Real Estate Market Update

For the first time since at least World War II, mortgage rates and the unemployment rate are below 4-percent. As a result, some economists are predicting home prices will increase at a faster pace over the next 12 months than they have in 2019.

Corelogic says home prices will likely increase by 5.8% through August 2020. That’s a faster pace than the 3.8% seen in August of this year.

First-time homebuyers, Generation Z homebuyers and single female homebuyers are taking full advantage of this fifty-year low…

46-percent of all loans Freddie Mac has purchased this year came from first-time homebuyers, while there has been a 200% and 500% increase in Gen Z and single female homebuyers, respectively.

* Labor Costs Likely to Push Home Prices Higher. In an article in CoreLogic’s Insights blog, Nothaft quotes National Association of Home Builder (NAHB) figures that say about 60 percent of a new home’s sales price reflects the construction costs of the home. The major components of building costs are those associated with purchasing and preparing a lot, acquiring permits and inspections, hiring labor and buying materials. There was a significant price run-up in the two major components of framing, lumber and steel. Labor costs are another matter. Much has been written about the shortage of construction labor. Many workers left the trades during the Great Recession and the industry has had trouble luring young people and especially young women into the field. Vacancies as a percent of construction job are now at the highest level in 18 years and compensation has risen accordingly. It is up 3 percent this year, about double the rate of inflation. Worker retention is an issue as well. Nothaft says rising land and labor costs will probably offset any savings builders might realize from lower lumber prices and overall costs for a new home will continue to rise.

Full Story… http://www.mortgagenewsdaily.com/10092019_residential_construction.asp

* Mortgage Rates Drop Again – And First-Time Homebuyers Take Full Advantage. Mortgage rates dropped again, and according to Freddie Mac, the downward spiral has first-time buyers gaining ground. In fact, of all the loans Freddie Mac has purchased in 2019, 46% came from first-time homebuyers – a two-decade high for the company. According to representatives at online mortgage provider Better.com, the lender has seen a “huge uptick” in first-time homebuyers as well. There’s also been a 200% increase in Generation Z homebuyers (born 1997-2012) and a 500% increase in single female homebuyers aged 30-40. As Sam Khater, Freddie Mac’s chief economist, reported yesterday, “The fifty-year low in the unemployment rate, combined with low mortgage rates, has led to increased homebuyer demand this year. Much of this strength is coming from entry-level buyers.”  

Full Story…  https://www.forbes.com/sites/alyyale/2019/10/11/mortgage-rates-drop-againand-first-time-homebuyers-take-full-advantage/#4691dbabeb0d

Where Have All the Affordable Homes Gone? Housing affordability has been a growing concern in the housing ecosystem, but why is it such a problem? While home prices have been steadily rising for many years, Nothaft observed, “We find that lower-priced homes have appreciated much, much more than higher-priced homes.” Since May 2018, prices of homes more than 25% above the median have risen 3%, while homes in the lowest tier, those more than 25% below the median, have risen almost 5.5%.  As demand rises on affordable homes, the supply has become increasingly constrained. Nothaft noted, “New construction, while picking up gradually over the last few years, is still well below what it was prior to the housing boom.” The current inventory for homes is tightest in the lowest price tiers, particularly in those between 50 and 100 percent of the median home price. On the affordable housing shortage, Nothaft concluded, “I don’t see that changing any time soon unless we find ways to reduce the cost of producing or delivering lower-priced homes into the marketplace and reducing some of the regulatory costs.” In the meantime, with demand rising on an increasingly scarce product, we can expect prices to continue rising on affordable homes for the foreseeable future.

Full Story…  https://www.corelogic.com/blog/2019/10/where-have-all-the-affordable-homes-gone.aspx

AimeeHartwigRealEstate.com
541-579-9213

Easy Home Staging Tips

For most of us, our home is the biggest investment we will ever make. When it comes time to sell, treating your home as such will help you get a bigger return on your investment. You want it to look it’s very best when potential buyers come through or view your photos online. First impressions matter, which is where home staging comes in. Home staging emphasizes its strengths and minimizes its weaknesses. This is important for your marketing photos and when potential buyers are trying to visualize a life there.

Here are a few tips to help you get your home ready to sell.

Declutter

One of the first things you want to do is declutter. Clutter takes up space and space is what sells. Make your home look bigger and more desirable by editing down to just the basics.

De-personalize

De-personalizing goes hand-in-hand with decluttering. You want potential buyers to be able to picture their things in the house. Go room-to-room and clear off the countertops, desk tops and shelves of all personal items. This includes your family photos. In this case, less is always more.

Clean

Cleaning goes a long way to improve the look and feel of your investment. A deep clean before you list the home is a good idea, but then set aside time each week to give the floors and bathrooms a once over.

Spackle and Paint

Now that your home is decluttered, de-personalized and clean, it’s a good time to spackle and paint. Filling in the holes and applying a fresh coat of paint will freshen the look of the house. Using lighter colors like white or beige will make the room feel bigger.

The National Association of REALTORS took a look at the value staging a home brings to the selling process, the return on investment or ROI. Here is what it determined.

  • 83% of buyers’ agents say that staging makes it easier for buyers to visualize the property as their future home.
  • 44% of buyers’ agents say that staging a home increases the dollar value offered
  • 53% of sellers’ agents say that staging a home decreases the amount of time a home spends on the market
  • 95% of agents recommend that sellers declutter their home before putting it on the market.

When it comes to the return on investment, a staged home will sell faster and for more money than a non-staged home. The results of a recent Coldwell Banker survey show staged homes sell for more than 6% above the asking price. For a $200,000 listing, that’s $12,000 extra in the seller’s pockets.

AimeeHartwigRealEstate.com / 541-579-9213 / aimeehartwig@bhhsrep.com

This Week in Real Estate

photo credit: housingwire.com

September 10th, 2019

Mortgage Rates May Tumble to Record 3.3% by 2019’s End. Fixed mortgage rates could fall to 3.3% by the end of the year as the nation’s economy slows, according to Lawrence Yun, chief economist of the National Association of Realtors. That would put the rate just a smidge below the 3.31% seen in November of  2012 – the lowest average for a 30-year fixed mortgage in Freddie Mac data going back to 1971. “But lower rates may not help with affordability because home prices are re-accelerating higher, easily above the latest wage growth. Housing inventory has recently stopped rising, putting upward pressure on home prices of moderately priced homes,” Yun said. “But there is still a time to get the economy into a higher gear with increased home building of affordable homes and lessening trade tensions.”

Full Story… https://www.housingwire.com/articles/50102-nars-yun-mortgage-rates-may-tumble-to-record-33-by-2019s-end

A Smaller Share of Prospective Buyers is Actively Looking For a Home. A national poll in the second quarter of 2019 revealed that 12% of adults are thinking about buying a home in the next 12 months. Of that group, 41% are already actively engaged in the process of finding a home to purchase, which is a smaller share than a year earlier, when 50% of prospective buyers were engaged in the search process. This finding suggests that the lower mortgage rate environment of 2019 has not had the expected effect of nudging more people to start looking for a home to buy. Across generations, about 40% of Millennials, Gen X’ers, and Boomer buyers have moved beyond just planning and begun the home search, compared to only 21% of Senior buyers. Geographically, prospective buyers in the Northeast are the most likely to be actively looking for a home (47%), followed by those in the West (43%), and those in the Midwest and South (both 39%). How long are buyers who are actively engaged in the search process hunting for a home? In the second quarter of 2019, 45% had been at it for less than 3 months while the other 55% had been trying to find the right home for 3 months or longer. Those shares were essentially unchanged from a year earlier, when they stood at 46% and 54%, respectively.

Full Story… http://eyeonhousing.org/2019/09/a-smaller-share-of-prospective-buyers-is-actively-looking-for-a-home/

Residential Construction Spending Drops Further Off 2018 Pace. Construction spending inched up by 0.1 percent in July, to a seasonally adjusted annual rate of $1.289 trillion compared to $1.288 trillion in June. The July figure is 2.7 percent lower than the rate of spending in July 2018. On an unadjusted basis, spending for the month was $119.214 billion and for the year-to-date (YTD) stands at $733.782 billion, down 2.1 percent from the $749.888 billion spent during the first seven months of 2018. Private sector spending on residential spending was at an annual rate of $506.743 billion compared to $503.515 billion in June, an increase of 0.6 percent but down 6.6 percent from the prior July. Single family construction was at a rate of $268.138 billion a 1.4 percent month-over-month gain but a decrease of 8.5 percent on an annual basis. For the YTD, total residential spending has totaled $289.891 billion, $150.219 billion of it on single-family houses. During the same period in 2018 the respective totals were $316.929 billion and $164.529 billion. These represent declines of 8.5 and 8.7 percent. 

Full Story… http://www.mortgagenewsdaily.com/09042019_construction_spending.asp

aimeehartwigrealestate.com / 541-579-9213 / aimeehartwig@bhhsrep.com