The growing trend of working remotely could untether Americans from office spaces in pricey areas and prompt them to buy homes elsewhere. Home sales in the suburbs as well as smaller, less expensive cities could see a boost that continues beyond pre-pandemic levels, The Wall Street Journal reports.
Some tech companies, including Facebook, Twitter, and Square, have already announced that they will allow select employees to work remotely full time. They expect half of their workforce to work remotely within five to 10 years. Facebook CEO Mark Zuckerberg says that about 75% of his employees have already expressed an interest in moving to a different city if they could work remotely.
Why do people decide to stay or leave a community? A new joint survey from the Urban Institute and the Knight Foundation seeks to find the true motivations behind Americans’ choices for places to live. The survey of more than 11,000 consumers was conducted before the COVID-19 pandemic. Here are a few highlights from their findings:
A shift in the mix of home buyers has been occurring since the pandemic began. Investor numbers are shrinking, while the number of home shoppers purchasing their first home ever is on the rise. These buyers are freed from having to sell a home prior to purchasing, and they are valuing homeownership in a pandemic.
The share of first-time buyers rose to 36% in April 2020, up from 32% a year ago, the National Association of REALTORS®’’ April 2020 REALTORS® Confidence Index Survey shows.
For Some, 30-Year Rates at 2.5% Are Possible
May 19, 2020
Borrowers with top-notch credit are scoring mortgage rates lower than the record average lows being reported. Freddie Mac announced the 30-year fixed-rate mortgage averaged 3.28% for the week ending May 14, but home shoppers with stellar credit could snag one with a rate of about 2.5%, according to The Mortgage Reports.
The Mortgage Reports’ daily rate survey shows that rates for 30-year, fixed rates for FHA and VA loans have fallen to 2.75%, in some cases. Borrowers with high credit scores, little debt, solid equity, and who shop around tend to find the lowest deals, The Mortgage Reports notes.
United Wholesale Mortgage, a residential mortgage lender, announced a 2.5% “Conquest” loan program for the 30-year, fixed- rate mortgage. “Some people said we’d never see interest rates drop below 3 percent on a 30-year mortgage,” says Mat Ishbia, United Wholesale Mortgage’s president and CEO. “We believe that the housing market is going to be strong, and we want to do our part to help more people get into their dream homes as we get through this pandemic together as a nation.”
Chase Bank followed suit by also offering mortgage rates below 3% on 30-year fixed-rate loans. Its offering for 30-year rates is as low as 2.875% (with a 2.944% APR).
Rates below 3% appear to be mostly reserved for purchase contracts and not refinancings, The Mortgage Reports notes. Refinance rates, for comparison, are falling in the 3.5% to 4% range.Source: “2.5% Mortgage Rates Are Here. What’s Next—2%? Or Even 1%?” The Mortgage Reports (May 18, 2020)
Record low mortgage rates are sticking around. The week ending May 14 marks the sixth consecutive week that mortgage rates have stayed at or near all-time lows. The 30-year fixed-rate averaged 3.28% this week, Freddie Mac reports.
“Mortgage rates have stabilized at very low levels over the last few weeks as homebuyer demand slowly improves,” says Sam Khater, Freddie Mac’s chief economist. “Although purchase applications reached a new low in mid-April, purchase demand today is only down 10% from one year ago. While demand is improving, inventory is low and declining with no signs of a turnaround yet.”
Home prices in the first quarter of the year were up in nearly all major U.S. cities, and despite the continuing difficulties of the COVID-19 pandemic, prices show no signs of slowing, according to the National Association of REALTORS®’ latest quarterly report.
The median price nationwide for an existing single-family home was $274,600 in the first quarter, a 7.7% increase year over year. “The first-quarter price jumps mostly reflect conditions prior to the coronavirus outbreak and show the strength of housing demand prior to the pandemic,” says NAR Chief Economist Lawrence Yun. “Even now, due to very limited listings, home prices are showing no signs of buckling.”
Homeowners Are Preparing to List After the Pandemic
May 7, 2020
Real estate professionals report that about 77% of potential sellers are preparing to sell their homes once stay-at-home orders from the COVID-19 pandemic are lifted, according to a newly released survey from the National Association of REALTORS®. More than half of REALTORS® report their clients are taking on do-it-yourself home improvement projects in preparation, too.
“After a pause, home sellers are gearing up to list their properties with the reopening of the economy,” says Lawrence Yun, NAR’s chief economist. “Plenty of buyers also appear ready to take advantage of record-low mortgage rates and the stability that comes with these locked-in monthly payments into future years.”
NAR conducted an Economic Pulse Flash Survey May 3-4 and asked about 2,500 members how the coronavirus has been affecting their real estate business.
Home buyers are gradually re-emerging, but the pandemic has shifted some of their housing preferences, according to the results. Five percent of REALTORS® report that their clients have changed their neighborhood preferences from urban to suburban due to the pandemic. Also, one in eight REALTORS® surveyed say that buyers have changed at least one home feature that’s important to them since the COVID-19 pandemic. The most common features identified are home offices, yard space for exercising or growing food, and more space to accommodate their family.
But home buyers in search of a big bargain may not find one. Nearly 75% of REALTORS® report that their sellers have not reduced listing prices to attract buyers. Housing inventories are near record lows and that reduced competition may be prompting more sellers to stand firm on their home prices.
Top New-Home Features in 2020
April 7, 2020
Closets, energy efficiency, and laundry rooms appear to be home builders’ top priorities in the single-family homes they’re constructing this year.
The National Association of Home Builders conducts a nationwide survey each year to find out what home features builders are most likely to include in a typical new home. The walk-in closet in the master bedroom was the most popular home feature builders cited, according to the survey. Energy-efficient features were popular, too, such as efficient lighting, programmable thermostat, Energy Star–rated appliances, and windows. Kitchens were most likely to have a central island, a walk-in pantry, and granite countertops, the NAHB survey shows.
On the other hand, the least likely features builders were to include in the price of the home were cork flooring for the living areas on the main floor, geothermal heat pumps, solar power systems, and dual toilets in the master bath. Also, specialty rooms unlikely to be included were sun rooms, media rooms, and two-story family rooms or foyers.Source: “Most Likely (Unlikely) Features in New Single-Family Homes in 2020,” National Association of Home Builders’ Eye on Housing blog (March 25, 2020)
Record low mortgage rates last week may have offered up plenty of incentive for home buyers, even in a pandemic. Mortgage applications for home purchases increased 7% this week, which follows a 12% uptick last week, the Mortgage Bankers Association reports. Mortgage applications are viewed as a gauge for upcoming home sales.This marks the third week in a row that purchase volume in mortgage applications has increased. The strongest growth in purchase applications was reported in Arizona, Texas, and California, the MBA reports.
Mortgage rates reached a new record low this week, with the 30-year fixed-rate mortgage falling to its lowest average ever since Freddie Mac began tracking such data in 1971. “The size and depth of the secondary mortgage market is helping to keep rates at record lows,” says Sam Khater, Freddie Mac’s chief economist. “These low rates are driving higher refinance activity and have modestly helped improve purchase demand from their extremely low levels in mid-April. While many people are benefiting from low mortgage rates, it’s important to remember not all people are able to take advantage of them given the current pandemic.”