Owners: Be Smart When Financing Renovations

The number of homeowners who are planning to take on home improvement projects or repairs this year is expected to increase 6.7 percent, according to the Joint Center for Housing Studies at Harvard University. As more owners look to remodel, they may be weighing how to fund their renovations.

Read more: What to Watch for in Home Renovations

One-third of affluent homeowners—those who earn at least $100,000 a year—plan to use credit cards to pay for home renovation projects, according to a new survey of more than 3,000 respondents conducted by LightStream, a lending division of SunTrust Banks. The percentage of those who are turning to credit cards to pay for their renovation projects is rising: This year, 32 percent said they would use credit cards, compared to 26 percent in 2016.

Homeowners may be using credit cards, even though they intend to pay for the balance as soon as it’s due, because they want the benefits of getting airline miles or other rewards from using the credit card, says Todd Nelson, LightStream’s business development officer. But for those who don’t intend to pay the credit card off right away, they may want to think twice about using credit cards to pay for their home renovation projects, warns Shomari D. Hearn, a certified financial planner with Palisades Hudson Financial Group in Fort Lauderdale, Fla.

“It’s fine to tap savings or use a home-equity loan or line of credit, but I don’t think it’s a good idea to use credit cards for home improvements,” Hearn says. “Interest rates on credit cards tend to be in the double digits, plus it’s personal debt and the interest is not tax-deductible.”

With recent home price increases of 5.5 percent in 2016, the number of mortgage holders who now have tappable equity is at 39.5 million, according to Black Knight Financial Services, a real estate data firm. With a HELOC—a home-equity line of credit—the interest may be tax-deductible and there are no upfront frees, says Ann Thompson, a senior vice president and divisional sales executive for Bank of America in San Francisco. A cash-out refinance is another option, where borrowers refinance for more than what they owe on the property and then take the difference out in cash.

For either a HELOC or cash-out refinance, homeowners do need to factor in added fees, such as refinance fees from the application, which start at $475 at Bank of America. There are also extra processing fees and closing costs to factor in too.

Source: “More Homeowners Pay for Repairs With Credit Cards,” realtor.com® (April 26, 2017)

4 Checks to Protect a Home in the Spring

The spring season can bring about dangers to a home from strong wind gusts, rains, and fluctuating temperatures. Be sure to take steps to protect your home this season.

Read more: Help Clients Prepare for Weather Challenges

1. Check outside faucets and exteriors for flood risks.

Inspect your outside hose faucets for any damage from the winter. Hold your thumb over the opening. If the flow stops completely, the pipe indoors could possibly be damaged and may need to be replaced. Also, check the hose for dry rot and examine the foundation and exterior walls for any cracks or potential areas where water could enter.

2. Check the roof and gutters.

The roof may have been damaged by heavy storms or hail. Don’t assume that because there are no visible signs of damage, there isn’t some beneath the shingles. Have it inspected. Also, clean the gutters to avoid risks of pooling water and leaks.

3. Check the landscaping.

Beware of trees that are too close to the home. In a storm, these could pose a threat. Have any tall overhead branches trimmed if they could potentially fall and hit the roof or damage the home.

4. Check the foundation.

Examine the lawn and near the foundation for any low areas. Water will collect and pool in any low areas. This could then potentially seep through any cracks in the home’s foundation or create a breeding ground for insects. Fill any low areas with compact soil and repair cracks in the foundation. (Read more: 5 Things to Watch for with a Foundation Check)

http://realtormag.realtor.org/daily-news/2017/04/27/4-checks-protect-home-in-spring

Generation X: Buying the Biggest Homes & Biggest Home Sellers

Generation X, buyers ages 37 to 51 years, make up the second largest share of home buyers by generation at 28 percent of all home buyers in 2016. The median age for this group is 43 years old and they were born between 1965 and 1979. They tend to have the largest families; 62 percent of these buyers have one or more children under the age of 18 years living at home—30 percent have two children under 18 years at home—and they make up the highest share of buyers that are married couples at 68 percent. The primary reasons that Generation X purchases homes is the desire for a larger home, job-related relocation, and change in family situation more than other generations.

Generation X make up the second largest share of first-time home buyers at 26 percent. Correspondingly, they make up the largest share to purchase detached single-family homes at 87 percent. They also have the highest median household income at $106,600, boosted by double income couples. They also purchase homes in accordance with their incomes and buy the most expensive homes of all generations—a median home price of $261,000. This generation of buyers also purchases the largest homes in size at a median square feet of 2,100.

Buyers 37 to 51 years are also the most racially and ethnically diverse group of home buyers, with 21 percent identifying as a race other than White/Caucasian. This group also have the highest percentage of home buyers that speak another language besides English. Thirteen percent of buyers 37 to 51 years were not born in the United States.

Generation X purchases new homes for the ability to choose and customize design features and previously owned homes for more charm and character. These buyers, like Millennials, purchase the shortest median distance from their previous home at a median of 10 miles. Generation X are the most likely to purchase in neighborhoods that were convenient to schools. This group is the most likely to compromise on the condition of the home at 21 percent. The length of the home search is the longest for Generation X buyers at 12 weeks, while all other generations search for a median of 10 weeks.

Generation X primarily uses savings and proceeds from a previous sale for the downpayment of their home purchase. However, these buyers are delayed four years from purchasing a home due to debt. Eighteen percent of buyers 37 to 51 are delayed five years and 27 percent are delayed more than five years from buying a home. Of these buyers that said saving for the downpayment was the most difficult step in the buying process, 41 percent have credit card debt and 15 percent have child care expenses, more than other generations. This group of buyers also have the highest median amount of student loan debt at $30,000. This group of buyers cancels vacations more than other age groups in order to save for a home. Equal with Millennials, 45 percent said that the mortgage application was not difficult or no more difficult than expected. Of the six percent that have a mortgage lender reject their application, 20 percent said it was due to their debt to income ratio. Generation X also has the highest share that sold a distressed property at 14 percent, primarily in 2011. More than other generations, buyers 37 to 51 use a fixed-rate mortgage at 93 percent.

Generation X is the largest share of home sellers at 29 percent. They also have the highest median selling incomes at $122,100 and sell median priced homes at $240,000. Among Generation X sellers, one in five wanted to sell earlier but could not because their home was worse less than their mortgage. Sellers typically purchased their home 10 years ago, in 2006. Generation X sellers equally are the most racially and ethnically diverse of the generations. On par with Millennials, they move within the same state at the highest rates. Buyers 37 to 51 sell the most homes in urban and central city areas and move the shortest distances. Their primary reasons for selling is a job relocation, the neighborhood is less desirable, and a change in family situation.

Posted in Economist Commentaries, by Amanda Riggs on April 14, 2017

Spring homebuying season kicks off strongly as prices and sales propel higher

- Existing, single-family home sales totaled 416,580 in March on a seasonally adjusted annualized rate, up 4 percent from February and up 6.9 percent from March 2016.

- March’s statewide median home price was $517,020, up 8 percent from February and up 6.8 percent from March 2016.

- At the regional level, the San Francisco Bay Area, Inland Empire, and Los Angeles metro area all experienced healthy annual sales gains of 6.4 percent, 8.5 percent, and 6.7 percent, respectively.

LOS ANGELES (April 17) – California’s spring housing market posted a strong start to the year as existing home sales and median price registered healthy gains in March on both a monthly and annual basis, as did every major region in the state, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) said today. 
Closed escrow sales of existing, single-family detached homes in California remained above the 400,000 benchmark for a full year and totaled a seasonally adjusted annualized rate of 416,580 units in March, according to information collected by C.A.R. from more than 90 local REALTOR® associations and MLSs statewide. The statewide sales figure represents what would be the total number of homes sold during 2017 if sales maintained the March pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales. The March figure was up 4 percent from the 400,720 level in February and up 6.9 percent compared with home sales in March 2016 of a revised 389,770.

“March’s solid sales performance was likely influenced by the specter of higher interest rates, which may have pushed buyers off the sidelines and close escrow before rates moved higher,” said C.A.R. President Geoff McIntosh. “The strong housing demand, coupled with a shortage of available homes for sale, is pushing prices higher as would-be buyers try to purchase before affordability gets worse.”

Following back-to-back monthly price declines, the median price of an existing, single-family detached California home climbed back above $500,000 in March. The median price was up 8 percent from $478,570 in February to reach $517,020 in March, and was 6.8 percent higher than the $484,120 recorded in March 2016. The median sales price is the point at which half of homes sold for more and half sold for less; it is influenced by the types of homes selling, as well as a general change in values.

“The spring homebuying season is off to a good start, as the economic and market fundamentals remain solid for the most part,” said C.A.R. Senior Vice President and Chief Economist Leslie Appleton-Young. “However, higher interest rates, a dearth of housing inventory, and slow wage growth will continue to have an adverse effect on housing affordability that is putting upward pressure on home prices, and is sure to hamper the market throughout the year.” 
Other key points from C.A.R.’s March 2017 resale housing report include:

• New statewide active listings continued to decline, falling 12 percent from a year ago, and contributed to a full one-month drop in the unsold inventory index.

• The substantial decline in new listings combined with March’s robust sales brought down C.A.R.’s Unsold Inventory Index to its lowest level so far this year and the third lowest level in more than three years. The index, which measures the number of months needed to sell the supply of homes on the market at the current sales rate, dropped a full month to 3.0 months in March from 4.0 months in February. The index stood at 3.6 months in March 2016.

• The median number of days it took to sell a single-family home fell from 33.5 days in February to 26.7 days in March and was down from 29.9 days in March 2016.

• C.A.R.’s sales-to-list price ratio* was 99.3 percent of listing prices statewide in March, 98.6 percent in February, and 98.9 percent in March 2016.

• The average price per square foot** for an existing, single-family home statewide was $252 in March, $241 in February, and $232 in March 2016.
• San Francisco County had the highest price per square foot in March at $872/sq. ft., followed by San Mateo ($838/sq. ft.), and Marin ($688/sq. ft.). Counties with the lowest price per square foot in March included Del Norte ($115/sq. ft.), Lassen ($118/sq. ft.), and Siskiyou ($125/sq. ft.).

• Mortgage rates have risen since last fall. The 30-year, fixed-mortgage interest rate averaged 4.20 percent in March, up from 4.17 percent in February and up from 3.69 percent in March 2016, according to Freddie Mac. The five-year, adjustable-rate mortgage interest rates dipped in March to an average of 3.21 percent, from 3.20 percent in February and 2.90 percent in March 2016.

Graphics (click links to open):

• March sales at-a-glance infographic.
• Calif. historical existing home sales.
• Calif. historical median home price.
• Share of sales by price range.
• Calif. price per square foot.
• Calif. sales to list price ratio.

Note:  The County MLS median price and sales data in the tables are generated from a survey of more than 90 associations of REALTORS® throughout the state, and represent statistics of existing single-family detached homes only. County sales data are not adjusted to account for seasonal factors that can influence home sales.  Movements in sales prices should not be interpreted as changes in the cost of a standard home.  The median price is where half sold for more and half sold for less; medians are more typical than average prices, which are skewed by a relatively small share of transactions at either the lower-end or the upper-end. Median prices can be influenced by changes in cost, as well as changes in the characteristics and the size of homes sold.  The change in median prices should not be construed as actual price changes in specific homes.

*Sales-to-list price ratio is an indicator that reflects the negotiation power of home buyers and home sellers under current market conditions. The ratio is calculated by dividing the final sales price of a property by its last list price and is expressed as a percentage.  A sales-to-list ratio with 100 percent or above suggests that the property sold for more than the list price, and a ratio below 100 percent indicates that the price sold below the asking price.
**Price per square foot is a measure commonly used by real estate agents and brokers to determine how much a square foot of space a buyer will pay for a property.  It is calculated as the sale price of the home divided by the number of finished square feet.  C.A.R. currently tracks price-per-square foot statistics for 39 counties.

Leading the way…® in California real estate for more than 110 years, the CALIFORNIA ASSOCIATION OF REALTORS® (www.car.org) is one of the largest state trade organizations in the United States with more than 190,000 members dedicated to the advancement of professionalism in real estate. C.A.R. is headquartered in Los Angeles.

March 2017 County Sales and Price Activity(Regional and condo sales data not seasonally adjusted)

March-17	Median Sold Price of Existing Single-Family Homes							Sales
State/Region/County	Mar-17	Feb-17		Mar-16		Price MTM% Chg	Price YTY% Chg	Sales MTM% Chg	Sales YTY% Chg
CA SFH (SAAR)	$517,020	$478,570	r	$484,120	r	8.0%	6.8%	4.0%	6.9%
CA Condo/Townhomes	$430,620	$407,040		$400,170	r	5.8%	7.6%	46.8%	6.0%
Los Angeles Metro Area	$474,550	$454,270		$448,420	r	4.5%	5.8%	44.4%	6.7%
Inland Empire	$335,660	$327,510		$309,890		2.5%	8.3%	40.3%	8.5%
S.F. Bay Area	$837,720	$784,470		$761,090	r	6.8%	10.1%	62.7%	6.4%
S.F. Bay Area
Alameda	$833,750	$786,000		$758,000	r	6.1%	10.0%	66.4%	5.5%
Contra Costa	$585,000	$554,250		$548,780	r	5.5%	6.6%	76.7%	11.2%
Marin	$1,250,000	$1,174,500		$1,187,500	r	6.4%	5.3%	67.9%	0.7%
Napa	$675,000	$660,000		$650,000	r	2.3%	3.8%	98.3%	23.2%
San Francisco	$1,350,000	$1,276,000		$1,355,000	r	5.8%	-0.4%	60.4%	12.6%
San Mateo	$1,350,000	$1,352,000		$1,205,000		-0.1%	12.0%	69.9%	8.6%
Santa Clara	$1,130,000	$1,100,000		$1,065,000		2.7%	6.1%	57.2%	11.6%
Solano	$400,000	$382,500		$370,000	r	4.6%	8.1%	42.5%	-6.8%
Sonoma	$635,000	$598,640		$560,000	r	6.1%	13.4%	43.9%	-5.2%
Southern California
Los Angeles	$465,810	$470,200	r	$441,700	r	-0.9%	5.5%	45.3%	8.4%
Orange	$760,000	$745,000		$720,200	r	2.0%	5.5%	48.2%	7.3%
Riverside	$375,000	$367,250		$350,000	r	2.1%	7.1%	47.3%	12.9%
San Bernardino	$263,100	$265,450		$237,350		-0.9%	10.8%	29.1%	1.1%
San Diego	$571,000	$559,950		$550,000	r	2.0%	3.8%	42.3%	8.2%
Ventura	$672,220	$636,180		$620,020	r	5.7%	8.4%	58.0%	-15.8%
Central Coast
Monterey	$562,450	$535,000		$490,000		5.1%	14.8%	31.6%	4.1%
San Luis Obispo	$547,500	$556,000		$550,000	r	-1.5%	-0.5%	64.6%	10.2%
Santa Barbara	$810,000	$844,000		$569,000		-4.0%	42.4%	44.2%	-4.3%
Santa Cruz	$814,500	$799,000		$790,000		1.9%	3.1%	15.5%	-15.8%
Central Valley
Fresno	$245,000	$229,900		$231,000	r	6.6%	6.1%	36.3%	10.2%
Glenn	$211,000	$181,500		$196,000	r	16.3%	7.7%	16.7%	16.7%
Kern	$225,000	$218,000		$220,000	r	3.2%	2.3%	52.1%	4.1%
Kings	$215,000	$222,500		$205,000	r	-3.4%	4.9%	11.5%	-8.4%
Madera	$220,000	$252,000		$219,500	r	-12.7%	0.2%	40.0%	16.7%
Merced	$229,500	$231,000		$185,000	r	-0.6%	24.1%	33.3%	-8.9%
Placer	$440,000	$435,000		$405,000	r	1.1%	8.6%	45.2%	0.9%
Sacramento	$326,750	$324,900		$305,000	r	0.6%	7.1%	37.4%	-1.9%
San Benito	$525,000	$517,500		$495,000		1.4%	6.1%	13.2%	-25.9%
San Joaquin	$320,000	$314,730		$295,000	r	1.7%	8.5%	53.9%	-1.5%
Stanislaus	$271,450	$270,500		$262,000	r	0.4%	3.6%	52.2%	8.1%
Tulare	$210,000	$216,500		$198,000	r	-3.0%	6.1%	27.8%	17.9%
Other Calif. Counties
Amador	$314,900	$265,000		$307,000	r	18.8%	2.6%	113.0%	-10.9%
Butte	$287,500	$290,000		$286,810	r	-0.9%	0.2%	34.8%	-7.7%
Calaveras	$292,000	$294,500		$270,000	r	-0.8%	8.1%	25.7%	-8.3%
Del Norte	$130,000	$265,000		$199,000	r	-50.9%	-34.7%	-21.4%	-52.2%
El Dorado	$450,000	$419,500		$435,010	r	7.3%	3.4%	57.2%	-15.8%
Humboldt	$295,000	$297,500		$280,000	r	-0.8%	5.4%	51.5%	-1.9%
Lake	$215,000	$230,000		$242,450	r	-6.5%	-11.3%	58.7%	-15.1%
Lassen	$182,000	$171,000		NA		6.4%	NA	122.2%	NA
Mariposa	$285,000	$335,000		$227,500	r	-14.9%	25.3%	-40.0%	12.5%
Mendocino	$395,000	$381,500		$379,000	r	3.5%	4.2%	32.3%	-19.6%
Mono	$1,022,500	$520,880		$580,000		96.3%	76.3%	166.7%	-23.1%
Nevada	$383,750	$390,000		$364,900	r	-1.6%	5.2%	44.0%	2.9%
Plumas	$565,000	$210,000		$225,000	r	169.0%	151.1%	-8.3%	-47.6%
Shasta	$239,000	$235,000		$222,250	r	1.7%	7.5%	41.7%	-3.1%
Siskiyou	$184,000	$240,000		$151,000	r	-23.3%	21.9%	69.6%	30.0%
Sutter	$258,000	$269,120		$232,000	r	-4.1%	11.2%	39.1%	-4.5%
Tehama	$201,000	$225,000		$189,500	r	-10.7%	6.1%	110.5%	0.0%
Tuolumne	$270,500	$287,500		$244,900	r	-5.9%	10.5%	33.3%	-4.5%
Yolo	$393,000	$372,000		$362,500	r	5.6%	8.4%	33.3%	-24.1%
Yuba	$254,900	$256,500		$235,450	r	-0.6%	8.3%	15.9%	-4.8%

r = revised
NA = not available

March 2017 County Unsold Inventory and Time on Market
(Regional and condo sales data not seasonally adjusted)

March-17	Unsold Inventory Index					Median Time on Market
State/Region/County	Mar-17	Feb-17		Mar-16		Mar-17	Feb-17		Mar-16
CA SFH (SAAR)	3.0	4.0		3.6		26.7	33.5	r	29.9
CA Condo/Townhomes	2.4	3.3		2.9		24.3	27.3		27.6
Los Angeles Metro Area	3.3	4.5		4.0		37.6	45.3		48.6	r
Inland Empire	3.6	4.8		4.5		44.7	50.2		54.4
S.F. Bay Area	2.2	3.0		2.6		21.1	24.3		21.2
S.F. Bay Area
Alameda	1.9	2.6		2.2		18.3	20.2		18.0
Contra Costa	2.1	3.0		2.4		19.6	22.3		18.9
Marin	3.7	4.6		3.5	r	24.2	40.7		24.6	r
Napa	3.4	6.2		4.5	r	50.2	73.1		48.3	r
San Francisco	2.0	2.7		2.7		21.2	23.9		20.4
San Mateo	2.0	2.5		2.3	r	18.1	19.8		18.6
Santa Clara	2.0	2.5		2.6	r	17.9	20.7		18.1
Solano	2.4	3.1		2.5	r	40.2	47.7		38.5
Sonoma	2.8	3.4		3.0	r	42.4	48.7		44.7
Southern California
Los Angeles	3.0	4.1		3.6		29.8	38.8		43.2
Orange	3.4	4.5		3.9		32.6	44.0		49.0
Riverside	3.6	5.3		4.8		45.6	50.1		57.5
San Bernardino	3.5	4.1		4.0		42.8	50.3		48.7
San Diego	2.7	3.5		3.4		21.7	24.4		23.2
Ventura	3.6	4.8		4.0		52.0	64.6		53.8
Central Coast
Monterey	4.2	5.3		4.9	r	27.4	29.8		29.7
San Luis Obispo	3.6	5.4		4.7		29.0	46.8		28.8
Santa Barbara	4.8	6.3		4.6		32.5	48.7		31.0
Santa Cruz	3.6	3.2		3.4	r	20.1	35.0		21.1
Central Valley
Fresno	3.5	4.4		4.2		25.5	27.5		27.8
Glenn	6.4	6.9		5.3		52.8	50.3		100.7
Kern	3.1	4.7		3.8		27.4	38.3		29.1
Kings	3.2	3.0		2.9		27.8	37.2		37.8
Madera	4.6	5.9		6.9		45.5	71.2		80.3
Merced	3.1	3.7		3.4		29.5	25.4		41.2
Placer	2.6	3.2		3.2		22.7	24.7		23.0
Sacramento	2.1	2.5		2.4		20.2	23.8		21.1
San Benito	3.3	3.6		2.9	r	33.4	47.6		23.1
San Joaquin	2.6	3.5		2.6		23.6	28.2		24.2
Stanislaus	2.4	3.4		2.8		23.8	28.8		24.6
Tulare	4.1	4.9		4.6		29.2	43.7		33.5
Other Counties in California
Amador	4.6	7.9		3.9		56.0	38.3		75.5
Butte	2.9	3.5		3.4		24.8	50.0		26.6
Calaveras	5.1	5.9		5.1		72.6	85.7		95.8
Del Norte	11.4	8.7		5.9		123.4	112.8		112.8
El Dorado	3.7	4.6		3.9		39.1	45.5		38.0
Humboldt	3.8	5.4		3.7		23.6	34.2		42.1
Lake	4.8	7.4		4.3		59.1	55.2		76.4
Lassen	6.0	12.2		NA		123.6	82.8		NA
Mariposa	7.6	3.9		13.1		27.1	50.3		91.0
Mendocino	7.3	8.5		7.3		121.7	81.3		95.8	r
Mono	8.9	14.3		NA		129.3	121.0		NA
Nevada	3.4	4.2		4.3		38.7	54.0		29.7
Plumas	20.9	15.0		11.8		129.3	130.7		129.7
Shasta	3.9	5.1		4.4		29.5	39.3		47.7
Siskiyou	5.8	9.2		7.7		79.1	91.0		80.3
Sutter	3.0	3.4		3.3		24.8	39.7		48.6
Tehama	4.8	9.7		5.3		91.0	65.8		55.2
Tuolumne	5.0	6.0		5.3		68.3	82.8		80.9
Yolo	3.0	3.4		2.4		22.8	26.6		21.5
Yuba	2.5	2.5		2.7		28.0	28.0		25.4

r = revised
NA = not available