If you have kids – or have ever been one yourself – you know that Halloween is an important time of year. The opportunity to amass large quantities of free candy is irresistible to most kids. Combine that with the chance to dress up in costume and parade through the streets and Halloween becomes one of the year’s most anticipated days. Because of this, Zillow ranks the best cities for trick-or-treating each year. Their rankings are based on home values, the share of population under 10 years old, and single-family home density.
This year, five of the top 10 cities are in California, with San Francisco topping the list. Of course, much of that has to do with higher home values in the West, but kids in Los Angeles, Sacramento, San Jose, and Long Beach can look forward to a happy Halloween this year.
Other cities that made the top 10 included Philadelphia, Baltimore, Washington D.C., Milwaukee, and Seattle. But regardless of where you are, Dr. Svenja Gudell, Zillow’s chief economist, says there’s a surefire way to tell the best local neighborhoods for trick-or-treating. “These are places we think will have plenty of candy and lots of young kids running around from door to door,” Gudell says. “If you don’t live in one of these cities, look for areas that are getting into the Halloween spirit with decorations and lots of costumed kids.”
It’s always good to prepare before you set out to buy a house. But that’s especially true in a tight market. If there are more buyers than homes for sale, there’s naturally also going to be competition. And where there’s competition, buyers need to be ready.
So what can buyers do to make sure they don’t lose the home of their dreams or blow up their budget? Well, the first thing is to set some boundaries. You’ll need to have a firm idea of what you’re willing to spend, so that you don’t get in a bidding war and buy more house than you can comfortably afford. You’ll also need to know where you’re able to compromise. If there aren’t as many homes to choose from, chances are you’re not going to get everything you wanted in a house. Make sure that you’re focused on things that can’t be remedied later. For example, if you don’t like the kitchen cabinets, they can change but you won’t be able to add more outdoor space, if the yard is small.
Buyers in competitive markets should also expect to act fast. You won’t have the luxury of thinking things over once you’ve found a good house. Be prepared to make an offer quickly, as there will likely be other buyers interested in the same property. For this reason, it’s also good to bid competitively. You may want to see if you can get a lower offer accepted but, if you’re trying to beat out other buyers, it’s a better idea to put in an attractive offer than to try and steal a deal. Generally, the more focused and prepared you are, the better your chances will be for successfully navigating a tight market.
New estimates from the U.S. Census Bureau and the Department of Housing and Urban Development show new home sales at an 8-month high in March. Sales were 5.8 percent above February’s rate and 15.6 percent higher than at the same time last year. The March results were the second best reading since 2008 and easily surpassed economists’ expectations. That’s encouraging news for the start of the spring season and could help boost the number of new homes that get built this year. And, at a time when inventory is low, that’s important. As more new homes are built there will be more options available for buyers, which will help balance the market and moderate price increases. That’s why new home construction is a closely watched indicator of the health of the overall housing market. In other words, whether you’re in the market for a new home or not, the new home market will have an affect on your home search. Also in the report, the median sales price of new homes sold in March was $315,000, which is a jump from the month before but only 1.2 percent above one year ago. At the current sales pace, there was a 5.2-month supply of new homes available for sale at the end of the month.
Mortgage rates moved solidly higher last week, but lenders saw no letup in loan demand.
Mortgage application volume rose 4 percent from the previous week. The Mortgage Bankers Association included an adjustment for the Martin Luther King Day holiday. Volume continues to lag last year, however, by 18 percent, mostly due to the falloff in loan refinances since rates shot up after the presidential election.
Refinance volume did move slightly higher again last week, up 0.2 percent seasonally adjusted. It had jumped sharply the previous week, after outgoing HUD Secretary Julian Castro announced a quarter-point drop in the FHA’s annual mortgage insurance premium. By last week, there was already considerable speculation that incoming HUD Secretary Ben Carson would reverse the move, and, in fact, that was one of the first acts of the Trump administration immediately following the inauguration on Friday.
The FHA share of total applications increased to 13.6 percent from 13.1 percent the previous week, but that is likely to fall back next week. Mortgage rates also moved higher, but that didn’t cut into refinance demand.
“While this was the first rate increase in January, rates remain about 10 basis points lower than four weeks ago,” said Lynn Fisher, MBA vice president of research and economics.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($424,000 or less) increased to 4.35 percent from 4.27 percent, with points decreasing to 0.30 from 0.39 (including the origination fee) for 80 percent loan-to-value ratio loans.
Mortgage applications to purchase a home, which were less sensitive to the FHA announcement, rose 6 percent last week compared from the previous week but are just 0.1 percent higher than one year ago. Homebuyers are facing a pitiful supply of homes for sale. Listings dropped again in December, hitting an 18-year low, according to the National Association of Realtors. While more homes will come on the market for the usually busy spring season, demand is far stronger than supply, and well-priced homes are moving quickly.
“Although it is still early in the homebuying season, purchase activity remains on par with a year ago, suggesting that recent wage growth of nearly 3 percent is helping to offset the increase in interest rates. This trend is also consistent with other reports of homebuying activity,” said Fisher.
Mortgage rates have been exceptionally volatile in the last week, taking big jumps up and then back down again on daily news. Home prices, however, are not reversing course. They continue to rise far faster than incomes and inflation. If rates do settle into an upward climb, the combination of the two will inevitably put pressure on home sales.
According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates decreased last week across all loan categories, including 30-year fixed-rate loans with both conforming and jumbo balances, loans backed by the Federal Housing Administration, and 15-year fixed-rate mortgages. Michael Fratantoni, MBA’s chief economist, says the Fed’s decision to leave rates unchanged led to the drop. “Treasury rates fell through the course of last week, as the Fed left their target rate unchanged, and concerns grew again about global growth, particularly in Europe and Japan,” Fratantoni said. “Refinance volume dipped for the week, but purchase application volume continues to show 2016 as a strong year.” Last week, demand for loans to buy homes was up slightly from the week before and 10 percent higher than the same week one year earlier. The size of the average loan was also up, however – which indicates that much of the buying activity remains on the higher end of the market. Refinance activity, on the other hand, was down 2 percent from the previous week, despite declining rates. The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications.
Sales of newly built, single-family homes fell in August after rising to the fastest sales pace in 9 years the month before. The data, released by the U.S. Census Bureau and the Department of Housing and Urban Development, shows new home sales down 7.6 percent month-over-month, though they remain nearly 21 percent higher than last year. But though the monthly decline may seem like a setback, there are a number of encouraging signs in the report for prospective home buyers. For starters, the number of new homes on the market rose nearly 2 percent last month. With inventory low, an increasing number of new homes available for sale is a promising sign, especially when combined with the fact that building permits also rose in August. That may indicate future gains to inventory levels across the country. And, with rising inventory, price increases should begin to moderate. For example, this month’s report shows the median price for a new home fell 5.4 percent from one year ago. In fact, the median sales price of new homes sold in August was $284,000; the average sales price was $353,600. Also in the report, new home sales were down sharply in the Northeast and South. The West saw an 8 percent increase and the Midwest fell 2.4 percent.
The S&P Case-Shiller U.S. National Home Price Index – considered the leading measure of U.S. home prices – has been tracking home values for nearly 30 years. According to their most recent release, national home prices are up 5.1 percent year-over-year, with the biggest price increases seen in the West. David M. Blitzer, managing director and chairman of the index committee at S&P Dow Jones indices, says home prices show no sign of slowing down. “Home prices continued to rise across the country led by the West and the South,” Blitzer said. “In the strongest region, the Pacific Northwest, prices are rising at more than 10 percent; in the slower Northeast, prices are climbing a bit faster than inflation. Nationally, home prices have risen at a consistent 4.8 percent annual pace over the last two years without showing any signs of slowing.” Overall, Blitzer believes the residential real estate market is in good shape, noting improvements in housing starts and home sales. Among individual cities included in the index, Denver, Seattle, and Portland led the way with the biggest year-over-year gains in home values.
Last year, an analysis of 417 counties across the country found 82 of them less affordable than historically normal. The same analysis done this year showed 74 counties exceeding normal levels of affordability. That improvement, however small, is an indication that home prices are increasing at a somewhat slower pace this year. The data – from RealtyTrac’s Q2 2016 Home Affordability Index – looked at the percentage of average wages needed to make monthly mortgage payments on a median priced home with a 30-year fixed-rate loan and a 3 percent down payment. Daren Blomquist, RealtyTrac’s senior vice president, says there is good news to be found in the report. “Although nearly one in five U.S. housing markets was not affordable by historic standards in the second quarter, the good news is that affordability is improving compared to a year ago in the majority of markets thanks to a combination of slowing home price appreciation and accelerating wage growth, along with falling interest rates,” Blomquist said. “The average interest rate on a 30-year fixed-rate mortgage is down 37 basis points from a year ago, while annual wage growth accelerated compared to a year ago in 72 percent of the markets we analyzed and home price growth slowed compared to a year ago in 68 percent of the markets, including bellwether markets such as Los Angeles County, Miami-Dade County, Brooklyn, Dallas County, and San Francisco County.”
When shopping for a house to buy, most prospective buyers will make a list of features they’d like – whether it’s an open floor plan or a place for entertaining. They will also, most likely, have a list of things they’d like to avoid. But despite all the careful thought and consideration they may’ve put into finding the perfect home, once they’ve settled in there will inevitably be a few things they never knew they needed and some issues they hadn’t even thought of during the house hunt. Because of this, it can be helpful for home shoppers to get a feel for what current homeowners most dislike about their home and neighborhood. Fortunately, a recent survey conducted by HSH.com polled Americans and asked them what most upsets them about their current living arrangement. Not surprisingly, when it comes to the home itself, the number one complaint was a lack of storage. Too much maintenance, insects, wildlife, and being too old, not updated, and small were all among the top complaints. Among the more unexpected responses, 25 percent named water pressure as a problem, while 30 percent said lack of parking. When it comes to the neighborhood and their neighbors, there are few things that don’t ruffle feathers. Noisy, messy neighbors who are unfriendly are an issue for most Americans. Participants also complained about too many teenagers, too much traffic, and their neighbors’ vehicles, pets, and kids.
Buying a home requires a little forethought. It is, after all, the largest purchase most people will ever make. So thinking things through before taking the plunge is always a good idea. But what issues weigh most heavily on the minds of potential home buyers? According to a recently released survey, today’s buyers are most concerned about rising home prices. In fact, nearly 27 percent of respondents named affordability their biggest concern – with too much competition from other buyers running a distant second at 17 percent. The results highlight a change from last year. Although prices, competition, and inventory retain their hold on the top three positions, rising mortgage rates have fallen from the top five and were named by just 5 percent of participants. Still, despite fewer worries about a spike in mortgage rates, a growing number of home buyers have legitimate concerns about price increases, especially first-time home buyers. Among first-time buyers, 31 percent named prices their top concern. On the other hand, some issues that may have ranked higher in the past appear to have receded from buyers’ minds. For example, worries about the economy and job security, difficulty getting a loan, and confusion about the buying process were each named by just 3 percent of prospective buyers.
Rande Turner Properties
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