Skeptical Over iBuyers, But Still Curious?

Sixty-six percent of homeowners recently surveyed say they don’t believe iBuyers yield higher sales prices than traditional sales. However, a nearly equal number say they would consider using an iBuyer due to the flexible options for selling, a new survey from Clever Real Estate finds.

The number of iBuyer companies and services has grown over the last few years, offering buyers a way to sell their house quickly by receiving an instant cash offer and setting their closing date.

While survey respondents mostly said they don’t believe iBuyers offer more at closing, they said they would be willing to accept an average of $45,400 less for their home in order to sell it instantly and choose their closing date, the survey finds.

But 72% of homeowners would still want to work with a real estate agent when requesting offers from iBuyers. Some brokerages have added iBuying arms, such as Keller Offers, RedfinNow, RealSure and others, to their companies to allow agents to continue to guide these instant-offer transactions.

Sixty-five percent of homeowners say they would consider selling their home to an iBuyer. Millennial respondents were more open to the idea (72%) versus baby boomers (52%).

That said, even though the iBuyer real estate model is now nearly a decade old, only 27% of about 1,000 homeowners surveyed by Clever Real Estate could correctly define what an iBuyer is. The sales strategy is still relatively uncommon; iBuyers comprised just 1.3% of home sales in 2021.

“The sentiment around iBuyers is complicated because the average American homeowner isn’t completely against them, but also doesn’t know much about them,” the Clever Real Estate survey says.

Source: 

“American Attitudes on iBuyer Companies: 2022 Data,” Clever Real Estate (June 6, 2022)

©National Association of REALTORS®
Reprinted with permission

Housing Stock Prompts Remodeling Boom

The median age of a home in the U.S. is 39 years old. The aging housing stock signals a growing remodeling market ahead, according to a new report from the National Association of Home Builders.

As homes age, they need repairs or updated components such as appliances. Homeowners may add amenities to older homes as well, to have them better compete against more modern home styles and amenities.

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“Rising home prices also encourage home owners to spend more on home improvement,” the NAHB says on its Eye on Housing blog. The aging housing stock also likely will lead to rising demand for new construction over the long run as homes get older, the NAHB notes.

More than half of owner-occupied homes were built before 1980. About 38% were built before 1970. Meanwhile, new-home construction has not kept up the pace over the past nine years, with the share of new homes dropping from 15% in 2006 to 7% in 2019, according to the builders’ trade group.

The share of housing stock built 50 years ago or more jumped from 30% in 2009 to 37% in 2019.

The country’s aging housing stock is prompting homeowners to make more home renovations, particularly younger owners who have faced limited housing inventories for sale. Nearly half of U.S. homeowners plan to upgrade or remodel their homes this year, according to a survey from 2021 conducted by LendingHome, a lender to real estate investors. The trend is most prominent among homeowners between the ages of 25 to 44, who are undertaking the most renovations and looking to bring new trends and renovations to the aging homes they purchase.

©National Association of REALTORS®
Reprinted with permission

Mentorship Program Helps Agents Discover New Niches

As the housing market slows, real estate pros may find it’s a perfect opportunity to explore new niches and expand their business opportunities. They’re finding that NAR Spire, the National Association of REALTORS®’ mentorship program, may provide guidance and encouragement.

The program, which kicked off last year, aims to help real estate professionals in underserved areas grow their businesses. Participants are matched with experienced agents and receive one-on-one mentorship and tips on business operations. Participants also can take advantage of live educational events and use NAR Spire’s online platform to connect.

“Through Spire, it is our hope … to lead new and blossoming members through their own processes of professional growth, advancement and transition,” NAR CEO Bob Goldberg writes in a recent column for The American Genius. The program aims to attract people from different backgrounds to the real estate profession.

Goldberg highlights an example of how the program has helped real estate pros discover new niches and business pathways. He shared the story of real estate pro Ahmed Islam in Lehigh Valley, Pa., who took part in the program to finally fulfill his dream of jumping from residential real estate to commercial real estate. He first became involved with NAR Spire in 2021. Islam said he tried unsuccessfully for seven years to make the jump into commercial real estate, and his mentor helped him make the leap in seven months. They met every other week via Zoom initially and continue to meet at annual NAR conferences.

“Mentors are not there to build your business—they’re there to guide you,” Ahmed said, as noted in Goldberg’s article. “And [my mentor] was a great guide.”

©National Association of REALTORS®
Reprinted with permission

Mortgage Rates Top 6% for First Time Since 2008

The interest rate for the 30-year fixed-rate mortgage crossed a major threshold this week, hitting 6.02%—the first time it has broken 6% since 2008, Freddie Mac reported Thursday. Volatile mortgage rates are sending shockwaves through the housing market and unnerving home buyers who are concerned about shrinking affordability. The 30-year loan averaged just 2.86% a year ago.

The increased rates have pushed monthly mortgage payments 60% higher year over year, says Nadia Evangelou, senior economist and director of forecasting for the National Association of REALTORS®. “There is no doubt that these higher rates hurt housing affordability,” Evangelou writes on the association’s blog. Mortgage rates already marked a grim milestone when they hit 5.7%, a rate that puts a median-priced home out of reach for the typical household.

Mortgage rates this week continued to rise alongside higher-than-expected inflation numbers, adds Sam Khater, Freddie Mac’s chief economist. “Although the increase in rates will continue to dampen demand and put downward pressure on home prices, inventory remains inadequate,” he says. “This indicates that while home price declines will likely continue, they should not be large.”

Further, homeownership may offer a hedge against inflation, Evangelou says. Fixed-rate mortgages are not adjusted to inflation, and home buyers’ monthly payments will remain the same during the loan period. She says that’s important at a time when rents are rising to their highest level in nearly four decades.

Freddie Mac reports the following national averages with mortgage rates for the week ending Sept. 15:

• 30-year fixed-rate mortgages: averaged 6.02%, with an average 0.8 point, increasing from last week’s 5.89% average. Last year at this time, 30-year rates averaged 2.86%.
• 15-year fixed-rate mortgages: averaged 5.21%, with an average 0.9 point, rising from last week’s 5.16% average. A year ago, 15-year rates averaged 2.12%.
• 5-year hybrid adjustable-rate mortgages: averaged 4.93%, with an average 0.2 point, increasing from last week’s 4.64% average. A year ago, 5-year ARMs averaged 2.51%.

Trying a Different Mortgage Option May Offer Savings

As the average for the 30-year fixed-rate mortgage rises, more home buyers are reaching for adjustable-rate mortgages or 15-year fixed-rate mortgages to lock in a lower rate. A new survey from LendingTree shows that 15-year mortgages could save home buyers an average of $214,899 in interest over the lifetime of their loan compared to 30-year mortgages. Homeowners in California, Hawaii, Washington, Massachusetts and New York stand to save the most from 15-year fixed-rate mortgages, the study shows.

“Borrowers should always keep in mind that different loan types exist and that one size doesn’t necessarily fit all,” says Jacob Channel, LendingTree’s senior economist. “For example, while a 15-year fixed mortgage may be the best option for some, it isn’t always the best option for everyone. Borrowers shouldn’t feel discouraged if they can’t afford a mortgage with a shorter repayment term. Ultimately, while factors like how much interest a loan charges or how long it will take to be paid off are important, they aren’t as important as whether or not that loan is affordable to a borrower.”

©National Association of REALTORS®
Reprinted with permission

REALTORS® Are Donating More Money, Time to Charity

REALTORS® are building deep connections within their communities, giving more money and devoting more time to support numerous causes from neighborhood cleanups to fundraising for those in need. Eighty-three percent of the nation’s 1.5 million REALTORS® cite community involvement as an important component of their business plan, according to the National Association of REALTORS®’ newly released 2022 Community Aid and Real Estate (CARE) Report. The report highlights the monetary contributions and volunteer efforts of NAR members, broker-owners and REALTOR® association executives and staff.

Two-thirds of REALTORS® say they volunteer on a monthly basis, spending an average of eight hours per month giving back, the report shows. Further, 79% made charitable donations last year. REALTORS® were most likely last year to volunteer to deliver food to the elderly or help food banks with COVID-19 relief efforts, according to the report. Twenty-two percent of REALTORS® say they hosted an annual fundraiser for their local community or nonprofits.

“REALTORS® are deeply involved in their communities, and this report shines a light on the great volunteer efforts by NAR members,” says NAR President Leslie Rouda Smith. “It is inspiring to see REALTORS® across the country continue to boost local charitable efforts, and I’m proud to be part of such a compassionate and caring group.”

Associations Encourage More Members to Get Involved

Charitable giving by REALTOR® associations has climbed 20% since 2020, the report shows. The typical REALTOR® association donated more than $12,000 to the community last year, up from $10,000 in 2020. Eighty-five percent of associations hold events that encourage their members to volunteer within their community, according to the report. At least half of the nation’s local and state REALTOR® associations planned volunteer projects for the week-long 2022 REALTOR® Volunteer Days event in June.

For example, Florida REALTORS® recently held a volunteer event called “Clean Up Florida’s Waters,” in which members across the state teamed up to clear more than 18,000 pounds of trash and debris from 36 miles of Florida waterways.

Additionally, NAR’s Good Neighbor Awards each year recognizes the extraordinary impact of REALTORS® in their community or beyond through volunteer work. The 2022 Good Neighbor finalists have been announced, and you can vote for your favorite cause through Sept. 30.

©National Association of REALTORS®
Reprinted with permission

Buyers Should Shop Around for a Mortgage as Rates Rise

As mortgage rates surge and remain volatile, it’s becoming increasingly necessary for home buyers to shop around for a loan to find savings. According to Freddie Mac, borrowers potentially could save an average of $1,500 over the life of a loan by gathering one additional rate quote from a lender. And borrowers could save even more by gathering five different quotes from lenders—up to $3,000, Freddie Mac research shows.

Every dollar may help as housing affordability reaches a critical threshold. The typical U.S. household will no longer be able to afford a median-priced home when mortgage rates reach 5.7%, Nadia Evangelou, senior economist and director of forecasting for the National Association of REALTORS®, predicted last week.

This week, the 30-year fixed-rate mortgage pushed to an average of 5.89%. That means the typical household must now spend more than 25% of their income on mortgage payments, a level most financial experts consider to be cost-burdened, Evangelou notes.

“Mortgage rates rose again as markets continue to manage the prospect of more aggressive monetary policy due to elevated inflation,” says Sam Khater, Freddie Mac’s chief economist. “Not only are mortgage rates rising but the dispersion of rates has increased, suggesting that borrowers can meaningfully benefit from shopping around for a better rate.”

Freddie Mac reports the following national averages with mortgage rates for the week ending Sept. 8:

• 30-year fixed-rate mortgages: averaged 5.89%, with an average 0.7 point, rising from last week’s 5.66% average. Last year at this time, 30-year rates averaged 2.88%.
• 15-year fixed-rate mortgages: averaged 5.16%, with an average 0.8 point, increasing from last week’s 4.98% average. A year ago, 15-year rates averaged 2.19%.
• 5-year hybrid adjustable-rate mortgages: averaged 4.64%, with an average 0.4 point, increasing from last week’s 4.51% average. A year ago, 5-year ARMs averaged 2.42%.

Freddie Mac reports commitment rates with average points to better reflect the total upfront cost of obtaining the mortgage.

©National Association of REALTORS®
Reprinted with permission

Could Solving the Housing Shortage Help Close the Racial Gap, Too?

The nation’s housing shortage has also fueled a housing inequity problem, Bryan Greene, vice president of policy advocacy for the National Association of REALTORS®, writes in an essay included in a new report, “Housing Underproduction in the U.S.” To close the widening racial gap in ownership, housing’s underproduction must be widely addressed, he notes.

And that problem is only worsening: The Up for Growth report puts a new number on the nation’s housing shortage—3.8 million homes, more than double where it stood in 2012. The deepening inventory crisis is widening in scope, affecting urban, suburban and rural areas alike and hitting certain minority groups particularly hard, according to the report.

“Underproduction in this country has many causes,” Greene writes. “Local zoning and land-use restrictions have, for decades, proved to be one of the greatest barriers to housing construction, affordable housing and diverse communities.”

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Report Shows ‘Double Trouble’ for Housing

The report notes long historical racial inequities in access to housing, such as from past discriminatory government grants and programs, widespread exclusionary zoning policies originally designed with racial segregation in mind, racially restrictive covenants written into home deeds from the 1910s to the 1940s, redlining practices that limited access to capital investments to prospective homeowners of color, and urban renewal projects that caused displacement and gentrification. These have led to a widening racial wealth gap that has stretched over generations and has made it more difficult for families of color to qualify for loans and afford homeownership, according to the report. The gap between Black and White homeownership rates has widened over recent years. These historic and systemic constraints combined with housing underproduction and high prices make homeownership even less attainable for buyers of color, the report notes.

‘Double Trouble’

In a report released earlier this year, NAR called record-high home prices and record-low housing inventories “double trouble” for real estate, particularly for Black Americans. The report found that about half of the homes for sale would require a household income of $100,000 or more to purchase. That has placed homeownership increasingly out of reach for a number of households: 50% of Asians, 65% of Whites, 75% of Hispanics and 80% of Blacks do not earn enough income to buy these homes, the report notes.

Where to Go From Here

Housing supply and housing equity can be addressed on multiple fronts such as by expanding the types of housing available for greater income levels and a broadening focus on land use. Greene points to zoning reforms, investments in new construction, expansion of financing, and tax incentives that prompt investment in housing and convert unused commercial space to residential spaces. NAR continues to advocate for incentives in the tax code to promote zoning and land-use changes, such as tax credits or other support to communities that ease zoning rules that had been limiting the supply of homes, like minimum lot sizes and bans on multifamily housing. Such policies can not only help ease housing shortages but ultimately help expand housing opportunities to more people, Greene writes.

“For more than a half-century we’ve witnessed how land-use decisions can limit housing development, affordability and equity,” Greene notes. “We cannot stand by and lament this lack of progress. Now, it is time to act.”

Read more from Greene’s article in the “Housing Underproduction in the U.S.” report.

©National Association of REALTORS®
Reprinted with permission