Potential homebuyers have a lot to contend with from tight credit and low inventory to rising prices. But for buyers who are able to muscle past these hurdles, Realtors® know that deals can still fall apart when needlessly high regulatory burdens get in the way. That point was made clear by Ben Carson, secretary of Housing and Urban Development, who told REALTORS at a recent meeting that HUD is working to make improvements with the goal of ushering in a new era of homeownership. NAR for years has pushed for reforms at the Federal Housing Administration – a program office under HUD’s jurisdiction – that would make it easier for homebuyers to utilize FHA’s low-down payment financing options to purchase condos. One example is NAR’s call for FHA to address current restrictions on the treatment of condominiums. The new rules would make it easier to buy a condo with FHA financing. NAR President William E. Brown, said, “Condominiums are an affordable option that many young and first-time buyers look to when they start their home search, but using an FHA loan to buy a condo is still a real challenge,” said Brown. “Finishing work on the condo rules would offer some much-needed clarity and relief.” In addition to condo rules and life of loan mortgage insurance, Brown raised another Realtor® priority: reinstating a cut to the mortgage interest premium FHA charges for its loans. FHA announced that it was cutting annual premiums consumers pay for mortgage insurance from 0.85 percent to 0.60 percent, but the cut was rescinded under the new administration just a few weeks later. FHA has said that the decision to reinstate the cut is still under review.
Sixty-one percent of U.S. adults believe home prices in their local area will rise over the next 12 months, the highest percentage since Gallup began collecting such data in 2005. That also marks a big difference between 2008 and 2012, when no more than one-third of Americans believed home prices would increase.
Residents in the western region of the U.S. are the most optimistic, with nearly three-quarters of residents saying they expect price increases compared to slightly more than half of Midwestern and Eastern residents, according to the Gallup poll. With mortgage rates sitting below 4 percent, consumers may have more incentive to act now before home prices rise even more.
Sixty-seven percent of U.S. adults say now is a good time to purchase a home, which is down slightly from the 2012-to-2014 period when at least 70 percent said so. Unsurprisingly, homeowners (74 percent) are more likely than renters (56 percent) to say it’s a good time to purchase a home, according to the poll. Higher home prices and declining views of home ownership may be behind the dip in those who say it’s a good time to buy, Gallup researchers note.
DAILY REAL ESTATE NEWS
The National Association of Realtor’s recent research shows a strong connection between rising student loan debt and the inability to purchase a home, which has negatively impacted our nation’s economy. In fact, student loan borrowers who are current on their loan payments expect to delay their home purchase by a median of 5 years due to their high monthly payments and overall debt load.
First-time homebuyers typically make up 40 percent of the primary residence buyers, which is currently at 32 percent, the lowest percentage of the housing market since 1987. This is especially concerning since homeownership is often the only way for hardworking Americans to build wealth and financial security.
NAR supports legislation that would streamline the myriad of confusing student loan programs into a simple fixed repayment plan. It would also create an income based repayment option that would guarantee all student borrowers the option to keep their loan payments as a small percentage of their income providing them confidence that they will be able to afford the cost of repaying their loans and be able to help grow our nation’s economy.
Major reforms are needed to lower tax rates and simplify the tax code, but that shouldn’t come at the expense of current and prospective homeowners, according to National Association of Realtors® President William E. Brown.
Brown said that while the President’s tax proposal released today is well-intentioned, it’s a non-starter for homeowners and real estate professionals who see the benefits of housing and real estate investment at work every day. By doubling the standard deduction and repealing the state and local tax deduction, the plan would effectively nullify the current tax benefits of owning a home for the vast majority of tax filers. In light of the plan’s release, Brown issued the following statement:
“For over a century, America has committed itself to homeownership with targeted tax incentives that help lower- and middle-class families purchase what is likely their largest asset. No surprise, real estate now accounts for over 19 percent of America’s gross domestic product, or more than $3 trillion in investment.
“Targeted tax incentives are in place to help people get there. The mortgage interest deduction and the state and local tax deduction make homeownership more affordable.
Existing-home sales took off in March to their highest pace in over 10 years, and severe supply shortages resulted in the typical home coming off the market significantly faster than in February and a year ago, according to the National Association of Realtors (NAR) only the West saw a decline in sales activity in March.
Sales rose 4.4 percent to an annual rate of 5.71 million in March a sales pace which is 5.9 percent above a year ago and surpasses January as the strongest month of sales since February 2007.
Lawrence Yun, NAR chief economist, says existing sales roared back in March and were led by hefty gains in the Northeast and Midwest. “The early returns so far this spring buying season look very promising as a rising number of households entered into the market and were successfully able to close on a home last month,” he said. “Although finding available properties to buy continues to be a strenuous task for many buyers, there was enough of a monthly increase in listings in March for sales to muster a strong gain. Sales will go up as long as inventory does.”
The median existing-home price for all housing types in March was $236,400, up 6.8 percent from March 2016 ($221,400). March’s price increase marks the 61st consecutive month of year-over-year gains.
Growing consumer interest and demand for greener, more sustainable properties is driving a dialogue between Realtors® and home-buyers and sellers. Realtors® find that consumers have interest in real estate sustainability issues and practices.
The home features that Realtors® said clients consider as important include a home’s efficient use of lighting (50 percent), a smart/connected home (40 percent), green community features such as bike lanes and green spaces (37 percent), landscaping for water conservation (32 percent), and renewable energy systems such as solar and geothermal (23 percent).
When it comes to the sustainable neighborhood features for which clients are looking, 60 percent of Realtors® listed parks and outdoor recreation, 37 percent listed access to local food and nine percent listed recycling as important to home buyers.
The transportation and commuting features of a community that Realtors® listed as important to their clients included walkability (51 percent), public transportation (31 percent) and bike lanes/paths (39 percent).
The National Association of Realtors (NAR) initiated the Sustainability Program as a platform for dialogue on sustainability for Realtors®, brokers and consumers. The program’s efforts focus on coordination of NAR’s existing sustainability resources, while also supporting a growing area of interest for consumers.
Multiple years of uninterrupted job gains and hope that the best is yet to come in 2017 are igniting consumer confidence across the country, and especially in rural and middle America, according to new consumer survey findings from the National Association of Realtors®.
In NAR’s quarterly survey, respondents were asked about their confidence in the U.S. economy and various questions about their housing expectations. In the first three months of 2017, the share of households believing the economy is improving soared to its highest share in the survey’s five-quarter history (62 percent), and is up from 54 percent last quarter and 48 percent in March 2016.
Lawrence Yun, NAR’s chief economist said, “Confidence levels generally rise after a presidential election as the nation hopes for the best. Even though it is a highly polarized country, consumers for the most part have upbeat feelings about the economy right now,” he said. “Stronger business and consumer morale typically lead to even more hiring and spending, which in turn encourages more households to make big decisions like buying a home.”
Higher confidence in the economy is also translating to better feelings about households’ financial situation. The survey’s monthly Personal Financial Outlook Index showing respondents’ confidence that their financial situation will be better in six months, climbing to 62.6 in March from 59.8 in December 2016.