Homeowners should be feeling richer. The share of equity-rich properties rose to a new high—26 percent of homeowners with a mortgage in the third quarter, according to ATTOM Data Solutions’ Q3 2017 U.S. Home Equity & Underwater Report.
In the third quarter, there were more than 14 million U.S. properties considered equity rich, which is when the combined loan amount secured by the property is 50 percent or less of the estimated market value of the property. The number of equity-rich properties is up by 905,000 compared to a year ago, according to the report.
“Median home prices nationwide are up 9.4 percent so far in 2017, the fastest pace of appreciation through the first three quarters of a year since 2013,” says Daren Blomquist, senior vice president at ATTOM Data Solutions. “Continued home price appreciation is helping to grow the number of equity-rich homeowners across the country compared to a year ago.”
ATTOM Data Solutions found these areas (in metros with a population of 500,000 or more) had the highest share of equity-rich properties:
DAILY REAL ESTATE NEWS | FRIDAY, NOVEMBER 17, 2017
The 30-year fixed-rate mortgage reached its highest average since July this week.
“The 10-year Treasury yield ticked up 6 basis points, while the 30-year mortgage rate jumped 5 basis points to 3.95 percent,” says Sean Becketti, Freddie Mac’s chief economist. “Today’s survey rate is the highest rate in nearly four months.”
Freddie Mac reports the following national averages with mortgage rates for the week ending Nov. 16:
30-year fixed-rate mortgages: averaged 3.95 percent, with an average 0.5 point, rising from last week’s 3.90 percent average. Last year at this time, 30-year rates averaged 3.94 percent.
15-year fixed-rate mortgages: averaged 3.31 percent, with an average 0.5 point, rising from last week’s 3.24 percent average. A year ago, 15-year rates averaged 3.14 percent.
5-year hybrid adjustable-rate mortgages: averaged 3.21 percent this week, with an average 0.4 point, falling slightly from last week’s 3.22 percent average. A year ago, 5-year ARMs averaged 3.07 percent.
Moving to a different house gives you license to finally ditch those worn-out chairs and frayed rugs and pick up something new. So what should you get? While everyone has their own particular styles and needs, certain items show up time and again as homeowners’ fave purchases—and speak to winning strategies for decorating a new home that we can all learn from. So here are some items to set your sights on.
Sometimes all it takes is a single piece to make a room. In Christina Vercelletto‘s case, it was an area rug. Her husband wanted one under their dining table, but she didn’t agree.
“He pushed and pushed for it, but I didn’t think we should cover up the beautiful hardwood floors,” explains the Babylon, NY, homeowner. But, he was right—it really does look nice. “Even though it’s a print of mostly neutral colors, it pulls the room together by warming it up and feels homier than just a bare floor,” she says.
Lesson learned: “An area rug acts as a frame for all of the furniture,” explains Leanne Zumbrunnen, a Showhomes franchisee in Kansas City. Rugs can also separate a room into sections and put everything in its place, she adds.
Bathroom decor can be extremely tough to master. Should you go dark and mysterious or bold and bright?
Debbie Skolnik of Scarsdale, NY, knew the solution to her tiny upstairs loo would be pretty wallpaper. “I was extremely happy when I purchased a blue and aqua toile for this space,” she recalls. “It gives the bathroom a lot of character.”
Lesson learned: Wallpaper is more impactful than paint if used sparingly, either in a small space like a powder room or on a single wall, explains Zumbrunnen.
“I typically use it on one side of a dining room where you might place a buffet,” she says.
When Nicole Crane in Los Angeles needed curtains for her windows, she was thrilled by the Aina curtains at Ikea.
“They’re linen, 100% washable, and super long so you can customize the length,” she explains, adding that the store’s hemming tape is also a dream for DIYers.
Another bonus is these curtains, seen above in pink, filter light but are opaque enough to offer privacy at night—plus they look more expensive than they are ($60 a pair).
“I have them in every room!” she says.
Lesson learned: Less expensive curtains are actually trending right now, says Zumbrunnen. “Elaborate window drapes are out of style because they tend to make a room seem aged and the windows look heavy.”
You could also indulge your DIY side and make your own!
A Keurig coffee maker
“I love my little Keurig coffee maker,” admits Desare Kohn-Laski of Coconut Creek, FL, who bought the device soon after moving in. “This inexpensive machine makes a single cup so fast, I can be out the door within one minute of pressing start,” she says. “Plus, it’s saved me lots of money I would’ve otherwise spent at Starbucks and I’m not wasting time waiting in long coffee lines.”
Lesson learned: Drinking coffee at home is a no-brainer when it comes to saving some cash. And a small investment in a couple of quality pans and a sharp knife will make cooking at home easier and faster, too, which means less money spent on takeout.
New England winters are no joke, so new homeowner Martha Rein wasn’t taking any chances. Shortly after she and her husband bought their house in Winsted, CT, she bought a Hearthstone enameled wood stove with a glass window and had it installed in one of their two working fireplaces.
“You get more warmth with a wood stove since the heat doesn’t all go up the chimney—and the glass front gives you the ambiance of an open fireplace,” she notes.
Lesson learned: Think long term about the kinds of swaps that’ll save you money and may improve your resale value. Others in this vein include storm windows and solid doors.
Anne Levy of New York City is in love with her dining table.
“It’s just outside our kitchen and has a rustic feel and two leaves for extending it,” she says. But it isn’t the look of the piece that makes her happy, it’s the way it helps her family bond.
“It’s the heartbeat of the house—we eat at it, the kids do homework there, it doubles as an art table for their projects, and it’s also the buffet for our annual Christmas party.”
Lesson learned: Go beyond single-use furniture to come up with multiple ways to use your pieces. For example, a drop-leaf table can double as a sideboard and an ottoman can be a footstool or a coffee table, with the addition of a large tray. Bonus points if the ottoman also has hidden storage!
Karina Burston needed a place to store makeup, perfume, and hair accessories when she relocated to Wakefield, RI. The fix? She had glass shelves installed on one wall of her bathroom.
“Finally, there was a place for all of my extra stuff—and it looks classy,” she says.
Lesson learned: Storage can be functional and attractive. When shopping for bathroom or pantry baskets or for crafts and toy bins, consider their look and materials. This way, colorful storage with patterns or texture can work to enhance your (already fabulous) design.
Jennifer Kelly Geddes has written for Parents.com, Chewy, Modern Farmer, Celebrations, and Care.com.
A 20 percent down payment is no longer the norm. In the past year, 1.5 million borrowers purchased their homes with down payments of less than 10 percent, according to Black Knight Financial Services. That marks a seven-year high.
A growing number of home shoppers are financing more than 90 percent of their home purchase.
“The increase is primarily a function of the overall growth in purchase lending, but, after nearly four consecutive years of declines, low down payment loans have ticked upward in market share over the past 18 months as well,” says Ben Graboske, executive vice president at Black Knight Data & Analytics. “In fact, they now account for nearly 40 percent of all purchase lending.”
The study showed that the segment with the largest growth in low down payment levels has been from purchasers making a 5 to 9 percent down payment.
Also, Graboske notes that the low down payment loans of today are nothing like the ones that were blamed on causing the housing crash. Half of all low down payment loans at that time were second loans or called “piggyback loans.” Today’s mortgages are mostly single, first liens, Graboske notes. The loans of the past also were mostly adjustable-rate mortgages, which are virtually nonexistent among low down payment mortgages today, according to the Black Knight report.
Instead, most of the loans issued nowadays are fixed-rate. Borrowers’ credit scores are also about 50 points higher than those between 2004 and 2007, according to Black Knight.
The growth of low down payment loans has mostly been triggered by new programs offered by mortgage financing giants Fannie Mae and Freddie Mac, which brought back 3 percent down payment loans in 2014. They require borrowers to pay mortgage insurance, just like the FHA does.
So far, defaults on recent low down payment loans have been modest, Black Knight reports. But economists note that’s mostly because home prices are rising fast and borrowers have been gaining equity quickly.
Inventory of available homes on the market is the lowest it’s been in two decades, but the reasons may surprise you. Two of the likely culprits are baby boomers and homeowners who are simply satisfied with their home, according to realtor.com®’s Housing Shortage Study.
Baby boomers are showing a desire to age in place in their current homes, and their refusal to sell is creating a clog in the market, according to the study. Eighty-five percent of baby boomers surveyed say they are not planning to sell their home in the next year. That means 33 million properties—many of which are urban condos or suburban single-family homes—will stay off the market. Many of those properties would be popular choices for millennials, a generation still largely waiting in the wings to break into homeownership.
“Boomers, indeed, hold the key to those homes the market desperately needs, both in the urban condo and the detached suburban home segment,” says realtor.com® chief economist Danielle Hale. “But with a strong economy and rising home prices, there’s really no reason for established homeowners to sell in the short term. Although downsizing might be on the minds of boomers, they face the same inventory shortages and price increases plaguing millennials.”
Furthermore, 63 percent of respondents to the survey indicate that their current home meets the needs of their family. They cite low interest rates (16 percent), recently purchasing their home (15 percent), and needing to make home improvements and low property taxes (each at 13 percent) as reasons not to sell. “Life events drive real estate transactions,” Hale says. “When the majority of homeowners feel their family’s needs are being met by their current home, there is nothing compelling to them to put their home on the market.”
There may be hope that more starter homes will hit the market soon. Possibly offsetting the low supply of starter homes, which is down 17 percent year over year, 60 percent of respondents to realtor.com®’s survey who did say they plan to sell in the next year are millennials who want to move to a larger home or one with nicer features.
“The housing shortage forced many first-time home buyers to consider smaller homes and condos as a way to literally get their foot in the door,” says Hale. “Our survey data reveals that we may see more of these homes hitting the market in the next year, but whether these owners actually list will depend on whether they can find another home.”
The U.S. homeownership rate may have finally bottomed out, as the share of Americans who own homes is steadily climbing. The ownership rate posted an increase in the second quarter, reversing a sharp downward trend that begun in the Great Recession.
The homeownership rate was 63.7 percent in the second quarter, the U.S. Census Bureau reported Thursday. That marks nearly a full percentage point increase from a year ago.
Last year, the homeownership rate had plunged to a 50-year low of 62.9 percent.
“The addition of 1.2 million households being homeowners is clearly good news, as more households are participating in housing equity gains,” says Lawrence Yun, chief economist for the National Association of REALTORS®. “But let’s keep it in perspective: There are fewer homeowners today compared to a decade ago, while renter households have risen by 8 million. So it is still the case that the massive $7 trillion in housing wealth gains from the cyclical low point has been accumulated by a fewer number of families in America. Further advances in homeownership are required to strengthen and broaden the middle class.”
Real estate professionals see a lot of dumb reasons why home buyers ultimately end up losing out on a deal. Practitioners recently shared some of the more common mistakes with realtor.com®, including ways to correct the situation:
1. Shopping outside their price range.
“It sounds obvious, but some home buyers just have trouble sticking to a budget,” says Benny Kang, a real estate professional in Irvine, Calif. Shopping online may increase the temptation to bump up the price range. One way to avoid this situation is to encourage your buyers to get preapproved for a loan so they know what they can truly afford and stay within their limits.
2. Submitting lowball offers in a hot market.
“If you’re in a seller’s market, making a crazy lowball offer can piss off the seller,” says Kang. Buyers would be smart to offer full price when homes are priced well. Help buyers understand how a comparative market analysis can offer insight into pricing.
3. Making a big purchase while in escrow.
Buyers often don’t realize they will need to delay big purchases and opening new credit lines while in the process of buying a home. “Even buying a fridge can throw off your credit or debt-to-income ratio,” says Kathy Conway, a Philadelphia real estate professional. If a big purchase is made, the mortgage lender’s underwriter will need to re-evaluate the buyer’s finances and recheck her credit report before closing to ensure the buyer still qualifies for the mortgage, so be sure to warn buyers when they’re approaching this period.
Buyers don’t just need money for the down payment. There are a lot of extra fees at settlement, too. Buyers can receive an estimate from their mortgage lender of what the closing costs will be before even making an offer on a property. Make sure they review that information carefully. Closing costs can vary drastically but typically cost 2 to 7 percent of the home’s purchase price.
A butler’s pantry could be a strong selling point for your listing. These spaces are often used as staging areas for meal prep and typically include a countertop and cabinets for storing tableware, dishes, serving pieces, and other items. More upscale butler’s pantries may include a dishwasher, small refrigerator, or sink.
Reba Haas, a real estate professional with RE/MAX Metro Realty in Seattle, says buyers are drawn to the accessibility of butler’s pantries. “Located adjacent to the dining room or other entertaining space, a butler’s pantry allows the host to prep for meals without having to go into the kitchen,” Haas says.
But there could be other uses, too. Some owners are using the space to store pet food, toys, and medications. The extra storage can be appealing, regardless of how buyers use it. “In every kitchen, there’s competition for storage; you need everyday dishes, glasses, silverware, and pots and pans in close proximity,” says William Hirsch, an architect and author of Designing Your Perfect House. “The butler’s pantry can become the ideal spot for storing the fancy dinnerware and linens.”
Hirsch says glass-front cabinets with interior lighting can dress up the space. Pocket doors, swinging doors, or sliding panels can help add privacy. Cabinet styles that compliment the nearby dining room rather than match the kitchen can give the pantry “a bit more formality,” he notes.
Some homeowners are opting to convert an extra closet near the dining room into a butler’s pantry. “The job can be done fairly cheaply and will typically entail removing the doors of an existing closet, filling screw holes on the door casing, stripping down the interior, and then adding back a counter-height piece of wood or remnant countertop [such as granite or quartz] and bracketed shelves above,” says Carole Marcotte, an interior designer with Form & Function in Raleigh, N.C.
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