Realtor.com® Debuts First-Time Buyer Videos

Realtor.com® Debuts First-Time Buyer Videos. Image courtesy of njaj / FreeDigitalPhotos.net

In new campaign efforts to bring millennials into the homebuying pool, realtor.com® is launching a five-part online video series that gives first-time buyers a humorous look at the stages of the purchase cycle. The “webisodes” feature Emmy-nominated actress Elizabeth Banks and are dubbed “The Home-Buying Process in Plain English with Elizabeth Banks.”

The videos will be promoted across a range of digital platforms, including Facebook, Yahoo, Hulu, HGTV, Google, and others.

“We want everyone to think of realtor.com® as the best real-time resource to help them make the most informed real estate decisions,” says Andrew Strickman, vice president of brand and creative services for Move Inc., the operators of realtor.com®. “Our knowledge that many buyers turn to the Web first for help navigating one of life’s most important decisions, and the fact that many first-time buyers prefer to consume entertainment digitally, drove the development of the content. With a partner like Elizabeth to help us, there was no question this humorous, episodic approach to the homebuying process was the way to go.”

The video series comes at a time when millennials are increasing their presence in the market. In a recent realtor.com® survey, 65 percent of millennials said they intend to purchase a home within three months, up from 54 percent in January.

In the webisodes, Banks walk viewers through the key components of buying a home. For example, in the first episode, called “Knowing When You’re Ready,” she recommends that potential buyers have a heart-to-heart talk with themselves about what they can truly afford: “Plan for the house you can afford now, not later. The most important thing for a first-time buyer is to live within your budget. Also, don’t be an idiot … But those are really the same thing.”

Other episode topics include: “Mortgage Lending 101”; “The Search”; “The Offer”; and “Closing the Sale.”

“For nearly everyone, buying a home is the biggest purchase they will ever make so there is that mixture of joy and anxiety,” Banks says. “It’s important to use humor to get people through the process.”

Watch the video:

Source: Move Inc.

What 6.5 Million Borrowers May Be Missing

What 6.5 Million Borrowers May Be Missing. Image courtesy of Stuart Miles / FreeDigitalPhotos.net

About 6.5 million borrowers could likely qualify for and benefit from a traditional refinancing or the HARP program, according to a new report released from the Black Knight Financial Services Inc.

About 3 million borrowers alone could save at least $200 a month via traditional refinances. About 500,000 borrowers stand to save $500 or more per month, the report shows.

“By looking at current interest rates on existing 30-year mortgages and applying broad-based underwriting criteria, we found that approximately 6.1 million borrowers make good candidates for traditional refinancing,” says Ben Graboske, senior vice president of Black Knight’s data and analytics. “An additional 450,000 meet HARP-eligibility guidelines. All told, in the aggregate we’re looking at about $1.5 billion that American home owners could be saving every month through a traditional refinance. Add in the 450,000 HARP-eligible borrowers and that figure swells to about $1.66 billion in savings every month — almost $20 billion a year.”

But refinancing is very rate-sensitive. If rates rise just half a percentage point, 2.6 million borrowers fall out of that population where refinancing would be beneficial, Graboske notes.

The Black Knight report also looked at the overall current state of home affordability. Just a 1 percent rise in interest rates would impact home affordability as much as a 13 percent jump in home prices, according to the report.

The monthly mortgage payment on a median-priced home is similar to what borrowers paid in 2000-2003. Monthly payments are down $400 from 2006 levels.

Source: “Black Knight’s May Mortgage Monitor: 6.5 Borrowers Could Save $1.66 Billion Monthly Via Refinancing,” Black Knight Financial Services (July 6, 2015)

Fewer Home Buyers Pay All-Cash

Fewer Home Buyers Pay All-Cash. Image courtesy of kittijaroon / FreeDigitalPhotos.net

The share of home buyers using all-cash to pay for their real estate transactions dropped to the lowest level since November 2009, according to a new report by RealtyTrac. Nearly 25 percent of all single-family home and condo sales in May were all-cash purchases, down from 30 percent a year ago.

The percentage of cash sales is nearing a long-term average that goes back to January 2000 of 24.8 percent. Cash sales are also well-below the peak of 42.2 percent reached in February 2011.

The share of institutional investors — those who purchase at least 10 properties in a year and who often pay all-cash — is plunging.

As such, housing markets are transitioning from an “investor-driven, cash-is-king market to one more dependent on traditional buyers,” says Daren Blomquist, vice president at RealtyTrac.

The top five metro areas with the highest share of cash buyers (and a population of at least 200,000) are all located in Florida. They are: Naples-Marco Island (56%); Sarasaota-Bradenton (54%); Miami (53.4%); Ocala (49.9%); and Cape Coral-Fort Myers (49.7%).

Source: “All-Cash Share of U.S. Home Purchases in May Drops to Lowest Level Since November 2009,” RealtyTrac (July 1, 2015)

Amenities That Jack Up Sales Prices

Amenities That Jack Up Sales Prices. Image courtesy of Toa55 / FreeDigitalPhotos.net

Americans will dig deeper in their pockets and shell out more cash to live near top-notch schools and in safer neighborhoods with access to retail and “artificial amenities,” according to a new study published in the Journal of Urban Economics. In analyzing 2,000 neighborhoods across the country, researchers found that home buyers are willing to potentially spend thousands of extra dollars for these amenities.

A regional funding increase of $1,000 per student in schools is associated with a $570 annual increase in what people are willing to pay for a home in the neighborhood, though “this number is likely biased from well-funded areas being nicer or having more desirable residents,” researchers note.

However, unsafe neighborhoods will bring in much lower offers from buyers. A 10-point increase in the murder rate — from 10 to 20 deaths per 100,000 residents annually — is associated with an annual drop of $1,000 to $1,600 in what people are willing to pay, according to the study.

Buyers will also pay more incrementally depending on how many bars and restaurants there are in the neighborhood. Each establishment per 1,000 was found to be worth an annual $170 increase in what people say they’re willing to pay for a home. That number may also reflect a desire to live near a variety of stores and entertainment areas, researchers note.

A neighborhood’s size, density, and “artificial amenities” — those that are created by the residents — were also found to be important, even more so than living near a natural environment such as mountains and coastlines, according to the study.

“Because artificial amenities are largely produced by local residents, they may reflect the desirability of the populations themselves,” the authors note. That means residents are willing to pay not only for the neighborhood itself but the access the neighborhood affords them to other people, jobs, and amenities, according to a report on the study by The Atlantic.

East Oahu, Hawaii, is the study’s top desirable location, with households willing to sacrifice 25 percent more of their pay than the average American in order to live there. California cities such as Marin, San Mateo, San Francisco, Santa Cruz, San Jose, and Oakland follow closely behind East Oahu, as well as parts of Colorado and Washington State.

Source: “How Much Are You Willing to Pay to Live in America’s Best Neighborhoods?” The Atlantic CityLab (June 29, 2015)

5 Issues That Will Impact Real Estate

5 Issues That Will Impact Real Estate. Image courtesy of Idea go / FreeDigitalPhotos.net

Demographic shifts from retiring baby boomers and the increase of millennials buying homes will have the most profound impact on the real estate industry in the coming years, according to a new survey of real estate professionals from the Counselors of Real Estate. CRE’s survey identifies the issues that will have the most significant impact on real estate near and long-term.

“This list reflects a higher degree of economic uncertainty than in years past,” says CRE chair Noah D. Shlaes. “Anticipation of rising interest rates, continued currency devaluation, and excess capital flowing into the United States are all on the minds of our membership. Combine this with a growing wage gap and major changes in demographics, and we’ve got a lot to think about this year.”

Issues topping the list include:

1. Demographic shifts: Retiring baby boomers and the population surge of  potential millennial home buyers are expected to have a big impact on real estate. For example, for seniors, housing needs will shift to homes where they can age-in-place or they may search for downsized homes, senior communities or assisted living. Millennials will be making choices on whether to buy or postpone buying and the location will have a big impact on their decision.

2. Excess capital supply:  U.S. real estate remains attractive to investors across the globe. “Funds continue to flow from outside the U.S. to purchase U.S. real estate,” BUILDER reports about the survey results. “The supply is driven by economies that have high savings rates, a shortage of mature financial markets and few safe assets. The investment rate is approaching record highs, presenting the potential for pressure on investments in the future.”

3. Rising interest rates: Interest rates have been near record lows, but are expected to rise later this year. An increase in interest rates could prompt an increase in short-term commercial development and slow home sales. However, if millennials get into the housing market before interest rates rise too much, they could help create a “second wind for the residential market,” BUILDER notes.

4. Global instability and currency devaluation: The U.S. dollar remains strong but the global economy is being affected by currency devaluation in many other countries, the report notes. Investment from foreign buyers helps to boost the U.S. housing market, but there is a risk if currency devaluation continues in other countries too.

5. Urbanization:  Young professionals as well as older generations are showing an increasing appetite for wanting to live in walkable communities in the city. On the commercial front, urban vertical shopping configurations are growing more popular. Also fueling the urbanization trend, greater corporate relocations have been occurring recently that are moving away from the suburbs to cities as companies try to lure more younger, urban professionals.

Source: “Top 10 Issues Affecting Real Estate Pros,” BUILDER (June 24, 2015)

Study Questions Home Efficiency Upgrades

Study Questions Home Efficiency Upgrades. Image courtesy of ponsulak / FreeDigitalPhotos.net

A new study makes a controversial finding: Home efficiency upgrades don’t equate to much energy savings over the long run.

The University of Chicago study analyzed a random sample of 30,000 low-income Michigan households that were eligible for an Energy Department home weatherization program. The study found that projected energy savings were 2.5 times greater than actual savings, but energy bills didn’t drop enough to pay for the initial cost of the upgrades.

“The models project much larger savings than are realized by home owners,” says Michael Greenstone, an energy economist and head of the Energy Policy Institute at the University of Chicago.

For example, the study found that home owners saw their energy use fall by 10 percent to 20 percent after the upgrades — which could net them $2,400 in energy expenses savings. But that is less than the $5,000 the upgrades cost to install, on average.

The study’s findings could undermine state efficiency programs and call into question long-held understanding of making existing homes energy efficient.

The study has not yet been reviewed by a panel of peers. Energy efficiency experts who were shown the study argue the authors’ conclusions about energy efficiency aren’t justified after a study of a single program in a single state and that was focused only on low-income households.

Steven Nadel, executive director of the American Council for an Energy-Efficient Economy, also argues that the study neglects to factor in other benefits of energy efficiency, including lower maintenance expenses, reducing the likelihood of missed utility payments, and a more comfortable home.

“Paying for the more efficient appliance is still always the best decision, for your pocket book and the environment, regardless of what this study says,” says Noah Horowitz, an efficiency expert and senior scientist at the Natural Resources Defense Council, who reviewed the study. “Nothing in this study contradicts the well-documented fact that energy efficiency is the cheapest, fastest and cleanest way to reduce climate change emissions.”

Source: “Study Says Many Home Efficiency Upgrades Don’t Pay Off,” The Associated Press (June 24, 2015)