Monday’s announcement of promising COVID-19 vaccine test results prompted investors to get bullish on several real estate stocks, notably within sectors of the market that have faltered during the pandemic. The Wall Street Journal reported as part of Monday’s vaccine news: “The share prices of some of the country’s biggest property owners were up more than 20% Monday compared with a roughly 3% increase in the Dow Jones Industrial Average.”
Office owners have faced high vacancy rates during the pandemic. Hotel and retail owners also have been among the hardest-hit real estate sectors during the pandemic as consumers avoid public venues. But after news broke of the positive vaccine results from BioNTech SE and Pfizer Inc., hotels and retailers saw an increase in the stock market.
Certain housing trends emerging from the pandemic likely will outlast the virus, real estate professionals predict. “The idea of what is necessary is changing,” Camille Thomas, a real estate professional in Jackson Hole, Wyo., told realtor.com®. “The home has become more than a living space.”
The Great EscapeThe suburbs have become a hot place to be in the pandemic. Some real estate experts have called urban flight a myth, but Americans—particularly millennials—were already leaving crowded cities for the suburbs in the five years prior to the pandemic, according to the Urban Land Institute. Now the trend has accelerated. Housing inventory in the suburbs is shrinking faster than in urban areas, according to a report from realtor.com®.
Jumbo, FHA Mortgage Rates Fall to Record Lows
November 5, 2020
The rates for jumbo and FHA loans dropped to all-time lows last week. Jumbo loans are for borrowers taking out larger loans while FHA loans offer borrowers’ low-down-payment loans. Their new lows fueled mortgage demand last week, the Mortgage Bankers Association reports.
The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $510,400) dropped to 3.18% last week. The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA fell to 3.08%. The 15-year fixed-rate mortgage also saw new lows last week, decreasing to an average contract rate of 2.55%, MBA reports.
“The drop in rates spurred an uptick in demand for refinances,” says Joel Kan, MBA’s chief economist.
Refinances overall increased 6% last week and are now up 88% compared to a year ago. The drive was essentially all driven by those “seeking conventionally and government loans,” Kan says.
On the other hand, mortgage applications to purchase a home dropped 1% last week. Applications are still more than 25% higher than a year ago.
“After a solid stretch of purchase applications growth, activity decreased for the fifth time in six weeks, but has increased year-over-year for six straight months,” says Kan. “2020 continues to overall be a strong year for the housing market.”Source: Mortgage Bankers Association; “Jumbo and FHA Mortgage Rates Set Record Lows, Juicing Refinance Demand,” CNBC (Nov. 4, 2020); and “Mortgage Applications Jump 3.8 Percent as Refinance Activity Remains Strong,” Mortgageorb.com (Nov. 4, 2020)
Coronavirus-Related Forbearance Rates Drop to 7-Month Low
November 3, 2020
Fewer homeowners are taking forbearance to delay their mortgage payments due to the financial and economic impact of the COVID-19 pandemic. The national forbearance rate dropped 7 basis points between Oct. 19 and Oct. 25, the Mortgage Bankers Association reports. Forbearance rates dropped for every loan type.
Mortgages in forbearance make up 5.83% of all outstanding mortgages, which is the lowest point since April 5, when the rate stood at 3.74%. Still, about 2.9 million homeowners remain in forbearance, and lenders remain concerned whether homeowners will be able to resume their payments at the end of the year or their forbearance period, when much coronavirus housing assistance runs out.
But so far, most of the data is showing that many homeowners who take forbearance are still keeping up with their mortgage payments and using it more as a safety net.
“Almost half of forbearance exits to date have been from borrowers who remained current while in forbearance, or who were reinstated by paying back past-due amounts,” says Mike Fratantoni, chief economist of the Mortgage Bankers Association. “The share of loans in forbearance has returned to levels last seen in early April, but it still remains remarkably high. Further improvement will require ongoing recovery in the job market, as well additional fiscal stimulus.”
If your clients are struggling to make their payments, the National Association of REALTORS® has developed a brochure that outlines what homeowners should ask lenders about their options and the payback requirements when considering forbearance. The brochure, called “Protect Your Investment,” is available at realtorparty.realtor.Source: “Forbearance Rate Hits Seven-Month Low,” National Mortgage News (Nov. 2, 2020)
Generation Z, the oldest of whom are turning 24 this year, is a growing force in the rental market, but real estate experts are watching these consumers’ preferences closely for when they’re ready to buy. Sixty-two percent of Gen Z renters say smart-home technology is extremely or very important, according to a new RentCafe survey of about 2,500 respondents. High-speed internet was the most important feature respondents cited, coming in higher than parking, gym, or laundry. Further, smart-home features such as smart locks, thermostats, and energy-efficient appliances were ranked higher in importance than extra space.
“Embracing technology and social media as a way of living, these young adults seem to know exactly what they are looking for when it comes to renting an apartment, what they expect from their apartment communities, and how much they are willing to spend,” RentCafe notes in its study. “Although they are budget-conscious and still at the dawn of their earning years, Gen Z renters want the highest-quality apartments and rental communities that feature the most technologically advanced features.”
The 30-year fixed-rate mortgage continued to hover near its all-time low this week, as economists predict that historically low rates will likely remain into 2021.
The 30-year fixed-rate mortgage averaged 2.81% this week, up slightly from last week’s 2.80%, which was the lowest ever in Freddie Mac’s records, dating back nearly 50 years.
“The record-low mortgage rate environment is providing tangible support to the economy at a critical time, as housing continues to propel growth,” says Sam Khater, Freddie Mac’s chief economist. “Strong purchase demand is helping to lift the construction, manufacturing, and transportation industries that build new homes and it is also leading to more consumer spending for owners, who are selling or improving their home.”
Tech problems have taken on greater significance in 2020 as more people work from home. One of the biggest complaints is a bad internet connection.
Sometimes even the best internet connection can stall. What can you do?
As a first step, restart. Power down your router and modem. On your device, close any apps you don’t need to make sure other background systems aren’t draining your device.
Then run an internet speed test to check on your connection. Speedtest by Ookla can test in seconds your connection’s response, download, and upload speeds. Check the connection speed around the house to uncover any potential dead zones. Also, use the information from the speed test to ensure your connection speed is what you’re paying your servicer for.
The pandemic has not dampened home appreciation. In fact, high buyer demand is prompting home prices to surge. In the third quarter, the average home sale generated a gain of $85,000, up from $66,000 a year ago, according to data from real estate research firm ATTOM Data Solutions. That $85,000 translates to a nearly 39% return on investment compared to the original purchase price.
“Home prices and seller profits across the nation continue racking up new highs as the housing market remains relatively immune from the economic havoc caused by the coronavirus pandemic,” says Todd Teta, chief product officer at ATTOM Data Solutions. “It’s almost as if the housing market and the overall economy are operating in different worlds.” Record-low mortgage rates and declining inventory are prompting strong home prices and returns for home sellers, Teta adds.
Mortgage Rates Hit Record Low—Again
October 23, 2020
The 30-year fixed-rate mortgage hit its 11th record of the year this week, averaging 2.80%—the lowest rate ever recorded by Freddie Mac.
“Mortgage rates remain very low, providing homeowners who have not already taken advantage of this environment ample opportunity to do so,” says Sam Khater, Freddie Mac’s chief economist. “Mortgage rates today are on average more than a full percentage point lower than rates over the last five years. This means that most low- and moderate-income borrowers who purchased during the last few years stand to benefit by exploring refinancing to lower their monthly payment.”
The low loan rates are fueling a hot housing market as buyers rush to lock in the rates. In September, existing-home sales jumped 21% compared to a year ago, the National Association of REALTORS® reported this week.
Freddie Mac reports the following national averages for mortgage rates for the week ending Oct. 22:
- 30-year fixed-rate mortgages: Averaged 2.80%, with an average 0.6 point, dropping from last week’s previous all-time low of 2.81%. Last year at this time, 30-year rates averaged 3.75%.
- 15-year fixed-rate mortgages: Averaged 2.33%, with an average 0.6 point, dropping from last week’s 2.35% average. A year ago, 15-year rates averaged 3.18%.
- 5-year hybrid adjustable-rate mortgages: Averaged 2.87%, with an average 0.3 point, falling from last week’s 2.90% average. A year ago, 5-year ARMs averaged 3.40%.