More Backing by FHA Loans for New Home Sales

 According to the National Association of Home Builders, the Quarterly Sales by Price and Financing report shows that FHA backed close to 14% of new home sales in the second quarter of 2023. Conventional loans went down to 73.7% of new home sales the same quarter while VA-backed sales were up to 5.4%. Cash purchases declined to 6.5% of new home sales. In fact, the share of cash purchases has decreased 2.9 percentage points over the past year and has ranged from 4.1% to 10.7% since Q2 2020.

Different regions within the US are backed by different financing sources. The national median sales price of a new home was $416,100. Split by types of financing, the median prices of new homes financed with conventional loans, FHA loans, VA loans and cash were $458,100, $346,500, 392,600 and 364,300, respectively. The price of a new home did decline in the past year. The biggest drop seen was a 20.1% decline.

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Is the Housing Market Slowing Down?

 According to data from the National Association of Realtors, pending home sales increased for the first time in six months in December 2022. Along with this it also reports that new home sales and mortgage applications are rising.

This has many in the industry asking if the housing market is slowing down. “The recent low point in home sales activity is likely over,” says NAR Chief Economist Lawrence Yun. “Mortgage rates are the dominant factor driving home sales, and recent declines in rates are clearly helping to stabilize the market.”

The new home market is seeing some progress even with higher construction costs and low affordability.

“Builder incentives and declining mortgage rates during the month of December helped push new-home sales up for the month,” says Jerry Konter, chairman of the National Association of Home Builders.

“The new normal for mortgage rates will likely be in the 5.5% to 6.5% range,” Yun says. “Job gains will steadily become important in driving local markets. The South, in particular, is set to outperform the rest of the country, thanks primarily to better job market conditions in this part of the country compared to other regions.”

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The End of 2021 Saw Gains For Private Residential Spending

 

The National Association of Homebuilders' Census Construction Spending reported that the total private residential construction spending jumped 1.1% at the end of 2021. In December 2021 spending was at an adjusted annual rate of $810.3 billion with a total that was 15% higher than in December 2020.

Single-family construction spending rose to a $435 billion annual pace which was up 2.1%. Multi-family constructions spending rose 0.4% but was hurt a little due to supply chain issues. In fact, home building is still facing supply chain issues and labor shortages.

Private non-residential spending stayed the same towards the end of 2021. December saw a rise from November 2021 which was 9.1% high than a year ago. The largest month-over-month nonresidential spending increase was made by the class of office ($0.49 billion), followed by amusement and recreation ($0.4 billion), and class of lodging ($0.37 billion).

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Is A 20% Downpayment Necessary?

 

Whenever a buyer thinks about a downpayment twenty percent comes to mind. This is a common misunderstanding that homebuyers have to come up with twenty percent. According to Lending Tree over half of the people surveyed said that a down payment is the biggest deterrent to purchasing a home.

Freddie Mac states “The most damaging down payment myth—since it stops the homebuying process before it can start—is the belief that 20 percent is necessary.”

The Profile of Home Buyers and Sellers from the National Association of Realtors (NAR) reports that the median down payment hasn't been over twenty percent since 2005. The current average downpayment is twelve percent and even lower for first-time homebuyers at 7%.

There are benefits to putting 20 percent down on a new home. One of the best perks is not having to obtain Private Mortgage Insurance (PMI). PMI is insurance that protects your mortgage lender in case you do not make your mortgage payments. Even if you are unable to put twenty percent down, you can ask your lender to remove PMI once you have obtained twenty percent equity in your home.

There are even good benefits for those who can put over twenty percent down. The more money you put down, the better interest rate you can get. This is not wise to do if you might need the cash in the near future. A first-time homebuyer might also opt-out from doing this because you might run into unplanned repairs or updates.

Saving for a downpayment can take time for some and be stressful. Trying to save 20 percent or more might take some months, years, or even longer. Waiting to save this much might not be in your best interest because you might miss out on a good opportunity. As you save money home vales are going up and you will lose out.

Currently, the mortgage rates are at historic lows. There are several programs that are for homebuyers to purchase a home with no money down. There are also some programs that will accept as little as 3% down.

If you are considering purchasing a home, contact a local Realtor who can help you with the loan, downpayment and home buying process. Remember interest rates are low and you do not need a huge down payment to thrive as a new homeowner.

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Will the Fall Bring a Cooler Housing Market?

The National Association of Realtors says the housing market is hinting at cooling off this fall. This doesn't mean the market still will not be viable, it just will not be as hot as we have seen in the first half of 2021.

"There has been a turn in the market from superheated to still very strong," said Lawrence Yun, NAR's chief economist.

High home prices have detoured many from purchasing but this scenario is improving a little according to Yun. Unsold homes increased 7.3% from June 2021 to July 2021 and unsold inventory is up at a 2.6 month supply at the current sales pace. There is a balanced market currently at around a 6 month supply of homes.

"We see inventory beginning to tick up, which will lessen the intensity of multiple offers," said Yun. "Much of the home sales growth is still occurring in the upper-end markets, while the mid-to lower-tier areas aren't seeing as much growth because there are still too few starter homes available."

As of July 2021, the median home price for existing homes was up 17.8% from a year ago to $359,900. The year-over-year gains have increased for the past 113 months in a row. Cash purchases have remained strong with all-cash sales making up 23% of home sale transactions in July. This was up 16% from July 2020. Low mortgage rates are still helping the current market and homebuyers.

"Despite the ongoing challenges of today's housing market, including limited inventory, lightning-fast home sales and competition from investors with deep pockets, many buyers are finding ways to persist until they find and close on a home," said Danielle Hale, Realtor.com chief economist.

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Buyers’ Must-Haves When It Comes to Kitchen and Bath Features

The National Association of Home Builders' publication What Home Buyers Really Want, 2021 Edition, gave us the top features buyers want in a kitchen and a bathroom. In the kitchen, four out of every ten buyers feel that a double sink is essential and expressed they would probably not purchase a home without this feature. For bathrooms, most buyers said it was essential for a separate shower and tub in the primary bathroom.

The kitchen top 10 kitchen features that rated essential or desirable were a double sink (side-by-side) 81%, walk-in pantry 81%, table space for eating 78%, a central island 77%, drinking water filtration 76%, granite/natural stone countertops 73%, recessed lighting 69%, customized backsplash 69%, pull-out shelves 68% and a breakfast bar 64%.

Broken out by buyers who say it is essential and buyers who say a feature is desirable were surprising. For the top 10 features that were essential 42% of buyers said a double sink, 35% table space for eating, 34% chose a walk-in pantry, 32% said a central island, 32% drinking water filtration, 26% granite/natural stone countertops, 26% recessed lighting, 23% customized backsplash, 22% pull-out shelves and 19% breakfast bar.

Bathrooms are deemed very important to today's buyers, especially the primary bathroom. The top ten on the list for the home's primary bathroom were a linen closet 76%, both shower stall & tub 74%, double vanity 69%, private toilet compartment 67%, toilet, tub & sink-white 65%, granite vanity 65%, ceramic tile walls, multiple shower heads 59%, whirlpool tub 56% and body spray panel 56%.

Buyers who said that the bath shower stall & tub were essential ranked the highest at 36% while the linen closet ranked the highest in desirable at 49%. The lowest-ranked feature for both essential and desirable were dual toilets.

If you are in the market for a new home, now is the time to purchase one due to historically low interest rates. Remember to use a Realtor who can help you with the process from choosing a home to closing.

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Seven Improvements To Make in Your Bathroom Before Selling Your Home

Two of the most important rooms during the sale of your home that should be in tip-top condition are the kitchen and the bathrooms.

“Kitchens and bathrooms sell homes,” says Kris Lindahl, CEO and founder of Kris Lindahl Real Estate. “If a buyer sees a bathroom that still needs projects or upgrades, the home is going to be much less appealing to them.”

To get top dollar for your home, here are some bathroom improvements that are a must.

1. Go for double sinks

Realtors and other home professionals will tell you that a double vanity upgrade is a must on most home buyers' checklists. Even a small bathroom can fit two small sinks which are better than one sink in a home with limited bathrooms.

“Upgrading to double sinks is always appreciated by buyers,” Lindahl says.

2. Install new bathroom hardware and accessories

This small task can update a dated bathroom in minutes. This DIY project takes only a screwdriver and a couple of hours to instantly give your bathroom a new look. It is ideal to have your faucet, doorknobs and shower frame complement each other and not clash.

“Swapping out hardware like light fixtures, towel bars, cabinet pulls and sink fixtures can make an impact relatively affordably,” Lindahl says.

Another simple trick to update your bathroom's look is to frame the mirror above the vanity. This tip is inexpensive and adds value to the space.

3. Replace or paint your vanity

The vanity is an important piece found in a bathroom for both functional and designer purposes. Many pros describe a bathroom vanity as the centerpiece in any bathroom. When updated a vanity make sure to use high-quality stone such as quartz or granite. If a new vanity is out of your price range, then paint the cabinets of your current vanity a high-gloss white or pale gray.

“Luxe sophistication and clean lines: That’s the theme for bathrooms in every price point,” Susan Kelleher, an associate broker at R New York. “I love the mirrored medicine cabinets from Restoration Hardware—functional, beautiful, and tres chic.”

4. Update old floors

A perfect way to add appeal to rooms is to update the floor. Carpet in your bathroom is not the desired look. This can be a DIY or hire contractor project.

“Updating old floors to tile or luxury vinyl tile really adds appeal,” Lindahl says.

5. Install new light fixtures

Simple, sophisticated light fixtures are what every bathroom needs. Updating the lighting and fixtures are simple yet dramatic changes.

“Great lighting [and] high-end faucets and hardware appeal to buyers in every price point,” Kelleher says.

“Updating light and plumbing fixtures is a quick way to modernize an old bath.”

6. Add space and storage

“Buyers are looking for more space in new homes, and the bathroom is no exception,” Turner says. “Think about expanding the shower in the master bathroom to fit a bench or seat. It’s an important feature that can be utilized in a lot of different ways.”

During the pandemic, homeowners have been finding ways to make the most of the space. Expanding a bathroom to have storage space or room for necessities is important to the current homebuyer. In fact, some professionals go as far as to say it might be worth borrowing space from a neighboring room to expand your bathroom.

“Take the adjacent linen closet to make a larger bathroom,” Kelleher says. “Even a small closet can make a big difference, and you can create cabinet space under each sink for maximum storage.”

7. Make your bathroom bright and light

Buyers are attracted to clean neutral colors in a bathroom. Potential buyers desire a clean slate. A neutral base to work from will make your bathroom improvements stand out.

“Classic white never goes out of style in a bathroom,” Lindahl says. “Replacing an old, colorful tub with a white one is a good idea.”

It's amazing what these simple steps can do to update your old drabby bathroom. If you are in the market to sell your home now is the time to make those improvements.

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These Days Spring Is Not the Only Optimal Time To Purchase a Home

 Typically spring and early summer are the best times for the real estate market. The past 15 months have changed the way the industry sees as the peak real estate season. Experts say that around Labor Day will be the best time to buy a home this year.

The market “will still be relatively competitive. But I think fall will be less competitive than spring and summer, than what we're experiencing in the housing market right now,” says Danielle Hale, Realtor.com’s chief economist.

According to the National Association of Realtors, now that pandemic restrictions are easing up, more sellers are willing to put their houses on the market. There is also an upward trend in home construction and there should be more housing inventory by this fall.

“There aren't as many other buyers out there looking. And at the same time, you still have some sellers that are hoping to close before the end of the year that are in the market,” Hale says.

Many experts say that the end of the year will be a great time for buyers. There are great deals out there in November and December.

“And if you're buying late in the year, you might even be able to pick up a house at a good price because the seller has already moved and doesn't want to carry an empty house,” says Joey Sheehan, a real estate agent and author in Bryn Mawr, Pennsylvania.

“Buyers who are not quite as serious tend to kind of fade out,” he says. “For buyers that are willing to keep their eye on the prize at that point in time of the year, I think there's a real opportunity to potentially find that home.”

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Five Things a First-Time Homebuyer Can Do To Boost Their Chances in a Hot Housing Market

 Buying a home is an exciting yet stressful life event. The current housing market is definitely a seller's market with tons of buyers and limited inventory. 

"Buyers walk in a home and say, 'This is it!' Then, they see all the business cards [from other agents] on the table and start panicking," says Georgia Stevens, president of the Seattle King County Realtors and managing broker of the Compass Washington agency.

If you are a first-time home buyer have no fear about the competition. Here are five tips to follow when shopping for your first house.

Start with an authentic budget

You will want to know how much home you can afford before you start house shopping. Get on solid financial ground from the beginning. Decide what your price range will be by looking at how much you can borrow and what your monthly budget will be.

A mortgage lender will be one of your first contacts during the home buying process. A mortgage lender can give you a preapproval letter. Getting preapproved on a mortgage will allow you and your realtor to get a gauge on what exactly you can afford. In this day in age with the current housing market, you have to have a preapproval letter from a lender to show real estate agents and sellers that you are a serious buyer.

"I always caution borrowers not to stretch for a home, and to establish a realistic budget that will afford a financial cushion for the future," Scott Lindner, national sales director for mortgage lending at TD Bank, said in an email. "This is even more important in the current uncertain environment."

Learn what to expect before you shop

An experienced real estate agent can help you with the process step by step along with verbiage you might not be familiar with. It is best to be familiar with the process before you start.

"Right now, the emotion is lowest and logic is highest," Alicia Holdaway, president of the Salt Lake Board of Realtors in Utah and an agent with Summit Sotheby's International Realty. says. "As soon as we look at homes, those are going to swap."

Emotions can take over and logic can go out the door. A Realtor will be your logic no matter how much you love a home. Holdaway says she will not take a buyer to see a home without first discussing what a real estate contract says and what terms can be put in place along with negotiations. A Realtor can stay grounded through this roller coaster of a ride.

Be firm on your needs, flexible on the rest

Make a list of the features you need in a home versus those amenities that would be nice to have. Spend a good bit of time thinking about the reasons you want to purchase a home to help distinguish between needs and wants.

Once you have your list you want to stick to those must-have items. You might love a home but it has only one full bathroom. You do not want to settle for something that does not tick off your must-have items.

There is a difference in compromising on cosmetic characteristics and amenities that you do not need in a home. A kitchen might have your must-haves but you hate the paint color. This is something that should not detour you from purchasing a home. Paint color can be easy and fairly budget-friendly to change.

"A house may not be HGTV-ready, but it can be something that can be improved over time," says Stephen Medeiros, president-elect of the Massachusetts Association of Realtors and an associate broker at Keller Williams Realty in Dartmouth.

Don't let negative emotions get the upper hand

Searching for a home, especially in a hot market, can be frustrating. You find a home you like and before you can even discuss it or think about an offer, it is already under contract.

According to Josh Harris, a certified financial planner and lecturer in finance at Clemson University, you do not want anxiety to make you rush into a bad decision. Before you get too worked up, take a break and think about why you are so anxious. He says to get a reality check from your real estate agent.

Holdaway says a good way to prevent this frustration is to not look at too many homes. First-time homebuyers are making this mistake a lot she confides. Doing this will lead to exhaustion and wears you down making you just want to make a decision to get the process over with. "They're sick of looking, and they say, 'I'll make it work. I just need a house,'" Holdaway says.

Stick to your price range and priorities

Buyers want to please a seller so they can seal the deal but this is not always the wisest way to go about the process. In a hot market, buyers are under pressure to make these concessions. Before you make any concessions make sure you completely understand the risks.

Many homes in the current market are in bidding wars. Potential homebuyers must compete with their offer to win the war. A good example is to offer above the listing price. Before doing this, make sure you can afford the higher price and still be comfortable financially.

"You don't want to live for your home," Medeiros says.

"There's always another great house," Stevens says. "This isn't the only one."

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Housing Market Is on its Way Towards a Full Recovery

One of the key indicators that the housing market is on its way towards a full recovery post-Recession is house prices.  House prices reached “bubble status” pre-Recession and was the partial cause of the entire crash of the mortgage industry during the crisis because buyers found themselves living in homes with loans that vastly exceeded the appraised value of the home.  House prices must maintain a delicate balance as the ebb and flow of the housing market dictated by new home and existing home buyer supply and demand raises and lowers pricing year-over-year.

The House Price Index (HPI) reported that house prices have been increasing for the last three months as of May, 2015, which had an annual growth rate of 5.4%.  That percentage was higher than April’s increase of 4.7% and March’s increase of 3.8%.  The HPI is issused by the Federal Housing Finance Agency, and another report by The Standard and Poor’s/Case-Shiller also showed a slower growth based on a moving three-month average.  This growth in home prices shows a strong demand for new and existing homes from home buyers nationwide.

The National Association of Realtors (NAR) also had good news to report about existing homes under contract nationally.  The Pending Home Sales Index (PHSI) reached a record-high in 9 years in May, 2015, and declined only slightly in June.  This statistic is based on homes with signed contracts as reported to the NAR.  Even with the decline, the PHSI was up 8.2% compared to June, 2014, and the number of homes under contract has been increasing for the last 10 months consecutively.  The Southern Region reflected a 5% increase for the entire year of 2015 for contracts on homes for sale.

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Newly Built Home Sales Rise 25.8% Year-Over-Year

Just like summer here in New Orleans, July’s housing market was hot! The new home sales activity is on its way back to normal with annual home sales already reaching 507,000. The Census Bureau and HUD reports that newly built home sales rose 5.4% from June of this year and 25.8% from July of last year.  New home inventories were reported at 218,000 in July which is the highest level that have been seen in over five years.
This increase can also be seen in private residential construction spending where the high was at an annual rate of $387 billion in July.  This solidifies the continuing economic growth in the construction industry.  Single-family homes have pushed construction expansion 15.8% on a year-over-year basis and multifamily new home construction spending is 21.2% higher than it was reported a year ago.

Developers are not the only ones that are seeing a positive growth, the National Association of Realtors (NAR) reports increase in existing home sales.  Existing home sales increased in July 0.5% from June and 7.4% from July of last year. Completed sales (closings) were reported at the highest since February 2007.

The confidence for home buyers stems from the strengthening economy.  The Bureau of Economic Analysis reports that the global economic developments (GDP) growth is at a strong 3.7% rate.  These findings were based on several factors including investment, faster growth for consumption, government spending and trade components.

Now is the time for buyers buying new homes or existing homes to tap into the housing market. Sales are solid which makes the real estate market a stable venture. New home prices are continuing to strengthen making real estate a great investment.

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