Naturally, home prices are a big part of any discussion of where the housing market is and where it’s headed. That’s because it’s an easy metric for home buyers and sellers to follow. It’s also because it’s an important factor in making decisions about when to make a move. However, recent news of rising prices may have hopeful homeowners getting ahead of themselves a bit. In fact, a recent study looking at the difference between what homeowners think their house is worth and what it actually appraises for found that owners are overestimating their home’s value by about 1.7 percent. And, though that might not seem like much, having a home appraise for less than its sale price could complicate the closing process, or worse, derail the sale altogether. That’s why it’s important to realize that, though home prices are up overall, how much your home’s particular value has gone up or down depends on where you are. This also reinforces why it’s so valuable to both homeowners looking to sell and buyers on the hunt for a new home to have the advice and guidance of a Realtor who knows their neighborhood. More here.
The vast majority of surveyed Americans say they believe owning a house is a solid investment, according to a new survey from Digital Risk. And that doesn’t just include homeowners and prospective buyers. In fact, 83 percent of renters agreed with current homeowners who said that buying a house was a good investment. Jeff Taylor, managing director for Digital Risk, says the perception of homeownership has come a long way over the past several years. “It’s important to remember how far we’ve come in a decade,” Taylor said. “The fact that the American dream of owning a home is once again considered a smart investment suggests the housing market has years of strong performance ahead of it.” But though overwhelming numbers say they think buying a house is a good financial move, renters also face some challenges when making the jump. Among them, insufficient income and not being able to save enough for down payment rank high. Still, the fact that homeownership has regained it’s reputation as an essential part of the American Dream and a good way to build wealth is a good indication that, despite those challenges, Americans will continue to aspire to homeownership. More here.
In the years following the housing crash, average mortgage rates hovered near or at all-time lows. Combined with lower home prices, historically low rates provided a great incentive for interested buyers to take advantage of affordability conditions and buy a house. As the economy and housing market has recovered, however, mortgage rates have begun to inch upward. For example, the Mortgage Bankers Association’s most recent Weekly Applications Survey found average mortgage rates up again last week, reaching their highest level since May. Michael Fratantoni, MBA’s chief economist, told CNBC recent increases have been driven by the Fed. “Rates continued to increase last week given increasing evidence that the Fed and other central banks are more likely to raise rates given the pickup in economic growth in their respective economies,” Fratantoni said. In other words, the stronger the economy is, the more likely mortgage rates will climb. Still, rates remain low by historical standards and have not deterred home buyers in the same way higher home prices have. That’s because mortgage rates are still favorable for buyers, even if slightly higher than they’ve been over the past few years. More here.
Your credit score is a pretty significant number. Though you may not think about it all that often, it has an effect on your ability to qualify for a loan and the terms you’ll receive if you’re approved. In other words, your credit score can cost you money. That’s why it’s important to maintain good financial habits and check in on your history from time to time, in case there are any errors that can be cleared up. But what is an average score? Well, according to FICO, scores range between 300 and 850 and the current average is at an all-time high. In fact, the most recent data shows the average credit score has reached 700 for the first time ever. For comparison, the average fell to 686 following the housing crash. Ethan Dornhelm, vice president for scores and analytics at FICO, told CNBC 700 is considered a very good score and would mean a borrower would “likely qualify for the credit they want at favorable terms.” However, if your credit score isn’t at 700 or above, that doesn’t necessarily mean you won’t qualify for a mortgage. It does mean it’d be worth your time to investigate ways you can improve it, though. More here.
If you’re in the process of, or thinking about, buying a house, you’ve probably done some calculations in your head about how much you’ll need for a down payment and what your prospective mortgage payment might look like. But you may not have given any consideration to how much you might spend after you’ve closed the deal. Simply put, you’re going to want to leave the closing table with a substantial amount of money left over because new home buyers spend about $10,601 in their first year as owners, according to new numbers released by the National Association of Home Builders. That includes things like furniture, appliances, and remodeling or home improvement projects. But in total, new homeowners spend nearly three times as much in their first year than a typical homeowner would in an average year. Of course, the condition of the home you buy will play a large role in how much money you end up spending after the move. But, no matter how move-in ready the home is, you’re likely going to want to make some changes once you’ve settled in. That’s why it’s important to stick to a budget and not totally deplete your savings when choosing a house to buy. More here.
How are Americans feeling about the real estate market this summer? Well, according to Fannie Mae’s monthly Home Purchase Sentiment Index, as good as ever. The index – which measures consumers’ attitudes about home prices, buying and selling, mortgage rates, etc. – found overall sentiment up in June, even matching February’s all-time high. Doug Duncan, Fannie Mae’s senior vice president and chief economist, said Americans are feeling optimistic overall but particularly about selling a house. “The June HPSI reading matches the previous record set in February and reflects the trend toward a sellers’ market that respondents indicated last month,” Duncan said. “Consumers are also growing more optimistic about their ability to get a mortgage, and lenders expect credit standards to ease further going forward, as shown in our Mortgage Lender Sentiment Survey.” But despite the good news, Duncan warns that, with fewer homes for sale this season, easing credit standards could have the unintended consequence of pushing home prices higher. Still, even with the challenges today’s market presents, buyers remain eager. In fact, the number of respondents who said now was a good time to buy a house was up 3 percent in June. More here.
According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates moved up last week across all loan categories, including 15-year fixed-rate loans, loans backed by the Federal Housing Administration, and 30-year fixed-rate loans with both jumbo and conforming balances. The rate increase was the sharpest in months and put rates at their highest level since May. Joel Kan, an MBA economist, told CNBC the rate increase was due to economic gains in Europe. “The 30-year fixed mortgage rate increased to its highest level since May 2017, following a jump in the U.S. 10-year Treasury which was driven mainly by news that European economies have strengthened and the ECB may be poised to tighten its accommodative policies,” Kan said. Whatever the case, home buyers weren’t phased by the bump in rates. In fact, demand for loans to buy homes was up 3 percent from one week earlier and is now 6 percent higher than at the same time last year. The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. More here.