Though still new to most homeowners and buyers, smart home technology is starting to catch on. These days, you can find everything from smart thermostats to locks and light bulbs that use an Internet connection to allow you to control them from your phone or computer. These devices and home automation systems can add convenience, security, and energy efficiency to your home – in addition to the novelty of being able to dim all the lights in your house at once. Still, despite their seeming inevitability, a new report from the National Association of Realtors found that only 15 percent of real estate agents say they’re getting questions about the technology from their clients. That, however, is likely due to the products’ newness rather than their popularity. “More homeowners are adopting smart-home technology and that will likely impact buyers’ purchase decisions in the future,” NAR president, William E. Brown, says. “While consumer interest in this trend is still developing, Realtors are becoming well-versed in successfully marketing smart homes and their features, such as devices and appliances.” As home buyers become more aware of what’s possible, they will almost certainly add smart home features to their must-have list. More here.
Some housing market trends are driven by economic factors, while others are driven by our lives. The job market, economic conditions, and wages can all affect whether or not we decide it’s a good time to buy or sell a house but, most often, that decision is made based on what is happening in our lives. Things like retirement or having a child are much more likely to influence a decision to move than the ups-and-downs of the market. Because of this, Realtor.com’s forecast for 2017 looks at some of the demographic changes that may affect the real estate market next year and beyond. Specifically, their forecast singles out baby boomers and millennials as two groups who will have a big impact. That’s because both are entering periods of their life when people typically change homes. Millennials because they are reaching the age when Americans typically buy their first home and baby boomers because they are at an age when their children have moved out and they may be looking to downsize or retire. When and where these groups decide to settle will help shape the real estate market next year and in the years to come. More here.
It’s normal to feel a little bit of stress when buying a house. Whether it’s financial worry or just the logistics of moving all of your belongings to a new home, there’s a lot to think about and plan for. This is especially true for first-time home buyers. That’s because first timers have never navigated their way through the home buying process before and may be feeling some added fear, confusion, and concern about handling the responsibilities of homeownership. So what should younger buyers be watching for if they’re planning on buying a home soon? Well, according to Fannie Mae’s chief economist, Doug Duncan, mortgage rates and inventory will be key to determining whether or not there are enough affordable, entry-level homes available for new buyers next year. “Demand from first-time buyers has increased with household formation and is outpacing supply, leading to significant price increases and affordability challenges for entry-level buyers,” Duncan said in Fannie Mae’s most recent Economic & Housing Outlook. “Home purchase affordability will be constrained further if the recent pickup in mortgage rates persists, which would present a downside risk to our forecast of housing and mortgage activity.” In other words, if mortgage rates continue rising and inventory remains low, first-time buyers should expect higher prices and more competition in the year ahead. More here.
The National Association Of Realtors’ Pending Home Sales Index measures the number of contracts to buy homes that are signed each month. Because it tracks contracts, and not closings, it is a good indicator of future sales of previously owned homes. In October, the index saw a 0.1 percent gain over the month before and is now 1.8 percent higher than the same time last year. Lawrence Yun, NAR’s chief economist, says pending sales are at their highest level since July. “Most of the country last month saw at least a small increase in contract singings and more notably, activity in all four major regions is up from a year ago,” Yun said. “Despite limited listings and steadfast price growth that’s now carried into the fall, buyer demand has remained strong because of the consistently reliable job creation in a majority of metro areas.” But Yun believes affordability conditions will begin to suffer in the months ahead if there isn’t an increase in the number of homes available for sale. With mortgage rates rising and inventory low, buyers could begin to feel the effects, especially in markets where prices have already largely recovered. More here.
According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates were up again last week across all loan categories, including 30-year fixed-rate loans with both conforming and jumbo balances, loans backed by the Federal Housing Administration, and 15-year fixed-rate loans. The increase brought rates to their highest level in over a year. As a result, refinance demand fell sharply. In fact, refinance activity was down 16 percent from the week before. Demand for loans to buy homes, on the other hand, was relatively flat – though the trend toward higher-balance loans may be an indication that younger buyers are being deterred by rising rates. “The mix continues to shift towards higher balance loans, as the average purchase loan size reached a new survey record,” Michael Fratantoni, MBA’s chief economist, told CNBC. “First-time buyers and buyers of lower priced units may have stepped away from the market to some extent given the jump in rates.” The week’s results include an adjustment for the Thanksgiving holiday. The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. More here.
So much time is spent analyzing monthly numbers and mortgage rate fluctuations that the big picture can sometimes get lost in all that data. Sure, paying attention to the short term movements of the market can give buyers and sellers an idea of what they should expect once they put their home up for sale or make an offer on a house, but in order to really know where the real estate market is headed in the future, there are some other more significant trends to watch. According to Freddie Mac’s most recent monthly insight report, increasing income inequality, the rising share of land costs, and the increase in land use restrictions will play a large role in determining who buys homes, where they buy, and how much they pay in the years to come. “The change in income distribution shifts the demand for housing – both the total demand for homeownership and the demand for different types of housing,” Sean Becketti, Freddie Mac’s chief economist, says. “The rising share of land costs shifts the supply of housing – houses cost more than before because of the higher cost of the land component of the house. And land use restrictions limit the supply of more-affordable housing in richer states. No analysis of the future housing market is complete without considering them.” More here.
Because buying a home is such a major undertaking, it’s easy to assume that it’s more expensive than finding a place to rent. That, however, isn’t necessarily true. In fact, buying remains the more affordable option in many markets across the country. A recent report from Zillow highlights some of the reasons why that is. For one, when home prices crashed, rental costs didn’t. That means, rent continued to head upward while home values were making up for lost ground. So, though home prices have largely recovered from their post-crash lows, they remain below their peak in most areas. The other reason buying a house remains the more affordable option is mortgage rates. While they’ve been climbing recently, they are still low by historical standards. And, with historically low rates helping to alleviate some of the effects of higher prices, affordability and monthly housing costs are kept under control. Going forward, Zillow predicts rental cost growth will begin to fall in the coming year. That’s good news for the real estate market, as it will provide some relief to younger renters who may struggle to save for a down payment on their first home. More here.
Sales of newly built homes fell 2 percent in October, according to new numbers from the U.S. Census Bureau and the Department of Housing and Urban Development. But, despite the month-over-month dip, sales were still strong when compared to the same time last year. In fact, October sales were 17.8 percent higher than the year before. Part of the reason for this is that monthly sales figures are typically volatile, while year-over-year numbers provide a better look at the big picture. And so far this year, low mortgage rates, a stronger labor market, and high buyer demand have led to overall gains in both new and existing home sales that should push sales to levels last seen before the housing crash. According to Doug Berson, chief economist at Nationwide, there may be reason to expect more improvement in the future. Berson told ABC News the millennial generation should provide increasing demand for single-family homes in the years ahead. “Historically, there is a significant uptick in homeownership at the age of 35 – an age that the oldest millennials are reaching now,” Berson said. Regionally, new home sales were down in the Northeast, Midwest, and South, while the West saw improvement. More here.
For the fourth straight week, average mortgage rates increased from the previous week. In fact, according to the Mortgage Bankers Association’s Weekly Applications Survey, rates were up across all loan categories, including 30-year fixed-rate loans with conforming and jumbo balances, loans backed by the Federal Housing Administration, and 15-year fixed-rate loans. Michael Fratantoni, the MBA’s chief economist and senior vice president of research and technology, says the increases are being driven by expectations of future economic growth and inflation. “Mortgage rates have continued to move higher in the post-election period, as investors worldwide are looking for increases in growth and inflation, with the 30-year mortgage rate reaching its highest weekly average since the beginning of 2016,” Fratantoni said. But while the highest rates since January have caused refinance activity to fall, prospective home buyers look to be locking in low rates before they go up any further. Last week saw a 19 percent increase in demand for loans to buy homes. The spike puts purchase loan demand 11 percent above where it was at the same time last year. The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. More here.
Autumn may typically be the time of year when home sales start to slow down but new numbers show sales of previously owned homes up for the second straight month and at their highest annual pace since February 2007. The data, from the National Association of Realtors, shows October sales up 2 percent over the month before and 5.9 percent above last year’s estimate. Lawrence Yun, NAR’s chief economist, says the past two months have been an autumn revival for the housing market. “October’s strong sales gain was widespread throughout the country and can be attributed to the release of the unrealized pent-up demand that held back many would-be buyers over the summer because of tight supply,” Yun said. “The good news is that the tightening labor market is beginning to push up wages and the economy has lately shown signs of greater expansion. These two factors and low mortgage rates have kept buyer interest at an elevated level so far this fall.” Sales were up in all regions, with the largest gains in the South, where home sales rose 2.8 percent. Also in the report, the typical home stayed on the market for 41 days in October, though 43 percent of homes sold in less than a month. More here.