The Federal Housing Administration announced plans on Thursday to increase loan limits in 2017, announcing a significant jump in counties set to increase compared to last year.
Due to home price increases, the FHA said that most areas in the country will see a slight increase in loan limits in 2017.
These loan limits are effective for case numbers assigned on or after Jan. 1, 2017, and will remain in effect through the end of the year.
The FHA recalculates its national loan limit on a yearly basis. The limits are based on a percentage calculation of the nation conforming loan limit.
Here are the upcoming changes. In high-cost areas, the FHA national loan limit “ceiling” will increase to $636,150 from $625,500. FHA will also increase its “floor” to $275,665 from $271,050.
Additionally, the maximum claim amount for FHA-insured Home Equity Conversion Mortgages (HECMs), or reverse mortgages, will increase to $636,150.
The FHA noted that this amount is 150% of the national conforming limit of $424,100.
The maximum loan limits for forward mortgages increased in 2,948 counties, which is attributed to changes in housing prices and the resulting change to FHA’s “floor” and “ceiling” limits.
There were no areas with a decrease in the maximum loan limits for forward mortgages though they remain unchanged in 286 counties.
This is compared to last year, which increased the loan limits in 188 counties due to changes in housing prices.
As an added note, FHA’s minimum national loan limit “floor” is set at 65% of the national conforming loan limit of $424,100. The FHA said the floor applies to those areas where 115% of the median home price is less than 65% of the national conforming loan limit.
For any area that doesn’t fit this and the loan limit exceeds the “floor,” it’s considered a high cost area. The maximum FHA loan limit “ceiling” for high-cost areas is 150% of the national conforming limit.
New homes with 5,000 square feet or more of living space increased both as a share of all new construction and in absolute number in 2015, according to the Census Bureau’s Survey of Construction. In 2015, the share of new homes this size reached a post-recession peak of 3.9% of new homes started. The total number of 5,000+ square-foot homes started that year was 28,000 units.
In 2012, the number of new homes started with 5,000+ square feet rose to 15,000 units, yet their share remained at only 2.8%. In 2015, while the number of 5,000+ square feet homes started (28,000) was the highest since 2008, their share of the new market (3.9%) was the highest since 2004. A previous postdiscussed the declining trend in the median and average size of new single-family homes due to an expansion in entry-level market wherein home size is expected to trend lower. This is not necessarily a contradiction, because 5,000+ square foot homes are relatively uncommon and represent the extreme upper tail of the distribution. The extreme upper tail can behave differently than the center of the distribution, measured by the average or median.
In the boom year of 2006, 3.0% or 45,000 new homes started were 5,000 square feet or larger. In 2007, the share of new homes this size was 3.6%, yet the total number of 5,000+ square-foot homes started that year fell to 37,000. In 2008, only 20,000 such homes were started or 3.2% of the total. From 2009 to 2011, fewer than 13,000 of these large homes were started every year, accounting for less than 3% of all new construction during this period. The extent to which the 5,000+ square foot homes have recovered, roughly to where they were in 2008, shows a growing trend at the top of the market at least through 2015.
When Shaun Alfreds and his wife decided to build a house for their family of five in Cumberland, Maine, they didn’t know if a high-performance project would be within their budget. “We aren’t wealthy by any stretch of the imagination, but we wanted an energy-efficient home,” says Alfreds, a chief operating officer at HealthInfoNet, a local health information technology company.
After some research, however, the couple realized that they achieve their dream for a nominal additional investment over the cost of a conventional house if they opted for a modular high-performance house. They chose a two-story, Cape Cod–style design from Portland, Maine–based BrightBuilt Home, and moved in last December.
At more than 3,000 square feet, the house is spacious, but its full sun exposure and a 10-kilowatt solar array of 39 photovoltaic (PV) panels should cover its energy consumption year-round. Alfreds says the house cost “almost exactly what other [builders] were bidding” for a standard, code-compliant project that was custom designed. And their small additional investment goes to building equity in the house, rather than to paying utilities.
BrightBuilt, a sister company of local firm Kaplan Thomson Architects (KTA), joins an increasing number of design companies that are expanding the market for high-performance residential projects. While KTA has custom-designed many energy-efficient houses, principal Phil Kaplan, AIA, says the firm also wanted to offer an off-the-shelf product. In 2015, it launched BrightBuilt with nine design templates. Starting at $175 to $180 per square foot, the houses bring net-zero energy to a price more people can afford. “We’re definitely seeing a lot of demand,” Kaplan says.
But some architects and builders have found ways to lower the price of net-zero housing even more.
Marie de Verneil dreamed of building a retirement home on land she owned in central Virginia. “To me, green was very important,” she says. However, her savings from teaching French and international relations at the University of Maryland, Baltimore County, didn’t seem like enough. “It’s kind of discouraging for someone like me,” she says.
Then de Verneil heard about Deltec Homes, in Asheville, N.C. The company—known for its distinctly round, prefabricated, and hurricane-resistant houses—recently launched Renew, a collection of models that use about two-thirds the energy of a conventional house and can include a PV array. De Verneil estimates she spent $250,000 on her 1,600-square-foot house (less than $160 per square foot), which includes a roof-mounted solar array. Her monthly electric bill is $30, the base fee for taxes and distribution. And when she is retired and living on a fixed income, she knows she’ll never have to say, “I can’t put the heat on.”
For those wanting to build a passive or net-zero energy house, right-sizing expectations is a crucial step to meeting one’s budget. And, as Deltec president Steve Linton adds, every project—modular or not—must be tailored to the particular site and climate. The company’s design team also conducts an energy model to evaluate site variables, solar energy capacity, building-shell size, features, and cost trade-offs.
Much of the market for high-performance housing is around single-family units in the suburbs, but the past few years have seen an uptick for multifamily dwellings and affordable housing projects in cities, including Washington, D.C., New York, and Philadelphia.
For low- and middle-income residents, in particular, an energy-efficient house can provide substantial benefits, says Orlando Velez, director of Housing Programs and Community at Habitat for Humanity of Washington, D.C.The organization recently built six passive townhouses last year in the district’s Ivy City neighborhood, whichhas a lot of air pollution. By creating a tight building envelope and filtering outside air, “you’re improving the air quality significantly,” Velez says. “It’s a healthier living environment.”
With savings from the lower utility bills, he says, residents may be able to spend more within the community. The organization plans to study those benefits over time to know whether energy efficiency is the best investment for its limited funds.
Living in a high-performance house can take some adjustment. Residents are often unfamiliar with high-tech HVAC equipment, such as energy recovery ventilators and solar water heaters. A tight building envelope also means that the size of the HVAC system can be decreased (fresh air supply is increased for indoor air quality purposes). The word that many residents use is “comfort”—indoor temperatures stay remarkably consistent across different areas of a house throughout the year.
Do you have a closet you’re terrified to open? Do sweaters, paperwork, and random Sports Illustrated Swimsuit issues from the last millennium clog up every drawer? If so, then there’s a very high likelihood you’re overdue for some serious spring-cleaning.
But what’s that you say: Lying on the couch bingeing on the latest season of “House of Cards” sounds way more enticing? Then you’ll love our first installment of the Lazy Homeowner’s Guide: a collection of hacks and shortcuts that make decluttering a breeze.
Try a few of these tips to whip your place into shape with minimal time and effort. Honest, you’ll barely work up a sweat
Trick yourself into tossing things
If you know you have a problem parting with things, Jennifer Adams, celebrity interior designer and lifestyle expert, advises taking on your separation anxiety literally. Get two large boxes; label one “repair/clean” and the other “not sure.” Box up the latter items, and date the box.
“If you haven’t opened the box in a year, donate it,” she says. Same goes for the “repair/clean” box. Stick them in the trunk of your car, and drive thyself to the nearest Salvation Army or other charitable organization.
“Face it: You’re not that committed to those items if you haven’t repaired, cleaned, or looked at them within a month or two,” Adams says.
Turn castoffs into cash
Maybe extra moolah is the prime incentive you need to help you clean out cluttered spaces. If selling your unwanted stuff on eBay is too complicated, try the simple-to-use app OfferUp, the largest mobile marketplace for local buyers and sellers. Take a snap of your unwanted items, and post it on the site—and you’ll instantly be connected to buyers in your neighborhood.
Curb your clothes
Your closets are likely full of clothes you don’t wear and are ripe for purging. What should you chuck?
“Focus on clothes that don’t fit, are out of style, require expensive tailoring, that don’t look good on you, or are duplicates,” says Cynthia Kienzle, aka New York’s The Clutter Whisperer. You could end up eliminating a large swath of your wardrobe, yet feel you have more clothes since everything you pull out is something you’ll actually wear!
Save space in your closet
After purging, set up simple systems and maintain them. One of Kienzle’s favorite inexpensive closet organizing tools is Ikea’s $5 hanging shoe bags. She calls them “the best organizing bargain around.” She also likes the Container Store’s Elfa door rack system—secured inside of closet doors—to hold scarves, gloves, and belts. For about $75, it’s an “inexpensive investment relative to the enormous value they provide. And they look so nice!” Finally, skinny Huggable hangers can triple your closet space, plus the felt keeps clothes from sliding off.
It’s time to unload those old catalogs, coupons, junk mail, and tax support documents (after all, you don’t need to keep your tax documents forever—for most states it’s only the past seven years). If you need to shred but dread the prospect of feeding a small home shredder all weekend, she recommends using Staples or FedEx Office shredding services. Easier still, you can hire a shredding truck to come to your apartment building or home.
Home prices are still rising, and the economy is improving, but the ills of the housing crash are far from cured: 7.4 million borrowers were still “seriously” underwater on their mortgages at the end of June, according to RealtyTrac.
The real estate information company defines that as the loan amount being at least 25 percent higher than the property’s estimated market value.
Over 13 percent of all properties with a mortgage are in this predicament, and that is actually a slight increase from the first quarter of this year.
Cherezoff | Getty Images
How can this be when home prices are still rising? It depends on how you read those prices. The National Association of Realtors reported that the median price of a home sold in June reached its highest level in history. The median, however, means half the homes sold for more and half sold for less, so if higher-priced homes are selling more, which they are, that skews the median higher. S&P/Case Shiller, which measures repeat sales of similarly priced homes, shows price gains have been shrinking in general but are still higher than a year ago.
Still, another report from Weiss Residential Research digs deeper in local areas and finds that nearly half the homes in the nation’s top markets are actually losing value.
“Don’t be fooled by averages,” said Allan Weiss, founder and CEO of Weiss Residential Research. “All of the largest metro indexes are rising more slowly than they were a year ago though market reports give the impression that values are rising across the board. However, people don’t own the entire market, they own one house.”
Larger, more expensive homes, are sitting on the market longer and seeing more price cuts than smaller homes with two bedrooms or less, according to Weiss. That is likely because there is so much less supply on the lower end of the market than on the high end.
Home prices are most often measured in terms of sale price, but RealtyTrac’s numbers are based on estimates of home all home values, not just the ones for sale.
Cash sales once again trended down, accounting for 33.7% of total home sales in April 2015, down from 37.4% in April 2014.
This marks the 28th consecutive month of declines, with the year-over-year share falling each month since January 2013.
On a monthly basis, the cash sales share fell by 0.9 percentage points. Due to seasonality in the housing market, cash sales share comparisons should be made on a year-over-year basis.
To put this in perspective, CoreLogic said, “The cash sales share peak occurred in January 2011 when cash transactions accounted for 46.5% of total home sales nationally. Prior to the housing crisis, the cash sales share of total home sales averaged approximately 25 percent. If the cash sales share continues to fall at the same rate it did in April 2015, the share should hit 25 percent by mid-2017.”
May home prices nationwide, including distressed sales, increased by 6.3% in May 2015 compared with May 2014, according to the home price report from CoreLogic(CLGX).
This change represents 39 months of consecutive year-over-year increases in home prices nationally. On a month-over-month basis, home prices nationwide, including distressed sales, increased by 1.7% in May 2015 compared with April 2015.
“Mortgage rates on 30-year fixed-rate loans remained below 4% through May, helping to fuel home-purchase activity,” said Frank Nothaft, chief economist for CoreLogic. “Our homes-for-sale listing data shows that markets with high demand and limited supply, such as San Francisco, are recording double-digit appreciation rates over the past year.”
Including distressed sales, 33 states and the District of Columbia were at or within 10% of their peak prices in May 2015.
Ten states and the District of Columbia reached new price peaks not experienced since January 1976 when the CoreLogic HPI started. These states include Alaska, Colorado, Iowa, Nebraska, New York, North Carolina, Oklahoma, Tennessee, Texas and Vermont.
Click to enlarge
Excluding distressed sales, home prices increased by 6.3% in May 2015 compared with May 2014 and increased by 1.4% month over month compared with April 2015. Excluding distressed sales, only Massachusetts (-2%) and Louisiana (-0.2%) showed year-over-year depreciation in May. Distressed sales include short sales and real estate-owned transactions.
The CoreLogic HPI Forecast indicates that home prices, including distressed sales, are projected to increase by 0.9% month over month from May 2015 to June 2015 and by 5.1% on a year-over-year basis from May 2015 to May 2016. Excluding distressed sales, home prices are projected to increase by 0.8% month over month from May 2015 to June 2015 and by 4.7% year over year from May 2015 to May 2016.
The CoreLogic HPI Forecast is a projection of home prices using the CoreLogic HPI and other economic variables. Values are derived from state-level forecasts by weighting indices according to the number of owner-occupied households for each state.
“The rate of home price appreciation ticked up in May with gains being fairly widely distributed across the country. Importantly, higher home prices over the past couple of years have spurred increases in new single-family construction,” said Anand Nallathambi, president and CEO of CoreLogic. “Sales of newly built homes during the first five months of 2015 were up 23% from a year ago, and as rising values build equity for homeowners, we expect to see more existing homes offered for sale in the coming year.”
California’s massive housing market is slowing down in almost every way imaginable, according to the latest California Real Property Report from PropertyRadar.
California single-family home and condominium sales dropped 3.5% to 36,912 in May from 38,249 in April.
However, the report explained that what is unusual this month is that the decrease in sales was due to a decline in both distressed and non-distressed property sales that fell 8.6% and 2.5%, respectively. The monthly decline in non-distressed sales is the first May decline since 2005.
On a yearly basis, sales were up slightly, gaining 2.3% from 36,096 in May 2014.
“With the exception of a few counties, price increases have slowed considerably,” said Madeline Schnapp, director of economic research for PropertyRadar. “You cannot defy gravity.”
“The environment of rising prices on lower sales volumes was destined not to last. Higher borrowing costs since the beginning of the year and decreased affordability was bound to impact sales sooner or later. We may also be seeing the fourth year in a row where prices jumped early in the year, only to roll-over and head lower later the rest of the year,” Schnapp continued.
Back in March, PropertyRadar’s report showed California was finally ramping up for the spring homebuying season, posting that March single-family home and condominium sales surged to 31,989, a 33.1% jump from 24,031 in February. It was the biggest March increase in three years.
Meanwhile, May’s median price of a California home was nearly unchanged at $396,750 in May, down 1.8% from $404,000 in April.
Within California’s 26 largest counties, most experienced slight increases in median home prices, edging higher in 21 of California’s largest 26 counties.
Year-over-year, the median price of a California home was nearly unchanged, up 0.4% from $395,000 dollars in April 2014.
While at the county level most of California’s 26 largest counties exhibited slower price increases, four counties continued to post double digit gains.
For many people renting apartments in New York City, renters insurance is in the back of their mind as something they should have but haven’t gotten around to yet. There’s no blanket rule or law requiring that you purchase a policy for your apartment, and many renters assume their stuff will be covered by their landlord’s policy if anything goes wrong in the building. Here’s some bad news: if anything damages your personal property and you don’t have renters insurance, you’ve lost it for good. The good news, though, is that protecting your stuff through renters insurance is fairly easy and not that expensive. “Most people don’t realize it’s inexpensive and widely available,” said Jeff Schneider, president of Gotham Brokerage. Gotham Brokerage specializes in renters and apartment insurance, but Schneider says that every insurance company offers it. Once secured, renters insurance will protect you from three things: coverage for personal possessions, liability protection, and additional living expenses.
The first concern of securing renters insurance tends to be cost. But Schneider insists it’s not that expensive: “You can get minimum coverage for under $200 a year,” he said. Renters coverage starts as low as $125 a year. Essentially, what you pay for a policy is based on the value of your belongings. The higher your property value, the higher your renters insurance, and visa versa.
Standard coverage levels for property damage range from $25,000 to $50,000, although it can go higher. The policy will also come with a deductible, what you’ll pay out-of-pocket before the insurance coverage kicks in. Your policy will offer deductibles of a specific amount, typically from $500 to $2,000. The larger the deductible, the lower the premium charged.
So before you secure a policy, you’ll have to take stock of all your stuff. The easiest way to determine the value of your personal possessions is by creating a home inventory. Track your furniture, clothing, books, electronics, appliances, kitchen utensils—pretty much everything you own that didn’t come with the apartment—and mark its estimated value. Schneider says the best way to to do this is by taking photos of your stuff and keeping track of credit card statements. (Here’s a free home inventory site that will help you out.) Keeping this list up-to-date will also make it easier to file an insurance claim in the future.
Once you’ve taken stock of your personal inventory, you’ll decide what kind of policy you want. There are two kind of coverage: replacement cost coverage or actual cash value coverage. Actual cash value considers what your items are worth including depreciation, not what you bought them for. A replacement cost policy will pay the cost of replacing your possessions without accounting for depreciation. Schneider recommends the replacement cost policy, despite a slightly higher price uptick of about 10 percent. It’s considered worth the extra expense as the value of most items tends to depreciate quickly. That MacBook you bought two years ago is now worth significantly less than what you paid for it.
Once you’ve secured your policy, your insurance will protect you against losses from fire or smoke, lightning, vandalism, theft, explosion, windstorm, and certain types of water damage. If there’s damage from a burst pipe, you’re covered. But if you live in a flood zone, note that most renters insurance policies do not cover floods. (Flood coverage comes from the federal government’s National Flood Insurance Program and a few private insurers.) Earthquakes typically aren’t covered. Sometimes jewelry, or electronics used for business purposes, will not be covered. It pays to do your research here to know exactly what your policy accounts for. There’s always the option to add a “floater” to your policy in the case of expensive jewelry, collectables, or equipment. The floater provides additional insurance for valuables and also covers them if they are accidentally lost.
On top of coverage for personal possessions, renters insurance comes with liability coverage usually up to $100,000. Basically, this will cover you against lawsuits for bodily injury or property damage done by you, your family members, and even your pets. If you’ve caused a leak that damages your neighbor’s apartment, your neighbor’s damage is covered by your policy. Some policies will refuse to cover dogs, especially certain breeds, not wanting to be liable if your dog bites a stranger. Or, your premium will be higher with certain types of pets. And most policies will not cover anything that happens under a sublet or if someone is renting your place through Airbnb.
The typical size of newly built single-family homes increased at the start of the year. The trend of increasing new home size leveled off in 2014, but new home size increased during the first quarter of 2015 with a decline in the volume of construction. As first-time buyers return to the market, typical home size is expected to trend lower.
According to first quarter 2015 data from the Census Quarterly Starts and Completions by Purpose and Design and NAHB analysis, median single-family square floor area increased from 2,445 in the fourth quarter of last year to 2,521 square feet. Average (mean) square footage for new single-family homes increased from 2,677 to 2,736 for the first three months of the year.
On a less volatile one-year moving average, the recent trend of leveling home size can be see on the graph above, although current sizes remain elevated. Since cycle lows and on a one-year moving average basis, the average size of new single-family homes has increased 13% to 2,678 square feet, while the median size has increased 18% to 2,477 square feet.