BlogRecently posted or modified blog postshttps://www.bluefieldgroup.com/blog/Copyright BluefieldGroup.com2024-03-18T10:25:39-07:00tag:bluefieldgroup.com,2012-09-20:18927How Affordable Is Buying A Home In 2024?<img src="https://assets.site-static.com/userfiles/767/image/AffordableHousingNeighborhood.jpg" width="1792" height="1194" />
National Trends in Housing Affordability
The National Association of Realtors (NAR) recently released a report on housing affordability, which details the fluctuations that occurred at the national level in January.<br />Thanks to some reprieve with interest rates, the average monthly mortgage payment fell by 2.4%, which, combined with a modest 0.3% decline in the median price of single-family homes led to improved affordability conditions at the start of the year when compared to December of 2023.
However, compared to the same period last year, affordability took a hit. The average monthly mortgage payment was up 9.1%, outpacing the 5.3% rise in median household income. The effective 30-year fixed mortgage rate also saw an uptick over the course of the year, standing at 6.72% compared to 6.35% in January of 2023.
Regional Affordability Disparities
Regional disparities in housing affordability were evident, with the Midwest emerging as the most affordable region. Conversely, the West retained its status as the least affordable region. The South and Northeast fell in between, showcasing varying degrees of affordability based on median family income and qualifying income.
From a year ago, housing affordability witnessed a decline across all four regions, with the Northeast experiencing the most significant dip followed by the Midwest, West, and South, respectively. However, on a month-to-month basis, affordability improved across all regions, with the South leading the gains.
Looking Ahead
As the housing market continues to change, potential homebuyers are presented with both challenges and opportunities. Understanding regional affordability dynamics, monitoring mortgage rate fluctuations, and staying informed about credit availability are crucial steps for navigating this dynamic landscape.
(Source: <a href="https://www.nar.realtor/blogs/economists-outlook/housing-affordability-conditions-made-progress-in-january-2024" target="_blank">nar.realtor</a>)2024-03-18T07:43:36-07:002024-03-18T10:25:39-07:00Bluefield Realty Grouptag:bluefieldgroup.com,2012-09-20:18915New Listings and Inventory Surged in February<img src="https://assets.site-static.com/userfiles/767/image/HousingShortageUpdate.jpg" width="1536" height="1024" />
A Preview of the Spring 2024 Housing Market
As spring begins to bloom, prospective homebuyers across the United States are greeted with a much-needed surge in new inventory hitting the market. This influx of listings not only offers more options for buyers but also signals a shift in the housing landscape, as homeowners previously hesitant to sell are now beginning to reemerge.
New Listings & Inventory Growth
New listings surged in February by 20% month-over-month. Even more notably, listings were up 21% on a year-over-year basis. This uptick is not limited to specific regions but is evident across all 50 of the largest U.S. metros, most particularly in the South, including vibrant markets like Texas and Florida. Both existing and new construction homes are contributing to the inventory growth, which is great news for homebuyers looking for various options.
In addition to new listings, total inventory is witnessing a notable uptick, marking a 12% increase nationally compared to the previous year. With over 900,000 homes for sale in February, it's the highest inventory count since 2020. Markets like Dallas, Tampa, Orlando, and Miami are experiencing the most significant annual increases, showcasing a robust supply-side response to meet growing demand.
Expert Insights
Skylar Olsen, Zillow's chief economist, recently noted that “For more than a year, Zillow homeowner surveys have shown an elevated share of homeowners expecting to sell in the next three years. We're finally beginning to see owners who have been putting off moves return to the market … For many households with record-high equity, waiting out potentially lower rates later in the year may not be worth it."
Persistent Competition Despite Increased Supply
Despite the increase in supply, competition for desirable listings remains fierce. Homes are going under contract at a swift pace, typically within 17 days of being listed. However, listings that are overpriced or lack appeal are lingering on the market for longer durations. Approximately one in five listings are witnessing price cuts as sellers adjust their expectations to align with market realities.
Continued Rise in Housing Costs
Housing costs continue their upward trajectory, with the typical home in the U.S. now valued at $349,216. This represents a staggering 40.8% increase compared to pre-pandemic levels. Monthly gains are most pronounced in high-demand coastal metros like San Jose, San Diego, and Seattle. The moderate rise in mortgage rates we saw in February further contributed to the increased cost of homeownership.
(Source: <a href="https://www.prnewswire.com/news-releases/influx-of-sellers-arrives-just-in-time-for-spring-season-302088906.html" target="_blank">prnewswire.com</a>)2024-03-15T05:41:35-07:002024-03-18T10:11:33-07:00Bluefield Realty Grouptag:bluefieldgroup.com,2012-09-20:18911Average Mortgage Rates Fall To 6.8%<img src="https://assets.site-static.com/userfiles/767/image/SharpDecreaseInMortgageRates.jpg" width="1792" height="1194" />
Analyzing the Latest Mortgage Trends
The Mortgage Bankers Association (MBA) recently released its Weekly Mortgage Applications Survey for the week ending March 8, 2024, revealing notable shifts in mortgage application activity. According to the report, mortgage applications surged by 7.1% from the previous week on a seasonally adjusted basis, with refinance applications climbing by 12%, and purchase applications rising by 5%.
Expert Insights
Mike Fratantoni, MBA's Senior Vice President and Chief Economist, provided insights into the driving factors behind the surge in mortgage applications. “Mortgage rates dropped below 7 percent last week for most loan types because of incoming economic data showing a weaker service sector and a less robust job market, with an increase in the unemployment rate and downward revisions to job growth in prior months.”
According to Fratantoni: “Purchase application volume increased for the week but remains about 11 percent below last year’s level. By contrast, refinance volume picked up by 12 percent, with a larger, 24 percent increase in the government refinance index. While these percentage increases are large, the level of refinance activity remains quite low, and we expect that most of this activity reflects borrowers who took out a loan at or near the peak of rates in the past two years.”
Shifts in Mortgage Share and Interest Rates
<br />The report also highlighted shifts in mortgage share across different loan types. While the FHA share of total applications decreased slightly, the VA share saw an uptick. Additionally, there were noticeable changes in average contract interest rates across various mortgage products:
30-Year Fixed-Rate Mortgages: The average contract interest rate for conforming loan balances decreased to 6.84%, while jumbo loan balances saw a similar decline to 7.04%.
FHA Mortgages: The average contract interest rate for FHA loans also decreased, reaching 6.77%.
15-Year Fixed-Rate Mortgages: Borrowers opting for 15-year fixed-rate mortgages benefited from a decrease in the average contract interest rate to 6.37%.
5/1 Adjustable-Rate Mortgages (ARMs): The average contract interest rate for 5/1 ARMs remained unchanged, offering stability for borrowers considering adjustable-rate options.
Implications for Borrowers
For potential homebuyers, the favorable mortgage rates present an opportunity to explore homeownership or consider refinancing existing mortgages to capitalize on lower rates. However, it's essential to evaluate individual financial situations and consult with mortgage professionals to make informed decisions.
(Source: <a href="https://www.mba.org/news-and-research/newsroom/news/2024/03/13/mortgage-applications-increase-in-latest-mba-weekly-survey" target="_blank">mba.org</a>)2024-03-14T05:38:09-07:002024-03-15T16:55:42-07:00Bluefield Realty Grouptag:bluefieldgroup.com,2012-09-20:18907Mortgage Credit Availability Improved In February<img src="https://assets.site-static.com/userfiles/767/image/HowEasyIsItToGetAMortgage.jpg" width="1792" height="1194" />
The Mortgage Credit Availability Index
The Mortgage Bankers Association (MBA) recently released its updated report on the state of mortgage credit availability for February, providing valuable insights for both borrowers, lenders, and real estate agents. The Mortgage Credit Availability Index (MCAI) serves as a critical barometer of lending standards in the mortgage industry. Last month, the index saw a modest increase of 0.2%, reaching 92.9.
A decline in the MCAI signifies tightening lending standards, while an increase suggests a loosening of credit. The index, benchmarked to 100 in March 2012, provides a comprehensive view of credit availability trends over time.
Conventional and Government Loans
Breaking down the MCAI components, the Conventional MCAI experienced a slight uptick of 0.5%, indicating a marginally more favorable lending environment for non-government loan programs. Conversely, the Government MCAI remained relatively stable, showing no significant change. Within the Conventional MCAI, both the Jumbo and Conforming indices saw modest increases of 0.1% and 1.6%, respectively.
Expert Insights
Joel Kan, the MBA's Vice President and Deputy Chief Economist, commented on the persistent tightness in mortgage credit availability, noting that the index remains near its lowest levels recorded in MBA's survey. Despite subdued application volumes compared to the previous year and ongoing industry capacity reductions, lending criteria continue to be conservative, according to Kan. Notably, there was a slight improvement in credit availability for refinance loan programs, while the purchase market continues to grapple with supply constraints and affordability challenges driven by higher mortgage rates.
Implications for Borrowers
For borrowers, the marginal increase in the MCAI suggests slightly improved credit availability, particularly in the conventional loan segment. However, it's crucial to remain aware of prevailing market conditions and evolving lending standards, which are still relatively conservative.
(Source: <a href="https://www.mba.org/news-and-research/newsroom/news/2024/03/07/mortgage-credit-availability-increased-in-february" target="_blank">mba.org</a>)2024-03-13T05:22:51-07:002024-03-14T13:38:25-07:00Bluefield Realty Grouptag:bluefieldgroup.com,2012-09-20:18900A Look At The Country's Most Stable Housing Markets<img src="https://assets.site-static.com/userfiles/767/image/StableHousingMarkets.jpg" width="1536" height="1024" />
Analyzing County-Level Housing Market Risks
ATTOM, a leading authority in real estate data, recently released its latest Special Housing Risk Report, a comprehensive overview of the vulnerability of county-level housing markets across the United States. The report, based on data from the fourth quarter of 2023, delves into various factors such as home affordability, underwater mortgages, and foreclosure rates to identify regions at risk of market declines.
Regional Vulnerability Patterns
According to ATTOM, 25 of the 50 counties deemed most stable (least susceptible to systemic housing market problems) were in the Midwest, and 14 were in the South. Nine were in the Northeast while just two were in the West.
The analysis reveals that California, New Jersey, and Illinois stand out with the highest concentrations of at-risk housing markets in the country. Particularly, areas surrounding New York City and Chicago, along with inland California, are prominently featured among the most vulnerable regions. Conversely, less vulnerable markets are predominantly dispersed throughout the South and Midwest.
California, New Jersey, and Illinois accounted for 34 out of the 50 counties considered most susceptible to potential market declines. Notably, these concentrations highlight ongoing market uncertainties fueled by escalating home ownership costs and relatively high mortgage interest rates. Despite recent fluctuations, the housing market remains resilient across most parts of the country, with some regions showing signs of vulnerability.
Key Risk Indicators
The report assesses housing market risks based on several key indicators:
Home Affordability: In 43 of the 50 most vulnerable counties, major home ownership costs consumed over one-third of average local wages. This underscores the financial strain faced by homeowners in these regions.
Underwater Mortgages: A significant proportion of mortgages (at least 5%) were underwater in 36 of the top at-risk counties, indicating that homeowners owe more on their mortgages than the estimated value of their properties.
Foreclosure Rates: Foreclosure rates were notably higher in counties at risk, with at least one in every 1,000 properties facing foreclosure actions in 36 of the vulnerable counties.
Unemployment Rates: In 39 of the most vulnerable counties, the November 2023 unemployment rate exceeded 4%, compared to the national figure of 3.7%. Central California, in particular, exhibited elevated unemployment rates, contributing to housing market risks.
Implications for Buyers and Sellers
For prospective buyers and sellers, understanding the risk landscape of housing markets is crucial for making informed decisions. While regions like California, New Jersey, and Illinois face heightened vulnerabilities, opportunities may abound in less-risky areas across the South and Midwest. Sellers should carefully assess market conditions before listing their properties, while buyers should consider factors like affordability and foreclosure rates when exploring potential investments.
(Source: <a href="https://www.attomdata.com/news/market-trends/home-sales-prices/q4-2024-housing-impact-report/" target="_blank">attomdata.com</a>)2024-03-12T06:43:01-07:002024-03-15T05:52:17-07:00Bluefield Realty Grouptag:bluefieldgroup.com,2012-09-20:18899Americans Feel Optimistic About Housing Market As We Approach Spring Selling Season<img src="https://assets.site-static.com/userfiles/767/image/HousingMarketOptimism.jpg" width="1792" height="1194" />
Consumer Sentiment Overview
The Fannie Mae Home Purchase Sentiment Index (HPSI) serves as a valuable gauge of consumer confidence in the housing market. In February, the HPSI saw a 2.1-point increase, reaching 72.8, marking the third consecutive month of growth. This uptick is largely attributed to heightened optimism surrounding home-selling conditions.
According to the February report, 65% of consumers believe it's a good time to sell a home, a significant increase from 60% in the previous month. However, optimism regarding the home-buying market remains subdued, with only 19% of consumers viewing it as a good time to buy. Despite this, a plurality of respondents anticipate a decline in mortgage rates over the next 12 months.
Doug Duncan, Fannie Mae's Senior Vice President and Chief Economist, notes the steady rise in consumer sentiment compared to the previous year. He highlights the growing optimism among current homeowners about selling conditions, which could potentially lead to increased listings. Duncan also emphasizes the importance of mortgage rate movements, suggesting that a decline could improve sentiment on both sides of the transaction and stimulate market activity.
Component Highlights
Good/Bad Time to Buy: The percentage of consumers who perceive it as a good time to buy increased from 17% to 19%, while the share of those who consider it a bad time decreased slightly. This resulted in a net increase of 4 percentage points in favor of buying.
Good/Bad Time to Sell: Conversely, the percentage of consumers who believe it's a good time to sell surged from 60% to 65%, accompanied by a decline in those viewing it as a bad time. This shift led to an 11 percentage point increase in the net share of those favoring selling.
Home Price Expectations: Respondents' expectations regarding home prices also saw notable changes, with more anticipating an increase in prices over the next 12 months. This sentiment shift resulted in a 4 percentage point increase in the net share expecting higher home prices.
Mortgage Rate Expectations: While the majority still anticipate a decrease in mortgage rates, there was a slight decline in this sentiment, accompanied by an increase in those expecting rates to rise. This change led to a 5 percentage point decrease in the net share predicting lower mortgage rates.
Job Loss Concern: Concerns about job loss increased slightly, with a higher percentage of respondents expressing worry about their employment stability in the next 12 months.
Household Income: The percentage of consumers reporting significantly higher household income compared to the previous year increased, contributing to a 5 percentage point rise in the net share of those perceiving improved income levels.
Implications for Buyers and Sellers
The latest HPSI report provides valuable insights for both buyers and sellers navigating the housing market. Sellers may find encouragement in the growing optimism surrounding home-selling conditions, potentially leading to increased listings and improved market dynamics. Meanwhile, buyers should monitor mortgage rate movements closely, as they have a significant impact on affordability and overall sentiment. While challenges such as affordability persist, the uptick in consumer sentiment bodes well for the 2024 real estate market.
(Source: <a href="https://www.fanniemae.com/newsroom/fannie-mae-news/home-selling-sentiment-moves-higher-ahead-spring-homebuying-season" target="_blank">fanniemae.com</a>)2024-03-11T06:35:00-07:002024-03-12T14:46:34-07:00Bluefield Realty Grouptag:bluefieldgroup.com,2012-09-20:18898Maximizing Your Home’s Sale Price In 2024<img src="https://assets.site-static.com/userfiles/767/image/HousePricingStrategy.jpg" width="1792" height="1194" />
Can You Time The Market?
Spring is traditionally seen as the prime season for selling homes, but recent data from Zillow suggests that the best time to list your home may have shifted slightly. According to a 2023 analysis, homes listed in the first two weeks of June sold for 2.3% more, translating to a significant $7,700 boost on a typical U.S. home sale. While previous studies had favored listing in early May, it's worth noting that his shift could have been impacted by the recent volatility in mortgage rates alongside the usual seasonal trends.
The analysis reveals that mortgage rates are playing a more significant role in shaping buyer behavior. In 2023, the first spring in over 15 years saw mortgage rates surpassing 6% on a 30-year fixed-rate loan. These higher rates initially deterred buyers, leading to a subdued market in May. However, a slight decrease in rates in June, from 6.79% to 6.67%, encouraged more determined buyers to act, driving up competition and sale prices.
According to Zillow Chief Economist Skylar Olsen, "With persistently low inventory, mortgage rate fluctuations make their own seasonality." Olsen emphasizes how first-time home buyers, particularly sensitive to rate changes, may enter or exit the market based on interest rate movements. Predictions suggest that any potential interest rate cuts by the Federal Reserve would likely occur no earlier than mid-2024, potentially sparking another surge in buyer activity later in the year.
Regional Variations and Sale Price Premiums
Zillow's research also highlights significant regional variations in the optimal listing times and associated sale price premiums. For instance, in San Francisco, the best time to list was as early as the second half of February, while New York saw peak listing times in the first half of July. Thirty of the top 35 largest metro areas experienced peak sale prices between May and early July, indicating a consistent seasonal trend.
Moreover, sale price premiums varied widely across regions. In San Jose, homes sold for 5.5% more during peak times, amounting to an $88,000 boost on a typical home. In contrast, San Antonio saw a more modest increase of 1.9% during the same period.
Selling Strategies for Maximum Impact
While timing plays a crucial role in maximizing sale prices, sellers can also employ strategic tactics to enhance their listing's visibility and appeal:
Online Marketing: In today's digital age, most buyers initiate their home search online. Utilizing high-resolution photos from a professional photographer, 3D home tours, and interactive floor plans can help your listing stand out and receive increased engagement, ultimately leading to faster sales.
Highlighting Desirable Features: Mentioning specific home features in the listing description can signal desirability to potential buyers. For example, mentioning a steam oven or a pizza oven can increase sale prices by as much as 5.3%, while including a doorbell camera can expedite sales by five days, according to the data.
Strategic Improvements: Sellers may want to consider undertaking home improvements to enhance appeal before listing. Strategic choices, such as painting interiors with trending colors like charcoal gray, can significantly increase sale prices.
Wrapping Up
While the optimal time to list a home may vary by region, and timing the market in 2024 may be difficult based on uncertainty around interest rate movement, leveraging the strategic approaches mentioned above can help sellers maximize their sale price regardless of the season. With careful planning and attention to market dynamics, sellers can capitalize on the current real estate landscape to achieve favorable outcomes.
(Source: <a href="https://www.prnewswire.com/news-releases/homes-listed-for-sale-in-early-june-sell-for-7-700-more-302082396.html" target="_blank">prnewswire.com</a>)2024-03-08T07:33:00-07:002024-03-12T14:40:06-07:00Bluefield Realty Grouptag:bluefieldgroup.com,2012-09-20:18871Buyers Bounce Back As Rates Hold Steady<img src="https://assets.site-static.com/userfiles/767/image/BuyersReactionToRates.jpg" width="1792" height="1194" />
Mortgage Applications Surge
The real estate market is showing signs of activity and resilience, with recent data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey revealing notable trends in mortgage applications and interest rates. According to the latest MBA survey the Market Composite Index, which measures mortgage loan application volume, surged by 9.7% from the previous week on a seasonally adjusted basis, indicating increased interest from prospective homebuyers and refinancers.
Refinance and Purchase Activity
Both refinance and purchase activity witnessed significant gains compared to the previous week. The Refinance Index increased by 8%, while the seasonally adjusted Purchase Index surged by 11%. These numbers reflect a growing appetite among homeowners to refinance existing mortgages and prospective buyers to enter the market. Notably, the strong increase in purchase volume, particularly for FHA loans, highlights the sensitivity of first-time homebuyers to changes in mortgage rates.
Mortgage Rate Movement
The report also sheds light on the impact of mortgage rates on borrower behavior. Mike Fratantoni, MBA’s SVP and Chief Economist, noted that mortgage rates experienced a slight decline last week, with the 30-year fixed mortgage rate dropping to 7.02%. This modest decrease in rates, coupled with steady inflation data, contributed to the uptick in mortgage applications. Fratantoni emphasized that even relatively small changes in mortgage rates can have a significant effect on buyer activity, particularly among first-time homebuyers.
The report provides insights into interest rate trends across various mortgage products. While the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances decreased slightly to 7.02%, there were mixed changes in rates for jumbo loans, FHA-backed loans, 15-year fixed-rate mortgages, and 5/1 adjustable-rate mortgages (ARMs). These fluctuations in interest rates highlight the dynamic nature of the mortgage market and underscore the importance of monitoring rate movements for borrowers and lenders alike.
Regional Variations and Loan Distribution
While overall mortgage activity increased, there were some notable variations in loan distribution across different loan types and regions. The refinance share of mortgage activity decreased slightly to 30.2% of total applications, indicating a shift towards more purchase-oriented activity. Additionally, there were fluctuations in the share of total applications for FHA, VA, and USDA loans, reflecting changing preferences and market conditions among borrowers.
Looking Ahead
The MBA's Weekly Mortgage Applications Survey offers valuable insights into the evolving dynamics of the housing market. Despite economic uncertainties, the surge in mortgage applications and slight decline in mortgage rates indicate a resilient housing market. Prospective homebuyers and refinancers should stay informed about these trends and consult with mortgage professionals to make informed decisions in this dynamic environment.
(Source: <a href="https://www.mba.org/news-and-research/newsroom/news/2024/03/06/mortgage-applications-increase-in-latest-mba-weekly-survey" target="_blank">mba.org</a>)2024-03-07T09:33:08-07:002024-03-12T14:21:07-07:00Bluefield Realty Grouptag:bluefieldgroup.com,2012-09-20:18858Number Of Affordable Homes For Sale Spikes<img src="https://assets.site-static.com/userfiles/767/image/IncreaseInAffordableHousingForSale.jpg" width="1792" height="1194" />
Uptick in New Listings
As we step into the spring season, the real estate market is showing promising signs of activity, according to Realtor.com®'s most recent monthly housing report. According to the data, February brought an increase in seller activity, with 11.3% more homes hitting the market compared to February of last year. This increase marks a significant shift, especially considering the 17-month streak of declining listing activity that preceded it. Danielle Hale, Chief Economist of Realtor.com®, notes that the country is experiencing the highest inventory levels since 2020, signaling positive momentum for the housing market.
Growing Inventory in Affordable Market Segments
One of the most notable trends highlighted in the report is the growth of inventory in the $200,000 to $350,000 price range. This segment saw a substantial increase of 20.6% compared to last year, surpassing all other price categories. For homebuyers in search of affordable options, this surge in inventory presents a favorable opportunity to explore a wider range of choices. While the market is still on the path to recovery with inventory still well below pre-pandemic levels, this uptick in new listings signals a potential shift towards a more balanced market.
Inventory Growth Across Southern Metros
Southern metros have emerged as frontrunners in inventory growth, with 29 out of 50 of the largest metros in this region experiencing an increase in homes actively for sale compared to the previous year. Metros like Orlando, Miami, and Tampa saw significant inventory growth, with increases of 38.5%, 37.4%, and 36.3% respectively. Interestingly, some metros, particularly in Texas, have surpassed pre-pandemic inventory levels, indicating robust market activity in these areas.
Impact of Mortgage Rate Fluctuations
The report also highlights the influence of mortgage rate fluctuations on home sales. While rates experienced a period of stability in January and early February, recent climbs following an inflation report have brought them to 6.94%. This volatility has impacted home sales, leading to an increase in the percentage of homes with price reductions compared to the previous year. However, despite these fluctuations, sellers remain active, with newly listed homes showing a consistent upward trend for the fourth consecutive month.
Preparing for the Spring Market
Realtor.com®'s February housing report paints a picture of a real estate market brimming with activity and opportunities. As we enter the hot spring homebuying season, buyers and sellers alike should stay informed and prepared to navigate the evolving market conditions. With growing inventory, particularly in affordable segments, buyers may find more options to choose from compared to recent years. Meanwhile, sellers should remain proactive in pricing strategies and market positioning to maximize their opportunities.
(Source: <a href="https://www.prnewswire.com/news-releases/realtorcom-february-housing-report-early-indications-show-a-promising-spring-real-estate-season-302079463.html" target="_blank">prnewswire.com</a>)2024-03-06T07:10:30-07:002024-03-07T13:40:18-07:00Bluefield Realty Grouptag:bluefieldgroup.com,2012-09-20:18851Income Needed to Comfortably Afford a Home Up 80% Since 2020<img src="https://assets.site-static.com/userfiles/767/image/IncreaseInHomePrices_StagnantWages.jpg" width="1792" height="1194" />
The Changing Landscape of Home Affordability
Affordability remains a paramount concern for many prospective homebuyers. Recent analysis from Zillow sheds light on the significant shifts in income needed to comfortably afford a home over the last several years, highlighting the challenges faced by today's buyers.
According to Zillow's analysis, the income required to comfortably afford a home has surged by a staggering 80% since January 2020. Back then, a household earning $59,000 annually could manage the monthly mortgage payments on a typical U.S. home with a 10% down payment, spending no more than 30% of its income. Fast forward to today, and prospective buyers now need to earn over $106,000 per year to meet the same affordability criteria.
Factors Driving Affordability Challenges
Orphe Divounguy, a senior economist at Zillow, attributes this drastic increase in affordability thresholds to soaring housing costs over the past four years. Significant spikes in both home prices and mortgage rates have far outpaced wage gains, making homeownership increasingly out of reach for many Americans. Divounguy emphasizes the importance of addressing this issue by focusing on long-term solutions, such as increasing housing supply.
With mortgage rates currently hovering around 6.6%, compared to approximately 3.5% at the beginning of 2020, the cost of homeownership has become substantially higher. The increase in rental rates has also put pressure on household budgets, making it more challenging for median-income earners to save for a down payment, extending the time needed to accumulate sufficient funds.
Creative Solutions
In response to these affordability challenges, prospective buyers are getting creative in their approach to homeownership. Many are turning to strategies like "house hacking," where they rent out part of their home for extra income, or co-buying with friends or family members. These alternative approaches help mitigate the financial burden of homeownership and make it more attainable for some buyers.
Regional Disparities
The analysis also highlights significant regional disparities in home affordability across major metro areas. While markets like Pittsburgh, Memphis, and Cleveland boast relatively lower income thresholds for homeownership, cities like San Jose, San Francisco, and Los Angeles require household incomes well above the national median to comfortably afford a home. This discrepancy underscores the varying degrees of affordability challenges faced by buyers depending on their location.
Looking Ahead
As the cost of homeownership continues to rise, navigating the real estate market requires careful consideration and strategic planning. While challenges persist, creative solutions and a focus on long-term affordability initiatives offer hope for a more inclusive and accessible housing market in the future.
While the temptation may be to wait on the sidelines and hope that mortgage rates and home prices come down, it may be worth considering the potential cost of waiting given the macroeconomic pressures that are continuing to push prices up.
(Source: <a href="https://www.prnewswire.com/news-releases/home-buyers-need-to-earn-47-000-more-than-in-2020--302075599.html" target="_blank">prnewswire.com</a>)2024-03-05T06:16:07-07:002024-03-06T07:55:55-07:00Bluefield Realty Grouptag:bluefieldgroup.com,2012-09-20:18838Home Prices Continue Increasing At Pace Above Historical Trend<img src="https://assets.site-static.com/userfiles/767/image/HomePricesAtHistoricHigh.jpg" width="1792" height="1194" />
Case-Shiller Home Price Indices
When it comes to understanding the pulse of the U.S. housing market, the S&P CoreLogic Case-Shiller Indices are the go-to source. Recently released data for December 2023 paints a nuanced picture of home price trends across major metro markets, revealing both annual gains and month-over-month fluctuations.
Year-Over-Year Insights
In December, the S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index reported a 5.5% annual gain, marking an uptick from the previous month's 5.0% rise. Similarly, both the 10-City Composite and the 20-City Composite showed year-over-year increases, with gains of 7.0% and 6.1% respectively. San Diego emerged as the frontrunner among the 20 cities, boasting an 8.8% year-over-year increase, followed closely by Los Angeles and Detroit, each with an 8.3% uptick. However, Portland experienced only marginal growth, with a 0.3% increase, ranking lowest in terms of year-over-year growth among the surveyed cities.
Month-Over-Month Trends
While the annual gains showcase the market's resilience, the month-over-month data reveal some fluctuations. The U.S. National Index saw a continued decrease of 0.4% in December, with both the 20-City Composite and the 10-City Composite posting 0.3% and 0.2% month-over-month declines respectively. However, after seasonal adjustment, all three indices showed modest month-over-month increases of 0.2%.
Expert Insights
Brian D. Luke, Head of Commodities, Real & Digital Assets at S&P Dow Jones Indices, offered valuable insights into the market dynamics. He noted that despite facing significant headwinds in the fourth quarter of 2023, the S&P Case-Shiller Home Price Indices continued to set records, marking seven consecutive record highs for the year.
Luke emphasized that 2023 surpassed average annual home price gains over the past 35 years. While not reaching the double-digit gains of previous years, the steady growth above the historical trend demonstrates the market's resilience amid rising mortgage costs. “2023 U.S. housing gains haven’t followed such a synchronous pattern since the COVID housing boom. The term ‘a rising tide lifts all boats’ seems appropriate given broad-based performance in the U.S. housing sector.”
(Source: <a href="https://www.spglobal.com/spdji/en/documents/indexnews/announcements/20240227-1470765/1470765_cshomeprice-release-0227.pdf" target="_blank">spglobal.com</a>)2024-03-04T08:15:58-07:002024-03-05T06:48:40-07:00Bluefield Realty Grouptag:bluefieldgroup.com,2012-09-20:18824Pending Home Sales Dropped 4.9% In January<img src="https://assets.site-static.com/userfiles/767/image/AreHomesSelling.jpg" width="1792" height="1194" />
Overview of Pending Home Sales
A recent report from the National Association of REALTORS® (NAR) shows that pending home sales fell by 4.9% in January on a month-over-month basis. The Pending Home Sales Index (PHSI), a key metric used to gauge contract signings and predict future home sales, decreased to 74.3. This represents an 8.8% year-over-year decrease when compared to January of 2023.
Expert Insights
Chief Economist Lawrence Yun of the NAR provided expert analysis on the current market conditions. He noted the solid job market and record-high total wealth due to stock market and home price gains. Despite these favorable economic conditions for homebuying, Yun highlighted consumers' heightened sensitivity to changes in mortgage rates, which have impacted home sales.
Yun emphasized that regions experiencing faster job growth, such as Southern states and those in the Rocky Mountain time zone, are witnessing increased long-term housing demand. However, the pace and volume of home purchases in these areas will largely depend on prevailing mortgage rates and inventory availability.
Regional Breakdown of Pending Home Sales
The report also provides a regional breakdown of pending home sales, revealing varying trends across different parts of the country:
Northeast: While the Northeast saw a modest 0.8% increase in the PHSI from the previous month, there was still a year-over-year decline of 5.5%.
Midwest: In contrast, the Midwest experienced a notable 7.6% decrease in the PHSI, with a significant 11.6% drop compared to January of the previous year.
South: The Southern region recorded a substantial 7.3% decline in the PHSI, falling 9.0% from the prior year.
West: The West saw a slight uptick of 0.5% in the PHSI, yet it still reflected a 7.0% decrease from January 2023.
Understanding the Pending Home Sales Index
The Pending Home Sales Index serves as a leading indicator for the housing sector, offering insights into upcoming sales closings based on pending contracts. This index provides a forward-looking indicator of the housing market's health, with a base level of 100 set in 2001. It's important to note that while pending contracts indicate imminent sales, the timeline between contract signing and closing can vary due to factors such as mortgage financing challenges, home inspection issues, or appraisal discrepancies.
(Source: <a href="https://www.nar.realtor/newsroom/pending-home-sales-receded-4-9-in-january" target="_blank">nar.realtor</a>)2024-03-01T13:03:44-07:002024-03-04T14:56:44-07:00Bluefield Realty Grouptag:bluefieldgroup.com,2012-09-20:18819Mortgage Rates See Little Change From Last Week<img src="https://assets.site-static.com/userfiles/767/image/MortgageRatesUnchanged.jpg" width="2048" height="1365" />
Mortgage Applications Decline
According to the Mortgage Bankers Association’s (MBA) most recent Weekly Applications Survey for the week ending February 23, 2024, mortgage applications experienced a 5.6% decrease from the previous week. Mike Fratantoni, MBA’s SVP and Chief Economist, noted that mortgage rates remained relatively stable but slightly higher compared to the beginning of the year, contributing to the slowdown in activity.
Refinance and Purchase Activity
The Refinance Index saw a notable 7% drop from the previous week and was 1% lower than the same week last year. On the other hand, the seasonally adjusted Purchase Index decreased by 5% from the previous week. Fratantoni highlighted a concerning trend, stating that purchase activity was trailing 12% behind last year's pace. However, he also mentioned a glimmer of hope revealed by the January Builder Application Survey, which showed a 19% increase in applications to buy new homes compared to the previous year.
The refinance share of mortgage activity dipped to 31.2% of total applications, down from 32.6% the previous week. Interestingly, there was a slight uptick in the adjustable-rate mortgage (ARM) share of activity, which increased to 7.5% of total applications.
Interest Rate Fluctuations
Interest rates saw mixed movements across different loan products. For 30-year fixed-rate mortgages with conforming loan balances, the average contract interest rate decreased slightly to 7.04%. Conversely, for jumbo loan balances, the average contract interest rate increased to 7.20%. Rates for FHA-backed mortgages decreased to 6.86%. Additionally, the average contract interest rate for 15-year fixed-rate mortgages and 5/1 ARMs experienced both increases and decreases, highlighting the dynamic nature of the market.
Wrapping Up
The latest data from the MBA depicts a mortgage market influenced by stable yet slightly higher interest rates. Refinance activity has slowed, and purchase activity continues to face challenges due to constrained inventory. Prospective homebuyers and current homeowners should stay vigilant and consult with mortgage professionals to navigate these market conditions effectively.
(Source: <a href="https://www.mba.org/news-and-research/newsroom/news/2024/02/28/mortgage-applications-decrease-in-latest-mba-weekly-survey" target="_blank">mba.org</a>)2024-02-29T14:56:52-07:002024-03-01T15:20:17-07:00Bluefield Realty Grouptag:bluefieldgroup.com,2012-09-20:18811New Home Sales Rise Again In January<img src="https://assets.site-static.com/userfiles/767/image/HousingShortage_IncreaseInConstruction.jpg" width="1792" height="1194" />
Growth In the New Construction Sector
While new construction homes only represent about 14% of overall home sales in the United States, the shortage of previously owned homes available has caused buyer interest in new homes to steadily increase. Recent data from the U.S. Census Bureau and the Department of Housing and Urban Development (HUD) reveals a noteworthy uptick in new single-family home sales, which surged by 1.5% in January compared to December. This spike represents an increase of approximately 2% on a year-over-year basis. Despite being a traditionally slow season for home sales, this improvement is significant.
Even amidst challenging conditions, the new home market continues to outperform its counterpart, the existing home market. The steady gains in new home sales highlight the resilience of this segment despite broader market fluctuations. Notably, adverse weather conditions, including freezing temperatures across various regions, likely hindered sales activity last month. The fact that new home sales saw growth during a typically slow period, coupled with the adverse weather conditions, underscores the underlying strength of buyer demand in the market segment.
The Impact of Mortgage Rates
Elevated mortgage rates are one of the factors working to keep the supply of existing homes constrained, as many would-be home sellers are waiting on the sidelines, hesitant to trade in the low mortgage on their current home for a higher rate on their next place. Although this “lock-in effect” has shown signs of abating, for some homeowners it simply doesn’t make sense to make a move unless rates come down. However, many experts predict that even a small drop in rates could be enough to get these potential sellers off the fence. Rates likely wouldn’t have to come down to 2021 levels for us to see inventory hit the market.
Looking Ahead
The increase in new home sales is not only a positive indicator for the housing market but also reflects broader economic trends. As more buyers turn to the new home market in search of available inventory, it could stimulate construction activity and bolster economic growth. Additionally, the rise in new home sales provides insights into consumer sentiment and confidence in the housing market's future prospects.
(Source: <a href="https://www.census.gov/construction/nrs/current/index.html" target="_blank">census.gov</a>)2024-02-28T06:27:50-07:002024-02-29T15:42:50-07:00Bluefield Realty Grouptag:bluefieldgroup.com,2012-09-20:18805Housing Activity Expected To Pick Up<img src="https://assets.site-static.com/userfiles/767/image/UptickInActiveHomeBuyers.jpg" width="1792" height="1194" />
Modest Growth in Home Sales
The latest commentary from the Fannie Mae Economic and Strategic Research (ESR) Group suggests a modest growth outlook for existing home sales and new single-family housing starts in 2024. This growth is expected to be driven by lower mortgage rates and an uptick in homebuyer sentiment. Housing affordability remains a significant concern due to the recent surge in home prices. However, there are positive signs emerging, such as an increase in the supply of existing homes for sale. Additionally, more households are expressing optimism about mortgage rates, which could lead to increased willingness to move.
Projections for Mortgage Rates and Housing Starts
Fannie Mae's forecast anticipates a decline in mortgage rates, with rates expected to reach 5.9% by the end of 2024 and 5.7% by the end of 2025. Despite a recent pullback, the forecast expects single-family housing starts to trend upward in 2024, supported by twelve consecutive months of increasing permits and robust demand for new homes.
The ESR Group has upgraded its macroeconomic growth outlook for 2024, citing a stronger-than-expected Q4 2023 gross domestic product (GDP) report and positive trends in population growth and immigration. However, the pace of economic growth is expected to slow compared to 2023.
Challenges and Uncertainties
Despite the positive indicators, there are challenges and uncertainties looming over the housing market. An unsustainably low savings rate suggests softer consumer spending, which was evident in the pullback in January retail sales. Additionally, slowing local and state tax receipts indicate a deceleration in direct government spending growth.
While payroll growth showed signs of improvement in December and January, other labor market measures suggest softness, including the household survey and the quits rate. This indicates a potential cooling of the labor market in the near future.
Expert Insights
Doug Duncan, Fannie Mae's Senior Vice President and Chief Economist, emphasizes the significant uncertainty surrounding the housing market and the broader economy. Factors such as the sustainability of recent GDP growth, the trajectory of inflation, and the path of monetary policy changes all contribute to this uncertainty.
Fannie Mae's base case scenario anticipates economic growth decelerating, with rates gradually declining and new single-family home sales slowly recovering as construction adds supply. However, there is a risk that if economic growth continues to surprise on the upside, mortgage rates may remain higher for longer.
(Source: <a href="https://www.prnewswire.com/news-releases/housing-activity-expected-to-pick-up-in-2024-as-rates-move-lower-302069458.html" target="_blank">prnewswire.com</a>)2024-02-27T11:17:29-07:002024-02-28T06:43:35-07:00Bluefield Realty Grouptag:bluefieldgroup.com,2012-09-20:1879840% of Hopeful Buyers Would Pull The Trigger If Rates Hit 6%<img src="https://assets.site-static.com/userfiles/767/image/MortgageRatesImpactOnBuyers.jpg" width="1792" height="1194" />
The American Dream of Homeownership Persists
Despite the ups and downs in the housing market over recent years, the aspiration of owning a home remains deeply ingrained in the American psyche. A recent survey by Realtor.com® sheds light on the enduring belief among Americans that the dream of homeownership is attainable, albeit with certain conditions.
Optimism Tied to Interest Rate Drop
For many prospective homebuyers, the realization of their homeownership dreams is closely tied to a significant drop in mortgage interest rates. According to the survey, a majority of Americans express confidence in achieving homeownership if mortgage rates were to fall below 6%. This sentiment is particularly strong among Millennials and Gen Z, with nearly half of Millennials and a significant portion of Gen Z respondents indicating a willingness to proceed with a home purchase even if rates were above 8%.
Expert Insights
Realtor.com® Chief Economist, Danielle Hale, emphasizes the shifting dynamics of the current housing market compared to pre-pandemic times. Despite challenges, Hale notes a positive outlook among Americans towards homeownership, especially among younger demographics. She underscores the role of declining mortgage rates in enhancing affordability, which has already led to an increase in listings and contract signings.
The enduring belief in the American dream of homeownership persists despite challenges in the housing market. With optimism and determination, Americans, particularly Millennials and Gen Z, are actively pursuing their homeownership goals, buoyed by the prospect of favorable market conditions and lower mortgage rates.
(Source: <a href="https://www.prnewswire.com/news-releases/americans-hold-on-to-the-dream-of-homeownership-302066683.html" target="_blank">prnewswire.com</a>)2024-02-26T10:14:14-07:002024-02-27T13:27:46-07:00Bluefield Realty Grouptag:bluefieldgroup.com,2012-09-20:18784Sales of Existing Homes Increased 3.1% in January<img src="https://assets.site-static.com/userfiles/767/image/HousesForSaleCurrently.jpg" width="1792" height="1194" />
Overview of Existing-Home Sales
The National Association of REALTORS® (NAR) recently released its latest data on existing-home sales for January 2024, revealing noteworthy trends in the housing market across different regions of the United States.
Existing-home sales experienced a 3.1% increase from December to January, reaching a seasonally adjusted annual rate of 4 million units. Despite this month-over-month growth, sales declined by 1.7% on a year-over-year basis when compared to January 2023.
Inventory and Affordability
Total housing inventory saw a slight uptick of 2.0% from December, amounting to 1.01 million units by the end of January. However, the unsold inventory still translates to a 3.0-month supply at the current sales pace. This figure, while slightly down from December, reflects ongoing challenges in inventory availability. The median existing-home price for all housing types reached $379,100, marking a 5.1% increase from the previous year.
Expert Insights
NAR Chief Economist Lawrence Yun highlighted the significance of January's monthly gain, signaling a positive shift in both supply and demand dynamics. He noted that modestly higher listings, coupled with lower mortgage rates, contributed to the uptick in home sales.
Regional Breakdown
Across different U.S. regions, existing-home sales demonstrated varying trends. Sales accelerated in the Midwest, South, and West, while remaining steady in the Northeast. Median home prices also experienced regional variations, with all four regions posting price increases.
Advocating for Increased Listings
NAR President Kevin Sears emphasized the importance of addressing inventory shortages to facilitate smoother transitions for American homeowners. He underscored NAR's advocacy efforts, particularly supporting legislation such as H.R. 1321 (The “More Homes on the Market Act”), aimed at incentivizing increased listings and easing the tax burden on home sales.
(Source: <a href="https://www.nar.realtor/newsroom/existing-home-sales-rose-3-1-in-january" target="_blank">nar.realtor</a>)2024-02-23T06:17:23-07:002024-02-27T05:16:46-07:00Bluefield Realty Grouptag:bluefieldgroup.com,2012-09-20:18775Average Mortgage Rates Back Above 7%<img src="https://assets.site-static.com/userfiles/767/image/MortgageRatesSeeAnIncrease.jpg" width="1792" height="1194" />
Mortgage Rates Increase and Applications Drop
The most recent data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending February 16, 2024 reveals an uptick in average mortgage rates and notable shifts in mortgage application activity.
For 30-year fixed-rate mortgages with conforming loan balances, the average contract interest rate increased to 7.06%. Similarly, 30-year fixed-rate mortgages with jumbo loan balances saw an uptick in average contract interest rates, reaching 7.16%.
According to the Market Composite Index, mortgage applications experienced a significant decline of 10.6% from the previous week on a seasonally adjusted basis.
Expert Insights
Mike Fratantoni, MBA’s Senior Vice President and Chief Economist, attributed the drop in mortgage applications to a resurgence in mortgage rates, which surpassed the 7% threshold. He noted that news of increased inflation in January dampened hopes of an imminent rate cut, leading to heightened sensitivity among potential homebuyers. Fratantoni highlighted the strain on affordability caused by higher rates and escalating home values in a market characterized by limited supply.
Refinance and Purchase Activity
The Refinance Index saw a significant decline of 11% from the previous week, although it remained marginally higher compared to the same week one year ago. Meanwhile, the seasonally adjusted Purchase Index also decreased by 10% from the prior week, reflecting a notable pullback in purchase activity.
Loan Composition and Share
The survey data also sheds light on the composition of mortgage activity. The refinance share of total applications decreased to 32.6%, down from 34.0% the previous week. Notably, the adjustable-rate mortgage (ARM) share of activity increased slightly to 7.4% of total applications.
Navigating a Shifting Mortgage Landscape
The latest data from the MBA's Weekly Mortgage Applications Survey paints a nuanced picture of the mortgage market, characterized by fluctuations in application activity and interest rates. As mortgage rates surpass the 7% mark, potential homebuyers face heightened affordability challenges amidst escalating home values. While economic data is likely to push off the chances of a Fed rate cut until later in the year, most analysts are still predicting that rates will ease by the end of 2024.
(Source: <a href="https://www.mba.org/news-and-research/newsroom/news/2024/02/21/mortgage-applications-decrease-in-latest-mba-weekly-survey" target="_blank">mba.org</a>)2024-02-22T06:25:10-07:002024-02-26T06:50:09-07:00Bluefield Realty Grouptag:bluefieldgroup.com,2012-09-20:18761Demand For New Homes Spiked 19% In January<img src="https://assets.site-static.com/userfiles/767/image/CurrentHousingMarketConditions.jpg" width="1792" height="1194" />
Uptick in New Home Purchase Applications
The latest data from the Mortgage Bankers Association's (MBA) Builder Application Survey (BAS) paints an optimistic picture for the new construction segment of the housing market, with mortgage applications for new home purchases showing significant growth in January 2024.
According to the MBA, mortgage applications for new home purchases soared by 19.1% compared to January of the previous year, and grew by 38% compared to the prior month. These figures exclude adjustments for typical seasonal patterns, indicating sustained momentum in the market.
Expert Insights
Joel Kan, MBA's Vice President and Deputy Chief Economist, attributed the surge in applications to the allure of newly built homes amidst lower mortgage rates. He highlighted that January marked the twelfth consecutive year-over-year increase in applications, with the non-seasonally adjusted index reaching its highest January reading in the survey's history. Additionally, the seasonally adjusted annualized pace of new home sales reached 700,000 units, the highest since October 2023.
Estimating New Single-Family Home Sales
The MBA's estimate for new single-family home sales serves as a leading indicator for the U.S. Census Bureau's New Residential Sales report. The data suggests that new single-family home sales were running at a seasonally adjusted annual rate of 700,000 units in January 2024, marking a significant increase from the December pace. On an unadjusted basis, MBA estimates 63,000 new home sales in January, reflecting a notable uptick from the previous month.
Loan Composition and Average Loan Size
The BAS data also provides insights into the composition of loans used by new home buyers. Conventional loans accounted for the majority of loan applications, comprising 64.5%, followed by FHA loans at 24.8%, VA loans at 10.3%, and RHS/USDA loans at 0.4%. Interestingly, the average loan size for new homes decreased slightly from December to January.
Understanding MBA's Builder Application Survey
MBA's BAS tracks application volume from mortgage subsidiaries of home builders nationwide. By leveraging this data along with other sources, MBA offers early estimates of new home sales volumes at the national, state, and metro levels. Additionally, the survey provides valuable insights into the types of loans preferred by new home buyers. It's important to note that official new home sales estimates are conducted by the Census Bureau on a monthly basis, typically coinciding with mortgage application data.
(Source: <a href="https://www.mba.org/news-and-research/newsroom/news/2024/02/16/january-new-home-purchase-mortgage-applications-increased-19.1-percent" target="_blank">mba.org</a>)2024-02-21T06:05:49-07:002024-02-22T11:18:21-07:00Bluefield Realty Grouptag:bluefieldgroup.com,2012-09-20:18755National Median Existing Home Price Hits $391,700<img src="https://assets.site-static.com/userfiles/767/image/HomePricesUp3.5.jpg" width="1792" height="1194" />
Home Price Dynamics
According to the most recent report from the National Association of REALTORS® (NAR), more than 85% of metro markets experienced home price increases in the fourth quarter of 2023. This surge in prices coincided with a notable drop in the 30-year fixed mortgage rate, which fell from 7.79% to 6.61%. Notably, 15% of tracked metro areas reported double-digit price gains, signaling robust demand amidst favorable financing conditions.
Expert Insights
NAR Chief Economist Lawrence Yun highlighted the dichotomy between homeowners and homebuyers. While existing homeowners have benefited from housing wealth accumulation, prospective buyers are grappling with soaring housing costs. Yun emphasized that the doubling in housing costs for recent buyers, not factored into official inflation calculations, contributes to widespread dissatisfaction with the economy.
Regional Variances
The national median single-family existing home price grew by 3.5% year-over-year to reach $391,700. Regional variations were observed, with the South leading in existing-home sales share at 45% and experiencing a 3.2% year-over-year price appreciation. Other regions also saw price gains, with the Northeast, Midwest, and West recording increases of 7.3%, 4.7%, and 4.2%, respectively.
Market Outlook and Affordability
Despite constrained inventory dampening sales, Yun remains optimistic about the market's trajectory. He anticipates that increased homebuilding coupled with lower mortgage rates will enhance housing affordability and alleviate inventory shortages in 2024.
Notable Market Trends
The report highlights the top 10 metro areas with the largest year-over-year median price increases, dominated by locations like Dayton, Ohio, and various California cities. Additionally, eight of the top 10 most expensive markets in the U.S. were situated in California, underlining the state's pronounced affordability challenges.
Affordability Challenges for First-Time Buyers
Affordability concerns persist, particularly for first-time buyers. While declining mortgage rates marginally improved affordability in the fourth quarter, prospective homeowners still face hurdles. The report indicates that families typically spent over a quarter of their income on mortgage payments, with first-time buyers allocating an even higher percentage.
(Source: <a href="https://www.nar.realtor/newsroom/more-than-85-of-metro-areas-registered-home-price-increases-in-fourth-quarter-of-2023" target="_blank">nar.realtor</a>)2024-02-20T06:26:40-07:002024-02-21T12:47:19-07:00Bluefield Realty Grouptag:bluefieldgroup.com,2012-09-20:18747Single-Family Permits Climb Amid January Downturn<img src="https://assets.site-static.com/userfiles/767/image/SingleFamilyHomeBuyers.jpg" width="1792" height="1194" />
Building Permits
In January, privately-owned housing units authorized by building permits stood at a seasonally adjusted annual rate of 1,470,000. While this reflects a 1.5% decrease from the revised December rate of 1,493,000, it marks a notable 8.6% increase from the January 2023 rate of 1,354,000. Single-family authorizations, a key indicator of demand, saw a slight uptick in January, reaching a rate of 1,015,000, which is 1.6% higher than the revised December figure.
Housing Starts
The data on privately-owned housing starts in January reveals a seasonally adjusted annual rate of 1,331,000. This represents a significant 14.8% decrease from the revised December estimate of 1,562,000. However, compared to January 2023, the rate is only marginally lower, standing at 0.7%. Single-family housing starts experienced a moderate decline, reaching a rate of 1,004,000, which is 4.7% below the revised December figure. Meanwhile, the rate for units in buildings with five units or more was reported at 314,000.
Housing Completions
Privately-owned housing completions in January were reported at a seasonally adjusted annual rate of 1,416,000. This reflects an 8.1% decrease from the revised December estimate of 1,541,000. However, compared to January 2023, completions are 2.8% higher. Single-family housing completions, crucial for addressing inventory shortages, saw a more significant decline, standing at a rate of 857,000, which is 16.3% below the revised December rate. Similarly, the completion rate for units in buildings with five units or more was 538,000.
Supply and Demand
Despite the slight dip in building permits and housing starts, the housing market continues to show resilience, with year-over-year increases indicating sustained demand. The uptick in single-family authorizations suggests ongoing interest from homebuyers, while fluctuations in multifamily permits and starts may reflect varying investment trends.
The decline in housing completions, particularly in the single-family segment, underscores persistent challenges on the supply side. Factors such as labor shortages, supply chain disruptions, and regulatory hurdles continue to impede construction activity, exacerbating inventory constraints and putting upward pressure on home prices.
Market Outlook
While short-term fluctuations are expected in response to economic and regulatory factors, the long-term outlook for the housing market remains positive. With demographic trends driving household formation and low mortgage rates sustaining buyer demand, the fundamentals for housing market growth remain intact. However, addressing supply-side challenges will be crucial for achieving a more balanced market and ensuring affordability for prospective buyers.
(Source: <a href="https://www.census.gov/construction/nrc/current/index.html" target="_blank">census.gov</a>)2024-02-19T08:14:16-07:002024-02-21T09:02:17-07:00Bluefield Realty Grouptag:bluefieldgroup.com,2012-09-20:18746Home Builder Confidence Continues To Rise<img src="https://assets.site-static.com/userfiles/767/image/NewConstructionSentiment.jpg" width="1792" height="1194" />
Builder Confidence Surges
The latest data from the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI) has brought positive news for the housing market, with builder sentiment experiencing a notable uptick for the third consecutive month. This surge in confidence comes amidst various factors that are shaping the trajectory of the housing market in the near future.
Factors Driving Builder Confidence
Expectations of Moderating Mortgage Rates: Builders are optimistic about the trajectory of mortgage rates in the upcoming months. With the anticipation of continued moderation in mortgage rates, there's a growing belief that this will stimulate buyer interest, particularly among those who have been waiting for favorable rates to enter the market.
Potential Future Rate Cuts by the Federal Reserve: The prospect of future rate cuts by the Federal Reserve later in the year further contributes to the positive outlook among builders. This expectation is seen as a catalyst for increased buyer activity, as lower interest rates tend to incentivize home purchases.
Impact of Existing Inventory Shortage: The persisting lack of existing inventory has played a role in bolstering builder sentiment. Limited options in the existing housing market often drive prospective buyers towards newly built homes, creating a favorable environment for builders.
Insights from NAHB Leaders
Alicia Huey, NAHB Chairman and experienced custom home builder, emphasized the improving buyer traffic, attributing it to even minor decreases in interest rates. She highlighted the potential influx of buyers into the market if mortgage rates continue to decline.
NAHB Chief Economist Robert Dietz provided further context by projecting a 5% increase in single-family starts for the year. However, he cautioned about challenges such as lot availability and labor shortages, which could impede the pace of construction despite the anticipated rise in starts.
Trends in Home Prices and Sales Incentives
As mortgage rates have dipped below 7% since mid-December, builders have begun to adjust their strategies. Fewer builders are resorting to price reductions to drive sales, with a decline reported from 31% in January to 25% in February. Similarly, the utilization of sales incentives has decreased, reflecting a market that's becoming less reliant on such tactics.
Key Highlights from the HMI
The HMI, derived from a longstanding monthly survey conducted by NAHB, provides valuable insights into builder perceptions and expectations. In February, all three major indices saw gains, with notable increases in current sales conditions, sales expectations for the next six months, and traffic of prospective buyers.
Regional Trends
Examining regional trends, the Northeast experienced a three-point increase, while the Midwest, South, and West also posted gains in builder confidence. These regional variations underscore the dynamic nature of the housing market, influenced by diverse economic and demographic factors.
(Source: <a href="https://www.nahb.org/news-and-economics/press-releases/2024/02/builder-sentiment-posts-third-consecutive-monthly-gain" target="_blank">nahb.org</a>)2024-02-16T08:08:00-07:002024-02-19T13:10:45-07:00Bluefield Realty Grouptag:bluefieldgroup.com,2012-09-20:18732Mortgage Rates Inched Higher Last Week<img src="https://assets.site-static.com/userfiles/767/image/IncreasingInterestRates.jpg" width="1792" height="1194" />
Mortgage Applications Dip Amid Rising Rates
The latest data from the Mortgage Bankers Association (MBA) reveals a 2.3% decrease in mortgage applications for the week ending February 9, 2024, on a seasonally adjusted basis. On an unadjusted basis, however, the index showed a 2% increase.
Purchases and Refinances
While the seasonally adjusted Purchase Index decreased by 3% from the previous week, the unadjusted index displayed a 4% increase compared to the previous week. However, purchase activity was notably lower compared to the same week last year, down by 12%.
Refinance applications also experienced a downturn, dropping by 2% from the previous week. Despite this decline, refinance activity remained 12% higher than the same period last year.
Expert Insights
Joel Kan, MBA’s Vice President and Deputy Chief Economist, attributes the weakened application activity to a surge in mortgage rates. The average 30-year fixed mortgage rate rose to 6.87%, its highest level since early December 2023. Kan notes that elevated rates are exacerbating affordability challenges, especially in the face of limited housing inventory.
Refinance Share and Loan Type Distribution
The refinance share of mortgage activity decreased to 34.2% from 35.4% in the previous week. Notably, the adjustable-rate mortgage (ARM) share of activity increased to 7.0% of total applications.
Loan Type Distribution
FHA Share: The share of FHA loans in total applications increased slightly to 13.4%.
VA Share: Conversely, the VA loan share decreased to 13.1%.
USDA Share: The share of USDA loans remained unchanged at 0.4%.
Average Contract Interest Rates
Conforming Loans: The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances increased to 6.87%.
Jumbo Loans: For jumbo loan balances, the average contract interest rate rose to 7.00%.
FHA Loans: FHA-backed loans saw an average contract interest rate of 6.68%.
ARMs: For 5/1 Adjustable-Rate Mortgages (ARMs), the average contract interest rate increased to 6.30%.
Looking Ahead
The decline in mortgage applications reflects the impact of rising mortgage rates on borrower demand. Prospective buyers and refinancers are navigating a challenging market characterized by higher borrowing costs. As rates continue to fluctuate, borrowers are advised to monitor market trends closely and consult with mortgage professionals to make informed decisions.
(Source: <a href="https://www.mba.org/news-and-research/newsroom/news/2024/02/14/mortgage-applications-decrease-in-latest-mba-weekly-survey" target="_blank">mba.org</a>)2024-02-15T07:52:12-07:002024-02-19T12:55:48-07:00Bluefield Realty Grouptag:bluefieldgroup.com,2012-09-20:18729Mortgage Credit Availability Increased In January<img src="https://assets.site-static.com/userfiles/767/image/ApprovedHomeLoans.jpg" width="1792" height="1194" />
Mortgage Credit Availability Trends
Monitoring mortgage credit availability is crucial for understanding the dynamics of the housing market. The Mortgage Credit Availability Index (MCAI), a report from the Mortgage Bankers Association (MBA), provides valuable insights into changes in lending standards.
The MCAI report for January 2023 showed an increase of 0.7% to 92.7 in January 2023. This rise indicates a slight loosening of credit standards compared to the previous month. It's important to note that the index was benchmarked to 100 in March 2012, offering a reference point for analyzing changes in credit availability over time.
Conventional and Government MCAI Trends
In January, the Conventional MCAI increased by 1.3%, signaling expanded credit availability within non-government loan programs. Conversely, the Government MCAI remained stable, with no significant change noted. This dichotomy suggests nuanced shifts in credit standards across different loan categories.
Expert Insights
Joel Kan highlighted the marginal increase in credit availability driven primarily by a greater number of conventional loan program offerings. However, he emphasized that overall credit availability remained close to 2012 lows, indicating persistent challenges in accessing mortgage financing. Despite an uptick in cash-out refinance programs, the lending environment remains tight, with many lenders reducing costs by scaling back certain aspects of their business operations.
Component Indices Analysis
The MCAI comprises various component indices, each offering insights into specific loan programs and credit risk. Notably, the Jumbo MCAI increased by 1.9%, reflecting expanded credit availability for borrowers seeking larger loan amounts. Similarly, the Conforming MCAI rose by 0.2%, albeit to a lesser extent. These nuances underscore the diverse landscape of mortgage lending and the importance of tailored financing solutions for different borrower profiles.
The Conforming and Jumbo MCAIs provide valuable insights into credit risk and availability for conventional loan programs. The Conforming MCAI examines loans falling under conforming loan limits, while the Jumbo MCAI focuses on conventional programs outside these limits. By analyzing these indices, lenders and policymakers can gauge the relative accessibility of mortgage financing across different loan categories.
Wrapping Up
The January 2023 MCAI report offers valuable insights into changes in mortgage credit availability, with a slight uptick indicating a modest loosening of credit standards. While the increase in conventional loan program offerings is encouraging, challenges persist in accessing mortgage financing, particularly for certain borrower segments. By closely monitoring MCAI trends and component indices, stakeholders can make informed decisions to navigate the evolving landscape of the housing market effectively.
(Source: <a href="https://www.mba.org/news-and-research/newsroom/news/2024/02/09/mortgage-credit-availability-increased-in-january" target="_blank">mba.org</a>)2024-02-14T11:14:16-07:002024-02-15T08:05:26-07:00Bluefield Realty Grouptag:bluefieldgroup.com,2012-09-20:18704Rising Showing Traffic A Good Sign For Spring<img src="https://assets.site-static.com/userfiles/767/image/IncreaseInHomeShowings.jpg" width="1792" height="1194" />
Analyzing Home Showings Trends
Understanding the trends in home showings offers valuable insights into the dynamics of the real estate market. Data from SentriLock, a prominent electronic lockbox company used by real estate professionals, sheds light on the home showing activity across the United States.
In December 2023, home showings in the U.S. experienced a notable 5% year-over-year increase, totaling 453,616 showings. This upward trend indicates ongoing buyer interest in the housing market despite seasonal variations. However, it's essential to note that the pace of showing activity witnessed a decline compared to the previous month, November 2023.
Rise in SentriLock Cards
SentriLock cards, including SentriKey® and SentriCard®, are crucial tools that enable REALTORS® to access lockboxes for property showings. Year-over-year data reveals a 3% increase in the total number of SentriLock cards, reaching 232,218. This uptick signifies a growing cohort of REALTORS® actively engaged in facilitating property showings.
The metric of “showings per card” serves as a gauge of buyer interest per listed property. Nationally, showings per card increased by 2% year-over-year in December, indicating sustained buyer activity in the housing market.
Regional Disparities in Home Showings
Analyzing regional variations provides deeper insights into the nuances of home showing trends across different parts of the country. In December 2023, the South and Midwest regions demonstrated positive year-over-year increases in home showings, while the Northeast and West regions experienced a decline.
The South region recorded a robust 12% uptick in home showings.
The Midwest region witnessed a 5% increase in home showings.
The Northeast region saw a 5% decrease in home showings.
The West region witnessed a 3% decline in home showings.
(Source: <a href="https://www.nar.realtor/foot-traffic/december-2023-foot-traffic" target="_blank">nar.realtor</a>)2024-02-13T06:20:44-07:002024-02-14T13:00:39-07:00Bluefield Realty Grouptag:bluefieldgroup.com,2012-09-20:18693Affordability Improves After Last Year's Lows<img src="https://assets.site-static.com/userfiles/767/image/CurrentHousingAffordability.jpg" width="1536" height="1024" />
Understanding Housing Affordability Challenges
Navigating the housing market, particularly in terms of affordability, has become increasingly challenging in recent times. The fourth quarter of 2023 saw mortgage rates hitting a more than 20-year high, exacerbating concerns about housing affordability.
The National Association of Home Builders (NAHB) and Wells Fargo recently released their updated Housing Opportunity Index (HOI), revealing that only 37.7% of new and existing homes sold in the fourth quarter of 2023 were “affordable” to families earning the U.S. median income of $96,300. This percentage remained nearly unchanged from the previous quarter, indicating stagnant affordability levels. The persistently low affordability is underscored by the fact that this reading was the lowest since tracking began in 2012.
Transition to the Cost of Housing Index (CHI)
The fourth quarter of 2023 marked the final report of the HOI series, which will be succeeded by the Cost of Housing Index (CHI) in the first quarter of this year. The CHI will analyze housing costs in the U.S. and metropolitan areas, providing insights into the share of a typical family's income required to make mortgage payments. This transition reflects a shift towards a more comprehensive analysis of housing affordability dynamics.
Expert Insights<br />NAHB Chairman Alicia Huey emphasized that while mortgage rates have decreased since their peak in the fourth quarter of 2023, affordability conditions remain challenging. High construction costs, regulatory burdens, and labor shortages continue to pose significant obstacles for builders and buyers alike. NAHB Chief Economist Robert Dietz echoed these sentiments, highlighting the need for policy interventions to reduce regulatory costs and boost housing supply.
Regional Disparities in Affordability
The HOI revealed stark regional disparities in housing affordability. Markets such as Lansing and Bay City, both in Michigan, emerged as the most affordable, with a significant proportion of homes being within reach for median-income families. Conversely, California cities dominated the list of least affordable markets, with Los Angeles, Long Beach, and Glendale topping the chart for major housing markets.
Looking Ahead
The fourth quarter of 2023 underscored the persistent challenges in housing affordability, exacerbated by high mortgage rates, construction costs, and regulatory burdens. Policy interventions aimed at reducing regulatory costs and enhancing housing supply are essential to improve affordability and ensure sustainable growth in the housing market. As we move forward, fostering affordability remains a key priority for creating inclusive and sustainable homeownership opportunities.
(Source: <a href="https://www.nahb.org/news-and-economics/press-releases/2024/02/housing-affordability-remains-near-historic-low-level" target="_blank">nahb.org</a>)2024-02-12T06:53:01-07:002024-02-13T13:09:22-07:00Bluefield Realty Grouptag:bluefieldgroup.com,2012-09-20:18687Americans Optimistic About Interest Rates<img src="https://assets.site-static.com/userfiles/767/image/HomebuyerSentimentAndInterestRates.jpg" width="1792" height="1194" />
Home Purchase Sentiment Index
The Fannie Mae Home Purchase Sentiment Index® (HPSI) serves as a valuable indicator of consumer sentiment toward the housing market. Last month, the HPSI witnessed a significant increase, reaching its highest level since March 2022.
According to the latest data, the HPSI surged by 3.5 points to 70.7 in January. This notable increase can be attributed to enhanced consumer confidence in job security and a substantial rise in the percentage of consumers expecting mortgage rates to decrease. A remarkable 82% of respondents expressed confidence in their job security for the next 12 months, marking an increase from the previous month. Moreover, an all-time high of 36% of consumers anticipate mortgage rates to decline over the next year, indicating growing optimism in the housing market.
Expert Insights
Doug Duncan, Senior Vice President and Chief Economist at Fannie Mae, highlighted the significance of these findings. He noted that mortgage rate optimism has reached unprecedented levels, with more consumers anticipating rate decreases rather than increases. This positive outlook, coupled with increased confidence in job stability, suggests a potential improvement in housing sentiment for the year 2024.
Affordability Challenges Persist
Despite the positive trends in mortgage rate expectations and job security, consumer perceptions of homebuying conditions remain predominantly pessimistic. Only 17% of respondents believe it's a good time to buy a home, reflecting ongoing affordability concerns. Duncan emphasized that while lower mortgage rates may enhance affordability, other factors such as high home prices and limited housing supply continue to pose challenges for prospective homebuyers.
Component Highlights of the HPSI
Examining specific components of the HPSI provides further insights into consumer sentiment:
Good/Bad Time to Buy: The percentage of respondents considering it a good time to buy a home remains low at 17%, reflecting persistent affordability concerns.
Good/Bad Time to Sell: In contrast, the percentage of respondents viewing it as a good time to sell increased to 60%, indicating favorable conditions for sellers.
Home Price Expectations: While fewer respondents anticipate home price increases, the majority still believe prices will either rise or remain stable in the coming year.
Mortgage Rate Expectations: A growing number of consumers expect mortgage rates to decrease, signaling optimism about affordability.
Job Loss Concern: The percentage of respondents expressing concern about job loss decreased significantly, indicating improved confidence in job security.
Household Income: Despite a slight decline in the percentage of respondents reporting higher household income, the majority perceive their income to be stable compared to the previous year.
(Source: <a href="https://www.fanniemae.com/newsroom/fannie-mae-news/mortgage-rate-optimism-hits-survey-high" target="_blank">fanniemae.com</a>)2024-02-09T06:04:36-07:002024-02-13T13:00:37-07:00Bluefield Realty Grouptag:bluefieldgroup.com,2012-09-20:18679Mortgage Rates Hold Steady Into February<img src="https://assets.site-static.com/userfiles/767/image/InterestRateUpdate.jpg" width="1792" height="1194" />
Understanding the Latest Trends in Mortgage Applications
The Mortgage Bankers Association (MBA) recently released data from its Weekly Mortgage Applications Survey for the week ending February 2, 2024. According to the report, mortgage applications experienced a notable uptick, increasing by 3.7% from the previous week. This growth is reflected in the Market Composite Index, which measures mortgage loan application volume and also saw a 3.7% increase on a seasonally adjusted basis.
Refinance and Purchase Activity
The Refinance Index surged by 12% from the prior week and showed a 1% increase compared to the same period last year. However, the Purchase Index, while up by 6% on an unadjusted basis, witnessed a 1% decrease on a seasonally adjusted basis. Despite the slight dip, purchase activity at the beginning of 2024 has been robust compared to the final quarter of 2023.
Expert Insights
Joel Kan, MBA's Vice President and Deputy Chief Economist, provided valuable insights into the current mortgage market dynamics: “Mortgage rates have stayed close to where they started the year, despite swings in Treasury yields because of slowing inflation offset by stronger than expected readings on the job market. The 30-year fixed mortgage rate was 6.8 percent, a slight increase from last week.”
Kan also noted, “Rates at these levels have not prompted much of a reaction in the refinance market, as most homeowners have mortgages with much lower rates. Purchase activity has been strong to start 2024 compared to the final quarter of 2023. However, activity is still weaker than a year ago because of low housing supply.”
Market Share and Interest Rate Variations
The MBA's report also highlighted shifts in market share among different types of mortgage applications. The refinance share of mortgage activity increased to 35.4%, while the adjustable-rate mortgage (ARM) share decreased slightly to 6.4%. Additionally, variations in average contract interest rates were observed across different loan types and sizes. For instance, the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances increased slightly to 6.80%, while rates for jumbo loan balances saw a decrease to 6.88%.
Wrapping Up
The latest data from the MBA's Weekly Mortgage Applications Survey provides valuable insights into the current state of the mortgage market. Despite fluctuations in interest rates and market dynamics, mortgage application activity continues to demonstrate resilience and growth. Whether you're a potential homebuyer or a mortgage industry professional, staying informed about these trends is essential for making informed decisions in the ever-evolving real estate landscape.
(Source: <a href="https://www.mba.org/news-and-research/newsroom/news/2024/02/07/mortgage-applications-increase-in-latest-mba-weekly-survey" target="_blank">mba.org</a>)2024-02-08T06:24:48-07:002024-02-09T07:02:51-07:00Bluefield Realty Grouptag:bluefieldgroup.com,2012-09-20:18674Home Price Index Shows Widespread Gains<img src="https://assets.site-static.com/userfiles/767/image/AppraisedHomeValues.jpg" width="1792" height="1194" />
S&P CoreLogic Case-Shiller Indices
The latest data from S&P Dow Jones Indices (S&P DJI) on the S&P CoreLogic Case-Shiller Indices provides valuable insights into the trends shaping home prices across major metro markets in the United States.
According to the report, there was a 5.1% annualized gain in November 2023, up from 4.7% in the previous month. Both the 10-City Composite and the 20-City Composite showed increases in year-over-year gains, with the former rising by 6.2% and the latter by 5.4%. Detroit maintained its position as the city with the highest year-over-year gain for the third consecutive month, followed by San Diego.
Month-Over-Month Changes
In November 2023, both the U.S. National Index and the 20-City Composite reported 0.2% month-over-month decreases, marking the first decline since January 2023. The 10-City Composite posted a 0.1% decrease. However, after seasonal adjustment, all three indices showed slight month-over-month increases, indicating a more nuanced picture of market fluctuations.
Expert Analysis
Brian D. Luke, Head of Commodities, Real & Digital Assets at S&P DJI, provided valuable insights into the November 2023 data. He noted that U.S. home prices experienced a slight downturn from their all-time high, with the index returning to levels last seen over the summer months. Luke highlighted Seattle and San Francisco as the cities with the largest monthly declines.
Looking at the year-over-year gains, November saw the largest growth in U.S. home prices in 2023. Detroit continued to lead the pack with an 8.2% gain, followed closely by San Diego at 8%. Luke emphasized that the Northeast and Midwest regions recorded the largest gains, with other regions not far behind. Notably, Portland remained the only market in annual decline.
Market Trends and Outlook
Luke's analysis highlighted a significant trend of narrowing performance disparities across the nation. He noted that micro-markets showing divergent trends are becoming less common, signaling a more uniform rise in home prices nationwide. The recent decline in house prices coincided with a peak in mortgage rates, which have since fallen, potentially supporting further annual gains in home prices.
(Source: <a href="https://www.spglobal.com/spdji/en/index-announcements/article/sp-corelogic-case-shiller-index-upward-trend-decelerates-in-november/" target="_blank">spglobal.com</a>)2024-02-07T06:08:17-07:002024-02-08T06:38:53-07:00Bluefield Realty Grouptag:bluefieldgroup.com,2012-09-20:18643Median Mortgage Payment Fell $82 In December<img src="https://assets.site-static.com/userfiles/767/image/DecreaseInMedianMonthlyMortgagePayment.jpg" width="1792" height="1194" />
Homebuyer Affordability Improves in December
The Mortgage Bankers Association (MBA) has recently released its Purchase Applications Payment Index (PAPI) for December 2023, shedding light on the current state of homebuyer affordability.
According to report, homebuyer affordability showed signs of improvement in December, with the national median purchase mortgage payment application decreasing from $2,137 in November to $2,055 in December, an improvement of $82. This positive shift in affordability can be attributed to a significant decline in interest rates from the two-decade highs we saw back in October, when rates were bumping up against the 8% threshold.
Edward Seiler, MBA’s Associate Vice President of Housing Economics, and Executive Director of the Research Institute for Housing America, commented on this improvement, saying, "Homebuyer affordability improved for the second consecutive month in December as interest rates declined significantly from recent highs."
Factors Affecting PAPI
The PAPI serves as an indicator of borrower affordability conditions in the housing market. An increase in the PAPI suggests declining borrower affordability due to factors such as rising mortgage rates, increasing application loan amounts, or a decrease in earnings. Conversely, a decrease in the PAPI indicates improving borrower affordability, which can result from lower loan application amounts, reduced mortgage rates, or increased earnings.
National PAPI: The national PAPI decreased by 3.8 percent in December, reaching a value of 161.8, the lowest level since January 2023. While mortgage payments increased by 7.1 percent compared to the previous year, a strong growth in median earnings, up by 5.5 percent year-on-year, contributed to the overall improvement in affordability.
Lower-Payment Mortgages: For borrowers seeking lower-payment mortgages (at the 25th percentile), the national mortgage payment decreased from $1,425 in November to $1,375 in December.
BPAPI: MBA's Builder Purchase Application Payment Index (BPAPI) also witnessed a decline, with the median mortgage payment for purchase mortgages falling from $2,597 in November to $2,541 in December.
State-Level Affordability
The PAPI report also provides insights into affordability trends at the state level. The top five states with the highest PAPI values were Idaho (250.2), Nevada (240.8), Arizona (222.3), Florida (210.7), and Utah (207.6). On the other hand, the top five states with the lowest PAPI values were Wyoming (113.5), Louisiana (118.7), Alaska (121.3), Connecticut (125.0), and New York (128.0).
(Source: <a href="https://www.mba.org/news-and-research/newsroom/news/2024/01/25/mortgage-application-payments-decreased-3.8-percent-to-2-055-in-december" target="_blank">mba.org</a>)2024-02-06T06:30:53-07:002024-02-07T08:15:39-07:00Bluefield Realty Grouptag:bluefieldgroup.com,2012-09-20:18639Percentage of "Equity Rich" Homes Falls Slightly<img src="https://assets.site-static.com/userfiles/767/image/HomeValueAppreciation.jpg" width="1792" height="1194" />
U.S. Home Equity & Underwater Report
ATTOM, a prominent curator of land, property, and real estate data, recently released their U.S. Home Equity & Underwater Report for the fourth quarter of 2023. The report highlights that 46.1% of mortgaged residential properties in the United States were considered equity-rich in the fourth quarter of 2023. This means that these properties had a loan balance no greater than half of their estimated market value. This percentage is down slightly from the previous quarter (47.4%), and represents the second consecutive quarterly decline. Moreover, it is down from 48% in the fourth quarter of 2022.
Rob Barber, CEO for ATTOM, noted, "There are increasing signs suggesting that the extended period of prosperity in the U.S. housing market may be showing signs of easing."
Slight Increase in Seriously Underwater Mortgages
The report also indicates that the percentage of seriously underwater mortgaged homes in the U.S. rose slightly from 2.5% to 2.6% during the last few months of 2023. Seriously underwater mortgages are defined as those with loan balances at least 25% higher than the property's estimated market value.
Factors Influencing Market Trends
The softening of equity in the housing market has followed a year when the median home price grew annually by just 2%, marking the weakest growth since 2012. This slowdown in price growth can be attributed to various factors, including rising mortgage rates, limited housing supply, strong employment, and fluctuations in the investment market.
Regional Equity Trends
Equity-rich levels varied by region. In 41 of the 50 U.S. states, the portion of mortgages that were equity-rich decreased slightly from the third quarter to the fourth quarter of 2023. The Midwest and West regions experienced the most significant declines. States like Missouri, Minnesota, Michigan, Washington, and Utah all saw notable decreases in their equity-rich percentages.
Conversely, in nine states, equity-rich levels rose, with the Northeast region leading in improvements. Vermont, West Virginia, Wyoming, New Jersey, and Connecticut recorded the most substantial increases in equity-rich homes.
Regional Variation in Seriously Underwater Mortgages
The percentage of seriously underwater mortgaged homes increased in 42 states, predominantly in the Midwest and South regions. States like Wyoming, Missouri, Oklahoma, North Dakota, and Illinois witnessed the largest quarterly increases.
On the other hand, states with decreasing percentages of seriously underwater homes included Idaho, California, West Virginia, Texas, and Vermont.
Equity-Rich and Seriously Underwater by Counties
The report highlights the counties with the highest and lowest shares of equity-rich properties. The top counties with the highest share of equity-rich homes were mainly located in the Midwest, Northeast, and West regions, including Addison County (VT), Chittenden County (VT), Benzie County (MI), Washington County (VT), and Manistee County (MI).
Conversely, counties with the lowest shares of equity-rich properties were primarily in the South, including Campbell County (WY), Vernon Parish (LA), Lincoln County (MS), Ascension Parish (LA), and St. Bernard Parish (LA).
Zip Code Insights
In nearly 40% of U.S. zip codes, over half of the mortgaged properties were considered equity-rich. These zip codes were predominantly found in California, Florida, and Massachusetts.
Conversely, there were only 36 zip codes where more than 20% of mortgaged properties were seriously underwater. These zip codes were primarily located in Gillette, WY, Brookhaven, MS, Mexico, MO, and McComb, MS.
Looking Ahead
The fourth-quarter 2023 U.S. Home Equity & Underwater Report from ATTOM paints a nuanced picture of the U.S. housing market. While the percentage of equity-rich homes decreased slightly, the increase in seriously underwater mortgages suggests a potential shift in market dynamics. As we head into the peak Spring and Summer buying season, it remains essential to monitor these trends closely to gain a better understanding of the long-term stability of the housing market.
(Source: <a href="https://www.attomdata.com/news/market-trends/home-sales-prices/attoms-q4-2023-home-equity-and-underwater-report/" target="_blank">attomdata.com</a>)2024-02-05T10:17:43-07:002024-02-06T10:19:33-07:00Bluefield Realty Grouptag:bluefieldgroup.com,2012-09-20:18623Inventory Levels Rising, As More New Listings Hit The Market<img src="https://assets.site-static.com/userfiles/767/image/NewListingsHittingTheMarket.jpg" width="1792" height="1194" />
Growing Inventory Signals Seller Confidence
As we step into the new year, the real estate market is showing promising signs of change, with sellers taking the lead. The Realtor.com® January Housing Report paints a picture of increased seller readiness, rising inventory levels, and shifts in market dynamics.
One of the standout trends in January was the notable increase in the number of homes actively listed for sale, showcasing a 7.9% growth compared to the previous year. This surge in inventory suggests that sellers are not only preparing to make their move but are already putting their properties on the market.
Stable Listing Prices & Reduced Time on Market
Despite the uptick in inventory, median listing prices have remained relatively stable. Prices experienced a modest growth of 1.4% compared to the same period last year. This stability is a positive sign for both buyers and sellers, indicating that the market is finding equilibrium even in the face of increased housing supply.
Another shift revealed by the report is the reduced time that homes spend on the market. Compared to January 2023, the typical home spent four fewer days waiting for a buyer. In some metropolitan areas, this decline in time on the market was even more pronounced. Cities like Las Vegas, Phoenix, and San Francisco saw substantial decreases, with homes spending 19, 14, and 13 fewer days on the market, respectively.
Price Dynamics: Considerations for Buyers
Buyers entering the market in January faced slightly higher listing prices and increased mortgage rates compared to the same period in the previous year. The cost of financing the typical home, assuming a 20% down payment, rose by approximately $108 (5.4%) per month compared to a year ago. As a result, the required household income to purchase a median-priced home increased by $4,300 to $84,000, excluding taxes and insurance costs.
However, there is a silver lining for buyers. Interest rates have been on a downward trend, and listing price growth has remained relatively restrained. This has led to a slowdown in the increase of the monthly cost to purchase a home, dropping from a 6.1% year-over-year increase last month to a 5.4% increase in January.
(Source: <a href="https://www.prnewswire.com/news-releases/realtorcom-january-housing-report-january-2024-marks-the-third-consecutive-month-of-annual-inventory-growth-302050254.html" target="_blank">prnewswire.com</a>)2024-02-02T06:19:10-07:002024-02-05T14:46:17-07:00Bluefield Realty Grouptag:bluefieldgroup.com,2012-09-20:18599Mortgage Rates Largely Unchanged Last Week<img src="https://assets.site-static.com/userfiles/767/image/SteadyMortgageRates.jpg" width="1792" height="1194" />
Mortgage Applications Take a Dip
According to the Mortgage Bankers Association’s (MBA) most recent Weekly Mortgage Applications Survey for the week ending January 26, 2024, mortgage applications decreased by 7.2% from the previous week. However, it's essential to note that last week's results included an adjustment to account for the Martin Luther King Jr. holiday. Despite this decline, the unadjusted Index showed an 8% increase compared to the prior week.
Refinance Activity Shows Promise
The Refinance Index bucked the trend, showcasing a 2% increase from the previous week. Moreover, it was 3% higher than the same week in the previous year. This uptick in refinance activity indicates that homeowners continue to explore opportunities to optimize their mortgage terms amidst fluctuating rates. The refinance share of mortgage activity increased to 34.2% of total applications, up from 32.7% in the previous week. This uptick suggests that homeowners are taking advantage of opportunities to refinance their existing mortgages.
Purchase Applications Face Challenges
On the other hand, the seasonally adjusted Purchase Index took a hit, decreasing by 11% from the previous week. Unadjusted data, however, painted a slightly more optimistic picture, with a 6% increase compared to the prior week. Nevertheless, when compared to the same week in the previous year, purchase applications were down by 20%.
Steady Mortgage Rates
Joel Kan, MBA's Vice President and Deputy Chief Economist, shed light on the state of mortgage rates. He mentioned that mortgage rates remained relatively stable, with the 30-year fixed rate holding at 6.78%. This rate, while higher than the record lows observed during the pandemic, is still lower than the peak of 7.9% recorded in October 2023.
Impact on the Housing Market
Kan also pointed out some factors influencing the housing market. Low housing inventory is limiting options for potential buyers, leading to elevated home prices. This combination of factors has resulted in a one-two punch, constraining home purchase activity. Additionally, the average loan size for purchase applications has increased recently to $444,100. This marks the largest average loan size since May 2022, indicating that buyers are navigating the market with a willingness to invest in higher-priced homes.
Interest Rate Insights
Interest rates play a pivotal role in the mortgage market, and this week's data revealed some interesting developments:
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances held steady at 6.78%.
For jumbo loan balances exceeding $726,200, the average contract interest rate for 30-year fixed-rate mortgages remained unchanged at 6.94%.
FHA-backed loans witnessed a slight increase in average contract interest rates, rising to 6.61% from 6.51%.
The 15-year fixed-rate mortgages saw an uptick in average contract interest rates, reaching 6.34% from 6.31%.
Lastly, 5/1 adjustable-rate mortgages (ARMs) experienced a minimal increase in average contract interest rates, rising to 6.23% from 6.22%.
Looking Ahead
As the mortgage market continues to navigate changing rates and market dynamics, staying informed about these trends is crucial for both prospective homebuyers and homeowners considering refinancing options. The steady but nuanced shifts in rates and application volumes underscore the importance of timing and informed decision-making in the real estate landscape.
(Source: <a href="https://www.mba.org/news-and-research/newsroom/news/2024/01/31/mortgage-applications-decrease-in-latest-mba-weekly-survey" target="_blank">mba.org</a>)2024-02-01T06:16:53-07:002024-02-02T08:55:11-07:00Bluefield Realty Grouptag:bluefieldgroup.com,2012-09-20:18590Will Bidding Wars Return Now That Rates Have Fallen?<img src="https://assets.site-static.com/userfiles/767/image/MoreBangForYourBuck.jpg" width="1792" height="1194" />
Lower Mortgage Rates Are Changing the Game
In a recent report by Redfin, the spotlight is on homebuyer purchasing power, revealing a significant shift in affordability thanks to the changing landscape of mortgage rates. Redfin estimates that with today's average mortgage rate of 6.7%, a $3,000 monthly budget can now fetch a $453,000 home, which is up about $40,000 from just a few months ago when the average mortgage rate stood at 7.8%.
To put it into perspective, the typical U.S. home, valued at around $363,000, now comes with a monthly mortgage payment of $2,545 with a 6.7% rate. In contrast, when rates were at 7.8%, that monthly payment was nearly $200 higher at $2,713. This reduction in monthly payments translates to a significant boost in affordability for homebuyers.
Evolving Mortgage Rate Trends
Mortgage rates have been on a rollercoaster ride recently. After hitting a two-decade high in October 2023, they have gradually eased. By the end of the year, weekly average rates had dipped into the 6.5% range, and they currently stand at 6.7%. While these rates are double what buyers experienced during the pandemic's record-low 3% rates, they have become more palatable to homebuyers compared to the near-8% rates that were looming just a few months ago.
Impact on the Real Estate Market
This shift in mortgage rates has ignited increased activity in the real estate market. Bidding wars are on the rise, with more homes receiving numerous offers. In many markets, buyers are now seizing opportunities as they realize that waiting may only result in heightened competition.
Future Rate Predictions
Many economists anticipate that mortgage rates will continue to decrease as the year progresses, though the path may be unpredictable. All eyes are on the Federal Open Market Committee’s (FOMC) next press conference, scheduled for this afternoon, which may provide insights into the timing of interest rate cuts. While some speculate a possible rate cut as early as March, it could be later in the year. It's important to note that mortgage rates are expected to come down gradually rather than dramatically.
Advice for Homebuyers
Redfin's Chief Economist, Daryl Fairweather, offers valuable advice to serious house hunters. Attempting to time the market solely based on mortgage rates may not yield significant results in the coming months. Instead, she suggests that buyers should consider their personal and financial circumstances. What matters most is whether a home meets your needs and if it's within your financial means. Trying to time the market, in hopes of another golden window of record-low rates like we saw in 2021, is unlikely to bear fruit.
(Source: <a href="https://dsnews.com/news/01-29-2024/tide-shifting-buyers" target="_blank">dsnews.com</a>)2024-01-31T06:13:12-07:002024-02-01T06:59:34-07:00Bluefield Realty Grouptag:bluefieldgroup.com,2012-09-20:18578Pending Contracts Increased 8% In December<img src="https://assets.site-static.com/userfiles/767/image/IncreaseInDecemberContracts.jpg" width="1792" height="1194" />
Pending Home Sales Show Positive Momentum
In December, the housing market continued to show its resilience, with pending home sales experiencing an impressive 8.3% increase, according to the National Association of REALTORS® (NAR). This significant surge in pending transactions is a promising sign for the real estate industry.
Regional Breakdown
The South experienced a remarkable 11.9% jump in the pending home sales index in December, reflecting a 1.5% increase from the prior year.
The West region witnessed a substantial 14.0% surge in the pending home sales index in December, showing a 1.5% increase compared to December 2022.
The Midwest recorded a 5.6% increase in the pending home sales index in December, marking a 4.3% rise from the previous year.
The Northeast saw a 3.0% decline in pending sales from the previous month, with a 3.9% drop compared to December 2022.
Positive Outlook for 2024 and 2025
NAR's Economic Outlook for January 2024 paints an optimistic picture for the real estate market. The association projects a 13% increase in existing home sales in 2024 compared to 2023, reaching a total of 4.62 million sales. This upward trend is expected to continue into 2025, with a forecasted 15.8% increase to 5.35 million sales.
Median Home Prices
For those concerned about home prices, NAR anticipates a 1.4% rise in the annual median home price in 2024, reaching $395,100. The following year, in 2025, prices are predicted to increase by 2.6% to $405,200. These modest yet steady price increases reflect a balanced market.
Mortgage Rates and Federal Reserve
The Federal Reserve is expected to play a role in shaping the market, with forecasts suggesting four interest rate cuts in the near future. Mortgage rates are expected to fluctuate within the 6% to 7% range for most of the year, influencing affordability and buyer behavior.
Inflation and Rent Growth
One notable projection is related to rent growth. Due to significant growth in apartment construction over the past three years, rent growth is expected to stabilize. This stabilization is likely to contribute to consumer price inflation remaining below 3% in 2024.
(Source: <a href="https://www.nar.realtor/newsroom/pending-home-sales-climbed-8-3-in-december" target="_blank">nar.realtor</a>)2024-01-30T06:00:10-07:002024-01-31T06:40:04-07:00Bluefield Realty Grouptag:bluefieldgroup.com,2012-09-20:18571New Construction Market Stays Hot Into Winter<img src="https://assets.site-static.com/userfiles/767/image/BuildingHouse.jpg" width="1792" height="1194" />
New Construction Home Sales
The market for new construction homes in December 2023 closed on a high note, with sales showing remarkable strength. According to the U.S. Census Bureau and the Department of Housing and Urban Development, new single-family home sales in December 2023 surged to a seasonally adjusted annual rate of 664,000. This figure represents an 8.0% increase from the revised November rate of 615,000 and a 4.4% rise from December 2022's estimate of 636,000. Let's dive into the key highlights.
In 2023, a total of 668,000 new homes were sold. This impressive number stands 4.2% above the 2022 figure of 641,000, underscoring the robust demand for new homes throughout the year.
Median and Average Sales Prices
The median sales price of new houses sold in December 2023 reached $413,200, reflecting the cost of a typical new home. Meanwhile, the average sales price came in at $487,300, indicating the overall price trend in the market.
Healthy Inventory Levels
At the end of December, the seasonally adjusted estimate of new houses available for sale stood at 453,000. This inventory represents a healthy supply of 8.2 months at the current sales rate. A balanced market typically maintains a supply of around six months, making this level slightly above the equilibrium.
The robust performance of new home sales in December 2023 and throughout the year demonstrates the resilience of the housing market. With a surge in sales and stable inventory levels, both buyers and sellers can find opportunities in this dynamic market. As we move forward into 2024, these statistics provide valuable insights for anyone considering entering the new home market. Stay tuned for more updates on the evolving landscape of the real estate industry.
(Source: <a href="https://www.census.gov/construction/nrs/current/index.html" target="_blank">census.gov</a>)2024-01-29T06:03:43-07:002024-01-30T14:30:52-07:00Bluefield Realty Grouptag:bluefieldgroup.com,2012-09-20:18554Typical Home Seller Profit Was $121,000 In 2023<img src="https://assets.site-static.com/userfiles/767/image/EquityOnTheRise.jpg" width="1792" height="1194" />
Analyzing ATTOM’s 2023 U.S. Home Sales Report
In recent years, the U.S. housing market has been a lucrative field for home sellers, with significant margins. However, ATTOM's Year-End 2023 U.S. Home Sales Report reveals that while home sellers continued to make substantial profits, there were some notable shifts in the market compared to 2022.
The report highlights that in 2023, the typical home seller made an impressive $121,000 profit, resulting in a remarkable 56.5% return on investment (ROI). This is a testament to the strength of the housing market in recent years. However, it's important to note that this year marked a change, as both gross profits and profit margins decreased from 2022, ending a trend that had persisted since 2011.
Median Home Price and Profit Margin
The gross profit on median-priced single-family home sales dropped from $122,600 in 2022. The profit margin also decreased from 59.8% year over year. This change occurred as the median nationwide home price saw its smallest annual increase in over a decade.
Market Volatility in 2023
The U.S. housing market in 2023 experienced ups and downs. It started with relatively flat prices, followed by a springtime spike, and ended with a drop-off in the fourth quarter. This volatility resulted from various factors, including strong employment and investment markets, a historically tight supply of homes, and fluctuating home mortgage rates.
Regional Differences in ROI
When analyzing the data, it becomes clear that sellers in the western and southern states continued to reap the highest returns on investment in 2023. These regions had 12 of the top 15 metro areas with the highest ROIs on typical home sales. The leading cities included San Jose, CA (99.4% ROI), Knoxville, TN (98.1%), Seattle, WA (92.9%), Spokane, WA (90.6%), and Scranton, PA (89.6%).
National Median Home Price Trends
The median home price in the U.S. increased by 2.1% from 2022 to 2023, reaching a new annual high of $335,000. Although this is a significant milestone, the 2023 increase was the smallest during the extended period of growth that began in 2012. Rising interest rates, approaching 8% for a 30-year mortgage, contributed to this slowdown.
Longer Homeownership Tenure
Homeowners in the U.S. who sold their homes in the fourth quarter of 2023 had owned their properties for an average of 7.96 years, marking an increase from previous quarters. This indicates a trend of longer tenure among sellers.
Cities like Barnstable, MA, Santa Cruz, CA, and Bridgeport, CT, saw the longest tenure for home sellers in the fourth quarter of 2023.
Cash Sales on the Rise
Cash purchases accounted for 38% of all single-family home and condo sales in 2023, the highest level since 2014. While this is a significant increase from previous years, it is still below the peak of 44.7% in 2011.
Cities like Macon, GA, Naples, FL, and Myrtle Beach, SC, had the largest share of cash sales in 2023.
Foreclosure Sales Slightly Up
Foreclosure sales to lenders represented just 1.5% of all single-family home sales in 2023. Although this is an increase from 2022, it remains significantly lower than the peak of 23.6% in 2009.
Illinois, Michigan, and Wyoming had the highest percentage of lender-purchased foreclosure sales in 2023.
Institutional Investing Decreases
Institutional investors were involved in 6.1% of all single-family home and condo sales in 2023, down from 7.6% in 2022. This decline marks a change in the trend of increasing institutional investment.
Memphis, TN, Indianapolis, IN, and Yuma, AZ, recorded the highest portions of institutional investor transactions in 2023.
FHA Loans on the Rise
Buyers using Federal Housing Administration (FHA) loans accounted for 8.8% of all single-family home and condo purchases in 2023, marking the first increase after three consecutive annual declines.
Cities like Merced, CA, Bakersfield, CA, and Lakeland, FL, had the highest share of purchases made with FHA loans in 2023.
Wrapping Up
While 2023 continued to be a profitable year for home sellers in most parts of the United States, the housing market experienced some changes. With a slower increase in median home prices, shifting profit margins, and regional variations in ROI, the market is evolving. This data will be crucial for prospective buyers and sellers in 2024, as they navigate the dynamic landscape of the U.S. housing market.
(Source: <a href="https://www.attomdata.com/news/most-recent/attoms-year-end-2023-u-s-home-sales-report/" target="_blank">attomdata.com</a>)2024-01-26T06:22:15-07:002024-01-29T06:51:27-07:00Bluefield Realty Grouptag:bluefieldgroup.com,2012-09-20:18526Mortgage Demand Surges, According to MBA's Most Recent Survey<img src="https://assets.site-static.com/userfiles/767/image/MotivatedHomeBuyersDespiteMortgageRates.jpg" width="1792" height="1194" />
Mortgage Rates Experience Slight Uptick, But Purchase Activity Surges
The Mortgage Bankers Association (MBA) has released its Weekly Mortgage Applications Survey for the week ending January 19, 2024, showcasing significant developments in mortgage applications and the housing market. Mortgage applications saw a notable increase of 3.7% from the previous week, as revealed by the MBA's survey. This encouraging trend aligns with an adjustment made to account for the Martin Luther King Jr. holiday.
The Market Composite Index, which serves as a gauge of mortgage loan application volume, rose by 3.7% when adjusted for seasonality compared to the prior week. However, on an unadjusted basis, the index witnessed a 4% decline in comparison.
Purchase Activity on the Upswing
One of the highlights of this week's survey is the surge in purchase activity. The seasonally adjusted Purchase Index experienced an impressive 8% increase from the previous week. Although the unadjusted Purchase Index also rose by 3% compared to the prior week, it's important to note that it remained 18% lower than the same week in the previous year.
Joel Kan, MBA's Vice President and Deputy Chief Economist, attributed this growth in purchase activity to conventional and FHA purchase applications. Many prospective buyers have seized the opportunity to enter the market early in the season. This surge in purchase applications indicates continued interest from homebuyers, even in the face of rising mortgage rates.
Refinance Activity Remains Subdued
In contrast to the positive developments in purchase activity, refinance applications experienced a decline, continuing a trend of relatively low levels. The holiday-adjusted Refinance Index decreased by 7% from the previous week and was 8% lower than the same week one year ago. On an unadjusted basis, the Refinance Index dropped by 16% compared to the prior week, aligning with the overall subdued interest in refinancing.
Kan highlighted the limited incentive for homeowners to refinance given the current rate environment. With mortgage rates at their current levels, many homeowners may find it less appealing to pursue refinancing options.
Market Share and Interest Rates
The share of refinance activity, in terms of total applications, decreased to 32.7% from 37.5% in the previous week. Conversely, the adjustable-rate mortgage (ARM) share of total applications increased to 6.3%.
Examining specific loan programs, the FHA share of total applications decreased slightly from the previous week to 14.1% while the VA share also saw a dip to 13.7%. The USDA share of total applications decreased to 0.4%.
As for interest rates, there was a slight uptick across various mortgage products. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances increased to 6.78% while jumbo loan balances experienced a similar increase, reaching 6.94%. FHA-backed mortgages also saw a rise, with an average contract interest rate of 6.51%. The 15-year fixed-rate mortgage averaged 6.31% and 5/1 ARMs registered an average contract interest rate of 6.22%.
Wrapping Up
The latest data from the MBA's Weekly Mortgage Applications Survey paints a mixed picture for the housing market. While refinancing activity remains subdued due to current rate levels, purchase applications have surged, indicating that homebuyers are actively seeking opportunities in the market. As mortgage rates continue to play a pivotal role, prospective buyers and homeowners alike are navigating a dynamic landscape in the pursuit of their real estate goals.
(Source: <a href="https://www.mba.org/news-and-research/newsroom/news/2024/01/24/mortgage-applications-increase-in-latest-mba-weekly-survey" target="_blank">mba.org</a>)2024-01-25T06:27:36-07:002024-01-26T06:52:14-07:00Bluefield Realty Grouptag:bluefieldgroup.com,2012-09-20:18521Construction Of New Homes Jumped 4.5% Last Year<img src="https://assets.site-static.com/userfiles/767/image/IncreaseInHousingPermits.jpg" width="1792" height="1194" />
New Data from Census Bureau and HUD
The U.S. Census Bureau and the U.S. Department of Housing and Urban Development have released the latest residential construction statistics for December 2023. These statistics reveal promising trends in building permits, housing starts, and completions, indicating potential growth in the housing market.
In December, privately-owned housing units authorized by building permits reached a seasonally adjusted annual rate of 1,495,000. This figure represents a 1.9% increase from the revised November rate of 1,467,000 and a notable 6.1% rise from the rate recorded in December 2022, which stood at 1,409,000.
Housing Permits on the Rise
Breaking down the data further, single-family authorizations in December totaled 994,000, marking a 1.7% increase from the revised November figure of 977,000. Additionally, authorizations for units in buildings with five units or more reached a rate of 449,000 in December.
Despite a slowdown in annual authorizations compared to the previous year, with an estimated 1,469,800 housing units authorized in 2023, this figure still falls 11.7% below the 2022 figure of 1,665,100.
Housing Starts Experience Growth
Privately-owned housing starts in December reached a seasonally adjusted annual rate of 1,460,000 units. Although this number reflects a 4.3% decrease from the revised November estimate of 1,525,000, it stands 7.6% higher than the December 2022 rate of 1,357,000.
Within the housing starts category, single-family housing starts in December were recorded at a rate of 1,027,000. This figure represents an 8.6% decrease from the revised November figure of 1,124,000. Meanwhile, units in buildings with five units or more had a rate of 417,000 in December.
For the entire year of 2023, it's estimated that 1,413,100 housing units were initiated. This number reflects a 9.0% decrease compared to the 2022 figure of 1,552,600.
Housing Completions Also Up
December saw privately-owned housing completions reach a seasonally adjusted annual rate of 1,574,000, marking an impressive 8.7% increase from the revised November estimate of 1,448,000. Furthermore, this figure represents a substantial 13.2% increase compared to the December 2022 rate of 1,390,000.
Breaking down the data, single-family housing completions in December achieved a rate of 1,056,000, an 8.4% increase from the revised November rate of 974,000. Units in buildings with five units or more reached a rate of 509,000 in December.
Over the course of 2023, an estimated 1,452,500 housing units were completed, reflecting a 4.5% increase compared to the 2022 figure of 1,390,500.
Wrapping Up
The latest residential construction statistics for December 2023 offer a glimpse of optimism for the U.S. housing market. Building permits, housing starts, and completions have shown encouraging trends, pointing towards potential growth and stability in the housing sector. While annual authorizations for 2023 dipped compared to the previous year, the overall picture suggests a resilient market with opportunities for further development in the coming months.
(Source: <a href="https://www.census.gov/construction/nrc/pdf/newresconst.pdf" target="_blank">census.gov</a>)2024-01-24T07:36:08-07:002024-01-25T07:06:05-07:00Bluefield Realty Grouptag:bluefieldgroup.com,2012-09-20:18515Will Interest Rates Fall Below 6% In 2024?<img src="https://assets.site-static.com/userfiles/767/image/ExpectedDecreaseInInterestRates.jpg" width="1792" height="1194" />
2024 Housing Market Outlook
As the dust settles on the tumultuous rollercoaster of the housing market in recent years, the Fannie Mae Economic and Strategic Research (ESR) Group offers its insights and projections for 2024. While uncertainties remain, the forecast paints a picture of a housing market gradually returning to equilibrium after experiencing significant disruptions due to fluctuating mortgage rates and unusual market dynamics.
Mortgage Rates: A Downward Trend
The ESR Group anticipates a promising change on the horizon. Mortgage rates are expected to decrease throughout 2024, ultimately dipping below the 6% mark by year-end. This shift in interest rates is poised to ignite refinance activity further, with early indications already visible in Fannie Mae's Refinance Application-Level Index. In 2024, refinance volumes are projected to nearly double their 2023 levels.
Lower mortgage rates bring the potential to thaw the existing home sales market, which has been grappling with the "lock-in effect." This phenomenon has deterred homeowners from selling or refinancing their homes due to concerns about losing their historically low interest rates. The ESR Group predicts that the annualized pace of existing home sales will rise to 4.5 million units by the fourth quarter of 2024, a significant increase from the 3.8 million units in Q4 2023.
However, a complete recovery to pre-pandemic sales rates will take time. Housing affordability remains a challenge, with prices stretched thin compared to household incomes.
New Construction
The ongoing supply shortage and affordability constraints in the existing homes market are expected to boost the demand for new single-family homes in 2024. The ESR Group forecasts that new home construction starts and sales will surpass the levels seen in 2023.
Overall, while some uncertainties persist, the ESR Group expects that the gradual normalization of the existing homes market, coupled with increased housing supply from new construction, will contribute to curbing excessive home price growth in 2024. Home prices are projected to rise by 3.2% over the year, a notable slowdown from the 7.1% increase experienced in 2023.
Economic Outlook
Beyond the housing market, the ESR Group's economic forecast indicates a shift from its earlier predictions. While the forecast still anticipates a slowdown in economic growth in 2024, it now foresees a more favorable economic backdrop compared to previous months. The expectation has shifted from a modest recession to positive, albeit below-trend, economic growth in 2024.
Several factors contribute to this revised outlook, including the Federal Reserve's recent easing of financial conditions following its December meeting and a positive trend in real personal income growth in October and November. These developments are viewed as positive drivers for growth in the coming quarters.
However, it's essential to acknowledge that this forecast carries heightened uncertainty and significant downside risks. The economy still faces a higher-than-normal risk of recession, underlining the importance of monitoring economic indicators closely.
Closing Thoughts
"In 2024, we expect home sales and mortgage origination activity to begin a gradual recovery in the presence of a slow-growing economy," said Doug Duncan, Fannie Mae Senior Vice President and Chief Economist. "Lower mortgage rates and increased homebuilding activity should aid affordability and stimulate the housing market. While the decline in mortgage rates is likely to encourage refinancing and purchase financing, there's more work to be done to reduce the 'lock-in effect' experienced by homeowners who made financial decisions during the pandemic. Overall, 2024 holds the promise of improved homebuyer affordability and a more robust mortgage industry compared to 2023."
As we step into 2024, the housing market is poised for change, with lower mortgage rates and gradual economic improvements offering hope for both buyers and sellers. However, the road to a fully stabilized housing market may still be long, as affordability challenges persist and uncertainties linger.
(Source: <a href="https://www.fanniemae.com/newsroom/fannie-mae-news/mortgage-rates-expected-dip-below-6-percent-2024-boosting-home-sales" target="_blank">fanniemae.com</a>)2024-01-23T06:04:30-07:002024-01-25T06:50:27-07:00Bluefield Realty Grouptag:bluefieldgroup.com,2012-09-20:18506Existing Home Sales Dipped 1.0% In December<img src="https://assets.site-static.com/userfiles/767/image/WhatToExpectFromTheUpcomingHousingMarket.jpg" width="1792" height="1194" />
Existing-Home Sales in December
The market for existing homes experienced a slowdown in December, marking a continuation of the challenges faced throughout 2023. Despite a year of ups and downs, and relatively low transaction volume, the housing market is showing signs of resilience. According to the latest report from the National Association of REALTORS® (NAR), existing home sales retreated 1.0% from November to December, resulting in a seasonally adjusted annual rate of 3.78 million. This decline in sales was consistent with the year-over-year trend, showing a 6.2% decrease compared to December 2022.
Factors Influencing the Market
NAR Chief Economist Lawrence Yun shared his perspective on the market, indicating that December's sales figures might represent the bottom before an expected rebound in the new year. This optimism stems from the reduction in mortgage rates, making homeownership more accessible. Yun highlighted the meaningful decrease in mortgage rates over the past two months, which has reignited interest among potential buyers. Additionally, the market is anticipating an increase in inventory in the coming months.
Housing Inventory and Supply
Housing inventory at the end of December stood at 1 million units, marking an 11.5% decrease from November. However, when viewed on a year-over-year basis, inventory was up by 4.2%. Unsold inventory is represented by a 3.2-month supply at the current sales pace, a decrease from 3.5 months in November but an increase from 2.9 months in December 2022.
Record-High Median Price in 2023
Despite the fluctuations in sales, 2023 saw the median price for existing homes reaching a record high of $389,800. This milestone was coupled with a decline in annual sales to the lowest level since 1995, with 4.09 million existing home sales.
The median existing home price for all housing types in December 2023 was $382,600, reflecting a 4.4% increase from the previous year. Notably, all four regions across the United States posted price increases.
Real Estate Market Trends
The REALTORS® Confidence Index for December indicated that properties typically remained on the market for 29 days, a slight increase from November. 56% of homes were sold in December after being on the market for less than a month.
First-time buyers accounted for 29% of sales in December, slightly down from November 2023. All-cash sales represented 29% of transactions in December, while individual investors or second-home buyers purchased 16% of homes during the same period.
Distressed sales, which include foreclosures and short sales, made up 2% of sales in December, maintaining stability from the previous month and year.
Single-Family and Condo/Co-op Sales
Single-family home sales in December reached a seasonally adjusted annual rate of 3.4 million, showing a minor decline from the previous month. The median price for existing single-family homes in December was $387,000.
Existing condominium and co-op sales for the same month recorded a seasonally adjusted annual rate of 380,000 units, reflecting a 7.3% decrease from November. The median existing condo price was $343,800 in December.
Regional Insights
Northeast: Existing-home sales in the Northeast remained unchanged from November but declined by 9.6% compared to December 2022. The median price in the Northeast was $428,100.
Midwest: Existing-home sales in the Midwest retracted by 4.3% from the prior month and 10.9% from the previous year. The median price in the Midwest was $275,600.
South: Existing-home sales in the South decreased by 2.8% from November and 4.4% from the prior year. The median price in the South was $352,100.
West: Existing-home sales in the West grew by 7.8% compared to the previous month but decreased by 1.4% year-over-year. The median price in the West was $582,000.
Looking Ahead
In conclusion, December brought a temporary slowdown in existing-home sales, but the market appears poised for a potential rebound in the new year. The drop in mortgage rates and the expected increase in inventory suggest brighter prospects ahead. However, the housing market will continue to grapple with challenges, including pricing sustainability and the need for increased home construction to create more pathways to homeownership.
(Source: <a href="https://www.nar.realtor/newsroom/existing-home-sales-slid-1-0-in-december" target="_blank">nar.realtor</a>)2024-01-22T07:04:24-07:002024-01-23T06:45:57-07:00Bluefield Realty Grouptag:bluefieldgroup.com,2012-09-20:18496Home Builder Optimism Spikes In January<img src="https://assets.site-static.com/userfiles/767/image/BuilderConfidenceInTodaysHousingMarket.jpg" width="1792" height="1194" />
Builder Confidence Surges
The housing market has kicked off the new year on a confident note, with builder sentiment on the rise, thanks in part to a significant drop in mortgage rates. According to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI), builder confidence in the market for newly-built single-family homes surged by seven points to reach 44 in January. This increase marks the second consecutive monthly rise in builder confidence and closely aligns with a period of declining interest rates.
Mortgage Rates and Improved Affordability
Lower mortgage rates have played a pivotal role in enhancing housing affordability and rekindling buyer interest. This past month has witnessed a resurgence of buyers who had been previously sidelined by elevated borrowing costs in the fall. NAHB Chairman Alicia Huey, a custom home builder and developer from Birmingham, Ala., notes, "Lower interest rates improved housing affordability conditions this past month, bringing some buyers back into the market."
The boost in builder confidence is particularly encouraging as it sets the stage for anticipated growth in single-family home starts in 2024. This growth is expected to contribute much-needed inventory to the housing market. However, builders may face mounting challenges in the form of increased building material costs, supply constraints, and lot availability.
The decline in mortgage rates is significant, with rates falling by over 110 basis points since late October, according to Freddie Mac data. This drop has propelled the future sales expectation component of the HMI into positive territory for the first time since August. NAHB Chief Economist Robert Dietz elaborates, "As home building expands in 2024, the market will see growing supply-side challenges in the form of higher prices and/or shortages of lumber, lots, and labor."
Builder Strategies in Response to Lower Rates
Despite the reduction in mortgage rates, many builders have continued to reduce home prices in a bid to stimulate sales. In January, 31% of builders reported lowering home prices, a decline from the 36% reported in the previous two months and the lowest rate since last August. The average price reduction remained consistent at 6%, unchanged from the previous month. Simultaneously, 62% of builders offered various sales incentives in January, a share that has remained steady between 60% and 62% since October.
Positive Momentum Across All Indices
All three major HMI indices exhibited gains in January. The HMI index assessing current sales conditions rose by seven points to reach 48. The component measuring sales expectations for the next six months saw a substantial 12-point jump, reaching 57. The component gauging the traffic of prospective buyers increased by five points, reaching 29.
Regional Trends
When examining the three-month moving averages for regional HMI scores, several trends emerge. The Northeast region saw a four-point increase, reaching 55. The South experienced a two-point gain, reaching 41, while the West registered a one-point gain, reaching 32. The Midwest maintained its position at 34.
Wrapping Up
The surge in builder confidence reflects the positive impact of declining mortgage rates on the housing market. As we progress through 2024, these trends will likely continue to shape the dynamics of the real estate market, offering both challenges and opportunities for builders and prospective homebuyers alike.
(Source: <a href="https://www.nahb.org/news-and-economics/press-releases/2024/01/builder-sentiment-surges-on-falling-interest-rates" target="_blank">nahb.org</a>)2024-01-19T08:37:26-07:002024-01-22T13:23:17-07:00Bluefield Realty Grouptag:bluefieldgroup.com,2012-09-20:18474Demand Climbs As Rates Fall To 3-Week Low<img src="https://assets.site-static.com/userfiles/767/image/JanuaryMortgageRates.jpg" width="1792" height="1194" />
A Strong Start to the Year
In a promising turn of events for the housing market, mortgage applications experienced a significant surge, driven by declining mortgage rates. The Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey for the week ending January 12, 2024, reveals compelling insights into the current state of mortgage applications, refinancing activity, and the factors shaping the real estate landscape.
Mortgage applications registered an impressive increase of 10.4% from the previous week, underscoring the renewed vigor in the housing market. The Market Composite Index, a crucial indicator of mortgage loan application volume, echoed this rise, surging by the same percentage on a seasonally adjusted basis.
This resurgence extends to both refinancing and purchase applications. The Refinance Index jumped by 11% from the prior week, marking a 10% year-over-year increase. Meanwhile, the Purchase Index saw a remarkable 9% increase from the previous week.
Joel Kan, MBA's Vice President and Deputy Chief Economist, attributes this surge to a noteworthy development in mortgage rates. He states, "Mortgage rates declined across all loan types as Treasury yields moved lower last week on incoming inflation data, which helped to support a rise in mortgage applications." Importantly, the 30-year fixed mortgage rate dipped by six basis points, reaching 6.75%, the lowest rate observed in three weeks.
Refinance and Purchase Applications
The data suggests that homeowners and prospective buyers are responding favorably to the decline in mortgage rates. Notably, the rise in both purchase and refinance applications was particularly prominent in the conventional market. While purchase activity still lags behind year-ago levels, refinance applications have seen improvements from their recent lows and have been experiencing year-over-year gains, albeit at relatively modest levels.
Joel Kan expressed cautious optimism about the future, stating, "If rates continue to ease, MBA is cautiously optimistic that home purchases will pick up in the coming months." The housing market is poised for potential growth if this trend persists, offering opportunities for both buyers and sellers.
Shifts in Mortgage Market Share
The distribution of mortgage activity across various types of loans underwent some changes in the reported week. The refinance share of mortgage activity decreased slightly, moving from 38.3% to 37.5% of total applications. In contrast, the adjustable-rate mortgage (ARM) share of activity increased to 5.9% of total applications.
Regarding government-backed loans, the FHA share of total applications decreased to 14.3% from the prior week's 14.4%. The VA share of total applications also saw a decrease, moving from 16.3% to 14.2%. Conversely, the USDA share of total applications experienced a slight increase, reaching 0.5%.
Interest Rates: A Decisive Factor
Mortgage rates are playing a central role in shaping current market dynamics. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances decreased to 6.75% from 6.81%. This rate decline comes with an increase in points to 0.62 from 0.61, including the origination fee, for 80% loan-to-value ratio (LTV) loans.
In the jumbo loan segment, the average contract interest rate for 30-year fixed-rate mortgages with balances greater than $726,200 decreased to 6.86% from 6.98%. Points associated with these loans decreased to 0.42 from 0.43, including the origination fee, for 80% LTV loans.
The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA also saw a decrease, moving from 6.56% to 6.46 percent, with points decreasing to 0.80 from 0.84, including the origination fee, for 80% LTV loans.
Buyers exploring shorter-term loans will find lower rates as well, with the average contract interest rate for 15-year fixed-rate mortgages decreasing to 6.24% from 6.41%. Points increased slightly to 0.59 from 0.55, including the origination fee, for 80% LTV loans.
Lastly, the average contract interest rate for 5/1 ARMs decreased to 6.14% from 6.17%. However, points increased to 0.68 from 0.56, including the origination fee, for 80% LTV loans.
(Source: <a href="https://www.mba.org/news-and-research/newsroom/news/2024/01/17/mortgage-applications-increase-in-latest-mba-weekly-survey" target="_blank">mba.org</a>)2024-01-18T06:27:48-07:002024-01-19T08:46:07-07:00Bluefield Realty Grouptag:bluefieldgroup.com,2012-09-20:18462Are More Homeowners Getting Ready To Sell?<img src="https://assets.site-static.com/userfiles/767/image/HomeOwnersLookingToSell.jpg" width="1792" height="1194" />
Housing Market Insights
The housing market is continually evolving, with various factors influencing the decisions of both buyers and sellers. In the latest monthly report from Zillow, several key insights shed light on the current state of the housing market and provide valuable information for those navigating the real estate world in 2024.
Mortgage rates have played a pivotal role in the housing market's dynamics, impacting affordability and buyer sentiment. Skylar Olsen, Zillow's Chief Economist, emphasizes the significance of these rates, especially for first-time buyers, stating, "Mortgage rates are fickle things... they'll play a massive role in determining appreciation and affordability."
Despite the volatility in recent weeks, buyers have found relief as rates have fallen. Lower mortgage rates have resulted in substantial savings for prospective homeowners, with monthly payments on a typical home now $143 less than in October. This drop has, by some definitions, restored affordability to home buying. For the first time since April, a new mortgage with a 20% down payment now consumes less than 33% of the median household income.
However, it's crucial to note that this is a national average, and the affordability picture varies significantly across regions. In many expensive metros, high home prices mean that the median household cannot qualify for a mortgage. Additionally, the 20% down payment requirement remains a challenging hurdle for first-time buyers, with many opting for lower down payments, often with assistance from family or friends.
Homeowners Emerge from Rate Lock
Zillow's survey of homeowners conducted in Q4 of 2023 reveals a noteworthy shift in sentiment. The survey found that 21% of homeowners are considering selling their homes within the next three years, marking an increase from 15% a year ago. Intriguingly, this trend applies almost equally to homeowners with mortgage rates above or below 5%.
This development contrasts significantly with the situation six months ago when homeowners with rates above 5% were nearly twice as likely to contemplate selling. The data suggests that more homeowners with lower rates are warming up to the idea of selling, while those with higher rates likely purchased their homes recently, making current mortgage rates less of a determining factor in their selling decisions.
Inventory: Slow Progress
The housing market has been grappling with inventory challenges for some time, exacerbated by the pandemic. Nevertheless, there are signs of improvement as inventory has begun to rebound. Inventory levels have now made their first annual gains since April, narrowing the gap to 36% below pre-pandemic averages from the previous 46% deficit seen in May.
New listings entering the market are slightly better than the previous year, though they remain 14.5% below pre-pandemic norms. The trajectory of inventory levels in 2024 will be critical in determining the overall health of the housing market.
Buyer Competition Persists
Limited choices for buyers have resulted in continued competition for appealing listings. Price reductions are infrequent during the winter months, with December seeing the lowest share of listings with price cuts since April 2022, standing at just under 16%.
Despite a cooling in demand from the peaks witnessed in 2021 and 2022, homes are still going under contract swiftly, approximately 50% faster than pre-pandemic norms. Recent data highlights that nearly 30% of homes nationwide are selling for more than their original list price, a substantial increase from about 20% observed in 2018 and 2019.
Wrapping Up
The housing market in 2024 remains influenced by mortgage rates, inventory dynamics, and persistent buyer competition. As the year unfolds, these factors will continue to shape the real estate landscape, impacting both buyers and sellers. For those considering entering the market, careful consideration of these trends and their personal financial circumstances will be essential in making informed decisions.
(Source: <a href="https://www.prnewswire.com/news-releases/relaxed-mortgage-rates-mean-serious-savings-for-buyers-302035109.html" target="_blank">prnewswire.com</a>)2024-01-17T06:12:41-07:002024-01-18T09:22:25-07:00Bluefield Realty Grouptag:bluefieldgroup.com,2012-09-20:18454First Time Buyers Say Now's The Time To Buy<img src="https://assets.site-static.com/userfiles/767/image/NowIsTheTimeToBuy2024.jpg" width="1792" height="1194" />
First-Time Buyer Sentiment
First-time homebuyers, despite facing a volatile real estate market, remain optimistic about their prospects in 2024. According to a recent Realtor.com survey, a significant 61% of first-time homebuyers believe that now is an opportune time to purchase a home. However, in a market marked by uncertainty, some unexpected places may offer the best opportunities for those looking to step into homeownership.
The housing market in recent years has posed significant challenges to first-time homebuyers, including high interest rates and limited inventory. However, the survey found that 95% of prospective first-time homebuyers believe they will be able to afford a home within their lifetime, with 40% anticipating affordability within the next year.
Data Analyzed in the Survey
Realtor.com's 2024 Housing Forecast has identified the top markets where first-time homebuyers can find affordability, inventory, culture, and promising growth prospects.
To compile its list of the best markets for first-time homebuyers, Realtor.com evaluated 2,738 cities and places within the 100 largest metro areas across the United States. The rankings were based on various key factors, including:
Share of Young Homeowners: The proportion of homeowner households aged 25 to 34, providing insight into the presence of peers in a similar life stage.
Availability of Homes: Measured by the number of active listings per 1,000 existing households in the past year, ensuring a diverse selection for potential buyers.
Affordability: Determined by the ratio of listing prices to gross household incomes of 25 to 34-year-olds in the city over the past year, emphasizing a lower ratio for affordability.
Job Opportunities: Estimated through the forecasted unemployment rate in the surrounding metro area, reflecting economic stability.
Commute Times: The average time it takes to commute to work, a crucial factor in daily life.
Culture and Liveliness: Gauged by the number of restaurants, cafes, bars, shopping establishments, and lifestyle businesses such as theaters, comedy clubs, and arts classes listed on Yelp in November 2023.
The Top 10 Markets for First-Time Homebuyers in 2024
Realtor.com's analysis revealed a collection of small to mid-sized towns and cities that offer hidden opportunities where affordability meets healthy inventory, cultural vibrancy, shorter commutes, and growth potential. Here are the top 10 markets:
Irondequoit, NY
Benton, AR
Winterset, IA
Newington, CT
Council Bluffs, IA
Cheektowaga, NY
Grand Rapids, MI
Moore, OK
Mattydale, NY
Riviera Beach, MD
Key Findings in Top Markets
Affordability: The top markets on this year's list boast an average 2023 listing price-to-income ratio of 3.1, significantly lower than the national rate of 5.4. Homes in these areas also have an average median listing price 42% lower than the national median of $382,000.
Investing in Growth: The top markets are located within metro areas with an average forecasted 2024 home price growth rate of 6.1%, substantially higher than the national expected decline of -1.7%. Irondequoit, NY, leads with the highest expected median sale price growth rate at 10.4%.
Options to Buy: In a time marked by chronically low inventory levels, the top markets boast an average of 40.2 active listings per 1,000 existing households in 2023. Riviera Beach, MD, stands out with the most active listings per household, at 59.3 per 1,000.
Things to Do: A thriving social scene is crucial for first-time homebuyers, and the top markets don't disappoint. With an average of 16.6 restaurants, cafes, bars, and entertainment businesses per 1,000 households, these areas offer a vibrant lifestyle.
Shorter Commutes: Commute times are a major consideration, with the top cities boasting an average expected 2024 commute time of 24 minutes, saving commuters approximately 50 hours per year compared to the national average.
Youthful Towns: These markets are home to an above-average share of homeowners aged 25 to 34 (8.1%), providing a sense of community for young adults. Riviera Beach, MD, leads with an expected 10.9% share of young adult homeowners.
(Source: <a href="https://dsnews.com/news/01-12-2024/first-time-buyers-optimistic" target="_blank">dsnews.com</a>)2024-01-16T06:31:14-07:002024-01-17T06:47:53-07:00Bluefield Realty Grouptag:bluefieldgroup.com,2012-09-20:18453Mortgage Rates Won't Stop Millennial Buyers<img src="https://assets.site-static.com/userfiles/767/image/MillennialHomeBuyerSurvey.jpg" width="1792" height="1194" />
Millennial Homebuyers Navigate the Real Estate Market
Millennials, the largest demographic group in the United States, are facing a daunting landscape in the real estate market. According to recent research from Real Estate Witch, an online publication associated with Clever Real Estate, a staggering 93% of millennials report that the state of the real estate market has caused them to adjust their home-buying plans. This finding underscores the significant challenges and concerns that millennials encounter as they strive to achieve homeownership in today's market.
The study reveals that 76% of millennials are apprehensive that the real estate market will become even more unfavorable for buyers before they manage to purchase a home. This sentiment is indicative of the uncertainty and anxiety that many young adults experience when contemplating homeownership.
Willingness to Accept High Interest Rates
For half of the millennials surveyed, high interest rates are a substantial barrier to homeownership. A notable 67% of respondents express regret about not buying a home during periods of lower interest rates. The current economic climate, characterized by rising interest rates, has made homeownership less attainable for many millennials.
In a surprising twist, the research reveals that a significant portion of millennial homebuyers (78%) would consider accepting interest rates higher than the national average, which hovered around 7% at the time of the survey. Remarkably, 65% of respondents would entertain an interest rate of 10% or higher, while 23% would be open to rates exceeding 15%. This willingness to accept higher rates may be attributed to the fact that 68% of millennials intend to refinance if rates decrease, suggesting a strategic approach to managing their mortgage expenses.
Financial Challenges
Financial concerns loom large for millennials entering the real estate market. Almost half (47%) of respondents plan to make a down payment of less than 20%, reflecting a desire to limit upfront costs. However, one in four millennials (25%) frets about not meeting the requirements for a mortgage, revealing the anxiety associated with the mortgage qualification process.
A concerning trend emerges when examining millennials' financial health. A staggering 57% of respondents carry $10,000 or more in debt, while only 25% have managed to accumulate $10,000 in savings. This imbalance underscores the financial hurdles millennials face when striving to become homeowners.
Accepting Imperfections in Homes
The study also highlights the sense of urgency among millennial homebuyers. Many are willing to overlook significant issues in properties to secure homeownership. For example, 67% would consider purchasing a home with asbestos, 62% with mold, and 58% with foundation issues. This willingness to compromise on property conditions showcases the determination of millennials to enter the housing market.
Competitive Spirit and Regrets
Amid fierce competition for homes, 79% of millennials express their willingness to pay above the asking price to secure their dream home. This figure represents a slight decrease from the 85% who held this sentiment in 2023, suggesting a shift in the intensity of the market.
Notably, the research reveals that 90% of millennial homeowners have regrets about their initial home purchases, a notable increase from the 82% recorded in 2023. Common regrets include suboptimal locations (27%), challenging neighbors (26%), and the burden of high interest rates (25%).
In conclusion, millennial homebuyers' challenges and concerns in today's real estate market are evident. High interest rates, financial imbalances, and a sense of desperation characterize their journey toward homeownership. Despite these obstacles, millennials demonstrate remarkable resilience and determination as they navigate the complex landscape of the housing market, underscoring their unwavering pursuit of the American dream of homeownership.
(Source: <a href="https://www.prnewswire.com/news-releases/high-interest-rates-are-millennials-no-1-barrier-to-homeownership-according-to-new-survey-302030715.html" target="_blank">prnewswire.com</a>)2024-01-15T06:20:00-07:002024-01-16T07:24:33-07:00Bluefield Realty Grouptag:bluefieldgroup.com,2012-09-20:18435Interstate Movers Find Savings Far From Home<img src="https://assets.site-static.com/userfiles/767/image/RelocatingForAffordableHousing.jpg" width="1792" height="1194" />
Data Shows Relocation to Metros with Lower Housing Costs
As 2023 drew to a close, a Zillow study of United Van Lines data unveiled an intriguing trend in housing relocation patterns across state lines. According to the study, households that embarked on interstate moves during 2023 gravitated towards markets where homes were, on average, $7,500 more affordable than their places of origin. While this figure marks a slight decline from the peak of the pandemic housing market in 2021, when the savings amounted to $8,900, it still represents a significant increase from the $2,800 savings observed in 2019.
The study identifies five metropolitan areas that saw the most significant net migration gains, based on United Van Lines data. These metros, located in the South, Midwest, and Northeast regions, are known for their relative affordability. Housing affordability has always been a critical factor influencing migration patterns, but the surge in house prices during the pandemic, coupled with rising mortgage rates, has intensified the quest for more manageable monthly housing expenses.
Orphe Divounguy, Zillow Senior Economist, emphasizes the pivotal role of affordability in housing decisions, stating, "Affordability is one of the biggest considerations for home buyers and sellers, and clearly plays a major role in deciding where to put down roots."
Challenges of Housing Costs
While affordability may see some improvement in 2024, it has seen a significant decline over the past four years. The study reveals that the share of median household income required to pay rent increased from less than 27% in November 2019 to nearly 30% in November 2023. Similarly, the share of income needed for a monthly mortgage payment on a typical home purchase surged from about 23% to almost 39% over the same period. In some regions, particularly on the West Coast, housing costs have skyrocketed to the extent that even families with median household incomes might not qualify for mortgages.
Top Metro Destinations for 2023
Among the 50 largest metros in the United States by population, the top destinations for United Van Lines customers in 2023 were Charlotte, Providence, Indianapolis, Orlando, and Raleigh. Notably, four of these metros also ranked among Zillow's top 10 hottest markets of 2024. These rankings are determined by factors such as expected home value growth, the speed of home seller-buyer contracts, job growth in conjunction with new home permits, and the increase in owner-occupied households.
Reduced Competition for Homes
The study also highlights that United Van Lines customers are increasingly drawn to markets with reduced competition for homes. In 2019, movers relocated to destination metros with an average of six fewer competitors per listing. However, by 2023, this difference had grown to 13.
Impact on Population and Home Values
Lastly, metros experiencing more outbound moves than inbound moves tended to witness lower growth in their working-age population during the same year. Furthermore, these metros also experienced lower growth in home values in the subsequent year.
The Zillow study of United Van Lines data sheds light on the ongoing trend of Americans seeking affordable housing as they make interstate moves. The pursuit of more manageable housing costs and the willingness to explore metros with less housing competition are evident in the choices made by households in 2023. These findings reflect the ever-evolving dynamics of the housing market and its profound impact on migration patterns across the United States.
(Source: <a href="https://www.prnewswire.com/news-releases/interstate-movers-chased-affordability-in-2023-302029385.html" target="_blank">prnewswire.com</a>)2024-01-12T06:19:00-07:002024-01-16T07:02:51-07:00Bluefield Realty Grouptag:bluefieldgroup.com,2012-09-20:18429Mortgage Applications Surge in First Week of 2024<img src="https://assets.site-static.com/userfiles/767/image/MortgageLender.jpg" width="1792" height="1194" />
Mortgage Application Surge
As we kick off the new year, we have some good leading indicators for a better housing market ahead with a significant surge in mortgage applications for the week ending January 5, 2024. According to the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey, mortgage applications increased by a substantial 9.9% compared to the previous week.
The Market Composite Index, which measures mortgage loan application volume, soared by 9.9% on a seasonally adjusted basis compared to the prior week. When looking at the unadjusted data, the index saw a staggering 45% increase from the previous week. This surge was, in part, attributed to an adjustment made to account for the New Year's holiday.
Breaking down the data further, the Refinance Index, adjusted for the holiday, leaped by an impressive 19% from the previous week. It also marked a substantial 30% increase compared to the same week one year ago. On an unadjusted basis, the Refinance Index surged by 53% from the prior week and was 17% higher than the same week last year.
In the realm of home purchases, the seasonally adjusted Purchase Index increased by 6% from the previous week. The unadjusted Purchase Index, reflecting a 40% rise compared to the prior week, did, however, show a 16% decline compared to the same week one year ago.
Market Insights
Joel Kan, MBA's Vice President and Deputy Chief Economist, offered insights into this surge in mortgage applications, saying, "Despite an uptick in mortgage rates to start 2024, applications increased after adjusting for the holiday." He emphasized that the growth in both purchase and refinance applications, whether for conventional or government loans, is promising as the year begins. However, he also noted that this surge may be attributed to some catch-up in activity following the holiday season and year-end rate declines.
Kan went on to mention that the mortgage rates and applications have displayed volatility in recent weeks, and overall market activity remains relatively low.
Market Share and Interest Rates
The refinance share of mortgage activity increased to 38.3% of total applications from 36.3% in the previous week. Conversely, the adjustable-rate mortgage (ARM) share of activity decreased to 5.4% of total applications.
The FHA share of total applications saw a slight decrease, settling at 14.4%, down from 14.5% the previous week. In contrast, the VA share of total applications increased to 16.3% from 14.6% in the prior week. The USDA share of total applications experienced a minor decrease, moving from 0.5% to 0.4% compared to the previous week.
Interest Rate Movement
Interest rates saw some shifts during this period. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances (up to $726,200) increased slightly to 6.81% from 6.76%. Points remained unchanged at 0.61, including the origination fee, for 80% loan-to-value ratio (LTV) loans.
For 30-year fixed-rate mortgages with jumbo loan balances (greater than $726,200), the average contract interest rate increased to 6.98% from 6.86%. Points increased slightly to 0.43 from 0.41, including the origination fee, for 80% LTV loans.
The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased to 6.56% from 6.51%. Points decreased slightly to 0.84 from 0.86, including the origination fee, for 80% LTV loans.
For 15-year fixed-rate mortgages, the average contract interest rate increased to 6.41% from 6.26%. Points decreased to 0.55 from 0.73, including the origination fee, for 80% LTV loans.
Lastly, the average contract interest rate for 5/1 adjustable-rate mortgages (ARMs) increased to 6.17% from 5.71%. Points decreased to 0.56 from 0.59, including the origination fee, for 80% LTV loans.
(Source: <a href="https://www.mba.org/news-and-research/newsroom/news/2024/01/10/mortgage-applications-increase-in-latest-mba-weekly-survey" target="_blank">mba.org</a>)2024-01-11T06:12:09-07:002024-01-12T07:10:33-07:00Bluefield Realty Grouptag:bluefieldgroup.com,2012-09-20:18427Inventory Shows Improvement Over Holidays<img src="https://assets.site-static.com/userfiles/767/image/IncreaseInHousingInventory.jpg" width="1792" height="1194" />
Inventory on the Rise and Mortgage Rates Falling
The real estate market in December 2023 showed signs of improvement, with homebuyers witnessing an increase in the number of unsold homes for the first time since May 2023, according to the latest Realtor.com® Monthly Housing Trends Report. This development is expected to have a positive impact on home-selling sentiment, especially as mortgage rates have been on a downward trend since November.
Across the United States, there has been a notable improvement in inventory levels, particularly in the South, where active listings have experienced a significant 7.7% increase year-over-year. Danielle Hale, Chief Economist at Realtor.com®, commented on this trend, stating, "While the uptick in December inventory levels is encouraging, it is important to note that two-thirds of outstanding mortgages in the U.S. have a rate under 4%, and more than 90% have a rate less than 6%."
Hale further expressed optimism about the direction of inventory levels. However, she highlighted that despite these positive changes, the number of homes on the market remains relatively low compared to pre-pandemic levels. Some sellers are already motivated to list their homes, but others may wait for even lower rates before making their move.
Positive Shift in December
December typically sees a slowdown in real estate activity due to the holiday season. However, December 2023 exhibited a more favorable scenario for both buyers and sellers. While active inventory still lags behind pre-pandemic levels by 34.3%, there was a 9.1% increase in newly listed homes compared to the previous year.
Moreover, when comparing the month-over-month change between November and December, which usually witnesses a more substantial inventory decline, this year's decrease was a more modest 5.5%. This suggests a smaller-than-typical drop in inventory for this time of year, indicating increased activity.
Regional Variations in Inventory Growth
Analyzing the 50 largest metropolitan areas, 23 of them saw year-over-year increases in inventory levels. Notable cities with significant growth include Memphis (+28.5%), New Orleans (+25.5%), and San Antonio (+20.9%). While this growth is promising, the nation as a whole still experiences lower inventory levels compared to pre-pandemic times.
Exceptions to this trend include San Antonio (+12.8%), Austin (+11.7%), and New Orleans (+11.6%), which reported higher inventory levels in December 2023 compared to the typical 2017 to 2019 period.
Stabilized Prices and Faster Property Movement
The median price of homes for sale in December remained relatively stable, with a year-over-year growth rate of 1.2%. Notably, a few areas experienced price decreases, including San Jose (-7.1%), San Antonio (-3.9%), and Memphis (-2.5%).
In terms of days on the market, homes are selling faster than in the past. On average, homes spent 61 days on the market in December, which is four days shorter than the same period in 2022 and approximately two weeks shorter than pre-COVID-19 pandemic levels.
(Source: <a href="https://www.prnewswire.com/news-releases/realtorcom-december-housing-report-signs-point-to-increases-in-number-of-home-listings-and-stable-prices-302029036.html" target="_blank">prnewswire.com</a>)2024-01-10T14:50:44-07:002024-01-11T07:26:42-07:00Bluefield Realty Grouptag:bluefieldgroup.com,2012-09-20:18415Homebuyer Sentiment Soars, As Mortgage Rate Expectations Drive Optimism<img src="https://assets.site-static.com/userfiles/767/image/HomebuyerSentimentSoars.jpg" width="1792" height="1194" />
Mortgage Rate Optimism Boosts Homebuyer Sentiment
The latest Fannie Mae Home Purchase Sentiment Index® (HPSI) report for December 2023 brings encouraging news for the real estate market. The HPSI increased by 2.9 points to reach 67.2, primarily fueled by a significant shift in consumers' expectations regarding mortgage rates. Let's dive into the key findings of this report to understand the driving factors behind this recent surge in homebuyer sentiment.
One of the standout findings in the December HPSI report is the notable increase in optimism regarding mortgage rates. A survey-high 31% of consumers participating in the survey expressed their belief that mortgage rates would decrease in the next 12 months. This shift in perception comes on the heels of recent changes in the bond market and a substantial drop in 30-year mortgage rates, from nearly 8% in early November to 6.62% by December.
Mark Palim, Vice President and Deputy Chief Economist at Fannie Mae, emphasized the significance of this shift, saying, "This significant shift in consumer expectations comes on the heels of the recent bond market rally and an already significant downtick in 30-year mortgage rates." Importantly, this optimism extends to homeowners and higher-income groups, with more homeowners believing that mortgage rates will decrease than go up—a historic first according to Fannie Mae's National Housing Survey.
Homebuyer Sentiment Components
The HPSI measures various components of homebuyer sentiment. Here are some key highlights:
Good Time to Buy: The percentage of respondents who believe it is a good time to buy a home increased from 14% to 17%. The percentage of those who think it's a bad time to buy decreased from 85% to 83%. As a result, the net share of those who believe it's a good time to buy increased by 5 percentage points month-over-month.
Good Time to Sell: The percentage of respondents who believe it is a good time to sell a home decreased from 60% to 57%. Conversely, the percentage of those who think it's a bad time to sell increased from 40% to 42%. The net share of those who believe it's a good time to sell decreased by 5 percentage points month-over-month.
Home Price Expectations: The percentage of respondents who expect home prices to rise in the next 12 months decreased from 41% to 39%. Those who expect home prices to go down remained unchanged at 24%, while those who anticipate prices to stay the same increased from 35% to 36%. As a result, the net share of those who expect home prices to rise decreased by 2 percentage points month-over-month.
Mortgage Rate Expectations: The percentage of respondents who anticipate mortgage rates to decrease in the next 12 months increased significantly from 22% to 31%. Those expecting rates to go up decreased from 44% to 31%. The share of those who think mortgage rates will remain the same increased from 34% to 36%. The net share of those anticipating mortgage rate decreases surged by 22 percentage points month-over-month.
Job Loss Concerns: The percentage of respondents who are not concerned about losing their jobs in the next 12 months decreased from 76% to 75%. Those who expressed concerns about job loss increased from 23% to 24%. The net share of those not concerned about job loss decreased by 3 percentage points month-over-month.
Household Income: The percentage of respondents reporting significantly higher household income than a year ago increased from 19% to 20%. Those reporting significantly lower household income increased from 12% to 13%. The net share of those reporting significantly higher household income remained unchanged month-over-month.
Outlook for 2024
Mark Palim also noted that a more optimistic outlook for mortgage rates among consumers could signal an expectation of improved home affordability in 2024. This optimism might encourage some homeowners to list their properties for sale, potentially increasing the supply of existing homes in the market.
However, despite lower mortgage rates, affordability challenges remain due to elevated home prices, particularly for first-time homebuyers. Consequently, the pace of home sales improvement is expected to be modest in 2024.
(Source: <a href="https://www.fanniemae.com/newsroom/fannie-mae-news/consumer-optimism-about-mortgage-rates-jumps-significantly" target="_blank">fanniemae.com</a>)2024-01-09T06:03:46-07:002024-01-11T07:08:35-07:00Bluefield Realty Group