Weekly Real Estate Market Update

According to the Federal Reserve’s Flow of Funds report released This Week in Real Estate the value of U.S. owner-occupied homes increased to a record of $29.2 trillion in the third quarter of 2019. Home values rise as mortgage rates remain low. Fannie Mae believes the average fixed rate in 2020 will probably be 3.6% and if so, will be the lowest annual average ever recorded in Freddie Mac records going back to 1973. Below are a few highlights from the first full week of 2020…

U.S. Home Values Rise to Record $29.2 Trillion, Fed Says. The value of all U.S. owner-occupied homes increased to a record $29.2 trillion in the third quarter, according to a Federal Reserve report known as the Flow of Funds. That was a gain of 4.2% from a year earlier, the slowest annualized increase since 2012. The collective value of U.S. homes is now 21% higher than the bubble peak reached in 2006. The Fed’s tally of home values for all U.S. residential real estate, whether occupied by homeowners or not, was $32.9 trillion, the report said.

Full Story…  https://www.housingwire.com/articles/u-s-home-values-rise-to-record-fed-says/

* U.S. Mortgage Debt Hits a Record $15.8 Trillion. Outstanding U.S. mortgage debt rose to $15.8 trillion in the third quarter of 2019, according to the Federal Reserve. The biggest chunk of debt was held on homes, at $11.1 trillion, followed by commercial, with $3 trillion of loans, multifamily at $1.6 trillion and farms at $254.1 billion, according to the Fed data. Mortgage debt is rising as U.S. real estate values gain. Low mortgage rates boost real estate prices, and hence the volume of loans, because cheaper financing means buyers qualify for higher-balance mortgages and can bid more for properties they want. The average fixed rate probably will be 3.6% in 2020, which would be the lowest annual average ever recorded in Freddie Mac records going back to 1973.

Full Story…  https://www.housingwire.com/articles/u-s-mortgage-debt-hits-a-record-15-8-trillion/

* Homebuying Sentiment Up Sharply From 2018. Fannie Mae’s Home Purchase Sentiment Index (HPSI) finished out the year with little change from November to December, but with a strong increase over the December 2018 version. “The continued strength in the HPSI attests to the intention among consumers to purchase homes. This is consistent with the Fannie Mae forecast for 2020,” said Doug Duncan, Senior Vice President and Chief Economist. “The HPSI hit and remained near an all-time high in 2019, driven by the 16-percentage point year-over-year increase in the share of consumers believing it is a good time to buy. The HPSI’s strength supports our prediction of a healthy housing market in 2020, as well as consumers’ appetite and ability to absorb the expected increase in entry-level inventory.”

Full Story… http://www.mortgagenewsdaily.com/01072020_national_housing_survey.asp

Going out of Town?

You may want to add THIS to your pre-travel checklist to keep your home protected.

When you head out of town on vacation, you probably take several steps to make sure your home isn’t broken into while you’re away, from leaving lights on to pausing your newspaper delivery.

But did you know that your home is at a greater risk of damage from water leaks than fire and theft when you’re away? According to property and casualty insurance company Chubb, the time between when a leak occurs and when it is discovered is the single greatest factor in determining the amount of damage, making leaks that occur while you’re away much more damaging in terms of both cost and severity.

The time between when a leak occurs and when it is discovered is the single greatest factor in determining the amount of damage.

Chubb, Insurance Company

In the past 10 years, the frequency of sudden pipe bursts has nearly doubled. In 2015, water damage accounted for nearly half of all property damage, according to the Insurance Information Institute. A study from Chubb finds that, despite the fact that 91 percent of homeowners rate themselves as “vigilant” or “doing an okay job” at preventative home maintenance, and that close to half (45 percent) have or know someone who has experienced a water leak in the past two years, only 18 percent have installed a water-leak detection device.  

Of all homeowners, high-net-worth individuals are particularly at risk. When compared against other income segments, for instance, high-net-worth individuals are the most likely (55 percent) to report being “vigilant” about conducting preventative maintenance, yet are the least likely (26 percent ) to rank internal water leaks as their top home-related concern. High-net-worth homeowners are also the income group least likely to periodically inspect appliance hoses (33 percent compared to 61 percent of middle class homeowners, the most of any income group), a frequent cause of internal water leaks.   

While there are a number of steps homeowners can take to mitigate the risk, Chubb recommends that when they go through their pre-departure process of locking doors and windows, identifying a neighbor to keep an eye on their home, and ensuring some lights are left on, that homeowners also add shutting off the water main to the checklist.

Additional findings from the survey include:

– The majority of homeowners (63 percent) cite the threat of relocating for an extended period of time (between one month and a year) as their first or second most potentially concerning water damage-related event.

– A quarter of all homeowners have never had their appliances inspected, despite being the surest way to prevent a leak from occurring.

– Many homeowners also cited the loss of irreplaceable items (59 percent) and repairing structural damage (46 percent) as the top most potentially concerning water damage-related events.

– The majority of homeowners are unfamiliar with the most common sources of internal water leaks, with close to half (49 percent) identifying the water heater as the most likely source (independent analyses indicate plumbing supply systems pose the greatest risk).

Closing & Escrow 101

Buying and/or Selling a home can be a confusing process. There are lots of moving parts and lots of terms you may or may not fully understand… Escrow, Title Insurance, Preliminary Title Report… to name a few. To help you better understand the process, I’m sitting down with industry experts to breakdown the process for you. This week on Real Estate 101 we’re discussing closing and escrow with Janette Tims, an escrow officer at Western Title and Escrow in Eugene, Oregon.

What is Escrow?

Escrow is the process in which buyers and sellers of a piece of property establish terms and conditions for the transfer of ownership of the property. These terms and conditions are given to a third party known as the escrow holder. In turn, the escrow holder has the responsibility of seeing that the terms of the escrow are carried out. The escrow is an independent neutral account and the vehicle by which the mutual instructions of all parties to the transaction are compiled with.

What is Title Insurance

The purchase of a home is often the single largest investment people will make in a lifetime; therefore, the importance of fully protecting such an investment cannot be over stressed. Title insurance is protection which assures that the rights and interests to the property are as expected, that the transfer of ownership is smoothly completed and that the new owner receives protection from future claims against the property. It is the most effective, most accepted and least expensive way to protect property ownership rights.

What is a Preliminary Title Report

Before issuing a policy of title insurance, the title company must review the numerous public records concerning the property being sold and financed. The purpose of this title search is to identify and clear all problems before the new owner takes title or the lender loans money. The research helps determine if there are any rights or claims that may have an impact upon the title such as unpaid taxes, unsatisfied mortgages, judgements, tax liens against the current or past owners, easements, restrictions and court actions. These recorded defects, liens and encumbrances are reported in a preliminary report to applicable parties.

If you are thinking about buying or selling, be sure to build a team you can trust. People who will communicate clearly and keep the transaction on track, as well as, a team who will keep your best interests in mind. Excellent customer service is at the HEART of what I do. If you don’t have a lender, I’m happy to recommend several to choose from whom I trust and do business with regularly.

How to Start the Lending Process

Starting the lending process is the first step to owning a home. Did you know you can buy a home with NO MONEY DOWN? Did you know that starting the lending process is FREE?

I enlist the help of an experienced lender to explain the basics of lending and common misconceptions about the home buying process.

Send me an email, text or give me a call and I will be happy to answer all of your real estate questions and recommend some of my most trusted lenders to get you on the path to homeownership.

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

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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

Appraisals on Certain Home Sales May NOT be Required Soon

If a new Federal rule is approved it will have a sizeable impact on the real estate market. Federal regulators are close to approving a proposal to increase the appraisal threshold on residential home sales. What’s that mean for you? It means that certain home sales, of $400,000 and under, may not require an appraisal. Since 1994 the appraisal requirement has been set at $250,000.

The proposal is currently awaiting Fed approval to move forward. It has been approved by both the FDIC (Federal Deposit Insurance Corp.) and the OCC (Office of the Comptroller of the Currency), so experts believe it’s only a matter of time before the Fed approves the rule, it’s entered into the Federal Register and enacted as the law of the land.

Now, it’s important to mention this does not apply to ALL loans. New rules do NOT apply to loans that are wholly or partially insured or guaranteed by, or eligible for sale to, a government agency or government sponsored agency. That means loans sold to or guaranteed by the FHA, HUD, the VA or Fannie and Freddie Mac would still require an appraisal, per agency rules. However, the new rule would apply to approximately 40% of home sales.

541-579-9213 / aimeehartwig@bhhsrep.com

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