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Unpack & unload: the best way to unpack and relax!
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You’ve just moved into your new home, now what? Well, might I suggest first unpacking your unpacking kit? That may sound like an oxymoron, but I promise you it will save you as you work tirelessly to put your home into order.
What goes into an “unpacking kit”:
-a box cutter and or scissors
-trash bags
-hand soap
-toilet paper
-shower curtain and liner
-shampoo and conditioner
-all-purpose cleaning wipes or spray
-pain relief (Tylenol or Advil)
-pet food (if applicable)
-paper plates and bowls
-plastic utensils
Everything inside of this box should be self-explanatory, but you don’t want to have to unpack and starve or remain dirty after cleaning!
Now that you have your lifeline, here are our top two hacks for unpacking:
- This should go without saying, but just in case, as you unload your boxes from your car or from the moving truck, DO NOT LIFT WITH YOUR BACK!!! This is number one for a reason. Don’t cause a serious injury, instead, lift with your legs!
- Go with the flow: the unpacking flow. My recommendation:
First, unpack your bathroom. The human body doesn’t wait for anyone! If you don’t want to unpack ALL your bathrooms, unpack at least one. Next, unpack your kitchen. There shouldn’t be terribly too many things, and you will, of course, need to refuel at some point. Then, move on to your bedroom. After unpacking most of your things, you will need rest! And of course, if you don’t get everything finished, you can at least sleep comfortably. Finally, everything else. Decorations, of course, should be last, as you must see where everything else fits first.
The American Dream and the looming recession
Refinances are finally making a comeback after last year’s drought. Black Knight revealed that an estimated 3.27 million homeowners could benefit from refinancing. This is an increase year-over-year by 16% from 2018. This means a jump of candidates around 75%, with rates at a current 10-month low.
Various areas throughout the country give low-income families a chance at the American Dream. Being a homeowner gives people a chance to benefit from their communities, as well as gain wealth from their home equity. With metros becoming more expensive and having a lack of affordable starter homes, low-income residents aren’t typically able to share in the prosperity of home ownership
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. To escape the high costs of homes, buyers are looking to relocate to inland markets.
With perks such as no down payment, it’s no surprise that VA loans have become increasingly more popular for first-time home-buyers. Benefits such as no mortgage insurance and strong loan servicing protections accompany this loan as well. Both prime and non-prime home-buyers using VA loans are reporting less early delinquency rates.
With a confident forecast of 2% economic growth for the next year, JP Morgan Chase chief economist Anthony Chan is dismissing concerns over a looming recession. During the Chicago Agent Magazine’s Accelerate Summit at the Chicago Merchandise Mart last Tuesday, he predicted that while it won’t be as exponential as last year, the economy will still see growth.
Purchase season, who has the power?
Realtor.com just provided data that reveals Millennials are finally ready to dominate the market. In January 2017, Gen X finally gave up its spot at the top for the most new mortgages. Millennials have held this position strong as their share of the mortgage market continues to rise. At the end of 2018 they were responsible for 45% of all new mortgages. However, while they are taking on larger mortgage payments, their down payments are significantly lower. The average for Millennials was only 8.8% while Gen X boasted an 11.9%.
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Roofstock is a real estate platform for buying and selling single-family rental homes. The company just announced that is it introducing a new program that will allow consumers to invest in a share of a single-family rental home without having to act as the landlord. With this new program investors can reap the reward of property ownership without the risk. Roofstock itself will be responsible for the financing, the insurance, property management, asset management, and the leasing. Profits from investment will be price appreciation, along with tax benefits and potential dividends. Investments can start as low as $5000.
According to LendingTree, 86.5% of mortgages borrowers now have a rate under 5% regarding a 30-year fixed. The most common rate offered was a 4.625%, which accounted for 19.2% of borrowers. This is notably below 2018. In 2018 87.3% of purchase mortgages were given a rate under 5%.
Over the past week purchase applications have rose 2% after four consecutive declines. This is also increased 2.5% from last year. With interest rates remaining low, there is certainly incentive for not only purchasing, but for refinancing as well. The refinance index just moved forward 6% from the previous week, while the purchase index moved forward 7%. This is a solid 3% higher than where the index was in 2018.
Lackluster Home Sales and Baby Boomers
In an analysis of 54 metropolitan areas, RE/MAX National Housing Report has conveyed the largest inventory increase in a decade. Although home sales themselves have scaled back by 11% on an annual basis, the increase in inventory has averaged 6% year-over-year. This greatly improves the market as there was a multi-year scarcity of homes for sale. Compared to just last year, January which is typically a slower month for home sales, had an improvement of .5 overall.
Baby Boomers continue to retire in waves without adequate savings to support themselves and their family during their golden years. It is becoming extraordinarily clear that the country is on the brink of a retirement crisis. As health care costs continue to skyrocket and pensions dwindle, Social Security is simply insufficient for the longevity of this generation. This all sounds doom and gloom, until it’s pointed out that many Americans are literally sitting in a pile of cash; their homes. Capitalizing on the equity of one’s home can solve many later in life money issues.
The Department of Housing and Urban Development announced its plan for awarding $10 million in “sweat equity” grants to nonprofit organizations. The funding is sourced from HUD’s Self-Help Home-ownership Opportunity Program. The actual money in combination with the labor from both volunteers and home-buyers will lower the overall cost of home-ownership. A minimum of 50 hours is required for a single ownership household, and the hours are doubled for a household of two. Community service is another requirement for eligibility. During the initial round of grants awarded more than half of the capital, around $5.3 million is going to Habitat for Humanity.
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While inventory is at a decade high, the affordability of homes for sale on the market is at a decade low. With only 56.6% of homes being affordable for the country’s median income, the National Association of Home Builders is calling on policymakers to make some changes. The Chief Economist of the NAHB, Robert Dietz indicates that wage growth is under performing while home appreciation continues to rise.
The U.S. Census Bureau’s most recent American Community Survey reported homeowners are currently spending more money per month than renters in all 50 states. This data was compiled tracking the median housing costs from 2013-2017. Costs such as mortgage payments, home insurance, property taxes and maintenance are making it far more expensive to own a home. However, experts say while renting saves money month to month it will not pay off in the end. Investing in a home can increase the home’s equity and look to put cash back in your pocket. A mortgage is a major expense, but once it is dropped off the monthly spending homeowners can expect a significant increase in their savings.
Loan Insights, Rent Burdens, & More.
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CoreLogic’s Loan Performance Insights report for September 2018 was released last week, showing the nation’s labor market and increased home prices overall has had a positive impact on serious delinquent loans and foreclosure rates—the overall delinquency rate is down 0.6 percent since September 2017. The 30-day delinquencies showed an increase of 0.4 percent but is being entirely attributed to Hurricane Florence.
Will more homeowners tap into their home equity in 2019. While increases in home prices might keep some homebuyers from making a move, it’s also resulting in record levels of home equity, and more homeowners are projected to have more opportunity to tap into that equity. Consumers in need of paying off higher interest rate credit card debt or in need of home improvements are prime candidates. This also allows for homeowners who might otherwise upgrade to a bigger home save money by tapping into that home equity and invest in home additions or upgrades.
Builder Confidence dropped four points to 56 according to the National Association of Home Builders Housing Market Index. Buyer Traffic was the only piece below 50, the threshold. Current Sales and Future Sales, however, both remained in the 60s. A reading above 50 signals growth. We should note Builder Confidence dropped significantly in areas with high home prices—the current deterrent of buyers is not mortgage rates thanks to recent declines. The demand is still there but consumers are hesitating due to “rising home costs.”
While the overall level of homelessness across the nation has fallen despite housing costs continuing to increase, the rent burden is becoming so extreme it’s risking thousands of Americans becoming homeless. Many areas are already pass the 32 percent tipping point, where over 32 percent of a household’s income is going to rent. Monroe Country in Florida is almost double, “with a median market rate rent consuming 62.9 percent of the area’s median household income.” That’s insane.
Ann Arbor, MI might rank as the No. 1 best small college town in the nation but it was ranked third overall for best college towns and cities, regardless of size—Austin, TX scored the hot seat. Ann Arbor is noted for its low unemployment rate of only 3 percent but the college town is also known for its social environment and academic and economic opportunities. The city is booming with part-time jobs for college students.
The Federal Reserve meets this week and there’s an 80% expectation they will hike rates another quarter point. Wednesday we find out their decision after their two-day meeting but more importantly, we’re hoping for any indications of what 2019 will look like for rate hikes.
Home Renovations on the Rise.
Photo Source: Realtor.com
The level of New Homes on the market is at the highest since January 2009—almost 10 years! New Home Sales, however, were down almost 9 percent in October, below expectations; though, a decrease in signed contracts on new homes was expected.
Home renovations: the popular solution for those who don’t want to face the homebuying competition or have hesitations with increased home prices. Not to mention, many have secured a very low mortgage interest rate they don’t want to give up by moving. In fact, there’s been about a 30 percent increase in home remodeling projects over the last five years, and unfortunately over 30 percent haven’t set aside the money for such renovations.
Home prices are slowing down and it’s welcomed news. The Case-Shiller Home Price Index, tracking changes in the value of residential Real Estate, showed a 5.5 percent annual gain for the National Index. The Federal Housing Finance Agency (FHFA) Housing Price Index, highlighting home appreciation on single-family housing, rose 0.2 percent in September and showed a 6 percent annual gain. For both these indices, the year over year appreciation rate decreased very slightly (talking .1 or .2 percent). This does not mean home prices overall decreased but rather are rising at a slower rate than they did last year. This is not a negative appreciation but rather a slower positive appreciation. (It’s a good time for cash out refinances before home prices do drop, though; help fund those renovation projects.)
Mortgage Applications for last week were up 5.5 percent, with purchases up 9 percent and refinances up 1 percent.
Over the last 20 years rent prices have more than doubled, going from about $450 in 1998 to over $1000 in the third quarter of 2018; and since 2008, the average rent for a new apartment has increased 28 percent. Over the last 10 years, the average size of a new apartment has decreased 5 percent—paying for less! California apartments have decreased in size by 12 percent. What’s driving this decline in size? Millennials looking to save a penny—they’d rather live in a smaller unit because of rental costs—and construction limitations: cost and space. Building smaller can yield room for more units to be built, increasing profit.
Debt doesn’t love Michigan—or maybe it does? Two Michigan cities, Ann Arbor and Lansing, made the Cities Where Home Buyers Have the Least Debt list with the former ranking at number 2! The median mortgage borrower’s debt-to-income (DTI) ratio is only 33.7 percent for the city. Honolulu held the highest DTI at 45.1 percent.
Older homeowners love Florida, with the state dominating all of the top 5 Metros with the Highest Average Homeowner Age. With the temperatures dropping in Michigan, we can’t blame anyone retiring to Florida.
Purchasing Young, Existing Home Sales, & More.
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Housing Starts for October were up 1.5 percent but Single-family Starts were down 1.8 percent which was disappointing, showing the gain was propelled mostly by multi-family starts. With price growth slowing down and mortgage rates not increasing as fast as some experts had forecasted, mortgages and homeownership is “attractive” right now. If only supply would catch up. That being said, for some homebuyers, the notice of rates and prices both still rising coupled with the limited most in-demand housing (starter homes) have lead some homebuyers to hit pause or hesitate; thus one reason why builder confidence dropped 8 points to a reading of 60 according to the National Association of Home Builders (NAHB) Housing Market Index. Note: any reading above 50 is still considered good, healthy, and strong.
Existing Home Sales showed a different story, highlighting homebuyers taking action with Sales up 1.4 percent in October, beating expectations and the first increase seen in 6 months. The report also showed 80 consecutive months of annual median existing home prices gains, though they have slowed down in growth—this is good for homebuyers. Reminder: deceleration is not a decline.
For the first time in 28 years, since 1994, the Federal Reserve is proposing to increase the threshold of an appraisal requirement from $250K to $400K, allowing certain home sales of $400K and below to no longer require an appraisal. However, this “would not apply to loans wholly or partially insured or guaranteed by, or eligible for sale to, a government agency or government-sponsored agency.” Meaning, home loans sold or guaranteed by the Federal Housing Administration, Department of Housing and Urban Development, Department of Veterans Affairs, Fannie Mae, or Freddie Mac would not be eligible for the appraisal exemption. Why the proposal? The threshold doesn’t hold up against today’s home prices. What do appraisers have to say? This could be significantly dangerous for lending as the expectation is more evaluations will be allowed to replace appraisals. More to come on this in the future.
Those who purchase a home between ages 25 and 35 can accumulate an additional $100K in home equity than those who purchase after the age of 35, leading those who purchase at a younger age to be more financially stable in retirement and have more home wealth than those who purchase later in life. Those who purchase a home before the age of 25 proved to receive more “bang for their buck” as they typically purchased a lower priced home but had less equity than those who purchased between 25 and 35 years old because they, typically, purchased such a lower priced home. Moral of the story: if you can make it work, purchase young.
Generation Zs Determined to Own a Home.
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Four-in-five Generation Zs (those aged 18 to 24) want to own a home and are actively saving for a downpayment “like no generation before them.” Twenty percent of this young generation wants to own their home before they’re 25. Their overwhelming desire and adamancy to save, coupled with the timing of them “graduating into one of the best labor markets in generations”, could give them a leg up.
Renters face more financial uncertainty than homeowners, with over 25 percent of the nation’s renters not confident they could cover a $400 emergency and over 30 percent feeling insecure about food.
Independent females are on the rise. One-in-five homebuyers are single females, outnumbering single male homebuyers two to one.
Zillow has officially entered the mortgage industry, acquiring Mortgage Lenders of America with plans to rebrand the company in 2019. They hope to streamline, shorten, and simplify the homebuyer process. Can’t say we disagree. Good philosophy to have—we find it not only necessary but essential.
Initial Jobless Claims for last week were reported at 214K. It might not be new news but it’s always good news for the economy—and housing—when employers are keeping their employees. More importantly, the BLS Jobs report showed 250K jobs created in October, greatly beating the almost 190K expected. Unemployment remained flat at 3.7 percent—the lowest level in nearly 50 years—and the average Weekly Earnings remained stable at a 3.4 percent annual increase, an 11-year high.
Affordable Downpayment.
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The Case-Shiller Home Price Index showed a deceleration in home prices and let’s be clear: this is good for home appreciation and housing affordability. It’s good news that it’s cooling off some for homebuyers while still remaining positive for homeowners. Detroit saw a healthy annual 6 percent gain. Las Vegas and San Fran are still seeing double digit annual increase in home prices. Insane.
The economy is booming thanks to unemployment at its lowest since 1969, encouraging consumers to invest and purchase. After a spectacular second quarter, analysts expected a slow down during the third quarter but the economy remained on track to grow 3 percent or more this year and expectation remains for the Federal Reserve to hike rates in December.
The ADP Employment Report showed 227K jobs created in October, greatly exceeding expectations of only 178K.
The average downpayment on a 30-year fixed rate mortgage dropped nearly 10 percent in the third quarter of 2018, along with the average mortgage loan amount falling almost $28K. It’s all about location. We’re still seeing many borrowers who are able to purchase a home by putting down only 5 percent or less.
Homeownership is on the rise, jumping a half percent in the third quarter of 2018 from a year ago, thanks to a healthy economy, affordable housing, low mortgage rates, and increased wages. The hurdle: inventory—that’s not a bad hurdle to face; folks are staying in their homes longer. How long? The average homeowner is opting to stay in their home longer these days: 8.23 years to be exact according to homes sold in the third quarter of 2018. That’s double that of homes sold in 2000.
The Hall Way 