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Home Sellers See $76,000 Profit On Typical Sale

Low inventory has been the housing market’s main challenge since well before the coronavirus pandemic began. Since its onset, though, the number of homes for sale has moved even lower. That means, in many markets, there are more interested buyers than available homes. And, according to ATTOM Data Solutions’ second-quarter Home Sales Report, that means big gains for home sellers. In fact, their report shows home owners who sold during the second quarter saw a $75,971 profit on the typical sale, up from $66,500 in the first quarter. Todd Teta, ATTOM’s chief product officer, says profit margins are now at record highs. “The housing market across the United States pulled something of a high-wire act in the second quarter, surging forward despite the encroaching economic headwinds resulting from the coronavirus pandemic,” Teta said. “Profit margins hit new records as prices kept climbing, with few indications that the impact of the virus would topple the market.” The typical homeowner who sold a house during the second quarter owned their home for eight years. (source)

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New Home Sales Increase Beats Expectations

The housing market continues to show encouraging signs of improvement. Just how encouraging becomes clearer with each new data release. For example, it was just reported that sales of previously owned homes rose nearly 21 percent in June. Now, new numbers from the U.S. Census Bureau and the Department of Housing and Urban Development show June sales of newly built single-family homes increased too, rising 13.8 percent month-over-month. It was the fastest sales pace since 2007 and a significantly faster pace than economists forecasted. In fact, economists polled by Reuters expected new home sales to increase just 4 percent. Surging new home sales are yet another sign that home buyers have returned to the market after putting their plans on hold this spring. Even when compared to last year, sales are up – with June’s improvement pushing new home sales nearly 7 percent higher than they were at the same time last year. Also in the report, the median sales price of new homes sold in June was $329,200. The average sales price was $384,700. (source)

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Existing Home Sales Up 20.7% In June

When the coronavirus outbreak began in March, optimistic analysts predicted the housing market would begin to rebound in the fall. But, according to new numbers from the National Association of Realtors, the recovery is far ahead of schedule. In fact, the recently released numbers show sales of previously owned homes had a record setting month in June. Overall, completed sales of single-family homes, townhomes, condominiums, and co-ops were up 20.7 percent month over month. Lawrence Yun, NAR’s chief economist, says the recovery has been strong and looks to be sustainable. “The sales recovery is strong, as buyers were eager to purchase homes and properties that they had been eyeing during the shutdown,” Yun said. “This revitalization looks to be sustainable for many months ahead as long as mortgage rates remain low and job gains continue.” The rebound was strongest in the West and South, though the Midwest and Northeast also saw significant month-over-month improvement. But while the quickness and strength of the recovery has been encouraging, sales are still down from last year – with overall transactions 11.3 percent below where they were in June 2019. (source)

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Demand For Purchase Loans Continues To Rise

According to the Mortgage Bankers Association’s Weekly Applications Survey, demand for home purchase loans increased 2 percent last week and is now 19 percent higher than it was last year at the same time. The improvement comes during a week when average mortgage rates were mostly flat, with only rates for loans backed by the Federal Housing Administration seeing a significant drop. Overall, though, mortgage rates remain near all-time lows. Joel Kan, MBA’s associate vice president of economic and industry forecasting, says buyer demand continues to be strong. “There continues to be strong home buyer demand this summer, as home shoppers have returned to the market in many states,” Kan sad. “Purchase activity increased again last week and was up 19 percent compared to last year – the ninth straight week of year-over-year increases.” Also in the report, low rates pushed refinance activity 5 percent higher than the week before. The refinance index is now 122 percent higher than last year. 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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Delayed Spring Buyers Become Summer Shoppers

At the beginning of the year, most analysts were predicting a hot spring sales season for the housing market. But in the wake of the coronavirus outbreak, a lot of prospective home buyers put their plans on hold. Now, it appears they’re ready to buy. According to a new analysis, contract signings were up 15 percent month-over-month during the last week of June and the typical home for sale was sold in just 19 days. That’s good news for the housing market, as it means spring’s crashing sales numbers will likely see a quick summer recovery. But it also means that potential home buyers need to be prepared for a competitive market. Since the inventory of homes for sale hasn’t rebounded as quickly as buyer demand has, there are more home buyers than available homes. In many markets, that’s led to increasing prices, bidding wars, and fewer choices for interested buyers. For example, home prices in cities like San Jose and Seattle were actually falling last year at this time. Now, because of the market’s imbalance, prices have turned around and are up more than 5 percent in both metros. (source)

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The Increasing Popularity Of Guest Dwellings

Accessory dwelling units (ADUs) are defined as secondary, self-contained housing units located on the same lot as a primary single-family home. In other words, guest houses, in-law apartments, garage apartments, and carriage houses. In most cases, these dwellings include a bathroom, kitchenette, living area, and a separate entrance. They’re also increasingly popular among Americans living in regions where population growth and cost-of-living is on the rise. In fact, according to a newly released study from Freddie Mac, properties with ADUs represented 4.2 percent of homes sold last year, which is up from 1.1 percent in 2000. And, if that doesn’t seem like a lot of growth, consider the fact that the number of property listings with ADUs grew by an average of 8.6 percent year-over-year between 2009 and 2018. Their quickly rising popularity makes sense, though. Affordable housing in major urban areas is more difficult to find these days and ADUs provide an option for all age groups, as well as both renters and buyers. That’s why these units have been multiplying over the past few years and especially in fast growing metros like Los Angeles, Portland, Dallas, Seattle, and Miami. (source)

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Would You Buy A Home Sight Unseen?

The coronavirus outbreak has caused us to change a lot about the way we get things done. Everything from grocery shopping to getting a haircut has undergone some rethinking. The home buying process is no exception. Fortunately, the adjustments the real-estate industry put into place have been successful so far. In fact, the option to tour homes virtually or via FaceTime has a significant share of buyers saying they’d be comfortable buying a house without ever seeing it in person. Recent surveys show nearly 40 percent of buyers say they would, which is up from 25 percent in surveys done earlier this year. Additionally, there was close to a third of current survey participants who said they’d like the option to buy and sell virtually even after the outbreak ends. Obviously, that still leaves a majority of buyers who feel they’d need to see a home in person before they’d make an offer. But the success of virtual tours benefits them as well – as an online tour can be used to narrow options down, so buyers have fewer homes to see when they do go out. Like a lot of things, real estate has had to adapt quickly. The good news is that the changes it underwent look like they’ve increased convenience and speed for both buyers and sellers. (source)

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Builder Confidence Back To Pre-Pandemic Levels

Whether you’re looking to buy a new house or not, what’s happening in the new home market should matter to you. That’s because, when the new home market is doing well. builders build more houses. And when more new homes are built, it creates additional supply which helps keep home prices from spiking. In short, if builders are optimistic about the market, it’s an encouraging sign. That’s why the National Association of Home Builders conducts a monthly survey tracking how builders feel about current conditions and their expectations for the coming months. In July, their Housing Market Index – which is scored on a scale where any number above 50 indicates more builders view conditions as good than poor – jumped 14 points to 72. Chuck Fowke, NAHB’s chairman, says there are a number of factors boosting builder confidence right now. “Builders are seeing strong traffic and lots of interest in new construction as existing home inventory remains lean,” Fowke said. “Moreover, builders in the Northeast and the Midwest are benefiting from demand that was sidelined during lockdowns in the spring. Low interest rates are also fueling demand, and we expect housing to lead an overall economic recovery.” Among its components, the index found current sales conditions and expectations for the next six months experienced the biggest month-over-month rebound. (source)

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Mortgage Rates Continue Downward Trend

According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates fell again last week, with rates down for 30-year fixed-rate mortgages with conforming loan balances, loans backed by the Federal Housing Administration, and 15-year fixed-rate loans. Rates for jumbo loans were flat from the week before. The drop in rates led to a 12 percent increase in refinance activity. Purchase demand, on the other hand, was down for the week, though still 16 percent higher than last year at the same time. Joel Kan, MBA’s associate vice president of economic and industry forecasting, says demand from buyers remains strong. “The drop in rates led to a jump in refinance activity to the highest level in a month, with refinance loan balances also climbing to a high last seen in March,” Kan said. “Purchase applications fell over the week but remained 16 percent higher than a year ago – the eight consecutive week of year-over-year increases. Purchase activity remains relatively strong, despite the continued economic uncertainty and high unemployment caused by the ongoing pandemic.” 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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Today’s Movers Motivated By A Desire For Space

While the features we look for in a house often change from one season to the next, the reasons we decide to move in the first place remain fairly consistent. Things like marriage, starting a family, or wanting to be closer to loved ones and friends are common factors that might influence a move. But, in the wake of the coronavirus, there have been some changes. For example, according to one new analysis, the number one thing motivating people to move these days was a desire for more space. It seems spending more time at home has Americans reconsidering what’s important to them in a house. That would explain the current trend toward home offices, bigger yards, more privacy, and homes in suburban and rural areas. It’s obvious that the pandemic has had an influence on today’s buyers, what’s less obvious is whether or not these trends are here to stay. Only time will tell. But with an increasing number of businesses allowing their employees to work remotely, the popularity of bigger, suburban houses with a dedicated home office may not just be another passing fad. (source)