2-26-2021

Sellers Feeling More Optimistic

Consumer sentiment for home-selling is on the rise, according to the Fannie Mae Home Purchase Sentiment Index. The percentage of respondents who say it is a good time to sell a home increased from 50% to 57%, while the percentage who say it is a bad time to sell decreased from 42% to 33%. Sellers cite favorable mortgage rates, high home prices, and low housing inventory as their primary rationale. Lower-income individuals in particular report feeling more optimistic, indicating the economic recovery is reaching those most negatively impacted by the pandemic.¹

Surprising Factors That Influence Mortgage Interest Rates

Interest rates are one of the biggest factors that can influence your home buying process. This little—or big—number can dictate how much house you can afford and if you can afford to buy a house at all. With so much riding on this figure, it’s important to understand... 
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Economic Recovery Grapples with the Pandemic 

Employment growth in January remained muted as many sectors experienced notable declines. The pandemic continues to weigh down industries like leisure and hospitality, limiting the labor market's potential recovery. Until a larger portion of the population receives a vaccine, expect employment growth in these areas to remain constrained. On a positive note, the manufacturing sector is expanding and an increase in January vehicle sales could be a positive indicator for more consumer spending in Q1.³

Painting and Seller Prep - Earth Tones or Bright Colors?

In 2021, homeowners are experimenting more with the color wheel to brighten up their living spaces. Earthy and warmer neutral tones are replacing grays as the most popular shades, according to 54% of 68 design trendsetters recently surveyed. Blue is the most popular color for bedrooms. Designers said that navy blue or off-white is preferred for home offices. In kitchens, expect natural and earth tones or shades of green.⁴

2-19-2021

Housing Shortage Persists

Overall housing inventory plummeted 43% in January compared to the same month in 2020. New listings were also down by 23% year over year. The home shortage increased U.S. median home prices by 15.4%, up to a national average of $346,000. The market is so tight across the country that the typical home spent 76 days on the market in January - 10 days less than one year prior.¹

47% of New Buyers Surprised by How Affordable Homes Are Today

Headlines matter. Right now, it’s hard to read about real estate without seeing a headline that suggests homes have become unaffordable for most Americans. In reality, there’s hard evidence that shows how owning a home is more affordable than renting in most parts of the country, as record-low interest rates are keeping monthly mortgage payments about 23% lower than the typical payment of 20 years ago. Despite the facts, misleading headlines persist, and they impact how hopeful homebuyers perceive the market.

In a recent survey by realtor.com, home shoppers indicated they were surprised by what they could actually afford when buying their first home. In fact, 47% discovered their budget was larger than they expected. George Ratiu, Senior Economist at realtor.com, explains:

“For first-time buyers, especially, the drop in the 30-year mortgage rate…has provided unexpected leverage. Lower rates allowed many buyers to stretch and buy more expensive homes while keeping their monthly budget the same.”

So why do these negative headlines that cast doubt on affordability continue to exist? Most analysts only look at two of the three elements that make up the affordability equation: price and income. It’s true that incomes haven’t kept up with the price of houses. However, affordability is about the cost of the home, not just the price. For that reason, mortgage rates, the third element of the affordability equation, are important to consider.²

Natural Disasters Disrupting Buy-Sell Decisions 

Record-breaking hurricanes, floods, wildfires, and tornados hit the United States hard last year, giving some buyers pause about where they want to put down roots, according to a survey conducted earlier this year. Of the 29 metro areas tracked in the survey, Houston residents were the most concerned about natural disasters. Nearly 60% said the frequency or intensity of natural disasters were "very much" factors in their decision to buy or sell a home. New York followed at 47%, and Miami was third at 46%. Respondents in the South and Northeast - 36% and 35%, respectively - said that natural disasters seriously affected their real estate decisions. Midwest respondents have the lowest concern about the impact of natural disasters.³

Credit Score Surprises, What Now? 

FICO, Experian, Equifax, and TransUnion are different credit bureaus with propriety algorithms for calculating credit scores. Borrowers often encounter their credit scores' impact in mortgage pricing. What should they do if they discover they have a lower score than expected? A significant difference between their score and their expected score could indicate fraud using the borrower's information or an incorrect reporting status on an account. Both are best resolved by obtaining and identifying anomalies on their credit report. Borrowers with a score near the next-highest bracket also can use a credit report to chart a path to their desired score.⁴

For more information about how credit scores work, how best to get a free copy of your report, and how to raise your score, download our free Understanding Credit eBook or one of our credit checklists from our Resource Center.

Virtual Tours Hit Popularity High 

Almost two-thirds of people who purchased a home last year - 63% of the nearly 2,000 polled - made an offer on a property they had not seen in person. The percentage is up from 32% a year ago and a new record, according to a recent study. Agents polled said less than 1% of tours were done by video at the beginning of 2020 - now about 10% of tours are viewed remotely. The survey results did not dissect which cause - pandemic shopping trends or the number of people moving to another state - is more responsible for the 10-fold increase in remote tours.⁵

2-12-2021

Applications for Vacation Homes Spike in January 2021 

Mortgage applications for second homes skyrocketed 84% year-over-year in January, according to a report from Redfin.  The jump marks the eighth straight month of 80%+ year over year growth. The increase is more than twice the increase in applications for primary homes according to data from Optimal Blue and is thought to be a reaction to the move to a remote workforce more permanently due to the COVID-19 pandemic. Many Americans have realized remote work is here to stay, allowing them to relocate to a vacation home indefinitely..¹

Sellers' Market Until Midyear, Perhaps Beyond

While builders push to meet the demand for more homes, a seller-advantaged market is likely to last to midyear. According to a recent report, home-sale prices increased by 18% near the end of January, compared to a year earlier. Pending sales also grew 28% compared during the same period. Additionally, 55% of homes under contract in late January found a buyer in 14 days or less.²

How to be a Buyer in 2021

It's not uncommon for buyers in a sellers' market to feel anxious about rising home prices. There are a few tradeoffs in the decision-making process to help buyers find their right-home, right-price scenario. Location, home type, the amount of work a home needs, financing options, downpayment assistance, or buying with family are all options to consider to arrive at the desired mortgage payment. 

Starting with a full pre-approval is a great way to understand all the numbers and how they affect your buying plans. The last thing you want to do is get your heart set on your perfect home only to realize you can't qualify for the loan! 

Want more information? Take a look at our article explaining the benefits and how to get started.

A $15,000 Homebuyer Tax Credit?

President Biden has proposed a $15,000 first-time homebuyer tax credit. If the House and Senate pass it, the buyer could access the funds immediately at the closing table. While the tax break would be beneficial in one sense, other buyers will also receive tax credits, which could put even more upward pressure on prices.⁴

Buyers' Love for Open Floor Plans, Break or Breakup?

After decades of popularity, open floor plans have fallen out of favor for some buyers wanting more delineated spaces. But will that trend last? Open floor plans benefit from natural light flowing throughout, among other positive attributes like hosting family gatherings. Before adding walls, consider using rooms with doors for multiple purposes - such as adding a desk to a guest room. Buyers' taste could revert quickly once the pandemic is behind us.⁵