Recap of 2017

The Best Year in a Decade 

Despite challenges, the housing markets remain on track for their best year in adecade by a variety of measures. Let's recap the major trends in the U.S. economy, housing and mortgage markets in 2017: 

Housing Markets on Track for the Best Year in a Decade

Modest economic growth, robust job gains, and low interest rates make for a favorable economic environment for housing and mortgage markets. But despite the favorable environment, housing markets have stalled a bit through summer and into fall. A lack of available for–sale inventory is helping to contribute to an acceleration in home prices.

The Mortgage Market Shifts

Mortgage originations: Bolstered by low interest rates, single–family mortgage origination volume has held up better than expected. Low mortgage rates helped refinance volumes exceed expectations. Nevertheless, as we documented in September of this year, mortgage rates don't have to increase much to dampen refinance activity. 

Through the first three quarters of 2017, refinance originations are down 35 percent from last year's pace. Purchase activity has partially offset the decline, but for the full year, we forecast volume to decline about 15 percent from 2016's level. For more on the mortgage market, see our September 2017 Outlook.

What's ahead in 2018 and 2019?

It's unlikely the economic environment will be as favorable for housing and mortgage markets than it currently is. Current low mortgage rates offer monthly mortgage payments that are more affordable than at almost any time in history.

Read our November Outlook for further examination of future markets.

Contract Signings Post Solid Gain

Existing-home sales and contract signings saw strong gains in October, 

but both remained  below year ago levels because of the persistent supply and affordability hurdles in much of the country.

34 days Listings are going under contract typically a week faster than last October.

 Supply levels remain weak, but strong job growth and hiher wages are giving households added assurance that now is a good time to buy a home.

NAR Chief Economist Lawrence Yun talks about the multi-year economic recovery, job creation, buyer interest, new home sales, and inventory levels.

source: NAR news

FHFA Raises Conforming Loan Limits Again

The Federal Housing Finance Agency announced it will raise its conforming loan limit on Jan. 1, 2018.

Mortgage financing giants Fannie Mae and Freddie Mac will allow maximum conforming loan limits for mortgages in most parts of the U.S. to be $453,100.

For 10 years, the FHFA had set the conforming loan limit in most places at $417,000. But as home prices started rising, the FHFA bumped up the conforming loan limit in 2017 to $424,100. As prices continued to move higher this year, the FHFA has raised limits again for 2018.

The Housing and Economic Recovery Act requires the conforming loan limit of the government-sponsored entities to be adjusted each year to reflect any changes in the average U.S. home price. Average home values have risen by 6.8 percent since the third quarter of 2016, according to the FHFA’s latest House Price Index. 

The maximum conforming loan limit will now rise by 6.8 percent too.
Home buyers are not eligible for the baseline limit in places where the local median home value is more than 115 percent of that limit. HERA permits higher limits in some locales, but the highest is 150 percent of the baseline limit. High-cost areas may see a baseline, therefore, of up to $679,650.

The FHFA provides the following interactive chart to check conforming loan limits in your area.

Source: Federal Housing Finance Agency

Real Estate Trends Will Be Game-Changers in 2018

We’re almost there: the long-awaited home stretch of 2017. And quite a year it's been! Already, we can’t help imagining

what developments next year might bring to the wild world of U.S. real estate. So we asked our realtor.com® data team to give us the inside scoop. The team sifted through historical real-estate data and other major economic indicators to come up with a realistic forecast of just what might be in store next year.
And it looks like a sea change is brewing.

From housing inventory to price appreciation to generational and regional shifts, these are the top trends that will shape, and reshape, real estate markets in 2018. Buckle up! It's going to be quite a ride.

Game-changer no. 1: Supply finally catching up with demand

After three years of a crushing shortage of homes for sale, the realtor.com economics team is predicting that the shortfall will finally ease up in the second half of 2018. “We expect the relief to start in the upper tiers, and it will make its way down to the lower tiers,” Hale says. Specifically, most of the initial inventory growth will be in the mid- and upper-tier price ranges, $350,000 and up.

“Overall, prices are expected to increase, and we’re expecting to see more of that in lower-priced homes,” Hale says. “It will get a bit worse before it gets better for buyers of starter and midprice homes.”

Game-changer no. 2: Millennials starting to come into their own

The housing market in 2018 will continue to present challenges for millennials—sorry, all of that student loan debt isn’t just going to disappear—but there are some bright spots on the horizon for these millions of Americans.

Millennials seem to be having more success at taking out mortgages on homes at varying prices, and not just starter homes, Hale says. They probably shouldn't wait too long to buy, either—mortgage rates are expected to reach 5% by the end of 2018 due to stronger economic growth, inflationary pressure, and monetary policy normalization.

Game-changer no. 3: Southern homes selling like crazy

When it comes to home sales growth, bet on Southern cities to beat the national average in 2018. We’re especially looking at you, Tulsa, OK; Little Rock, AR; Dallas; and Charlotte, NC. Those markets are expected to see 6% growth or more, compared with 2.5% nationally.

The South has been luring corporations and individuals to its balmy cities with its low costs of real estate, and living in general. The resulting strong economic growth and strong household growth, combined with an accommodating attitude toward builders, is setting the stage for an accelerating boom in homeownership, Hale says.

As soon as there are more homes to sell, these places will be selling strong.

Game-changer no. 4: Tax reform (maybe)

source: Realtor.com

New Homes Are Getting Smaller

Developers are continuing to shrink the size of new single-family homes, according third-quarter housing data compiled by the National Association of Home Builders.

The median square footage of a single-family home was 2,378 square feet in the third quarter.

In the years following the Great Recession, builders were focused on the higher end of the market, catering to larger-sized homes. But more recently, builders have renewed their focus on the entry-level market, and NAHB predicts square footage of new homes to continue to decrease.
“Typical new-home size falls prior to and during a recession, as home buyers tighten budgets, and then sizes rise as high-end home buyers, who face fewer credit constraints, return to the housing market in relatively greater proportions,” NAHB explains at its Eye on Housing blog. “This pattern was exacerbated during the current business cycle due to the market weakness among first-time home buyers. But the recent declines in size indicate that this part of the cycle has ended, and the size will trend lower as builders add more entry-level homes into inventory.” 

Source: “Declining New Home Size Trend Continues,” National Association of Home Builders’ Eye on Housing blog (Nov. 17, 2017)

Reasons to Buy a Home This Fall

For many, fall is undeniably one of the most coveted seasons of the year. What's not to love? The leaves are beautiful, pumpkin spice abounds, football spirit is in high gear, it's cool but not cold.

What many don't know is that fall is also one of the best times of the year to buy a home. Here's why:

Less competition. Spring and summer are the prime months for buying and selling homes and competition can be fierce. In the Fall, however, there are fewer people in the market, typically resulting in fewer bidding wars and the pressure to sign a contract so quickly. Because the market is quieter, sellers will take your offer seriously.

Sellers are serious. If a home is for sale in the fall, it's usually because of a life event that triggered the sale, such as a job transfer. The power of negotiation is typically in your hands, whether it's price, timing or home updates as they're needing to move versus wanting to move.

Sellers are worn-out. The sellers who listed their home in the spring or summer with aggressive price points or in a saturated market are just plain tired. They've likely lowered their price and, due to the slow movement of the market in the fall, they're willing to negotiate.

If you're in the market to buy, now may be the time as you'll have the upper hand in most cases. Plus, if you're a first-time home buyer and you close before the end of the year, you can take advantage of tax breaks.

source: Realtor.com

Hope to Sell Your Home Next Year

5 Holiday Splurges to Avoid

If you are looking to sell in the next year, you may want to watch it with the festive cheer. Some holiday traditions could end up making your home tougher to sell. Realtor.com®highlighted a few, including:
Decorations: Some decor could actually damage a home, leaving behind holes in the wall, marks on the floor, or screws along a home’s exterior. Also, realtor.com® warns those with live Christmas trees to make sure water doesn’t spill on their hardwood or laminate flooring. It can warp or stain the surface.

Holiday debt: It's tempting to splurge on gifts, but those who plan to buy a home need to be cautious over how much debt they accumulate. Opening up new credit cards or taking on a car loan could hamper one's chances of getting approved for a mortgage. “Speak with your lender if making a real estate purchase after the sale on how much you can spend on big-ticket items,” advises.

New pets: Tell your clients to try to resist the adoption drives this holiday season if they plan to sell soon. House training a puppy or teaching a new cat not to scratch may not be ideal right before putting a property on the market. House showings with a pet can be a challenge, and even more so with a new pet.




Source: “5 Holiday Splurges to Avoid if You Hope to Sell Your Home Next Year,” realtor.com® (Nov. 22, 2017)