Homeowners Putting the Brakes on Remodeling

As the housing market slows, homeowners are halting their plans to upgrade their home. The booming housing market had been making homeowners feel like investing their growing equity into sprucing up their homes. Remodeling activity climbed to a decade high of 7.7 percent this year, according to a new report from Harvard University’s Joint Center of Housing Studies. But it predicts a slowdown over the coming months as the overall housing market eases.

“Low for-sale inventories are presenting a headwind because home sales tend to spur investments in remodeling and repair both before a sale and in the years following,” says Chris Herbert, the Joint Center’s director. Herbert also points to rising interest rates that are making buying a home more challenging for many Americans. This increase in rates also has an impact on the cost of tapping into home equity lines when funding big remodeling projects.

Credit Suisse downgraded shares of home remodeler retailers’ stocks due to the slower growth in home prices and projections of a slowing remodeling business. “Home prices have been a key driver of big-ticket projects, supporting strong average ticket growth,” Credit Suisse analysts write.

Source: REALTOR® Magazine
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Fewer Americans Are Willing to Move for a Job

Fewer Americans are willing to uproot their lives to move for new job opportunities, suggests new census data.

About 3.5 million Americans relocated for a new job last year, a 10 percent drop from 3.8 million in 2015. The number has been trending lower, despite the overall population increasing 20 percent over that time, The Wall Street Journal reports.

Why are more people staying put? Experts told WSJ that some blame may rest on rebounding real estate values. Housing costs have soared higher in some regions where jobs may be more plentiful, like East and West Coast cities, but it may be pricing out some who may have otherwise been willing to relocate.

Read the full article on REALTORmagazine

Top 10 Threats to Real Estate in 2019

Rising interest rates and the economy are the top two current issues to watch in real estate, according to the Counselors of Real Estate’s Top Ten Issues Affecting Real Estate 2018-2019, a list of the biggest threats to the housing market. For the first time, CRE broke its annual list down into current and longer-term issues to watch during the industry’s next year.

Read the article on REALTORmagazine

The Tax Cuts and Jobs Act – What it Means for Homeowners and Real Estate Professionals

The National Association of REALTORS® (NAR) worked throughout the tax reform process to preserve the existing tax benefits of homeownership and real estate investment, as well to ensure as many real estate professionals as possible would benefit from proposed tax cuts. Many of the changes reflected in the final bill were the result of the engagement of NAR and its members, not only in the last three months, but over several years.

While NAR remains concerned that the overall structure of the final bill diminishes the tax benefits of homeownership and will cause adverse impacts in some markets, the advocacy of NAR members, as well as consumers, helped NAR to gain some important improvements throughout the legislative process. The final legislation will benefit many homeowners, homebuyers, real estate investors, and NAR members as a result.

Read the National Association of Realtors article…

Fannie Mae to Loosen Mortgage Requirements

Government-sponsored financing giant Fannie Mae will ease its requirements this month, raising its debt-to-income ceiling from 45 percent to 50 percent on July 29. The move could pave the way for a larger number of new buyers to qualify for a mortgage, particularly millennials who may be saddled with student loan debt.

The debt-to-income ratio compares a person’s gross monthly income with his or her monthly payment on all debt accounts, including auto loans, credit cards, and student loans. It also factors in the projected payments on the new mortgage. Lenders see applicants with lower debt-to-income ratios as less at risk of defaulting.

Fannie Mae, Freddie Mac, and the Federal Housing Administration have exemptions that allow them to buy or insure loans with higher ratios than the federal rules, which are set at a maximum of 43 percent. The FHA allows debt-to-income ratios of more than 50 percent in some cases.

In a recent study, Fannie Mae researchers looked at more than a decade and a half of data from borrowers with debt-to-income ratios in the 45 percent to 50 percent range. They found that a significant number of these borrowers had good credit and were not prone to default.

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Will Tax Changes Benefit Homeowners and Investors?

As the White House shifts its focus to tax reform, analysts are examining who will benefit from the proposal announced last week. The New York Times recently reported that the week’s stock market surge could be attributed to President Donald Trump’s call to cut the corporate tax rate to 15 percent, from 35 percent. However, the article goes on to note that optimism on Wall Street doesn’t always translate to growth on Main Street.

“We have to distinguish between pro-profit and pro-growth policies,” Diane Swonk, an independent economist in Chicago, told The New York Times. “A pro-profit approach increases the share of the pie going to corporate earnings and shareholders. Pro-growth policies increase the size of the pie.”

Treasury Secretary Steven Mnuchin told reporters the plan will eliminate all personal tax deductions other than the mortgage interest deduction and those that encourage charitable giving. However, by increasing the standard deduction the plan will effectively nullify the benefits of the MID for the vast majority of filers, something strongly opposed by the National Association of REALTORS®.

Read the article on REALTORmag…

FHA Mortgage Insurance Premium Reduction

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Lower costs are coming for homebuyers seeking a Federal Housing Administration -insured mortgage.

FHA recently announced that they are cutting annual premiums for mortgage insurance from 0.85 percent to 0.60 percent, a move the National Association of Realtors® said breathes new life into the program.

“FHA mortgage products exist to serve an important mission: providing homeownership opportunities to creditworthy borrowers who are overlooked by conventional lenders,” said NAR President William E. Brown, a Realtor® from Alamo, California and founder of Investment Properties. “The high cost of mortgage insurance has unfortunately put those opportunities out of reach for many young, first-time- and lower-income borrowers. Now, we have a real opportunity to get back on track.”

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