Home Renovations on the Rise.

least debt cities

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.


Photo Source: Unknown via Pinterest.

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.


Photo Source: Unknown via Instagram.

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.


Photo Source: Home Bunch via Pinterest.

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.

Credit Scoring & Halloween Housing.


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Credit access expansion could be on the horizon for millions of Americans as Experian, FICO, and Finicity announced a new credit scoring model: UltraFICO. This new model would reward the consumer on positive financial behavior and would take a deeper look at how the consumer manages their money. The three companies are excited over what this change could bring to the lending world, however, we should still note that in pulling credit, lenders look at Experian, TransUnion, and Equifax.

It’s October which means Pumpkin Spice has graced our lips since mid-September and if you are on the ball you have been thinking about your Halloween costume for weeks but if you are a die-hard Halloween junky who bleeds orange, black, and everything spooky we may have found something just for you.

Derek Miller of Smart Asset collected data based on vacant homes, cemeteries, and costume shops within an area and found that, Salem has nothing on the Mid-West. Detroit ranks in the top 5 of spooky cities; tying with Pittsburgh, having the most vacant single-family homes. Coming at eighth is Cincinnati, Ohio, where you can run around in the abandoned Subway tunnels and find the best mortgage rates if you are looking to shop around.

If you want Halloween 365 days a year you should look at these towns. Yes, you read that right, towns that are up for sale where you can literally dig for gold. Oregon King Mine in Ashwood, OR has 200 acres for sale that has abandoned homes, the mine, and all the old structures perfect to turn into a Halloween getaway all for about $2 million dollars. And if you are looking for somewhere a little warmer, Gold Mine Ghost town in Wikieup, AZ is up for $100,000 and is perfect for horseback riding, ATV trails, and hiking. Both places give you the option to create something different than just your typical apple orchard.

Condo Cost: Rent vs. Buy.

Existing Home Sales for September was released last week showing sales were down to the lowest in almost 3 years (since November 2015) and missed expectations. However, while inventory remains tight the number of homes for sale are up 1.1 percent year over year and homes stayed on the market for an average additional 3 days this month, up to 32 days. Entry level homes are still seeing competition. The first-time homebuyer slightly increased to 32 percent of sales and the Median Home Price, while still up, is increasing at a slower rate.

Rent prices are up, particularly for single-family properties in vacation hotspots, however, the question in the headlines: Are more folks turning to renting? One article argued YES because of “recent record-high interest rates.” Let’s take a look at history: the average 30-year fixed mortgage rate with Freddie Mac for October 2018 is 4.82%; in October of 1981, the average was 18.45%. Wonder where they got that record high from because where we’re standing, today’s interest rates look welcoming. The real argument, however, surrounds affordability so we looked into the cost of renting vs. buying a similar place in the same area. To rent a two-bedroom, 925 sqft condo in Birmingham, MI it costs $1300. To purchase a similar condo (two-bedroom, 925 sqft condo in Birmingham, MI) that’s newer, the estimated monthly payment including, mortgage, taxes, and insurance, would be less than $1100. If you have the savings, why pay a landlord when you can invest in that home equity? There’s still low-downpayment options available.

10 skyrocketing metros

While many housing markets are slowing down on the home price front, some are heating up. Battle Creek, MI ranked No. 5 for 10 Surprising U.S. Metros Where Home Values Are Skyrocketing. The city is seeing great jobs posting numbers thanks to its heavy industrial presence, leaving folks buying homes and home prices up almost 21 percent year over year in the area.

Ann Arbor scored the No. 2 spot for Livability’s 2018 Best Places to Raise a Family, thanks to an impressive student-to-teacher ratio in local school districts, night life, family entertainment, parks, and more.

Retiring or First-Time Homebuyer?


Photo Source: Pinterest.

It’s never too early to think about retirement and Farmington won the top spot for best places to retire in Michigan. While we’re still in a seller’s market, if you’re close to retirement, now might be the time to look into your next move. The list considered local medical centers, retirement communities available, and the tax burden for retirees. Thankfully, the top 10 maintain the 17 percent tax burden which shouldn’t make a difference in cost of living. And there is a city for you depending on your likes and interests. Want to be surrounded by water? Try Traverse City or Grosse Pointe. Want a small, quiet town? Chelsea and Brighton would be perfect for you.

Not looking to retire just yet and just starting out? You’re not alone. Fun facts about the first-time homebuyer:

  • Fifty-seven percent of first-time homebuyers put less than 20 percent down on their first home. What a market to be in.
  • The typical first-time homebuyer is 34 years old, with millennials and Gen Z making up 66 percent of all new buyers.
  • The starter home, however, may be a dead fish with millennials looking to purchase homes similar to that of a repeat buyer thanks to millennial buyers being more flexible and thinking more about their future, i.e. family, schools, etc. However, one difference between first-time homebuyers and the repeat buyer: the former tends to prioritize a particular location more than the latter.
  • What’s that saying? If at first you don’t succeed, try try again? It works for mortgages too with 29 percent of first-time homebuyers who obtained a mortgage having been denied at least once. There’s power in shopping for a mortgage.

Strong Housing.

10.10.2018Thanks to the unemployment rate falling to the lowest level in nearly 50 years and home prices continuing to rise but at a slower pace, when it comes to loan performance, housing is very strong. In every category of CoreLogic’s Loan Performance Insights report for July, rates dropped. Seriously delinquent loans in foreclosure were the lone sailor remaining stable. Even better: with the unemployment rate remaining below 4 percent since July, we are hopeful to see delinquency rates continue to drop in the future. However, natural disasters and any unemployment rises could impact delinquency rates at a local level not a national level.

A record of 77 percent of homeowners believe now is a good time to sell. It might be a seller’s market for most locations but for some millennials, homes aren’t selling fast enough, leaving the generation “the most likely to make concessions, change the date of their closing, and have an offer fall through.” If you didn’t catch our latest Live on Real Estate podcast, we’re talking about this sudden cool off compared to traffic we saw four months ago.

Mortgage rates have hit the 5 percent level but this isn’t terrible news. With home prices cooling off slightly and the historical average between 8 to 9 percent, those 5s are still looking good for homebuyers, especially in a market that is thriving with little percent down.

The dreaded lack of inventory has seen some slight relief, with September’s new listings up 8 percent year over year according to Realtor.com’s housing report. This is the highest annual jump since 2013. Unfortunately, this was driven by condos and townhomes.

A hundred years ago, kit homes allowed many Americans to become homeowners and now, they might be making a comeback. Fortunately, this time, we’re talking rooms and additions; you don’t need to buy the whole house. Unfortunately, with today’s regulations, depending on the kit a contractor or expert might need to be hired to assemble the kit.

Staged Homes & Forecasted Rate Hikes.

10.01.2018As expected, the Federal Reserve hiked rates last week by 0.25 percent to 2.25 percent. What we’re more interested in is the forecast: 12 of the 16 Fed members forecasted a 4th rate hike this year, expected in December, and 3 rate hikes in 2019. Then you have the outliers in the group, with one believing there will be no more hikes over the next several years and another who thinks 2019 will see 5 rate hikes. Very interesting.

Pending Home Sales report was released last week but was a disappointing miss, down 1.2 percent in August. New Home Sales, however, were up 3.5 percent in August, and are up almost 13 percent year over year. We’re also starting to see a welcomed growth in inventory for Existing and New Home Sales.

Fact: staging your home can not only help you sell your home faster but can also potentially bring in higher bids. What are the tips of the trade to do it yourself? Essentially, lose the clutter but here’s 3 specific tips:

  • Curb appeal! It’s all about first impressions and for the buyer, that’s before they even walk up to the front door.
  • Remove at least 30 percent of your personal belongings: you want to allow the buyer to picture themselves in the home and they can’t do this with your belongings everywhere. This also helps you to create space.
  • Think neutral: the house should remain the focus, keep the walls neutral but use accent colors for décor and for show.

On average, staged homes sell 73 percent faster. Well, when you put it like that, who is ready to pull weeds and move some furniture?

Home Investment, Dream Home, & More.

09.25.2018Rent is not friendly on the wallet. With rent overall rising 3 percent year over year, it was the lower end market value (equivalent to $100K – $300K homes) that rose nearly 4 percent. Right now is a good time to make a move and see if buying is right for you before rent prices continue to rise. Why pay a landlord when you can invest in a home?

The average homeowner gained over $16K in home equity from Q2 of July 2017 to Q2 of July 2018. Last week, CoreLogic released their Equity report, highlighting homeowners with a mortgage (which CoreLogic estimates about 63 percent of homes have a mortgage) have seen their equity increase by 12.3 percent since last year. Less than 3 percent of all homes are under water; housing remains healthy.

Home appreciation is still going strong but thankfully, at a slower rate. The Case-Shiller Home Price Index showed a 6 percent annual gain in July. The media might dramatize this cool off but it’s healthy and let’s be honest, we want it. We want homes to appreciate but to remain affordable for buyers. Las Vegas, Seattle, and San Francisco still saw double-digit annual gains.

The Federal Housing Finance Agency also released their House Price Index for July today, also showing a deceleration in home price appreciation on single-family homes with conforming loan amounts. Home prices rose 0.2 percent in July, missing expectations of a 0.3 percent rise, but are still up 6.4 percent from a year prior.

Loan officer employment from 2016 to 2026 is expected to grow faster than the average for all occupations and is ranked No. 57 on the 100 Best Jobs in 2018. (Yes, we are hiring.)

The American dream home defined: over 10 acres of land, almost 5,000 square feet, swimming pool, four bedrooms, three bathrooms, waterfront (or at least with a view to a cost, city, or hills), suburban area, ranch- or farmhouse-style made of brick, covered front porch, wood flooring (except for bedrooms and kitchen), central air conditioning, fireplace, finished basement, skylights, vaulted ceilings, and granite countertops in the kitchen. Oh yes, the recent survey results from Porch.com got that specific and Europeans have something completely different in mind for their ideal home: 1,589 square feet and less than an acre of land—now that’s more realistic. When we factor in maintenance, we wonder how many Americans would actually choose to live in their dream home or if it’s just a fantasy.