This quarter marked the first time since the pandemic that applications for new purchase mortgages outpaced the application volume for refinances. New home purchase mortgages accounted for 53% of the total application volume in the 3rd quarter. The demand for rate and term refinances decreased 23% year-over-year marking the end of what many would consider a year plus long refinance boom.
According to a report by Corelogic, homeowners gained $2.9 trillion in equity during the second quarter. This $2.9 trillion gain equates to a 29.3% year-over-year increase from 2020. The growth in homeowner equity allows for tens of millions of Americans to feel a higher sense of financial cushion and fend off the fears of foreclosure brought about by the uncertainty of the pandemic. As the housing market continues to stay hot, equity in homes should continue to rise also.
According to John Tedesco, the senior VP of business development at Appraisal Nation, stiffer appraisal regulations and harder entry requirements for appraisers are leading to longer appraisal wait times with higher costs of completion. Because of the high demand for appraisals, appraisal wait times have increased from about five or six days to two or three weeks in some cases. Similarly, the price has risen from between $400-$500 to $700-$800. Appraisal Nation is one of the top appraisal management companies in the United States working with more than 26,000 appraisers every year completing 150,000 residential and commercial appraisals. Since 2013, the number of real estate appraisers has been rapidly falling. In 2013 there were over 89,000 licensed appraisers according to Appraisal Institute, but now there are only about 78,000 with 20% of them being older than 66. As the need for appraisals continues to rise and the work force ages towards retirement, new appraisers are needed to quell the increasing demand.
Mortgage application volume increased 0.3% this past week ending in September 10th. This increase in application volume was led by purchase applications coming in at a much higher level than the previous weekly period. Refinance applications fell by 3% as the purchase applications rose 8%, marking the highest level of purchase mortgage applications since April 2021.
The Sunshine State has seen a vast population increase in recent years, especially in Miami. According to a Redfin monthly migration report, the net inflow of Redfin users moving to Miami was 7,610. Last year during the same month 2,216 people moved to Miami. Of more local relevancy, Cape Coral saw 4,315 Redfin users move to the area, an increase from the 2,778 that moved to Cape Coral in July 2020. The warm weather, beaches, and low taxes are huge factors in the influx of new Florida residents. As we get later into 2021, we can expect to see a high volume of buyers continue to seek Florida housing.
From June to July existing-home sales increased by 2% according to a report from the National Association of Realtors. Year-over-year there was a 1.5% increase in completed transactions of single-family homes, townhomes, and condominiums. After having 12+ months of low inventory, the availability of unsold homes in the market rose 7.3% from June to July. As more and more sellers enter the market, the hope of leading economists is that it will level the playing field for homebuyers moving forward. First time homebuyers may still feel a bit priced out of the market as the median existing home sales price rose to $359,900 in July, up from $305,600 last year. This 17.8% increase in price seems to be pushing some buyers out of the market. NAR released a report recently stating that 30% of sales in July were completed by first time homebuyers compared to 34% this time last year. Adding more inventory and having purchase prices stabilize should allow new buyers to be more comfortable in today’s market.
With today’s housing environment, you’re going to see a lot of competition when putting in an offer for a purchase. Having all of your metaphorical ducks in a row before you put in your offer should make you ready to make decisions involving purchasing a home.
For the fourth month in a row, sales of existing homes have dropped according to a report from the National Association of Realtors. The main factor behind the volume of existing home sales dropping is that the inventory of homes for sale continues to dwindle. This low inventory is causing median existing-home prices to rise (23.6% from May 2020 to May 2021) pricing some buyers out of the market. Region by region. the Midwest saw an increase in existing home sales month-over-month, but the Northeast, South, and West fell by 1.4%, .4%, and 4.1% respectively. Year-over-year each of these regions saw a double digit rise in existing home sales. As home builders rush to build on already purchased lots and materials to build remain tough to find, existing home sales may see a bounce back in the next few months.
New legislation would offer a benefit similar to VA loans to first responders and teachers looking to buy homes. This new bill called the Homes for Every Local Protector Educator and Responder Act was introduced on May 13th. This bill would allow first responders and teachers to finance up to 100% of the price of their home purchase subject to FHA loan limits. Similar to an FHA loan, borrowers would pay an up-front mortgage insurance premium which could also be financed. This would replace the monthly insurance premium. The new program, if passed, would be administered by the Federal Housing Administration. Under this proposed bill public/private school teachers, prison guards, police officers, firefighters, paramedics, and emergency medical technicians would all be eligible for this benefit.
Starting in 1995, if you own a primary residence in the state of Florida, you can apply for a tax benefit called Save Our Homes. This benefit can be applied to all primary residences in the state of Florida and limits the increase in a property’s assessed value to 3% per year. As market values rise, this can help limit the increase in your real estate tax bill. When selling a primary residence, this benefit can be transferred to your new home through a process called portability. If your new residence has a market value higher than your former residence, the portability amount is determined by finding the difference in the assessed value of your former home from its market value. Assume your previous residence has a market value of $500,000 but the assessed value is $300,000. That means that the assessed value of your new home can be reduced by $200,000 for tax purposes due to portability – which can result in big real estate tax savings. The maximum amount that can be ported is $500,000. If you’ve sold a home and did not transfer your prior benefit, you have two years from the time of your sale. For more information on Save our Homes and portability, check with your local property appraiser.