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North Salem NY Real Estate

Home prices will not fully recover until 2025 | North Salem Real Estate

Check out any one of the many national home price reports, and headlines scream of new peaks and growing gains each month. Home prices are rising faster than inflation, faster than incomes and faster than some potential buyers can bear. Those reports are heavily weighted toward large metropolitan housing markets.

In fact, most of the U.S. housing market has not recovered from the epic crash of the last decade.

Only about one-third of homes have surpassed their pre-recession peak value, according to a new report from Trulia, a real estate listing and analytics company. Price growth in most markets is so slow that it will take about eight years for the national housing market to fully recover — that is, for all home values either reaching or surpassing their previous peaks.

Huge price gains during the last housing boom were juiced almost entirely by an incredibly loose mortgage lending market that no longer exists.

To say that the housing recovery has been uneven is an understatement. Some markets that have seen huge employment and population growth in the last decade, such as Denver, Seattle and San Francisco, lead the news with bubble-worthy headlines.

Not only have home prices there surpassed their recent peaks, they continue to rise at double-digit paces. Nearly all the homes in Denver and San Francisco (98 percent) have exceeded their pre-recession peak, according to Trulia. Other less obvious markets, like Oklahoma City and Nashville, Tennessee, have also seen the prices of most homes surpass their peak.

In areas hit hardest by the foreclosure crisis, fewer than 4 percent of homes have recovered to pre-recession price peaks. These include Las Vegas; Tucson, Arizona; Camden, New Jersey; Fort Lauderdale, Florida; and New Haven, Connecticut.

Rising incomes are the leading cause of home price growth, according to Trulia, which looked at four factors: job growth, income growth, population growth and post-recession housing vacancy rates. Income growth showed the greatest correlation to home price growth.

The intuition here is this: “Housing is what economists call a ‘normal good,’ so when incomes rise, households tend to spend more on housing, which pushes up prices,” wrote Ralph McLaughlin, Trulia’s chief economist, in the report.

Job growth didn’t correlate at all because more jobs don’t necessarily mean higher incomes. Of course job growth does matter tangentially, as more jobs often mean a growing population.

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http://www.cnbc.com/2017/05/03/home-prices-will-not-fully-recover-until-2025.html?__source=newsletter%7Ceveningbrief

Mortgage rates average 4.20% | North Salem Real Estate

 

Freddie Mac (OTCQB: FMCC) today released the results of its Primary Mortgage Market Survey® (PMMS®), showing average fixed mortgage rates moving lower for the first time in ten weeks.

News Facts

  • 30-year fixed-rate mortgage (FRM) averaged 4.20 percent with an average 0.5 point for the week ending January 5, 2017, down from last week when it averaged 4.32 percent. A year ago at this time, the 30-year FRM averaged 3.97 percent.
  • 15-year FRM this week averaged 3.44 percent with an average 0.5 point, down from last week when it averaged 3.55 percent. A year ago at this time, the 15-year FRM averaged 3.26 percent.
  • 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 3.33 percent this week with an average 0.4 point, up from last week when it averaged 3.30 percent. A year ago, the 5-year ARM averaged 3.09 percent.

Average commitment rates should be reported along with average fees and points to reflect the total upfront cost of obtaining the mortgage. Visit the following link for the Definitions. Borrowers may still pay closing costs which are not included in the survey.

Quote
Attributed to Sean Becketti, chief economist, Freddie Mac.

“The 30-year mortgage rate fell this week for the first time since the presidential election, dropping 12 basis points to 4.20 percent. This marks the first time since 2014 that mortgage rates opened the year above 4 percent. Despite this week’s breather, the 66-basis point increase in the mortgage rate since November 3 is taking its toll — the MBA’s refinance index plunged 22 percent this week.”

Unmasking the Millennials | North Salem Real Estate

Zillow’s new Zillow Group Report on Consumer Housing Trends, authored by Stan Humphries, Chief Analytics Officer and Chief Economist, is a remarkably valuable 21st Century addition to the body of research profiling the changing face of residential real estate.

Its many jewels of new or intuitive findings regarding the mysterious Millennials, the generation that so far has defied expectations, are worth noting Here are some the brighter gems that might help to unmask the Millennials.

 Market domination. Millennials, ages 18-34, comprise 42 percent of all home buyers today, while an additional 31 percent of buyers are members of Generation X (ages 35-49). Baby Boomers (ages 50-64) and the Silent Generation (ages 65-75) together make up the smallest share of home buyers (26 percent), with only 10 percent of buyers over age 64.

Millennials buy later and buy up market.  Millennials are delaying many life milestones that precede homeownership, such as completing their education, getting married or starting families, and thus are renting deeper into adulthood.  When Millennials do become homeowners, they leapfrog the traditional starter home and jump into the higher end of the market by choosing larger properties with higher prices, similar to homes bought by older buyers. They pay a median price of $217,000 for a home, more than Baby Boomers, and just 11 percent less than Generation X. The Millennial median home size is 1,800 square feet, similar in size to what older generations buy. The modern-day starter home is nearly as large as the median home for move-up buyers and costs about 18 percent less.

 New homes are on the table. Younger buyers (50 percent of Millennials and 54 percent of Generation X) are significantly more likely than Baby Boomers or the Silent Generation (38 percent and 39 percent, respectively) to consider newly built properties. Nearly half (48 percent) of all buyers are considering new homes.

Millennials less likely to use agents. The older the buyer, the more likely that buyer is using an agent.  Baby Boomers and the Silent Generation rely most heavily on an agent or broker for real estate guidance, with 83 percent and 81 percent respectively citing them as a resource in their home search. Seventy-four percent of Generation X buyers report using an agent, followed by 70 percent of Millennials.  When they enlist an agent, they do so earlier in the home-search process, shop for a home faster than most older generations, and are more likely to stay in touch with an agent.

Do a better job of shopping for agents. The average number of agents all buyers consider hiring is 2.2.  Sixty-eight percent of the Silent Generation and 57 percent of Baby Boomers considered only one agent, compared to 44 percent of Generation X and 38 percent of Millennials considering just one agent. Millennials are particularly likely to evaluate an agent online, including reading online reviews (61 percent) and delving into past sales data (57 percent).

In an agent, Millennials want a partner, not a control freak. The process of finding or selling a home is much more collaborative for Millennials than for older generations. They bring all available tools to the process, including their smartphones, social media, and online networks. While older generations rely on real estate agents for information and expertise, Millennials expect real estate agents to become trusted advisers and strategic partners.

Definition of household is changing. Seventeen percent of younger Millennials  (ages 18-24) are shopping for a home with a friend or roommate, with an additional 51 percent shopping with a spouse or partner. Older Millennials (ages 25-34) are more like the average buyer, as 73 percent are shopping with a spouse or partner. Seventeen percent of younger Millennials (ages 18-24) are shopping for a home with a friend or roommate.

Millennial are not sold on buying. Millennial buyers (71 percent) are the most likely to consider renting. As buyers age, their interest in renting declines. Just over half, 54 percent, of all Generation X buyers considered renting compared to about one-third (32 percent) of Baby Boomers.  Only 18 percent of those 65 years and older considering renting as well as buying.

Millennials social support in decision-making.  Millennials rely on their personal networks. They’re the generation most likely to turn to a friend, neighbor, or relative to share the details of their home search (58 percent, versus 52 percent of Generation X buyers, 42 percent of Baby Boomers, and 37 percent of the Silent Generation). Millennials seek input from friends, relatives, and neighbors 58 percent of the time, versus the Silent Generation, who poll friends just 37 percent of the time.

Millennial home buyers are more diverse. Fourteen percent of Millennial buyers are Latino/Hispanic, whereas roughly 11 percent of Gen X, 7 percent of Baby Boomers and 6 percent of Silent Generation buyers are Latino/Hispanic. Some 6 percent of Millennials are black/African-American, a smaller share than Gen X (9 percent) or Boomer (8 percent) buyers who are black/African-American.

They are more suburban than urban animals, and they buy locally.  Nearly half of Millennial homeowners live in the suburbs (47 percent), while one-third settle in an urban setting (33 percent), with eight in 10 adults under 25 living outside an urban core. While only 11 percent of buyers are moving out of state, it’s notable that older buyers are more likely to make these long-distance moves. While just 7 percent of both Millennials and Generation X are moving across state lines, Baby Boomers and the Silent Generation make such moves 20 percent and 29 percent of the time, respectively.

Millennials aren’t just buyers. The biggest group of home sellers belongs to Generation X (38 percent). A quarter of home sellers is Millennials (26

 

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http://www.realestateeconomywatch.com/2016/11/unmasking-the-millennials/

FHA increases loan limits going into 2017 | North Salem Real Estate

house sun

Home prices force loan limits higher

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.

Check here for a complete list of FHA loan limits.

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http://www.housingwire.com/articles/38657-fha-increases-loan-limits-going-into-2017?eid=311691494&bid=1602929

Growing number of firms offering energy-efficient modular design | North Salem Real Estate

The Alfreds' net-zero residence, in Cumberland, Maine, is a modular design by BrightBuilt Home.
James R. SalomonThe Alfreds’ net-zero residence, in Cumberland, Maine, is a modular design by BrightBuilt Home.

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.

De Verneil residence, by Deltec Homes (Ridgeline model)
Marie de VerneilDe Verneil residence, by Deltec Homes (Ridgeline model)

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.

Kitchen, de Verneil residence
Marie de VerneilKitchen, de Verneil residence

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.

Ridgeline model in Deltec Homes' Renew Collection
Spacialists.com courtesy Deltec HomesRidgeline model in Deltec Homes’ Renew Collection
Interior rendering, Ridgeline model
Courtesy Deltec HomesInterior rendering, Ridgeline model

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.

 

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http://www.architectmagazine.com/technology/living-the-dream-of-a-net-zero-house_o

New homes surge in April | North Salem Real Estate

New homes surged in April, a sign that builders are stepping up as demand for housing remains robust.

Sales soared 16.6% to a seasonally adjusted annual rate of 619,000, the Commerce Department said Tuesday. That was the biggest monthly jump in 24 years and trounced estimates of a 525,000 pace.

The median price also jumped, rising 9.7% from 12 months ago to $321,100.

The big increase in sales took supply sharply lower. At the current pace, it would take 4.7 months to exhaust all inventory.

March numbers were revised up to a 531,000 annual pace. The April figures were 23.8% higher compared to a year ago.

Regional performance was mixed, from a 52.8% surge in the Northeast to a 4.8% decline in the Midwest. The South saw a 15.8% increase, while in the West sales were up 18.8%.

Demand for housing has run much hotter than supply for the past few years, in part because home builders have been reluctant to ramp up to the brisk level of activity they enjoyed before the recession.

 

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http://www.marketwatch.com/story/new-home-sales-roar-back-crushing-forecasts-with-a-619000-annual-pace-in-april-2016-05-24

Higher Prices Chill Buyers | North Salem Real Estate

In the cold light of winter. concerns about affordability are cooling potential buyers, according to the latest Sentiment Index from Fannie Mae.

Fevers consumers believe this is a “Good Time to Buy”; figures trended down for the year in 2015 and declined an additional 4 percentage points in January. The share of consumers who reported that their income was significantly higher than it was 12 months ago fell 3 percentage points after climbing 9 percentage points on net in December. Altogether, the index decreased 1.7 points to 81.5 in January.

“Housing affordability is being constrained because the pace of growth in real income has not kept up with gains in real home prices as demand has grown faster than supply,” said Doug Duncan, senior vice president and chief economist at Fannie Mae. “On the bright side, consumers have been increasingly positive about their ability to get a mortgage, suggesting that credit tightness is not the main issue limiting housing market activity today, a feeling that we also see conveyed by lenders in our Mortgage Lender Sentiment Survey®. We expect further progress in the HPSI to be limited until income growth picks up or supply, particularly in lower-priced homes, expands more rapidly.”

 

2016-02-08_15-51-37

While four of the six HPSI components decreased in January, Good Time to Sell rose by 1 point and Mortgage Rate net expectations stayed the same at negative 52 percent. Overall, the HPSI is down 1.3 points since this time last year.

  • The net share of respondents who say that it is a good time to buy a house fell 4 percentage points to 31%. An all-time survey low was equaled as only 61% of respondents say it is a good time to buy a house.
  • The net percentage of respondents who say it is a good time to sell a house rose 1 percentage point to 9%.
  • The net share of respondents who say that home prices will go up fell 3 percentage points to 37%.
  • The net share of those who say mortgage interest rates will go down remained at negative 52% this month.

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http://www.realestateeconomywatch.com/2016/02/higher-prices-chill-buyers/

Key Trends in the 2016 Cost vs. Value Report | North Salem Real Estate

Bigger and more expensive projects, rising new-home prices, curb appeal, and energy efficiency all contributed to a slight gain in remodeling projects’ payback at resale, the 2016 Cost vs. Value report shows.

The average cost and average return at resale for the 30 projects in this year’s report resulted in an average of 64.4% of a project’s investment dollars getting recouped if the home is sold within a year. That’s up from 62% in the 2015 report and the second-highest return in the past eight years.

This year’s 64.4% deserves an asterisk because the 2016 report eliminates eight projects from last year, including some with the weakest returns­, while adding two projects, one of which—attic insulation—topped the list. But if you look only at the 17 projects we’ve tracked since 2005, the results are similar.

For those 17, the average value recouped was 63.7%, up from 62.1% in the 2015 report and the second-best year in the past six. When you look at cost alone, regardless of whether you’re talking about the 17 perennials or all 28 projects that were in the 2015 and 2016 reports, the result was the same: The average project cost 4.7% more this year. But when you ask real estate professionals for their view of how much that project boosted a home’s value at resale within a year, the results varied according to which projects you included. For the 28 jobs tracked both years, real estate professionals estimated the average project’s dollar return was 6.7% higher in the latest report than in 2015. For just the 17 perennials, the gain in value was 7.3%.

Those differences give only a first sense of why Cost vs. Value isn’t so much a portrait of America’s remodeling industry as it is a kaleidoscope—one in which the view of our remodeling industry changes every time you turn the data wheel.

Because costs change independently from real estate pros’ assessment of value (and for our 17 perennial projects, they’ve moved in different directions six of the past 10 years), each year the resulting cost-value ratio will have a different reason for why it changed. This ratio expresses resale value as a percentage of construction cost: When cost is higher than value, the ratio is less than 100%; when value is higher than cost, the ratio exceeds 100%. It’s the “bang-for-the-buck” meter.

In last year’s report, the overall cost-value ratio went down from the previous year because valuations were cut on about half of the 36 projects. This time, the average return went up largely because real estate professionals were more optimistic, lowering their estimates of resale value on only five of the 30 projects surveyed.

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http://www.remodeling.hw.net/cost-vs-value/2016/trends

NAHB: Builder Confidence increased to 70 in December | North Salem Real Estate

 

The National Association of Home Builders (NAHB) reported the housing market index (HMI) was at 70 in December, up from 63 in November. Any number above 50 indicates that more builders view sales conditions as good than poor.

From the NAHB: Builder Confidence Closes Year on a High Note

Builder confidence in the market for newly-built single-family homes jumped seven points to a level of 70 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI). This is the highest reading since July 2005.

“Though this significant increase in builder confidence could be considered an outlier, the fact remains that the economic fundamentals continue to look good for housing,” said NAHB Chief Economist Robert Dietz. “The rise in the HMI is consistent with recent gains for the stock market and consumer confidence. At the same time, builders remain sensitive to rising mortgage rates and continue to deal with shortages of lots and labor.”

All three HMI components posted healthy gains in December. The component gauging current sales conditions increased seven points to 76 while the index charting sales expectations in the next six months jumped nine points to 78. Meanwhile, the component measuring buyer traffic rose six points to 53, marking the first time this gauge has topped 50 since October 2005.

Looking at the three-month moving averages for regional HMI scores, the Northeast rose six points to 51, the Midwest posted a three-point gain to 61, the South rose one point to 67 and the West registered a two-point gain to 79.

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http://www.calculatedriskblog.com/2016/12/nahb-builder-confidence-increased-to-70.html

 

New Home Sales Nudge Forward | North Salem Real Estate

The number of new homes sold in November increased by 4.3% from a downwardly revised October level to 490,000 on a seasonally adjusted annual basis. On a year to date level, sales are up 14.5% from the eleven month total in 2014. Inventories of new homes also increased to 232,000, the highest since January 2010 even as builders continue to seek workers and lots.

New Home Sales – Monthly and Annual
The increases in sales and inventories signifies continued builder optimism and customer demand growth. However, the levels remain disappointing given the amount of pent up demand and the low level of turnover in existing home sales. Most new home sales are to existing home sellers so the weak sales of existing homes and low inventories of existing homes produces fewer potential new home buyers. On the positive side, home equity is up, employment continues to increase and mortgage rates remain low by historic standards. On the negative side, few first time home buyers are in the market as credit standards remain restrictive and young individuals remain living with their parents. Existing home owners are reluctant to sell when the inventory of existing homes remains low, a double-edged retardant to a more robust new and existing home market.

Inventories
Regionally, Northeast sales dropped 29% but from a high October and within the smallest region. Midwest sales also fell 8.6%. The South and West increased 4.5% and 20.5% respectively. For the year, the same is true: the Northeast is behind last year’s total to date by 12.3% and the Midwest is virtually unchanged from the same 11 month period in 2014. The South and West are ahead of last year’s 11 month sum by 18.8% and 19.5% respectively.

 

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http://eyeonhousing.org/2015/12/new-home-sales-nudge-forward/