Mortgage Applications Dip Once Again

Bob Vaughan

Mortgage application volume once again experienced a dip, falling 0.9% last week. In a week marked by a slight rise in mortgage rates, refinance application volume remained unaffected, while purchase applications saw a minor fall. This marks the second straight week of decreases in purchase mortgage application volume. The lack of inventory remains a problem with purchase mortgages as the amount of people applying is outweighing the amount of homes available discouraging prospective buyers.

 

  • The FHA’s share of mortgage applications decreased to 10.1% from 10.7%.
  • The VA share of mortgage applications decreased from 12.2% to 11.9%.

Things to Consider When Buying a Second Home

Bob Vaughan

As more and more people begin buying second homes in eventual retirement destinations, there are a few things you should consider to make this decision as easy as possible. 

  1. Find the best location: Does the location of your eventual retirement residence coincide with your lifestyle? Do you enjoy activities the area provides?
  2. Know what is most important to you: Is it close to family? Is it near airports/trains for easy travel? What factors matter the most to you?
  3. Consider medical care facilities: Is it near hospitals, doctors, and specialists?
  4. Does the home meet current and future needs: Will you want stairs when you’re retired? Is the house too large to keep clean by yourself?
  5. Think about rental income the property can bring: Can you rent in this neighborhood?
  6. Do the seasons change drastically: Make sure you want to live in this area year round. Weather that becomes drastic during specific seasons may be a deterring factor.

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.

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.

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 Applications on the Rise Again

Bob Vaughan

Last week mortgage application volume jumped 8.15% from the week prior. The previous two weeks application volume saw decreases after starting the year strong. Refinance volume was the highest, up 11% from the previous week, reaching the highest level since March 2020. This level of refinance activity was 59% higher than this time last year.

 

  • The FHA share of mortgage application volume went down to 9.1% from 9.4% the previous week.
  • The VA share of mortgage application volume went down also, dropping from 12.4% to 12.1% this week.