Category Archives: Industry News

Mortgage rates causing hesitations in first-time homebuyers

Posted on by

The rising of mortgage rates at the end of 2016 is causing some would-be first-time homebuyers a little hesitation in house hunting this spring.

In October 2016, 55 percent of potential homebuyers were planning to make their first home purchase in the spring. This number has dropped to 44 percent this month, according to realtor.com®. The website reported that the average 30-year conforming rate rose .8 percent from September to December 2016, and would cost, on average, an extra $720 per year in interest.

“Last fall, we saw a large jump in the number of first timers planning home purchases, which was very encouraging because their market share is still well below pre-recession levels,” said Jonathan Smoke, chief economist for realtor.com®. “But, as evidenced by their decline in share, first-time buyers are really dependent on financing and affordability is one of their largest barriers to home ownership. This number could continue to decline with anticipated increases in interest rates and home prices.”

While first-time buyers accounted for nearly one-third of buyers in November 2016, first-time buyers were almost five times more likely than repeat buyers to report that they struggled to qualify for a mortgage.

In addition to mortgage rates, the continued lack of inventory on the market is impacting would-be first-time homeowners. Inventory on realtor.com® in December 2016 was down 11 percent from December 2015. Another aspect of the low amount of inventory is that the cost of homes is still above average. In December 2016, homes on the market cost 9 percent more than they did in 2015.

Realtor.com® also reported that the average listing views saw an increase of 40 to 80 percent during the last few weeks in December 2016, compared to December 2015, as more buyers are striving to purchase the same homes.

 

What noise factors can impact your sellers’ home value?

Posted on by

What’s that noise?

Turns out homebuyers typically have a preference when looking at home near notoriously noisy areas. What does it cost the sellers?

The realtor.com® team analyzed nine “major noise factors” and how they impacted home prices of homes near them.

Not surprisingly, airports are the highest offender. Sellers of homes within two miles of an airport are listing, on average, 13.2 percent below the average listing in their zip code. Relatedly, railway tracks within a tenth of a mile of a home for sale will see a discount of 12.3 percent, compared to other homes in the zip code. This is followed by highways within a tenth of a mile, where homes will see a dip of 11.3 percent, compared to other homes in the zip code.

On the other end of the spectrum, people living within a tenth of a mile of a fire station only see a decrease of 1.8 percent, compared to other homes in their zip code. Schools are another one, homes within a tenth of a mile see a decline of 4.3 percent, compared to other homes in their zip code, as some parents may see this as a positive thing. Yet, homes a little further away from schools, such as 1 to 5 miles generally see a jump in prices, up to 8.6 percent.

A 24-hour supermarket within a tenth of a mile will typically see a decline of 5 percent in price of the home. However, realtor.com® points out that a good store in the area generally increases home prices by 3.4 percent.

The other factors realtor.com® included in the study were busy roads within a tenth of a mile (9.5 percent decrease), a hospital emergency room within a half of a mile (7.6 percent) and a busy church within a half of a mile (5.2 percent).

 

What remodeling projects give homeowners the most resale value?

Posted on by

Of the 29 home projects in Remodeling Magazine’s annual Cost vs. Value Report, for resale purposes, the average return on investment is 64.3 cents to the dollar.

“Greige,” described as Remodeling Magazine as being a mix of gray and beige is THE color this year, thanks to its subtly.

Of the 29 projects in this year’s report, 24 have been monitored since 2011, and have seen an increase of only three-quarters of a penny for resale value since the 2016 report. However, the average cost for these projects increased 3 percent.

The project that gives homeowners the most bang for their buck in resale value is loose-full insulation in an attic, which is the only project that costs less than its’ resale, at 107.7 percent. The average cost is $1,343, while the average resale value is $1,446. A steel door replacement is second, with a 90.7 percent resale value, costing, on average, $1,413, with an average resale value of $1,2,82. A manufactured stone veneer comes in at 89.4 percent in third, costing $7,851 on average, with a resale value of $7,019. Rounding out the top five are the minor kitchen remodel (80.2 percent return on investment) and a garage door replacement (76.9 percent return on investment). Remodeling Magazine pointed out that these projects are generally some of the most inexpensive ones that homeowners can complete.

The projects with the lowest resales include a bathroom addition, which costs, on average, $43,232, but has an average resale value of $23,283 (53.9 percent) a backup power generator, which only has a resale value of 54 percent, from the cost of $12,860 to a resale value of $6,940, and a backyard patio, which costs homeowners an average of $51,985, with a resale value of $28,546, or 54.9 percent. Rounding out the bottom five are the bathroom remodel, which costs, on average, $18,546, but only sees a resale value of $12,024 (64.8 percent) a master suite addition, which costs $119,533 on average, with a resale value of $77,506 (64.8 percent).

In 2017, it is expected that remodeling projects will increase 4.4 percent, and then 3.3 percent in 2018.

Pennsylvania Realtors® named to 2017 Swanepoel Power 200

Posted on by

Each year, Swanepoel releases its POWER 200, a list of the leaders in the real estate industry.

PAR would like to extend congratulations to five Pennsylvania Realtors® who were recognized by Swanepoel as top leaders of the real estate industry.

13. Howard “Hoddy” Hanna and Helen Hanna Casey, Pittsburgh.  Howard serves as the chairman, while Helen is the CEO of Howard Hanna Real Estate Services, a 60-year old firm, with more than 260 offices and 8,000 agents. The firm is the third largest real estate company in the country, with offices in Pennsylvania, Ohio, New York, Virginia, Michigan, West Virginia, North Carolina and Maryland. The firm recently acquired Nothnagle REALTORS® and RealtyUSA.

61. Joan Docktor, Philadelphia. Serving as president of Berkshire Hathaway HomeServices Fox & Roach since 2013, Docktor has been with the company since 1986. Currently, she manages 62 offices with more than 4,300 agents, accumulating nearly $11 billion in sales each year.

106. Douglas Rebert and Pete Slaugh, Lancaster. The duo oversees more than 1,000 agents at Berkshire Hathaway HomeServices Homesale Realty. They founded Prudential Homesale Services Group, which became Berkshire Hathaway HomeServices Homesale Realty in 2014. The currently do more than $2.6 billion in sales.

We’d be remiss not to mention Howard “Hoby” Hanna IV, who is an integral part of Howard Hanna Real Estate Services, but does not reside in Pennsylvania.

Coming in at number 94 on the Swanepoel list, Howard serves as president of Real Estate Brokerage for Howard Hanna Real Estate Services. Residing in Ohio, he oversees business and operational efforts throughout Ohio, Michigan and New York.

Lancaster, Pittsburgh named safest cities for walkers

Posted on by

Two Pennsylvania cities were recently ranked on the top 10 list of the safest areas for pedestrians in the country.

According to Curbed.com, who ranked the cities, walkers in this country are now seven times more likely to be killed walking than in a natural disaster.

Lancaster, which was ranked seventh overall, offers several walking trails, some old railroad tracks redone.

Lancaster Association of Realtors® President Lynn Zimmerman said that “good schools, good family units with strong moral teaching and caring law enforcement” are the top reasons Lancaster ranks above most cities in the country for walkers’ safety.

Additionally, Zimmerman said the housing market is “strong with low inventory.” However, affordable rentals can be hard to find, making living in Lancaster a bit of a challenge for low-income residents. But the city offers a good tourist industry, he said, as well as a “very diversified economy which helps balance highs and lows in the economy.”

In Pittsburgh, pedestrian safety is a top priority. In the city, ranked ninth on the list, the Pittsburgh Downtown Partnership worked to bring more awareness to pedestrian safety in October. Actors dressed as zombies and the Grim Reaper surprised pedestrians who weren’t paying attention, thanks to their phones.

Ahead of the trend, the city launched WalkPittsburgh.org a few years ago, which encourages residents to walk when they can. The website and app provide walkable routes, safety tips and walkers can even sign in to log miles for their neighborhoods, and see how much gas they saved by walking.

Overall, Colorado Springs was named the safest city for walkers, while Cape Coral-Fort Myers, FL was named the least.

Completed foreclosures down 25 percent from last November

Posted on by

Foreclosures were down 25.9 percent in November 2016, compared to November 2015, according to CoreLogic’s National Foreclosure Report for November.

In November 2016, 26,000 completed foreclosures happened across the country, a decrease from 35,000 in November 2015. Homes in various states of foreclosure also decreased significantly, from 465,000 in November 2015 to 333,000 in November 2016, representing a decrease of 30 percent. Of all homes with a mortgage, 0.8 percent are in a state of foreclosure, a rate that matches June 2007.

Month-to-month, foreclosures were down 2.4 percent from October to November 2016, marking it 61 months in a row of year-to-year decreases in foreclosures.

CoreLogic also reported that the seriously delinquent rate is at 2.5 percent lowest level in nearly a decade, since August 2007.

“The decline in serious delinquency has been substantial, but the default rate remains high in select markets. Serious delinquency rates were the highest in New Jersey and New York at 5.6 percent and 5 percent, respectively. In contrast, the lowest delinquency rate occurred in Colorado at 0.9 percent, where a strong job market and home price growth have enabled more homeowners to stay current,” said Frank Nothaft, the chief economist at CoreLogic.

In Pennsylvania, 1.1 percent of mortgaged homes were a part of the foreclosure inventory in November 2016, according to CoreLogic. This is a decrease of 30.3 percent from November 2015. Between November 2015 and November 2016, 18,451 homes completed a foreclosure. The seriously delinquent rate in the commonwealth is 3.4 percent.

New Jersey, New York, Hawaii, Maine and Washington, D.C. had the highest foreclosure inventory as a percentage of homes with mortgages, while Colorado, Arizona, California, Minnesota and Utah had the lowest, according to CoreLogic.

Homeowners overestimating house worth by 1.33 percent

Posted on by

The gap between homeowner’s estimates of their home’s worth and appraiser’s estimates has grown for the first time in the past six months.

According to Quicken Loans’ National Home Price Perception Index, on average, the appraiser estimate was 1.33 percent below the owner’s in December.

Prior to December, the gap between the two had been inching closer and closer together. However, Quicken Loans pointed out that home values decreased 1.19 percent from November to December, but rose 3.85 percent compared to December 2015. Yet, year-to-year, home price growth is slowing. From November 2015 to November 2016, home prices increased 5.28 percent.

“Home value growth has been mostly driven by enthusiastic buyers vying for a smaller than usual inventory of properties,” said Quicken Loans Chief Economist Bob Walters. “Appraised values have dipped along with the seasonal decline in sales around the winter months. It’s yet to be seen if value growth will build as sales rise in the spring, or as construction increases.”

In Philadelphia, the only Pennsylvania metro analyzed, homeowners were overestimating the cost of their home by 2.94 percent, compared to what appraisers said it was worth. This is continuing to widen, having only been 2.87 percent in November. However, this is a decrease from December 2015, where homeowners overestimated the value of their home by 3.50 percent. Philadelphia has consistently had one of the largest, if not the largest, gaps between homeowner’s estimates and appraiser’s.

The report also found that homeowners in the West and South areas of the country were more likely to match the appraisers’ opinions or even underestimate their home’s worth, as opposed to homeowners in the Northeast and Midwest, who tended to think their homes were worth more.

Buying is less expensive than renting in the majority of U.S. counties

Posted on by

Buying a home is now more affordable than renting in nearly two-thirds of markets across the United States.

RealtyTrac combined data from the U.S. Department of Housing and Urban Development, the Bureau of Labor Statistics and public record sales deed data in 540 counties, with at least 900 home sales in last year.

The average monthly fair market rent on a three-bedroom residence in 2017 will cost 38.6 percent of average salary. Comparatively, a monthly home payment, which includes mortgage, property taxes and insurance, on a median-priced home will cost 36.6 percent of average salary.

Out of the 540 counties analyzed, there were 55 in which the average fair market rent for a three-bedroom property will cost more than 50 percent of average wages, according to RealtyTrac.

“While buying continues to be more affordable than renting in the majority of U.S. markets, that equation could change quickly if mortgage rates keep rising in 2017,” said Daren Blomquist, senior vice president with ATTOM Data Solutions, the parent company of RealtyTrac. “In that scenario, renters who have not yet made the leap to homeownership will find it even more difficult to make that leap this year. Additionally, renting may end up being the lesser of two housing affordability evils in a growing number of high-priced markets.”

The report did find that both rent and the cost of homes for sale are increasing more quickly than salaries. Rents are expected to rise 4.2 percent this year, while home prices rose 5.7 percent in 2016, compared to 2015.  Average wages only increased 2.2 percent from last year. However, Philadelphia was named one of the 203 counties in which average wage growth was growing quicker than rent cost.

 

 

 

Real estate predictions for 2017

Posted on by

“Millennials will be buying properties. 2017 will be a year when we see more loan applications and purchases for millennials,” said Abby Shemesh, founder and CEO of Amerinote Xchange, on what trends he anticipates for the real estate industry in 2017.

Another trend Shemesh expects is that baby boomers will be downsizing this year. However, he said where the boomers and millennials buy may not be where you would expect.

“A lot of folks are saying that millennials will be purchasing in ‘hot’ cities, I disagree. A lot of markets are so saturated and overpriced. My assessment is that you will see a huge increase in cities that are not being focused on. It will be a huge migration, depending on the job situation for millennials. They may be moving to not-so-sexy cities.”

He said bigger cities in Pennsylvania will still see growth this year, but not at the rate they have experienced in the past year. “It will be steady in Philadelphia and Pittsburgh, but there may be slower periods. As for smaller areas, they should see more inventory this year, so they may be attractive.”

As for the baby boomers, he said they may still be heading south, but not as south as before. He thinks the southeast may see an uptick in boomers, as they strive to find housing that is affordable.

Shemesh also believes we will see mortgage rates increase. He predicts they will be as high as 4.75 percent, especially if the economy is doing well, but doesn’t see it going any higher.

“The president-elect should not make too much trouble for real estate market, at least for now,” he said. “I feel that his business practices align with how real estate markets can grow. But if he does something in politics that would significantly affect the American economy, it would affect real estate market eventually,” said Shemesh.

How can Realtors® prepare for the housing market this year? Shemesh believes it’s all in how you do business.

“I’ve seen agents blow by their competition by thinking outside the box. Broaden horizons and get more creative. All Realtors® in all areas can benefit from that advice. Let go of what you think you’re supposed to do. Apply yourself in a way that would be creative. Don’t be another agent waiting in line to submit a bid.”

Average monthly rent in the U.S. fell $4 in December

Posted on by

Monthly rent costs in the U.S. dropped $4 in December, according to a recent Yardi Matrix Report on monthly rent.

Across the country, the average monthly rate for December was $1,210, according to data pulled from 124 markets. Year-to-year, rents saw an increase of 4 percent from December 2015.

Between September and December 2016, rents fell $10 on average. “Some of the drop can be attributed to normal seasonal factors, but it is clear that rents are in a period of deceleration after growing at high levels for the previous two years,” the report stated.

Specifically, multi-family rents fell .3 percent in December, a .1 percent decline from November. However, the decrease in rents was more lifestyle properties, which is defined as those who rent by choice. Lifestyle rents tend to be higher-end and those rents fell .4 percent. Renter-by-necessity properties only saw a decrease of .1 percent.

Yet, gains are still above the long-term 2.3 percent average, according to the report. Yardi Martix predicts a 3.9 percent increase this year in apartment rental costs.

Stabilized properties remained the same in occupancy rates at 95.7 percent, with lifestyle occupancy staying at 95.5 percent, and renter-by-necessity properties remaining at 95.7 percent. The report found that occupancy stayed about the same for the majority of 2016.

“With the economy creating jobs at a 2 million-per-year rate, and GDP growth showing strength, we expect no let up in apartment absorption,” the report stated. Yardi Matrix also predicted growth in the later half 2017, thanks to economic stimulus and an predicted decrease in new supply.