Monthly Archives: July 2016

REALTORS® Survey: Rochester a great place to live and getting better

When most people think of Rochester, MN the Mayo Clinic is what comes to mind. It is one of the greatest health care facilities in the world, evidenced by more than 1 million in annual patient visits. Mayo Clinic visitors come to Rochester for everything from a simple check-up to life saving treatments.

However, local REALTORS have known for a while that Rochester, MN is not only a healthcare destination but a premier place to live and raise a family. In fact, since 1990 Rochester has grown by around 35,000 residents and the growth is predicted to continue at the same pace.

Rochester is actually in the process of updating its Comprehensive Plan to prepare for the housing expansion to come. During one of the planning meetings for the plan the city staff voiced that they would love to have real data on what Rochester residents were thinking about housing. The Southeast Minnesota Association of REALTORS® (SEMAR) was happy to step up and began working with NAR’s Smart Growth program to put together a resident survey.

The survey results demonstrated what local REALTORS had already predicted – residents love living in Rochester and are happy with the pace that the town is growing. In fact, 90% of residents surveyed felt that the quality of life was excellent. The survey results also showed that despite the popularity of downtown apartments with walkable shops, half of the population prefer to live in homes that are set away from the city center and don’t mind the drive to shopping areas.

SEMAR shared the results with the City Council and they have since been incorporated into City documents and presentations. The survey has been a terrific tool to gain insight into what residents think of the area, and what their housing needs are. Bringing awareness to the fact that their housing needs are diverse, and supporting SEMAR’s call for more housing of every type in every location.

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Pending Home Sales Marginally Rise in June

Pending home sales were mostly unmoved in June, but did creep slightly higher as supply and affordability constraints prevented a bigger boost in activity from mortgage rates that lingered near all-time lows through most of the month, according to the National Association of Realtors®.

The Pending Home Sales Index inched 0.2 percent to 111.0 in June, which puts it at its second highest reading over the past 12 months, but is noticeably down from this year’s peak level in April.

“With only the Northeast region having an adequate supply of homes for sale, the reoccurring dilemma of strained supply causing a run-up in home prices continues to play out in several markets, leading to the last two months reflecting a slight, early summer cooldown after a very active spring,” Lawrence Yun, NAR chief economist said. “Unfortunately for prospective buyers trying to take advantage of exceptionally low mortgage rates, housing inventory at the end of last month was down almost 6 percent from a year ago, and home prices are showing little evidence of slowing to a healthier pace that more closely mirrors wage and income growth.”

Adds Yun, “Until inventory conditions markedly improve, far too many prospective buyers are likely to run into situations of either being priced out of the market or outbid on the very few properties available for sale.”

One noteworthy and positive development occurring in the housing market during the first half of the year, according to Yun, is that sales to investors have subsided from a high of 18 percent in February to a low of 11 percent in June, which is the smallest share since July 2009.

“Limited selection of homes at bargain prices is reducing the number of individual investors willing or able to buy,” adds Yun. “This will hopefully open the door for first-time buyers, who made some progress last month 3 but are still buying homes at a subpar level even as rents increase at rates not seen since before the downturn 4.”

In spite of the slight slowdown in contract signings from April’s peak high, existing-home sales this year are still expected to be around 5.44 million, a 3.6 percent boost from 2015 and the highest annual pace since 2006. After accelerating to 6.8 percent a year ago, national median existing-home price growth is forecast to slightly moderate to around 4 percent.

Existing-Home Sales Boosted in June by First-Time Homebuyers

Boosted by a greater share of sales to first-time buyers not seen in nearly four years, existing-home sales climbed 1.1% to a seasonally adjusted annual rate of 5.57 million in June. Only the Northeast saw a decline in closings in June, and sales to investors fell to their lowest overall share since July 2009. This is the fourth consecutive monthly increase.

Existing Home Sales June 2016

Lawrence Yun, NAR chief economist, says the impressive four month streak of sales gains through June caps off a solid first half of 2016 for the housing market.

“Existing sales rose again last month as more traditional buyers and fewer investors were able to close on a home despite many competitive areas with unrelenting supply and demand imbalances,” he said. “Sustained job growth as well as this year’s descent in mortgage rates is undoubtedly driving the appetite for home purchases.”

“The modest bump in June sales to first-time buyers can be attributed to mortgage rates near all-time lows and perhaps a hopeful indication that more affordable, lower-priced homes are beginning to make their way onto the market,” adds Yun. “The odds of closing on a home are definitely higher right now for first-time buyers living in metro areas with tamer price growth and greater entry-level supply — particularly areas in the Midwest and parts of the South.”

NAR-Backed Condo Legislation Passes U.S. Senate, Offers Relief for Homebuyers

US Congress

The U.S. Senate has passed H.R. 3700, the “Housing Opportunity Through Modernization Act,” by unanimous consent. This legislation includes reforms to current Federal Housing Administration restrictions on condominium financing, among other provisions, and is long supported by the National Association of Realtors®.

Changes include efforts to make FHA’s recertification process “substantially less burdensome,” while lowering FHA’s current owner-occupancy requirement from 50 percent to 35 percent. The bill also requires FHA to replace existing policy on transfer fees with the less-restrictive model already in place at the Federal Housing Finance Agency.

NAR testified last year in support of the bill, which passed in the House of Representatives 427-0 in February.

Tom Salomone, president of NAR and broker-owner of Real Estate II Inc. in Coral Springs, Florida, praised the legislation as a significant step towards eliminating barriers to safe, affordable mortgage credit for condos.

Following is a statement from Mr. Salomone:

“Condominiums often represent an affordable option that’s just right for first-time and low-to-moderate income homebuyers. Unfortunately, overly-burdensome restrictions on condo financing have for too long put that option out of reach for many creditworthy borrowers.

“This legislation meets those restrictions head on, putting the dream of home ownership back in reach for more Americans.

“Tight inventory and rising home prices are a reality of today’s market, and mortgage credit is hard to come by. We should take every opportunity to clear the path for well-qualified borrowers to purchase a home when they’re ready, and this legislation does just that.

“Sens. Tim Scott (R-S.C.) and Robert Menendez (D-N.J.) have done tremendous work to see H.R. 3700 move forward, and we’re thankful for their support. Realtors® made their voices heard as well, reaching out to their Senators and Representatives to remind them of how important this issue is to home ownership.”

“We look forward to seeing this legislation signed into law so homebuyers can start seeing some much-needed relief.”

 

Everything You Need to Know About Saving For a Down Payment…

Fast Fact: Saving for a down payment is the number one obstacle preventing First-time home buyers from achieving the dream of homeownership.

Saving is easy when your income exceeds your spending. But rising costs — particularly rent — along with high student debt and stagnant wages have made saving increasingly difficult. In fact, after correcting for inflation, the average American takes home almost 10% less today than 15 years ago.

That’s why only about 30% of today’s home buyers are first-timers, even though about 40% historically should be.

And it’s a problem that’s bound to grow. Last year, less than 6% of all new homes were priced under $150,000. Almost none were priced under $100,000! Yet 31% of first-time buyers expect to pay less than $150,000 for a home, and another 15% expect to pay under $100,000.

Why’s It Such a Big Deal if Young Americans Can’t Buy?

When first-timers can’t afford to buy homes, sellers hoping to move up are essentially stuck, creating a domino effect throughout a community’s entire housing market.

The good news is that more than 2,000 government programs are available to help first-time home buyers achieve the dream of ownership in a variety of ways:

  •  Home buyer, credit, financial literacy classes and counseling;
  •  Below market interest rate loans;
  •  Grants repaid upon sale or refinancing;
  •  Low-cost mortgages;
  •  Mortgage payment deferral;
  •  Principal forgiveness;
  •  Lower mortgage insurance requirements;
  •  Shared-equity arrangements;
  •  Closing cost assistance;
  •  Down payment assistance;
  •  Mortgage interest credit income tax certificates.

If someone you love is a first-time home buyer struggling to save a down payment, let them know a local REALTOR® can help them navigate state and local programs in an effort to get a down payment and financing.

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More on this topic


NY First Home – REALTORS Push for First-time Homebuyer Savings Plan

Dare to Dream

One of the New York State Association of REALTORS® (NYSAR) top priorities during the 2016 legislative session was the NY First Home proposal. This legislation, sponsored by Senator Betty Little and Assemblyman Phil Ramos, will help first time homebuyers achieve the American dream of homeownership in New York.

High taxes and fees have created barriers for potential homebuyers in New York who work hard to save for the purchase of their first home. State lawmakers considered the NY First Home proposal, modeled after the state’s 529 College Savings program, which would allow New Yorkers to save $5,000 annually (couples up to $10,000) to pay for costs associated with purchasing their first home. New York State taxpayers could also take a state income tax deduction against any deposits into the program.

Working with the National Association of Realtors®, NYSAR engaged in a multi-faceted media campaign designed to educate the public and lawmakers regarding the challenges facing first-time homebuyers in New York. Voters were asked to reach out to their elected officials and express their support for the NY First Home proposal by phone and mail.

The NYSAR campaign began with a statewide poll of probable voters across New York State that found broad, bi-partisan support for a first-time homebuyer savings program like the one we are advocated for during this session. A second and critical baseline component to our campaign was economic research and a cost-benefit analysis for our proposal. This independent study done by several economists found that for every dollar invested in the NY First Home proposal, state and county governments would recoup more than $5 dollars of economic benefit.

The NY First Home bill passed in the New York State Senate, but did not reach the Assembly floor for a vote. NYSAR will continue to champion the passage of this bill throughout 2016 and into the 2017 legislative session.

Visit NYFirstHome to learn more about our proposal and to take action by letting your lawmakers know you support this initiative.

REALTORS Place Financial Advocacy Before Trendy Listing Techniques

Fixer Uppers

Many prospective and current homeowners are noticing a peculiar trend when looking at recent home listings. A handful of homes for sale have descriptions that are touting the fact that they are “ugly” properties, complete with photos of overgrown landscapes and run down interiors. According to a recent REALTOR.com article the trend of the “ugly home” is a growing one too, with listings actually going so far as to advertise the home as the “worst in the neighborhood.”

Shannon Kutchek, Top Producing REALTOR at Smothers Realty Group in LaGrange, IL doesn’t feel that using a property’s unattractiveness as a listing feature is a necessarily a good idea. “As a REALTOR it’s my job to be a financial advocate for my clients, bringing them the most money I can for their property. This means promoting the best aspects of any home that I list, whether it’s newly renovated or a fixer-upper.” Shannon goes on to share that while positioning a listing as an “ugly house” may be a novel approach that could generate a lot of online interest – that interest may not necessarily translate into good offers.

While homeowners may not want to rely on an “ugly home” marketing approach to move their property, they can be assured that their less than perfect property is still marketable. Quite a few first-time homebuyers are more than willing to put in sweat-equity to bring a home up to their standard of living. Student loan debt is one reason that many millennials are willing to make a housing investment that can help them to build a stronger financial future. “Rehabbed homes can generate cash flow and, potentially, a steady income to help build wealth over time.”, states Homevesters.com.

So should homeowners with properties in need of a little TLC consider trying the “ugly house” listing technique? The bottom line is that the role of a REALTOR is not only to make the process of buying home easier, but to act as their client’s strongest financial advocate. REALTORS will take trends like the “ugly house” advertisement into consideration, but will ultimately invest in the listing technique that they feel will result in the highest monetary gain for their clients.