Monday, April 24, 2023
Funnel Wall Property That Plays Music To April Showers
Middle-income Homeowners Gained More Than $120,000 in Wealth Over the Past Decade From Home Appreciation, According to NAR
something to consider from National Associations of Realtors...NAR...more equity in seller's home in cash anyone is looking to sell and cash out...
KANSAS CITY, Mo. (April 18, 2023) – A new housing report by the National Association of Realtors® reveals middle-income homeowners accumulated $122,100 in wealth as their homes appreciated by 68% in the last 10 years. The report, Wealth Gains by Income and Racial/Ethnic Group, speaks to the value agents and Realtors® bring to consumers when helping buy and sell homes that build generational wealth. NAR released the report during its 2023 Realtor® Broker Summit as the association commemorates Fair Housing Month.
While not everyone has the same opportunities for homeownership, data show substantial variations and inequalities in homeownership rates across different income and racial and ethnic groups. For instance, low-income homeowners were able to build $98,900 in wealth in the last decade from home price appreciation only, while upper-income households saw an increase of $150,800.
"This analysis shows how homeownership is a catalyst for building wealth for people from all walks of life," said Lawrence Yun, NAR's chief economist. "A monthly mortgage payment is often considered a forced savings account that helps homeowners build a net worth about 40 times higher than that of a renter."
Although Black homeowners experienced the smallest wealth gains among any other racial or ethnic group, these owners were able to accumulate over $115,000 in wealth in the last decade. For the first time in this report, NAR identified the top 10 U.S. metro areas which have recorded the largest wealth gains for Black homeowners over the last 10 years. Black households in Bellingham, Washington; Ocala, Florida; Palm Bay, Florida; Modesto, California; Greeley, Colorado; and Charleston, South Carolina were among the areas where more than 60% of Black households own their home. Owners in these areas were able to accumulate more than $125,000 in wealth in the last decade.
Along with the wealth gains accumulated in the last decade, homeowners also saw their debt drop by 21%. Many homeowners who were able to refinance and secure a rate lower than 4% in the months following the onset of COVID-19 may have paid off an even larger amount of their mortgage, Yun noted.
"Your neighborhood Realtor® is a champion able to help you achieve the dream of homeownership," said NAR President Kenny Parcell, a Realtor® from Spanish Fork, Utah, and a broker-owner of Equity Real Estate, Utah. "Homeownership helps create long-term wealth and financial stability for your family and future generations."
No matter the income level, owners who live in expensive metro areas experienced the largest wealth gains. In the San Jose metro area, low-income owners have accumulated nearly $630,000 in the last decade, and middle-income owners gained $643,000. All of the top 10 areas with the largest wealth gains for low-income owners – surpassing $290,000 – were located in California.
In the top 10 areas with the highest homeownership rates for middle-income households, owners gained $110,000 in wealth on average in the last 10 years. In Ogden, Utah, for example, with 85% of the middle-income households owning their home, homeowners have built nearly $220,000 in wealth in the last decade.
Some significant areas to note include Port St. Lucie, Florida, where homeownership rate for middle-income households was 83%, and middle-income owners gained nearly $200,000 in wealth. The metro areas of Barnstable Town, Massachusetts and Palm Bay, Florida were some other areas where most middle-income households own their home and accumulated a substantial amount of wealth – over $170,000 – in the last decade.
Respectively, in the areas with the highest homeownership rates for low-income households, wealth gains were $140,000 on average. In Prescott, Arizona, while more than 2 out of 3 low-income households (68%) own their own home, owners have built more than $200,000 in wealth in the last decade. Barnstable Town, Massachusetts, as well as the Florida metro areas of North Port, Port St. Lucie, Palm Bay and Deltona, were other areas where most low-income households owned their home and accumulated a substantial amount of wealth – over $120,000 – in the last decade.
This is how much it could cost to buy a house in the U.S. by 2030 — and tips on how to start saving now
food for thought from cnbc.com....where will real estate be in 2030...
Select spoke with economist Danielle Hale about why home prices are rising and what people can do to prepare.
Over the last few years, we’ve seen homes sell at astronomical prices, way above the market value. It’s been a housing market that, to say the least, has left many aspiring homebuyers feeling disillusioned — like homeownership is even further off than they thought. Granted, much of this occurred under extraordinary circumstances — during a pandemic that pushed people out of densely populated cities and into suburban homes and a time of record low interest rates.
But an economic report by Realtor.com released in March 2023 asserts that the monthly cost of financing your home (assuming you made a 20% down payment) has increased by almost $630, compared to last year.
The hefty financial burden of owning a home today has left many people wondering: If homes are this expensive now, how much could prices rise in the future?
According to a RenoFi report from Oct. 2020, the average price of a single-family home in the U.S. could reach $382,000 by 2030. Depending on where you live, this figure may seem like a drop in the bucket compared to the home prices in your city. For example, the median price of a home in New York City in February 2023 was $760,000, but the average price around Albany in Upstate New York was $219,000, according to Redfin trends.
RenoFi also looked into the projected 2030 home prices for every state and some major cities in the U.S. It projects that San Francisco will have the highest average home value in the country at a staggering $2,612,484. Following it will be two other California cities, San Jose at $2,251,703 and Oakland at $1,713,554.
Housing prices in the U.S. increased 48.55% over the past 10 years, according to RenoFi. When doing the projections, RenoFi assumed housing prices would again increase by the same amount over the next decade. Here’s what else RenoFi shared in its report:
New York City will have an average home value of $964,101 by 2030.
The average home value in Nashville will reach $539,292. Currently, the average home value is $435,000.
Houston will see an average home value of $309,806 by 2030. The average home value as of March 2023 is $258,055.
RenoFi has the full breakdown on its website.
Home value doesn’t always equate to the actual price a buyer pays. The home value represents the amount of money a home will likely sell for based on the market. But buyers may agree to pay a price that is lower or even higher than the home’s value.
What is driving up home values?
Don’t Quit Your Day Job, a website providing investment resources, used housing price index data from Robert Shiller, a professor of Economics at Yale University and the Federal Housing Finance Agency to find the median value of existing homes in the U.S.
In September 1996, the median price was $112,230.80 ($213,963.97 when adjusted for inflation)
In September 2006, the median price was $215,734.57 ($319,869.82 when adjusted for inflation)
In September 2016, the median price was $224,817.22 ($280,141.54 when adjusted)
In September 2021, the median price was $343,122.34 ($376,307.55 when adjusted)
In September 2022, the median price was $381,471.31 ($386,653.42 when adjusted)
Experts predict that this number is going to keep getting higher.
In 2021, Danielle Hale, chief economist at Realtor.com, explained to CNBC Select, “These are hefty price increases. We see this because sellers ask for one price, buyers make an offer and the home usually sells for another price. This year [2021] we saw the sale price come in above the asking price in many places.”
This was at a time during super-low interest rates and increased demand for homes. But even during normal times, home prices continue to increase — as we saw by looking at home prices from 1996 to 2006 to 2016 and from 2021 to 2022. Supply and demand and interest rates can certainly affect home prices but according to Hale, another contributing factor can be an increase in wages.
“In a normal economy, we see home prices increase roughly on par with wage increases because the majority of homebuyers are using wage income to buy their homes,” she explains. “Even though incomes are rising, home prices are rising even faster.”
According to data from the Social Security Administration, the average wage in the U.S. between 1996 and 2019 has increased from $24,859.17 to $51,916.27. Thanks to inflation and an increased cost of living though, it can feel as if the dollar affords workers less and less over time. This is why, for many people, it can still feel as though homeownership is a far-off goal.
How can people prepare for higher prices?
Though looking at projected future home values might make homebuying feel like a pipe dream, it’s important for aspiring homeowners to start taking steps to improve their chances of being able to afford the home they want in the future.
“The key is for young people to start saving as soon as they can,” Hale says. ″The earlier you start, the more money you may accumulate and the bigger your potential down payment will be. Be consistent about it.”
If you don’t plan to buy a home for another five to 10 years, you might want to consider investing the money you save for a down payment in order to make sure your cash is beating inflation.
Index funds are a low-cost way to invest, and some funds, like those tied to the S&P 500, have a history of yielding an average return of 10% per year. (Note that past returns do not indicate future success.) You can get started by opening a brokerage account through a financial provider like Fidelity or Charles Schwab.
If you want something a little more hands-off, consider robo-advisors like Wealthfront and Betterment, which will automatically invest and rebalance your money based on preferences like risk tolerance and when you want to make withdrawals, so you’re not taking on too much risk.
Acorns is another investing platform that is good for new investors. It has a feature that will automatically invest any spare change you have from making everyday purchases, which is an easy way to build investing into your daily life.
You only want to invest the money you’re saving for a down payment if you have a much longer time horizon for buying a home so you can ride out any market dips. And keep in mind that when you sell your assets and withdraw the money, you’ll owe taxes.
Monday, March 13, 2023
This $300 Million Mansion in London Is Now the World’s Most Expensive Home for Sale-The trophy property was built in 1818 and includes 40 bedrooms and 29,000 square feet of living space.
fun article from RobbReport.com
A 205-year-old mega-mansion in London’s Regent’s Park has taken the title of the
most expensive home in the UK—and the world. The lakefront trophy residence
dubbed the Holme can be yours for an eye-watering £250 million ($298.5 million),
the Financial Times first reported. Previously, the highest-priced pad to hit
the market in Britain was a Knightsbridge property known as 2-8a Rutland Gate,
which was listed for $221 million in October 2022. (It also sold for a whopping
$232 million in 2020.) And until now, the $250 million penthouse atop Central
Power Tower claimed the top spot for the most expensive abode on the planet. The
two-story estate dates all the way back to the 19th century when it was built by
English architect James Burton and designed by his son, Decimus Burton, in 1818.
The massive spread sits on four acres and comprises 40 bedrooms and an
impressive 29,000 square feet of living space. It also includes eight garages, a
tennis court, a library, a sauna and a grand dining room. “It’s the White House
in Regent’s Park,” a source told The Evening Standard. “It’s very special,
because you’ve got the ornamental lake, sweeping lawns and this magnificent rear
façade which looks like the rear façade of the White House. It’s the most
incredible property.” According to records, the Saudi royal family have owned
The Holme for over three decades since they bought it in 1998. However, the
manse is now in the hands of receivers along with a plane and an additional New
York residence after it was repossessed due to an expired loan. Since The Holme
is considered the highest-valued asset in the family’s real estate portfolio,
putting it up for sale is the fastest and easiest way to pay off the $180
million loan. Agents at Beauchamp Estates and Knight Frank are reportedly
handling the listing. fun article from RobbReport.com
In tough housing market, mortgage rate buydowns gain momentum
more helpful buyer info from bankrate.com.....
Amid higher mortgage rates and a cooling housing market, some home sellers are wooing buyers with a freshly popular incentive: paying for a temporary reduction to the buyer’s mortgage interest rate.
Why are buydowns popular now?
In one common scenario, known as a 2/1 buydown, the seller pays to cut the buyer’s mortgage rate by 2 percentage points for the first year of the loan and by 1 percentage point for the second year.
As rates have surged to 7 percent, that buydown helps reduce some of the sticker shock buyers are experiencing.
“Temporary rate buydowns have been around for a long time, but they’re really only relevant in a market like this, where rates are flying off the handle,” says Dan Catinella, chief lending officer at Total Expert, a company that sells marketing software to mortgage companies.
Some of the nation’s largest lenders, including Rocket Mortgage, United Wholesale Mortgage and Guaranteed Rate, have begun marketing the tactic. Rocket Mortgage advertises its buydown program as an “Inflation Buster.” True to the name, the buydown could reduce the buyer’s monthly mortgage payment by hundreds of dollars.
“A buydown is a way for buyers to feel a little more comfortable,” says Eric Hamilton, senior vice president of mortgage lending at Guaranteed Rate.
During the pandemic-driven housing boom, sellers hardly needed to do anything to unload their homes quickly and for a hefty premium. This year, the housing market has slowed sharply, and sellers face a new reality.
“Bidding wars are starting to go away,” says Catinella. “Sellers are starting to have open houses. Homes are sitting on the market longer.”
As the market starts to reset, buyers are asking for concessions, feel less pressure to bid aggressively and have more time to weigh their options — and negotiate for a better deal.
“Buyers don’t have to go through all these crazy inspection waivers and appraisal waivers,” says Elena Sarantidis, a mortgage broker with Prime Plus Loans in Wellington, Florida.
How do rate buydowns work?
Say a buyer plans to pay $375,000 for a home, make a 20 percent down payment and finance the remaining $300,000 with a mortgage.
The monthly payment on a $300,000 loan at 7 percent is $1,996. With a 2/1 buydown, the interest rate would fall to 5 percent for the first year, and the buyer’s payment would drop to $1,610 — a savings of $386 a month, or $4,632 that first year. The buyer still must qualify for the loan at the higher rate.
For the seller, the cost of a 2/1 buydown varies, but typically is a bit more than 2 percent of the amount of the loan. For a $300,000 mortgage, the seller would pay $6,000 to $7,000 into a buydown account that belongs to the buyer. A portion of that sum would be released each month to reduce the buyer’s monthly mortgage payments. If the buyer decides to refinance while there’s still money left in the account, the remaining balance would be applied to the new loan, Hamilton and Sarantidis say.
Mortgage lenders offer a variety of buydown options, including:
2/1 buydown: The borrower’s rate drops by 2 percentage points in the first year of the mortgage and by 1 point in the second year.
1/0 buydown: The borrower’s rate drops by 1 percentage point in the first year of the mortgage.
3/2/1 buydown: The borrower’s rate drops by 3 percentage points in the first year of the mortgage, 2 percentage points in the second year and 1 point in the third year. This option is costlier for the seller.
Rate buydowns have become a popular option for homebuilders, but others, like Realtors and lenders, can offer them too, says Sarantidis.
Why not just cut the sale price?
The most common way for sellers to close a deal with a reluctant buyer is to simply cut the price. Proponents of buydowns, however, say both sellers and buyers get more bang for their buck with a temporary rate buydown.
In the example of the $375,000 home and $300,000 mortgage, the buyer’s monthly payment would be $1,996. If the seller cut their price to $365,000 and the buyer financed $292,000 instead, the monthly payment would be $1,943. That savings of $53 a month might not look as attractive as the $386 savings with the 2/1 rate buydown.
Loan amount Mortgage rate Monthly payment
No concession $300,000 7% $1,996
Price cut $292,000 7% $1,943
Rate buydown $300,000 5% $1,610
“On a 30-year mortgage, the price cut is not going to make a big difference,” says Sarantidis. “In the short term, the buydown is a better savings.”
For builders, the appeal of a rate buydown is clear: If they cut the price now, they’ll feel pressure to do so for future buyers. The temporary buydown is a way to protect their pricing while also giving the buyer something of value.
How is a buydown different from paying points?
Some borrowers opt to pay discount points to lower their mortgage interest rate. Unlike a rate buydown that expires in a year or two or three, paying points permanently reduces the rate.
With points, however, the rate cut is less steep. Paying one discount point — 1 percent of the loan amount — reduces the rate by about a quarter of a percentage point.
Basically, points are a long-term play. If you plan to be in the home for a long time and not refinance, paying points — or asking the seller to pay them on your behalf — could be a better bet. If you expect rates to reverse course in the near future and therefore to refinance your loan, the short-term savings of a buydown could be a better deal.
How is a buydown different from an ARM?
A temporary buydown has some of the same characteristics of an adjustable-rate mortgage (ARM): The borrower begins making payments at one interest rate, then the rate adjusts at a predetermined time down the road.
An ARM carries a fixed interest rate for a period of time, typically five years. After that, the interest rate and monthly payments can change every six months or year.
With a buydown, on the other hand, the interest rate is technically fixed — it’s just that the seller reduces the borrower’s interest payments for a set period.
Both buydowns and ARMs have grown more attractive as mortgage rates have swiftly gone up. However, buydowns look more appealing in the short run compared to ARMs.
“The problem is the yield curve is inverted,” says Hamilton, “so ARMs just don’t have the advantages they had in the past.”
In Bankrate’s Nov. 16 survey of lenders, the average rate on a 5/6 ARM was about 0.6 percentage point lower than the average rate on a 30-year mortgage, so a buydown could win on this front, too.
Bottom line
If you’re a seller looking to entice a buyer, consider paying for a temporary rate buydown. This move can cost you far less than a price cut. Ask your listing agent for advice — and keep in mind that this tactic has re-entered the mortgage market only recently, so many Realtors and loan officers are still learning how it works.
As housing cools, some sellers in "Zoom towns" help buyers with mortgage costs
more common to see sellers buying down buyer's mortgage interest rates now....
from cbsnews.com
As rising mortgage rates dent housing sales, many "Zoom towns" — areas that boomed during the pandemic thanks to an influx of remote workers — are seeing their housing markets cool. That's leading sellers to get creative and giving buyers a bit of leverage in finding a home.
One new strategy that's making inroads: The mortgage "buydown," which can help buyers line up a slightly lower mortgage rate than the 6% or 7% interest on on most home loans today.
Taylor Marr, deputy chief economist at Redfin, explained how this works on CBS News Mornings. In a "2-to-1" buydown, a common arrangement, a buyer can secure a lower rate for the first two years of the loan by putting down additional funds.
"If you're buying a $500,000 home, you might put an extra $10,000 or $20,000 to temporarily pay down your mortgage rate," he said. "If you're getting a 6% mortgage rate, for the first year you actually get 4%. And then it goes up to 5%, then 6%," he said.
"It can be a great way to afford a home if your income is rising rapidly. But you do have to put more money upfront," Marr added.
Buydowns are becoming more popular in some areas where home sales are slowing, but they're just one of several concessions sellers can make to nudge a deal over the line. Other sweeteners could include kicking in some money toward repairs or offering to pay the buyer's closing costs, Marr said.
In fact, sellers offered a record share of concessions in the last three months of 2022, according to Redfin data. Some 42% of sales by the firm's agents included a concession, according to a recently published report. Some sellers are also having to drop prices outright, with Marr noting that about half of recent home sales closed below the asking price.
Concessions are most common in the West, Redfin found. Nearly three-quarters of home sales in San Diego had a concession last quarter, followed by Phoenix, Portland, Las Vegas and Denver.
"The pandemic-fueled housing market frenzy was concentrated in a lot of these pandemic boomtowns that were mostly out west," Marr said. "These are the same markets that have cooled rapidly when [interest] rates rose. They're increasingly having to come up with concessions to get buyers to be able to buy a home.
Denver housing inventory is low, but the “luxury market” is thriving
A good article from....
Denverite.com
A Colorado Public Radio Funded Paper
Denver home buyers are still facing a shortage of properties to purchase.
That’s according to the March market-trends report from the Denver Metro Association of Realtors.
The 8,000-some-member real estate trade group pulls data based on real estate deals in the 11-county metro area: Adams, Arapahoe, Boulder, Broomfield, Clear Creek, Denver, Douglas, Elbert, Gilpin, Jefferson and Park counties.
Analysts expected home prices to drop in 2023. That isn’t happening.
Month-to-month, home prices rose. The median price of homes is $562,500, with houses at $600,000, and condos, duplexes and other attached units at $400,000.
While the trade organization still describes Denver-area real estate as a “sellers market,” many sellers considering moving from one home to the next are waiting to list their properties, hoping interest rates drop.
Sellers with homes on the market continue to drop prices to drum up offers among buyers who are choosier than they have been.
So what’s the inventory situation?
At the end of February, there were 3,778 homes listed on the market, more than twice what was available last year but down more than 8% from what was listed at the end of January.
But in what the trade organization describes as the “Luxury Market,” homes selling for more than $1 million saw a massive rise in February, with nearly 61% more on the market — 494 in total.
“The Luxury Market defied the headlines predicting a plummet in home prices, with both detached and attached homes enjoying significant appreciation month-over-month, as well as year-over-year,” noted realtor Colleen Covell, a member of the association’s Market Trends Committee.
The metro area continues to have a shortage of workforce housing.
In the “Classic Market,” homes selling from $300,000 to $500,000 saw an uptick in inventory. But those gains aren’t matching the demand.
The Classic Market boasts roughly a third of the real estate inventory and is what working people are most likely to be able to entertain buying (though even these prices are a stretch).
Despite a small increase in the number of available Classic Market homes, “the Metro area’s inventory shortage was felt most significantly in the Classic Market, with only 1.06 months worth of properties available to sell,” explained realtor Molly Polinkovsky, a member of the Market Trends Committee.
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