neutrals coupled with gorgeous jewel-toned greens and furniture and accessories that create a truly indoor-outdoor vibe.”
View more outdoor trends at realtor.com®.

Source: “Outside Is the New Inside, and 7 More of the Year’s Biggest Outdoor Design Trends,” realtor.com® (May 9, 2018)

Daily Real Estate News | Thursday, May 10, 2018

Young Buyers Are Skipping the Starter Home

Millennials who delayed homeownership following the Great Recession are now finally entering the market in bigger numbers. They comprised 36 percent of home buyers last year, up from 32 percent in 2013, according to the National Association of REALTORS®. But they’re trying to make up for lost time by skipping over the starter, entry-level home and heading right into buying larger, pricier homes that they plan to stay in longer, USA Today reports.
Find More Starter Homes for First-Time Buyers
Inventory shortages are particularly critical in entry-level price points. Use these strategies to help expand housing options for your clients. Read more.
“They rented for longer,” says Diane Swonk, chief economist at Grant Thornton. “Now they’re going to where they want to stay.”
Many millennials in their mid-30s can now afford the more expensive homes. Some young adults have been saving by living with their parents for years into adulthood. They’ve also been moving up in their jobs and earning higher salaries.
As they get married and start raising kids, they’re finding they need more space and are moving into homeownership. However, a severe shortage of lower-priced starter homes is prompting them to up their budgets and look at pricier places.
The cost for what is generally considered a starter home can vary widely by geographic area, but tends to average between $150,000 to $250,000 in most markets, Swonk says.
The percentage of millennials who purchased homes for $300,000 or more this year stands at 30 percent, up from 14 percent in 2013, according to data from NAR.
Older millennials tend to splurge the most. From 2012 to 2016, nearly one-third of buyers ages 33 to 37 purchased four-bedroom homes compared to about 24 percent in 1980, 1990, and 2000, according to an analysis by Ralph McLaughlin, chief economist at Veritas Urbis Economics.

Source: “From Their Parents’ Basements to Dream Homes: Millennials Are Skipping Starter Houses,” USA Today (May 7, 2018)

Daily Real Estate News | Tuesday, May 08, 2018

Must-Do May Checklist for Homeowners

May marks a golden opportunity for homeowners to assess their home and ensure everything is in tip-top shape before the summer months begin. HouseLogic recently provided a checklist that your clients can use to save both time and money.

For smart homeowners, these four tasks are essential for the month of May:

1. A new refrigerator. If your current fridge is leaky, not cooling enough, or tight on storage space, consider buying a new model this month. May is pre-summertime—which is when new fridges will hit the sales floor—and stores will need to clear out old models to make room. If your home needs a stove or other kitchen appliances, HouseLogic advises to wait until fall when they’ll be going on sale.

2. Exterior painting. Buff up your home’s outer coat of paint to revive its color after winter’s drab weather. In most areas, May temperatures range from 50 to 80 degrees Fahrenheit, which is prime weather for painting your home’s exterior. HouseLogic also suggests making touch-ups to your home’s trim and siding while you’re repainting.

3. A new mattress. How old is your current mattress? Over time, mattresses collect more dust and mites so be sure to upgrade yours if it’s needed. Stores will offer a good mattress deal in May before new stock comes in, helping you save hundreds of dollars.

4. Overflowing closets. Be on the lookout for deals on storage materials at Memorial Day sales, and start tidying up those closets! According to HouseLogic, experts estimate that only 20 percent of what’s in peoples’ closets are actually worn. This month, trim down and store the 80 percent of your wardrobe that’s left: put sentimental clothes (college sweatshirts, t-shirt memorabilia) and those pieces you need but rarely use (formalwear) in storage containers and under-the-bed bins.

Source: “4 Things Smart Homeowners Always Know to Do in May,” HouseLogic (May 2, 2018)

Daily Real Estate News | Thursday, May 03, 2018

Highest Rates in 5 Years Prompt Pullback

Would-be home buyers and refinancing homeowners both receded from the mortgage market last week as mortgage rates surged to their highest averages in nearly five years. The Mortgage Bankers Association’s seasonally adjusted index showed that total application volume, which includes home purchases and refinances, dropped 2.5 percent last week and are now 3.3 percent lower than a year ago.

Refinance volume took most of the hit, dropping 4 percent last week compared to the previous week. Refinance volume is now 15 percent below a year ago. Borrowers who wish to refinance tend to be more rate-sensitive than home shoppers.
Applications to buy a home still dropped 2 percent last week. Purchase applications, however, remain 5 percent higher than a year ago.
The average for a 30-year fixed-rate mortgage was 4.80 percent last week, the highest level since September 2013, the MBA reports. The share of adjustable-rate mortgages continues to rise in the lending market. ARM activity rose to 6.7 percent of the total applications. ARMs offer lower introductory rates, usually for a set time period, before rising.
The market will closely be watching the Federal Reserve’s meeting on Wednesday.
“While the Fed is not even remotely expected to hike rates again at this meeting, investors are always tuned in to the verbiage of the announcement in case it offers clues about the future policy path,” Matthew Graham, chief operating officer at Mortgage News Daily, told CNBC.

Source: “Mortgage Demand Drops 2.5% on the Highest Rates in Nearly 5 Years,” CNBC (May 2, 2018)

Daily Real Estate News | Wednesday, May 02, 2018