Home Builders Warn of Shrinking Profits

Home builders have been reporting higher profits the past year, but they say appreciation will soon slow. They are warning investors that they likely will see a decrease in profit margins in the new-home market in the early part of next year, mostly attributed to the rising costs of building homes.

For example, homebuilder Meritage Home Corp. reported gross margins up 22.8 percent in the third quarter over 18.6 percent a year earlier. However, chairman and chief executive Steven Hilton said that Meritage’s margins likely would rise or stay flat for two or three quarters before starting to fall next year toward 20 percent or 21 percent.  

“The biggest impact for us, our margins, going forward is going to be land cost,” Hilton told investors on a recent conference call. “Particularly in California, it’s going to be difficult for us to replace [at economical prices] some of that land that we got at really good prices” in past years.

Builders often purchase land two to three years before they sell it. Land prices have been on the rise since 2012 and spiked this year. 

“That means that homes sold today are on land bought for relatively affordable prices in 2011 or thereabouts,” The Wall Street Journal reports. “However, homes sold in 2014 and 2015 will be built on land bought at significantly higher prices last year and this year.”

If home prices rises don’t outpace the rise in land costs, builders will see their profits shrink. 

Richard Dugas, chairman and CEO of PulteGroup Inc., said that the increase in land prices likely will have a “push-down effect” on profit margins. 

Source: “Home Builders Have Marginal Concern for 2014,” The Wall Street Journal (Nov. 1, 2013)

Fannie, Freddie Retain Higher-Priced Mortgage Limits

Mortgage giants Fannie Mae and Freddie Mac will continue to fund higher-priced mortgages at current limits at least through the middle of next year, federal regulators announced. 

The Federal Housing Finance Agency, which oversees Fannie and Freddie, was planning to lower limits by the end of the year in a move designed to decrease its role in the market and bring more private capital to the mortgage business. But Ed DeMarco, FHFA acting director, says: "We are not making a change there in the immediate term.”

In 2008, government-backed mortgage limits were increased from $417,000 to up to $729,750 in some high-cost areas. In 2011, limits were reduced to $625,500 in high-cost areas, but FHA’s limits remain at $729,750. The limits were scheduled to decrease at the end of this year.  

The housing industry has been lobbying against any drop in the loan limits, concerned it could hamper the housing recovery. 

The National Association of REALTORS®, along with other housing industry associations, recently wrote to Congress, urging the FHFA to delay reducing the loan limits.

"While high-cost loans make up a low percentage of all loans, it is simply a matter of equity for those living in high-cost markets where many millions of families live,” NAR wrote. “Without higher loan limits in these areas, many hard-working, middle-income families will be denied homeownership just because they happen to reside in an area of high home prices. Lowering loan limits also would ... create confusion and uncertainty for potential borrowers and lenders, especially in the months leading up to any reduction. There is already turbulence enough in the regulatory environment for mortgage lending."

DeMarco said that FHFA would provide at least a six-month warning of any changes to the limits in the future. 

Source: “US extends backing for higher-priced mortgages,” CNBC (Oct. 24, 2013)

Neighborhood Preferences Are Changing

Americans are increasingly showing their desires for walkable neighborhoods that combine a mix of homes and stores. In fact, a new survey shows that the least popular neighborhood is a suburban one with just houses in it. 

Sixty percent of Americans surveyed say they favor neighborhoods with a mix of houses and stores and other businesses that are easy to walk to over neighborhoods that require greater driving among home, work, and recreation, according to the National Association of REALTORS®’ 2013 Community Preference Survey of 1,500 Americans. 

“Although there is no one-size-fits-all approach, smart growth is typically characterized by mixed-use development, higher densities, and pedestrian-friendly streets that accommodate a wide diversity of transportation modes,” says NAR President Gary Thomas. “Growth patterns, economic development, and quality-of-life issues are inextricably linked to the success of communities and residents.”

Americans say they’re willing to sacrifice the size of the home and lot in order to live in a neighborhood with walkable features and a shorter commute. For example, 78 percent of respondents said that the neighborhood is more important to them than the size of the home. Fifty-seven percent said they’d give up a home with a larger yard if they could have a shorter commute. Fifty-five percent said they’d give up a home with a larger yard if it meant they could live within walking distance to schools, stores, and restaurants. 

—REALTOR® Magazine Daily News

Housing Affordability Starts to Slip

Home prices are up 12 percent from a year ago. When that's combined with higher mortgage rates—up a full percentage point since last spring —it chips away at housing affordability. 

"Affordability has fallen to a five-year low, as home price increases easily outpaced income growth," Lawrence Yun, chief economist for the National Association of REALTORS®, noted in a recent housing report. "Expected rising mortgage interest rates will further lower affordability in upcoming months."

According to a new report by Interest.com, only eight housing markets out of the top 25 are deemed “affordable” for households that earn  median income. Income growth is not keeping pace with home prices, the report notes. 

Interest.com finds the following metro areas are the least affordable (the percentage reflects the amount by which median household income in the area falls short of the income needed to buy a median-priced home there): 

• San Francisco: -47.93%
• San Diego: -37.71%
• New York: -35.82%
• Los Angeles: -30.31%
• Miami: -24.56%

On the other hand, Interest.com found the most affordable metro areas for housing are the following (the percentage reflects the amount by which median household income in the area exceeds the income needed to buy a median-priced home there): 

• Atlanta: +24.92%
• Minneapolis: +23.86%
• St. Louis: +17.94%
• Detroit: +16.87%
• Pittsburgh: +11.33%

Source: “Home affordability sinks as housing slows,” CNBC (Oct. 23, 2013)

FHFA to Stop 'Forced' Homeowner's Insurance

The Federal Housing Finance Agency will bar mortgage companies from accepting payments to arrange force-place homeowners' insurance, government officials have announced. 

The housing regulator will ban fees for the coverage, which is often forced on borrowers whose regular homeowners' policy has lapsed, despite industry objections that such a move encroaches on state regulators. Rather than set rules on what insurers can charge for such policies, which is generally the purview of states, the FHFA will prevent mortgage servicers that do business with Fannie Mae and Freddie Mac from accepting certain payments. 

Doing so essentially would block the entire industry from the practice, since Fannie and Freddie back about two-thirds of U.S. mortgages.

Source: "U.S. Takes Aim at 'Forced' Insurance," The Wall Street Journal (Nov. 5, 2013)

Copyright © 2013 Information Inc.

Survey: Home Owners Don't Like Renters as Neighbors

Americans don’t care to get to know the neighbor renting next door, according to a survey of more than 3,000 adults conducted by Harris Interactive on behalf of Trulia. 

Home owners dismiss neighbors who are renters more than any other group living in their neighborhood, the survey finds. Thirty-five percent of respondents say it’s most important to them that their neighbors be home owners, and 51 percent of home owners say they prefer to have other home owners as neighbors. That compares to 33 percent who say they prefer neighbors who speak the same language as them, 16 percent who say they prefer neighbors with the same family structure, and 10 percent who say they prefer the same race and ethnicity.

At a time when more single-family homes have been turned into rentals, other surveys have found a prejudice against renter neighbors, too. Nearly 75 percent of home owners say that renters are bad neighbors, according to a survey by NeighborsFromHell.com. 

“Renters are less likely to adapt to local customs concerning noise, trash, parking, and lawn upkeep,” says Robert Borzotta, founder of NeighborsFromHell.com. “Home owners are perceived to care more about their property, its appearance, safety of the community, and property values.”

Still, according to the Trulia survey, two-thirds of those surveyed say they like their neighbors. But don’t expect them to know their neighbors' names. Only 46 percent of urbanites say they know their neighbor's name. 

Source: “America’s Least Favorite Neighbors: Renters,” MarketWatch (Oct. 30, 2013)

How Men, Women Differ on Home Buying

Men are from Mars, women are from Venus — and that couldn't be more true when it comes to home buying. According to Prudential Real Estate's third-quarter Consumer Outlook Survey, men and women are quite different when it comes to what they value most about home ownership and the process of buying and selling.

Women enjoy the home search more than men, with 87 percent of women versus 77 percent of men saying they like looking at homes, the survey finds. More women associate home ownership with "pride," "accomplishment," or "independence," while men tend to associate it with "control over living space" and "more space for my family."

"As the real estate market strengthens and household formation grows, men and women approach the buying-selling process from different angles," says Earl Lee, president of Prudential Real Estate. "What's most interesting is the dynamic that exists among couples and the role that agents play in balancing couples' real estate objectives."

Agents may often find themselves stuck in the middle, but both sexes say they trust their agent to be the voice of reason and settle any disagreements among couples. Eighty-three percent of survey respondents say their real estate agent was helpful in moderating an agreement, and 86 percent value the agent's point of view as much as — or more than — their partner's, according to the survey. Both sexes cited "honesty" and "knowledgeable" as the most important traits in a real estate agent. 

Men and women tend to take on different responsibilities when it comes to home buying, the survey finds. Men take on more of the financial aspects, while women tended to take the lead on planning aspects, such as neighborhood research. Nearly 40 percent of men said they researched banks and secured the mortgage; 42 percent of women said it was their responsibility to manage appointments, and 34 percent took the lead in researching neighborhoods. 

When it comes to the most important home features, men and women are mostly in agreement. Both genders ranked "safe neighborhood," "overall condition of home," and "number of bedrooms" the highest. 

Source: Prudential Real Estate

6 Cities With Highest Income Inequality

The American middle class is a shrinking group: About 51 percent of the population was classified as middle class at the start of this decade, a drop from 61 percent 40 years earlier. Income inequality is widening nationwide, with the gap between the wealthy and the poor varying across the nation, USA Today reports. 

24/7 Wall St. used the Census Bureau’s 2012 American Community Survey data to find the metro areas with the highest income inequality. Most of the metro areas identified have extreme cases of income inequality that is evident in urban and suburban neighborhoods:

1. Sebastian-Vero Beach, Fla.
   Median income: $40,413
   Poverty rate: 17.2%
   Percentage with income over $200,000: 7.1%
2. Bridgeport-Stamford-Norwalk, Conn.
   Median income: $79,841
   Poverty rate: 8.9%
   Percentage with income over $200,000: 21.8%
3. Naples-Marco Island, Fla.
   Median income: $54,126
   Poverty rate: 13.8%
   Percentage with income over $200,000: 9.6%
4. Albany, Ga.
   Median income: $34,469
   Poverty rate: 26.9%
   Percentage with income over $200,000: 3.6%
5. New York-Northern New Jersey-Long Island, N.Y.-N.J.-Penn.
   Median income: $63,982
   Poverty rate: 14.8%
   Percentage with income over $200,000: 11.3%
6. Jackson, Miss.
   Median income: $42,604
   Poverty rate: 22.2%
   Percentage with income over $200,000: 4.8%

Loan Demand Eases in Past Week

Loan demand dropped 7 percent last week as interest rates remained mixed, the Mortgage Bankers Association reports. The MBA’s mortgage application index reflects both applications for refinance and home purchase. 

Demand for refinancings has been falling since mortgage rates began edging up this summer. The refinance index fell 8 percent last week. 

Applications for home purchases -- viewed as a leading indicator for future home sales -- dropped 5 percent last week, the MBA reports. 

Meanwhile, the average 30-year fixed-rate mortgage dropped from 4.33 percent to 4.32 percent last week, the MBA reported. The average on the 15-year fixed-rate mortgage rose slightly from 3.42 percent to 3.44 percent. 

Source: “U.S. Mortgage Application Volume Fell 7% in Latest Week, MBA Says,” The Wall Street Journal (Nov. 6, 2013)

Home Ownership Rate Flatlines at 18-Year Lows

U.S. home ownership rates remained at 65.1 percent in the third quarter, holding at its lowest level since 1995, the Commerce Department reports. Some economists are blaming the low rate on first-time home buyers being squeezed out of home ownership. 

The home ownership rate peaked in 2004 at 69.4 percent. But high unemployment and tight lending conditions is placing home ownership out of reach to more families, Reuters reports. About 21.5 million Americans are either unemployed or working only part-time, although desiring a full-time job. 

Also, “with the share of first-time home buyers hovering well below levels that economists and real estate professionals consider ideal, there are concerns the higher borrowing costs could hold the home ownership rate near current lows,” Reuters reports. 

The Commerce Department reports that the home ownership rate was lowest for the under-35 age group and highest among those 65 years and older. 

Source: “U.S. Home Ownership Rate Holds Near 18-Year Lows,” Reuters (Nov. 5, 2013)

More Banks Offering Up Loans for 5% Down?

For the last few years, buyers have been hard-pressed to land a mortgage if they didn’t have a 20 percent down payment, unless they turned to the Federal Housing Administration’s low down-payment loans.

But a growing number of banks are now offering loans with just 5 percent down, CNNMoney reports. For example, Bank of America, Wells Fargo, and TD Bank are among the banks reportedly offering mortgages with down payments as low as 5 percent. 

TD Bank is offering a “Right Step” loan product that allows borrowers to get a loan with a 5 percent down payment while also allowing borrowers to get up to 2 percent of the sales price as a gift from a relative or third party. In actuality, then, borrowers would only need to come up with a 3 percent down payment themselves. 

Banks that are offering 5-percent down payment loans, however, are requiring borrowers to purchase private mortgage insurance. Borrowers will have to keep PMI until they build up 20 percent equity in the home. 

Source: “Banks Offering Mortgages with Only 5% Down Payments,” CNNMoney (Nov. 5, 2013)

High-Priced Properties Drive Housing Recovery

Sales growth is strongest among homes in the highest home tiers, according to a new analysis of housing data from the National Association of REALTORS®. Homes in the above-median-priced categories are outselling homes in the lower-priced tiers. 

Over the past year, more than 11 percent of homes sold were priced at over $500,000.

A big variation exists among regions for median prices. The median price reflects half of the homes in an area that sold at a higher price and half of the homes that sold at a lower price than the median. 

One explanation behind the trend of pricier homes outselling lower priced homes is that “home sales are shrinking in the lowest price tier -- most likely a result of limited inventory in this price range as would be expected in a housing market where prices are rising,” says Danielle Hale, a research economist at NAR. 

Sales in the lowest price range fell by more than 7 percent nationwide. On the other hand, sales in higher-priced tiers rose more than 30 percent in September compared to year ago levels, Hale notes. 

An expected decrease in distressed sales in the months ahead could mean even smaller inventories of lower-priced homes for sale compared to high-priced homes. That would “mean continued upward pressure on the median price of homes compared to one year ago until inventories help relieve some of this pressure.”

Source: “Pricier Properties Lead the Recovery,” Real Estate Economy (Oct. 28, 2013)

Home Buyers Need You More, Despite Internet Growth

Internet growth in home buying is growing, but buyers who use the Internet are more likely to say they need a real estate agent, according to the National Association of REALTORS®’ 2013 Profile of Home Buyers and Sellers survey. 

In fact, the highest share of buyers in the survey’s history -- 92 percent -- reported using the Internet to search for a home to buy. Forty-two percent of buyers reported starting their home search by looking for properties online, while 17 percent said their first step was to contact a real estate agent. 

The Internet is helping buyers to find the home they ultimately purchase too. Forty-three percent of buyers said they found the home they purchased online, up from 8 percent in 2001. 

Despite home buyers increasingly relying on the Internet for their home search, the overwhelming majority turns to a real estate agent for extra help. 

Eighty-eight percent of buyers said they purchased their home through a real estate agent. Among those who used the Internet to search for homes, that share grew higher -- up to 90 percent, according to the NAR survey. 

“While the vast majority of buyers use the Internet during the homebuying process, the Internet does not replace the real estate agent in the transaction,” according to the report. “In fact, buyers who used the Internet were more likely than those who did not use the Internet to purchase their home through an agent.” 

Buyers ranked the following services highest that agents’ can provide them in their search: finding the right property, helping to negotiating terms of the sale and price negotiations, identifying comparable properties, and assisting with paperwork. 

Source: “Homebuyers More Likely to Use Real Estate Agents, Even as Internet Usage Hits an All-Time High,” Inman News (Nov. 4, 2013) 

The 5 Priciest, Cheapest Places for Home Buyers

Malibu ranks as the priciest housing market in the country. The average list price in Malibu for a four-bedroom, two-bathroom home is $2.5 million, according to Coldwell Banker’s annual report of more than 1,900 markets. 

Of the top 25 spots of most expensive housing markets, California holds 13 of those spots. 

“If you look at the overall history of the index, California has always been the most expensive state overall,” says Budge Huskey, president and chief executive of Coldwell Banker. “Anytime you move into a coastal market you’ll find there’s going to be higher prices.”

The following are the top five most expensive housing markets (including the average list price for a four-bedroom, two-bathroom home), according to Coldwell Banker: 

• Malibu: $2.5 million
• Newport Beach, Calif.: $1.8 million
• Saratoga, N.Y: $1.7 million
• Los Gatos, Calif.: $1.36 million
• San Francisco: $1.3 million

Meanwhile, home shoppers looking for a deal may need to head to the Midwest, which boasted 15 of the 25 most affordable housing markets. 

The following were the least expensive housing markets, according to Coldwell Banker: 

• Cleveland: $63,729
• Garfield Heights, Ohio: $66,075
• Flint, Mich.: $84,437
• Saginaw, Mich.: $87,000
• Jackson, Miss.: $94,000

Source: “For expensive housing, you can't beat California,” USA Today (Nov. 6, 2013) and “5 Most Expensive and Most Affordable Housing Markets,” FOX Business (Nov. 6, 2013)

Investors Try Out New Approach: Build to Rent

As the number of foreclosed homes dries up in some markets, some investors are looking elsewhere for properties to turn into rentals. With the rental market still strong, some investors are either buying finished single-family homes that they can use as rentals or even developing vacant lots to turn into rentals from the ground up, The Wall Street Journal reports. 

Last year, 5.8 percent of single-family home starts were being built as rentals, the highest share since 1974, according to an analysis by the National Association of Home Builders. 

“For investors, the interest in new homes reflects their belief that the rental market will continue to see strong demand and rising rents,” The Wall Street Journal reports. 

For example, Colony Capital LLC’s Colony American Homes has added about 1,000 new homes into its 15,000 rental portfolio. 

Apartment rents have been on the rise, increasing 11.3 percent since 2009, according to Reis Inc. 

Investors have turned a high number of single-family homes into rentals. As of last year, about 15 million single-family homes nationwide were rentals -- up from 10.8 million in 2005, according to the research firm Zelman & Associates. 

Source: “New Homes Get Built With Renters in Mind,” The Wall Street Journal (Nov. 3, 2013)

These Cities Were Made for Walking

More Americans are showing a stronger desire for walkable, mixed-use neighborhoods, according to a recent survey by the National Association of REALTORS®. 

Which cities offer up some of the most walkable neighborhoods? Walk Score recently rated the walkability of nearly 3,000 cities nationwide. According to the 2014 report, here are the cities that topped the list for walkability: 

1. New York: Top walkable neighborhoods are Little Italy, Chinatown, and NoHo
2. San Francisco: Top walkable neighborhoods are Chinatown, Financial District, and downtown
3. Boston: Top walkable neighborhoods are Haymarket, Government Center, and North End
4. Philadelphia: Top walkable neighborhoods are Center City East, Center City West, and Wharton/Hawthorne/Bella Vista
5. Miami: Top walkable neighborhoods are downtown, Little Havana, and Wynwood/Edgewater
6. Chicago: Top walkable neighborhoods are Near North, Printers Row, and Gold Coast
7. Washington, D.C.: Top walkable neighborhoods are Dupont Circle, Chinatown, and U Street Corridor
8. Seattle: Top walkable neighborhoods are downtown, Denny Triangle, and Pioneer Square
9. Oakland, Calif.: Top walkable neighborhoods are Civic Center, Chinatown, and downtown
10. Baltimore: Top walkable neighborhoods are Mount Vernon, downtown, and Mid-Town Belvedere

--REALTOR(R) Magazine Daily News

9 Buzzwords Helping to Sell Homes

Marble, big windows, and wine cellars are becoming popular words in listing ads to sell high-end homes, according to a new study by Trulia. The study defined luxury listings as those valued four times the median asking price in an area.

The following buzz words have grown in luxury listings the past two years: 

• Marble bath: +78%
• Oversized windows: +56%
• Ceiling windows: 37%
• Floor-to-ceiling windows: +39%
• Wine cellars: +30%
• Marble floors: +30%
• Gyms: +28%
• Private elevators: +24%
• Tennis courts: +24%

Source: “The Keywords Being Used to Sell Homes,” The Wall Street Journal (Nov. 6, 2013)

Homebuyer Demand Bucking Seasonal Decline

Late-season home buyers are being drawn into the market, with buyer demand outperforming typical seasonal patterns, according to the real estate brokerage Redfin’s Demand Pulse, which analyzes the housing market based on home tour and offer data in 22 top real estate markets. 

Home tour and offers in October appeared “more robust than expected compared to typical seasonal declines,” Redfin notes in its report. Offers signed by Redfin customers rose 7.8 percent month over month in October. For comparison, in October 2012, offers had dropped 3.8 percent.

"Since mid-September, mortgage rates have done an about-face thanks to the Fed's decision to keep its stimulus program in place, providing extra incentive for buyers to continue their search," says Ellen Haberle, a Redfin economist. "Moreover, competition is dropping steadily, which is helping to boost buyers’ negotiating power. For buyers who have contended with heavy competition and rising rates and prices in 2013, these changes are a breath of fresh air."

The report showed the government shutdown did prompt many home buyers to halt their searches. But after the government reopened, buyers started to re-emerge. 

During the two-week government shutdown, tours declined 2.8 percent and offers fell 8.4 percent. After the government reopened, tours rebounded 3.4 percent while offers rose 2.4 percent.

Source: Redfin

Gov't Shutdown Having Lingering Effects on Confidence

The government shutdown deflated Americans’ outlook toward the economy and the housing market, according to the October National Housing Survey conducted by Fannie Mae of 1,000 home owners and renters. In the latest survey, the gap widens between those who think the economy is on the right track and those who think it’s headed in the wrong direction.

"Housing market sentiment has clearly suffered in the wake of the recent government shutdown and debt ceiling debate,” says Doug Duncan, chief economist at Fannie Mae. “In October, we saw attitudes toward both the economy and the current buying environment experience their largest one-month drops in the survey’s three-year history. While this decline in consumer optimism may portend a slowing of the housing recovery, supply constraint data suggest that we are likely to see continued positive growth in home prices. 

“That being said, October’s survey results suggest that consumer attitudes are highly responsive to ongoing debate and decision-making in Washington,” Duncan notes. “Three key budget and debt ceiling dates loom in December, January, and February. The handling of each will likely play a key role in determining the pace and timing of any recovery in consumer sentiment."

The percentage of Americans who said they expect their financial situation to worsen in the next year reached a survey high -- 22 percent.

Fewer home owners also said now is a good time to buy a house, falling to 65 percent and reaching another survey low. The percentage had been 72 percent who said it’s a good time to buy. 

Fewer Americans also thought it was a good time to sell, with the percentage dropping from 38 to 37 percent in the latest survey. 

Home owners aren’t expecting much appreciation in their homes in the next year. Expectations over home appreciation in the next 12 months fell by 4 percentage points to 46 percent. Meanwhile, 52 percent of Americans surveyed said they expect rents to rise, on average, by 4.4 percent in the next year. 

Fewer Americans are expecting mortgage rates to increase over the year, falling from 63 percent to 57 percent. 

Source: Fannie Mae October 2013 National Housing Survey

Home Builders Warn of Shrinking Profits

Home builders have been reporting higher profits the past year, but they say appreciation will soon slow. They are warning investors that they likely will see a decrease in profit margins in the new-home market in the early part of next year, mostly attributed to the rising costs of building homes.

For example, homebuilder Meritage Home Corp. reported gross margins up 22.8 percent in the third quarter over 18.6 percent a year earlier. However, chairman and chief executive Steven Hilton said that Meritage’s margins likely would rise or stay flat for two or three quarters before starting to fall next year toward 20 percent or 21 percent.  

“The biggest impact for us, our margins, going forward is going to be land cost,” Hilton told investors on a recent conference call. “Particularly in California, it’s going to be difficult for us to replace [at economical prices] some of that land that we got at really good prices” in past years.

Builders often purchase land two to three years before they sell it. Land prices have been on the rise since 2012 and spiked this year. 

“That means that homes sold today are on land bought for relatively affordable prices in 2011 or thereabouts,” The Wall Street Journal reports. “However, homes sold in 2014 and 2015 will be built on land bought at significantly higher prices last year and this year.”

If home prices rises don’t outpace the rise in land costs, builders will see their profits shrink. 

Richard Dugas, chairman and CEO of PulteGroup Inc., said that the increase in land prices likely will have a “push-down effect” on profit margins. 

Source: “Home Builders Have Marginal Concern for 2014,” The Wall Street Journal (Nov. 1, 2013)

Home Buyers Need You More, Despite Internet Growth

Internet growth in home buying is growing, but buyers who use the Internet are more likely to say they need a real estate agent, according to the National Association of REALTORS®’ 2013 Profile of Home Buyers and Sellers survey. 

In fact, the highest share of buyers in the survey’s history -- 92 percent -- reported using the Internet to search for a home to buy. Forty-two percent of buyers reported starting their home search by looking for properties online, while 17 percent said their first step was to contact a real estate agent. 

The Internet is helping buyers to find the home they ultimately purchase too. Forty-three percent of buyers said they found the home they purchased online, up from 8 percent in 2001. 

Despite home buyers increasingly relying on the Internet for their home search, the overwhelming majority turns to a real estate agent for extra help. 

Eighty-eight percent of buyers said they purchased their home through a real estate agent. Among those who used the Internet to search for homes, that share grew higher -- up to 90 percent, according to the NAR survey. 

“While the vast majority of buyers use the Internet during the homebuying process, the Internet does not replace the real estate agent in the transaction,” according to the report. “In fact, buyers who used the Internet were more likely than those who did not use the Internet to purchase their home through an agent.” 

Buyers ranked the following services highest that agents’ can provide them in their search: finding the right property, helping to negotiating terms of the sale and price negotiations, identifying comparable properties, and assisting with paperwork. 

Source: “Homebuyers More Likely to Use Real Estate Agents, Even as Internet Usage Hits an All-Time High,” Inman News (Nov. 4, 2013) 

Rates Move Higher for the First Time in Three Weeks

Mortgage rates reversed course this week, moving upwards for the first time in three weeks amid more positive economic data, Freddie Mac reports in its weekly mortgage market survey. Production in the manufacturing industry and non-manufacturing sector alike showed signs of expanding.
Freddie Mac reports the following national averages with mortgage rates for the week ending Nov. 7: 

• 30-year fixed-rate mortgages:
 averaged 4.16 percent, with an average 0.8 point, rising from last week’s 4.10 percent average. Last year at this time, 30-year rates averaged 3.40 percent. 

• 15-year fixed-rate mortgages: 
averaged 3.27 percent, with an average 0.7 point, rising from last week’s 3.20 percent average. A year ago, 15-year rates averaged 2.69 percent. 

• 5-year hybrid adjustable-rate mortgages: 
averaged 2.96 percent, with an average 0.5 point, holding the same average as last week. Last year at this time, 5 year ARMs averaged 2.73 percent. 

• 1-year ARMs: 
averaged 2.61 percent, with an average 0.5 point, dropping from last week’s 2.64 percent average. A year ago, 1-year ARMs averaged 2.59 percent. 

Source: Freddie Mac

Flood Subsidies Phasing Out, Unless Congress Acts

UPDATE: Read NAR’s Oct. 10 letter to Craig Fugate outlining steps his agency could take to mitigate the sting of rising flood insurance premiums.

Any chance of the federal government delaying the phase-out of flood insurance subsidies coming down the pike rests entirely with Congress, because the Federal Emergency Management Agency (FEMA), which administers federal flood insurance, doesn’t have the authority to take action on the phase-out on its own, the agency’s head told lawmakers yesterday.

“Without some additional legislative support, I am bound and boxed in,” FEMA chief Craig Fugate said at a Senate Banking subcommittee hearing yesterday.

For more information and video:
http://speakingofrealestate.blogs.realtor.org/

Homeowners can challenge flood insurance rates

Homeowners hit with substantial increases in their flood insurance as a result of recent changes in the federal program should do their homework, experts say, because there may be ways to lower their bills. “A lot of people don’t know the flood map is not set in stone,” said Jason Cummins of Cummins-Cederberg, a coastal and marine engineering firm based in South Miami. Federal officials “understand they are limited in many aspects, budget, resources and time available, and you can challenge it.” 

See more at: http://osceolarealtors.org/homeowners-can-challenge-flood-insurance-rates/#more-'

Health Care Reform and Real Estate

Today is October 1, a big day in the world of health care reform. That’s because today’s the day the online state health insurance exchanges launch. What are the health exchanges? They’re online marketplaces—one for each state—where consumers can shop for health coverage in a way that’s intended to make comparisons easier than before.

For more information:
http://speakingofrealestate.blogs.realtor.org/2013/10/01/this-is-it-open-enrollmen-starts-today/

Yun on Debt Ceiling: 450,000 Lost Sales

If the federal government fails to increase its borrowing authority prior to when the U.S. Treasury says it will run out of money to pay its bills, debt default is not necessarily the first consequence we’ll see, says NAR Chief Economist Lawrence Yun. Rather, the government could decide to pay the interest on its debt, which is about three percent of the U.S. gross domestic product, and ensure that global investors of U.S. Treasury bonds are made whole. That would help protect the dollar as the world reserve currency. But to do that, the government would have to curtail spending elsewhere.

For more information and video:
http://speakingofrealestate.blogs.realtor.org/2013/10/09/yun-on-debt-ceiling-450000-lost-sales-with-1-mortgage-rate-rise/

Shutdown with the Shutdown: How the Government Closures are Affecting Real Estate

The effects of the government shutdown are rippling through the real estate industry, and practitioners are feeling the pain all over the country. Most of the complaints we’re fielding are about USDA loans, which have been entirely frozen. Real estate pros are seeing deals fall apart, as the Department of Agriculture has shuttered its mortgage division during the shutdown.

For more information:
http://speakingofrealestate.blogs.realtor.org/2013/10/09/showdown-with-the-shutdown-tales-of-how-the-government-closures-are-affecting-real-estate/

No Federal Guarantee, No 30-Year Mortgage

The looming debt ceiling crisis and the federal government shutdown have pushed aside pretty much every other issue in Washington today, but it won’t be too long before one of the major real estate issues facing the federal government will be back on the agenda, and that’s reform of the secondary mortgage market. Its importance can’t be overstated, because if the government stops backing conventional, conforming loans—these are the all-important loans backed by Fannie Mae and Freddie Mac–it’s unlikely we’ll have 30-year fixed-rate mortgages in the United States anymore.

For more information and video: http://speakingofrealestate.blogs.realtor.org/2013/10/16/no-federal-guarantee-no-30-year-mortgage/

While Existing-Home Sales Fall, Prices Rise

Existing-home prices are continuing to edge up across the country, but sales aren’t keeping pace. Here are five key indicators for the housing market from the National Association of REALTORS®'latest existing-homes report, which reflects September data:

1. Home prices: The median price nationally for an existing home in September was $199,200, up 11.7 percent from a year ago. Home prices have had 10 consecutive months of double-digit year-over-year increases.
2. Home sales: Sales of existing single-family homes dropped 1.5 percent in September to a seasonally adjusted annual rate of 4.68 million. However, sales remain 10.9 percent above year-ago levels. Meanwhile, existing condo and co-op sales dropped 4.7 percent in September but are 8.9 percent above year-ago levels. 
3. Distressed homes: Foreclosures and short sales accounted for 14 percent of September sales. That’s up from 12 percent in August. A year ago, distressed home sales made up 24 percent of the market. “Lower levels in the share of distressed sales account for some of the growth in median prices,” NAR notes. In September, foreclosures were sold at an average discount of 16 percent below market value; short sales were being discounted by an average of 12 percent.  
4. Inventory: Housing inventory in September held steady, with a 5-month supply at the current sales pace. NAR’s report shows that 2.21 million existing homes were available for sale in September. For-sale inventory is 1.8 percent higher than a year ago. 
5. Days on the market: The median time on the market for all homes was 50 days in September, up from 43 days in August but down from 70 days a year ago. Short sales were on the market for a median of 93 days in September; foreclosures were at 43 days. NAR notes that 39 percent of homes sold in less than a month in September.

For more information  and video: http://realtormag.realtor.org/daily-news/2013/10/22/while-existing-home-sales-fall-prices-rise

3 Hurtles Home Sales are Facing Right Now

Existing-home sales are hitting a snag because of several constraints that the housing market is grappling with, according to the National Association of REALTORS®' latest housing report. NAR officials note several challenges for the housing recovery: 

1. Less Affordability: “Affordability has fallen to a five-year low as home-price increases easily outpaced income growth,” says Lawrence Yun, NAR’s chief economist. “Expected rising mortgage interest rates will further lower affordability in upcoming months.” Interest rates for 30-year fixed-rate mortgages increased to 4.49 percent in September from 4.46 percent in August, according to Freddie Mac. Rates are at the highest level since July 2011. Just a year ago, 30-year rates averaged 3.47 percent.
2. Government shutdown: The effects that the 16-day federal government shutdown had on the housing market will likely be revealed in next month’s housing report, NAR says. “Just one impact of the recent government shutdown — delays in tax transcripts needed for approval of mortgage loans — put a monkey wrench in the transaction process and could negatively impact sales closings in next month’s report,” says NAR 2013 President Gary Thomas. 
3. Rising flood insurance premiums: Higher flood insurance rates went into effect Oct. 1 andcould impact future sales in flood zones, NAR reports. The Biggert-Waters Act gradually removes and reduces federal subsidies for flood insurance on more than a million homes nationwide. It has caused premiums for flood insurance to skyrocket in some areas. “REALTORS® report that approximately 10 percent of transactions in September were located in flood zones, and that nearly one out of 10 of those transactions were delayed or canceled due to concerns over rising insurance rates," NAR's report says.

For more information: http://realtormag.realtor.org/daily-news/2013/10/22/3-hurdles-home-sales-are-facing-right-now