NEW BUILDING MATERIALS THAT ARE REVOLUTIONIZING HOME CONSTRUCTION

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The real estate industry is constantly evolving, and with this ever-changing landscape comes innovation. This innovation appears in many forms, from advanced technologies to new ways of handling real estate transactions. One thing that has made a significant change in the housing industry is the increasing cost of building materials. Lumber costs have skyrocketed in recent years, halting construction on new housing and causing home prices to rise to new highs—especially with inventory at a historic low across the country.

Read: High Lumber Prices: Here’s What It Means for Homeowners and Homebuyers 

Another factor to consider when it comes to building materials is location. From destructive wildfires on the West Coast to devastating hurricanes on the East Coast and in the South, climate change is making a serious impact on housing. According to a special report by The Mortgage Bankers Association’s (MBA) Research Institute for Housing America (RIHA)—The Impact of Climate Change on Housing and Housing Finance—climate change will place increasing stress on housing, creating a need for adaptation strategies, such as incorporating building modifications into new construction and existing buildings, increasing the resiliency of communities through infrastructure improvements and standards.

These challenges have led to construction innovations that will begin to transform the new-home market. From concrete and cement to natural and recycled materials, these options can help scale down home building costs, reduce your carbon footprint and increase durability against natural disasters.

Bamboo

An environmentally friendly, renewable resource, bamboo has become a popular alternative for building homes. From durability to sustainability, this natural resource offers many qualities compared to more traditional materials.

Traditional lumber sources, such as maple and oak, can take up to 80 years to replenish. Bamboo, on the other hand, is the fastest growing plant on the planet, and can be harvested multiple times a year. In fact, according to Bamboo Living, every bamboo home that goes into production saves almost 10 acres of forest from destruction.

This material is also much stronger and sturdier than traditional woods, making it a great option for flooring. And even though it is strong, it is also flexible, which means builders can get creative with shapes and home designs that may have been limited with traditional materials. Bamboo also contains a natural bio-agent, bamboo kun, which makes this material resistant to pathogens and pests. Not only does this eliminate the risk for termites, but it also reduces the risk for rotting and losing strength over time.

Bamboo Living, a leader in providing artisan-quality bamboo homes and innovative, durable building products, has designed and manufactured over 400 homes around the world. From California to Florida, even all the way to India, their structures have proven to be resilient against the effects of changing climates and tough weather. Plus, it is not only eco-friendly, but budget-friendly, too.

Hempcrete

Sticking to the theme of eco-friendly and natural materials, hemp is taking big steps in the home building industry. As one of the oldest building materials, and with more and more states legalizing cannabis, hemp is becoming a more attainable alternative to traditional building materials and has many advantages.

The hemp plant has a very thick pulp, which can be used to create textiles, such as shoes and clothing, as well as building materials. Once fibers and seeds are removed from the plant, you are left with a woody stem, also known as a shiv. Hempcrete is made from combining this part of the plant with lime binder and water, creating what resembles a concrete block, without the weight. Industrial hemp can also be grown in many different climates and soils, giving builders across the country a sustainable alternative in a short period of time.

Hemp Block USA, the U.S.’s only provider of load bearing hempcrete blocks, share the many benefits of utilizing hempcrete as an alternative building material, including:

  • Mold resistant – Hempcrete regulates indoor humidity and air quality, which helps keep mildew and mold from growing.
  • Energy efficient thermal insulation – The value of hemp insulation can reduce energy costs up to 70% for both heating and cooling.
  • Termite-free – Termites and many other pests are not drawn to the hemp plant, reducing the chance of infestation and rotting.
  • Fire resistant – Hempcrete does not burn and has an excellent fire resistance rating, perfect for both walls and insulation.
  • Carbon negative – Finished hempcrete walls sequester more CO2 than they use during production.
  • Rendered finish – Hempcrete creates a finished rendered wall both inside and out.
  • Load bearing – Hempcrete is engineered for up to two stories.
  • Fast and easy assembly – Interlocking blocks can be stacked with minimal effort, saving 80% of traditional construction time.

Upcycled storage containers

Both environmentally friendly and cost-effective, this building option is becoming more popular amongst those looking to embrace unique home designs that ultimately meet their functionality needs and budget. Container homes have continued to gain momentum, and according to a study by Allied Market Research, the global market for this type of home is expected to reach more than $73 million by 2025.

Aside from being cost-effective, converting a shipping container into a home has additional benefits. Because they’re basic structure, they are very simple to construct, and augment. They are essentially a form of modular homes, offering the option to add and modify to your liking, and can even allow for container homeowners to easily relocate.

Shipping container homes are also extremely durable, made from Corten steel, which can withstand extreme weather conditions that traditional home materials may not, making these a great option for areas that suffer from hurricanes.

For the environment-friendly builders and buyers, there is nothing better than reusing and recycled materials. Steel is one of the most recycled materials in the world and using these containers as residences not only conserve resources, but offer a high-quality, affordable and sustainable solution.

Custom Container Living, a home construction company specializing in building homes from shipping containers, offers a step-by-step process for what you can expect, from start to finish construction, to financing, delivery and custom-build floor plans.

3D-printed concrete

A new technology has reached the home building industry, and it brings a new sustainable option to the forefront. Though concrete is a very common building material, it is now being used in new ways, making the building process more affordable while still utilizing existing materials.

The 3D printing process is primed to not only build houses faster and cheaper, but ultimately stronger and more long lasting compared to traditional materials, such as lumber. According to Habitat for Humanity, who have recently endorsed 3D printed homes, adding the use of concrete walls may save an estimated 15% per square foot in building costs, as it retains temperature in all climates, saving on heating and cooling costs, and is more resistant to hurricane and tornado damage.

3D printers have become more and more popular over the last 5 years, however, on this homebuilding scale, they are still new. In 2019, Statista projected that by 2025, the size of the global market, plus materials and any associated services will reach $49.1 billion, compared to $5.1 billion in 2015, a 700% increase.

Pilari, a technology driven developer of sustainable communities and modular homes, is re-imagining the future of home building with sustainability in mind, making an impact through reduction of waste and carbon emissions. In 2021, the company started development on the country’s first 3D-printed community in the desert city of Rancho Mirage, California, including 15 eco-friendly homes made from 3D-printed panels.

From climate change to increasing costs of lumber, traditional building materials could eventually take a backseat to these innovative and eco-friendly options.

Paige Brown is RISMedia’s content editor. Email her your real estate news ideas to pbrown@rismedia.com.

2021 Price Surges Yield Record-Level Profits for Home Sellers, Report Says

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It’s no secret that 2021 was a banner year for real estate sales, but a new report from ATTOM Data Solutions indicates that homeowners that were willing to sell last year reeled in a profit that hasn’t been seen in more than a decade.

ATTOM released its Year-End 2021 U.S. Home Sales Report on Jan. 27, which shows that home sellers realized a profit of $94,092 on the typical sale in 2021—up 45% from 2020 and up 71% from two years ago.

Based on median purchase and resale prices, experts said the profit increase marked the highest level in the United States since at least 2008.

Major takeaways

  • National median home prices rose 16.9% in 2021 to $301,000, causing profits to surge.
  • Profits margins rose in nearly 90% of the nation—150 of the 173 metro areas with sufficient data to analyze.
  • Homeownership tenure dipped to a nearly 10-year low of 6.14 years.
  • One of every three single-family house and condo sales in 2021 was an all-cash purchase—a six-year high.
  • Institutional investing accounted for one of every 14 single-family home and condo sales in 2021 in the U.S.—an eight-year high.
  • Federal Housing Administration sales hit their lowest levels in 14 years.
  •  

What this means

Frenzied market behavior filled headlines last year as pandemic-induced stimulus and historically low mortgage rates helped fuel demand for a finite number of homes for sale.

According to the report, a surge of buyers financially unscathed by the pandemic flooded the market throughout 2021. The intense competition for a tight supply of homes contributed to a price surge that proved to be a boon for sellers who were able to reel in nearly $95,000 in profit for their homes.

“What a year 2021 was for home sellers and the housing market all around the U.S.,” said Todd Teta, chief product officer at ATTOM, in a statement. “Prices went through the roof, kicking profits and profit margins up at a pace not seen for at least a decade. All that happened as the virus pandemic raged on, which actually helped drive the increases instead of stifling them. Households that escaped job losses from the pandemic dove into the market, in large part as a response to the crisis. And the rising demand led the market boom onward.”

While 2021 was a record-setting year for price gains and profit margins, ATTOM noted that there are signs that prices could flatten out in this year as declining affordability, lower investor profits, and rising foreclosure activity contributes to a market cooldown that began in the fall.

The report stated that that was layered over with rising inflation and likely increases in mortgage rates this year.

A silver lining is that the current imbalance in demand and supply suggests there is room for at least some additional price gains.

“No doubt, there are warning signs that the surge could slow down this year,” Teta said. “But 2021 will go down as one of the greatest years for sellers and one of the toughest for buyers.”

Jordan Grice is RISMedia’s associate online editor. Email him your real estate news ideas to jgrice@rismedia.com.

Millennial Demand Is Driving Prices Up in Neighborhoods With Kids

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With a record number of millennials set to reach key age milestones for homebuyers over the next two years, experts say this could push already accelerated price gains even further. This, according to a new report from Zillow that found home values are growing fastest in areas with the highest share of kids, reflects the impact millennial house hunters are making on family-friendly neighborhoods already experiencing a shortage of homes for sale.

According to the report, the top 10% of ZIP codes with the largest share of kids in each county analyzed saw an average of 21.3% growth from October 2020 to October 2021, compared to 17.6% in ZIP codes with the smallest share of kids. This trend started in 2013, which, not coincidentally, was the year the oldest millennials turned 32, the age when many new parents buy their first homes. That’s the median age of first-time home buyers and one year older than the median age of fathers with newborns, Zillow’s report stated.

“As millennials go, so goes the housing market, and we are seeing now, as millennials age, that they are looking for homes that fit the needs of growing families,” said Zillow economist Nicole Bachaud. “Millennial demand has helped push up home prices in areas with the most children. Competition for homes in these family-friendly areas should intensify in the coming years as more millennials reach the key age of 32, adding to the affordability squeeze.”

Zillow’s report analyzed 421 U.S. counties, representing 71% of the country’s population. ZIP codes with more residents under 18 years old are associated with higher home value growth in nearly two-thirds of the counties studied. Many of the counties where this relationship does not hold true are vacation destinations, where part-time residents have unconventional housing demands. Home value growth in these family-friendly areas began to outpace nearby ZIP codes in 2013, and the correlation between kids and home value growth has been nearly perfect for each year since 2017, according to the report.

That first wave of early-30s millennials had the benefit of discounted home prices because of the Great Recession; home values in these family-friendly ZIP codes were hit particularly hard between 2008 and 2011, during the nationwide housing crash. Today’s first-time home buyers are encountering a much different market, especially as home price growth has reached record highs during the pandemic.

Kristi Ramirez-Knowles, a REALTOR® and team leader for Your Home Sold Guaranteed Realty working in West Los Angeles, told RISMedia late last year that millennials are often forced to look at areas near or abutting these traditional family-friendly zip codes, because the most attractive markets have no homes within their budget.

“It’s pushed further,” she says. “Other places where it wasn’t very family friendly, now it’s starting to get very family friendly because they’re building brand new construction with everything built in—with the pool and the rec room, and that’s drawing to those areas. That’s attracting families even though the school district may not be that great. It’s the appeal of brand-new and something they can afford.”

That also seems to be the case on the other side of the country, as Virginia-based agent Kathryn Kramer with Howard Hanna, suggests that the Norfolk housing market has seen similar behavior.

“I think that this effect is compounded by two factors,” Kramer says. “Empty-nesters are more hesitant to move because of the pandemic, and we have fewer of those homes on the market. Also, more millennials are working from home which has allowed markets like ours to flourish because people who can now work remotely are moving to areas that have better schools and amenities and a lower cost of living.”

Kramer went on to say that some of the neighborhoods that are not traditionally thought of as first choices for families are going to start improving as people start getting priced out of other neighborhoods.

The snowball of millennials reaching peak age for first-time home buyers has grown during the past nine years and is about to turn into an avalanche, Zillow reported. Nearly 200,000 more Americans will turn 32 this year than did so in 2021―the biggest jump since the transition from Generation X to millennials in 2013—and even more will do so in 2023. This demographic reality should fuel even faster price growth in family-friendly ZIP codes over the next two years, making saving for a down payment even more challenging for first-time buyers.

This effect, the report states, is strongest in counties that encompass the cities of Norfolk, Virginia; Washington, D.C.; Portland, Oregon; Austin, Texas; and Seattle. Counties where this trend does not hold true include those encompassing Galveston, Texas; Santa Barbara, California; and Ocean City, New Jersey.

NATIONAL DELINQUENCY DROPS BELOW MARCH 2020 LEVEL

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Another good indicator of a strong economy, was revealed in CoreLogic’s monthly Loan Performance Insights Report for November 2021.

In November, 3.6% of all mortgages in the U.S. were in some stage of delinquency (30 days or more past due, including those in foreclosure), representing a 2.3-percentage point decrease compared to November 2020, when it was 5.9%. This suggests mortgage performance is following the nation’s income growth.

Key findings: 

  • Early-Stage Delinquencies(30 to 59 days past due): 1.2%, down from 1.4% in November 2020
  • Adverse Delinquency(60 to 89 days past due): 0.3%, down from 0.6% in November 2020
  • Serious Delinquency(90 days or more past due, including loans in foreclosure): 2%, down from 3.9% in November 2020 and a high of 4.3% in August 2020
  • Foreclosure Inventory Rate(the share of mortgages in some stage of the foreclosure process): 0.2%, down from 0.3% in November 2020. This remains the lowest foreclosure rate recorded since 1999
  • Transition Rate(the share of mortgages that transitioned from current to 30 days past due): 0.6%, down from 0.8% in November 2020

The takeaway:


In addition to low delinquency rates, foreclosure rates also remain at historic lows as borrowers have been able to quickly pile on equity during a year of record-breaking home price growth. These factors have helped offset some of the difficult economic impacts of the ongoing pandemic.

“Nonfarm employment rose 6.45 million during 2021, helping to rebuild income for families under financial stress during the pandemic,” said Dr. Frank Nothaft, chief economist at CoreLogic. “Income growth has helped to reduce past-due rates and home equity build-up has reduced the likelihood of a distressed sale for families that experience financial challenges.”

Regional highlights:

  • In November 2021, all states logged year over year declines in their overall delinquency rate. The states with the largest declines were: Nevada (down 3.8 percentage points); New Jersey (down 3.6 percentage points); Hawaii (down 3.5 percentage points); Florida (down 3.4 percentage points); and New York (down 3.2 percentage points).
  • All except one U.S. metropolitan area posted at least a small annual decrease in their overall delinquency rate. The one area with an annual increase in November 2021 was Houma-Thibodaux, Louisiana (up 0.4 percentage points). Houma was impacted by Hurricane Ida in the fall, but its November delinquency rate is an improvement from October as the area works to recover.

MORTGAGE RATES CONTINUE UPWARD MOMENTUM

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The 30-year fixed-rate mortgage (FRM) averaged 3.14% for the week ending Oct. 28, according to the latest Primary Mortgage Market Survey® (PMMS®) from Freddie Mac. Declining COVID cases and improved consumer confidence, however, are keeping purchase demand strong despite increasing rates.

Mortgage details:

– 30-year fixed-rate mortgage averaged 3.14% with an average 0.7 point for the week ending Oct. 28, 2021, up from last week when it averaged 3.09%. Last year, the 30-year FRM averaged 2.81%.

– 15-year fixed-rate mortgage averaged 2.37% with an average 0.7 point, up from last week when it averaged 2.33%. A year ago at this time, the 15-year FRM averaged 2.32%.

– 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 2.56% with an average 0.3 point, up from last week when it averaged 2.54%. Last year, the five-year ARM averaged 2.88%.

The takeaway:

“The yield on the 10-year Treasury note has been trending up due to the decline in new COVID cases, increasing consumer optimism, as well as broadening inflation and persistent shortages,” said Sam Khater, Freddie Mac’s chief economist, in a statement. “Mortgage rates are also rising, but purchase demand remains firm, showing that latent purchase demand exists among consumers.”

“Next week’s Federal Reserve FOMC meeting to decide on the next monetary steps will offer more clarity to financial markets about the road ahead. With the Fed expected to announce a tapering of its asset purchases in light of stronger employment and higher inflation, I expect rates to continue rising,” said realtor.com® Manager of Economic Research, George Ratiu, in a statement.

“Real estate markets are showing signs of a new equilibrium, marked by a steady pace of transactions, and more moderate price growth. As more homeowners list their houses for sale, these homes are spending more time on the market. A good number of cities that were fraught with bidding wars earlier this year are finding a calmer housing landscape, where price reductions are bringing sky-high asking prices back down to earth,” added Ratiu. “While the market remains brisk, there are fewer competing offers, and contingencies have returned, both clear signs of a healthier housing market. For buyers, approachable mortgage rates and less competition mean good opportunities to find the right home. Even so, at today’s rate, buyers of a median-priced home will pay an extra $142 toward their mortgage payment compared with a year ago.”

By RISMedia Staff

MARKET COOLS IN SEPTEMBER AS PENDING HOME SALES DIP

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Despite a late summer rebound, pending home sales dipped again in September, according to the newest report from the National Association of REALTORS® (NAR).

NAR’s Pending Home Sales Index (PHSI), a forward-looking indicator of home sales based on contract signings, declined by 2.3% last month, dropping to 116.7. 

All regions saw year-over-year contract signings fall last month, declining 8.0% nationally. The northeast decline was the most significant, with another double-digit drop in contract signings.

Lagging inventory was a primary factor in potential buyers momentarily pausing their home searches in September. Despite the lull in contract signings, experts predict that the buying activity will resume in 2022 as the supply of homes for sale improves. 

Home sales have risen by 6.4% in 2021 based on NAR’s data from the year. Looking ahead, the association expects sales activity to decline by 1.7% in 2022 under rising mortgage rates in the new year. 

https://www.rismedia.com/wp-content/uploads/2021/10/NAR_PHS-SEPT2021.png

Regional Breakdown:

Northeast
-3.2% MoM — Now 93.1 PHSI
-18.5% YoY 

Midwest
-3.5% MoM — 111.4 PHSI
-5.8% YoY 

South
-1.8% MoM — 139.1 PHSI
-5.8% YoY  

West
 
-1.4% MoM — 105.3 PHSI
-7.2% YoY

What the Industry Is Saying:

“Contract transactions slowed a bit in September and are showing signs of a calmer home price trend, as the market is running comfortably ahead of pre-pandemic activity. It’s worth noting that there will be less inventory until the end of the year compared to the summer months, which happens nearly every year.

“Rents have been mounting solidly of late, with falling rental vacancy rates. This could lead to more renters seeking homeownership in order to avoid the rising inflation, so an increase in inventory will be welcomed.”— Lawrence Yun, NAR Chief Economist

“Although home sales activity has retreated from its earlier highs, it is stabilizing at a level of activity that is above pre-pandemic pace thanks to a combination of eager young buyers, lingering pandemic savings, and low mortgage rates creating opportunity despite ongoing home price gains.

“Whether the housing market will maintain this plateau and begin to grow again or slide back is dependent on home construction and income growth. Rising home prices will be the norm as long as demand exceeds supply, and with a 5.2 million cumulative home shortage over the last decade and many millennials entering prime home-buying age, the stage is set for that imbalance to continue. If builders continue to ramp up production, as they have, that could help stem price growth to a pace more consistent with rising incomes. 

“Alternatively, as rising home prices are paired with rising mortgage rates, which have already jumped above 3%, we could see mortgage payments that require larger shares of buyer paychecks, especially if incomes grow more slowly. This could cause some buyers to opt out, dampening demand and ultimately causing sales activity and home price growth to slow.” — Danielle Hale, Chief Economist at realtor.com®

For more information, please visit www.nar.realtor

Jordan Grice is RISMedia’s associate online editor. Email him your real estate news ideas to jgrice@rismedia.com.

MORTGAGE APPLICATIONS UP BUT REFINANCE INTEREST WANING

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Mortgage applications increased 0.3% from one week earlier for the week ending Oct. 22, 2021. According to the latest data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey, the Market Composite Index, a measure of mortgage loan application volume, increased 0.3% on a seasonally adjusted basis from the previous week.

The details:
– Unadjusted, the Index increased 0.2%compared with the previous week.
– The Refinance Index decreased 2% from the previous week—26% lower YoY.
– The seasonally adjusted Purchase Index increased 4% from one week earlier.
– The unadjusted Purchase Index increased 3% from the previous week—9% lower YoY.
– The refinance share of mortgage activity decreased to 62.2% of total.
– The adjustable-rate mortgage (ARM) share of activity decreased to 3.1%.
– The FHA share of total applications increased to 10.4%.
– The VA share of total applications increased to 10.6%.
– The USDA share of total applications remained unchanged from 0.5 percent the week prior.

The takeaway:

“Mortgage rates increased again last week, as the 30-year fixed rate reached 3.30% and the 15-year fixed rate rose to 2.59%—the highest for both in eight months. The increase in rates triggered the fifth straight decrease in refinance activity to the slowest weekly pace since January 2020. Higher rates continue to reduce borrowers’ incentive to refinance,” said Joel Kan, MBA’s associate vice president of Economic and Industry Forecasting, in a statement.

“Purchase applications picked up slightly, and the average loan size rose to its highest level in three weeks, as growth in the higher price segments continues to dominate purchase activity,” added Kan. “Both new and existing-home sales last month were at their strongest sales pace since early 2021, but first-time homebuyers are accounting for a declining share of activity. Home prices are still growing at a rapid clip, even if monthly growth rates are showing signs of moderation, and this is constraining sales in many markets, and particularly for first-timers.”

By RISMedia Staff

YEAR-END OUTLOOK: PRICE GROWTH TO COOL AS AFFORDABILITY CHALLENGES PERSIST

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Depending on whom you ask, the past year of home price gains may have been a boon or a bust. Home prices rose by nearly 20% over the past year under a perfect storm of a widening supply and demand gap in addition to pandemic-induced influences.

On the one hand, sellers have benefited from heated competition that drove property value through the roof during the second half of 2021. On the other, surging price tags have continued to exacerbate long standing affordability issues, with more people being priced out of the market.

Housing affordability dipped in 2021 as tight inventory and high demand contributed to record-setting price surges, according to Gay Cororaton, senior economist and director of Housing and Commercial Research at the National Association of REALTORS® (NAR).

“Even before the pandemic, we had a tight supply because of lack of labor, and then when the pandemic hit, people didn’t seem too interested in listing their homes,” she says.

When the COVID-19 pandemic first appeared in March 2020, many people anticipated the housing market’s demise, says Matthew Gardner, chief economist at Seattle-based Windermere Real Estate.

“What we found was that demand not only came back, but it came back in an even more robust manner than had been seen before the pandemic hit,” Gardner says. “That was boosted even more by the work-from-home paradigm.”

The success and uncanny market behavior resulted from a series of factors, including razor-thin supply and mortgage rates, which began declining in January 2020 and ultimately landed at historically low levels—2.68%—by December of that year.

With a month left in 2021, real estate experts tell RISMedia that they expect home prices to continue climbing in 2022, albeit at a slower pace than 2021.

The days of double-digit price appreciation are gone, according to Gardner who suggests price gains to hit just above 7% in 2022.

“That is certainly not a number to be sniffed at,” Gardner says, adding that the growth will still be above the long-term average but will “come off of the sugar high that we saw this year.”

“We are going to see headwinds relative to price growth, but it’s going to be predominantly a function of two things: wages not keeping up affordability and mortgage rates rising,” Gardner warns.

In previous conversations with RISMedia, Gardner said he expected 30-year fixed mortgage rates to approach but not break 4% next year. While he maintains those predictions, he notes that it will still be up by an entire percentage point from the lows in 2021, which will squeeze more buyers out of the market.

Another factor likely to add to the cooldown in price gains is the addition of new supply. Cororaton suggests that new construction is poised to improve next year.

Despite expected improvements in new construction, Cororaton says there is still a long way to go before the industry makes a substantial dent in the market’s 5.8 million housing unit needs.

“We’re just estimating an increase of 100,000 housing starts right now, so supply will continue to remain tight as it has been since 2012,” she says.

Brokers and industry leaders say they are keeping a close eye on how many homes come on the market next year, especially as seller confidence picks up under continued progress in vaccinations.

“There are likely many that sat on the sidelines in 2021 because of the pandemic,” says Sherry Chris, president and CEO of Realogy Expansion Brands.

Chris suggests that the increase in supply and rising mortgage rates could influence the number of potential buyers. “Should this occur, we might see a decrease in multiple-bid offers, and prices might stabilize,” says Chris.

Another factor that could inject additional homes into the market is increasing foreclosure activity, says Ashley Bowers, president of HomeSmart International.

“If we start to see more foreclosures, I think it will slow down the price increase and probably shake up affordability too for people who want to do more of the fixer-uppers,” Bowers says.

The market hasn’t had to wait long to see foreclosure activity pick up since the moratorium lifted in July 2021.

While experts and brokers have been unconvinced that the market will see a deluge of foreclosed homes on the market, Bowers notes that a sizable increase could slow price gains a bit further.

“We’ve seen a little bit of an increase already, but I think it depends quite honestly on the administration and what happens with decisions that they are making as it relates to moratoriums and things like that,” she says.

Christina Pappas, VP of the Keyes Company, thinks brokers and agents looking to meet the coming market conditions head-on should prioritize their client-facing messaging regarding home-buying and affordability challenges.

“The misconception of the expensiveness of the down payment is one of those topics where we think about how we help our agents become valuable to the consumers,” Pappas says.

She adds that the value will come from agents showing deep knowledge and understanding of the programs offered in their neighborhood and what is affordable.

“The other catch when you look at affordability is that many people look at prices, and those are great headlines, but what matters is my monthly payment, and that’s the story that we need to talk about,” Pappas continues.

Despite the current trajectory of mortgage rates, they are still relatively low when compared with pre-pandemic levels. Pappas indicates that millennials and first-time homebuyers will still try to take advantage of the lower rates next year.

Jordan Grice is RISMedia’s associate online editor. Email him your real estate news ideas to jgrice@rismedia.com.

Tags: Ashley BowersChristina PappasFeature

Editor’s Note: RISMedia’s Year-End Outlook series provides an in-depth analysis of the housing market’s leading indicators for economic health, and showcases expert insights on what’s to come in 2022. 

Mortgage Applications Up But Refinance Interest Waning

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Mortgage applications increased 0.3% from one week earlier for the week ending Oct. 22, 2021. According to the latest data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey, the Market Composite Index, a measure of mortgage loan application volume, increased 0.3% on a seasonally adjusted basis from the previous week.

The details:
– Unadjusted, the Index increased 0.2%compared with the previous week.
– The Refinance Index decreased 2% from the previous week—26% lower YoY.
– The seasonally adjusted Purchase Index increased 4% from one week earlier.
– The unadjusted Purchase Index increased 3% from the previous week—9% lower YoY.
– The refinance share of mortgage activity decreased to 62.2% of total.
– The adjustable-rate mortgage (ARM) share of activity decreased to 3.1%.
– The FHA share of total applications increased to 10.4%.
– The VA share of total applications increased to 10.6%.
– The USDA share of total applications remained unchanged from 0.5 percent the week prior.

The takeaway:

“Mortgage rates increased again last week, as the 30-year fixed rate reached 3.30% and the 15-year fixed rate rose to 2.59%—the highest for both in eight months. The increase in rates triggered the fifth straight decrease in refinance activity to the slowest weekly pace since January 2020. Higher rates continue to reduce borrowers’ incentive to refinance,” said Joel Kan, MBA’s associate vice president of Economic and Industry Forecasting, in a statement.

“Purchase applications picked up slightly, and the average loan size rose to its highest level in three weeks, as growth in the higher price segments continues to dominate purchase activity,” added Kan. “Both new and existing-home sales last month were at their strongest sales pace since early 2021, but first-time homebuyers are accounting for a declining share of activity. Home prices are still growing at a rapid clip, even if monthly growth rates are showing signs of moderation, and this is constraining sales in many markets, and particularly for first-timers.”

By RISMedia Staff

U.S. HOME PRICES IN AUGUST WERE UP 1%

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Nationwide, home prices increased in August by 1% compared to July. According the latest Federal Housing Finance Agency House Price Index (FHFA HPI®), year-over-year, home prices increased 18.5%.

“Annual house price gains remained extremely high in August but the pace of month-over-month gains continues to decelerate,” said Dr. Lynn Fisher, FHFA’s deputy director of the Division of Research and Statistics, in a statement. “This does not mean house prices are at risk of declining—far from it, they continue to climb at a double-digit pace in all regions—but it does suggest we may have seen the peak in annual gains for the time being.”

For the nine census divisions, seasonally adjusted monthly house price changes ranged from -0.1% in the New England division to +1.9% in the South Atlantic division. On a yearly basis, changes ranged from +14.9%in the West North Central division to +25.8% in the Mountain division.

According to FHFA, their HPI is the nation’s only collection of public, freely available house price indexes that measure changes in single-family home values based on data from all 50 states and over 400 American cities that extend back to the mid-1970s. The FHFA HPI incorporates tens of millions of home sales and offers insights about house price fluctuations at the national, census division, state, metro area, county, ZIP code, and census tract levels.

By RISMedia Staff

October 27, 2021