A Glance at Homeowners’ Equity by State

Rising home prices are boosting homeowners’ equity across the country. Nationwide, owners saw home equity rise, on average, by $13,700 during 2016, according to CoreLogic’s latest “Homeowner Equity Report.” States like Washington and Oregon saw some of the largest home-price appreciation last year, up $31,000 and $27,000, respectively.

Take a look at this map to see the average equity per owner in your state.

Of the largest metros by population, the following five areas had the highest percentage of residences with equity in the fourth quarter of 2016, according to CoreLogic’s report:

1. San Francisco-Redwood City-South San Francisco, Calif.: 99.4%
2. Houston-The Woodlands-Sugar Land, Texas: 98.5%
3. Denver-Aurora-Lakewood, Colo.: 98.5%
4. Los Angeles-Long Beach-Glendale, Calif.: 97%
5. Boston, Mass.: 95.3%

Read more: Homeowners Find an Equity Bright Spot

On the other hand, the following five areas had the highest percentage of residences in negative equity:

1. Miami-Miami Beach-Kendall, Fla.: 16.1%
2. Las Vegas-Henderson-Paradise, Nev.: 15.5%
3. Chicago-Naperville-Arlington Heights, Ill.: 12.6%
4. Washington-Arlington-Alexandria, D.C.-Va.-Md.-W.Va.: 8.4%
5. New York-New Jersey-White Plains, N.Y.-N.J.: 5.1%

Source: “Homeowner Equity Report: Fourth Quarter 2016,” CoreLogic (March 2017)

Mortgage Mistakes That Jeopardize Closing

After home buyers get preapproved for a loan, they aren’t guaranteed a swift ride to closing. If they make a financial misstep, they could face a change to their mortgage terms and interest rate or even have their mortgage denied.

Here are some tips with their finances they’ll want to avoid on their road to closing:

Read more: Parents May Need a New Mortgage Perspective

Don’t move your money around.

Your buyers may have been storing their cash reserves. Warn them not to move that money out of savings and into stocks, or anywhere else for that matter. “You’d think that isn’t a big deal, but we’re counting how much money you have going into closing,” says Casey Fleming, a mortgage adviser and author of The Loan Guide: How to Get the Best Possible Mortgage. “With savings, we count that as 100 percent, but with stocks we only use 70 percent of the value because stock prices can change. So, if you have $100,000 in savings and you move that into stocks, suddenly you only have $70,000 from an underwriter’s perspective.” Lenders want to see buyers have enough for the down payment, closing costs, and at least three months of mortgage payments.

Applying for new lines of credit.

Watch how many times you apply for a new credit card or request a credit limit prior to closing. “Some credit inquiries are OK, but not all of them—and you don’t know which is which,” warns Glenn S. Phillips, CEO of Lake Homes Realty. “Worse than the actual hit on your credit score is any pattern of trying to borrow more money from more companies all at once. This suggests you are not wise with your money and just out running up debt you may not be able to repay.”

Heading out on a shopping spree.

Now is not likely the best time to buy too much new furniture, new appliances, or even a new car. “Because lenders often run credit reports within hours of the scheduled closing, running up new large debt is an awful idea,” Philips says. “It can change debt ratios, change your interest rate (which may also kill your mortgage approval), and even lead to a lender deciding you have too much debt and (you are) not worth the risk anymore.” You can still put small charges on your credit cards. You aren’t required to have a zero balance to get approved. But for any big-ticket items, it may be best to wait until after closing.

Source: “5 Stupid Money Mistakes That Can Get Your Mortgage Denied,” realtor.com® (March 13, 2017)

Real Estate This Spring: The Early Bird Wins

Entering real estate’s traditionally busiest time of year, the housing market is being buoyed by a stronger economy and consumer confidence. Job creation is 30 percent stronger this year compared to a year ago, unemployment is near a 9-year low, and wages and incomes are growing at the largest levels in about eight years, notes Jonathan Smoke, realtor.com®’s chief economist.

Read more: Get Ahead of the Spring Buying Season

Some buyers are in more of a hurry this season too. In the last two weeks, the 30-year fixed-rate mortgage rose by nearly a quarter of a point. The Federal Reserve also has given strong indication that it plans to raise short-term rates later this week (even though mortgage rates aren’t directly tied to short-term rates, they do tend to have an influence). Smoke predicts three to four major increases in mortgage rates this year. He expects rates to rise by from 10 to 25 basis points in one- to two-week spurts, followed by some holding patterns.

“The upside of higher rates is that it is getting easier to get a mortgage,” Smoke says. Mortgage credit access has increased 6.5 percent since September, the Mortgage Bankers Association reports.

“Arguably the biggest challenge to buyers this spring will be simply finding a home to buy and getting it successfully under contract,” Smoke says. “That’s because the supply of homes for sale is at an all-time low, and yet demand is strong and getting stronger.”

In January, the nation saw the lowest inventory of homes available for sale ever at realtor.com®. Inventory did manage a 2 percent increase in February, but it's still down 11 percent compared to last year.

With lower inventories and higher demand, homes are selling faster. Twenty-seven percent of listings sold in less than 30 days in February, according to realtor.com®’s data.

“The early birds who decided to buy in the winter faced less competition and enjoyed lower rates than we are seeing now,” Smoke says. “It gets more expensive and more competitive going forward, but the early-ish buyer, at this point, is still likely to come out on top, when you consider that prices and rates are likely to be much higher later in the year.”

Source: “Forget the Snow: Spring Has Sprung in the Nation’s Housing Markets,” realtor.com® (March 13, 2017)

Home Renovations That Can Hurt (and Help) Property Value

If you’re into renovation projects, then updating and revamping your home can be a lot of fun. But before you get too excited about knocking down walls and setting up a custom movie room, you might want to consider resale value. Flashy renovations don’t always yield the best returns, so you’ll need to take care when picking projects.

To make things easier for you, here are four remodels to avoid and four to invest in.

Remodels to Avoid

Luxury RoomsAn indoor basketball court, wine cellar, sauna, or even a movie theater won’t often recoup the high building costs. Luxury add-on rooms are hard to pitch to buyers unless you’re living in an upscale housing market—the average homebuyer won’t be willing to pay for them. Further, rooms that depend heavily on wired electronics, like home theaters, are hard to keep current because TVs and speakers are constantly advancing.

Swimming PoolThe average cost to build a pool is $39,084, a hefty price tag that is seldom recovered once the home is sold. It’s widely accepted throughout the industry that a homeowner will lose money by adding a swimming pool. Homebuyers don’t want to deal with the maintenance cost of a pool (which can cost as much as $2,000 a year), the added insurance premiums, and—if they have young kids—the safety issues.

Gaudy AccentsThough gold-plated crown molding or mosaic-tile backsplashes may feature prominently in your ideal vision for your home, they often turn out to be the average homebuyer’s worst nightmare. Passing fads or niche trends rarely stick around long, so if you miss the brief window when your remodeling choices are in, you’ll end up paying for it later.

Changes Contrary to Area StandardsIf you aren’t watching the trends common to your area, you could end up losing a lot of money. A home that totals $600,000 after all the renovations won’t sell in a neighborhood where homes are netting half that price. Likewise, knocking down the walls of extra bedrooms for an open layout won’t be appealing in a family-oriented neighborhood.

Remodels that Pay

Steel Doors
You don’t want to go cheap on a standard front door. At roughly $1,000, steel doors are comparatively affordable, durable, low maintenance and burglar resistant. As an added bonus, the National Association of Realtors® reports that steel door upgrades show the highest return on investment of any home remodel, at over 100 percent of the cost.

Solar PanelsAs the price of solar panels continues to drop, the energy payback on installing them is becoming greater and greater. The average rooftop solar system is now paid off in seven and a half years. After that, panels are a big money-saving asset. A study by the Lawrence Berkeley National Laboratory notes that homebuyers “consistently have been willing to pay more for a property” with solar panels—a premium of around $4 per installed watt, on average.

Related: Will Your Homeowners Insurance Cover Solar Panels?

New SidingThe exterior of your house is the first thing potential homebuyers see when they come to your home, and you want to make the best first impression. This is part of the reason redoing your siding is so profitable. New siding recoups around 80 percent of the initial cost, according to the National Association of Realtors®, thanks largely to the increased curb appeal and improved energy efficiency it provides.

Broadband Access
Access to broadband speeds is considered an essential utility for today’s connected homebuyer. Research shows that faster internet speeds increase your home value by as much as 3 percent. Homeowners can prepare their homes for higher broadband connectivity by working with area providers to install requisite equipment and wiring. Building out wall ports and cable-hiding baseboards is a good move to attract buyers, too.

Even if you’re not considering selling your home just yet, keep potential selling benefits in mind. Intrepid homeowners know that the best remodels will increase both quality of life and listing price, so take care to invest in projects that will net the biggest returns.

By Brooke Nally

http://blog.rismedia.com/2017/home-renovations-hurt-property-value/?utm_source=newsletter&utm_medium=email

White House Weighs a $6 Billion Cut to HUD

The Trump administration reportedly is considering cuts at the Department of Housing and Urban Development of more than $6 billion, which could particularly hit public housing support programs hard, according to The Washington Post. 

Read more: Ben Carson Confirmed as HUD Secretary

The potential cut is expected to reduce public housing support and end most federally funded community development grants, such as those that help to repair abandoned properties in low-income neighborhoods.

HUD’s preliminary budget would shrink by about 14 percent to $40.5 billion in fiscal 2018, if approved, The Washington Post reports. Up to $1.3 billion could be cut from the public housing capital fund, while $600 million from a public housing operating fund could be affected. That means programs on the chopping block could include the HOME Investment Partnerships Program, which provides block grants for local communities to build affordable housing, and Choice Neighborhoods, a program that invests in redeveloping low-income communities. Also, programs like the Community Development Block Grant Program could have its $3 billion in funds cut entirely.

The budget document “is still a work in progress,” says HUD spokesman Jereon Brown.

The preliminary budget does generally continue the level of funding for rental assistance programs, The Washington Post reports. HUD reportedly will recommend that many of the programs targeted for budget reductions surrounding building maintenance and community development projects be funded by other agencies. 

Some housing agencies are already expressing concerns about the preliminary budget.

“These sorts of cuts could … increase the number of families and people who are homeless because housing is less affordable,” Marc Morial, president of the National Urban League, told The Washington Post.

President Donald Trump has a goal to cut domestic spending by $54 billion in order to provide greater support to the defense budget. Trump will release the complete budget plan next week. 

John Czwartacki, Office of Management and Budget spokesman, called the HUD budget document an “internal discussion” at this point and too preliminary to comment on yet. 

“The president and his Cabinet are working collaboratively as we seek to create a budget that keeps the president’s promises to secure the country and prioritize taxpayer funds,” Czwartacki said.

Source: “Trump Administration Considers $6 Billion Cut to HUD Budget,” The Washington Post (March 8, 2017)

Americans More Confident in Housing Than Ever Before

Americans are more confident about their housing prospects than ever before, with more believing now is “a good time” to buy or sell a home, according to the just-released Fannie Mae Home Purchase Sentiment Index® (HPSI), which hit high point after high point in February.

“The latest post-election surge in optimism puts the HPSI at its highest level since its starting point in 2011,” says Doug Duncan, chief economist and senior vice president at Fannie Mae. “Millennials showed especially strong increases in job confidence and income gains—a necessary precursor for increased housing demand from first-time homebuyers.”

The Index registered an all-time high, 88.3, in February. Forty percent of Americans surveyed in the Index believe now is a good time to buy a home, up 11 points from January, while 22 percent believe now is a good time to sell, up 7 points to an Index high. Seventy-eight percent—another Index high—believe they are secure in their jobs, and 19 percent—still, another Index high—report “significantly higher” incomes in the past year.

Forty-five percent, at the same time, believe home prices will rise.

“Preliminary research results from our team find that millennials are accelerating the rate at which they move out of their parents’ homes and form new households; however, continued slow supply growth implies continued strong price appreciation and affordability constraints facing millennials and first-time buyers in many markets,” Duncan says.

Source: Fannie Mae

Gen X Homeowners Make Comeback after Coming Up in the Crash

Homeowners in Generation X are making a comeback after coming up in the housing crash, according to the National Association of REALTORS® (NAR) recently released Home Buyer and Seller Generational Trends study for 2017. More Gen X homeowners—who were most dogged by the downturn—are set to sell this year, having regained enough equity lost in the recession.

“Gen X sellers’ median tenure in their previous home was 10 years, which puts many of them selling a property they bought right around the time home values were on the precipice of declining,” says Lawrence Yun, chief economist at NAR. “Fortunately, the much stronger job market and 41 percent cumulative rise in home prices since 2011 have helped a growing number build enough equity to finally sell and trade up to a larger home. More Gen X sellers are expected this year, and are definitely needed to ease the inventory shortages in much of the country.”

Gen X has taken a backseat to millennials in recent years, who have been the primary source of opportunity in housing, Yun says. More activity on the part of Gen X homebuyers and sellers this year opens up new prospects in the market.

According to the survey, the share of Gen X homebuyers grew to 28 percent—the largest percentage since 2014—but is behind the share of millennial homebuyers, 34 percent, and the share of baby boomer homebuyers, 30 percent. The trend toward multigenerational living is going strong, driven by baby boomers housing adult children who either have not moved out or moved back in after moving out.

“The job market is very healthy for young adults with a college education, but repaying student debt and dealing with ever-increasing rents on an entry-level salary are forcing many to either shack up with several roommates or move back home,” says Yun. “This growing trend of delayed household formation is one of the main contributors to the nation’s low homeownership rate.”

Student loan debt is also an issue for Gen Xers and younger boomers, though Gen Xers have the biggest burden, with a student debt load of $30,000—more than millennials’ $25,000 and boomers’ $10,000, according to the survey. Student debt plays a major role in the ability to save for a down payment on a home; in fact, 55 percent of millennial homebuyers, 29 percent of Gen X homebuyers and 9 percent of boomer homebuyers report student debt has stifled their savings.

“Repaying student debt also appears to be slowing some current homeowners who went to graduate school and now can no longer afford to sell and trade up because of their loans,” Yun says. “Nearly a third of homeowners in a NAR survey released last year said student debt is preventing them from selling a home to buy a new one.”

Gen Xers aside, there are shifts occurring in the millennial generation. One significant movement, according to survey, is the presence of children: 49 percent of millennial homebuyers have at least one child, prompting more home-buying activity in the suburbs.

“Millennial buyers, at 85 percent, were the most likely generation to view their home purchase as a good financial investment,” says Yun. “These strong feelings bode well for even greater demand in the future as more millennials settle down and begin raising families. A significant boost in new and existing inventory will go a long way to ensuring the opportunity is there for more of them to reach the market.”

What hasn’t changed, according to the survey, is the need for a real estate professional. Ninety percent of those surveyed worked with a real estate professional to buy or sell a home—92 percent of millennial homebuyers and 90 percent of millennial sellers, and 88 percent of Gen X homebuyers and 89 percent of Gen X sellers.

For more information, please visit www.nar.realtor.

For the latest real estate news and trends, bookmark RISMedia.com.

More Homeowners Turn to Their Equity Again

As home values rise fast, homeowners are starting to realize they have a lot of wealth tucked into their homes, and it’s become enticing to tap into it.

Read more: Equity-Rich Properties Rise By 1.3M in 1 Year

Since the housing crash, homeowners have been shy about accessing any of their home equity, even those who still had money in their homes. But as millions of borrowers emerge from their underwater home loans and see their home values jump again, they’re turning to home equity lines of credit, or HELOCs, once again.

HELOC volume has increased 21 percent over the past two years. It’s now at the highest level since 2008, according to Moody’s data. Still, it is far from the levels of the housing boom.

"The more second liens that people take out, it adds a risk that comes from the rising home prices,” says Peter McNally, a senior analyst at Moody’s. “The fact that people are leveraging their homes more than before makes things more risky.”

Mixed with that, borrowers also are putting down smaller down payments. Prior to the last housing boom, the median down payment was just over 7 percent. Down payments dropped to 3 percent during the housing boom, but were back up to about 6 percent in 2016, according to ATTOM Data Solutions. Down payments are projected to move lower as more lenders offer greater low down payment options again.

Source: “More Homeowners Cashing in on Their New Housing Wealth,” CNBC (March 3, 2017)

The Hottest Housing Markets Right Now

California cities continue to dominate the list of the hottest housing markets in the country. In Vallejo-Fairfield, Calif., days on the market for listings have dropped by half over the past year, which helped propel it to the top of realtor.com®’s hottest housing market list for February.

Read more: 20 Markets With Strongest Kickoff to 2017

Across the country, homes for sale are more limited than ever before, and strong buyer demand mixed with that limited inventory is fueling higher home prices, according to realtor.com®’s latest analysis.

The hottest housing markets for February, according to realtor.com®, are:

Source: “These Are the Hottest Real Estate Markets in February 2017,” realtor.com® (2017)

Priced Out: Gender Pay Gap Spills Over to Housing

Single homebuyers have a tougher time than most affording a house—and a new report shows single women have it harder than single men.

A joint report by PropertyShark and RENTCafé reveals housing in 23 of the nation's top 50 metropolitan areas is out of reach for single women, while housing in 14 areas is out of reach for single men. Austin, Texas; Boston, Mass.; Long Beach, Los Angeles, Oakland, Portland, San Diego, San Francisco, and San Jose, Calif.; Miami, Fla.; New Orleans, La.; New York, N.Y.; Philadelphia, Pa.; and Washington, D.C. are unaffordable to singles regardless of gender—but Chicago, Ill.; Denver, Colo.; Fort Worth and Houston, Texas; Memphis and Nashville, Tenn.; Milwaukee, Wis.; Sacramento, Calif.; and Seattle, Wash. are, in addition, unaffordable to single women. The starkest pay gap of the nine areas unaffordable to single women—but affordable to single men—is in Fort Worth, Houston and Seattle, spanning 70-73 cents on the dollar.

The areas where single women face the lowest housing affordability are New York, Los Angeles, San Francisco, Boston and Miami, according to the report. In New York, monthly housing costs take up 119 percent of the average single woman's income, while in Los Angeles, monthly housing costs take up 104 percent—a full-on shut-out.  Monthly housing costs for single men in these areas take up just shy of 100 percent.

There are areas where single women can afford to buy a home: Detroit, Mich.; Wichita, Kan.; Indianapolis, Ind.; and Tulsa and Oklahoma City, Okla., according to the report. The monthly housing cost in Detroit takes up just 4 percent of the average single woman's income, while monthly housing costs in Wichita and Indianapolis take up 10 percent.

View more from the report here.  http://blog.rismedia.com/2017/gender-pay-gap-housing/?utm_source=newsletter&utm_medium=email&utm_campaign=eNews

Consumers Turn to Non-Banks for Mortgages

More borrowers are choosing non-banks—financial institutions that only issue loans and do not offer savings or checking accounts—to get a mortgage, The Washington Post reports. It's a major shift in borrower behavior. In 2011, 50 percent of all new mortgage loans originated from the three largest banks: JPMorgan, Bank of America, and Wells Fargo. However, in September 2016, that share plunged to 21 percent.

During that time, non-banks emerged as six of the 10 largest lenders by volume, including Quicken Loans, loanDepot, and PHH Mortgage. In 2011, only two of the 10 largest lenders were non-banks.

"For consumers, it doesn't really matter whether you get your loan through a bank or a non-bank, although in some ways, non-banks are a little more nimble and can offer more loan products," says Paul Noring, managing director of Washington, D.C.–based financial risk management firm Navigant Consulting. "The impact is bigger on the housing market overall because without the non-banks, we would be even further behind where we should be in terms of the number of transactions."

Some traditional banks have backed away from the mortgage business after financial regulations were put in place following the last housing crisis, says Meg Burns, managing director of Collingwood Group. That has opened the market to non-banks. "The regulatory atmosphere changed from a risk management regime to a zero-tolerance and 100 percent compliance regime," Burns says. "Not only were new regulations implemented, but new regulators like the Consumer Financial Protection Bureau were created. At the same time, the CFPB and other agencies became more assertive in their enforcement practices."

The greater regulations made banks more cautious about lending, says Jeffrey Taylor, managing partner of Digital Risk, a provider of mortgage processing services and risk analytics. "Now banks only approve 'perfect' loans, not 'good-enough' loans," Taylor says. "This created an opportunity for non-banks that focus entirely on mortgages and are less regulated than big banks."

Indeed, some consumers benefit from non-banks because they tend to offer "more opportunities to borrowers who are not perfect," says Ricky Sharga, chief marketing officer of Ten-X, an online real estate marketplace. Some lenders are offering "loans to borrowers with lower FICO scores, but [these non-bank lenders] are still not making risky loans," Sharga says.

Source: “The Mortgage Market Is Now Dominated by Non-Bank Lenders,” The Washington Post (Feb. 23, 2017)