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Home Buyers Stay Active Into December

December isn’t usually the month people think of when they think about buying a home, but this year is different. The housing market is hot and buyers are still active – even as most Americans settle in for the holidays. For example, according to the Mortgage Bankers Association’s Weekly Applications Survey, demand for loans to buy homes continues to rise. Joel Kan, MBA’s associate vice president of economic and industry forecasting, says the gains have been widespread. “The ongoing strength in the housing market has carried into December,” Kan said. “Applications to buy a home increased for the fourth time in five weeks, as both conventional and government segments of the market saw gains. Government purchase applications rose for the sixth straight week to the highest level since June – perhaps a sign that more first-time buyers are entering the market.” Overall, purchase-loan application demand is up 26 percent from the same week one year ago. One reason for the strength is persistently low mortgage rates, and last week saw rates fall even further. In fact, average rates for 30-year fixed-rate mortgages with conforming loan balances set yet another record low. (source)

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Can The Housing Market Keep Its Momentum?

The housing market in 2020 has been surprisingly resilient. Though coronavirus-mitigation efforts stalled what was forecast to be a strong spring, the market came back quickly and its hot summer carried into fall. But can the real-estate market continue its current pace in 2021? Well, according to the most recent outlook from Fannie Mae’s Economic and Strategic Research Group, the answer is mixed. Doug Duncan, Fannie Mae’s senior vice president and chief economist, says they expect it’ll be a good year, if a bit slower. “We also expect housing to remain strong, despite slowing from its previously torrid pace, as home builders catch up on current commitments and more existing homeowners list their homes to take advantage of strong price growth,” Duncan said. “We expect the mortgage market to finish 2020 at a historic level of production before slowing slightly but remaining strong in 2021.” In other words, home buyers, sellers, and owners can expect similar, if slightly slower, conditions in the year ahead. (source)

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Homes In Risk Areas See Slower Price Growth

Home buyers have a lot to think about. After all, there’s a laundry list of factors, features, and amenities to consider when deciding on a house to buy. Everything from the size of the kitchen to the neighborhood and school district is up for discussion. So it isn’t surprising that homes for sale in areas at high risk of flood or fire might give buyers pause. But a new analysis from the National Association of Realtors’ consumer website shows exactly how that hesitation affects home prices in those locations. According to the study, homes in high-risk areas show slower price growth than those in areas with less risk. In fact, over the past five years, homes in locations at risk of flooding saw sales prices 5 percent lower than homes in surrounding areas. In locations at risk for fire, prices grew 3 percent slower. Danielle Hale, chief economist for the website, says at-risk homes may have a lower price tag but they also come with some additional costs. “When buying a home in a flood or fire-prone area, home shoppers should budget for the added cost of home insurance, mitigation practices, and potential losses, which can add to the total cost of ownership for the home.” (source)

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How Much Is The Median Down Payment Now?

In the minds of home buyers, there are two big numbers to consider. One is the monthly mortgage payment. Calculating what a particular house will cost you each month is an important determiner of whether or not you can really afford it. But you can’t calculate your prospective monthly mortgage payment without knowing first what your down payment will be. That’s why the down payment is the other number home buyers have to grapple with before buying. Figuring out how much you will potentially have to put down on a house and where you will get the money are among the first questions prospective buyers should address. So what should they expect their down payment to be? Well, it depends on where they’re buying, of course. A down payment in San Francisco is going to be a lot different than a down payment in Kansas City. But, according to one recent analysis, the median down payment nationally, during the third quarter of 2020, was $20,775. That’s 6.6 percent of the median sales price for homes purchased during the same period. It’s also good place to start when thinking about how much you’ll need to put toward your next house. (source)

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Commute To Work Falls From Top Buyer Concerns

In the past, shopping for a house to buy involved calculating how difficult your commute to work would be. Whether it was measuring the distance to public transportation, the nearest highway, or timing the total drive, home buyers had to consider their daily routine before making an offer. Then, COVID hit and changed everything. Now, with more Americans working from home, commutes are becoming less of a factor in home buying decisions and it’s changing how and where we buy. For example, a recent survey found that 40 percent of Americans who have recently moved or plan to soon are relocating more than 100 miles away – half of them are moving over 500 miles away. Additionally, real-estate professionals report that they are seeing more city-to-suburb moves and are getting far fewer requests for homes close to transportation options. And now it’s looking like the change will be permanent. In fact, three out of four consumers who have moved or are planning a move say they don’t plan to return to the area where they lived pre-pandemic. (source)

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Mortgage Rates Hit New Lows In Weekly Survey

According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates fell to new lows last week, with rates for 30-year fixed-rate mortgages with conforming loan balances, loans backed by the Federal Housing Administration, and 15-year fixed-rate loans down from the week before. Rates for loans with jumbo balances were flat from the previous week. Joel Kan, MBA’s associate vice president of economic and industry forecasting, says low rates spurred a bump in refinance applications. “Refinance activity increased last week in response to mortgage rates for 30-year, 15-year, and FHA and VA refinances, while conventional activity fell slightly,” Kan said. “The purchase market is also poised to finish 2020 on a strong note. Applications fell slightly last week but were around 3 percent higher than the two weeks leading up to Thanksgiving.” Overall, demand for mortgage loan applications was down 1.2 percent from the week before, with an adjustment for the holiday. The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. (source)

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Number Of Showings Per Listing Stays High

Typically, this is the time of year when buyers put a pause on house hunting and wait until spring. However, this year is different. Evidence continues to show that the housing market is defying seasonal trends as we head into winter. For example, according to one recent analysis, buyer demand is still surging in many markets across the country, with some seeing twice as many house showings per listing compared to the same time last year. In fact, several markets have recorded double-digit showings per listing – significantly higher than the current average of six per listing. In other words, there are still plenty of interested buyers. So why haven’t we seen a seasonal slowdown? Well, one factor is COVID-19. Delayed demand from spring has been pushed later into the year. Another factor is the combination of favorable mortgage rates and low for-sale inventory. Together, they’ve driven traffic 60.9 percent higher than it was last year at the same time – with the Northeast up 65.5 percent and the West seeing traffic 64.7 percent higher than one year ago. (source)

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Home Purchase Sentiment Retreats From Peak

Each month, Fannie Mae’s Home Purchase Sentiment Index tracks how Americans feel about the housing market, buying and selling a home, mortgage rates, prices, their job, and income. The index is a monthly measure of home buying conditions and consumer confidence in the real-estate market. In November, the HPSI fell 1.7 points, marking the first decline after three consecutive months of increases. Doug Duncan, Fannie Mae’s senior vice president and chief economist, says consumer sentiment may have peaked for now. “The HPSI appears to have peaked for now as consumers continue to consider how COVID-19 impacts their ability to buy or sell a home,” Duncan said. “Drilling down a bit, home purchase confidence has recovered more for homeowners than renters, in part because homeowners have been less likely than renters to have had their jobs and finances impacted by the pandemic.” Among the results, the number of respondents who said now is a good time to buy a home fell 3 percent, while the number of participants who feel it’s a good time to sell remained unchanged from the previous month. (source)

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Half Of Americans Say They’re Ready To Move

The idea of packing up your things and moving somewhere new can be exciting – especially if your current living situation isn’t ideal. So it’s not surprising that a recent survey found nearly half of Americans say they’re considering a move in the next year. According to the results, 46 percent of respondents said they’re thinking about moving. Among them, 27 percent said they’re looking for a new place in their current area, 12 percent were hoping to find a home in another part of the state, and 8 percent said they’re considering moving out of state. But what are the main factors causing so many of us to think about starting fresh somewhere else? Well, most respondents said money. In fact, 44 percent of people who said they’re considering moving said they were doing so because their current home was too expensive. Other reasons participants offered included that their home was too small, they wanted different features, they’d rather live in a different part of town, and they’re unhappy with the management at the property they’re renting. (source)

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Buyers’ Suburban Shift Continues Into Fall

After the coronavirus’ onset in March, remote work became much more widespread. With it, Americans began to realize the benefits of not having to commute to the office every day. Among them, the ability to move further away from city centers and live in less densely populated suburbs and exurbs was a favorite. Online home searches in locations outside of large metropolitan areas skyrocketed, as Americans looked to relocate to more affordable areas where they could have more space and privacy. Now, according to the National Association of Home Builders’ third quarter Home Building Geography Index, there’s evidence that the trend has continued into fall. In fact, during the third quarter, single-family home building saw its biggest growth in the suburbs , while large-metro urban cores saw the smallest gains year-over-year. That’s a good indication that buyers are continuing to show interest in smaller markets where they can get more for their money. A similar decline in apartment construction further supports the evidence that Americans’ preference continues to shift to the suburbs. (source)