Buyers May Find Relief in Cooling Housing Market –Based on Redfin’s recent reports, nearly 29 percent of listings in major markets during the month of October saw price reductions. “The cycle has moved from seller-advantage to at least mildly buyer-advantage in many parts of the United States,” writes Kenneth Harney, a nationally syndicated real estate columnist. The housing market is showing several signs of slowing, providing a much-needed break for potential buyers who have been waiting to jump into the market. Existing-home sales were 2.4 percent lower in the third quarter than a year ago, and the drop comes at a time when many areas are starting to see an uptick in new listings. Home prices in many markets are no longer rising by double digits or even single digits annually. But with a strong economy and low unemployment, the housing dip is more of a rebalancing of the market than a sign of a downturn, housing analysts say. Sellers are realizing there is a slowdown and are starting to cut their prices to better compete.
More Buyers Reach for ARMs in High-Priced Markets –According to Freddie Mac, as mortgage rates rise, more buyers in expensive metros are turning to adjustable-rate mortgages to curb costs. But the potential savings between a fixed-rate mortgage and an adjustable-rate mortgage is narrowing. The average rate on the 30-year fixed-rate mortgage and 5/1 adjustable-rate mortgage have both jumped by about 70 basis points from August 2017 to August 2018. ARMs still typically offer a slightly lower initial interest rate that then rises after a set period, such as five or seven years. ARMs are more common in expensive metros and among home buyers who are borrowing larger balances on their mortgage loans, according to CoreLogic, a real estate data firm. ARMs accounted for 51 percent of the dollar volume among mortgages of more than $1 million that were originated during August 2018. Among mortgages in the $400,001 to $1 million range, the ARM share was about 21 percent, and in the $200,001 to $400,000 range, ARMs accounted for just 7 percent of the mortgages.
Study: Homeownership Delay Hurts Financial Health –Based on a new report from the Urban Institute, millennials who put off homeownership may be severely curtailing their ability to build wealth over their lifetimes. Buying a home at an early age offers a “big bang for their housing buck,” concludes the report’s authors, Hyun Choi and Laurie Goodman. Researchers tracked individuals since 1968 to identify those who reached age 60 between 2003 and 2015 and how homeownership has affected their finances. Of those now in their early 60s, individuals who had purchased their first home between the ages of 25 and 34 had a median housing wealth of $150,000, while those who waited to buy until they were between 35 and 44 had $72,000 less. Those individuals who did not buy until 45 or older had median wealth of at least $100,000 less than those who purchased between the ages of 25 to 34, according to the study.
A Turnaround in Home Sales: More Business Is Coming to Town –According to the National Association of REALTORS®, the streak of sluggish home sales finally came to an end in October. Following six consecutive months of decreases, existing-home sales reversed to post a rise last month. Three of the four major regions of the U.S. reported gains in October. Total existing-home sales which are completed transactions that include single-family homes, town homes, condos, and co-ops increased 1.4 percent in October from September. Sales, however, are still down 5.1 percent from a year ago. “Buyers are finally stepping back into the housing market,” says Lawrence Yun, NAR’s chief economist.