Americans expect rising rates to stifle housing demand

Americans expect rising rates to stifle housing demand

After months of upward trends, home mortgage rates have retreated somewhat and are currently at an average of 4.39 percent for a 30-year fixed loan, lower than levels in June. However, after two benchmark rate hikes already this year, two more are signaled by the Federal Reserve and are expected by top analysts for 2018, meaning current mortgage rates most likely could increase again. 

In ValueInsured’s latest Modern Homebuyer Survey, over 3 in 4 Americans (76%) believe mortgage interest rates will continue to go up in 2018. Nearly 6 in 10 (59%) predict an average 30-year fixed rate will reach 5% by the beginning of 2019, and 13% Americans expect to see 6% 30-year mortgages by the end of 2019.

Homebuyers' remorse on the rise

Homebuyers' remorse on the rise

A realtor we know recently said this: “All homebuyers have buyer’s remorse at some point during the pre-closing escrow period. I never not hear from a buyer after contract signing and before the home closing, some wonder if they paid too much, others may ask if I read a recent article about the market potentially turning.” In a survey conducted last year, Trulia found nearly half of all Americans have buyer’s remorse about the home they bought.

Now, with stakes ever higher in this expensive market, where home payments in some areas are swallowing up 45% of local median income, expectation of buyer’s remorse is high.

Inflation and debt worries - Impact on housing

Inflation and debt worries - Impact on housing

You may have noticed many more reports about rising debt, delinquencies, inflation and risk of an associated recession.  Curious ourselves, we thought we'd put things into context (you have to be concerned with fake news, right)?  And it was interesting. 

If you just follow housing, you may have positive or negative feelings about the market trends, but to get the full picture, you cannot isolate just that one expenditure.  You have to look at similar debts like student loans, car loans and credit cards (and rising delinquencies).  Put together, we are now at similar debt levels as 10- years ago.  So, when a buyer is thinking about buying a home, they are also thinking about all of these other debts and expenses. 

And then there is inflation.  It has been whispered about for a while, but it may become a roar in the near future. This is a great article on why you should keep an eye on it (just ignore the sales pitch at the end).

Millennials wish to own a home, but are they saving enough?

Millennials wish to own a home, but are they saving enough?

Since its inception in Spring 2016, ValueInsured’s quarterly Modern Homebuyer Survey has reported shifts in homebuyer attitudes and confidence; however, one thing has remained constant: Millennials’ strong desire to own home, currently at 77%. At the same time, Millennial homeownership is now at the lowest level – at 35.3% – since the U.S. Census began tracking homeownership by age groups in 1982.

While Millennials enjoy strong employment in this robust economy, many are not saving enough of their paychecks for a home. Today, Millennial homeowner hopefuls are paying for $5 coffees (sometimes three of these daily) and $900 cell phones. According to a recent study, 53% of Millennials spent recently on an Uber or taxi ride, and 73% on a music, sporting or other live entertainment event. 79% spent to dine at a hot restaurant in town. So, it is not surprising that according to the latest Q2 ValueInsured Survey, 72% of all millennials who wish to buy a home save less than $250 a month. 

Sellers demand more than high prices, botching sales

Sellers demand more than high prices, botching sales

Home buying has become intensely competitive in some of the nation’s top markets. Over 1 in 3 homebuyers made an offer on a home last year sight unseen, while home sellers are expecting shorter closing windows and more lenient closing terms. None of these is news. Now, we have another new data point.

According to ValueInsured’s latest Q2 2018 Modern Homebuyer Survey, 21% of all surveyed homebuyers have experienced a failed sale transaction due to what they consider to be “unrealistic seller’s demands,” including waiving contingencies, cash-only offers, and fast closing. 26% of millennial first-time homebuyers and 30% existing starter-home buyers surveyed report to have experienced these sellers’ demands that they believe to have derailed a potential sale.

Experts warn of 2020 housing correction, but they are not the first

Experts warn of 2020 housing correction, but they are not the first

In the past two weeks, several housing headlines caught the eyes of many. MarketWatch printed “Thinking of selling your home? Do it before 2020, economists say”. Citing housing experts, Zillow released a Home Price Expectation Survey where it is predicted that the Next recession will begin in 2020. CoreLogic reported “More than half of US housing markets were overvalued in April”. Chief economist of NAR warned the current run-up in home prices is not sustainable, which is then echoed by a separate study and yet another bearish headline of unsustainable home price gains by Black Knight.

Not trying to be a downer here, but these chorus of consistent headlines are the elephant in the room and hard to ignore. So let’s address it.

Refi is at 18-year low, but here’s your secret weapon

Refi is at 18-year low, but here’s your secret weapon

Homeowners now have a new reason to refinance, and it may just be the secret weapon the mortgage industry needs to survive this alarming refi drought. Home prices have reached record-high in many top metros, but if you have paid attention to any local realtors, to CoreLogic, or to housing experts and economists here, here, and here, many of these markets are overvalued and are expected to correct. In ValueInsured’s latest quarterly survey, 68% Americans believe a housing correction will happen within 2 years. Interestingly, the consumer survey was conducted before releases of the Zillow and Wall Street Journal economist panel reports, but their prediction timeline mirrors those of the experts’.
 
Historically, homeowners’ choice when faced with a potential correction is to sell (but then where would they live?), or to stay put and risk watching their home value depreciate in the near future. Those are hardly good options and the bottom line is, the homeowner themselves have little to no control.
 
Now, they have a third option…

85% millennials compromised on buying their dream home

85% millennials compromised on buying their dream home

It is quite a conundrum for millennials in this housing market. Majority who wish to own cannot afford to buy. Of the few who could, over 8 in 10 wish they bought a different home and want to move. 74% of them say now would be a good time to sell, but they can’t because prices to buy another home is too high, so they wait and try to time the market. It appears that for millennials, once you finally achieve the American Dream, there’s an obstacle course right around the corner, just in case you thought you could catch a breath.