new construction

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For many individuals and families, owning a home is a lifelong dream. However, with rising real estate prices, some may find themselves seeking financing beyond the conforming loan limit. In this instance, you’d need to apply for a jumbo loan. So whether you’re planning to buy a new construction home in Sioux Falls or a home in Harrisburg, let’s break down what a jumbo loan is in South Dakota, the 2023 conforming loan limits, and what’s needed to qualify for this type of loan.

What is a jumbo loan?

So what are jumbo loans in South Dakota? They are large loans that exceed the loan limits set by the FHFA for conforming loans. Jumbo loans allow borrowers to finance homes that exceed the conforming loan limit (CLL), making it possible to buy high-end properties that may not be otherwise affordable.

If the loan amount needed is more than the CLL, you’ll need a jumbo loan. Because of the larger loan amounts, jumbo loans typically carry stricter requirements and higher interest rates than conforming loans. Lenders may require a higher down payment, a lower debt-to-income ratio, and a stronger credit score to qualify for a jumbo loan in South Dakota.

What is the jumbo loan limit in South Dakota?

In South Dakota, the conforming loan limit is $726,200 across all counties. For example, the conforming loan limit in Minnehaha County is $726,200, so any mortgage that surpasses the loan limit designated for your county by even one dollar is classified as a jumbo loan.

As a reminder, the amount being borrowed is what determines whether or not you’ll need a jumbo loan, not the home price. So, if you were to put $100,000 down on a $780,000 home in Minnehaha County, the loan would be $680,000, which is under the conforming loan limit for this area. In this case, your loan wouldn’t be considered a jumbo loan.

For more information on the conforming loan limit in your county, use the FHFA map.

What are the requirements for a jumbo loan in South Dakota?

Borrowers must meet stricter requirements to qualify for a jumbo loan than they would for a conforming loan. The specific requirements can vary from lender to lender, but below are the typical requirements for borrowers seeking a jumbo loan.

Higher credit score: When it comes to receiving a jumbo loan, credit score requirements are typically more stringent than for conventional mortgages. It’s possible that some lenders may be willing to accept a lower score, a credit score of at least 720 is generally required to qualify for a jumbo loan. It’s essential to have a strong credit profile and a solid financial history to increase your chances of being approved for a jumbo mortgage.

Larger down payment: When buying a higher-priced home, buyers will typically need to make a more substantial down payment. While borrowers seeking traditional mortgages may be able to find programs that allow for down payments as low as 3%, those seeking a jumbo loan should expect to put down a minimum of 10%, and in some cases, as much as 30%. If a lender allows for a down payment of less than 20%, the borrower will need to pay for private mortgage insurance (PMI).

More assets: To qualify for a jumbo loan, lenders require borrowers to demonstrate that they have sufficient liquid assets or savings to cover at least one year of loan payments. The exact amount of assets needed can vary depending on the lender and the size of the loan, but having more assets can increase the chances of approval and potentially lead to better terms and interest rates.

Lower debt-to-income ratio (DTI): When applying for either a conforming loan or non-conforming loan, lenders will review your debt-to-income (DTI) ratio to assess your financial behavior and creditworthiness. The DTI ratio is calculated by dividing your total monthly debt payments by your gross monthly income. For conforming loans, some lenders may accept a DTI as high as 50%. However, for jumbo loans in South Dakota, borrowers are typically required to have a DTI under 43%, with a preference for a ratio closer to 36%. Maintaining a lower DTI can demonstrate financial stability and improve your chances of being approved for a jumbo loan with favorable terms.

Additional home appraisals: Your lender may require a second home appraisal for a jumbo loan, in addition to the standard appraisal, to get a second opinion on the property’s value. This is especially true in counties with limited comparable property sales. The second appraisal helps lenders ensure that they are providing funds for a property that is worth the loan amount or more.

Source: redfin.com

Apache is functioning normally

Metro Atlanta’s housing market last month downshifted the way it usually does in mid-summer, with higher mortgage rates applying an added brake.

Fewer than 4,900 homes were sold in the 12-county core of the region in July — down 16% from June — as the median price of a sale edged down slightly to $400,000, according to the Georgia Multiple Listing Service.

The market typically decelerates as the start of school approaches and families’ scramble to lock in new addresses eases. Moreover, the market has been in a year-long slide with home sales in July down 21% from the same month last year, according to Georgia MLS.

Mortgage rates have been hovering near their highest levels in two decades amid the Federal Reserve’s sustained efforts to tame inflation. That has been a problem at both ends of the supply-demand equation — with buyers facing headwinds and many would-be sellers deciding not to list their homes.

“It’s an issue especially for first-time homebuyers,” said Latoya Forbes, broker at Village Premier Collection, specializing in the city and the eastern suburbs. “Those rates make their monthly payments so much higher. There are absolutely some people staying out of the market because of it.”

Those on limited budgets who are intent on buying cannot be too choosy, she said. “You don’t have the luxury of saying, ‘I only want to stay on this side of town.’”

In the past year, rates have been higher than any time since the spring of 2002.

The average 30-year fixed-rate mortgage peaked at 7.08% interest last fall and, while it hasn’t hit that mark since, it’s been consistently flirting with 7%.

But it is not just buyers thinking about higher rates. Many current homeowners who might be in the market for a new home are thinking about the low rates they have now on their current mortgages and the higher cost of a loan on a new home.

Many of them held back from selling, which depresses inventory — that is, the numbers of homes listed for sale.

Buyers seem to be gritting their teeth and accepting the reality of higher rates, said Connie Spaziano, managing broker at Re/Max Around Atlanta, which has four northern metro locations. “We have more buyers than sellers. The real issue is low inventory.”

In a balanced market, in which buyers and sellers have roughly equal negotiating power, the number of homes for sale equals at least six months of sales. But inventory in metro Atlanta has been consistently less than two months of sales for more than a year.

There were 11% fewer listings than a year ago, when inventory was already historically sparse, according to MLS.

That shortfall has made newly built homes an ever-larger part of the picture, perhaps 30% of overall sales. And with listings few in number, new construction is often snapped up quickly.

Smith Douglas Homes expects to build 1,000 homes in metro Atlanta this year, said James Van Kirk, executive vice president of the Atlanta-based builder.

“This year is going much better than we anticipated,” he said. “We attribute a lot of the demand to a lack of re-sale inventory on the market.”

In late July, when homes went on sale at the company’s 27-house development in Dallas, in Paulding County about 30 miles northwest of Atlanta, four sold almost immediately at prices between $330,000 and $380,000, he said.

But buyers who want a home for less than $300,000 must go farther, Van Kirk said: Below the $300,000 line, the company has built townhomes in Jasper and houses in Dalton.

After the collapse of the housing bubble and the ensuing Great Recession, home construction virtually ceased. As the economy recovered, the region again started drawing transplants from around the county, but building has not caught up.

Amid strong job growth and a surge in home values, the Atlanta area remains affordable compared to many competing metros. According to real estate marketplace Zillow, the most common out-of-state location of wannabe buyers looking at metro Atlanta homes is much higher-priced New York.

According to national brokerage Redfin, the median home price in metro New York is $800,000.

Metro Atlanta housing report

Atlanta housing market*, in July

Number of homes sold: 4,827

Median sales price: $400,000

Number of listings: 10,654

Change from a year earlier

Number of homes sold: -21.2%

Median sales price: -0.6%

Number of listings -11.0%

Compared to the month before:

Number of homes sold: -16.1%

Median sales price: -2.2%

Number of listings: 4.0%

Mortgage rates, average 30-year mortgage

Highest: 18.39% (1981)

Lowest: 2.65% (2021)

Year ago: 4.99%

Two years ago: 2.77%

Five years ago: 4.59%

Ten years ago: 4.40%

Recent: 6.90%

*For the 12 counties centered on the city of Atlanta

Source: Georgia Multiple Listing Service, Federal Reserve Bank of St. Louis, Freddie Mac

_________________________________

Source: ajc.com

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People, on average, take about a year to decide whether or not to buy or sell a home. But when it comes to selecting a real estate agent, many people decide in just one day. That’s why agents need flawless follow-up and fine-tuned scripts in order to convert contacts into clients at a high level. On today’s show, Caleb Spears shares the systems and scripts that have brought him his biggest successes with sellers. Caleb also discusses the benefits of starting as a buyer’s agent, offers his predictions on where the market is headed, and more.

Listen to today’s show and learn:

  • About Destin, Florida and its exponential growth [4:57]
  • Caleb’s start in real estate [6:36]
  • Graduating college at age 19 [8:43]
  • Caleb’s first year and first deal in real estate [13:30]
  • What Caleb wishes he knew as a new real estate agent [20:15]
  • Where Caleb gets business today [26:10]
  • How to bring value when making cold calls [27:20]
  • Caleb’s favorite real estate script [29:17]
  • Caleb’s real estate market predictions [36:22]
  • What drives Caleb and excites him about Real Estate Rockstars [43:08]
  • Where to follow and find more from Caleb Spears [45:20]

Caleb Spears

When Caleb Spears was offered a job at Scenic Sotheby’s International Realty, he said what convinced him of this career path for his life was the ability to make a positive and noticeable impact on the lives of the people he’d serve. By the age of 24, Caleb ranked among the top 1% of agents by sales volume while serving on the top-producing team on the Emerald Coast, expertly guiding clients through the largest financial transactions of their lifetime and helping them to achieve their goals and dreams along the way.

An Emerald Coast native, Caleb earned a bachelor’s degree with a minor in entrepreneurship from Florida State University at the age of 20 and had an associate’s degree before he’d even finished high school. The hard work and diligence those achievements required translate well in his daily business.

On a daily basis, he makes time for prospecting for his buyers and sellers, both locally and throughout the Sotheby’s International Realty network. He specializes in high-end luxury properties including new construction and income-producing properties for his investment-minded clients.

One particular story he cherishes from his real estate career is helping a retired surgeon and military officer purchase a gulf-front home where he could share memories with his parents and adult children. Years later, that client still touches base with gratitude for the impact Caleb has had on their lives.

Caleb conducts his business with integrity and is results-oriented. To date, he has accrued more than $100 million in career sales and has personally developed multiple properties in the market including rental homes.

When he’s not working, Caleb serves in his church and at various local charity events. He enjoys playing basketball, working out and going to Colorado to snowboard. He and his wife, Madeline, enjoy spending time with their son, Liam. They frequently watch Disney movies in other languages to practice their comprehension skills. He also sings, plays guitar and is a jiu-jitsu enthusiast.

Related Links and Resources:

Thank You Rockstars!
It might go without saying, but I’m going to say it anyway: We really value listeners like you. We’re constantly working to improve the show, so why not leave us a review? If you love the content and can’t stand the thought of missing the nuggets our Rockstar guests share every week, please subscribe; it’ll get you instant access to our latest episodes and is the best way to support your favorite real estate podcast. Have questions? Suggestions? Want to say hi? Shoot me a message via Twitter, Instagram, Facebook, or Email.
-Aaron Amuchastegui

Source: hibandigital.com

Apache is functioning normally

The strongest agents are constantly analyzing their return on investment regarding how they’re spending both their time and their money. This includes money spent on their business as well as their personal lives. Below are the top 10 powerful secrets that strong agents use to stay motivated and keep the right mindset for success.    

If they’re not getting more out than they’re spending in return, the expenditure isn’t worth it. 

‘Breaking even’ doesn’t count, because of the time lost and effort expended to get the results. Results mean trackable, profitable, closed business. Not just leads, impressions or likes. 

They are actively and aggressively isolating themselves from the media, both online and off. 

They are making their world smaller regarding who is influencing them. Following a  media-free morning or media-free life is a good start. Eliminating negative feeds from social media is another good strategy to ‘build a moat’ around your mindset! 

They are constantly monitoring their own internal dialog. 

Has negative thinking entered their mindset? Strong agents are self-aware of the unintended consequences of allowing one negative thought to manifest. 

They are hyper-aware of their own market conditions. 

They study what’s selling, what’s not and what the hot price ranges and zip codes are. Strong agents know where the new construction is being built and they know what’s happening with mortgages. They’re not hiding out waiting for the market to lift them up. 

Their mantra is ‘If it’s meant to be, it’s up to me!’ 

They are very proactive in their lead generation, having more conversations with more prospects. 

They’re not reliant on lucking into repeat or referral business, and they’re not addicted to buying leads. They are working with multiple sources of business at once. 

They are aware that when they’re feeling out of control, they’ll subconsciously look for things to control. 

This sometimes manifests in overeating, substance abuse, and wrecking relationships. That gives them the feeling of control, but it’s destructive. Powerful agents (and people) are introspective before they make those mistakes. 

They recognize their own ‘early warning signs’ as the trigger to the bad behavior and take a step back before causing more drama to themselves, their prospects, clients or family. 

They are empathetic to the fact that other people don’t have the mechanisms to adapt quickly to the forced changes happening in the economy.

Strong agents forgive easily and quickly because they understand that others are stressed. They offer a positive light backed by facts and thoughtful solutions, rather than jumping in the moshpit of negativity or drama.

Because they’re rooted in a mindset of service, they are genuinely excited and appreciative of the opportunities in the market.

They are focused on the many people who genuinely need help and they are there to be of service.   

They know that knowledge leads to confidence and ignorance leads to fear. 

Thus they are constantly increasing their skillset so they can increase their confidence. They’re seeking out new ways to be able to help more people in a variety of circumstances. An example of this is knowing how to explain different types of mortgage loan programs that get the interest rates down and make the payment more attractive. 

They’re involved in Premier Coaching. 

They actively get overwhelming value from the daily, semi-private coaching sessions! 

Tim and Julie Harris host a podcast for real estate professionals. Tim and Julie of Premier Coaching have been real estate coaches for more than two decades, coaching the top agents in the country through different types of markets.

Source: housingwire.com

Apache is functioning normally

With mortgage rates exceeding 7% again and home prices reaching new heights, some critics are sounding the alarm.

The argument is that we’ve got an unhealthy housing market, in which the typical American can’t afford a median-priced home.

And when payments are out of reach, it’s just a matter of time before things correct. It is, after all, unsustainable.

Some are even arguing that it’s 2008 (or whatever early 2000s year you want to use) all over again.

But is the housing market really on the brink of another crash, or is housing simply unaffordable for new entrants?

What Could Cause the Next Housing Crash?

Over the past few years, I’ve been compiling a list of housing market risk factors. Just ideas that pop in my head about what could cause the next housing crash.

I’m going to discuss them to see what kind of threat they pose to the stability of the housing market.

This is what my list looks like at the moment:

  • Single-family home investors selling all at once
  • Climate-related issues
  • Spike in mortgage rates
  • Overbuilding (home builders going too far)
  • Crypto bust (bitcoin, NFTs, etc.)
  • Forbearance ending (COVID-related job losses)
  • Mass unemployment (recession)
  • Contentious presidential election
  • Mom and pop landlords in over heads
  • Airbnb and STR saturation (especially in vacation markets)
  • Increase in overextended homeowners (high DTIs, HELOCs, etc.)
  • Student loans turned back on (coupled with high outstanding debt)
  • Buy now, pay later (lot of kicking the can down the road)

The Spike in Mortgage Rates

I had this on my list from a while back, and this one actually came to fruition. The 30-year fixed jumped from around 3% to over 7% in the span of less than a year.

Rates have since bounced around, but generally remain close to 7%, depending on the week or month in question.

However, this hasn’t had the expected effect on home prices. Many seem to think that there’s an inverse relationship between home prices and mortgage rates.

But guess what? They can rise together, fall together, or go in opposite directions. There’s no clear correlation.

However, markedly higher mortgage rates can put a halt to home sales in a hurry, and obviously crush mortgage refinance demand.

In terms of home prices, the rate of appreciation has certainly slowed, but property values have continued to rise.

Per Zillow, the typical U.S. home value increased 1.4% from May to June to a new peak of $350,213.

That was nearly 1% higher than the prior June and just enough to beat the previous Zillow Home Value Index (ZHVI) record set in July 2022.

What’s more, Zillow expects home price growth of 5.5% in 2023, after starting the year with a forecast of -0.7%.

They say that rate of appreciation is “roughly in line with a normal year before records were shattered during the pandemic.”

So we’ll move on from the high mortgage rate argument.

Overbuilding and a Flood of Supply

The next risk factor is oversupply, which would surely lead to a big drop in home prices.

After all, with housing affordability so low at the moment, a sudden flood of supply would have to result in dramatic price cuts.

But the problem is there’s very little inventory, with months’ supply near record lows. And it’s about a quarter of what it was during the lead up to the housing crisis.

Just look at the chart above from the Urban Institute. If you want to say it’s 2008 all over again, then we need to get inventory up in a hurry, close to double-digit months’ supply.

Instead, we have barely any inventory thanks to a lack of housing stock and a phenomenon known as the mortgage rate lock-in effect.

Ultimately, today’s homeowner just isn’t selling because they have a super low fixed mortgage rate and no good option to replace it.

But New Construction Isn’t Keeping Up with Demand

At the same time, new construction isn’t keeping up with demand. As you can see from the chart below, completions are on the rise.

But new residential production, including both single-family and multifamily completions as well as manufactured housing shipments, was only up 2.2% from a year earlier.

And at 1.60 million units in May 2023, production is just 67.2% of its March 2006 level of 2.38 million units.

The other great fear is that mom and pop landlords will flood the market with their Airbnb listings and other short-term rentals.

But this argument has failed to show any legs and these listings still only account for a tiny sliver of the overall market.

What you could see are certain high-density pockets hit if a large number of hosts decide to sell at the same time.

So specific hotspot vacation areas. But this wouldn’t be a national home price decline due to the sale of short-term rentals.

And most of these owners are in very good equity positions, meaning we aren’t talking about a repeat of 2008, dominated by short sales and foreclosures.

A Decline in Mortgage Quality?

Some housing bears are arguing that there’s been a decline in credit quality.

The general idea is recent home buyers are taking out home loans with little or nothing down. And with very high debt-to-income ratios (DTIs) to boot.

Or they’re relying on temporary rate buydowns, which will eventually reset higher, similar to some of those adjustable-rate mortgages of yesteryear.

And while some of that is certainly true, especially some government-backed lending like FHA loans and VA loans, it’s still a small percentage of the overall market.

If we look at serious delinquency rates, which is 90 days or more past due or in foreclosure, the numbers are close to rock bottom.

The only slighted elevated delinquency rate can be attributed to FHA loans. But even then, it pales in comparison to what we saw a decade ago.

On my list was the end of COVID-19 forbearance, but as seen in the chart, that seemed to work itself pretty quickly.

At the same time, lending standards are night and day compared to what they were in the early 2000s. See chart below.

Since 2012, mortgage underwriting has been pretty solid, thanks in no small part to the Qualified Mortgage (QM) rule.

The majority of loans originated over the past decade were fully underwritten, high-FICO, fixed-rate mortgages.

And while cash-out refis, HELOCs, and home equity loan lending has increased, it’s a drop in the bucket relative to 2006.

In the prior decade, most home loans were stated income or no doc, often with zero down and marginal credit scores. Typically with a piggyback second mortgage with a double-digit interest rate.

And worse yet, featured exotic features, such as an interest-only period, an adjustable-rate, or negative amortization.

What About Mass Unemployment?

It’s basically agreed upon that we need a surge of inventory to create another housing crisis.

One hypothetical way to get there is via mass unemployment. But job report after job report has defied expectations thus far.

We even made it through COVID without any lasting effects in that department. If anything, the labor market has proven to be too resilient.

This has actually caused mortgage rates to rise, and stay elevated, despite the Fed’s many rate hikes over the past year and change.

But at some point, the labor market could take a hit and job losses could mount, potentially as a recession unfolds.

The thing is, if that were to materialize, we’d likely see some sort of federal assistance for homeowners, similar to HAMP and HARP.

So this argument kind of resolves itself, assuming the government steps in to help. And that sort of environment would also likely be accompanied by low mortgage rates.

Remember, bad economic news tends to lead to lower interest rates.

Maybe the Housing Market Just Slowly Normalizes

While everyone wants to call the next housing crash, maybe one just isn’t in the cards.

Arguably, we already had a major pullback a year ago, with what was then referred to as a housing correction.

Not easily defined like a stock market correction, it’s basically the end of a housing boom, or a reversal in home prices.

We did recently see home prices go negative (year-over-year) for the first time since 2012, which made for good headlines.

But it appears to be short-lived, with four straight monthly gains and a positive outlook ahead.

Instead of a crash, we might just see moderating price appreciation, higher wages (incomes), and lower mortgage rates.

If supply begins to increase thanks to the home builders and perhaps less lock-in (with lower mortgage rates), prices could ease as well.

We could have a situation where home prices don’t increase all that much, which could allow incomes to catch up, especially if inflation persists.

The housing market may have just gotten ahead of itself, thanks to the pandemic and those record low mortgage rates.

A few years of stagnation could smooth those record years of appreciation and make housing affordable again.

Where We Stand Right Now

  • There is not excess housing supply (actually very short supply)
  • There is not widespread use of creative financing (some low/0% down and non-QM products exist)
  • Speculation was rampant the last few years but may have finally cooled off thanks to rate hikes
  • Home prices are historically out of reach for the average American
  • Unemployment is low and wages appear to be rising
  • This sounds more like an affordability crisis than a housing bubble
  • But there is still reason to be cautious moving forward

In conclusion, the current economic crisis, if we can even call it that, wasn’t housing-driven like it was in 2008. That’s the big difference this time around.

However, affordability is a major problem, and there is some emergence of creative financing, such as temporary buydowns and zero down products.

So it’s definitely an area to watch as time goes on. But if mortgage rates ease back to reasonable levels, e.g. 5-6%, we could see a more balanced housing market.

As always, remember that real estate is local, and performance will vary by market. Some areas will hold up better than others, depending on demand, inventory, and affordability.

Read more: When will the next housing crash take place?

Source: thetruthaboutmortgage.com

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In a clear sign of the times, Zillow has announced a partnership to syndicate new-construction listings on Redfin.

This means home shoppers will see more new builds than they did in the past, at a time when existing housing supply has rarely been lower.

It also means home builders will gain even more exposure, further boosting their already-high market share.

Once launched, Redfin will source non-MLS new-construction listings exclusively from their competitor Zillow.

And any new-construction listings that are available through an MLS will continue to be discoverable on the Redfin platform.

Zillow and Redfin Linkup a Boon to Home Builders

Zillow apparently has the largest selection of new-construction communities of all real estate U.S. websites.

This seems to be due to their existing partnerships with home builders, whereby they advertise their properties on Zillow.

To broaden their reach, these listings are slated to be syndicated to Redfin starting in the fourth quarter of 2023.

And Redfin users will get to take advantage of new features designed specifically to discover new-construction communities and connect with home builders.

Powered by Zillow’s Community pages, they’ll list all available homes for sale within the community, along with their amenities.

Shoppers will be able to view move-in ready homes, nearly complete homes, and even lots.

Those interested will find a direct link to the home builder’s website, along with pertinent contact information and sales center hours.

New Home Sales Up Big Year-Over-Year

The U.S. Census Bureau recently reported that sales of newly built single‐family houses climbed to a seasonally adjusted annual rate of 697,000 in June 2023, up an estimated 23.8% from a year earlier.

Meanwhile, the seasonally‐adjusted estimate of new homes for sale at the end of June was 432,000, which represents a 7.4-month supply at the current sales rate.

That’s down from 448,000 a year earlier, when supply stood at 9.5 months.

At the same time, Zillow reported that there were 28% fewer new listings in June compared to a year ago.

And Redfin noted that about one-third of all single-family homes available for sale were new construction, which is apparently a record-high share.

As you can see from the chart above (from early 2022), newly-built homes saw their market share rise from around 21% in 2019 to 34.1% by the end of 2021.

It appears their market share has climbed even higher since then, as existing supply continues to be hard to come by.

Where Did Existing Home Supply Go?

The National Association of Realtors (NAR) reported that there were just 1.08 million unsold existing homes at the end of June.

That was down 13.6% from a year ago when there were about 1.25 million existing homes available.

This represents a 3.1-month supply at the current monthly sales pace. Interestingly, it’s up slightly from 3.0 months in May and 2.9 months in June 2022.

As for why, demand is also low, mainly because housing affordability is so poor at the moment.

Between much higher mortgage rates and all-time high home prices, there aren’t many willing and able buyers out there.

Still, inventory remains in short supply, especially due to the mortgage rate lock-in effect. In short, existing owners are staying put because of the stark difference in interest rates.

Even if they’re able to sell their home and buy a replacement at today’s rates, going from a 2-3% rate to a 7% rate isn’t ideal for anyone.

Home building has also lagged for many years, so inventory wasn’t great to begin with over the past decade.

This explains why the median existing-home price was $410,200 last month, the second-highest price of all time and just shy of its record-high $413,800 in June 2022.

Home Builders to the Rescue

To help alleviate this supply and demand imbalance, home builders have been stepping up their game.

They’ve been offering both temporary and permanent rate buydowns to ease affordability concerns.

And because they often have their own financing departments, they’re able to get creative and really push down rates.

While someone purchasing an existing home might be subject to a 6-7% mortgage rate, the home builders could be able to offer a 5% mortgage rate.

This is a huge advantage for builders. Additionally, they don’t have to worry about a seller finding a replacement property.

As such, there’s no mortgage rate lock-in to worry about, nor is a contingent sale necessary.

Collectively, this may explain why the market share of new homes has increased so much. And why Zillow and Redfin want more new home listings on their platforms.

So if you’re a prospective home buyer, don’t be surprised if you see more and more newly-built homes versus existing homes in your searches.

Read more: Should I buy a new home or an old home?

Source: thetruthaboutmortgage.com

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Zillow Group‘s new-construction listings will be automatically syndicated to Redfin. The deal between the listing platforms comes as new construction listings form roughly 30% of the housing sales market.

The partnership is aimed at expanding the reach of homebuilder listings on Zillow, allowing Redfin’s brokerage customers to explore a broader range of new construction for sale, the two companies said on Tuesday.

“Zillow’s Community pages, in particular, help buyers understand the benefits of a new-construction home and give home builders a place to highlight all the amenities within a new-build community,” Owen Gehrett, vice president and general manager of new construction at Zillow, said in a statement.

“The partnership with Redfin extends this unique and valuable resource to a wider audience. It benefits home builders by expanding their reach to additional home buyers,” Gehrett added.

Zillow and Redfin’s partnerships come at a time when buyers are increasingly turning to new construction due to a rate lock-in effect caused led by high mortgage rates.

New single-family home sales rose 23.8% in June from a year ago while the market saw 28% fewer new listings added during the same period.

With inventory of existing homes dwindling and buyers’ demand for new construction rising, one-third of single-family homes available for sale were newly built homes – marking a record-high share, according to a Redfin analysis. 

“This (Zillow partnership) is a win-win-win for our customers, agents and the builders who advertise with Zillow, who will now reach the homebuyers on Redfin,” Adam Wiener, Redfin’s president of real estate operations, said.

“The partnership provides a new revenue opportunity while allowing us to focus on what we do best, helping customers buy and sell homes with local Redfin agents,” Wiener added.

Zillow, the country’s top real estate listing platform, recorded a $22 million net loss in the first quarter of 2023. Its business model relies heavily on revenue from real estate agent advertising, and it’s been a sluggish housing market.  

Traffic to its apps and site remained flat compared to a year ago and other metrics including – Premier Agent and Zillow Home Loans – were not as strong. 

Despite weak financial earnings, executives said they will focus on making the home-buying transaction more seamless for the remainder of 2023.

Real estate brokerage and listings platform Redfin was also in the red in Q1 — reporting a $60.8 million net loss, an improvement on the $90.8 million lost in Q1 2022. 

While executives at Redfin noted that the company is headed in the right direction, the firm is unlikely to get in the black in Q2 – with net loss projected to be between $35 million and $44 million.

Source: housingwire.com

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(Bloomberg) — US homeowners are nearly twice as willing to sell if their mortgage rate is 5% or higher, but just one in five mortgaged homes meet that criteria.

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For those who have a mortgage rate of at least 5%, 38% said they’re planning on selling their homes, according to a quarterly survey by Zillow. Just 21% of holders with rates below that dividing line said the same.

Existing-home sales have fallen almost every month since the start of last year as higher mortgage rates disincentivize owners from moving. Prospective buyers have sought out new construction instead since inventory on the resale market is so low.

About 80% of mortgage holders reported having a rate of less than 5%, and about 90% have a rate of less than 6%, Zillow said. Almost a third reported a rate of less than 3%.

Mortgage rates “are unlikely to return to 5% in the near future,” said Orphe Divounguy, a senior economist at Zillow Home Loans. “That means many homeowners will move only for major life events, like a new baby or retirement.”

Even so, nearly a quarter of homeowners are considering selling their home in the next three years or currently have their home listed for sale — significantly higher than the 15% of homeowners who said the same one year ago, Zillow said. That suggests inventory could be on the rise soon.

Of course, mortgage rates aren’t the only factor that influence one’s decision to move. About two-thirds said they’re looking to upgrade to a nicer home while 45% cited a growing family.

The tight supply on the resale market has kept home prices elevated. Zillow’s latest monthly market report finds that home values hit a record high in June, topping $350,000 for the first time nationally. And home values climbed in all of the 50 largest metro areas for a second month in a row.

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Source: finance.yahoo.com

Apache is functioning normally

Property values for most Los Angeles County owners increased for a 13th straight year with a 5.91% bump to the 2023 assessment roll, bringing the total value to nearly $2 trillion, the county assessor announced Thursday.

The roll includes all taxable property within the more than 4,000-square-mile county and is valued at a record $1.997 trillion.

From that valuation, the county assessor’s office estimates $20 billion in property taxes will fund public services, including schools and medical care.

Property owners will see only a standard 2% tax increase, due to Proposition 13, unless their properties were reassessed because of new construction or other reasons.

Some cities saw jumps significantly higher than the county’s 5.91% rate.

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Industrial hamlet Irwindale led all cities in gains with a 10% increase in property values, which beat out Burbank and Cudahy, which both finished with a 9.7% boost.

Conversely, La Verne saw the smallest hike, increasing by 2.3%, which was a little less than Whittier (3.5%) and Bell Gardens (3.6%).

“Most local governments rely on property taxes as a source of revenue to support the provision of local government services,” said Eric J. Heikkila, a professor at USC Price School of Public Policy.

“When property values increase, the same tax rate can yield more revenues for those purposes,” said Heikkila, author of the book “The Economics of Planning.”

In terms of property assessment, no city was close to the $819.7 billion valued for Los Angeles parcels. Long Beach was the next highest at $74.8 billion, followed by Santa Monica ($49 billion) and Beverly Hills ($45 billion).

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Bradbury is the lone city in the county valued at less than $1 billion. The town of less than 1,000 nestled at the doorstep of the San Gabriel Mountains is valued at a mere $879,383 million. Cudahy and Avalon follow in valuations, finishing at $1.08 billion and $1.1 billion, respectively.

The county assessments are handled annually and provide “insight into the state of the real estate market as well as the local economy,” the county assessor’s office said.

“Our analysis does indicate property value growth at this time and that’s certainly good news for property owners and for local governments,” County Assessor Jeff Prang said.

He added: “However, the real estate market began more robustly in 2022 than it ended, and we will not be surprised if the sluggish market continues into the coming year.”

Online real estate broker Redfin reported that the median sale price in June for an L.A. County home was $860,750, which marked a 3.3% decrease year over year. The price peaked above $900,000 in June 2022. Redfin also noted that 4,874 homes were sold by June, a 20.7% decrease from this time last year.

“To say this has been a challenging couple of years is an understatement,” Prang said.

Heikkila said property assessments are only one tool in determining the strength of an economy that includes employment levels, inflation and GDP growth. He also said that “measures of inequality need to be considered.”

The county assessor’s office noted that single-family homes “produced a marked increase in property transfer assessments,” which netted the biggest increase — $67.4 billion — to the roll.

There were also increases due to inflation ($36.7 billion), personal property and fixtures ($10.4 billion) and new construction ($5.6 billion), along with $2.5 billion in decline-in-value reductions.

In total, there were 2,391,198 taxable property parcels, 200,969 business properties, 33,871 boats and 2,952 aircraft assessed.

Source: latimes.com

Apache is functioning normally

Mortgage rates rose slightly this week ahead of the Federal Reserve Open Markets Committee‘s rate hike. The 25-basis point increase to the federal funds rate was widely anticipated and priced in by capital markets.

Freddie Mac’s Primary Mortgage Market Survey, which focuses on conventional and conforming loans with a 20% down payment, shows the 30-year fixed rate averaged 6.81% as of July 27, up from last week’s 6.78%. By contrast, the 30-year fixed-rate mortgage was at 5.30% a year ago at this time. The 15-year fixed-rate mortgage also rose this week to 6.11%, up five basis points from the prior week.

“Mortgage rates inched up slightly after a significant decline last week,” said Sam Khater, Freddie Mac’s chief economist. “Higher interest rates continue to dampen activity in interest rate-sensitive sectors, such as housing. However, overall U.S. consumer confidence is unwavering, surging to a two-year high in the Conference Board’s Consumer Confidence Index for July 2023. Rising consumer confidence often leads to greater spending, which could drive more consumers into the housing market.”

Recent inflation and employment data shows slowing price growth and more moderate hiring. However, persistently-robust consumer spending kept inflation running above the 2% target, cutting against the Fed’s strategy. As a result, the FOMC raised the target policy rate a quarter point in Wednesday’s meeting.

Federal Reserve Chairman Jerome Powell said that the full impact of the rate hikes and credit tightening has not yet been realized and further emphasized the importance of a “data-informed” approach to future rate hikes. The goal remains to restore price stability, to do so will “require a period of below-trend growth and some softening of labor market conditions,” he said during the press conference with reporters Wednesday. 

Other mortgage rate indexes showed mixed results on Thursday morning: 

HousingWire’s Mortgage Rates Center showed Optimal Blue’s 30-year fixed rate for conventional loans at 6.85% on Wednesday, compared to 6.74% the previous week. However, the 30-year fixed rate for conventional loans was at 6.95% at Mortgage News Daily on Wednesday, up 5 basis points from the previous week.

The sideways trajectory of the 10-year Treasury which climbed lately, mirrored financial markets’ uncertainty. For consumers, the Fed’s rate hike means that borrowing costs will be even higher, with effects likely to be felt in the next month and a half, according to George Ratiu, chief economist at Keeping Current Matters.

The rates for credit cards, auto and personal loans, as well as adjustable-rate mortgages will increase. In addition, the spread between the 10-year Treasury and the 30-year fixed rate mortgage is poised to widen as uneasy investors might keep the risk premium elevated.

“Higher borrowing costs will also spill over into real estate markets, keeping mortgage rates at the higher echelons of the 6% – 7% range we have experienced over the past 11 months. For buyers of a median-priced home, the monthly mortgage payment—assuming a 20% down payment—amounts to about $2,300, not including property taxes and insurance,“ said Ratiu.

The cost of financing a median-priced U.S. home, assuming a 20% downpayment, rose 12.4% from June 2022, according to Realtor.com economic researcher Hannah Jones. In addition, supply remains very tight: total existing home sales slipped 3.3% in June from the prior month to a seasonally adjusted annual rate of 4.16 million. Year-over-year, sales dropped 18.9% from 5.13 million in June 2022. Bidding wars are raging in some markets of the country, preventing  home prices from falling significantly nationally, noted Jones.

Some buyers have turned to new construction to secure a home, and builders are ramping up their workforces to complete projects. Economists are hopeful that it might ease the housing supply shortage that has widened over the past decade. 

“Both increased housing supply and eventual lower inflation would usher in a healthier housing market with more evenly matched supply and demand, taking some of the upward pressure off prices,” said Jones in a statement. 

Source: housingwire.com