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Wednesday, December 20, 2017

new-home-construction

Housing starts move 3.3% higher in Nov.

 Construction of new homes increased 3.3 percent in November with the gain largely coming from single-family houses being built at the strongest pace in more than a decade.
The Commerce Department said Tuesday that builders broke ground on homes last month at a seasonally adjusted annual rate of 1.3 million units. The increase marks a key moment in the recovery from the Great Recession: Builders started work on single-family houses at the fastest pace since September 2007, which was just a few months before the start of that economic downturn.
Driving the rebound in home construction has been a shortage of existing properties being listed for sale.
Fewer people are putting their property on the market, despite healthy demand from buyers because the unemployment rate is at a 17 year-low and mortgage rates remain at attractive levels. New construction has filled some of this gap with starts on single-family houses rising 8.7 percent so far this year.
Still, not enough new homes are being built to totally end the supply squeeze. Over the past year, the number of sales listings for the much larger market for existing homes has fallen 6.4 percent.
The construction growth last month came from the South and West, while the Northeast and Midwest reported declines.
Builders are also backing away from the apartment rentals that until recently were a driving force behind the rebound in residential construction. Ground breakings for multi-family buildings such as apartment complexes have declined 8.5 percent year-to-date.
Building permits, an indicator of future construction, slipped 1.4 percent in October to 1.3 million. But the number of permits authorized so far this year has increased 5.8 percent.
Relatively low mortgage rates have helped would-be homebuyers, even as property prices have climbed faster than wages. The average rate on 30-year fixed-rate U.S. mortgages was 3.93 percent last week, slightly better than the 4.16 percent rate a year ago, according to mortgage Freddie Mac.

Tuesday, August 22, 2017




Study: FSBOs net ‘significantly’ lower profits
 
 Aug. 21, 2017 – For-sale-by-owners (FSBOs) tend to sell their homes for lower prices than homes sold through traditional agents via the MLS, and in many cases below the average differential represented by the prevailing commission rate, according to a new study by Collateral Analytics. The study examined the price differences between homes sold through traditional agents versus those sold by FSBOs from 2016 to the first half of 2017.
Some homeowners attempting to avoid commission costs attempt to sell their home on their own – but that can backfire and turn into a much lower sales price, the study found.
Even successful FSBO sellers achieve prices "significantly below" those from similar properties sold more traditionally via Realtors®, the study found. A FSBO sale, on average, nets nearly a 6 percent lower price than an MLS sale for a similar property, the study found.
Overall, the authors found that the differential in selling prices between FSBOs and MLS sales is "remarkably close to average commission rates."
"Assuming that both buyers and sellers pay the commission, one might have expected something less than this average," the researchers note. "It appears that many sellers are avoiding commissions while netting home prices less than they would with an agent-represented MLS sale."

Source: "Saving Real Estate Commissions at Any Price," Collateral Analytics Research (Aug. 16, 2017)

Thursday, July 27, 2017



LOW APPRAISALS HELP CASH BUYERS
After Dallas-area real estate pro Laura Barnett put a listing on the market three weeks ago, it quickly received 22 offers. But Barnett didn't take the highest bid. Instead, she took a cash offer because she wanted to ensure that there were no hang-ups along the way toward closing. Appraisals, she says, aren't keeping up with sales prices, and if the appraisal doesn't match the contracted price, buyers often can't get a mortgage and never make it to settlement.
"They're kind of putting a glass ceiling where we can't raise our prices any higher than we have comps to support it, so we're definitely going with more cash offers than we used to," Barnett, a real estate professional with RE/MAX DFW Associates, told CNBC.
Younger, first-time buyers are feeling the brunt of the competition because they tend to be more mortgage-dependent and use low downpayment loans, which have stricter underwriting standards.
As a result, a first-time buyer may submit the highest bid for a listing, but if the mortgage lender's appraisal comes in even a slight bit under the contract price, the mortgage financing – and the real estate transaction – can fall through.
"Anytime prices move up fast, the actual appraisal process – because they're looking back in history, not forward into the future" can lag behind, says Lawrence Yun, chief economist at the National Association of Realtors® (NAR).
"From the buyer's perspective," says Yun, "it's a tough situation where they want to rely on the value of the home, on the appraisal, yet they know that if they decide to back away, there are other buyers waiting to pounce."
Source: "This House Had 22 Offers. Here's Why the Owners Didn't Take the Highest," CNBC (July 24, 2017)

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