Millennials purchased 36 percent of homes last year, which is the highest share of any age group, according to the National Association of REALTORS®. But faced with one of the tightest, most competitive housing markets in years, they’re being pushed out of some of the the nation’s largest and priciest cities.

Therefore, young home shoppers are relocating to more affordable parts of the country. Realtor.com® identified cities with the highest percentage of mortgages issued to millennials, a generation defined as those born between 1981 and 1996. The following markets had the highest share of millennial mortgages:

1. Appleton, Wis.

  • Median home list price: $150,000
  • Percentage of mortgages to millennials: 57%

2. Des Moines, Iowa

  • Median home list price: $294,000
  • Percentage of mortgages to millennials: 56.9%

3. Utica, N.Y.

  • Median home list price: $139,500
  • Percentage of mortgages to millennials: 56.8%

4. Provo, Utah

  • Median home list price: $376,700
  • Percentage of mortgages to millennials: 56.5%

5. Duluth, Minn.

  • Median home list price: $175,000
  • Percentage of mortgages to millennials: 56.3%

6. Lafayette, La.

  • Median home list price: $210,100
  • Percentage of mortgages to millennials: 56.3%

7. Lancaster, Pa.

  • Median home list price: $275,000
  • Percentage of mortgages to millennials: 56%

Source: “Forget SF, Goodbye NYC! You Won’t Believe the New Millennial Magnets for Home Buyers,” realtor.com® (April 30, 2018)

Median prices for luxury homes in the Santa Monica, Calif., ZIP code of 90401 have surged 60.7 percent over the last year, making it the hottest high-end ZIP code in the country, according to a new analysis by realtor.com®. The site’s researchers culled housing data from April 2016 through March 2017 for more than 600 ZIP codes where median list prices are above $1 million. They compared that 12-month period to the previous year to identify the ZIP codes with the largest median price increases. (Note: Researchers limited their list to two ZIP codes per state for geographic diversity.) The hottest luxury ZIP codes are:

1. Santa Monica, Calif.: 90401

  • Median list price: $3,045,000
  • Percentage increase in median home prices: 60.7

2. West Newton, Mass.: 02465

  • Median list price: $2,219,000
  • Percentage increase in median home prices: 60.4

3. Palo Alto, Calif.: 94301

  • Median list price: $5,599,000
  • Percentage increase in median home prices: 59.1

4. Kattskill Bay, N.Y.: 12844

  • Median list price: $2,365,000
  • Percentage increase in median home prices: 42.7

5. Seattle: 98101

  • Median list price: $1,475,000
  • Percentage increase in median home prices: 42.1

6. Bellevue, Wash.: 98005

  • Median list price: $1,480,000
  • Percentage increase in median home prices: 41.5

7. New York: 10002

  • Median list price: $1,806,000
  • Percentage increase in median home prices: 39

Source: “Luxury Liftoff? The 10 Ritzy Regions Where Home Prices Are Soaring the Highest,” realtor.com® (April 9, 2018)

Be careful: You and your buyer may be under surveillance when touring a property. Some sellers are using surveillance cameras inside their home to record the sight and sound as prospective buyers walk through.

The increase in these home recordings—many from security systems that owners already have installed—are raising some concerns surrounding privacy in real estate transactions, MarketWatch reports.

Jill Comfort, a real estate pro in Phoenix, told MarketWatch she recalls recently walking through a home with her client and spotting several surveillance cameras that appeared to be “following us” and that made her and her client feel “awkward.”

“I can understand where some sellers are leery of strangers walking through their house, but that’s what happens when you put your house on the market,” Comfort says.

Andie DeFelice, a broker with Savannah-based Exclusive Buyer’s Realty Inc. and the president of the National Association of Exclusive Buyer Agents, said she was unaware she and her client had been watched by the seller last fall when they toured. That is, until after the deal settled and the client was meeting a neighbor who informed him, “I just want you to know the guy who sold the house knew he had a buyer the minute you walked through.” The neighbor was able to repeat the conversation between the client and broker when they had first toured the property.

“It’s one of those things where it is the person’s home, they have the right to do whatever—but you feel a little violated,” DeFelice says.

Sellers may be “desperate” for feedback and turn to recorders to get it, says Ilyce Glink, author of 100 Questions Every First-Time Home Buyer Should Ask.

Source: www.realtormag.com

Though homeowners are gaining equity across the country, the number of underwater borrowers in some areas remains high. The metro with the highest share of homeowners with negative equity is Miami-Miami Beach-Kendall, Fla., where the number of those in the red has grown 13.1 percent year over year, according to a new report from CoreLogic.

Nationwide, the number of homes with a mortgage in negative equity—which can occur due to a decrease in a home’s value or an increase in the homeowners’ mortgage debt—dropped 1 percent between the third and fourth quarters of 2017. About 2.5 million homes, or 4.9 percent of all properties with a mortgage, were still in a negative equity position as of the fourth quarter, according to CoreLogic. Overall, negative equity in the fourth quarter plunged 21 percent year over year.

In the fourth quarter of 2009, negative equity peaked at 26 percent of all residential properties with a mortgage, according to CoreLogic’s records. The following metros had the highest share of negative equity in the fourth quarter of 2017:

  • Miami: 13.1%
  • Chicago: 10.1%
  • Las Vegas: 9.2%
  • Washington, D.C.: 6.5%
  • New York: 5.4%
  • Boston: 3.7%

The following chart from CoreLogic shows the negative equity share on the state level.

Source: CoreLogic

Taking aim at real estate is not the way to generate growth.

1950s real estate ad

The federal government can give housing and the economy a boost by taking a page from the last time the country had a big inventory shortage. After coming home victorious from World War II, American troops were ready to enjoy life, and they didn’t disappoint. They gave us the baby boom and the economic boom.

Many returning soldiers were in their prime years for household formation. The result: tens of millions of babies born in just their first few years back. The numbers show a birth rate of around 110 to 120 per 1,000 women, up from around 75 per 1,000 women prior to the war.

Just as consequential was the housing boom. Private residential investment, mostly arising from new home construction, went from $3 billion a year over the five years prior to the war to $16 billion a year for the five years immediately following.

The contribution of home construction to the country’s gross domestic product rose from less than 1 percent to more than 5 percent. Consequently, GDP grew at an incredible rate of 8 percent in both 1950 and 1951. Jobs and incomes rose significantly as a result and federal tax revenue in those two years tripled and quadrupled.

What’s happening now? Congress is mulling over the mortgage interest deduction. Commercial real estate could get whacked by a change in the tax status of 1031 like-kind exchanges. Mortgage accessibility is being closely scrutinized even though default rates are running at historic lows. Capital at the secondary mortgage companies, Fannie Mae and Freddie Mac, is rapidly being drained off by the Treasury. Why harm real estate and economic growth at a time when, like the postwar period, home inventories are well below demand?

A better decision involves recognizing the massive housing shortage we have in this country from a decade-long underproduction of homes. We need more construction. An economic boom, not unlike the one we had almost 70 years ago, could result.

green-money

The median down payment on a single-family home or condo in the fourth quarter of 2017 was $18,000, up 20 percent from $14,950 a year prior, according to a new report by ATTOM Data Solutions. The 2017 figure represents 7.1 percent of the median sales price of the home purchased, up from 6.2 percent in the fourth quarter of 2016.

The Big Down Payment Myth

Many Americans, particularly young people, think they need a lot more money down than they really do.

Among 143 metro areas analyzed, the top five cities where residents paid the highest down payments in the fourth quarter of 2017 were in California:

  • San Jose, Calif.: $268,000
  • San Francisco: $174,500
  • Santa Rosa, Calif.: $123,450
  • Los Angeles: $119,800
  • Ventura, Calif.: $107,000

Buyers in Seattle were also bringing higher down payments to settlement. “The median down payment in the greater Seattle area was 14.1 percent—twice the national average—and is continuing to rise,” says Matthew Gardner, chief economist for Windermere Real Estate in the Seattle area. “This is good news for homeowners in our market, as it provides them with a layer of protection should home prices see a downturn in the future.”

Meanwhile, the share of loans backed by the Federal Housing Administration dropped to a three-year low, according to ATTOM Data Solutions. FHA loans accounted for 12 percent of all residential property loans originated in the fourth quarter of 2017, down from 12.3 percent a year ago and the lowest share since the fourth quarter of 2014.

Residential loans backed by the U.S. Department of Veterans Affairs comprised 6.6 percent of all residential property loans originated in the fourth quarter of 2017, down from 7.6 percent a year ago.

Source: ATTOM Data Solutions

For your clients who enjoy the perks of small-town living, realtor.com® researchers have identified the best places to call home—and the Midwest reigns supreme. Realtor.com® came up with its 2018 list of most affordable small towns by  factoring in the cost of housing, employment, and safety.

Millennials have love for small towns, with about 21 percent of home buyers ages 37 or younger purchasing a home in a small town compared to 16 percent a year ago, according to the National Association of REALTORS®. “The benefit of moving to a small town is that your housing dollars can go a lot further,” says realtor.com® Chief Economist Danielle Hale. “While maybe you could get a tiny condo in the city, you can get a bigger house and land to spread out in a small town. You might even find a home with fun features like a porch to [entertain] your friendly new neighbors.”

Realtor.com® ranked the following as 2018’s top seven affordable small towns—all with populations under 40,000:

1. Logansport, Ind.

  • Median home price: $62,700

2. Mexico, Mo.

  • Median home price: $69,600

3. Guymon, Okla.

  • Median home price: $76,000

4. Defiance, Ohio

  • Median home price: $86,500

5. Albert Lea, Minn.

  • Median home price: $99,200

6. Emporia, Kan.

  • Median home price: $99,800

7. Lexington, Neb.

  • Median home price: $110,700

Source: “Top 10 Affordable Small Towns Where You’d Actually Want to Live, 2018 Edition,” realtor.com® (March 19, 2018)

Homeowners and appraisers are seeing more eye-to-eye when it comes to home values. Appraised values in February were, on average, just 0.53 percent below homeowner estimates—the fifth consecutive month where the gap between the two groups has been less than 1 percent, according to the National Quicken Loans Home Price Perception Index.

Still, more than three-quarters of metro areas had appraised values that were higher than owner estimates. Dallas owners may be the most upbeat; appraisals there were, on average, 2.72 percent higher than what owners expected. “The Home Price Perception Index is a perfect example of how localized housing is across the country,” says Bill Banfield, executive vice president of Quicken Loans Capital Markets. “The fact that appraisals are showing home values nearly 3 percent higher than expected in Dallas, but the average appraisal is lower than the owner estimates by almost 2 percent in Philadelphia, illustrates this to a tee. Dallas is an incredibly hot housing market right now, and appraisers are seeing just how fast home values are climbing. When shopping for a home—or even refinancing a current mortgage—consumers should always keep the changes in their local market in mind before estimating a home’s value.”

Source: Quicken Loans

home loan

The National Association of REALTORS® has expressed support for the Economic Growth, Regulatory Relief and Consumer Protection Act, S. 2155, a banking reform bill the Senate plans to take up this week. The bill could open up more lending to households aspiring to become homeowners, NAR says.

The bill balances consumer protections with changes that could make home lending more readily available to people who need it, including renters struggling to acquire a mortgage because they haven’t yet amassed a conventional credit history. The bill includes a requirement that Fannie Mae and Freddie Mac, the country’s largest source of home mortgage funds, accept rent and utility payment history as part of loan applicants’ credit scores.

The bill also reduces some regulatory burdens on credit unions and smaller community banks, which are often the main source of home mortgage financing in rural areas.

“We believe this bill balances financial regulation with consumer protections,” NAR President Elizabeth Mendenhall said in a statement Tuesday. “It contains some favorable provisions for the housing industry, including expanding Fannie Mae and Freddie Mac’s use of alternative credit scoring models and easing credit through reduced regulatory burdens on smaller community banks and credit unions.”

The bill would also hold Property Assessed Clean Energy—or PACE—loans more accountable and improve access to manufactured housing. Homeowners use PACE loans to make their property energy-efficient, including by installing a solar panel system. But the loans are considered problematic because they typically are put in a first-lien position, which can make them incompatible with mortgage loans.

The House has already passed its version of banking reform, known as The Financial Choice Act. Should the Senate pass its version, the bills will have to be reconciled.

“REALTORS® believe that balanced financial regulation and appropriate consumer protection will result in a more vibrant housing market and overall economy,” Mendenhall said. “NAR urges Congress and the [Trump] administration to enact S. 2155 into law.”

—Robert Freedman, REALTOR® Magazine

Mortgage rates are inching higher, and most home buyers seem unfazed by it. Only 6 percent of prospective home buyers recently surveyed said they would stop their home search if mortgage rates rose above 5 percent, according to a new survey released by the real estate brokerage Redfin of more than 4,000 consumers.

Mortgage rates hovered below 4 percent at the end of 2017, but in January the average 30-year fixed-rate mortgage surpassed 4 percent. For the last five consecutive weeks, rates have been on the rise, with the 30-year mortgage rate averaging 4.32 percent in Freddie Mac’s most recent survey.

However, 27 percent of consumers who plan to buy a home in the coming year did say that a 5 percent mortgage rate would cause them to slow their plans to buy. A quarter of buyers said that an increase would have zero impact on their plans.

Higher rates may cause some buyers to rush their timelines. Twenty-one percent of potential buyers surveyed said that a rate bump to 5 percent would cause them to increase their urgency to buy. Another 21 percent said that such an increase would instead make them want to look in more affordable areas or to buy a smaller home.

 

Source: “Redfin Survey: Just 6% of Homebuyers Would Cancel Plans to Buy if Mortgage Rates Surpassed 5%,” Redfin (Feb. 12, 2018)