Seniors to blame for inventory shortage?

According to Freddie Mac’s February Insight report, seniors are helping to keep young adults from home ownership for the first time by not moving out & selling their homes but choosing to “age in place.” Freddie Mac estimates that up to 1.6 million homes are being held off the market by the seniors’ to remain.

1.6 million units is approximately equal to the number of new homes being built each year. Freddie Mac estimates that 2.5 million units are needed each year to account for population growth.

The Urban institute estimates that 3.4 million millennials are being held out of home ownership.

Choosing the right mortgage

When you purchase a home, chances are you won’t be able to buy it outright: you’ll need to borrow money and this loan is called a mortgage. Depending on your financial situation and your long-term plans, there are several options for choosing which type of mortgage is right for you.

  • Fixed rate mortgage: For those who want predictability – your interest rate will stay the same for the life of the loan (typically either 15 or 30 years). A good choice if you plan on living in the home for 7 years or longer
  • Adjustable rate mortgage (ARM): ARMs have a fixed rate for short period (usually 3 or 5 years) often at lower rate, then can change according to the interest rate index changes. Good to get started or if you don’t mind the unpredictability. Also good if you only plan to be in the home for less than 5 years
  • Conforming or jumbo loans: Conforms to the guidelines of Freddie Mac and Fannie Mae, loan limits depend on location and number of units. Jumbo loans exceed those guidelines and have stricter qualifying standards
  • Government backed loans: FHA loans, backed by the federal Housing Administration often have lower down payments, interest rates and more flexible qualifying requirements. VA loans are for veterans or the members of the military offering favorable terms

The end of the Open House?

According to the National Association of Realtors only 3% of potential home buyers visited an open house in 2018. This is down from 68% twenty years ago!

Moreover, many realtors are advising their clients not to feature an open house saying it is “out of date” or “utterly worthless.”

The rise of the Internet has changed home buying, of course, and 92% of potential home buyers view properties first online. Email alerts allow buyers to see changes in price etc. instantly.

Sales are down, prospects are good

In a bit of good news / bad news, pending home sales (contract signings) decreased by 2.2 percent in December but the Federal Reserve’s announcement that they don’t foresee any increases in the interest rate for the future has already sent mortgage rates tumbling.

Moreover, the government shutdown did not have any significant impact on home sales although analysts warned that a second shutdown could have more severe consequences.

Overall, the National Association for Realtors expressed confidence that 2019 would be strong year for home sales.

Home value appreciation slowing in major markets

According to the Zillow Home Market Real Estate Report annual home value growth slowed in more than 50 percent of the country’s largest housing markets in the last year. Seattle saw a drop from 12.4 percent to 5.0 percent from December 2017 to December 2018 while San Jose declined from 16.8 percent to 9.9 percent over the same time period.

Despite the drop in 19 of the top 35 metro markets, overall the nation’s home value appreciation was up 7.6 percent over the past year. More affordable Southern markets, such as Atlanta, showed an even greater increase.

Natural disasters caused $11 billion real estate damage in 2018

According to CoreLogic’s Natural Hazard Report there were 11 major natural disasters – floods, hurricanes, and wildfires in the United States in 2018 causing more than $11 billion in commercial and residential real estate losses.

Hurricane Florence caused widespread flood damage in North Carolina, South Carolina, and Virginia with 85 percent of the losses not covered by insurance policies.

Wildfires burned the eighth highest number of acres in U.S. history. Eleven states (all in the West) had a least one wildfire that burned more than 50,000 acres with California and Oregon suffering the most.

The hottest housing market in 2019? Think San Jose

According to a report by Zillow, San Jose with its low unemployment rate and double digit home value growth, projects to be the hottest housing market in the United States in 2019. Just as it was in 2018, as a matter of fact.

Income growth remains strong in San Jose with the average household income rising by 6.8 percent in 2018. The good news for potential home buyers is that inventory of available homes in San Jose has nearly doubled in recent months.

However, change could be coming in the real estate market as analysts see a move towards the South where homes in Jacksonville and Orlando, for example are selling for six times cheaper than San Jose and rents are three times cheaper on average.

Looking to sell? Hire a handyman

When it comes time to put your home on the market, it literally pays to invest some time and money into getting it into top shape. Too often homeowners are used to maneuvering around elements that are old, worn-out or even broken. Just remember, a potential buyer has never seen your home before and they’re going to have a sharp eye out for anything that is substandard.

Some common areas that could use improvement:

  1. Paint: Chances are your walls could use a fresh coat
  2. Countertops: You don’t need to remodel the entire kitchen; in fact it’s amazing what new – freshly cleaned – countertops will add
  3. Lighting: These days brightly-lit rooms are the norm so adding some recessed or pendant lights might just do the trick

IRS clerks allowed to work during shutdown

After an intense lobbying effort my the mortgage industry 400 furloughed IRS clerks will be allowed to work – and get paid – during the current partial federal government shutdown. These clerks help potential home buyers verify their incomes. Without their work, the $1.3 trillion mortgage industry would be at a standstill.

Many questioned the government’s decision to allow the clerks to work, arguing that while their jobs are important, they are not essential as outlined by the law. It was seen as a favor to a powerful industry.

Government officials responded by saying it was done as a service to consumers trying to buy a home and not as a favor to the mortgage industry.

Many homeowners prefer DIY projects

The 2019 Remodeling Impact Report: DIY finds that many homeowners experience greater satisfaction from their own projects over hiring a professionals. Most projects center around improving the livability or functionality of their home as well as increasing the aesthertics.

Nearly 75 percent of Generation Y and millennials choose to do DIY home projects while more than half of Generation X and baby boomers tackle this work.

Interestingly, pet-driven projects – dog doors, fence or laminate floor installations – are some of the more common DIY projects.