Sense of Community and Building Equity Top Factors for Young Buyers

Bob Vaughan

A recent homebuyer report from Bank of America showed that over half of homebuyers between 18 to 43 highly valued friendly neighbors and a sense of community when deciding where to buy a home. When polling that same question with the homebuyers aged 57-75, only 33% of buyers said community was an important factor to them. Having a sense of belonging and being connected is a major factor in today’s age. In addition, 46% of prospective homebuyers 18 to 43 said that building equity through your home is more important now than ever before. Long term stability is in sight for these buyers by trading in their monthly rent, which could rise at any time, for steady mortgage payments. Knowing these important factors may aid in working with young, first time buyers.

Huge Rebound in Mortgage Application Volume Last Week

Bob Vaughan

After six weeks in a row of mortgage application decreases, last week there was a 8.6% rise in volume. Mortgage rates reached their lowest level in almost two months and this caused the uptick in refinance volume we experienced last week. Refinance applications accounted for 60% of total mortgage applications during this past week.

 

  • The FHA’s share of mortgage applications increased to 11.3% from 10.8% the previous week.
  • The VA’s share of mortgage applications decreased to 11.5% from 12.1% the previous week.

Mortgage Application Volume Continues to Drop

Bob Vaughan

Last week home mortgage application volume continued to fall due to low inventory and slightly higher mortgage interest rates. Overall application volume dropped 3.7% last week marking the third straight week of declining purchase activity. Purchase activity was not the only sector of mortgage application volume decrease as refinance application numbers fell also.

 

  • The FHA share of total mortgage application volume increased from 10.2% to 10.8% last week.
  • The VA share of mortgage application volume decreased from 13.38% to 12.1% last week.

Average Home Sale Price Hits Record High

Bob Vaughan

From 2020 to 2021 the median home sale price increased 16% year-over-year. According to Redfin, the median home sale price is currently sitting at $331,590. Offers to buy existing homes are coming in fast and furious, with nearly 40% of homes being sold over asking price. This number is an all-time high and 15% higher year-over-year compared to 2020. Most experts believe that home prices will remain high even after mortgage rates have risen in the last few months because inventory remains extremely low. As building materials can start being produced at higher levels through facility reopening, new homes can be built quicker and the inventory of new homes should level with demand allowing prices to stabilize.

New Home Construction Stutters

Bob Vaughan

Sales of newly built homes dropped significantly in February because of the higher cost of building materials and subsequent delays. As the delays continued and material prices increased builders in turn raised their prices also creating a lack of affordability for some new home buyers. Overall, sales dropped 18% month-over-month marking the lowest level of new home sales since May of 2020. According to Chuck Fowke, chairman of the National Association of Home Builders, soaring prices in materials, specifically lumber, have added more than $24,000 to the price of a new home. This uptick in price coupled with higher interest rates is pushing the median home prices nationwide to a 5% higher mark year-over-year. Demand remains high despite these factors, but time will tell if prolonged material shortages will price some prospective buyers out of the new home market and towards existing homes.

Home Prices Climb, Mortgage Applications Dip

Bob Vaughan

The amount of home mortgage applications decreased for the third straight week, paced by a 5% drop in mortgage refinance applications. Overall total application volume was down 2.5% from the week prior. The main issue with application volume right now continues to be the low inventory levels pushing up home prices and discouraging some buyers from entering the market. Should inventory catch up to demand, home mortgage purchase applications should rebound as well.

 

  • The FHA share of total mortgage applications remained at 11.7% this past week seeing almost no change.
  • The VA share of total mortgage applications decreased to 9.8% from 10.3% the previous week.

Mortgage Application Numbers Drop, How Will the Spring Start?

Bob Vaughan

To end February and usher in the first week of March, mortgage application volume dropped by 1.3%. Despite this drop experts believe we are in store for a strong start to the spring because of the rebound in purchase numbers to end the week. While mortgage interest rates are up slightly from where they started to begin the year, demand from homebuyers to purchase remains high. Refinance application volume dropped 5% over the last week also.

 

  • The VA share of mortgage application volume decreased to 11.6% from 12.1% the previous week.
  • The FHA share of mortgage application volume decreased to 11.1% from 12.3% the previous week.

Five First Time Homebuyer Issues to Avoid

Bob Vaughan

Being a first time homebuyer may seem like a daunting situation, but these tips on things to avoid could make your life much more stress free.

  1. Not having home insurance prepared: The lender will require you to have an insurance policy in effect the day of your closing. Forgetting to have your insurance ready will delay your closing.
  2. Lower than necessary appraisals: If your appraisal comes in lower than your offer, it could be the reason you don’t receive funding to close. You’ll have to cover the difference in value to purchase price, negotiate with the seller, or be forced to back out of the deal.
  3. Credit problems: Lenders will re-check your credit prior to close. Opening new credit accounts or making large credit purchases prior to close could ruin your chances of closing.
  4. Homebuyer loan document issues: Make sure to check your loan documents for mistakes. If your name is misspelled or other things are incorrect, notify a loan officer as soon as you can.
  5. Last minute walk through problems: Make sure to be proactive on your final walk through. If anything is in lesser condition than discussed, try to fix this as soon as possible to avoid delay.

End of 2020 Home Prices Soared Year-Over-Year

Bob Vaughan

According to the end of 2020 census, home prices in December increased 10.4% year-over-year from 2019. In November a similar gain was experienced, with home prices rising 9.5% in 2020 when compared to 2019. Last year started in a way that almost no one expected, but low interest rates allowed more homebuyers across the country to enter the housing market, shortening inventory, and causing a surplus of demand in the market. As inventory remains low this far into 2021, demand will continue to outweigh supply and home prices should remain high. While this comes as no surprise given the extremely hot housing market nationwide, this leads to the question of exactly how much higher home prices can go.

Home Mortgage Application Levels Bounce Back

Bob Vaughan

Applications for home mortgages increased a marginal amount, going up 0.5% last week after falling the week prior. Refinances made up 67.5% of total applications this past week despite the uptick in mortgage rates. Many borrowers across the country can still save themselves hundreds of dollars a month by refinancing their mortgages and it’s clear people are willing to take advantage of this opportunity. One other movement to note is the increase in VA and FHA mortgage refinance application volume this past week. Typically as rates rise and fall, in terms of volume, government backed conventional loans see more volatility than both FHA and VA loans and this past week was another example of that.