Now that we’re at the half waypoint of 2019, it is definitely time to continue and/or up the ante on your business strategies and actions for the remainder of 2019.
Consider how these housing and mortgage trends from NerdWallet may impact your thinking and doing:
- Wanted: More Houses to Sell
- The housing market has favored sellers since August 2012 with more buyers than homes for sale.
- The balance of power is now shifting to buyers with 30,000 more resale and 33,000 more newly constructed homes than last year, however, the shortage of for-sale homes still exists, according to Freddie Mac, due to population and household growth.
- Prices Will Continue to Increase
- Prices continue to rise but at a slower pace
- Each of the first four months of 2019 saw y/y price increases of less than 4%.
- Each of the first four months of 2018 saw y/y price increases of more than 4.5%.
- The National Association of REALTORS ® (NAR) predicts year-end prices to be +2.2% higher than at the end of 2018.
- Fannie Mae predicts price increases of +4.3% for resale homes through this year.
- Prices continue to rise but at a slower pace
- Mortgage Rates Will Remain Constant and Low
- After peaking at 5.09% in November 2018, the average APR for a 30-tear fixed mortgage came down to 4.09%, according to NerdWallet’s daily mortgage rate survey.
- The Federal Reserve is expected to lower rates at least one time through 2019 due to a cooling economy and trade tensions between the US and China.
- Affordability STILL Major Concern
- Mark Boud chief economist with Metrostudy, said the housing market is “top heavy” with plenty of homes priced at $800,000+ and too few priced at $400,000 or less.
- April 2018, 67% of new homes sold for under $400,000.
- April 2019, 64% of new homes sold for under $400,000.
- More Homeowners Could Save by Refinancing
- Black Knight, a tech provider for the mortgage industry, estimates that 5.9M homeowners could cut 0.75% or more from their mortgage interest by refinancing.
- Black Knight estimates 953,000 homeowners who bought their homes in 2018 could save an average of $162/month by refinancing.
- NerdWallet suggests homeowners use a mortgage refinance calculator for details about saving through refinancing.
- More Homes Are Getting Larger
- Home size is trending larger in 2019 as opposed to 2018 when size was trending smaller.
- Y/y median prices for new homes mirror size increases.
- Prices were up sharply for new homes in April 2019 to $342,200, a +8.8% increase from one year ago.
- Everyone Is Paying Attention to First-Time Buyers
- According to Tian Liu, chief economist with Genworth Mortgage Insurance, some 3M first-time buyers delayed buying from 2007-2015. Obviously, pent up demand is huge.
- Liu said, “Those buyers are reaching the age when they can no long delay…their housing needs (and growing families) are really catching up with them…they want their own place…(this) will be very significant for the next few years.”
- Lending Standards Have/Are easing
- The Urban Institute’s Housing Finance Policy Center has said that lenders overcorrected after the financial crisis.
- Matt Hackett, operations manager with EquityNow, said that easing lending standards come in the form of reduced documentation requirements, lower credit scores, and bigger loan-to-debt ratios.
- Ellie Mae indicated average credit scores in April 2019 were 753 compared to 752 in April 2018
- Ellie Mae indicated debt-to-income ratios in April 2019 were the same as April 2018.
- Overconfident Sellers Could Struggle
- Danielle Hale, realtor.com economist, said that pricey homes appealed to move-up buyers, not first-time buyers.
- “If you’re in that above median price point you’re going to have to price competitively and offer incentives for buyers.”
- Home prices vary by location and market
- According to NAR, median resale home price in the Western US this spring was $395,100. Median resale home price in the Midwest this spring was $210,500.
