One of the things to keep in mind when observing the housing market, is that price is affected by many factors. Keeping an eye on both national and local factors is critical when looking to get a good idea of the future of the housing market. To this end, there are organizations which assess and report trends in the housing market. The National Association of Home Builders (NAHB) releases monthly assessments of homebuilder confidence. The NAHB homebuilder confidence index is a look at how optimistic homebuilders are sales of single family houses in the near future. So, what does it all mean, and why is it happening?
The index is compiled through survey of home builders. They are invited to rate their current sales as well as what they expect the next 6 months to look like. Their scores are compiled into an aggregate rating, with scores above 50 being positive, and scores below indicating negative sentiment. Currently, the score is 71, indicating a lot of confidence about the future of the housing market.
While the index jumped after the election which cemented Donald Trump as the president, it slid in the first two months of his presidency before jumping again in March, this time to the highest level in 12 years. The changing political climate is a major factor in the home market. So, a large part of the rise is that builders believe changes in the laws and regulations governing housing will change to affect them positively. One of the main factors is that Donald Trump has sworn to repeal and remove many of the environmental regulations on the construction of new houses. As builders have seen congress and the president moving in this direction, they understand that less regulations will mean cheaper construction.
What this means, is that we could end up seeing a stronger home market in the next few years. While it is important to keep an eye on a number of market factors, this one suggests that there could be increased construction and sale of homes. While the housing market has largely recovered from the Great Recession, many homeowners and businessmen stand to profit if the housing market goes through a boom. However, we will have to wait and see what surprises await us in the coming years. While things look good now, it remains to be seen whether or not these confident expectations will be met.
Recent trends have seen Scottsdale real estate interest rates rise slightly over the past couple of months. While prospective home buyers may feel disillusioned by rising rates, let's take a look at what it may mean for them and the possibility of becoming homeowners.
As mortgage rates increase, naturally, the amount of home you can purchase decreases. In other words, the higher the interest rate, the higher the payment — and perhaps the lower the mortgage amount must be to be affordable. Borrowers need not be completely dismayed however, as there is flexibility among mortgage lenders and their qualification guidelines. Let's take a short revisit of the rate fluctuations since the presidential elections of this past November and review how interest rates have affected home affordability. How will recent Scottsdale real estate trends affect the housing market?
A Recap of Scottsdale Real Estate Interest Rates and the Outlook for the Future
Between the election on November 8 and Christmas of 2016, Scottsdale real estate interest rates went up .75%. The rate increase was fueled in part by the feeling on the part of the American public that the new administration would enact policies of infrastructure spending, tax cuts, and a certain amount of deregulation that, once enacted, would be inflationary. In addition the skyrocketing gains in the stock market pushed the bond yields downward, and since mortgage rates are very closely tied to the US Treasury bond rates, mortgage rates had nowhere to go but up.
Most savvy economists felt when interest rates rose, they would also level off in time. And, while that is happening, it is still volatile at best. Interest rates go up and down literally daily in response to investors reacting to policies of the new administration. When investors exhibit concern that post-election inflation will continue to occur, the rates go higher. Conversely, when investors feel inflation will be softened by certain policies, delays in action, or hindrances, rates will come down.
The bottom line for interest rates is the post-election peak seems to be over, and the net result is an interest rate increase of roughly .5% since the election.
Experts predict continued rate volatility as stock market investors and the Federal Reserve work to gauge interest rate movement as part of the new government administration. Here's how that volatility is expected to impact housing activity.
The Effect of Scottsdale Real Estate Interest Rates on Home Affordability
According to experts, a $350,000 home purchase on which a prospective borrower plans to put down 20%, a rate increase of .5% reduces the affordability by roughly $17,000.
While such a decrease in affordability may tend to make a prospective homebuyer look for a lower-priced home, there are other alternatives — especially if you're familiar with how most mortgage lenders operate.
For decades, mortgage lenders have used a debt-to-income (DTI) ratio in their qualification guidelines. A DTI compares the relationship of your total monthly recurring debt to your gross monthly income. Mortgage lenders typically like to see a DTI of 43% or less.
Borrowers earning, say, $65,000 annually with monthly obligations such as an auto loan and credit card bills totaling $615 per month may have qualified for the $350,000 home mentioned above. However, at a slightly higher interest rate of .5% more, they may not. Here’s why: At the income and debt totals currently, the DTI ratio was less than 43%. With the rate increase, it’s climbed to over 44%. At first glance, the only solution is to work to reduce the purchase price down to $333,000 (the original $350,000 less the $17,000 by which the affordability was reduced.) That would reduce your DTI back to a level less than 43%. However, let’s consider an alternative.
Increasing Home Affordability
Rather than trying to get the price reduced by $17,000, most experts recommend lowering your other recurring debt. As an example, a monthly credit card payment of $125 with a remaining balance of $3,125 can be reduced to roughly $45 per month by paying down the balance by just $2,000. Honestly, that may be a much easier solution and a much softer sell than trying to get the seller to come down $17,000.
Analyzing Scottsdale Real Estate Interest Rates and Trends to Make the Best Decisions
It’s important to keep an eye on interest rates and other changes in the marketplace. Remember, in much the same way that the old adage, “All real estate is local,” all mortgage lending is individual. What that means is every situation is different and everyone’s DTI is comprised of components that may be changed slightly to improve the qualification percentage. Don’t make the erroneous assumption that rising rates will always reduce the price a borrower may qualify for.
See more articles pertaining to the latest Scottsdale real estate interest rates and trends in the section of articles on Scottsdale Real Estate just below Scottsdale Real Estate Categories in the column to your right. And remember, we also post tips daily on Facebook and Twitter. Check us out there as well.
In recent Scottsdale economic news, it appears home buyers and home sellers are entering the coming spring selling season with a feeling of optimism. Despite interest rates moving slightly upward and home prices continuing to rise, housing sentiment is increasing as well.
Fannie Mae publishes an index each month that ranks buyers’ sentiment. The most recent report showed buyers’ sentiment about the spring real estate sales season has risen to the highest level in six years, in part, due to a strong showing by millennial purchasers.
The millennials segment of the home buying population mentioned solid increases in employment confidence and income gains, which go hand-in-hand for first-time home purchasers – creating increased demand in the housing market. And while millennials are finally making the move out of mom and dad’s basement or spare bedroom faster than ever, the majority are still destined to rent, according to Fannie Mae’s research and statistics. As the supply of affordable inventory in the housing market continues to plague many millennials, so too does the higher price appreciation. Simply put, most millennials still find it challenging to afford to purchase their first home.
However, an ever-increasing number of millennials are entering the housing market and that’s making Scottsdale economic news. The same millennials that had put off marriage and having families are slowly turning their thoughts to home ownership. Recent research shows roughly 50% of millennial families have at least one child. That represents an increase of nearly 5% from last year and 7% two years ago. Real estate experts say children in the family is the most common reason young couples buy their first homes. With the U.S. home ownership rate at what has been near an all-time low, that’s good news for millennials and good for the housing economy. In addition, when it comes to living in urban areas, the number of millennials desiring to live the urban lifestyle is decreasing – by more than 6% in just two years. They are opting for the suburbs for the spacious outdoor amenities like playgrounds and parks.
The Fannie Mae buyers’ sentiment survey also revealed 85% of millennial buyers felt their home purchase was a “good financial investment.” And why wouldn't they? They’ve seen the prices of homes rise consistently in many of the popular neighborhoods throughout the country and they’re familiar with the average cost of a home – many have watched homes in their price range continue to rise faster than their income. Despite the higher prices, the fact that millennials see their home as a good investment should fare well for increased demand as they and other millennials begin raising bigger families and buy larger and newer houses as their families grow.
Experts say the Scottsdale economic news would include even greater demand for housing were it not for home values that continue to rise as a result of lower inventories nationwide – especially starter homes, popular with first-time home buyers. According to CoreLogic, nationwide home values increased 6.9% in 2016 compared to 2015. While home prices grew at a faster pace than incomes, the result was lower during the month of December 2016. Analysts cite a rise in mortgage interest rates immediately after the presidential election as possibly having an affect on asking prices by eager home sellers.
A CoreLogic spokesperson said, “Home prices continue to climb across the nation, and the spring home buying season is shaping up to be one of the strongest in recent memory.” He further added, “A potent mix of progressive economic recovery, demographics, tight housing stocks and continued low mortgage rates are expected to support this robust market outlook for the foreseeable future.”
According to the Fannie Mae sentiment report which measures consumer confidence regarding the housing market, the biggest gain in confidence was among those respondents who felt now is a good time to purchase a home. In addition, home sellers also felt it was a good time to sell. With more Americans feeling better about their employment and job opportunities, fewer are worried about losing their jobs. Other statistics in the survey showed more households are reporting slightly higher incomes – and the number of people surveyed expecting home prices to continue to rise did indeed increase. Lastly, among respondents asked about expectations that mortgage interest rates would drop, the survey percentages remained largely unchanged for the third consecutive month. This signals to researchers and real estate professionals alike that demand is high in the housing market, prospective purchasers are fairly bullish on home values and, so far, are not thwarted by what could possibly be continued slight increases in mortgage rates.
All in all, it appears that the biggest story in the Scottsdale economic news is that the housing market could see a relatively strong spring selling season. Prices will be as high as they’ve been for the past several months, but qualified purchasers will be fueled by steady incomes and job security for the most part – and, while interest rates are worth watching, most analysts feel they won’t be a deterrent for purchasers anxious to trade up.
You can find more articles pertaining to Scottsdale economic news in the "Economy" section of articles just below Scottsdale Real Estate Categories in the column to your right. Remember to also check us out by finding us on Facebook and Twitter.
Scottsdale home improvement ideas usually are reserved for homeowners who want to make their homes bigger, more attractive or more modern. However, many home improvement steps can be taken to prepare your home when it comes time to sell. If you’ve made the decision to sell your home, it’s not just a good idea – sometimes it’s a necessity – to make your home as attractive and presentable as possible for prospective buyers. Here’s how.
Be Ready to Hit the Market Running Listing your home for sale isn’t a decision to be made lightly. In addition, putting your home on the market before you’re ready or it’s ready can severely hamper your ability to sell it for its full value. Make sure you prepare your home for the real estate marketplace. Follow these Scottsdale home improvement ideas and make the best impression you can for potential buyers to sell your home quickly and for the best price.
Clean and Declutter Your Home While it may sound cliche’ to some, we can’t emphasize enough how important it is to make sure your home is clean and free from unsightly clutter. Follow these steps and you’ll be glad you did when you receive an offer that’s at or near your full asking price.
- Remove as much clutter as possible before you start to clean. There's no better time to get rid of unwanted items and things you’re just tired of staring at each day (we’re talking about objects, not family members!) You can donate unneeded items to a local charity, or have a yard sale if you have larger items. In addition, recycling companies are usually more than happy to come pick up large metal items – often at no charge.
- Give your house a good deep-cleaning. While this step will take the largest investment of time, it will also yield the best results. Try to involve the entire family and assign everybody a task or two. Make sure you give necessary attention to the bathrooms and kitchen – lots of women who will ultimately make the decision on the house purchase will be looking them over closely. Lastly, clean the inside and the outside of your home’s windows. You’ll be surprised how it will make your home sparkle – and buyers will notice!
- Take the time to organize your closets, cabinets and drawers. Don't just stuff them with things you want to get out of the way. You’ll be surprised at how many prospective buyers will open cabinets and closets so they can get an idea of the amount of storage space they contain. Clean, organized cabinets, drawers and closets will give the buyers the impression that you take care of the home – which may translate into a feeling that the rest of the home and its systems are well-maintained, too.
Make Do-it-Yourself Repairs One of the next Scottsdale home improvement ideas – and possibly one of the least expensive – is to perform various repairs to your home you can take care of all by yourself with a little time and know-how.
- Fix leaky faucets and running toilets
- Replace the caulking around showers, tubs and sinks
- Repair or replace grout, if necessary
- Repair cracks, stains, or nail holes in walls and repaint them in a neutral color
- Fix cracked, broken or discolored windows
- Replace or repair damaged or missing window screens
- Replace burned-out light bulbs or fluorescent tubes
Improve Your Home’s Curb Appeal The old adage, “You never get a second chance to make a good first impression” is never truer than when you’re showing your home to prospective purchasers. If they don’t like what they see in exterior photos online or in person, chances are they may not look further. And, if your home’s curb appeal is just “average,” most buyers may adopt the feeling the rest of the home is “average,” as well. You want to “wow” your buyers. Make them love what they see on the outside and they will look forward to seeing the rest of the house. Consider these “spruce-up” tips for your home’s outside, too.
- Trim the bushes, shrubs and trees in your yard
- Fix broken downspouts and gutters
- Apply new mulch as needed to give your planted areas a fresh, clean look
- Clean and repair concrete or stone areas such as driveways and walkways. Pay close attention to oil stains and weeds or grass growing through the cracks.
- Add some flowers to give your lawn and garden a little more color. Add a new doormat to your doorstep or front porch area. Ensure that the house numbers are clean and easy to see.
As you can see, with a relatively small amount of time, attention and expense to your home, these and a few of your own Scottsdale home improvement ideas will help you give it a renewed appearance – making it more attractive inside and out to prospective home shoppers.
You can find more articles pertaining to Scottsdale home improvement ideas in the Scottsdale Home Improvements section of our site below Scottsdale Real Estate Categories in the column to your right. We also post tips daily on Twitter and Facebook and would love for you to follow us there as well.
The Scottsdale mortgage rate outlook this spring is creating a sense of urgency on the part of prospective home purchasers. With interest rates having edged up slightly and home prices rising continuously, many borrowers are making a beeline to apply for home loans. Their rationale is the sooner they act, the more they potentially will save – on interest rate charges and home price increases.
Interestingly, home purchasers are electing to take out adjustable rate mortgages (ARMs) in unusually high numbers in hopes they can handle the Scottsdale mortgage rate outlook of potentially higher rates and save money on their mortgage payments in the first few years.
Mortgage activity has been on the rise in recent weeks, having increased nearly 3.5% from one week to the next, based on the most recent report from the Mortgage Bankers Association (MBA.) Despite the week over week increase, total mortgage volume is roughly 18% lower than it was during the same period in 2016. Experts say the lower volume has more to do with the decrease in the number of refinance applications than it does with the Scottsdale mortgage rate outlook. While most borrowers refinanced a year ago when interest rates were at or near record lows, there is still some refinance activity in the mortgage marketplace. The volume of refinance loans is down 34% so far this year, but mortgage lenders have seen an increase of more than 5% in recent weeks – based on consumer fears that the Scottsdale mortgage rate outlook might include higher interest rates moving forward.
Some analysts attribute the rush to refinance to recent remarks made by key Federal Reserve officials indicating what wound up being another interest rate increase in March. In addition, other economic factors came into play such as the recent Gross Domestic Product (GDP,) manufacturing results and inflation projections. While mortgage interest rates really are not directly tied to federal funds rates – upward or downward – a rate increase by the Federal Reserve could still make mortgage interest rates increase, only time will tell on this for sure. Fed funds rates are generally more short-term in nature, while mortgage rates are longer term, of course.
How will the Scottsdale mortgage rate outlook impact the usually brisk spring real estate sales season? While the true impact remains to be seen, economists say demand on the part of home buyers is still high. The problem, they contend – which is of greater concern than the prospect of higher interest rates – is affordable homes are still in short supply. The inventory shortages that occurred during much of 2016 have carried over into 2017, and don’t appear to be improving anytime soon. Since a good portion of the housing demand is on the part of millennials and first-time buyers, the inventory shortage is of major concern.
As mentioned above, one of the results of the recent Scottsdale mortgage rate outlook is more buyers are opting for adjustable rate mortgage solutions in an effort to save money since the ARMs offer lower interest rates for a certain time period. Statistics reported by the MBA showed that the ARM share of recent mortgage lending applications was the highest since 2014. The results simply highlight the concern borrowers have for higher interest rates, and in spite of the indications, home demand remains high going into the spring. In addition to the ARM share of applications reaching a three-year high, the average loan size for applications to purchase homes reached a high of $313,000. This is the result of two different factors. First-time buyers tend to impact the higher mortgage amounts less than buyers in the market who are moving up and buying bigger, newer and more expensive homes.
The Scottsdale mortgage rate outlook may have a definite impact on the spring market, however, all early indications are that due to high demand and the overall impression that interest rates – despite their slight upward tick in recent months – are still relatively low. Many borrowers remember when interest rates were in the 8%-9% range for a number of years. With that in mind, rates roughly 50% as high are veritable bargains today – in spite of the higher home prices that exist in today’s real estate market.
More first-time borrowers are going to faced with the dilemma of continuing to pay higher rents versus putting their monthly payments into paying a mortgage and building equity in a home of their own. The home participation or home ownership rate reached an all-time low in 2016, but the trend seems to be one of slight improvement during 2017. Time, as usual, will tell as first-timers decide what to do and when to do it. Housing inventory, as already cited, will determine a great deal as the market needs starter homes and more affordably priced houses to meet the demands of some of the first-time home buyers. In addition, there needs to be a larger supply of “move-up” homes for that segment of the buying public that’s ready to expand into a larger home, a better neighborhood or a newer home.
You can find more articles pertaining to the Scottsdale mortgage rate outlook in the "Scottsdale Mortgage Info" section of articles just below Scottsdale Real Estate Categories in the column to your right. Remember to also check us out by finding us on Facebook and following us on Twitter..