5 top motivators for buying now

CHICAGO – Oct. 2, 2015 – What are the main drivers in today’s home-buying decisions? Realtor.com surveyed recent house hunters through the BDX Home Shopper Insights Panel. According to the survey, here are the top reasons buyers identified as triggers to their decision to consider purchasing a home:

1. “I’m tired of my house”
That was the top reason identified, cited by 28 percent of the house hunters panel. The average time in a home has risen since the last recession as more owners found themselves underwater and faced price declines from 2007 to 2011. “After four years of above-average price appreciation, confidence in the market has returned,” notes Jonathan Smoke, realtor.com’s chief economist.

2. Interest rates are attractive
Interest rates were the second trigger buyers identified – 27 percent of shoppers listed it as a reason to act now. The average 30-year fixed-rate mortgage reached a low in January at 3.63 percent and continues to average under 4 percent. Last week, Freddie Mac reported the 30-year fixed-rate mortgage averaged 3.86 percent. That’s a big discount compared to the average monthly 30-year fixed conforming rate since 1971, which was 8.39 percent. “Compared to that, interest rates will certainly remain favorable for many months ahead,” Smoke says.

3. Home prices are favorable
In a 2012 realtor.com survey, 47 percent of active home shoppers cited favorable home prices as the top trigger for buying. That price motivation has been decreasing, but it still remains one of the top triggers. Today, just 26 percent of home shoppers cite favorable home prices as a reason for buying. In June, the U.S. surpassed its 2006 peak as home prices zoomed to a record high, but on an inflation-adjusted basis, home prices today are still about 20 percent beneath the peak at the height of the housing bubble, Smoke adds.

4. “I’ve got more money to spend”
Twenty-four percent of active homebuyers say an increase in income is their primary trigger for buying a home now. The 25- to 34-year-olds surveyed cited having more money to spend as the No. 1 motivator in buying. It was cited by 35 percent of the “older” millennials, Smoke says.

5. A change in family circumstances
Eighteen percent of homebuyers said a change in family circumstance or composition was their main reason for buying. More people are expanding their families: Births rose last year and are expected to grow again this year as well.

Source: “Here’s What Pushes People to Buy Homes in 2015,” realtor.com® (Oct. 1, 2015)

© Copyright 2015 INFORMATION, INC. Bethesda, MD (301) 215-4688

Average rate on 30-year mortgage eases to 3.85%

WASHINGTON (AP) – Oct. 2, 2015 – Average long-term U.S. mortgage rates eased slightly this week, continuing at low levels that could entice potential homebuyers.

Mortgage giant Freddie Mac said Thursday the average rate on a 30-year fixed-rate mortgage declined to 3.85 percent from 3.86 percent a week earlier. The rate on 15-year fixed-rate mortgages ticked down to 3.07 percent from 3.08 percent.

Rates have stayed below 4 percent for 10 straight weeks.

The Federal Reserve announced Sept. 17 its decision to keep interest rates at record lows for now. A rate hike by the Fed could bring higher rates for home loans. The Fed has kept the federal funds rate near zero since the financial crisis struck in 2008.

Despite the low mortgage rates, fewer Americans signed contracts to buy homes in August, as pending sales slumped amid broader concerns about the U.S. stock market and global economy.

Signed contracts to purchase homes have climbed a healthy 6.1 percent over the past 12 months, aided by steady job growth and low loan rates.

The August data issued Monday by the National Association of Realtors indicate that home sales lack the stamina to keep accelerating. Uncertainty in the financial markets and rising prices for homes are stirring doubts about affordability for many would-be buyers.

To calculate average mortgage rates, Freddie Mac surveys lenders across the country at the beginning of each week. The average doesn’t include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.

The average fee for a 30-year mortgage fell to 0.6 point from 0.7 point last week. The fee for a 15-year loan increased to 0.7 point from 0.6 point.

The average rate on five-year adjustable-rate mortgages was unchanged at 2.91 percent; the fee declined to 0.4 point from 0.5 point. The average rate on one-year ARMs was unchanged at 2.53 percent; the fee remained at 0.2 point.

AP Logo Copyright © 2015 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Florida – Foreclosures Drop to 40%

RealtyTrac: IRVINE, Calif. – Sept. 17, 2015 – The latest U.S. Foreclosure Market Report from RealtyTrac finds a 33 percent drop in foreclosure activity in Florida. While the state still has inventory to work through the system, an increase in bank takeovers and a drop in new homes entering the foreclosure process bumped the state from its No. 1 position for foreclosures to the No. 4 spot. Florida’s foreclosure rate dropped out of the top three for the first time since June 2012 thanks in part to a 33 percent year-over-year decrease in foreclosure activity in August to the lowest level since April 2007.  Nationwide, foreclosure starts dropped to its lowest level since November 2005. In Florida, the number of new homes entering the foreclosure process declined 40 percent year-to-year. While 29 other states also saw a decline, it was less significant, including California (down 29 percent from year ago), New Jersey (down 38 percent), Texas (down 17 percent) and Maryland (down 26 percent).  Bank repossessions – which take homes out of the foreclosure process – increased from a year ago in 36 states, including Florida, where they rose 23 percent. However, bank takeovers occurred in greater percentages in other states, including California (up 31 percent), Texas (up 168 percent), Ohio (up 35 percent) and New Jersey (up 295 percent). A few Florida cities led the nation in a decline in overall August foreclosure activity. Miami topped the list of major markets with a 37 percent decline, followed by San Francisco (down 35 percent), Atlanta (down 28 percent), Tampa-St. Petersburg (down 23 percent) and San Diego (down 21 percent).

“We saw a small increase in REOs,” says Mike Pappas, CEO and president of the Keyes Company covering the South Florida market. “The market is easily absorbing them at higher prices, and we are cleaning out the remnants from our ponderous judicial system.”

Pappas says the “decline in new (foreclosure) filings indicates bright skies ahead.”

As a percentage of all homes with a mortgage, Florida metro areas still landed in seven of the top 10 national spots. Two New Jersey cities, Atlantic City and Trenton, topped the list, followed by Deltona-Daytona Beach-Ormond Beach (one in every 418 housing units with a foreclosure filing), Ocala (one in every 445 housing units), Jacksonville (one in every 462 housing units), Tampa-St. Petersburg (one in every 527 housing units) and Pensacola at No. 7 (one in every 541 housing units).

Rockford, Illinois, Las Vegas and Fayetteville, North Carolina rounded out the metro area top 10.

© 2015 Florida Realtors®

Miami Properties For Sale: Fed delays interest rate hike!

Fed delays interest rate hike

WASHINGTON (AP) – Sept. 17, 2015 – Federal Reserve policymakers have slightly lowered their projections for growth and inflation in the next two years, an outlook that likely factored into their decision to hold off on raising interest rates.

The Fed also reduced its estimate for long-run unemployment to 4.9 percent from 5 percent. This suggests that it is willing to wait for unemployment to fall further before cutting rates. Unemployment stands at 5.1 percent.

And Fed policymakers now see just one rate hike likely to take place this year, down from two in their previous forecast, issued in June.

The Fed now expects that its preferred measure of inflation will rise only 0.4 percent this year, down from 0.7 percent in June. Both are far from the Fed’s target of 2 percent.

AP Logo Copyright © 2015 The Associated Press, Christopher S. Rugaber. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

More buyers turning to Realtors for home advice

WASHINGTON – Sept. 17, 2015 – More consumers use the Internet during their home search, but buyers also increasingly rely on the knowledge and expertise of a real estate agent, according to the National Association of Realtors®‘ (NAR) Real Estate in a Digital Age report.

“Research proves (that consumers) are still seeing the value a Realtor brings to the transaction, from the initial search to well after the closing,” says NAR President Chris Polychron. “So while consumers have more technological tools available at their fingertips, Realtors are now more than ever a part of the home buying and selling equation.”

The report found that “finding the right property” ranked as the most difficult step in the home buying process, and 40 percent buyers looked for properties online as their first step in the home buying process, up from 36 percent in 2010.

However, 88 percent of buyers in 2014 purchased their home with assistance from a real estate agent, up from 83 percent in 2010.

Buyer ages
While 94 percent of millennials and 84 percent of baby boomers used online websites during their home search, only 65 percent of adults age 69 to 89 years did the same. Older boomers, those aged 60 to 68 years, used a mobile device to search for properties at less than half the rate of millennials (30 percent versus 66 percent).

Online features
When it comes to website listing features, photos and online property information were more important to millennials, while virtual tours and direct contact with a real estate agent were more important to baby boomers. Despite visual content growing in popularity and importance, older homebuyers found virtual tours more useful than younger buyers (45 percent among older adults and baby boomers compared to 36 percent among millennials).

Length of the home search
Internet users tended to look at more homes and shop longer than non-Internet users. Millennials typically looked for about 11 weeks to find a home, while baby boomers and members of the Silent Generation (adults older than 69) searched for eight weeks. Those who used the Internet to search homes looked at 10 homes over a 10-week period versus four homes in four weeks for those not looking on the web.

Where buyers found their future home
Forty-three percent of buyers first found the home they ended up purchasing on the web; that number was just 8 percent in 2001. In 2001, nearly half (48 percent) of buyers found the home they purchased from a real estate agent; today that number is 33 percent.

Realtor tech communication
Realtors prefer to communicate with clients via email (at 93 percent) as well as text messages (85 percent) and instant messaging (31 percent).

Social networking
Social media is also popular with Realtors, though 70 percent of female Realtors are active on social media compared to only 58 percent of male Realtors. Some social media platforms are more popular than others among Realtors: Facebook and LinkedIn are most utilized by Realtors at 80 percent and 71 percent, respectively. Realtors active on social media do so for visibility/exposure/marketing (81 percent), building relationships and networking (66 percent), advertising (59 percent) and promoting listings (51 percent).

Realtors must adapt to technology to better work with and understand clients, but it’s not always easy: 46 percent of all real estate firms cite keeping up with technology as one of the biggest challenges they face over the next two years. That number is even higher for commercial real estate firms at 53 percent.

© 2015 Florida Realtors®

Will stock market flop hit luxury home sales?

NEW YORK – Sept. 14, 2015 – Observers worry that recent stock market negativity could affect America’s upscale housing market. They believe real estate investors will simply take a wait-and-see approach to ensure it is just a temporary correction – but if the slump is prolonged, luxury homes sales will likely slow.

A stock market flop “has two different levels,” explains National Association of Realtors® (NAR) director of housing statistics Danielle Hale. She says some prospective buyers will “leave their current investments alone and avoid any new investments,” while others “look to real estate as relatively less volatile than stocks, so they might increase their investments in real estate.”

Hale believes the “decent buying momentum this summer” will continue due to economic and job market improvements. She says sales in the $1 million-plus segment “have been doing quite well.”

How much money foreign investors are willing to spend will determine whether current growth rates are sustainable, especially since foreign buyers accounted for 4 percent of resales and 8 percent of total dollar volume during the year-over-year period ended in March, according to NAR.

China’s stock market woes could also impact Chinese investment in U.S. real estate, FNB Securities analyst Joel Locker says.

“You might go buy a second home in New York or Los Angeles when the stock market is going good because you have more discretionary income to spend,” says Locker. “When the market falls, that same amount of discretionary income isn’t there anymore.”

Source: Investor’s Business Daily (09/11/15) P. A10; Cariaga, Vance

© Copyright 2015 INFORMATION, INC. Bethesda, MD (301) 215-4688

Are lenders cherry-picking higher FICO scores?

NEW YORK – Sept. 14, 2015 – Some lenders might be playing a numbers game with consumers, claiming they’re open to lending home loans to people with lower credit scores but actually approving applicants with higher scores, on average, than they did a year ago or even early 2015.

The Mortgage Bankers Association recently reported that conditions for applicants have improved for “eight of the last nine months,” including for loans where borrowers have “lower credit scores.”

However, Ellie Mae Inc. data finds that average FICO credit scores on non-government and government-backed mortgages for homes have been increasing – not decreasing – since the first of this year. FICO scores range from 300, the highest risk of default, to 850, the lowest risk.

Back in January, Ellie Mae’s research found that the average FICO credit score for applicants who closed on non-government home mortgages was 752. But it climbed steadily to 757 in July, the most recent month surveyed – a higher average than during any month in 2014. Federal Housing Administration (FHA) loans show a similar pattern, with VA loan scores also up in July on average compared with January.

The question then becomes: “Are lenders cherry-picking when it comes time to approve applications, or are other factors at work?

Mortgage Bankers Association Chief Economist Mike Fratantoni says that part of the conflict between the credit availability report and Ellie Mae’s statistics can be traced to the fact that they are measuring different things. The MBA study examines what terms lenders are offering – terms that have definitely loosened up over the last year. By comparison, the Ellie Mae report focuses on the end result of actual applications.

“Some borrowers may have acceptable credit scores but negative issues elsewhere in their applications,” real estate writer Ken Harney concludes.

Source: Hartford Courant (Connecticut) (09/11/15) Harney, Ken

© Copyright 2015 INFORMATION, INC. Bethesda, MD (301) 215-4688