Mortgage Rates vs. Presidential Inaugurations: Is There a Correlation?

Last updated on October 14th, 2020

Let’s get political – just kidding.

Let’s talk about data that involves presidential elections and mortgage rates, more specifically, what happens to rates during an election year and the subsequent year to find out if there are any trends that pop out.

I went ahead and scoured Freddie Mac’s 30-year fixed-rate mortgage data, which dates back to April 1971 and lined it up with every presidential election since then.

Three pieces of data were plucked from their database:

– Mortgage rates at the time of the election
– Mortgage rates a month after the inauguration
– Mortgage rates at inauguration year-end

November 6th, 2012 Obama incumbent win (Democrat)

The 30-year fixed averaged 3.35% during the month of November 2012. It averaged a HIGHER 3.53% for the month of February 2013, the month after Obama’s inauguration.

It ended the year 2013 HIGHER at 4.48%.

November 4, 2008 Obama win (Democrat)

The 30-year fixed averaged 6.09% during the month of November 2008. It averaged a LOWER 5.13% for the month of February 2009, the month after Obama’s inauguration.

It ended the year 2009 LOWER at 4.93%.

November 2, 2004 Bush Jr. incumbent win (Republican)

The 30-year fixed averaged 5.73% during the month of November 2004. It averaged a LOWER 5.63% for the month of February 2005, the month after Bush’s inauguration.

It ended the year 2005 HIGHER at 6.27%.

November 7, 2000 Bush Jr. win (Republican)

The 30-year fixed averaged 7.75% during the month of November 2000. It averaged a LOWER 7.05% for the month of February 2001, the month after Bush’s inauguration.

It ended the year 2001 LOWER at 7.07%.

November 5, 1996 Clinton incumbent win (Democrat)

The 30-year fixed averaged 7.62% during the month of November 1996. It averaged a HIGHER 7.65% for the month of February 1997, the month after Clinton’s inauguration.

It ended the year 1997 LOWER at 7.10%.

November 5, 1992 Clinton win (Democrat)

The 30-year fixed averaged 8.31% during the month of November 1992. It averaged a LOWER 7.68% for the month of February 1993, the month after Clinton’s inauguration.

It ended the year 1993 LOWER at 7.17%.

November 8, 1988 Bush Sr. win (Republican)

The 30-year fixed averaged 10.27% during the month of November 1988. It averaged a HIGHER 10.65% for the month of February 1989, the month after Bush’s inauguration.

It ended the year 1989 LOWER at 9.74%.

November 6, 1984 Reagan incumbent win (Republican)

The 30-year fixed averaged 13.64% during the month of November 1984. It averaged a LOWER 12.92% for the month of February 1985, the month after Reagan’s inauguration.

It ended the year 1985 LOWER at 11.26%.

November 4, 1980 Reagan win (Republican)

The 30-year fixed averaged 14.21% during the month of November 1980. It averaged a HIGHER 15.13% for the month of February 1981, the month after Reagan’s inauguration.

It ended the year 1981 HIGHER at 16.95%.

November 2, 1976 Carter win (Democrat)

The 30-year fixed averaged 8.81% during the month of November 1976. It averaged a LOWER 8.67% for the month of February 1977, the month after Carter’s inauguration.

It ended the year 1977 HIGHER at 8.96%.

November 7, 1972 Nixon incumbent win (Republican)

The 30-year fixed averaged 7.43% during the month of November 1972. It averaged a HIGHER 7.44% for the month of February 1973, the month after Nixon’s inauguration.

It ended the year 1973 HIGHER at 8.54%.

Did We Find Any Trends?

So let’s tally up the numbers here. The Freddie Mac data stretches back to 1972, allowing us to cover 11 presidential elections.

There were six Republican wins and five Democratic wins during that time.

Republican terms were split 3/3 in favor of lower vs. higher rates at inauguration year-end.
Democratic terms were split 3/2 in favor of lower vs. higher rates at inauguration year-end.

In six out of the 11 inauguration years, mortgage rates ended up LOWER at the end of year compared to November of the previous year.

That meant the five remaining years did the opposite. The same held true of rates in November (election) versus the following February (inauguration). So LOWER barely edged out HIGHER overall.

But if we remove the elections from 1972-1980, the balance shifts to 6 to 2 in favor of LOWER rates.

If we throw out the four incumbent wins since 1984, it moves to 4 to 0 in favor of LOWER rates.

If we throw out all incumbent wins since 1972, we have a ratio of 4 to 2 in favor of LOWER rates.

When Donald J. Trump won the election last November, the 30-year fixed averaged 3.77%. It has since shot up to 4.12% in rather volatile fashion (it was as high as 4.32% in December).

The last inauguration year that mortgage rates ended higher with a newcomer president (a president-elect) was in 1981. Does this mean mortgage rates could end 2017 lower with President Trump in office?

The data isn’t definitive, but if they don’t go down, it would be the first time in nearly 40 years.

Read more: Presidential Elections vs. Mortgage Rates

(photo: DVIDSHUB)

About the Author: Colin Robertson

Before creating this blog, Colin worked as an account executive for a wholesale mortgage lender in Los Angeles. He has been writing passionately about mortgages for nearly 15 years.

Source: thetruthaboutmortgage.com

There Will Be a 3-Month Waiting Period to Get a Mortgage After Forbearance

Last updated on September 11th, 2020

We’ve finally got some clarity regarding what happens after mortgage forbearance in terms of obtaining a subsequent home loan.

The Federal Housing Finance Agency (FHFA), which oversees Fannie Mae and Freddie Mac, announced temporary guidance regarding the matter today.

Waiting Period After Mortgage Forbearance for Fannie and Freddie

  • No wait to buy a home or refinance if you’re in a forbearance plan but continued making payments
  • 3-month waiting period if you didn’t make payments while in a forbearance plan
  • Those who paused payments must make 3 consecutive monthly mortgage payments after forbearance ends to be eligible for a new home loan
  • Only applies to mortgages backed by Fannie Mae or Freddie Mac

While it’s not 100% clear, thanks to ambiguous wording from the FHFA, it appears there will be a three-month waiting period to get a mortgage after forbearance ends, assuming you didn’t make payments during that time.

The key to eligibility is to ensure that you have made three consecutive payments after forbearance comes to an end, via a repayment plan, the payment deferral option, or loan modification if applicable.

Those who just go back to making regular payments via the payment deferral option should only need to make three regular payments to restore eligibility for a mortgage refinance or new home purchase loan.

The semi-confusing part is the release also says borrowers in forbearance plans are eligible to refinance or buy a home, presumably right away, if they are current on their mortgage.

For example, if a homeowner is in a forbearance plan but still making mortgage payments for some reason, possibly because they just wanted the safety net and didn’t actually need the assistance.

FHFA Director Mark Calabria said those “who are in COVID-19 forbearance but continue to make their mortgage payment will not be penalized,” allowing them to take advantage of today’s record low mortgage rates.

That makes sense seeing that someone who didn’t actually miss a payment shouldn’t have to wait to get a mortgage.

But there’s still some uncertainty, from a lender’s standpoint, if a forbearance plan is available to the borrower and they later decide to pause payments.

Apparently, about one-third of borrowers in forbearance plans have continued making payments, per FHFA data shared by Calabria during a webinar titled “MBA Live: State of the Industry.”

Regardless, for the majority who are in forbearance plans and actually not making mortgages payments, the wait will be a mere three months, which is a pretty good deal in my opinion.

The FHFA also extended its policy to purchase mortgages in forbearance, which was due to expire on May 31st, 2020.

They will now buy forborne loans with note dates on/before June 30th, 2020 as long as they are delivered by August 31st, 2020 (and only one mortgage payment has been missed).

Getting an FHA Loan After Forbearance

In mid-September 2020, HUD released a mortgagee letter detailing waiting periods for FHA loans post-forbearance.

Similar to Fannie and Freddie, those who entered a forbearance plan but continued to make all their monthly mortgage payments can get a home loan with no wait provided the forbearance plan is terminated prior to or at closing.

Those in forbearance plans who paused payments will be subject to a three-month waiting period once the forbearance plan has been completed. In other words, they must make three monthly payments post-forbearance.

That rule applies to both home purchase loans and rate and term refinances.

For cash out refinances, the borrower must have completed their forbearance plan AND made at least 12 consecutive monthly payments post-forbearance.

A borrower who is still in a mortgage forbearance plan at the time of case number assignment, or has made less than 3 consecutive monthly mortgage payments post-forbearance, is eligible for a Credit Qualifying streamline refinance provided they meet the other streamline loan requirements.

For Non-Credit Qualifying streamline refinances, you must have made three consecutive monthly mortgage payments post-forbearance and meet the other general requirements for a streamline refinance.

What About Mortgage Forbearance Waiting Periods for Other Types of Home Loans?

  • No waiting period guidance yet for USDA loans and VA loans
  • They tend to be more forgiving/flexible than Fannie and Freddie in these situations
  • Might be a similar waiting period or none at all if certain conditions met
  • Keep in mind that lenders may impose their own overlays above and beyond these rules

It’s unclear how other types of home loans will be treated, such USDA loans, VA loans, jumbo loans, and miscellaneous portfolio loans.

My guess is Ginnie Mae-backed loans will get similar or even more favorable treatment, seeing that they’re usually pretty lax.

Back during the mortgage crisis, you could get an FHA loan just one year after foreclosure, short sale, or bankruptcy with extenuating circumstances.

Clearly COVID-19 is an extenuating circumstance for EVERYONE so I couldn’t see them imposing much of a wait if any at all.

With regard to jumbo loans, non-conforming loans, and portfolio loans, your guess is as good as mine.

It will likely vary by bank/lender and you may need to meet other various conditions to show you’re not a delinquency threat.

The other question is will there be lender overlays that go above and beyond this interim rule?

In other words, will certain banks and mortgage lenders require borrowers to be six or 12 months out of forbearance before extending new financing?

You could certainly make the argument, especially if there’s a correlation between mortgage forbearance and delinquency rates.

Read more: Will Forbearance Prevent You from Getting a Mortgage in the Future?

Source: thetruthaboutmortgage.com

Will Mortgage Rates Go Up or Down If Trump/Biden Wins the Election?

Last updated on October 15th, 2020

As everyone knows, we have a very important U.S. presidential election just around the corner. In fact, it’s now less than three weeks away.

It could be the biggest in U.S. history, at least in terms of drama and friction, and possibly an unknown or disputed outcome come November 3rd.

Unfortunately, not everyone takes the time to vote for one reason or another, and it appears that those behind on the mortgage are even less likely to vote.

Those Behind on the Mortgage Are Less Likely to Vote

mortgage vs vote

A new survey from Apartment List revealed that 87% of homeowners who began the month without any unpaid mortgage bills will “definitely” vote next month.

This compares to just 60% of those who had unpaid bills to begin the month.

Now it’s unclear if these borrowers are actually late, given the fact that mortgage lenders often provide a grace period to pay the mortgage until the 15th of the month.

But we can at least glean some patterns and trends that emerge over time.

You can also see that voter turnout is even worse for renters, whether they pay on time or not.

Only 68% of on-time renters plan to vote, whereas just 48% of those behind on rent expect to make it out to the polls.

As to why renters are generally less likely to vote than homeowners, Apartment List noted that homeowners are often motivated by policies and propositions that could affect local property values.

There are also housing related bills that could affect tax treatment, property tax rates, and so forth.

While there doesn’t seem to be a difference based on party affiliation, such as being a Democrat or Republican, they said they’ve previously found that renters are more likely to be non-citizen immigrants, which makes them ineligible to vote.

Renters may also have more difficulty getting out to vote, due to an hourly-wage job, or possibly affected by voter suppression tactics.

Overall, the company said 71% of homeowners made a complete on-time payment in the first week of October, down from 73% in September.

Despite the month-to-month decline, it’s certainly better than the 68% of homeowners who made on-time payments in August.

What Will Happen to Mortgage Rates If Trump/Biden Wins the Election?

Mortgage Rates vs Presidential Elections

  • Mortgage rates surged higher after Trump won the presidential election in 2016
  • They improved slightly during 2017 but remained above November 2016 levels
  • Today they are at/near all-time record lows due to a variety of different factors
  • Statistics tell us a Biden victory would lead to lower mortgage rates both post-election and post-inauguration

Now let’s talk about mortgage rates, which could be affected by the outcome of the very important presidential election.

Roughly eight years ago, I wrote about the correlation between presidential elections and mortgage rates, specifically the 30-year fixed.

What I found was the election itself didn’t tend to make much of an impact, at least from November to December in an election year.

However, mortgage rates often fell if a Democrat won, which means if Biden wins, rates may improve.

Additionally, rates went up fairly significantly after Trump won back in 2016, from 3.77% to 4.20% in the span of a month.

They’ve since dropped tremendously to near-record lows, but during that window from November to December, they experienced a volatile uptick.

I also looked into mortgage rate movement from election month to a month post-inauguration, and found that rates were lower in six out of 11 Februaries versus the preceding November.

More importantly, if the four incumbent wins since 1984 were removed, mortgage rates were lower four out of four times by the end of the following year.

And they were always lower in February, other than when Reagan took office in 1981, Bush Sr. in 1989, and Trump in 2017.

As expected, mortgage rates did close out the year lower in 2017, but were still higher than they were before the election.

Now if Trump wins again, as the incumbent, the outlook is a little less clear.

A total of five incumbents have won the presidency since 1972, which resulted in lower mortgage rates only two out of those five years.

The 30-year fixed ended the year higher in 1973, 2005, and 2013, and lower in the years 1985 and 1997.

Basically, the best chance for lower mortgage rates is for both a newcomer to win and a Democrat, which favors Biden, based on the data.

But Trump could always pull a Reagan if he wins a second term.

About the Author: Colin Robertson

Before creating this blog, Colin worked as an account executive for a wholesale mortgage lender in Los Angeles. He has been writing passionately about mortgages for nearly 15 years.

Source: thetruthaboutmortgage.com

Why Joe Biden and Kamala Harris Haven’t Paid Off Their Mortgages

Posted on November 11th, 2020

You’d think presumably wealthy politicians like Joe Biden and Kamala Harris would own their homes free and clear. But that’s not the case, per their 2019 tax returns.

Both individuals disclosed their returns on the JoeBiden.com website, and each paid tens of thousands of dollars in mortgage interest last year.

But why would they pay interest if they had the means to simply pay off the loans, a luxury most other Americans can’t afford to do? The reason is simple.

Mortgage Debt Is the Cheapest Debt Out There

  • Joe and Jill Biden paid $15,796 in home mortgage interest in 2019
  • Kamala Harris and Douglas Emhoff paid $32,041 in home mortgage interest in 2019
  • There’s a good chance both parties could have paid off their mortgages in full
  • But why bother if you can earn a higher rate of return for your money elsewhere?

Why Biden and Harris and so many other rich homeowners choose to carry mortgages as opposed to paying them off has to do with how cheap they are relative to virtually everything else.

Ultimately, it doesn’t get much better than home loan debt, especially with mortgage rates in the 1-2% range at the moment. What other type of loan offers such cheap financing?

This is why I refer to mortgages as good debt, especially since you have the opportunity to write off the interest in many cases.

On top of that, the low rate of interest makes it easy for savvy homeowners to beat the rate of return on their mortgage by investing elsewhere.

Simply put, your mortgage rate is your rate of return if you choose to prepay your home loan ahead of schedule.

Any extra dollars put toward your loan essentially earn whatever your mortgage rate is, so if it’s 2.75%, you’re earning 2.75% if you choose to pay any extra each month or year.

Unfortunately, the lower mortgage rates go, the less it makes sense to prepay the mortgage because you’re earning a lower and lower rate of return.

Interestingly, we often hear feel-good stories in the news about everyday Joes paying off their mortgages in just 5-10 years. Or even less time. But why? What’s the rush exactly?

Getting Rid of the Mortgage Is a Psychological Victory

  • The obsession with paying off the mortgage is a psychological one
  • Often times there are better uses for your money than prepaying your home loan
  • An alternative might be to pay off other high-interest rate debt like credit cards
  • Or to invest any extra funds in the stock market, mutual funds, or a general retirement account

Sure, it’s great not to have to make a monthly mortgage payment, but that doesn’t mean it’s the best move financially to prepay your home loan.

Often, the desire to pay off the mortgage has more to do with human psychology than it does math.

It probably feels good to pay off any debt, especially a large sum of money such as a mortgage.

But as noted, it’s cheap debt and you might be better served putting extra dollars elsewhere.

Apparently, this is what Joe Biden and Kamala Harris do, and Obama did the same based on his old tax returns.

In the past, I reported that Joe Biden had been a refinancing machine, constantly taking advantage of cheaper financing by way of rate and term refinance to save money on his home loans.

One of the richest men in the world, Warren Buffett, has also been a proponent of carrying a mortgage for the same reasons.

You get to lock in an ultra-low mortgage rate for three decades and watch the payment become effectively cheaper over time as inflation erodes the value of the dollar.

It doesn’t get much better than that, especially when you might be able to write off the interest too.

This explains why Joe Biden, Kamala Harris, Warren Buffett, and even Facebook founder Mark Zuckerberg choose to hold mortgages when they can easily pay them off.

Read more: Should I pay off my mortgage early?

(photo: Elvert Barnes)

About the Author: Colin Robertson

Before creating this blog, Colin worked as an account executive for a wholesale mortgage lender in Los Angeles. He has been writing passionately about mortgages for nearly 15 years.

Source: thetruthaboutmortgage.com

Value of U.S. Housing Market Hits Another All-Time High

Posted on October 29th, 2020

In the second quarter of 2020, the U.S. housing market hit an all-time high of $32.8 trillion, per The Federal Reserve’s Flow of Funds Report, as referenced in the latest Monthly Chartbook from the Urban Institute.

That was up from roughly $32.4 trillion in the first quarter of 2020, thanks to an increase in home equity from $21.1 trillion to $21.5 trillion.

Meanwhile, outstanding mortgage debt remained steady at $11.3 trillion, which tells us most borrowers are paying down existing mortgages and/or applying for rate and term refinances to lower monthly payments.

And that’s a good thing because it means most homeowners aren’t overleveraged like they were back in 2006, before the housing crisis ushered in the Great Recession.

Looking at it a different way, American homeowners have a collective loan-to-value ratio (LTV) of about 34%.

The Housing Market Appears to Be Healthy Despite Record Home Prices

value of housing market

  • U.S. property values continue to rise as mortgage debt keeps falling
  • American homeowners have a collective loan-to-value ratio (LTV) of about 34%
  • Mortgage debt is essentially unchanged from 2006 while home values have risen nearly $8 trillion
  • This means today’s homeowners are in good shape overall, but it’s harder for new buyers to enter the market

While one could always express caution when prices hit all-time highs, you’ve got to consider more than just the price.

More important is to look at housing affordability and the debt held by existing homeowners.

Fortunately, U.S. homeowners only carry a collective $11.3 trillion in mortgage debt, which appears to be flat or even lower than total housing debt back in 2006.

There are several reasons why today’s homeowners are carrying a lot less mortgage debt. For one, most haven’t tapped their equity.

Very few homeowners these days have applied for cash out refinances or pulled equity via home equity line of credit or home equity loan.

cash out share

Instead, they’ve been paying down their home loans each month, enjoying tailwinds propelled by record low mortgage rates.

Simply put, homeowners owe less and pay more in principal with each monthly payment, creating a housing market that is less leveraged.

This is a good thing for individual households and for the housing market as a whole because it means borrowers aren’t overextended, and have options if they’re unable to keep up with monthly payments.

A decade ago, mortgage payments often weren’t affordable because of so-called exploding ARMs that reset much higher after the borrower enjoyed an initial teaser rate.

And because they didn’t have any skin in the game, aka home equity, they couldn’t refinance to seek out payment relief.

That led to a flood of short sales and foreclosures, and eventually the creation of widespread loan modification programs such as HAMP and HARP.

Today, even if a homeowner falls behind due to COVID-19 or another setback, they could potentially sell for a tidy profit and move on.

This protects both that individual and their local housing market, which might otherwise suffer from declining property values due to the presence of distressed home sales.

In summary, this is why today’s housing market is very different than the one we experienced more than a decade ago, despite some economists seeing home prices in “bubble territory.”

But What About Housing Affordability Today?

  • Mortgage affordability has actually improved in recent years despite surging home prices
  • Existing homeowners typically spent 17.5% of household income on their monthly housing payments in September, down from 19.6% two years ago
  • Low mortgage rates are improving affordability, but rising down payments are hurting prospective buyers
  • Property values have grown at 2X rate of incomes over the past six years, and typical U.S. home now worth 3.08 times median homeowner household income

It’s great that existing homeowners are enjoying record low mortgage rates and equally affordable housing payments, but what about prospective home buyers?

Well, housing affordability has actually improved since 2018 due to the ultra-low mortgage rates available, per a new analysis from Zillow.

This is despite the fact that home values have grown at about double the rate of incomes over the past six years.

While households typically spent just 17.5% of income on monthly housing payments in September, down from 19.6% two years earlier, the typical U.S. property is now worth 3.08 times median homeowner household income, an all-time high per Zillow.

In other words, monthly payments are cheap for existing homeowners, but their properties are valued well above their incomes.

They remain affordable because many of these homeowners have small mortgage balances and super low mortgage rates.

But if these same folks were to buy their homes today, it might not work out, which brings us to those prospective buyers, or Gen Z home buyers.

Zillow noted that home values have increased a whopping 38.3% since September 2014, while homeowner incomes have gone up just 18.8% over the same period.

If a home buyer puts down 20% on a median-priced property they would have only needed about $36,600 at the start of 2014, or 6.4 months of income for a median homeowner household.

Today, they’d need a $52,000 down payment, which is 7.5 months of income for that 20% down payment to avoid PMI and obtain a more favorable interest rate.

Even worse for those still renting, Zillow expects home prices to rise a further 7% over the next year, which would increase that required down payment another $3,600 to about $55,600.

This is essentially going to steer more new home buyers into low down payment mortgages, such as FHA loans that only require 3.5% down, or Fannie Mae HomeReady and its mere 3% down requirement.

While it at least gives them an option, they’re going to have higher mortgage payments as a result, due to a larger loan amount, higher mortgage rate, and compulsory mortgage insurance.

Additionally, they’ll have very little skin in the game, which could present a problem if home prices take a turn for the worse, as they did a decade ago.

The good news is the bulk of homeowners are sitting pretty on mounds of equity, so assuming cash out refis don’t become the next big thing, the overall housing market should be relatively safe.

Could Existing Homeowners Afford to Buy Their Properties at Today’s Prices?

One last thing. We’ve basically got this weird situation where a lot of existing homeowners probably wouldn’t be able to afford their same properties if they were to purchase them today.

However, they’ve got a ton of home equity that is only growing each month thanks to regular payments of principal and rising home prices, meaning more money is essentially locked in their properties.

At the same time, it makes a move difficult because even a lateral purchase would be pricey from an affordability standpoint when you factor in stagnant incomes and higher property taxes.

Or the fact that some of these owners are retired or not making peak income.

In the end, it further exacerbates an already difficult situation in terms of housing inventory, which has been on the record low end of things for quite a while.

That just points to even higher home prices and lots of equity accrual, which buffers the housing market, but makes it increasingly difficult for new homeowners to get into the game.

Source: thetruthaboutmortgage.com

Home Buying 101: Getting What You Want Is Possible

The content on this site is not intended to provide legal, financial or real estate advice. It is for information purposes only, and any links provided are for the user’s convenience. Please seek the services of a legal, accounting or real estate professional prior to any real estate transaction.

Source: zillow.com

6 Factors to Consider When Seeking a Family-Friendly Rental

Family-friendly rentals are more abundant than you might think. Keep these factors in mind to find the perfect one.

Anyone who has ever rented knows it has its advantages. You don’t have the stress of a mortgage, the landlord is on the hook for repairs, and, best of all, it’s easy to move when you desire a change in digs.

The same benefits hold true for families that rent, but with so many individuals’ well-being on the line — spouse, kids, pets, maybe even aging parents — shopping for a rental means keeping a few extra tips in mind.

The three factors that concern rental-seeking families the most are location, value, and convenience, according to Carol Jackson, an area vice president at Morgan Properties.

Knowing that, take these key considerations into account when searching for the perfect rental for you and your family.

Schools and childcare

Mollie Churchill was already renting her urban Baltimore row house when she gave birth to her son, who is now two. While one of the first tips for any renter is to seek a home near good schools, for Churchill, finding a good nanny share was of more imminent concern.

Luckily, her location lent itself to success: “It’s easier to find someone to share with, since I live in a place where there are just more people,” Churchill says of her urban neighborhood.

Whether in a suburban or urban location, access to quality childcare and schools will be a deciding factor for many families.

Overall location

Parks, playgrounds, Little League teams, nearby museums — a rental’s location dictates a family’s quality of life. It also determines the daily work commute, which should be kept to a minimum for sanity’s sake.

City location isn’t the only consideration to keep in mind, however. An apartment’s location within a complex can be just as important. Will your child be spending substantial time on the basketball court or at the playground? “Consider a unit near those facilities so you can keep tabs from the window,” says Jackson.

Safety

A host of safety issues come into play when families shop for a rental, especially in units built before 1978 that may contain lead paint. “Ask about the presence of lead and request to see the landlord’s lead-free certification if applicable,” advises Churchill. “If your landlord is squeamish, then that’s a big red flag.”

You should also ask if childproofing is allowed, such as installing gates or cabinet safety locks.

Finally, ask yourself if the apartment’s decor is appropriate for children. Will your baby be tempted to put crumbly pieces of the oh-so-chic exposed brick wall in her mouth? If so, then the lease might be a pass.

Space

Sarah Murtaza is expecting her first child later this year and is worried about space in the 1-bedroom apartment she shares with her husband in the heart of Washington, D.C. They’re already pondering where to put a bassinet and crib. “Building a nursery or finding space for baby clothes is a challenge for us right now,” Murtaza says.

For expanding families, an in-building storage space, a tiny study, or a high person-to-closet ratio can provide the square footage necessary for new belongings.

If these aren’t an option, see if moving into a larger, albeit pricier, unit within the building is possible. Changing units is often permitted, and some management companies even waive move-in fees if you do it.

Amenities

What Murtaza’s unit lacks in space, the building makes up for in amenities, including a rooftop deck, a trash room on every floor for easy diaper disposal, and a dishwasher, washer, and dryer in each unit.

Conveniences like these can be a deciding factor in whether to sign a lease, as are playgrounds, dog parks, and other family-friendly spaces.

Scams

Shopping with a child in tow often adds frustration to the already tedious process of finding an apartment. That said, Marc Hagerthey, a Maryland-based real estate agent with Re/Max Components, advises that you never take any shortcuts, and be wary of Craigslist scams.

“Make sure you are dealing with the property owner by researching your local property tax records online, or make sure you are dealing with a reputable property management company,” he says.

A dream rental for you and your family is out there — follow these tips, and you’re sure to make the search a smooth one.

Related:

Source: zillow.com

Factors Driving The Housing Market Moving into 2021

According to a study done by Eyul Tekin, “after adjusting for inflation over time the future of the American Dream seems rather gloomy. Median home prices increased 121% nationwide since 1960, but median household income only increased 29%.” This is rather disturbing.

Thankfully, we have companies like Fannie Mae and Freddie Mac who have mandates to keep housing affordable for Americans.

In response to this disparity between the rise in wages versus home prices, Doug Duncan, Senior Vice President and Chief Economist at Fannie Mae said “the rise of women in the workforce has changed the dynamics of house prices to reflect an expectation of two incomes. If you look at median house price in a market relative to median income of a two- person household, it’s at long term normal levels. If you have only one income, that is where the affordability problem is.”

So, it’s not so gloomy, it is societal trends running their course.

The accelerated increase in house pricing is being driven by several factors:

  • The cost of the big three components – land, labor and lumber – have all increased. Lumber cost is at an all-time high. With lower levels of immigration, labor costs have increased and, with strict zoning regulations, especially in urban settings, land has been limited and the price driven up.
  • Low interest rates, which are expected to remain at existing levels though this year, have made borrowing more affordable. That same monthly payment can now buy more house, driving up buyers’ bids.
  • The supply/demand imbalance, which is perhaps the biggest factor. On January 22nd, the National Association of Realtors announced that unsold housing inventory sits at an all-time low of 1.9 months based on the current sales rate. That’s down from 3 months a year ago. Demand, driven by low interest rates and societal shifts due to Covid-19, has outpaced supply.

Why the shortage of houses for sale?

Many people, especially older people driven by COVID-19 concerns, who own homes don’t think now is a good time to sell. In December, the Fannie Mae  Home Purchase Sentiment Index® (HPSI) declined for the second consecutive month and fell to its lowest level since May 2020 as consumers adjusted to the worsening COVID-19 conditions of the first few weeks of December.

“Both the ‘Good Time to Sell’ and ‘Good Time to Buy’ components fell significantly, with respondents overwhelmingly noting the unfavourability of economic conditions,” Duncan said. “In particular, the sell-side component fell for the first time since April and by 18 points, reversing most of the increases of the past three months and implying to us that, at least temporarily, potential home sellers might wait to list their homes. If so, this could have the effect of perpetuating already-tight inventory levels and supporting additional (albeit lesser) home price growth, which could contribute to a further moderating of home sales.”  When supply falls more sharply than demand, prices increase.

Supply is Expected to Increase Going Forward

The U.S. Commerce Department announced that housing starts jumped 21.4% on a year-over-year basis and building permits soared 9.2%, the highest level in 13 years. “The good news about the house rise is that markets are performing the way you would expect. When prices go up and profits go up that is a signal for others to enter production and increase supply, and that’s certainly happening,” Duncan said. However, it might take a while for the supply to catch up with demand. Experts say that homebuilders and construction companies will have to continue these increased efforts though 2022 to meet demand levels.

It’s Not Just About Building More Houses

More people may be putting their houses on the market as well. As the HPSI indicates, there is pent up demand on the sell side.

Also, the MBA estimates that 5.54% of mortgage loans are in forbearance. When forbearance ends, some homeowners will be faced with a tough choice, either sell or get foreclosed upon. Unless they bought very recently, chances are they have built up enough equity to make selling the best option. This too will add to inventory levels.

The impact of the end of forbearance on the housing market is a matter of debate, but Fannie Mae sees the impact as one reason it is forecasting housing appreciation in 2021 to be 4.5% rather than the 10% of 2020. (Note: the historical norm for annual price increase is 3.75%)

Millennials were already starting to move from urban to suburban areas. During the financial crisis Millennials were looking for jobs and the places they were available was in the urban centers. This meant many lived in apartments. Now that they have children that are reaching school age they are moving out to areas with more land, more sports, good schools and other amenities.

They are moving from urban areas to the suburbs. When COVID-19 hit, the plans these people had for the next three years accelerated. The recent housing starts data support this, showing single family housing starts rose 12% while multi-family fell 13.6%.

How sustainable this movement is remains to be seen. If this is just an acceleration of buying that would have happened anyway, it implies that the supply/demand balance would move toward more supply, less demand a few years out.

There are a lot of factors at play when it comes accessing the cost of housing. It seems that the house prices will continue to rise in the short term and have the potential to grow at a slower pace, or even decline slightly, a few years out. With that said, if you have to borrow to buy a house, now is a good time to buy. You might just have to be more patient or more aggressive than you would have been otherwise given the competition.

Source: themortgageleader.com

How We Bought a House That Wasn’t for Sale (and How You Can, Too)

While trying to buy a house this summer, I assumed our real estate options were limited to homes that were officially for sale.

Well, guess what? We ended up buying a house that wasn’t even listed—and learned that this home-buying strategy wasn’t just possible, but often preferable if you’re purchasing property in a competitive market.

Here’s how we pulled it off, and how you can, too.

How we bought an unlisted house

The backstory: My husband and I had been house hunting for months in Alabama, and had fallen in love with one particular property in the highly desirable historic district of Florence. We made an offer the same day we toured the house, only to be heartbroken upon learning that it went to another buyer (a relative of the seller).

Feeling at a loss, we scoured Florence for other options, but nothing else was for sale—which made sense, because it’s a coveted area of the Shoals region.

Disappointed and tired of waiting for listings that seemed to sell within days of their going live, we asked our real estate agent, Jody Lanier with MarMac Real Estate, if he had any ideas.

That’s when he introduced the idea of looking beyond what was available on real estate listings sites.

We were game to try it out. So our real estate agent put out feelers, and soon found a 1917-built home that was on our perfect street. My husband and I fell in love with it the moment we set foot on the front porch and felt giddy stepping inside.

Basically, the sellers had named their asking price, and if we were interested, we could put in an offer for that amount—take it or leave it. Since the price was within our budget, we went for it, signing and submitting a typical home buyer’s contract that evening.

In the morning, we had more good news: They’d accepted!

It was a thrill to know that we’d gone under contract without having to compete against other buyers, saving us a lot of worry and disappointment in the offer process.

How to buy a house that isn’t on the market

Buying an unlisted house appears to be a growing trend in heated markets. According to Pamela Ermen, president of Real Estate Guidance in Norfolk, VA, it’s called “going under the market,” which means digging into the housing inventory in a particular area to find unlisted gems where the owners might be up for selling if they receive the right offer.

It’s just smart to “introduce yourself as a buyer to [a home] before you have to compete with other people for it,” says Ermen, who specializes in such listings.

Here are a few tactics that will help make this needle-in-haystack process a success.

Find a real estate agent willing to do some digging

Buying a house that isn’t for sale takes more legwork on the agent’s end than usual. So for starters, you’ll want to make sure you have an agent willing to go the extra mile. Here are a few of the steps agents take.

  • Review expired listings: This is where your real estate agent digs through expired listings to see who once had their home on the market, checking to see if it ever sold. If it hasn’t, your agent can then reach out to the sellers and see if they’re open to selling now.
  • Check tax records: Your agent can also research tax records in a particular neighborhood to see who has a different address for tax returns than the property address. This suggests that the house is vacant or an investment property.
  • Send direct mail: This involves a real estate agent sending postcards to homeowners in the neighborhood or ZIP code you want to live in, inviting them to get in touch if they’re open to receiving offers on their home. Since part of the appeal might be that the sale could be easy and practically painless—no home staging or open houses needed—the postcard should emphasize that the agent has “fully qualified buyers” (like yourself) who are interested in a “quiet sale.”
  • Prospecting neighborhoods: This is where you and your agent drive around a particular neighborhood, writing down addresses of homes that, if they were on the market, you’d love to see. During the COVID-19 pandemic, buyers can also do this on their own, then pass the list of addresses to their agent, who can then reach out to these owners.

While a real estate agent will have to do many of the above tactics, there’s plenty home buyers can do as well to improve the odds of finding an unlisted property they’d love to purchase. Here are a few tactics we tried.

Commit to buying a house in a particular area

If a real estate agent is willing to go the extra mile to find you an off-market home, pledging your commitment to that person is a no-brainer. Stay loyal to that agent so his or her work will pay off.

In our case, our real estate agent showed us about 15 homes this summer, so we knew we’d work only with him on a sale to make it worth his time.

Be flexible

When an agent finds you an off-market home, be ready and willing to go see it at a moment’s notice. In our case, our agent urged us to go ASAP, before the sellers potentially changed their mind about selling. Ermen says she once showed an off-market home at 10 p.m.

Work out your mortgage ahead of time

Ermen says it’s a good idea to get pre-approved for a home loan, and have that letter from the bank in hand to submit with your offer. This proves you’re serious, and can put your money where your mouth is.

Decide what you’re willing to do

Get crystal-clear on your budget and what you’re willing (and not willing) to do to get a home before going the route of an off-market listing, says Ermen.

The nice part about buying a home this way means that you’ll hopefully avoid lots of back-and-forth negotiating, as in a typical sale, and the worry that you’re competing with other buyers. But that doesn’t mean you can necessarily go in with an offer far below asking. If you’re in a competitive market, you’ll need to ask yourself: What am I willing to do to buy this house?

Don’t assume your seller won’t play the field

Even if you’re the first buyer to come knocking at a homeowner’s door, don’t assume things will stay that way once you’ve piqued the seller’s interest in selling.

“You have to assume that a seller is astute enough to know that they might get more money with more competition,” explains Ermen.

You’re also going to have to be prepared to make an offer quickly, as we did. Be fair, legitimate, and direct in your offers.

“You know what they say,” Ermen says. “If you’re going to sleep on it, you won’t sleep in it.”

Source: realtor.com

Moving Rituals from Around the World

By Al Harris, Web Editor, SpareFoot.com

Moving to a new home is a new beginning. What better way to make sure your new beginning starts off right than with a little ritual?

Cultures around the world have developed unique rituals for bringing good luck to a move into a new house. While you may not be of the superstitious sort, practicing a move-in ritual is a great way to set intentions for how you will live in your new home. 

So, let’s take a tour around the world to see what different cultures do when moving to a new home:

India

In India, it is important to pick certain auspicious days for moving. For example, the first day of the lunar calendar, a full moon, or a festival day are all common moving days in India. Families might even consult a Hindu priest to determine the best date that is suited to them based on various factors. Fridays, Saturdays and rainy days are considered unlucky for move-ins, but Thursdays are considered the best.

Another moving day superstition in India is that you must step through the threshold with your right foot first.

Russia

In Russia, it is considered good luck to let a cat into your new home first. This tradition is so widespread that one of Russia’s largest banks recently provided a “loaner cat” to any customer who obtained a new mortgage.

United Kingdom and Ireland

Many Irish believe it is bad luck to exit the home through a different door than you entered. But this only applies the first time you enter and exit the house. 

Another tradition in the British Isles is to bring a new broom with you to your new home. That’s because old brooms carry all of your past troubles and bad energy, and you don’t want to bring that with you to your new place. A new broom ensures a fresh start. The broom superstition is actually common across many cultures around the world, not just the United Kingdom.

Mexico

In Mexico it is tradition to place an aloe plant outside your home to ward off negative energy. The succulent plant is said to absorb bad vibes like a sponge.

The Philippines

To guarantee financial prosperity when moving in the Philippines, it is common to place coins throughout every corner of the home. Along with the coins, rice and salt must also be the first things that you bring into your new house.

America

In America it isn’t uncommon to burn bundles of sage throughout a new house to purify the air and expel any negative forces. The practice, known as smudging, is adapted from Native American culture. Oddly enough, smudging has been embraced by practitioners of Feng Shui as means to clear any negative energies out of a house. 

Another moving ritual in America is one you are most likely to find in the Deep South. It is tradition to paint the ceiling of your front porch a shade of light blue called “haint blue”. The color is said to repel haints, a regional term for ghostly spirits, from entering the house.

A World of Superstition

We’re not sure if any of these practices will actually bring you good luck, but it does go to show that every culture considers moving into a new home to be a momentous event. Whether you practice a moving ritual or not, be sure to take a moment to celebrate your move and recognize the major life event taking place before you.

Al Harris is the web editor at SpareFoot.com, the world’s largest marketplace for finding and reserving a self-storage unit.

Source: zoocasa.com