Who’s Afraid of Rising Interest Rates?

While mortgage rates remain “historically low,” many first-time buyers think they’re substantially more expensive because they don’t remember high-rate years.

1st Time Homebuyers

[Move.com] Rising mortgage rates have created an urgency for Experienced Purchasers to buy before further increases. Average listing views on realtor.com surged 40% to 80% in the last 3 weeks of December 2016 compared to December 2015.

“Rising rates have made demand even more intense,” realtor.com notes. However, the demand mostly seems to be coming on stronger from repeat buyers. For first-time buyers, rising mortgage rates are having an opposite effect and they’re showing signs of beginning to shy away from the market.

The number of 1st-time buyers planning to purchase this spring has dropped sharply and the rise in mortgage rates over the past few weeks may be to blame for their retreat, according to realtor.com® study. Repeat buyers, on the other hand, want to lock in rates right away.

Forty-four percent of active home buyers who plan to buy a home this spring are first-time home buyers, down from 55% last fall who said they were planning to buy in the spring. So what’s spooking them?

Average rates today are about a half percentage point higher than they were in 2016. That means a median-priced home financed with a 20% down would cost an extra $720 per year in added interest, realtor.com.

If you want to own your first home, now is STILL the time to buy!

First-time buyers are nearly 5 times more likely than repeat buyers to say they are facing challenges qualifying for a mortgage. Affordability topped first-time buyer concerns.

In November, first-time buyers made up 32% of all buyers, according to the National Association of Realtors.

“The rise in rates is associated with an anticipation of stronger economic and wage growth, both of which favor buyers,” adds Jonathan Smoke chief economist for realtor.com. “At the same time, higher rates make qualifying for a mortgage and finding affordable inventory more challenging. The decline in the share of first-time buyers since October suggests that the move up in rates is discouraging new home buyers already.”

On the other hand, repeat homebuyers realize mortgage rates – while moving higher overall – are still at historical lows. Before rates jump more, these buyers are in a rush to close before rates increase further, according to realtor.com’s study.

First-time buyers may need to lower their expectations a little and not insist on a dream home…  Their perfect home is out there, it just takes a different approach  and process to finding it.  Please give us a call, we would love to help you.

http://www.ForeSiteResidential.com

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Why Do You Think Mortgage Interest Rates Are Increasing?

Mortgage Interest Rates

According to Freddie Mac’s latest Primary Mortgage Market Survey, the 30-year fixed rate mortgage interest rate recently jumped up to 3.94%. Interest rates had been hovering around 3.5% since June, and many are wondering why there has been such a significant increase so quickly.

Why did rates go up?
Whenever there is a presidential election, there is uncertainty in the markets as to who will win. One way that this is noticeable is through the actions of investors. As we get closer to the first Tuesday of November, many investors pull their funds from the more volatile and less predictive stock market and instead, choose to invest in Treasury Bonds.

When this happens, the interest rate on Treasury Bonds does not have to be as high to entice investors to buy them, so interest rates go down. Once the elections are over and a President has been elected, investors return to the stock market and other investments, leaving the Treasury to raise rates to make bonds more attractive again.

Simply put, the better the economy, the higher interest rates will go. For a more detailed explanation of the many factors that contribute to whether interest rates go up or down, you can follow this great link to Investopedia.

The Good News
Even though rates are closer to 4% than they have been in nearly 6 months, they are still slightly below where we started 2016, at 3.97%.

The great news is that even at 4%, rates are still significantly lower than they have been over the last 4 decades.

Any increase in interest rate will impact your monthly housing costs when you secure a mortgage to buy your home. A recent Wall Street Journal article points out that, “While still only roughly half the average over the past 45 years, according to Freddie Mac, the quick rise has lenders worried that home loans could become more expensive far sooner than anticipated.”

Tom Simons, a Senior Economist at Jefferies LLC, touched on another possible outcome for higher rates:

“First-time buyers look at the monthly total, at what they can afford, so if the mortgage is eaten up by a higher interest expense then there’s less left over for price, for the principal. Buyers will be shopping in a lower price bracket; thus demand could shift a bit.”

Key Take-Away

Interest rates are impacted by many factors, and even though they have increased recently, rates would have to reach 9.1% for renting to be cheaper than buying. Rates haven’t been that high since January of 1995, according to Freddie Mac.

Give us a call… we can and will help you find the perfect home in spite of this rate bump.  www.ForeSiteResidential.com

Thanks to Keeping Current Matters for their facts and narrative.

From Empty Nest to Full House… Multigenerational Families Are Back!

Multi-Generational Homes

Quick take-away…

Multigenerational households are making a comeback. While it is a shift from the more common nuclear home, these households might be the answer that many families are looking for as home prices continue to rise in response to a lack of housing inventory.

Multigenerational homes are coming back in a big way!

In the 1950s, about 21%, or 32.2 million Americans shared a roof with their grown children or parents. According to a recent Pew Research Center report, the number of multigenerational homes dropped to as low as 12% in 1980 but has shot back up to 19%, roughly 60.6 million people, as recently as 2014.

Multigenerational households typically occur when adult children (over the age of 25) either choose to, or need to, remain living in their parent’s home, and then have children of their own. These households also occur when grandparents join their adult children and grandchildren in their home.

According to the National Association of Realtors’ (NAR) 2016 Profile of Home Buyers and Sellers, 11% of home buyers purchased multigenerational homes last year. The top 3 reasons for purchasing this type of home were:

  • To take care of aging parents (19%)
  • Cost savings (18%, up from 15% last year)
  • Children over the age of 18 moving back home (14%, up from 11% last year)

Donna Butts, Executive Director of Generations United, points out that,

“As the face of America is changing, so are family structures. It shouldn’t be a taboo or looked down upon if grown children are living with their families or older adults are living with their grown children.”

For a long time, nuclear families (a couple and their dependent children) became the accepted norm, but John Graham, co-author of “Together Again: A Creative Guide to Successful Multigenerational Living,” says, “We’re getting back to the way human beings have always lived in – extended families.”

This shift can be attributed to several social changes over the decades. Growing racial and ethnic diversity in the U.S. population helps explain some of the rise in multigenerational living. The Asian and Hispanic populations are more likely to live in multigenerational family households and these two groups are growing rapidly.

Additionally, women are a bit more likely to live in multigenerational conditions than are their male counterparts (20% vs. 18%, respectively). Last but not least, basic economics.

Carmen Multhauf, co-author of the book “Generational Housing: Myth or Mastery for Real Estate,” brings to light the fact that rents and home prices have been skyrocketing in recent years. She says that, “The younger generations have not been able to save,” and often struggle to get good-paying jobs.

via KCM Crew

 

Housing Market Synopsis

John Burns was on Fox Business News yesterday discussing a host of real estate market topics:

Investors: They won’t sell while home prices are going up.

Entry-level buyers: 30% of buyers are entry-level which is a typical number, but you would think the percentage would be higher given the recovery and the number of homeowners with no equity.John Burns--Housing Market

Gen-Y Homeownership: We ballpark that they will achieve 5% lower due to high-debt. More research is needed here.

Normal Seasonal pickup: Let’s not make a headline out of seasonally adjusted annual existing home sales being down 0.6% month over month.

California Inventory: Two (2) of our team members have received unsolicited offers on the California homes they live in

California Growth: California’s housing market is hot, despite increasing reports from our clients in Texas and Nevada that they are seeing a surge of affluent Californians moving in to avoid the new 13.3% top tax rate.

Southeast Lag: The Southeast is late to the recovery partially because investors believe that price appreciation will be less likely (note-our Consulting SVP in Atlanta, David Kalosis, reports that the markets in Atlanta and the Carolinas have improved dramatically this Spring).

Fed Stimulus: How long will the Fed keep buying $45 billion per month in mortgage securities to keep rates down?

Get in Now: At the risk of sounding like a broken record, monthly housing payments are near all-time lows and are trending up.

Pent-up Demand: Consumers can now look in the rear view mirror and see that they should have bought 6 months ago. This should increase demand.

Watch video…

http://www.McAuliffeMcCormick.com

Century 21: Smarter, Bolder, Faster

No matter who you’re pulling for in tomorrow’s Super Bowl game, it’s going to be fun keeping score of your favorite commercials.

We’re pulling for Century 21 to be Smarter, Bolder and Fast enough to finish near the top…

 

www.McAuliffeMcCormick.com

Do You Know the How Much the Sale of a Home Means to the Economy?

Check out this video by the Florida Association of Realtors on the impact Real Estate has on the economy.

FAR says, Realtors should be proud of the jobs created and the boost they give their community every time they sell a home.

Each home purchased pumps $60,000 into the economy through tremendous job creation… providing 2.5 million private sector jobs per year and even more once the home is sold.

Housing touches dozens of occupations. contributing over 15% to GDP.

Top 10 Reasons Home Buyers Prefer New Homes vs. Used

Had to share this terrific post from NewHome Source’s website.

Today’s new homes offer more benefits than ever before. Here’s a quick list of the Top 10 Reasons why so many home buyers prefer new homes to used houses:

1) Design Your Dream Home Your Way: Why settle for someone else’s choices? Select your favorite cabinets, countertops, appliances, carpets and floor coverings, bath and kitchen fixtures. Your new home will reflect your taste, not someone else’s.

2) Choose a Floorplan and Room Layout that Meets Your Needs: Want a Master Bedroom on the first floor? With massive his and her’s walk-in closets? Done! With high ceilings and a luxurious, resort-style Master Bath? Would you like a sitting room with fireplace in your Owner’s Suite? French Doors opening to a private patio or the pool? Build your Master Suite, your way.

3) All New, Under Warranty: A used home has tired products that may soon need replacing. Your new home — and the products that comprise it — are brand-new and under warranty. What’s the cost to replace a roof, appliances and countertop or water heater on a used home? Those same components of your new home feature the latest designs and building materials — and they offer years of comfort and enjoyment before needing replacement.

4) Energy and Cost savings: Today’s new homes are far more energy efficient than homes built just five years ago, and no comparison to homes that are 10, 20 or even more years old. New homes offer much higher levels of performance in heating, cooling, and insulation. Why settle for drafty, energy-wasting single-pane windows in a used home? Many new homes offer double or even triple-pane windows with special coatings and inert gases between layers of glass that save energy in both heating and cooling season.

5) Comfort and Indoor Air Quality: Today’s new homes meet stringent energy standards and codes not in place in the past. They combine high-performance energy efficiency with state of the art ventilation and air filtration. The result is year-round, consistent and draft-free comfort with higher indoor air quality.

6) Low Maintenance: New cars today are computer-designed and computer-equipped and they perform far more reliably than a 10 or 20 year old car. Homes are the same. Today’s new homes not only have open floorplans and high ceilings to reflect the way we live today, they’re also made of state-of-the-art building products that require less care and maintenance.

7) Community Amenities: Many new homes are built in lavish, Master-Planned Communities with state of the art Community Centers, Pools and Clubhouses. Many new home communities feature hiking trails, protected open lands, and some of the best new schools and shopping nearby or even within your new home community.

Manor House D Weekley Christenbury Woods near Charlotte

8) Advanced Technology and Design: It’s possible to replace all of the single-pane windows in a resale home with state of the art high performance windows. It’s also possible to add insulation to a used home. However, it is very expensive to replace out of date appliances, cabinets and counter-tops in that used home. And it’s simply not realistic to dream of high ceilings on the first floor of a 10 year old two-story home. All the more reason to build it your way for the way you live today.

9) Safety: State of the art circuit breakers. Electric garage door openers with infrared beams that stop if a tricycle or child is too near. High-efficiency furnaces and air conditioners that use the latest environmentally-friendly coolants. Cabinets, carpets and paints that use fewer Volatile Organic Compounds so you and your family can breathe easier.

10) That New Home Feel: A used home was someone else’s dream, reflecting someone else’s choices, and someone else’s family memories. You may love avocado-green appliances and you may be willing to scrub stained countertops or grease-encrusted ovens and cooktops but more and more people prefer that never lived-in feel.

When was the last time you went to a department store and selected used clothes? Or visited a car dealer and paid more for a used car than a new car?

New homes offer the latest designs, style, comfort and quality and provide a care-free lifestyle so that you can enjoy your home, not work on it. Start shopping now on NewHomeSource.com, the world’s largest and most complete new home website. You’ll be glad you did.

Reprinted from NewHome Source post on their website.

http://www.mcauliffemccormick.com/