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Wednesday, April 26, 2017

Now is the time to purchase new construction

Trump slaps 20% tariff on Canadian softwood


 
WASHINGTON (AP) – April 25, 2017 – The Trump administration moved Monday to impose a 20 percent tariff on softwood lumber entering the United States from Canada, escalating an intensifying trade dispute between the two countries.
The president announced the decision during a gathering with conservative media outlets at the White House Monday evening. Trump's initial comments were relayed by four people who were in the room and confirmed by an administration official.
On Twitter, Breitbart News White House correspondent Charlie Spiering quoted Trump as saying, "We're going to be putting a 20 percent tax on softwood lumber coming in – tariff on softwood coming into the United States from Canada."
The Commerce Department later announced it had reached a preliminary determination and would impose countervailing duties ranging from 3 percent to 24 percent on imported softwood lumber, with an average of about 20 percent.
One person in the room said Trump threatened that dairy could be next.
The U.S. and Canada typically enjoy a friendly trading relationship, but things have soured in recent months. Trump has been railing against Canada's decision to change its policy on pricing domestic milk to cover more dairy ingredients, leading to lower prices for products, including ultra-filtered milk. Trump has called the move "a disgrace" that's hurting U.S. producers in dairy states like Wisconsin.
"It has been a bad week for U.S.-Canada trade relations," said Commerce Secretary Wilbur Ross in a statement. "This is not our idea of a properly functioning Free Trade Agreement."
The Canadian government, meanwhile, rejected the assessment, calling the duty "unfair and punitive."
"The Government of Canada disagrees strongly with the U.S. Department of Commerce's decision to impose an unfair and punitive duty," said Jim Carr, Canada's Minister of Natural Resources, and Chrystia Freeland, Canada's Minister of Foreign Affairs, in a joint statement. "The accusations are baseless and unfounded."
They warned the action would have a negative impact on American families who will have to pay more to build or renovate homes. And they said they would sue, if necessary.

According to the U.S. Commerce Department, imports of softwood lumber from Canada were valued at an estimated $5.66 billion in 2016.

Thursday, April 20, 2017

Major changes coming to credit score calculations

 
       The math behind your credit score is getting an overhaul, with changes big enough that they might alter the behavior of both cautious spenders as well as riskier borrowers.
Most notably for those with high scores: Abiding by the golden rule of "don't close your credit card accounts" may now hurt your standing. On the other side, those with low scores may benefit from the removal of civil judgments, medical debts and tax liens as factors.
Beyond determining whether someone gets approved for a credit card, a credit score can affect what interest rate and what spending limit are offered.
The new method is being implemented later this year by VantageScore, a company created by the credit bureaus Experian, TransUnion and Equifax. It's not as well-known as Fair Isaac Corp., whose FICO score is used for the vast majority of mortgages. But VantageScore handled 8 billion account applications last year, so if you applied for a credit card, that score was likely used to approve or deny you.
Using what's known as trended data is the biggest change. The phrase means credit scores will take into account the trajectory of a borrower's debts on a month-to-month basis. So a person who is paying down debt is now likely to be scored better than a person who is making minimum monthly payments but has been slowly accumulating credit card debt.
"This is a really big deal," said John Ulzheimer, an expert in credit reports and credit scoring. Ulzheimer said taking trended data into account has long been considered by the credit score industry, but hasn't been implemented on a meaningful scale. He expects more lenders to adopt it.
People with high credit scores may be affected the most, since the goal of trended data is to see warning signs long before a borrower actually gets into serious trouble.
"When it comes to prime borrowers, you may not have bad behavior on your credit file, but a trajectory provides very powerful information," said Sarah Davies, senior vice president for research, analytics and product development at VantageScore.
The change also shakes up the maxim that had people keeping open accounts they'd opened long ago. An important metric in calculating credit scores has been the portion of their available credit people are actually using. A person with $5,000 in credit card debt with a $50,000 limit across several cards could score better than someone with $2,000 in debt on a $10,000 limit because of that ratio.
But VantageScore will now mark a borrower negatively for having excessively large credit card limits, on the theory that the person could run up a high credit card debt quickly. Those who have prime credit scores may be hurt the most, since they are most likely to have multiple cards open. But those who like to play the credit card rewards program points game could be affected as well.
Taking civil judgments, medical debts and tax liens out of the equation comes after a 2015 agreement between the three credit bureaus and 31 state attorneys general. The argument was that civil judgments and tax liens – which can significantly hurt a person's credit score – were often full of errors. Medical debt was being reported on a person's credit report before there was time for insurance to reimburse.
People with those items on their credit reports now could see a bump of as much as 20 points. But it won't help much if they also have negative marks like delinquencies and debts that have gone to collection.

Mortgages, though, won't be affected. The government-owned mortgage companies Fannie Mae and Freddie Mac require a FICO score for eligibility. Because of their outsized influence on the market, few mortgage lenders use VantageScore.

Credit: AP

Wednesday, April 19, 2017












Forget millennials: Gen X driving today’s market

 
              Millennials often get all the attention, but members of Generation X are really the ones driving the housing market lately. Gen Xers – adults between the ages of 37 and 51 – make up the second largest share of home buyers, comprising 28 percent in 2016, according to data from the National Association of Realtors® (NAR).
They're also buying the largest, most expensive homes compared to any other generation.
The median price of homes purchased by Gen X buyers is $261,000, and the median size of the homes is 2,100 square feet, according to NAR. Further, Gen Xers boast a median household income of $106,600 – higher than any other generation.
Some Gen Xers are drawn to previously owned homes for their charm and character, while others prefer new homes so they can customize design features, NAR data shows. Gen X buyers are also the most likely to purchase a home in neighborhoods that are convenient to schools.
But they're also willing to compromise: 21 percent of Gen Xers indicate a willingness to make concessions on the condition of a home, more than any other generation.
The largest share of sellers are also members of Gen X (29 percent), according to NAR. They're selling homes at a median price of $240,000. One in five Gen X sellers say they wanted to sell earlier but couldn't because their home had been worth less than their mortgage. On average, Gen X sellers purchased their home 10 years ago.
Other findings about Gen X home buyers

  • They tend to have the largest families: 62 percent have at least one child under the age of 18 years old living at home; 30 percent have two children.
  • 68 percent are married couples, more than any other generation.
  • Primary reasons to purchase a home: A desire for a larger home, job-related relocation or a change in family situation.
  • Median age: 43 years old.
  • They have the largest number of single-family home purchasers: 87 percent.
  • They're the most racially and ethnically diverse group of home buyers (21 percent identify their race as other than white/Caucasian) and have the highest percentage of non-English speakers.



Source: "Generation X: Buying the Biggest Homes and Biggest Home Sellers," National Association of Realtors Economists' Outlook blog (April 14, 2017)

Thursday, March 23, 2017

Could rising mortgage rates be good for housing?

The Federal Reserve is finally taking more action to raise its short-term rates. Last week, it voted to raise the Fed funds rate by 25 basis points. That is expected to add pressure to mortgage rates, too. Many housing analysts fear that rising mortgage rates could further impact home affordability and lead home buyers to pause.
However, Rick Sharga, executive vice president of Ten-X and former senior vice president at RealtyTrac, disagrees. He thinks the rise in mortgage rates could prove to be a good thing for the housing market.
He argues that it will cause buyers to get off the fence faster and move into the market sooner – before rates go any higher. He expects that to help increase home sales in 2017.
Sharga also believes higher rates will cause lenders to loosen some of the tight underwriting standards that have plagued the housing market the last few years and prevented many would-be borrowers from moving forward.
"This will happen partly just due to higher mortgage interest rates, which will provide a bit of a cushion for lenders to take on a little more risk," Sharga writes in a recent column. "And higher rates will also drastically reduce the number of refinance loans being issued, which lenders will try to offset by doing more purchase loans."
Sharga thinks the Fed's recent 25-basis-point hike may not actually have a big an impact on mortgage rates.
"The 25-basis-point hike was well within the range that most industry analysts had expected, which means it's possible that this hike won't cause mortgage rates to rise significantly from current levels, which are already the highest they've been in years," Sharga notes.

Source: "Why Rising Federal Funds Rate Might Be Good for the Housing Market," HousingWire (March 16, 2017)

Saturday, February 4, 2017

Downtown Tampa

Florida Home Values Rise 9.2% In 2016
 Florida's housing market had higher median prices and fewer all-cash sales in December, according to the latest housing data released by Florida Realtors®. Sales of single-family homes statewide totaled 22,332 last month, up 0.8 percent from December 2015.
"The trend of tight housing supply continued to have an impact on Florida's housing market in December," says 2017 Florida Realtors President Maria Wells, broker-owner with Lifestyle Realty Group in Stuart. "Last month, statewide median sales prices for both single-family homes and townhouse-condo properties rose year-over-year for 61 months in row. While that's good news for sellers, it's continuing to put pressure on inventory for first-time homebuyers and those who may be looking for their next 'move-up' home.
"And that's where your local Realtor comes in – he or she will put their expertise to work for you to successfully navigate the complexities of finding the right property in your local real estate market and will make sure you get to the closing table."
Home sellers continued to get more of their original asking price at the closing table in December: Sellers of existing single-family homes received 96 percent (median percentage) of their original listing price, while those selling townhouse-condo properties received 94.7 percent (median percentage).
The statewide median sales price for single-family existing homes last month was $226,000, up 9.2 percent from the previous year, according to data from Florida Realtors research department in partnership with local Realtor boards/associations. The statewide median price for townhouse-condo properties in December was $166,900, up 7.7 percent over the year-ago figure. The median is the midpoint; half the homes sold for more, half for less.
According to the National Association of Realtors (NAR), the national median sales price for existing single-family homes in November 2016 was $236,500, up 6.8 percent from the previous yearthe national median existing condo price was $222,600.In California, the statewide median sales price for single-family existing homes in November was $501,710; in Massachusetts, it was $365,000; in Maryland, it was $266,164; and in New York, it was $240,000.
Looking at Florida's townhouse-condo market, statewide closed sales totaled 8,673 last month, down 5.2 percent compared to December 2015. Closed sales data reflected fewer short sales and cash-only sales last month: Short sales for townhouse-condo properties declined 45 percent while short sales for single-family homes dropped 39.2 percent. Closed sales may occur from 30- to 90-plus days after sales contracts are written.
"Florida's markets for existing homes closed out the year in December with a performance very much in line with what we saw over the previous 11 months of 2016," says Florida Realtor Chief Economist Brad O'Connor. "At the local level, single family home sales increased in 15 of Florida's 22 metro areas, while condo and townhouse sales rose in only five of these markets. And, as has been the case all year, the lack of significant sales growth in much of the state has had a lot more to do with a shortfall of supply in key price tiers than with demand."
Inventory dipped to a 3.9-months' supply in December for single-family homes and was at a 6-months' supply for townhouse-condo properties, according to Florida Realtors.
According to Freddie Mac, the interest rate for a 30-year fixed-rate mortgage averaged 4.20 percent in December 2016, up significantly from the 3.96 percent average recorded during the same month a year earlier.
For the full statewide housing activity reports, go to Florida Realtors Research and Statistics on floridarealtors.org. Realtors also have access to local market stats (password protected) on Florida Realtors' website.

Thursday, January 19, 2017



Builders predict big expansion in construction


Construction of single-family homes is expected to gradually rise this year, as a growing economy, solid employment gains and rising household formation buoys builders' forecasts.
Last year, the National Association of Home Builders projected 1.16 million total housing starts in 2016, which was up nearly 5 percent from the previous year. Now NAHB is forecasting a 10 percent increase in single-family production for 2017 and a 12 percent rise for 2018.
Still, there will be pressing challenges as builders look to increase their supplies this year.
"While positive developments on the demand side will support solid growth in the single-family housing sector in 2017, builders in many markets continue to face supply-side constraints led by the three Ls – lots, labor and lending," says NAHB chief economist Robert Dietz. Sixty-four percent of builders reported "low" or "very low" lot supplies. "The industry needs to recruit more workers and get more land in the pipeline, but it will take time."
Builders are particularly facing challenges building $200,000-range entry-level homes. Regulatory requirements comprise nearly 25 percent of the cost of a new home, which has made construction on lower-cost homes more difficult, Dietz says.
Nevertheless, townhome construction, which tends to appeal to younger buyers, is already showing significant growth, comprising 12 percent of all single-family starts, Dietz notes.
"As millennials age, that is a big potential base to expand the home buyer market," adds Frank Nothaft, CoreLogic's chief economist.
While higher mortgage rates may soften demand this year, builders remain upbeat. NAHB forecasts mortgage interest rates to average 4.5 percent in 2017 and then 5.3 percent in 2018.
"Higher mortgage rates will be offset by stronger wage gains and job growth, which suggests that housing demand will increase this year," says David Berson, chief economist for Nationwide Mutual Insurance Co. "The question is: How much will supply go up?"
Many metro areas nationwide are seeing solid job growth, dropping mortgage delinquency rates, and strong housing price gains, Berson notes. He says demand has been exceeding supply and likely will continue to do so in 2017. That could put more pressure on home prices, however.
"If there aren't enough homes on the market, that will be a problem," Berson syas. "Price gains need to moderate. We can't have 6, 7, or 8 percent gains. That is not sustainable."
Source: National Association of Home Builders


Wednesday, November 2, 2016

Does home flipping help ease affordability? 




November 2, 2017
 Investors have re-emerged in home flipping, scouring markets to find homes they can make over to earn a profit. The practice – once blamed for helping to fuel the housing crisis a decade ago – is now a welcome sign to some city officials who say it's helping to solve an affordability crunch.
States like Florida and Nevada continue to have a large stock of foreclosed homes, and flippers are stepping in to renovate homes that, at the same time, help battle neighborhood blight and create more options for first-time and low-income buyers. In many cases, the flipped homes being sell well below the rest of the market. Industry analysts point to that as a sign that it's filling a shortage of affordable housing.
"This flipping activity could be seen as a social good if it's bringing houses up to standards and putting them back on the market," says Steven Swidler, an Auburn University professor who studies home flipping.
Still, flipping can drive up home prices too, Swidler cautions.
"In other areas," he says, "it could be putting it beyond the price points for affordable housing for some people. It's all about location, location, location."
Nevertheless, today's flippers are not the same as they were from years ago.
"Conditions are different now. You can't just buy a house and expect to make a profit," Swidler says. "In many cases (flippers) have to go in there and replace wiring, put in new refrigerators. Some of these places had holes in the walls. It took extensive work to renovate them."
Rae Sovereign, an affordable housing activist in East Nashville, says the city has been facing an affordability crisis with its housing stock as developers tear down houses to build rentals. However, flippers are helping to bring more affordable housing to its residents, she says.
"Bringing these houses back to the market is good in general for the neighborhoods where they are located," adds Hector Sandoval, a University of Florida economist. "It increases the supply, which means prices can't go too high, and they should be affordable, at least for the middle class."
Home flipping zoomed to its highest number since 2010 in the second quarter. A total of 51,434 single-family homes and condos were flipped, up 14 percent from the previous quarter, according to data from ATTOM Data Solutions.
The markets seeing some of the highest number of flips – where one in 10 homes sold in the second quarter was a flip – were in Tampa, Fla.; Memphis, Tenn.; and Visalia, Calif. The states with the highest overall rates of flipping – with 7 percent or more of homes sold within a year flipped – are Florida, Tennessee, and Nevada.