Discussing existing home sales, renting versus buying, strong remodeling indicators, mortgage rates and much more!
Existing Home Sales Weak Again
After three straight monthly declines, existing-home sales slightly reversed course in September, but ongoing supply shortages and recent hurricanes muted overall activity and caused sales to fall back on an annual basis, according to the National Association of Realtors®.
Total existing-home sales rose 0.7% to a seasonally adjusted annual rate of 5.39 million in September from 5.35 million in August. Last month’s sales pace is 1.5% below a year ago and is the second slowest over the past year (behind August).
The median existing-home price for all housing types in September was $245,100, up 4.2 percent from September 2016 ($235,200). September’s price increase marks the 67th straight month of year-over-year gains.
Lawrence Yun, NAR chief economist, said:
Home sales in recent months remain at their lowest level of the year and are unable to break through, despite considerable buyer interest in most parts of the country. Realtors this fall continue to say the primary impediments stifling sales growth are the same as they have been all year: not enough listings – especially at the lower end of the market – and fast-rising prices that are straining the budgets of prospective buyers.
Check out the charts:
This NAR report is talking about the entire country and you must look at what is happening in your area. For example, in September 2017 there were 192 homes reported sold in Anderson County. Compare that to the 223 homes reported sold during September 2016 in Anderson County.
I would point to the lack of inventory as being the main cause for the decrease in home sales in Anderson County. Buyers should not let this discourage them but they must be prepared and represented by a Realtor to be successful in today’s market.
Asthma: Another Reason Owning Beats Renting?
From Urban Institute:
Renters with kids are more likely to have asthma triggers in their homes than owners and are more likely to have at least one child with asthma.
Renters are particularly vulnerable. Because of lease restrictions or building-wide problems, they have fewer means to address certain asthma triggers (mold, leaks, and smoke) on their own. Action by the US Department of Housing and Urban Development, private landlord education, and legal aid for tenants may be required.
Wow! It may surprise you to find out one reason owning beats renting has to do with your health! Of course, there are financial reasons as well…
Renting Versus Buying
Trulia recently released another Rent vs. Buy Report and it stated that owning a home is still less expensive than renting if you use a 30-year fixed rate mortgage ( in the 100 biggest metropolitan areas in the U.S. ).
Plus, we need to consider a recent study by GoBankingRates. They studied renting vs. owning at the state level and determined that in 39 states, it really is ‘a little’ or ‘a lot’ cheaper to own! Check out the map below:
One of the biggest reasons that owning a home is substantially less costly than renting is that mortgage rates have remained at or near historic lows. Nationally, interest rates would have to increase to 9.1% for renting to beat owning! Mortgage rates have not been that high since way back in January of 1995 according to Freddie Mac.
According to Zillow, it takes more to rent a median priced home than it does to buy one:
Remember, every housing market is different. Before you sign a lease, you owe it to yourself to talk with a lender and see what is possible for you!
Owning your home is a good idea both financially and for the many ways it will improve your life. A recent study found that 58% of renters feel stressed about their rent. With a fixed-rate mortgage and today’s low interest rates, it is possible to own with less stress at a lower monthly cost!
Remodeling Strong in 3rd Quarter 2017
The National Association of Home Builders’ (NAHB) Remodeling Market Index (RMI) posted a reading of 57 in the third quarter of 2017, up two points from the previous quarter. For 18 consecutive quarters, the RMI has been at or above 50, which indicates that more remodelers report market activity is higher compared to the prior quarter than report it is lower. The overall RMI averages ratings of current remodeling activity with indicators of future remodeling activity.
NAHB Remodelers Chairman Dan Bawden said:
Remodelers are seeing higher demand in residential repairs, and expect to be busy well into the new year with jumps in work backlog, call for bids and proposal appointments, likely due in part to the significant damage caused by hurricanes across the southern states. However, the ongoing labor shortage is constraining how quickly the repairs can be completed.
Hold on this isn’t the only news about remodeling…
Growing Momentum Expected for Remodeling Spending
Accelerating growth in residential improvement and repair expenditures is anticipated through the third quarter of 2018, according to the Leading Indicator of Remodeling Activity (LIRA) released today by the Remodeling Futures Program at the Joint Center for Housing Studies of Harvard University. The LIRA projects that annual gains in home renovation and repair spending will increase from 6.3 percent in the fourth quarter of 2017 to 7.7 percent by the third quarter of next year.
Chris Herbert, Managing Director of the Joint Center for Housing Studies said:
Recent strengthening of the US economy, tight for-sale housing inventories, and healthy home equity gains are all working to boost home improvement activity. Over the coming year, owners are projected to spend in excess of $330 billion on home upgrades and replacements, as well as routine maintenance.
Because of the low inventory of homes for sale, buyers are starting to consider homes that need updating or some repairs.
I strongly suggest all home buyers speak to their lender about what condition issues could cause a lender to say no. If a home needs work, some lenders will not give you a mortgage.
Now that I have said that, remember that IF you can see the possibilities while remaining realistic about the costs of updating/rehab, you can find some great deals. There are only so many homes in the location you want so if you will consider a home that isn’t move in ready, you may be able to get a great deal.
The Latest on Mortgage Rates
From Freddie Mac:
- 30-year fixed-rate mortgages averaged 3.88% with an average 0.5 point
- This is down from last week when it averaged 3.91%
- Last year at this time, 30-year fixed-rate mortgages averaged 3.52%
- 15-year fixed-rate mortgages this week averaged 3.19% with an average 0.5 point
- This is down from last week when it averaged 3.21%
- Last year at this time, 15-year fixed-rate mortgages averaged 2.79%
Sean Becketti, chief economist, Freddie Mac said:
Rates came down slightly this week, ending a brief, two-week streak of increases. The 10-year Treasury yield dipped 6 basis points, while the 30-year fixed mortgage rate fell 3 basis points to 3.88 percent.
Nice! Look at the chart showing how much better mortgage rates are compared to some of the highs in the last decade.
Now let’s look at what the Mortgage Bankers Association said:
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($424,100 or less) decreased to 4.14% from 4.16%, with points remaining unchanged at 0.44 (including the origination fee) for 80% loan-to-value ratio (LTV) loans.
The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $424,100) increased to 4.13% from 4.11%, with points increasing to 0.32 from 0.31 (including the origination fee) for 80% loan-to-value ratio (LTV) loans.
The average contract interest rate for 15-year fixed-rate mortgages increased to 3.45% from 3.44%, with points increasing to 0.43 from 0.36 (including the origination fee) for 80% loan-to-value ratio (LTV) loans.
Somewhat mixed signals from the MBA but since these are the average mortgage rates, they only give you a sense of where things are. Finding out exactly what is possible for you means talking to a real live mortgage professional.
Building or Purchasing a U.S. Home? It’s Getting Even Pricier
The roots of pricier building supplies stretch from the wildfire-stricken forests of British Columbia to the hurricane-affected coasts of Texas and Florida. Supply concerns and home-rebuilding efforts, along with U.S. duties on Canadian timber, have driven softwood lumber prices on the Chicago Mercantile Exchange to the fifth-highest peak since 1986.
Higher costs of lumber and wood products for framing and sheathing account for almost 20 percent of the price of building a home in 2015. The increase in costs of building materials is part of a general pickup in prices paid by construction companies and other non-manufacturing businesses, as well as manufacturers.
Not good for home buyers since this increase in costs will be passed along to them.
Why America is Coming Apart at the Seams
Snippets from a MUST Read article in The Week:
America is tearing itself apart. People are angrier at each other, more resentful and contemptuous of each other, than they’ve been in living memory. Americans are experiencing a collective nervous breakdown, and there’s no telling what happens if they don’t find a way out of it.
Ideas matter. Policies matter. Politics matters. But political parties themselves are nothing more than utterly amoral vehicles for winning elections. Which is fine — you need political parties in a democracy. It’s important to have utilities. But I wouldn’t wear my utility’s T-shirt or feel contempt for someone who gets their electricity from a different company.
You can believe in your ideas and defend them and advance them without giving in to tribalism and hatred. And when we do give in, we feed into a vicious cycle that is taking us into a tailspin.
I get very worried about the future of America when I see the childish behavior of some people. We must stick together and work together to improve America. United we stand, divided we fall…
Congress Approval at Lowest Level Since July 2016
Americans’ approval of Congress ebbed further in October, to 13%, and it is now at its lowest point since July of 2016. This is a few percentage points higher than the historic low of 9% recorded in 2013.
Americans of all political stripes hold Congress in similarly low regard. Just 18% of Republicans, 14% of Democrats and 10% of independents approve of the job the legislative body is doing. This month, these figures are unchanged among Republicans, while down slightly among Democrats and independents.
I guess sticking together can be all of us thinking Congress is a bunch of morons. But what does it say about us since we elected these morons?
Why Is “Affordable” Housing So Expensive to Build?
From City Observatory:
It’s a problem that isn’t going away: the so-called “affordable” housing we’re building in many cities–by which we mean publicly subsidized housing that’s dedicated to low and moderate income households–is so expensive to build that we’ll never be able to build enough of it to make a dent in the housing affordability problem.
The combination of very limited public funds for affordable housing, even in the most prosperous and liberal cities, and the tendency for publicly subsidized housing to be nearly as costly as new, market rate housing, is a recipe for failure. Ultimately, we’ve got to find ways to make housing (whether built by the public sector or the private sector) less expensive.
Good article and it does hint at one of the root problems: ridiculous regulations. Add that to the rising costs of supplies and land, and you can see why affordable housing is expensive to build.
However, we do need to find a way to build more affordable housing. My suggestion is tackling the regulations to start with by applying good old fashioned common sense.
We need affordable housing so that people can save money for retirement, college or maybe even buying a home!
Land: They Are Not Building Any More
From Eye On Housing:
On average, lot values accounted for less than 17% of sale prices of new single-family homes started in 2016, the lowest share since at least 1999.
Nationally, the share of lot values in new home prices fluctuated around 20% during the housing boom years, peaked at 21% in 2009 and has been declining ever since, despite the rising and record-setting lot prices. The declining share of new home sale prices attributed to lots suggests that other construction costs, including cost of labor and materials, are outpacing the rising lot values.
Interesting that the percentage of a new homes cost that is attributed to the lot has been decreasing despite rising home prices.
Remember, real estate has always been about location and there are only so many buildable lots in any area. You will pay more to live in highly desirable areas.
Well that is it for today! Please share and subscribe!