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Jumbo Home Loans Near Pre-2008 Crisis Levels

Fewer buyers qualify for conventional mortgages due to higher prices and lower downpayments. As a result, the number of jumbo loans is at pre-Great-Recession levels.

NEW YORK – Bank of America (BofA) researchers reported that originations of “jumbo” U.S. residential mortgage loans surpassing “conforming limits” set for Freddie Mac and Fannie Mae could total $550 billion this year, a level not seen since the run-up to the 2008 financial crisis.

Jumbo originations reached about $283 billion in the first half of 2021, putting the annual volume close to a post-crisis record. However, several public mortgage lenders recently said they would offer borrowers confirming loans of up to $625,000, a level expected to match new federal guidelines for 2022.

Bank of America said jumbo mortgage-bond issuance in 2021 has already reached a post-2008 record of $38 billion, with $45 billion likely by year’s end. The firm cited an expanded investor base for private-label mortgage bonds, as well as low credit losses and “strong” origination guidelines.

Credit in the U.S. housing market is on the rise yet remains relatively tight in the years since millions of homes wound up in foreclosure. Qualified borrowers recently could obtain rates of less than 3% on 30-year fixed home loans, a boon for many first-time home buyers.

Wall Street generally expects the Federal Reserve to detail its plan in November for tapering its $120 billion in monthly emergency purchases of Treasury and agency mortgage-backed securities as the U.S. economy bounces back. Tapering could also push mortgage rates higher.

Source: MarketWatch (10/11/21) Wiltermuth, Joy

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Can’t Afford a Home? Co-buying Skyrockets

More roommates are committing to long-term relationships and co-buying a home. ATTOM says the number of co-buyers with different last names surged 771% in six years.

SAN FRANCISCO – Millennials are pooling finances with roommates, friends and significant others to buy a home together.

The number of home and condo sales by co-buyers is increasing, according to research from ATTOM Data Solutions. The number of co-buyers with different last names surged by a whopping 771% between 2014 and 2021.

The trend especially took off during the pandemic. From April to June 2020, 11% of buyers purchased as an unmarried couple and 3% as “other” (e.g., roommates), according to data from the National Association of Realtors® (NAR). That’s up from 9% and 2%, respectively, in 2019.

“During the pandemic, people have been renting and they may have wanted more space, and so they looked at, perhaps, their roommate and decided, ‘Let’s go buy a home together,” Jessica Lautz, vice president of demographics and behavioral insights for NAR, told The Wall Street Journal.

But affording a home isn’t easy for a first-time buyer. The median existing-home price for all housing types was $356,700 in August, up nearly 15% from a year earlier.

Besides the higher costs to buy, student loan debt increasingly burdens young adults, hampering their ability to afford a home. Half of the potential homebuyers surveyed this year say they haven’t bought yet because of student debt, according to a report by NAR and Morning Consult. Millennials are the most likely to point to student debt as a top reason for delaying homeownership.

Those with student loan debt are still finding ways to buy, though. In addition to co-buying, for example, they may apply for a mortgage with a co-signer such as a family member to help improve their credit status.

Source: “Millennials Team Up to Fulfill the Dream of Homeownership,” The Wall Street Journal (Oct. 11, 2021) [Log-in required.]

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Buyer, 84, Fatally Shoots Agent Over Home Dispute

A Va. homebuyer bought a home sight unseen and wanted to “return the house.” He killed his real estate agent who went over to talk about it and, later, himself.

PORTSMOUTH, Va. – Real estate professionals are on edge and in shock in Portsmouth, Va., where a real estate agent in the community was shot and killed by his homebuyer client.

Albert Baglione, 84, had just moved into his new home in Portsmouth, which he purchased sight unseen from Alabama. He moved in last Thursday. The next day, Baglione called his real estate agent asking to “return the house,” a neighbor told local WTKR-News 3.

Soren Arn-Oelschlegel, 41, a real estate professional with Long & Foster in Suffolk, Va., arrived at the house to talk with the man about his concerns. The conversation turned deadly.

Police were later called to the home, where police say that Baglione admitted to them that he killed Arn-Oelschlegel.

After Baglione spoke to police from his doorstep, he quickly shut the door to his home and then a gunshot rang out. Baglione took his own life, according to police reports. Police later found Arn-Oelschlegel inside the home with a fatal gunshot wound.

Colleagues and friends remembered Arn-Oelschlegel as a Realtor® immersed in his community, and a member of the LGBTQ nonprofit Hampton Roads Pride for more than a decade.

“He always had tons of energy,” Rudy Almanazor, president of Hampton Roads Pride, told WTKR-News 3. “I never saw him not smiling, laughing and wanting to have fun. He worked hard, played hard.”

The Outer Banks Association of Realtors® posted the following message on its site: “It really gives you pause when a tragedy happens so close to home. The shocking news of a 41-year-old Realtor being shot and killed by his buyer is unreal.”

Source: “New Details Released in Death of Hampton Roads REALTOR® Killed in Murder-Suicide,” WTKR.com (Oct. 11, 2021) and “REALTOR® Shot and Killed in Portsmouth,” The Outer Banks Voice (Oct. 11, 2021)

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Lawmakers Consider Changes to Fla. Law After Surfside Tragedy

How can the state mitigate condo disasters following the tragedy in Surfside? A Fla. Bar task force pulled together experts and submitted its recommendations on Tues. In Sept., Realtors outlined the problems condo buyers face getting important docs, suggesting better records and tighter oversight.

TALLAHASSEE, Fla. – In the aftermath of the collapse of Champlain Towers South in Surfside, Florida, state lawmakers and other stakeholders looked closely at existing laws and asked what could be done to avert a similar tragedy going forward. The building collapse killed 98 residents on June 24, 2021.

In response, the Florida Bar created the Condominium Law and Policy Life Safety Advisory Task Force, a task force that interviewed or heard from experts in various fields. The task force submitted its report to Gov. Ron DeSantis and the Florida Legislature on Tuesday.

While the governor and lawmakers say they need time to study the report, it’s expected to spark a discussion and possibly lead to changes in Florida condo law during the 2022 session of the Florida Legislature.

The Florida Bar Condominium Law and Policy Life Safety Advisory Task Force report includes a number of recommendations for condominium developments in Florida, including:

  • Require timely maintenance and repair
  • Empower condo boards to impose assessments on owners
  • Empower condo boards to borrow money to pay for repairs
  • Mandate engineer or architect reports on each building’s common elements
  • Require those common-element reports to be updated every five years
  • Boost requirements for cash reserves

According to task force chair and Florida attorney Bill Sklar, the recommendation to boost cash reserves is likely one of the most controversial proposals.

Realtors note problems faced by condo buyers

Speaking before a Sept. 8 meeting of the task force, Florida Realtors® members pointed out problems faced by many condominium buyers – problems that also reflect on difficulties current condo owners face. They called for greater transparency in condo sales.

“There were 20 new sales and eight rentals preceding Champlain,” said Keith Wood, director of ERA American Real Estate Sales and Rentals, according to Florida Bar News. “Would this have occurred if the whole picture had been presented? Maybe. Maybe not.”

Wood said Florida condo buyers can’t easily obtain inspection reports to help potential buyers understand a building’s condition. “Prospective owners don’t know the right questions to ask,” he said. “The transparency side is fundamentally unfair, and in no one’s best interest.”

According to Wesley Ulloa, broker and founder of South Florida’s Luxe Properties, it’s not just records that are difficult to obtain. She told the task force that she sometimes has difficulty even identifying board members – and once she does identify board members and obtain records, the minutes don’t clearly state whether a vote was taken to waive the requirement that an association maintain adequate reserves.

“We would like that information upfront, and in an easily accessible manner,” she said at the meeting. “We believe it’s a best practice that reserves should not be waived.”

Ulloa cited an example in Florida Bar News: She said a professional condo management company recently produced maintenance and other records for her buyer just two days before closing – records that she requested weeks earlier.

“That is too late for a potential purchaser to make a decision,” she said. “We are putting a buyer’s back up against the wall to decide whether they want to purchase it or not.”

Danielle Blake, chief of public policy for the Miami Association of Realtors, focused on mandatory 40-year inspection reports required by some South Florida metros. “When buyers are asking, when members are asking, where do I get that report, I don’t know where to tell them to go,” she said.

Florida has over 900,000 condominiums that are at least 30 years old, and proposed changes could impact about two million residents. Roberto Balbis, principal engineer for Ardaman & Associates Inc., told the task force that 40-year inspection requirements aren’t mandated statewide, noting that Gulf of Mexico salt spray is just as corrosive as Atlantic Ocean salt spray.

“I don’t see why that certification shouldn’t apply to Tampa or Clearwater,” Balbis told the task force in September. “Forty years seems like a long time.”

Source: Wall Street Journal, Oct. 12, 2021; Florida Bar News, Sept. 10, 2021

© 2021 Florida Realtors®

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Commercial Investors Worry About Possible 1031 Exchange Rules

WASHINGTON – One proposal in President Joe Biden’s $1.8 trillion American Families Plan has been drawing close attention from concerned commercial real estate investors. It would place a $500,000 limit on 1031 exchanges, which allow investors to defer paying tax on real estate gains if they reinvest the proceeds to buy other property within six months of the sale.

The bill would limit gains to $500,000 for each taxpayer ($1 million for married taxpayers filing a joint return) each year for real property exchanges that are like-kind. Any gains from like-kind exchanges in excess of these limits would be recognized by the taxpayer in the year of the exchange. The tax break has been in the U.S. tax code since 1921.

Putting a limit on 1031 exchanges “would absolutely slow down the movement of capital in the industry,” said Keith Sturm, a principal with Minneapolis-based Upland Real Estate Group.

A proposed increase in the capital gains tax from 20% to 39.6% would also reduce returns for real estate investors.

“Most commercial real estate transactions are pretty high-dollar amounts, $1.5 million-plus. People don’t like paying 40 to 50% in taxes on the value of properties. So instead of selling and losing half of their value they just might decide to hold onto the property,” Sturm said.

According to a study supported by accounting firm Ernst & Young, eliminating 1031 exchanges would negatively impact the economy by up to $13.1 billion annually. One analysis (backed by research from Ernst & Young) found that a repeal of 1031 exchanges would likely result in less federal tax revenue.

In a statement, the National Association of Realtors pointed out that 1031 exchanges are used primarily by retirees, investors and landlords, not by the super-rich.

To qualify for tax-free deferral of a gain, the law also requires that before an investor closes on the sale of property to be used for a 1031 exchange, they enter into a contract with a qualified intermediary who will receive (temporarily) the sale proceeds similar to escrow. The intermediary holds the funds until the new property is purchased, said Brad Williams, a real estate attorney and partner with the Dorsey & Whitney law firm in Minneapolis.

Williams said so-called “reverse exchanges” in which a replacement property is identified and purchased first, have become more common than in the past. That’s driven by the intense competition among buyers for suitable properties, in a “hot” market.

In some cases, the tax deferral enables 1031 property buyers to pay higher prices for more desirable properties, or put money into necessary improvements, Williams pointed out.

1031 exchanges are not always relatively simple deals of exchanging one property for another, Williams said. With new developments funded by multiple sources of 1031 capital, “some of those deals can get pretty exotic.”

Bill Katter, president and chief investment officer of United Properties Development, pointed out that tax deferrals for like-kind exchanges are not unique to real estate, but are also available in every other asset class, including stocks. Historically the exchanges have been heavily favored by investors to defer gains. Exchanges “have fueled liquidity in our business, particularly for long-term, net-lease property; for example, a Starbucks location with a 10-year lease,” Katter said.

The 1031 exchange has often been used by farmers who sell their land for single-family home development. The 1031s are usually focused on predictable income, as opposed to high-risk acquisitions, such as an office building which relies on a few tenants to generate income. “Single-tenant retail and multifamily housing properties are good candidates for 1031 buyers,” Katter said.

United Properties has developed a number of 7-Eleven retail outlets in Colorado, “and most of our buyers have been selling raw property or farmland.”

Farmers are allowed a “green acre” tax deferment when they sell land if it will continue to be used for agriculture. Otherwise, 1031 exchanges are the only way to avoid a big tax bill on such transactions, Katter said.

How likely is the prospect that 1031 exchange gains will be capped?

“There are differing opinions on that in the industry,” Katter said. “The consensus is that it is not likely to go away.” But the odds are not zero. He said real estate investors considering a 1031 exchange should stay well-informed on the applicable tax law discussions taking place in Washington.

Mox Gunderson, senior director of capital markets with the Minneapolis office of Jones Lang Lasalle, said he has recently observed “an increase in velocity” in 1031 transactions, possibly attributable to the possible change in the law. About half of the transactions his office handles as an intermediary broker are 1031 exchanges, many in the currently robust market for industrial properties. He also believes it is unlikely the proposed cap will become law, considering the positive impact the availability of 1031’s has on the economy.

“Any potential changes in the 1031 rules are certainly a concern to sellers,” said Sturm. “If the 1031 went away it would totally change the dynamics of real estate investment.”

One transaction typically triggers multiple transactions, he noted. “It might start with someone selling an apartment building in California. That person might do an exchange and buy a Walgreens in Minneapolis. The guy who sold that Walgreens might buy a Chick-fil-A [restaurant] in Tennessee. Eventually, somebody pays the taxes,” including state and local transfer taxes generated from each of the transactions.

Service providers involved in these transactions might include title companies, 1031 exchange companies, environmental companies, real estate brokers, lenders and attorneys. All of these service providers are paying income tax for the revenue generated, Sturm pointed out.

The 1031 exchanges also have the effect of promoting the “highest and best use” of ag property, for example a vacant property that is transformed into multifamily housing.

The time constraints placed on 1031 exchanges have a positive impact by inducing sellers to make decisions and complete new acquisitions within the time limit. Without exchanges, “I would expect velocity to slow tremendously.”

Also, without an exchange, a certain property may not be salable, where taxes would be higher than proceeds would be from a sale, Sturm said. “That happens quite a bit with farmland.”

Sturm believes the proposed cap originated with people who don’t understand how the 1031 process works. “Once people understand the process and what it is doing [for the economy], very few people would want to have it eliminated.”

Copyright © 2021 BridgeTower Media. All rights reserved; © Copyright, 2021, Finance & Commerce (Minneapolis, MN)

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Fortify Finances Against Natural Disaster

It’s not enough to pack survival tools and photos when evacuating before a disaster. Pack cash too – or at least have credit that can help you cover the first few days.

MIAMI – Emergency preparedness experts recommend that you have a “go bag” and a “stay bin” for disasters: kits with supplies to help you survive a few days if you have to evacuate your home or shelter in place.

Preparing your finances for natural disasters is also smart. Having cash on hand, access to credit and the right insurance coverage can help you get through perilous times. Fortifying your home against disasters also can be a good investment.

Not everyone can make these preparations, of course. People with the fewest resources often suffer the brunt of disasters. But anything you can do to bolster your situation now could help you limit the toll.

Stash some cash

Having cash on hand could help you pay for groceries, gas, shelter and other necessities if ATMs and payment systems aren’t functioning, which could happen if the power goes out or cyberattacks knock systems offline.

You may need more than you think, especially if you’re away from your home for more than a few days. Insurance consumer advocate Amy Bach recommends keeping at least $2,000 in a safe place somewhere in your home. After a widespread disaster, there is often “incredible competition” for rentals and other lodging, and a cash deposit could help you secure a place to stay, says Bach, executive director of the nonprofit United Policyholders.

The currency should be in addition to any emergency savings you have at the bank. Again, anything is better than nothing. While financial planners typically recommend an emergency fund equal to three to six months of expenses, even a couple hundred dollars can help you cope.

Get some credit

Your insurance may have high deductibles or other limitations on your coverage that require you to pay thousands or even tens of thousands of dollars out of pocket. Earthquake and hurricane policies, for example, often have deductibles of 10% or more of the insured value. Insurers also may limit how much they pay for upgrades needed to meet current building codes or for replacing older roofs, Bach says.

A home equity line of credit can give you access to a relatively inexpensive source of money in an emergency. You’ll need to set this up long before disaster strikes, since lenders won’t let you borrow against a damaged home. Resist the urge to tap this credit for other purposes, so that the money is available when you need it.

An alternative if you’re a renter or otherwise can’t qualify for a HELOC is to ask your bank for a personal line of credit. Credit cards can also help pay the bills if there’s enough available credit. Once you have $500 or so set aside for emergencies, consider paying down your credit cards and aim to use no more than 30% of your credit limits. Using even less of your credit limits would be even better, because it frees up more space on your cards and also helps to build or maintain your credit scores.

Try to cover the big risks

Check your home’s susceptibility to various disasters at freehomerisk.com, a database created by HazardHub, which supplies risk data to insurance companies. Each hazard your property might face is graded from A to F. The lower the grade, the more you should consider ways to mitigate the risk if you can, says HazardHub co-founder Bob Frady.

That could mean buying additional coverage. A typical homeowners or renters policy doesn’t cover damage from floods or earthquakes, for example, but such coverage can be purchased separately.

Review your policy to see what’s covered and what’s not. Make sure you have replacement coverage for your possessions rather than actual cash value coverage, which pays considerably less. You’ll also want at least 24 months of loss-of-use coverage, which pays for your living expenses while your home is rebuilt, Bach says. Widespread disasters can cause even longer rebuilding times.

“It usually takes at least two years to rebuild after a wildfire,” she says.

Protect your property if you can

There’s no way to make your home entirely disaster-proof, but there are ways to “harden it” to reduce potential losses, Frady says.

Frady helped start HazardHub after a friend’s home suffered significant uninsured damage when a nearby river overflowed its banks. The friend didn’t realize she lived next to a flood zone because she wasn’t required by her mortgage lender to buy flood insurance, Frady says. If she’d known, she could have purchased the insurance and taken steps to protect her property, such as regularly changing the batteries in her sump pump, which failed, and keeping valuable items out of the basement or other low points in the house.

Installing storm shutters may reduce losses to hurricanes and tornadoes, while bolting your house to its foundation can help it survive an earthquake.

“There’s power in knowing what the perils are, and that can lead you to create a safer location,” Frady says.

Liz Weston is a columnist at NerdWallet, a certified financial planner and author of “Your Credit Score.”

Copyright 2021 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission. This column was provided to The Associated Press by the personal finance website NerdWallet.

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S. Fla. Condo Sales Unfazed by Surfside Condo Collapse

After the 12-story Surfside condo complex collapsed, experts wondered if condo demand would decline – but 3Q Miami-Dade condo sales were the highest in years, with luxury units selling at a record pace. Any stigma seems isolated to older inventory and buildings close to the Surfside tragedy.

MIAMI – The deadly collapse of a 12-story condo tower in Surfside left urgent questions about the safety of similar buildings – and also the future of South Florida’s condo market, especially in older buildings.

New data shows the market only heated up, with record sales and price growth across South Florida in the third quarter of this year, according to a preliminary report on the impact of the collapse on the condo market by Analytics, a Miami-based real estate research firm.

Sales for condos in Miami-Dade County in the third quarter of 2021 were the highest in years, with 6,259 units sold. The priciest units – those over $1 million – also sold at a record pace, with 663 closing in the third quarter, a 228% increase from pre-COVID levels in 2019, data shows.

The boom continued elsewhere in South Florida, too.

“The flow of capital to South Florida shows absolutely no sign of abatement,” said Ana Bozovic, founder of the firm. The company expects to release a full report on the aftermath of the collapse of the Champlain Towers South and its effect on the condo market later this week.

The numbers are the highest for a third quarter in years, the data shows. There were slight dips heading into the third quarter, but that trend happens each year because the second quarter always has the highest sales volume of the year, Bozovic said.

On the ground, agents are seeing record numbers of buyers flocking to South Florida condos. Preconstruction sales are up along with sales of existing condos and their selling prices, said Sepehr Niakan, broker and owner of Blackbook Properties in Miami.

The 40-year-old Champlain Towers South collapsed in the early morning on June 24, after numerous engineering reports had warned of concrete deterioration and $9 million in needed repairs. At the time, some experts warned that older condos could see declining sales as prospective buyers got skittish about maintenance costs and safety.

“If there were to be any negative market effects, they would be isolated to older inventory and to inventory immediately around the site of Champlain Towers,” Bozovic said.

The condo-heavy area surrounding the collapse site did see a drop in sales, falling to pre-COVID levels in the months that followed the tragedy, data shows. The Surfside area is a smaller market, and usually sees about 100 transactions a year, noted Bozovic. The third quarter saw 16 condos sold, down from about 50 in the second quarter and a little under 60 sales in the first quarter of 2021.

It’s something Realtor Vivian Fernandez with Ocean Yes Realty in Miami has seen play out with some of her clients. Her business slowed down briefly after the collapse, but quickly picked up steam again.

Fernandez said she noticed a slight uptick in buyers interested in newer condos – those built after 1990. Her business sold 697 condos from just after the aftermath of the collapse to the beginning of October. Of those sold, 39.7% were in buildings constructed after 1990. For the same period in 2020, about 31% of sales were in newer buildings.

Prospective buyers are also asking more questions about the integrity of the building, Fernandez said. Instead of focusing on cosmetic changes like the layout of the unit, buyers are asking to inspect the basement to make sure the structure of the building is safe.

Things could change in the market, however, as insurance companies begin to decide which buildings they will insure based on repairs and maintenance, said Peter Zalewiski with Condo Vultures in Miami.

© 2021 South Florida Sun-Sentinel. Distributed by Tribune Content Agency, LLC.

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Redfin Expands Program Allowing Buyers to Self-Tour Homes

Buyers are allowed to tour vacant homes without an agent. Redfin’s app unlocks the door, and an agreement with ADT provides monitoring and security.

SEATTLE – Redfin is allowing more buyers to tour homes for sale on their own without an agent. An expansion of the Direct Access Home tours brings the program to 22 markets and introduces a partnership with the security firm ADT to provide 24/7 monitoring and smart-home devices.

Potential buyers who use Direct Access to tour vacant homes without an agent use a Redfin app to unlock the door, with the smart locks and sensors provided by ADT. As buyers tour, sellers can monitor who enters and exits their property.

Redfin launched Direct Access on vacant seller homes in select markets last year. The company says that homes in the Direct Access program get double the number of tours, on average, compared with other homes on the market. The company plans to roll out the service to all U.S. markets where it has a presence.

“In this hot market, more than a third of homes are finding a buyer within the first week, and buyers are hustling to see new homes as quickly as possible,” Bridget Frey, Redfin’s chief technology officer, told Security System News. “Direct Access Makes it simple to tour our sellers’ homes conveniently and safely without having to coordinate with an agent to schedule a showing, driving double the foot traffic that leads to offers for our sellers.”

Homebuyers who purchase a Direct Access home with ADT’s smart-home security systems already installed are given the option to keep the smart lock, ADT security panel and sensors, which ADT values at $899. But to keep the security devices, buyers must sign up for ADT’s smart-home security monitoring services to activate them.

Redfin says it takes other precautions in the self-guided buyer tours. It verifies the identity of every buyer prior to a tour, uses geofencing technology to monitor when a buyer enters and exits the home, and covers up to $100,000 in the event of loss or damage to the home.

Source: Redfin.com and Redfin Direct Access

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Many Bathroom Remodels Are Really More of an Upgrade

Survey: Remodeling skyrocketed during lockdowns with many homeowners focused on their bathrooms. The desire to “soak in a bathtub” rose 6 percentage points.

NEW YORK – Bathrooms have become popular spots to renovate during the pandemic, particularly to outfit with more spa-like features, according to the 2021 Houzz Bathroom Trends Study, a survey of nearly 3,000 homeowners planning or who have recently completed a bathroom renovation.

The report finds a higher interest in both bathtub and shower upgrades. The percentage of homeowners who relax in their renovated bathroom by soaking in the bathtub is up by six percentage points this year, reaching 61%, the survey finds. That outpaces the 54% share who unwind with long showers.

More than three-quarters of homeowners added premium features to their bathtubs and showers. For the bathtub, it often included space for whirlpool baths. Shower upgrades included rainfall showerheads, dual showers, body sprayers and thermostatic mixers, which maintain a steady temperature.

“In the midst of the chaos created by the pandemic, we’re seeing homeowners turn to their bathrooms for respite, creating calming sanctuaries with premium features, hygienic surfaces, and plants and other greenery,” says Marine Sargsyan, a senior economist with Houzz. “Given the major changes involved, homeowners renovating their bathrooms are seeking out professional help at a growing rate, and hiring general contractors.”

The median cost of bathroom projects rose to $8,000 this year. Higher-end projects started at $30,000.

The following are some additional trends revealed in the report:

  • More greenery: Nearly one-third of homeowners added plants to their bathroom after a renovation for their aesthetics, their role in creating a calming environment and their help purifying the air.
  • Marble is hot: Marble is being used by renovating homeowners this year more often than before. It’s becoming a favorite for flooring inside and outside the shower, along with the walls outside the shower.
  • Colorful vanities: White continues to be the most popular choice, but blue and wood vanities gained popularity. The share of homeowners opting for blue vanities doubled year-to-year (8% in 2021, up from 4% in 2020), while medium and light wood tones are becoming more common (14% and 8%, respectively in 2021).
  • Lighting priorities: More owners add lights to their bathroom upgrades. Wall lights and recessed lights remain the two most popular upgrades, but lighted mirrors, such as those with LED lighting and anti-fogging systems, pendant lights and chandeliers gained popularity this year. Dimmable lighting also contributed to a more spa-like atmosphere.
  • Commode upgrades: More than a third of homeowners who upgraded their toilets during renovations added technology. Bidets remain the most popular tech feature, added by one in five homeowners, followed by self-cleaning mechanisms, heated seats, overflow protection and built-in nightlights.
  • Custom medicine cabinets: Nearly one-third of renovating homeowners installed custom or semi-custom medicine cabinets. Many of these cabinets also included features like hidden plugs and inside lighting.

Source: “2021 Houzz Bathroom Trends Study,” Houzz (Oct. 6, 2021)

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Small Businesses Less Optimistic as Inflation, Labor Take Toll

Business is good, according to NFIB’s monthly study – but it would be better for small companies if they could get more workers and not worry about inflation.

WASHINGTON – A monthly study of small business attitudes, the NFIB Small Business Optimism Index, decreased one point in September to 99.1. Three of the index components improved, five declined and two were unchanged.

Overall, America’s small businesses are doing well, but many have trouble attracting new employees and some face supply-chain shortages.

“Small business owners are doing their best to meet the needs of customers, but are unable to hire workers or receive the needed supplies and inventories,” says NFIB Chief Economist Bill Dunkelberg.

He says small-business owners also fear possible changes in policy that could impact their bottom line. “The outlook for economic policy is not encouraging to owners, as lawmakers shift to talks about tax increases and additional regulations,” says Dunkelberg.

In response to a tight labor market, they survey found that 30% of small-business owners plan to raise compensation in the next three months, up four points from August’s record-high reading. While 12% of owners cited labor costs as their top business problem, 28% cited labor quality. Both were record-high readings for the monthly survey.

Capital expenditures

Overall, small businesses appear to be shying away from capital expenditures when they can: 53% expect capital outlays in the next six months, down two points from August and historically a weak reading. Of those with recent expenditures, 37% spent it on new equipment, 21% acquired vehicles, 12% improved or expanded facilities and 10% spent money for new fixtures and furniture. July 6% of owners acquired new buildings or land for expansion.

In the next few months, 28% play capital outlays, down two points from August and one point below NFIB’s 48-year average.

Sales improving

Seasonally adjusted, 3% of owners reported higher nominal sales in the past three months, up three points from August. The net percent of owners expecting higher real sales volumes improved by four points to a net 2%.

The net percent of owners reporting inventory increases rose five points to a net 3%, back into positive territory after two months with owners reporting more declines than gains. NFIB says it’s the highest reading since the pandemic started.

Over 35% of owners say supply chain disruptions had a significant impact on their business; 32% report a moderate impact and 21% report a mild impact. Only 10% of owners report no impact at all.

One in 10 (10%) owners say current inventory stocks were “too low” in September, down one point from August. A net 9% of owners plan inventory investment in the coming months, down two points from August but historically a notably elevated reading.

Inflation affecting prices

The net percent of owners raising average selling prices decreased three points to a net 46% (seasonally adjusted). Unadjusted, 8% of owners reported lower average selling prices and 53% reported higher average prices. Price hikes were the most frequent in wholesale (75% higher, 0% lower), manufacturing (67% higher, 4% lower), and retail (71% higher, 2% lower).

Seasonally adjusted, a net 46% of owners plan price hikes.

The frequency of positive profit trends increased one point to a net negative 14%. Among the owners reporting lower profits, 26% blamed the rise in the cost of materials, 23% blamed weaker sales, 19% cited labor costs, 10% cited the usual season change, 6% cited lower prices, and 6% cited higher taxes or regulatory costs.

For those owners reporting higher profits, 57% credited sales volumes, 19% usual seasonal change, and 5% higher prices.

Business loans

Only 2% of owners said that all their borrowing needs weren’t satisfied, while 20% said. Twenty percent said all credit needs were met and 62% said they’re not interested in a loan. A net 4% of owners said their last loan was harder to get than in previous attempts, though none considered financing their top business problem, and 0% said they paid a higher rate on their most recent loan.

© 2021 Florida Realtors®

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Institutional Single-Family Rentals Have Come of Age

Before the Great Recession, mom-and-pop investors owned most single-family home rentals. But today, large institutional investors have turned it into a big business.

NEW YORK – Single-family homes have historically been owned by one of two groups – homeowners who lived in the houses and “mom-and-pop” investors who rented them out.

For the latter group, single-family homes provided a relatively uncomplicated entry into real estate investing. These properties are typically more affordable than other multifamily assets, such as mid- or high-rise buildings, and while the tenant pays the mortgage, the “mom and pop” build equity.

But when home values collapsed under loads of debt during the Great Recession, institutional investors like Colony Capital, Starwood Capital and Blackstone began buying up suburban single-family homes at significantly discounted rates in order to rent them out. A growing number of institutional investors quickly followed suit, citing favorable long-term secular trends that were beginning to play out.

These trends included the maturation of millennials, which would lead to marriage, child rearing and a desire for good neighborhoods, good schools, more living space and a yard. At the same time, many of these same millennials were locked out of homeownership by heavy student debt burdens, which made it difficult to save for a down payment, and by the imposition of strict mortgage underwriting standards following the Great Recession.

From 2006 to 2018, the number of single-family rentals in the U.S. grew 30.1% to nearly 14.7 million, according to the Urban Institute. Institutional ownership in the sector has risen rapidly as well, and new players continue to enter the market.

Though institutional ownership has grown significantly in recent years, it still makes up a small percentage of the single-family rental market, leaving a long runway for continued growth. Of some 23 million single-family rentals in the U.S. today, 1.16% are owned by large operators, according to the National Rental Home Council (NRHC).

Solid fundamentals

The resiliency of single-family rentals during the pandemic has helped solidify confidence in the asset class. Along with the previously noted secular trends, a transition to “work-from-home,” health concerns stemming from dense urban living arrangements and lockdowns that restricted movement have helped bolster single-family rental demand and fundamentals.

The Single-Family Rental Market Index, a quarterly survey that gauges the industry’s health by measuring factors such as median rent, leasing activity and occupancy, rose to 90.3 out of 100 in the first quarter of 2021 from 62.5 out of 100 a year earlier, according to John Burns Real Estate Consulting and NRHC, which created the index in mid-2019. Similarly, same-property portfolio occupancy, which refers to properties that had completed renovations or became stabilized prior to the start of the quarter and does not include properties that were slated for sale, climbed to a record high index of 80.1 in the first quarter from 60.3 a year earlier. Single-family rental operators also reported a tsunami of leasing activity and expected it to remain brisk through the next six months.

The strong demand is fueling robust rent growth. Single-family rental rates increased 5.3% in April 2021 compared to a year earlier, according to CoreLogic. A shortage of housing (the U.S. is 5.5 million homes short of where it should be) and a consequent rise in home prices suggest that the single-family rental industry will enjoy healthy demand and rent growth for the foreseeable future.

The rise of build-to-rent

Given the overall housing shortage, the single-family rental industry increasingly builds communities of single-family rentals to meet the demand rather than solely depending on the acquisition and conversion of existing homes. This so-called “build-to-rent” segment of the single-family rental asset class is not new. Not long after institutional investors began buying homes to rent, homebuilders like Lennar began building single-family rental communities, and other single-family rental operators contracted with builders to buy their newly constructed homes.

The approach brought some 25,000 single-family rentals to the market in 2014, and since then, more and more homebuilders and investors have embraced the concept. In 2020, builders added 226,000 single-family rentals to the market, up from 219,000 in 2019, according to the U.S. Census Bureau.

For renters, the properties provide all the benefits of a new upscale apartment – professional management and maintenance, and amenities like pools and gyms – but in a standalone setting that offers more space and privacy. Anecdotally, it seems that a large number of residents in build-to-rent communities are millennials and empty nesters. While both of these groups continue to display a preference for mobility and freedom from a mortgage, millennials in particular see the new suburban homes as ideal settings to start a family.

For quite some time, real estate observers have debated as to whether the single-family rental boom was a fad or a permanent fixture of the U.S. housing market. With the emergence of the build-to-rent segment of the single-family rental market, it is clear that single-family rentals are here to stay. It’s hard to ignore how the industry’s growing investment appeal mirrors the rise of multifamily itself as a favored institutional asset class over the last few decades. From March 2020 to June 2021 alone, institutional funds poured roughly $15 billion into build-to-rent companies, as well as conventional single-family rental operators, according to John Burns Real Estate Consulting, which only tabulated the 25 largest deals.

In fact, the single-family rental industry is estimated to be a $3.4 trillion market, which is just shy of the multifamily industry’s $3.5 trillion market value, according to Walker & Dunlop. The commercial real estate finance company also predicts that the growth of the single-family rental space will outpace that of apartment, office, retail, storage and hospitality properties over the next few years, because population growth will continue to put pressure on housing needs, especially as the millennial generation creates more families.

Capitalizing on the opportunity

While mom-and-pop investors still dominate the single-family rental space, that landscape is gradually changing. For investors who want access to the high-growth asset class without the hassle of midnight phone calls to plunge a toilet, crowdfunding can provide access to invest in single-family rentals and build-to-rent communities. Investors will still receive the benefits that come with it, including escalating rent payments and appreciation to name a few. And like other real estate asset classes, single-family rentals have a relatively low correlation to the stock market, which can help diversify investment portfolios. As hard assets, single-family rentals could also provide a hedge against inflation.

© 2021 Penton Media. Adam Kaufman is co-founder and COO of the real estate crowdfunding platform ArborCrowd.

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Soaring Home Prices Roiling Appraisals, Upending Sales

In Aug., 13% of appraisals came in below a home’s contract price. It was higher in May (19.7%), but is still up compared to sales early last year (7.3% in Jan. 2020).

NEW YORK – An abnormally high number of homes across the United States are being appraised below their agreed-upon sales prices, causing some deals to implode.

With home prices soaring in recent months, buyers often pay above asking price to win bidding wars. As a result, CoreLogic estimated that about 13% of appraisals came in below the contract price in August. That’s better than in May (19.7%), but still notably higher than pre-pandemic appraisals. In January 2020, it was 7.3%.

The disparity underscores the risks buyers face in the current market, especially those stretching their dollars to win a bidding war. Mortgage lenders will typically offer only enough to cover the appraised value of a home, forcing buyers to either provide the balance, renegotiate or terminate the deal if an appraisal comes in below the contract price.

Many buyers prepare for the possibility of a lower appraisal by making down payments of just 5% to 10% and holding their extra cash in case they need it to make up any difference should the appraisal fall below the sales price, says Phoenix-area Realtor Nicole Dudley.

To create a home appraisal, appraisers normally rely on factors like data from recent closed and pending sales. But since sales usually close a month or two after going under contract, some buyers say rapidly increasing home values can sometimes skew appraisals that rely on home values recorded months earlier.

In a separate poll by the National Association of Realtors, 12% of contracts closed or terminated in August were hit with appraisal issues, compared to 9% in August 2019, before the pandemic-fueled housing surge.

In recent months, many buyers voided their right to terminate a contract due to a low appraisal in an effort to make their offers compete. However, this practice appears to be waning somewhat as the market cools.

Source: Wall Street Journal (10/10/21) Friedman, Nicole

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High Home Prices Continue to Weigh on Homebuying Sentiment

Fannie Mae’s index dropped 1.2 points in Sept. More consumers (66%) thought it was a bad time to buy a home while only 28% believed it was a good time to buy.

WASHINGTON – The Fannie Mae Home Purchase Sentiment Index® (HPSI) dropped 1.2 points to 74.5 in September, as survey respondents continued to report divergent opinions of homebuying and home-selling conditions.

Overall, three of the index’s six components decreased month over month. Most notably, an even greater share of consumers reported that it’s a bad time to buy a home – with that number now sitting at 66% last month and significantly higher than the 28% of respondents who believe it’s a good time to buy. The home-selling conditions component remained mostly flat, with a strong majority of consumers maintaining that it’s a good time to sell. Year over year, the full index is down 6.5 points.

“The HPSI declined slightly this month but remains within the general bounds we’ve seen since the end of last year,” said Doug Duncan, Fannie Mae senior vice president and chief economist. “The survey’s story is also largely unchanged: Consumers feel it’s a bad time to buy a home but a good time to sell – and they continue to cite high home prices as the primary reason.

“Across all consumer segments, renters and younger consumers were slightly more likely to indicate it’s a bad time to buy, perhaps a reflection of their generally lower incomes and their observation that the availability of affordable homes is lacking. We’re also seeing a softening in consumers’ expectations that home prices will continue to increase; however, in our view, other housing market fundamentals remain supportive of further home price appreciation – including low levels of inventory and low interest rates.”

Home Purchase Sentiment Index highlights

Fannie Mae’s Home Purchase Sentiment Index (HPSI) decreased in September by 1.2 points to 74.5. The HPSI is down 6.5 points compared to the same time last year.

Good/bad time to buy: The percentage of respondents who say it is a good time to buy a home decreased from 32% to 28%, while the percentage who say it is a bad time to buy increased from 63% to 66%. As a result, the net share of those who say it is a good time to buy decreased 7 percentage points month over month.

Good/bad time to sell: The percentage of respondents who say it is a good time to sell a home increased from 73% to 74%, while the percentage who say it’s a bad time to sell remained unchanged at 19%. As a result, the net share of those who say it is a good time to sell increased 1 percentage point month over month.

Home price expectations: The percentage of respondents who say home prices will go up in the next 12 months decreased from 40% to 37%, while the percentage who say home prices will go down remained unchanged at 24%. The share who think home prices will stay the same increased from 31% to 33%. As a result, the net share of Americans who say home prices will go up decreased 3 percentage points month over month.

Mortgage rate expectations: The percentage of respondents who say mortgage rates will go down in the next 12 months increased from 6% to 8%, while the percentage who expect mortgage rates to go up decreased from 53% to 51%. The share who think mortgage rates will stay the same decreased from 35% to 33%. As a result, the net share of Americans who say mortgage rates will go down over the next 12 months increased 4 percentage points month over month.

Job concerns: The percentage of respondents who say they are not concerned about losing their job in the next 12 months decreased from 82% to 81%, while the percentage who say they are concerned increased from 15% to 16%. As a result, the net share of Americans who say they are not concerned about losing their job decreased 2 percentage points month over month.

Household income: The percentage of respondents who say their household income is significantly higher than it was 12 months ago increased from 26% to 27%, while the percentage who say their household income is significantly lower increased from 12% to 13%. The percentage who say their household income is about the same decreased from 59% to 57%. As a result, the net share of those who say their household income is significantly higher than it was 12 months ago remained unchanged month over month.

Fannie Mae’s National Housing Survey (NHS) polled approximately 1,000 respondents via live telephone interview to assess their attitudes toward owning and renting a home, home and rental price changes, homeownership distress, the economy, household finances and overall consumer confidence. Homeowners and renters are asked more than 100 questions used to track attitudinal shifts, six of which are used to construct the HPSI (findings are compared with the same survey conducted monthly beginning June 2010).

The September 2021 National Housing Survey was conducted between Sept. 1 and Sept. 26, 2021.

© 2021 Florida Realtors®

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RE Q&A: Is Now a Good Time to Start Being a Landlord?

To be successful, treat it like a business. Keep a cushion of several months’ expenses to carry the property’s costs in case of any issues like a non-paying tenant.

FORT LAUDERDALE, Fla. – Question: We are getting older and ready to move to a smaller home. Our plan has always been to rent our existing house to make extra money toward our retirement. After the eviction moratorium, we are nervous. Is it a good time to be a landlord? — Jerri

Answer: Not collecting rent is a scary prospect that every landlord needs to be prepared for.

Whether it is because of a pandemic, natural disaster or non-paying tenant, you need to have enough of a cushion to carry the house’s expenses for at least several months.

Renting property, done correctly, can be rewarding.

The good news for landlords coming out of the coronavirus crisis is that rents are higher now.

To be a successful landlord, treat it like a business. Write everything down and save your receipts. Keeping track of your financials can help when it is time to file your taxes.

Tenant selection is critical to successfully renting your property. It is better to spend extra time upfront choosing your tenant than spending even more time evicting them. Check work history and do a background and credit search to ensure your prospective tenant is financially stable.

Take the time to read the landlord-tenant statute. It is written to be understandable to non-lawyers and reads almost like an instruction manual for renting.

Knowing your rights and responsibilities is key to a good experience. If you feel intimidated by the process, you can hire a real estate agent to help you.

Once you find a good tenant, do not ruin the relationship by trying to be friends. Being friendly is good, but who wants to evict a buddy for not paying the rent.

Remember to treat this as a business relationship. Respond to repair requests quickly.

In return, your tenant also needs to take the relationship seriously. Explain that they need to treat the house as their home and must pay their rent on time.

Accepting excuses rather than rent rarely works out. Posting a warning notice for nonpayment sends a clear message that the rent needs to be paid each month to avoid immediate consequences.

Copyright © 2021 South Florida Sun Sentinel, Gary Singer. All rights reserved.

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How Much Can You Save by Downsizing? It Depends

In the biggest 20 U.S. metros, you could save an average of $194K going from a 4-bedroom to a 2-bedroom home. Miami metro downsizers were 5th on the list for savings.

MIAMI – As property values continue to rise, homeowners looking to downsize can save varying amounts based on where they live. A new StorageCafe study found homeowners in the 20 largest U.S. metros could save $194,000 when downsizing from a four-bedroom home to a two-bedroom home.

Such savings are even higher in some markets, according to StorageCafe, which looked at such factors as property taxes over 10 years and closing costs for selling and buying both properties.

California led the list, with San Francisco, San Diego, and Los Angeles taking the first three spots on the list for large downsizing savings at $406,000, $264,700, and $239,800, respectively.

In South Florida, downsizers in Miami-Fort Lauderdale-Pompano Beach ranked fifth on the list for savings. Homeowners looking to downsize in the Miami area could save roughly $230,000, according to the report. Downsizing in the city of Miami could save homeowners about $160,000, while Fort Lauderdale homeowners could save $364,000.

The report indicates that the most profitable route in South Florida would be moving from a four-bedroom home in Miami to a two-bedroom home in Pompano Beach, which could save nearly $290,000. Those downsizing from Miami to Fort Lauderdale could save more than $150,000. 

Source: South Florida Agent (09/29/21) Hughes, Liz

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Homeowner Equity Grows to Nearly $3T in Q2

CoreLogic: Homeowners with mortgages – about 63% of all U.S. properties– saw a 29.3% annual increase in equity, averaging out to a gain of about $51.5K per borrower.

NEW YORK – Homeowners gained a total of $2.9 trillion in equity in the second quarter of 2021 as home prices continued to grow, according to a new report.

Negative equity share, where a homeowner owes more on their home than what it is worth, fell to 2.3% in the second quarter, and 163,000 homeowners regained equity, CoreLogic’s Homeowner Equity Report showed.

Homeowners with mortgages, which is about 63% of all properties in the U.S., saw a 29.3% annual increase in equity. This averages out to an annual gain of $51,500 per borrower.

If you want to take advantage of an increase in your home value, consider taking out a cash-out refinance. At today’s record low interest rates, you can take money out of your home and possibly still lower your monthly mortgage payment.

Consumer confidence in Q2 rises to highest level since pandemic began

As home prices grow, so does Americans’ confidence in the housing market, U.S. News & World Report previously said. By the end of the second quarter, consumer confidence had risen to the highest point since the beginning of the pandemic.

Additionally, in a recent CoreLogic consumer survey, 59% of mortgage holders said they are extremely confident in their ability to keep up with their monthly payments in the year ahead.

CoreLogic explained that homeowners have been able to remain current on their monthly payments due to government provisions, increased vaccine availability that has allowed people to return to work and record homeowner equity gains.

“The growth in homeowner equity provides a strong financial cushion for tens of millions Americans,” CoreLogic President and CEO Frank Martell said. “For those most impacted by the pandemic, equity gains will help play a critical role in staving off foreclosure. Based on projected increases in economic activity and home values over the next year, we expect to see further gains in equity and a corresponding drop in negative equity, forbearance rates and foreclosure.”

If you’re interested in tapping into your home’s equity, consider taking out a mortgage refinance amid the current low interest rates. A refinance could also help you lower your mortgage payment if you are struggling financially.

Home equity sits at record levels

A person’s home equity is determined by how much they’ve paid down their mortgage and home price changes. In July, home price gains hit a record high of 19.7% annually, according to the latest S&P CoreLogic Case-Shiller Index Report. This boost is up from the previous month’s annual increase of 18.7%, which was also a record high.

“Home equity wealth is at a record level and will bolster economic activity in the coming year,” CoreLogic Chief Economist Frank Nothaft said. “Higher wealth spurs additional consumer expenditures and also supports room additions and other investments in homes, adding to overall economic activity.”

Homeowners can take advantage of their newfound equity through a cash-out mortgage refinance and use the funds for home improvement projects or to consolidate high-interest debt.

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Mortgage Rates Decrease Slightly

The average 30-year fixed-rate mortgage decreased slightly this week, easing to 2.99%; it was 3.01% last week. The 15-year FRM averaged 2.23% this week.

MCLEAN, Va. – The average 30-year fixed-rate mortgage (FRM) decreased slightly this week, easing to 2.99%; however, many analysts predict that mortgage rates will continue to rise modestly over the next year.

“Mortgage rates continue to hover at around 3% again this week due to rising economic and financial market uncertainties,” said Sam Khater, Freddie Mac’s chief economist. “Unfortunately, with the expectation that both mortgage rates and home prices will continue to rise, competition remains high and housing affordability is declining.”

Average mortgage rates for the week of Oct. 7

•The 30-year fixed-rate mortgage averaged 2.99% with an average 0.7 point, down slightly from last week’s 3.01%. A year ago at this time, the 30-year FRM averaged 2.87%.

•The 15-year fixed-rate mortgage averaged 2.23% with an average 0.7 point, down from last week’s averaged 2.28%. A year ago at this time, the 15-year FRM averaged 2.37%.

•The 5-year Treasury-indexed hybrid adjustable rate mortgage (ARM) averaged 2.52% with an average 0.3 point, up from last week’s 2.48%. A year ago at this time, the 5-year ARM averaged 2.89%.

© 2021 Florida Realtors®

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Investors Bet Flexible Leases Are a Lasting Trend

Remote work sparked demand for short-term housing with flexible terms. Some estimate the number of workers who remain fully remote will eventually top out at about 20%.

NEW YORK – Investors believe one pandemic-related trend will offer up long-term results: short-term apartment leases. They’re rushing to invest in such buildings that can offer flexible short-term apartment rentals, even as more workers return to the office.

Over the past year, companies like Blueground, June Homes, and Landing have added thousands of units to their platforms, The Wall Street Journal reports. They’re raising millions in recent funding rounds as short-term rentals win more attention from Wall Street.

Remote work sparked a demand for short-term housing with flexible terms. About half of the nation’s office workers continue to work remotely. Short-term housing providers believe the number of workers who remain fully remote will eventually top out at about 20%.

“That’s about 36 million workers,” Kulveer Taggar, co-founder and CEO of Zeus Living, which specializes in single-family homes, told The Wall Street Journal.

Even renters who return to the office may favor a short-term rental over a full year’s lease.

Many of these short-term lease providers sublet to tenants through a digital platform on a month-to-month basis. Many do not require a security deposit either, The Wall Street Journal reports. Many of the companies also offer fully furnished units.

Blueground, which offers fully furnished units, offers flexible arrangements at a higher cost. For example, tenants may have to pay anywhere between 15% to 100% more than what they would for a traditional 12-month lease for an unfurnished apartment.

June Homes, in contrast, offers tenants the option to rent any unit unfurnished, furnished, or partially furnished. It also offers a shared apartment option for many of its properties as it targets younger generations.

Source: “Short-Stay Housing Companies Are Confident Even as Workers Return to the Office,” The Wall Street Journal (Oct. 5, 2021) [Login required]

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NAR Urges Congress to Work on Long-Term Debt Ceiling Solution

Such a solution is needed to “maintain stability and faith in the American economy,” said NAR Pres. Charlie Oppler, following a meeting at the White House.

WASHINGTON – Following a meeting at the White House with President Joe Biden and other business leaders on the nation’s debt ceiling, National Association of Realtors® President Charlie Oppler has issued the following statement:

“NAR is encouraged by reports Congressional leaders are working on a short-term debt ceiling extension following our meeting.

“With more than $8 trillion in mortgage debt backed by the federal government, the real estate sector is highly susceptible to market instability. A debt default would unleash unnecessary and unknown harm on the economy and our 1.5 million members, most of whom are small business owners. And rising interest rates would serve a devastating blow to the homeownership dreams of countless American families.

“We encourage Congress to keep working on a long-term debt ceiling solution to maintain stability and faith in the American economy.”

Source: National Association of Realtors®

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In Memoriam: 1971 Florida Realtors Pres. John R. Wood, 1929-2021

NAPLES, Fla. – John R. Wood knew how to “light up a room.” 

He used humor (corny and clean jokes) and smarts (a law degree and a down-home Arkansan sense of post-Depression resourcefulness) to build a business and lifelong relationships. It was this enviable combination plus a genuine desire to help people succeed that drew people to him.

Wood founded John R. Wood Properties in 1958, the oldest active real estate brokerage in Southwest Florida. He died Aug. 4, 2021, just six weeks shy of his 92nd birthday.  

As the 1981 National Association of Realtors® (NAR) president, Wood led NAR’s persuasive “Unlock the Economy” campaign to promote affordable homeownership as a key to ending the recession when mortgage interest rates peaked above 18%. Existing-home sales had plummeted by 50% since 1978. 

He called the White House and Congress to task at several high-level meetings in Washington. “In recent times, the commitment to a national housing goal has begun to disappear,” Wood told the Senate Committee on Banking, Housing and Urban Affairs in May 1981. “If this anti-housing trend should continue, our children will be unable to afford homeownership, and the right to private property will be limited to the rich.”

With Wood at the helm, “we were energized,” says Bill Watson, Jr., Watson Realty Corp. founder and chairman of the board. “We were active in Washington. And when NAR had legislative days, we worked the ‘waterfront’ trying to get some relief for homeowners,” Watson says. “We couldn’t have a better spokesperson. John was a charmer. Everybody liked him – that was a huge advantage.”

Watson, Florida Realtors® president in 1981 and Florida Realtors Spirit of Advocacy award winner in 2021, met Wood in 1968 when they took GRI classes over three years. Wood was appointed dean of the class. “He’d open up with two or three jokes and then get his message across … whatever it took to get things moving along.”

They remained good friends. “Over the years, he asked me many times: ‘Is there anything I can do for you?’ He knew how to make you feel good, which made you want to do good. He had the ability with his smile to neutralize adverse situations,” Watson says.

As president of Florida Realtors in 1971, Wood rallied support for state Realtor initiatives. Countless times during Realtor events, he’d be cracking jokes to get the crowd’s attention and then get to the point, whether it was to support legislative efforts or continued education. 

Ask just about anyone in the Realtor family and they’ll say the same as they remember what made him tick.

Cathy Whatley, 1996 Florida Realtors president and 2003 NAR president, remembers him when she was a teen. “My dad Jim Buck (Florida Realtors president in 1962) and John were very good friends and great joke tellers. You could be in a room and it was a comedy team trade-off. They were engaging and really funny, and they knew how to get things done.”

“When I ran for NAR president, John did everything to give me counsel, and every year he would call me and talk about business. But he’d also go on about his gardens that he and his wife Wanda tended and his tennis game. He was bigger than life, gracious and genuine, and that was in everything he did. He was hard not to love.”

Wood was a resourceful guy who liked to watch things grow, whether it was nurturing his organic vegetable garden and tropical fruit orchard or mentoring young, energetic agents on his real estate team. 

He opened the firm in 1958, scraping together $200 monthly to pay the rent for his storefront office by subleasing desk space to other local business people. He mainly sold undeveloped land at the time. Investors were wary of buying swampland that couldn’t be developed, so John created his own memorable slogan: “Walk on it before you buy,” which he painted on the side of the Jeep he used to drive prospects around. Wood built his real estate firm’s reputation on honesty and integrity, to become the largest brokerage in Southwest Florida with more than 650 agents and employees in 19 offices in Lee and Collier counties, racking up $3.8 billion in closed sales volume from Jan. 1, 2021 to Aug. 31, 2021. 

Along with achieving the highest-ranking positions at Florida Realtors and NAR, Wood was active in his local Realtor association board, serving two years as president, and as chairman of the Florida Real Estate Commission (FREC). Within NAR, he was a regional vice president for the Southeast and a member or chairman of more than a dozen association committees.

He also is fondly remembered as a philanthropist and fundraiser, advocating for many community groups, such as St. Matthew’s House, United Way, the Greater Naples Chamber of Commerce, Collier County Junior Deputies and the Boy Scouts.  

“He was a role model to a lot of different people. Not so much for how to sell real estate, but just for how to lead your life,” his son Phil Wood, current president and CEO of John R. Wood Properties, said in a recent tribute to his dad. Phil Wood joined his father in the real estate business in 1977 after graduating from college with a business degree.  

Jeff Zipper, senior vice president of Communications & Marketing at Florida Realtors, met Wood when he was new to the state association management team. “He took me under his wing, too,” Zipper says. “Every once in a while, someone breaks through everything and allows you to see what one person can do. John was truly a leader. It was always a better day when he was around.”

Wood will be fondly remembered and always admired. “He was born to lead,” Whatley says. “In his community, in his church and in the Realtor family, people just knew this man was going to make a difference in many lives in many ways.”

John R. Wood is predeceased by his wife Wanda Ross Wood (1930-2017), and survived by his son Phil, granddaughters Corey McCloskey and Nikki Wood, and two great grandchildren, Hunter and Ryli. Donations in his memory can be made to St. Matthew’s House or Collier County Junior Deputies.

© 2021 Florida Realtors®

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Homeowners Seek Refinancing; Mortgage Rates Over 3%

Mortgage rates remain historically low. However, industry observers say borrowers should not misinterpret the surge last week as being the last one in 2021.

WASHINGTON, D.C. – A closely observed survey indicates that mortgage rates on housing loans, largely sought after in the U.S., spiked during the past week.

Householders who opted for refinancing before last week, when mortgage rates were below 3% for several months, currently have a reason to rejoice on account of their prudence and the thousands of dollars they saved.

The increase in mortgage rates last week should be an alarm bell for those who deferred refinancing over expectations of rates falling even lower.

Despite the current rate increases, mortgage rates remain attractive. However, borrowers should not misinterpret the surge last week as being the last one in 2021, said industry observers.

The average 30-year fixed mortgage interest rate rose to 3.01% last week, as compared to 2.88%.

This was reportedly the largest surge in one week since the middle of February, during which time hopes were rising due to the inoculation program against the coronavirus disease in the United States.

Meanwhile, chief economist at Freddie Mac, Sam Khater, attributed the sharp rate increase during the past week to the burgeoning interest in treasury bonds, specifically the TNX. Fixed mortgage rates have a tendency of rising in tandem with an improvement in the yield on TNX.

“Many factors led to this increase, including the Federal Reserve communicating that it will taper its support of the capital markets, the broadening of inflation and emerging energy supply shortages, which compound other labor and materials shortages,” Khater wrote.

In a recent announcement, the U.S. Federal Reserve Bank said it might slash its per-month purchasing of assets – treasuries and MBS – reaching billions of dollars.

The purchases have maintained mortgage rates at lower levels.

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Real Estate Investors: Less Optimistic About U.S. Housing Market?

RealtyTrac: 48% of individual RE investors see the investment market as worse than a year ago; and 57% of investors cite lack of available inventory as a top concern.

NEW YORK – According to a new RealtyTrac survey, 48% of individual real-estate investors view the investment market as being worse or much worse than it was a year ago. That’s up from 45% of investors in last year’s edition of the same survey.

Small scale real-estate investors are less enthusiastic about the state of the U.S. housing market, with 63% of respondents listing the rising costs of homes as a major challenge.

The lack of available inventory was cited by 57% of investors as a top concern, according to the survey. Other major worries included the cost of materials and labor for home building and improvement projects, as well as competition from traditional home buyers.

Moreover, RealtyTrac found that the number of homes in foreclosure is at the lowest level on record (down 70%), thanks to the availability of mortgage forbearance and an ongoing moratorium on foreclosures at the federal level.

The survey found that many investors are divided as to whether they believe foreclosure activity will return to normal in the future or surpass typical levels. Due to the appreciation in home prices, many people who are in forbearance and behind on mortgage payments may be able to sell their homes rather than go into default. 

Source: MarketWatch (09/29/21) Passy, Jacob

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Condo Prices Are on the Rise in Florida

More buyers are turning their attention to condos and townhomes these days. Realtor.com’s top 10 list for growth in condo and townhouse prices includes six Fla. cities.

SANTA CLARA, Fla. – Priced out of the single-family market, more buyers are now turning their attention toward often a more affordable alternative – condominiums and townhouses. Over the past year, sales have rapidly been on the rise, whether for a permanent residence or even as a second home.

Twice as many condos sold in May than a year earlier, according to realtor.com® data. However, that is being measured against a 46% drop in condo sales in May 2020 compared to 2019. Condo demand plummeted during the first couple of months of the pandemic. More people were desiring space and distance from neighbors – single-family homes in the suburbs and exurbs surged.

Realtor.com’s data team evaluated cities with at least 250 condo, cooperative, and townhouse listings and looked at which ones saw the largest median list price growth from August 2020 to August 2021. Six coastal cities in Florida made realtor.com’s top 10 list for growth in condo and townhouse prices.

“People from the Northeast are saying, ‘If I’m going to get stuck because of mandatory quarantines, I’d rather have that happen in Florida than in New York,’” Brad Hunter, the head of Hunter Housing Economics, a market advisory firm, told realtor.com.

The following condo markets are seeing the largest price growth, according to realtor.com’s list:

1. Destin, Fla.

Annual condo price growth: 67%

Median condo/townhouse price: $694,050

2. Panama City, Fla.

Annual condo price growth: 58%

Median condo/townhouse price: $395,570

3. Naples, Fla.

Annual condo price growth: 37%

Median condo/townhouse price: $425,050

4. Park City, Utah

Annual condo price growth: 37%

Median condo/townhouse price: $900,500

5. Panama City Beach, Fla.

Annual condo price growth: 32%

Median condo/townhouse price: $515,000

6. Aspen, Colo.

Annual condo price growth: 31%

Median condo/townhouse price: $1.1 million

7. North Miami Beach, Fla.

Annual condo price growth: 22%

Median condo/townhouse price: $192,550

See the full list at realtor.com.

Source: “Condos Are Back! Here Are the Cities Where They’ve Become the Hottest Thing in Real Estate,” realtor.com® (Oct. 4, 2021)

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4 Ideas About Millennial Homeowners That Never Came True

Think millennials don’t care about homeownership or just want to live in the city? Those are myths. The majority of millennials buy homes in the suburbs for instance.

CHICAGO – Millennials have been a closely watched group in real estate for years, and forecasters have long made predictions about their entrance into homeownership. The beliefs about this massive segment of potential buyers have been significant – they favor renting over buying, they just want to live in the city, and they must have their parents’ help to buy.

Jessica Lautz, vice president of demographics and behavioral insights at the National Association of Realtors®, recently blogged about the most common myths about millennials at the association’s blog. Here are some myths she busted:

Myth 1: Millennials aren’t interested in homeownership.

The homeownership rate for those under the age of 35 is lower than previous generations at the same age. However, millennials are still active in the housing market. They are facing plenty of challenges in obtaining homeownership: low housing inventories, competition, and rising home prices. But they are the largest generation of home buyers currently in the market at 37%, Lautz notes.

Myth 2: Millennials just want to live in the city.

Millennials love the suburbs after all. The majority of older and younger millennials have purchased a home in the suburbs; one-fifth of these young adults purchased in small towns, Lautz says. “The affordability of suburban areas is a driver,” Lautz notes. “Younger millennial buyers place a top priority on being close to friends and family while purchasing.”

Myth 3: Millennials need parents’ funds to buy.

The majority of millennials use their own savings to buy. Nearly a third of older millennials use proceeds from their previous home sale as a down payment on their next home. But millennials aren’t shy about accepting some help from their parents either: Twenty percent of millennials ages 31 to 40 and 28% between 22 to 30 report receiving a gift or loan from family and friends to purchase a home, Lautz notes.

Myth 4: If millennials would save more, they could buy.

Millennials have been hit with a lot of bills — housing in particular. The costs of rents have surged and that’s made it difficult to afford homeownership. “Younger millennials are spending more on housing, education, and slightly more on health care,” Lautz notes. “Younger boomers, in comparison, spent more on transportation, food away from home, apparel and services, and entertainment.”

See more myths about this growing segment of buyers at NAR’s Economists’ Outlook blog.

Source: “Myth-Busting Millennial Tropes: 8 Common Myths Busted,” National Association of Realtors® Economists’ Outlook blog (Sept. 29, 2021)

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Mortgage Payments Are Getting More and More Unaffordable

Fed Reserve of Atlanta: The median U.S. household currently would need 32.1% of its income to cover the mortgage on a median-priced home, the highest since 2008.

ATLANTA – U.S. incomes are trailing home prices, reducing affordability for many Americans. The Federal Reserve Bank of Atlanta says the median American household would need 32.1% of its income to cover mortgage payments on a median-priced home, the highest since 2008.

Skyrocketing home prices across the country are nullifying the effects of modest income growth and historically low interest rates, with prices climbing at a record pace for the fourth straight month in July due to a shortage of listed houses.

The Atlanta Fed said median home prices in July were $342,350, while median incomes were $67,031, amounting to 23% and 3% year-over-year increases, respectively.

Economists say first-time home buyers will be most impacted by the affordability decline, which will force them to agree to larger monthly payments, purchase less desirable homes, or avoid the market altogether.

“The question is whether it is an insurmountable hurdle or is it just that these households have to spend more of their monthly income on the mortgage,” notes Haus chief economist Ralph McLaughlin.

Christopher and Danielle Ferreris have been hoping to buy a Tampa-area home for nearly two years, and while they can manage about $1,600 in monthly payments, every house they have viewed requires monthly payments about 25% higher than that. The typical value of a home in Tampa was $331,000 in August, up from $265,000 in August 2020, according to Zillow.

Source: Wall Street Journal (10/03/21) McCaffrey, Orla

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Take Steps to Maximize Insurance Benefits After a Storm

Emergency management professionals advise you to check your insurance, call your insurance company and find out what’s covered under your policy. And if your home is flooded, hire a mitigation firm to vacuum out water as soon as possible.

WOODLAND PARK, N.J. – When Hurricane Ida hit, its heavy rains wreaked havoc across much of New Jersey and southern New York, causing flooding throughout the region. For homeowners faced with the task of cleaning up due to flooding, it’s often a race against the clock.

How do you maximize your insurance coverage and quickly salvage your personal belongings? Here are some important tips from emergency management professionals.

1. Call your insurance company. According to ConsumerReports.com, the first step to file a claim is to get in touch quickly with your insurer or the agent who sold you the homeowners insurance. Your policy may require you to file within a certain time frame.

2. Get a mitigation company. It is crucial to hire a company that can vacuum out water as soon as possible, said Nat Piro, manager of the North Jersey and New York metro division of NFA, a public insurance adjuster. Wood swells in water and the longer it sits in water the greater the damage, he said. It’s also important that the structure be treated for mold.

3. Check your insurance. Flood damage is only covered if you have flood insurance, Piro said. Flood insurance is not required if you do not live in a flood zone.

4. Loopholes. If you do not have flood insurance, there are ways that the damage may be covered under regular homeowner’s insurance, Piro said. Some cases where the damage may be covered include a sump pump that stopped working or a downspout that broke, he said.

5. Take pictures. Be sure to take photos and document any damage resulting from the storm to ensure you have documentation of the impact, which is needed for insurance and any federal or state relief programs that may become available moving forward, said the New Jersey Economic Development Authority.

6. Find out what’s covered by your policy. A standard homeowners’ insurance policy covers damage to the home’s structure and personal property, minus a deductible. The amount you’re paid will depend on the kind of coverage you have. Replacement cost coverage should cover repairing or replacing your home and any lost or damaged items.

Actual cash value coverage will pay you the value of your home and the damaged items inside, according to Consumer Reports.

7. Avoid filing too many small claims. Try not to file claims that appear to be less expensive than the value of your deductible, according to Consumer Reports. That’s because if you’re filing a lot of claims, your insurer may decide that you’re filing too often and raise your premiums. But some storms may prove the exception.

8. Large claim? You may want a public adjuster. If you have a very large claim, you may want to turn to a public adjuster, who works on your behalf and represents you for the claim, Consumer Reports said.

Piro said his company, NFA, typically charges 10% or less of the settlement with company personnel handling the damage estimates and negotiations with your insurance company.

9. Prioritize. You may not be able to save everything after flooding. Focus on what’s most important to you, whether for sentimental or monetary reasons.

Copyright © 2021 North Jersey Media Group Inc., The Record

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Downsizing Your Home in Retirement

Financial experts suggest carefully evaluating monetary, personal comfort and family needs when considering downsizing upon retirement. Weigh the pros and cons.

ELIZABETHTOWN, Ky. – Question: Should I downsize my home when I retire?

Answer: Retirement is usually a time of major life changes ranging from not working full-time to modifying where and how you choose to live. With regards to the later, there are significant pros and cons to downsizing/rightsizing and it may not be the right choice for everyone.

To help decide if moving to a smaller or differently configured living space makes sense for you, there are a few key questions to answer. Perhaps the most important is what is affordable based on your income and expenses in retirement?

First, calculate the cost of your current housing by totaling monthly mortgage or rent payments, utilities, annualized maintenance, insurance premiums, etc. If you have an existing low-rate mortgage, significant built-up equity, already live in your preferred neighborhood and the home meets current as well as possible future physical requirements, perhaps aging in place is a viable option.

Or you may want to sell and cash out your equity to purchase a more affordable, smaller house or condo that could eliminate or greatly reduce monthly mortgage payments, according to the Ascent/Motley Fool website. Or perhaps add the proceeds to retirement savings for a more secure financial future.

However, if you relocate to a more expensive neighborhood or locale, you might end up spending more by downsizing in mortgage/rent, taxes, insurance and other services. A few residential retirement communities feature smaller homes, condos or apartments with maintenance, housekeeping and some personal services included, but at additional costs.

Next, consider how much space you currently have and what you’ll need in the future. Will there be enough room in a smaller home if grandchildren or relatives visit frequently; if you entertain often; or have adult children move back home?

Also, selecting a smaller home can be a big change in other ways, particularly if you’re used to land around your house. On the upside, some garden home retirement communities offer lawn services and provide other property maintenance, usually at an additional cost often included a monthly homeowners’ association fee.

Millions of older Americans are choosing to downsize in retirement. Forty-six percent of baby boomers selling their homes in 2017 did so to downsize, according to a Zillow report.

A 2018 Merrill Lynch study found the No. 1 reason given by respondents for moving in retirement was to be closer to family. The desire to reduce expenses came in a close second.

However, not everyone makes an intentional decision to downsize. Sometimes a move becomes necessary because of declining health, the loss of a spouse or an unexpected financial crisis. Understanding your individual motivations for moving then weighing the pros and cons carefully are important to feeling comfortable with your decision.

Beyond saving money and potentially bolstering retirement financial plans, downsizing and/or relocating could significantly change your lifestyle and possibly improve your quality of life. For example, moving from a suburban home to a condo by the beach or relocating from one side of the country to the other to be closer to family.

As life changes in retirement, financial experts suggest carefully evaluating monetary, personal comfort and family needs when considering downsizing or rightsizing.

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6 Ways to Create Video Walk-Throughs That Attract Leads

First, plan how to best show the listing’s standout features, then write a script that matches the video images. Keep in mind equipment needs, too.

NORWALK, Conn. – To gain new leads and sell homes fast, it is essential for real estate agents to conduct video walk-throughs of for-sale properties. Agents first need to create a plan for how to best showcase a listing.

For instance, a large backyard can be a strong selling point to families.

Once agents have an idea of how they want to present the listing, they need to write a script. It can be based on a description that is already written for a particular listing. The goal is to have a clear, concise script that aligns with the video imagery.

While agents can use their smartphone to get a high-quality finished product, they can also consider adding a video camera, a drone for aerial shots, a good microphone and editing software.

Next, agents should do a few practice runs to ensure the video is just right. If needed, changes to the script or other elements can be made. When making the listing video, agents should ensure there is sufficient natural light getting into the property.

They can also consider hiring a videographer, who typically will have access to the best equipment, and an editor to help put the entire video together with no mistakes.

Agents should share the completed videos across their social media accounts, pair them with a link to the listing, provide a few highlights of the property and include their contact information.

Furthermore, agents can ask viewers what their favorite feature is to encourage a conversation and increase engagement.

Source: RISMedia (06/29/21) Brown, Paige

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Incorporate Humor on Social Media with Real Estate Memes

Entertaining real estate memes can attract social media users like millennials, who may look at 20 to 30 memes daily, which could lead to a 60% increase in engagement.

NORWALK, Conn. – Social media has become an important marketing tool for real estate professionals, but consumers often scroll through their feeds inattentively. To attract prospects, agents can incorporate some humor to their marketing methods, alongside educational and promotional posts.

For instance, real estate memes can be both relatable and engaging, and can help entertain millennials, the largest generation of home buyers. Forbes estimates there are more than 3 billion social media users, of whom at least 60% are looking for funny and entertaining content.

Millennials usually look at an estimated 20 to 30 memes every day, which can eventually lead to a 60% increase in engagement with 10 times the reach. But no matter the generation or demographic, these images use positive emotions to break the ice and potentially enhance brand exposure.

Tips for agents include developing a meme library using sources like Giphy, Imgflip, and Canva, and selecting memes based on how well they match with the agent’s brand identity. It is also essential to understand the targeted audience and avoid any politics to prevent alienating members of their audience.

Source: RISMedia (09/22/21) Brown, Paige

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Average Mortgage Amount Increases to $410,000

Mortgage Bankers Association: With home price appreciation continuing to rise, last week’s average now marks the highest average mortgage amount since May.

WASHINGTON – The dollar value of mortgages that home buyers are taking out is soaring as they try to afford higher home prices.

The average amount for a mortgage averaged $410,000 last week, according to data from the Mortgage Bankers Association. That marks the highest average mortgage amount since May.

“With home price appreciation continuing to run hot, increasing more than 19% annually in July, applications for larger loan amounts continue to outpace lower-balance loans,” says Joel Kan, the MBA’s associate vice president of economic and industry forecasting.

While home prices continue to rise, they are inching up by smaller annual gains than they have been. The National Association of REALTORS® reported a 14.9% annual gain in home prices for August’s existing-home sales.

Also, more housing inventory is coming onto the market. Nearly one-third of the 50 largest metros saw increases in the number of newly listed homes compared to last year, according to a new report from realtor.com®. That said, there are still fewer homes for sale than a year ago.

As buyers face higher home prices, they’ll need to set a budget and stick to it as they continue to face competition for homes. Most financial experts recommend homeowners limit their spending to 30% of their take-home pay for housing. That 30% also considers additional expenses of homeownership, like property taxes, homeowners insurance, private mortgage insurance (if applicable), and homeowners association fees.

Source: “This Is the Average Mortgage Borrowers Are Taking Out. Can You Afford It?” The Ascent/Motley Fool (Sept. 30, 2021) and Mortgage Bankers Association

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