Tag: statistics

You can find advice for prospective home buyers all over the internet — including, of course, in our articles. But who knows better than the buyers themselves what they’re having trouble with? For over half of survey respondents, 56% to be exact, the biggest problem is finding the right property. This is probably partially the current market, with very low inventory, and partially buyers not knowing what or where they can afford to buy.

This isn’t one of the categories buyers mention, though. For nearly a third of respondents, the most difficult part is understanding the process and paperwork involved. 20% cite primarily monetary issues, either with saving for a down payment or getting a loan. Comparatively few, only 7%, believe that COVID-19 was a significant complication. Meanwhile, 18% of respondents don’t think the process of buying a home is difficult at all.

Photo by Elisa Ventur on Unsplash

More: https://www.marketwatch.com/picks/more-than-half-of-homebuyers-find-this-to-be-the-no-1-most-difficult-aspect-of-buying-a-home-01651507815

The majority of homebuyers choose fixed-rate mortgages (FRMs) over adjustable-rate-mortgages (ARMs) in order to not have to deal with the uncertainty of changing interest rates. However, there’s very little uncertainty right now — interest rates are going up. This does include both FRMs and ARMs, but ARMs tend to have lower starting rates — a 5-year ARM was at 4.28% in mid-April. Buyers are predicting that even with an adjustable rate, their rate is not likely to surpass the 30-year fixed rate of 5.37% as of the end of April.

ARMs aren’t exactly popular, though. Even with their share doubling in the past three months, that’s still only 9% of mortgages. About as large a share of potential buyers are instead choosing to simply wait for a better time, with mortgage applications dropping by 8% and refinance applications dropping by 9%. Refinance applications are also drastically lower than the same time last year, having dropped a whopping 71%. New mortgage applications also dropped since last year, by a much more modest but still significant 17%.

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More: https://www.cnbc.com/2022/04/27/adjustable-rate-mortgage-demand-doubles-as-interest-rates-hit-the-highest-since-2009.html

We know that the wildly high post-lockdown demand was in large part driven by fear of missing out, or FOMO. People definitely took notice of the low interest rates and decided to take advantage of them. Interest rates are no longer low, and home purchasing demand has slowed. However, home renovations are still in high demand for just a bit longer. Renovating is not as expensive as buying, so homeowners with FOMO who could not afford to buy instead sought to remodel their current homes to better suit their needs.

In turn, though, home renovation costs have also increased rapidly in response to demand. By the last quarter of 2021, the year-over-year change in home remodeling costs had risen to 9.4%, about 2.5 times the expected 3.8% increase. Current projections have the Q3 2022 increase at an incredible 19.7%. But just like with rising home prices, increasing home remodeling costs will begin to price out even those affected by FOMO. Q3 is predicted to be the peak, with the prices starting to slow again by Q4 2022.

Photo by Milivoj Kuhar on Unsplash

More: https://journal.firsttuesday.us/californias-home-remodeling-boom-set-to-peak-in-2022/83020/

Over approximately the past decade, the average length of time homeowners have stayed in their home has steadily increased, from 10.1 years in 2012 to the peak of 13.5 years in 2020. Until last year. The figure actually dipped in 2021, decreasing to 13.2 years, even slightly below the 2019 average of 13.3 years.

Much of this can be attributed to the economic aftermath of the pandemic, as relocations increased dramatically in 2021 as a result of work-from-home opportunities and low mortgage rates. It’s unclear whether this is a temporary decline, or 2020 was the peak of homeowner tenure and it’s going to continue to decrease. Analyzing the reasons for the decrease and why it’s been increasing in the first place suggests it’s probably going to go back up. Work-from-home is still happening; however, mortgage rates are no longer low and are still going up. Meanwhile, the initial reasons for the increase over the past decade include increased propensity for aging in place and a desire to keep one’s property tax base low. Neither of these are changing much, even with the ability to transfer your property tax base in some cases.

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More: https://www.redfin.com/news/2021-homeowner-tenure/

It’s true that some people have taken work-from-home as an opportunity to travel far and wide, but it could be that most buyers still want to be relatively near where they already are. They also aren’t looking for major changes in community type, whether urban, suburban, or rural. Nor are their motivations primarily financial, except in cases in which they changed jobs.

In a small survey of 514 respondents who were actively searching for a home, just over 40% of them were looking between 6 and 50 miles away, and over a quarter were searching between 2-5 miles away. However, it is important to note that of those looking more than 50 miles away, most were looking over 500 miles away. Between 63% and 77% of respondents wanted to stay in the same community type, and if they wanted a switchup, it would probably be to a suburban area. The primary reasons for moving were either lifestyle fit or major life events, not a growing wanderlust prompted by the possibility of a work-from-home model.

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More: https://email.ojo.com/is-there-really-a-great-migration-happening

WalletHub examined 182 of the largest cities in the US in an effort to answer the question of which cities were the happiest. Their research focused on various aspects of emotional and physical well being, income and employment, and community and environment. As it turns out, their data suggest that California could be a very happy state. 6 of the top 10 ranked cities are in California. This includes Fremont, which was the number 1 ranked city, as well as San Francisco, San Jose, Irvine, Huntington Beach, and San Diego. The other four cities in the top 10 were Columbia, MD; Madison, WI; Seattle, WA; and Overland Park, KS.

However, these results should be taken with a grain of salt. WalletHub never directly asked anyone whether they were happy or not, though their methodology does include –among many other criteria — a few clear correlations, such as suicide rates and depression rates. Their data may be accurate, but the conclusion that their data points to happiness is up for debate. In addition, the focus was 182 of the largest cities. It’s entirely possible that the happiest places are not large cities, or even cities at all. Not to mention California has a huge advantage in this regard, since it is very large, is almost entirely urban, and makes no legal distinction between cities and towns. California therefore has far more cities analyzed by the data than any other state, at 28. WalletHub’s selection criteria did include at least two cities per state, but many states only use data from those two cities.

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More: https://wallethub.com/edu/happiest-places-to-live/32619

Most people who have been paying attention to real estate are aware that the construction industry has been struggling lately. But there’s one area where the industry is doing just fine, and that’s townhouses. Townhouse construction dropped in 2020 along with everything else, but it’s already recovered and is now above pre-pandemic levels. It seems townhouses are simply in fashion right now, as they feel like single-family homes — and are considered as such by some categorization methods — but are generally less expensive.

The truth is a little more complex, though. In reality, townhome construction has been on the rise for about a decade, and 2020 was merely a small dip — which also happened in 2011 and 2012. Perhaps townhome construction specifically was largely unaffected by the most recent recession, and this is just a continuation of the trend. It was actually the Great Recession in the latter half of the 2000s that caused townhome construction to plummet, and it’s been steadily recovering ever since. It’s not quite back at 2006 levels, slightly lower than the 2005 peak, but it’s not far off.

Photo by Zachary Keimig on Unsplash

More: https://eyeonhousing.org/2022/02/townhouse-construction-surged-in-2021/

The commercial real estate market has been experiencing mixed performances, with some sectors doing better than others. That’s not about to change any time soon. The industrial sector is still going strong, the retail sector continues its recovery, and the office sector keeps lagging behind.

Already low vacancy rates in industry have dropped to near-zero, as what few vacancies remain are completely unusable. New construction isn’t focusing on the industrial sector, except in the Inland Empire, which nevertheless still has a mere 0.9% vacancy rate, down from 3.1% in 2020. San Diego has the highest vacancy rate in Southern California at 2.3%. In the retail sector, the vacancy rate didn’t change much, only increasing 0.2% in San Diego from 4.7% to 4.9%. However, the availability rate — which includes all properties on the market, whether vacant or currently leased — dropped from 6% to 5%. It’s likely that this is representative of off-market leases. Offices are still struggling, with vacancy rates above 12% and availability rates around 17%. The solution to the office problem will probably come in the form of conversions to residential or mixed-use property, which are far more in demand than office space.

Photo by Jake Nebov on Unsplash

More: https://journal.firsttuesday.us/2022-commercial-market-to-be-led-by-industrial-and-conversions/81922/

As of the end of last week, the average 30-year FRM rate is at 3.69%. It’s been steadily increasing since the historic lows of 2020. The ARM and 10-year Treasury Note rates also increased between January and February. Periods of historic lows followed by steady increases aren’t necessarily unexpected, though. That’s been the trend for at least the past three decades — ups and downs but a clear overall downward trend. Precipitous drops have tended to result in a period of reduced average. For the past decade it has averaged somewhere around 4%, but it’s unclear whether the sharp decline in 2019-2020 will result in a reduced average for the coming future.

What may prevent a reduced average is the Fed’s plans for the future. Their gradual reduction of purchases of mortgage-backed bonds (MBBs) has kept mortgage rates relatively stable. They will cease buying MBBs entirely in March, at which point they will begin increasing their benchmark rate throughout 2022. This is going to result in higher interest rates. With the rate already approaching 4%, the increasing rates will likely result in the average going above 4% and continuing the trend of the past decade.

Photo by Nicholas Cappello on Unsplash

More: https://journal.firsttuesday.us/current-market-rates/3832/

As of the end of 2021, fewer buyers are choosing to waive contingencies than earlier in the year. This is a return to normalcy, as the frequency of waivers was inflated during the period of heavy competition. Buyers had sought to improve sellers’ perception of their offers by foregoing things such as inspections and appraisals in order to expedite the process. As competition dwindled, fewer buyers felt the need to do that. In addition, the appraisal process is starting to move faster with increased vaccination rates, and home prices remaining high means buyers want to make sure they’re getting their money’s worth.

The percent of people who did not waive any contingencies increased steadily from the trough of 21% in June to the peak in December of 40%. Inspection and appraisal contingencies were most often waived, though there are other types of contingencies. For waivers of inspection contingencies, the peak was 27% in July, down to 19% in November and December. The percent waiving appraisal contingencies decreased from 29% in June to 21% in November and December.

Photo by Leon Seibert on Unsplash

More: https://www.nar.realtor/blogs/economists-outlook/december-2021-realtors-confidence-index-survey-fewer-buyers-waiving-appraisal-inspection-contract