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Mortgage Rates Descend to Year Low

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Mortgage rates descended to a new year low with the 30-year, fixed rate averaging 3.82 percent, down from 3.86 percent the week prior, according to Freddie Mac’s recently released Primary Mortgage Market Survey® (PMMS®). The 15-year, fixed rate averaged 3.12 percent, down from 3.16 percent the week prior, while the 5-year, Treasury-indexed hybrid adjustable rate averaged 3.14 percent, down from 3.17 percent the week prior.

“The 10-year Treasury yield fell to a new 2017-low [this week],” says Sean Becketti, chief economist at Freddie Mac. “In response, the 30-year mortgage rate dropped four basis points to 3.82 percent, reaching a new year-to-date low for the second consecutive week. However, recent releases of positive economic data could halt the downward trend of mortgage rates.”

Source: Freddie Mac

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Study: FSBOs Net ‘Significantly’ Lower Profits

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For-sale-by-owners tend to sell their homes for lower prices than homes sold through traditional agents via the MLS, and in many cases below the average differential represented by the prevailing commission rate, according to a new study by Collateral Analytics.

The study examined the price differences between homes sold through traditional agents versus those sold by FSBOs from 2016 to the first half of 2017.

Some homeowners may be tempted to try to avoid commission costs to a broker and try to sell the home on their own. But that can backfire and turn into a much lower sales price, the study found.

Even successful FSBO sellers achieve prices “significantly below” those from similar properties sold more traditionally via REALTORS®, the study found.

The authors found that the differential in selling prices for FSBOs when compared to MLS sales is “remarkably close to average commission rates.” A FSBO sale, on average, nets nearly a 6 percent lower price than an MLS sale for a similar property.

“Assuming that both buyers and sellers pay the commission, one might have expected something less than this average,” the researchers note. “It appears that many sellers are avoiding commissions while netting home prices less than they would with an agent-represented MLS sale. They are avoiding commissions at any price, even one that exceeds a commission rate.”

Source: “Saving Real Estate Commissions at Any Price,” Collateral Analytics Research (Aug. 16, 2017)

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Home Prices Surge on Strong Buying Season

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Home prices continue on at a clip, surging 6.2 percent in the second quarter of 2017, according to the latest quarterly report by the National Association of REALTORS® (NAR). The pace outdoes the previous peak observed in the third quarter of 2016.

“The 2.2 million net new jobs created over the past year generated significant interest in purchasing a home in what was an extremely competitive spring buying season,” says Lawrence Yun, chief economist at NAR. “Listings typically flew off the market in under a month—and even quicker in the affordable price range—in several parts of the country. With new supply not even coming close to keeping pace, price appreciation remained swift in most markets.”

Single-family home prices went up in 87 percent of the markets assessed in the report, or 154 of 178 metropolitan statistical areas (MSAs). Thirteen percent of, or 23, metro areas saw prices up by double digits. At the national level, the median existing single-family home price was $255,600, and the median existing condominium price was $239,500.

Home prices in the West grew at the highest year-over-year rate, 7.5 percent to a median existing single-family value of $372,400, according to the report. Prices in the South followed at 6.7 percent to a median $229,400, while prices in the Midwest were up 6.6 percent to a median $204,000. Prices in the Northeast grew at the lowest year-over-year rate, 3.2 percent to a median $282,300.

Affordability, again, shrunk in the second quarter. A home buyer with a 5 percent down payment would need an income of $56,169 to afford a single-family home priced at the national median. A home buyer with a 10 percent down payment would need an income of $53,213, and a home buyer with a 20 percent down payment would need an income of $47,300.

“The glaring need for more new-home construction is creating an affordability crisis that needs to be addressed by policy officials and local governments,” Yun says. “An increasing share of would-be buyers are being priced out of the market and are unable to experience the wealth-building benefits of home ownership.”

The most expensive metro areas by median existing single-family price in the second quarter were San Jose, Calif. ($1,183,400); San Francisco, Calif. ($950,000); Anaheim-Santa Ana, Calif. ($788,000); Honolulu, Hawaii ($760,600); and San Diego, Calif. ($605,000). The least expensive metro areas were Youngstown-Warren-Boardman, Ohio ($87,000); Cumberland, Md. ($98,200); Decatur, Ill. ($107,400); Binghamton, N.Y. ($109,000); and Elmira, N.Y. ($111,600).

Existing-home sales, including condos, fell 0.9 percent to 5.57 million in the second quarter, according to the report. Existing homes available for sale were down 7.1 percent year-over-year to 1.96 million at the end of the quarter, with an average supply of 4.6 months.

“Mortgage rates have subsided in recent months, which has only somewhat helped take away some of the sting prospective buyers are experiencing with the deteriorating affordability conditions in many areas,” says Yun. “Household incomes may be rising and giving consumers assurance that now is a good time to buy, but these severe inventory shortages will likely continue to be a drag on sales potential the second half of the year.”

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Americans Think Buying a Home Is a Good Financial Decision Says 2017 Survey

NAR’s twelfth Housing Pulse Survey shows a vast majority of Americans believe that buying a home is a solid financial decision, and most believe that homeownership helps create safe, secure, and stable environments.

The survey, which measures consumers’ attitudes and concerns about housing issues, found that building equity and preparing for retirement are the top financial reasons for buying a home. Yet six in 10 say that they are concerned about the cost to buy a home or high rent prices in their area.

The telephone survey of 1,500 adults nationwide in the 25 most populous metropolitan statistical areas was conducted for NAR by American Strategies and Myers Research & Strategic Services for NAR”s Housing Opportunity Program.

Some key findings from the year’s survey include:

  • Americans overwhelmingly believe that buying a home is a good financial decision; 84 percent hold that view.
  • Nationally, 44 percent categorize the lack of available housing that is affordable as a very big or fairly big problem.
  • Family and friends, REALTORS®, and banks top list of trusted sources when it comes to buying a home or property.

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Homeowners Continue to Overestimate Value, Except in Hot Markets

Homeowners continue to overestimate the value of their homes, except in hot markets, according to the latest Quicken Loans’ HPPI.

Appraised home values came in 1.55 percent below what homeowners expected in July, according to the latest Quicken Loans’ National Home Price Perception Index (HPPI). The latest Quicken Loans National Home Value Index (HVI) shows appraised values rose 4.21 percent year-over-year.

“The home appraisal is one of the most important data points in the mortgage process,” says Bill Banfield, executive vice president of Capital Markets at Quicken Loans. “It determines the level of equity the homeowner has and, if the owner’s estimate is too far from how the appraiser views the property, it can cause the mortgage to be restructured. Our hope is that this Index is eye-opening for homeowners. Their home equity could be thousands of dollars higher, or lower, than they realize. If they are aware of the perceived trends in their area it could help them better prepare for their home purchase or refinance.”

A summary of the HPPI:
The HPPI shows appraisers’ opinions fell short of homeowners’ expectations by 1.55 percent in July. This shows a narrowing gap, as homeowner estimates in June were 1.70 percent lower than appraised values. HPPI tracks differing trends across the country, as real estate often fluctuates on a local basis. On average, appraisals were higher than owner expectations—the inverse of the national trend—in some of the fastest-growing housing markets, including Dallas and Denver. However, some metro areas in the Northeast and the Midwest regions reported appraised values lower than owner estimates at a higher rate than the national trend.

A summary of the HVI:
The National HVI, based solely on appraisal data, reported home values rose an average of 0.33 percent in July. The positive momentum was even more substantial for the annual measure, showing a 4.21 percent increase year-over-year. All of the areas measured also reported annual home value growth—ranging from a 2.65 percent annual increase in the Northeast to a 5.64 percent annual rise in value in the West.

“The regional differences in home value growth mirror the perception difference across the country,” Banfield says. “Areas with slower growth were more likely to have owners overestimating their home value, and areas with much stronger growth had higher appraisals than owners realized they would be. With home values constantly changing, and the rates of change varying across the country, this is one more way to show how important it is for homeowners to stay aware of their local housing market.”

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Home Builder Confidence in Boomer Market Leaps Forward

Home builder confidence in the single-family 55-plus housing market took a leap forward in the second quarter of 2017, according to the National Association of Home Builders’ (NAHB) recently released 55+ Housing Market Index (HMI). The Index reading for the second quarter was 66, up a solid 11 points from the first quarter. An above-50 reading indicates more builders have a positive outlook than a negative one.

“Demand for 55-plus housing continues to grow, and this quarter’s Index is a reflection of that,” said Dennis Cunningham, chairman of NAHB’s 55+ Housing Industry Council, in a statement. “Consumers in this market want a home that addresses their specific needs, and 55-plus builders and developers are able to create homes and communities that cater to these needs.”

Home builders’ expectations regarding present and expected single-family home sales in the 55-plus market both rose in the second quarter, up to 70 and 80, in order, while expected home buyer traffic rose 19 points to 53—an Index high.

“We are seeing strong demand in the 55-plus housing sector due to favorable market conditions, such as record highs in the stock market and rising home prices,” said Robert Dietz, chief economist at NAHB. “This quarter’s reading is in line with our forecast, as we expect to see continued gradual gains in 2017.”

Source: National Association of Home Builders (NAHB)


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New-Home Sales Improve Slightly in June


New-home sales improved in June, with sales of new, single-family homes eking up 0.8 percent to 610,000, according to the U.S. Census Bureau and the Department of Housing and Urban Development (HUD). The average new-home sales price was $379,500, while the median was $310,800. New-home listing inventory was 272,000—5.4 months supply.

“Although we saw modest gains this month, new-home sales have risen nearly 11 percent since the start of 2017,” said Granger MacDonald, chairman of the National Association of Home Builders (NAHB), in an NAHB Now update. “Our members remain optimistic as the single-family housing market continues to recover.”

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