Buyers with a minimum down payment are generally faced with the decision of whether to get a FHA or a conventional loan.  With the new 3% down payment program on conventional loans, it may become more confusing which loan to pursue.

The two loan programs have mortgage fees that can differ greatly.  FHA has a 1.75% up-front mortgage insurance charge in addition to the monthly mortgage insurance charge which was recently lowered by .5%.

FHA’s mortgage insurance is a fixed amount where conventional mortgage insurance providers’ fees are determined by individual companies and according to the credit score of the borrowers.  A borrower with a good credit score will be charged less than a borrower with a marginal credit score.

Mortgage insurance on conventional loans can be cancelled when the equity in the property reaches 20%.  FHA mortgage insurance in most cases, is paid for the life of the mortgage.  Once a borrower has a 20% equity in their home, to eliminate the monthly FHA mortgage insurance, they would need to refinance the home with a conventional loan and would not be eligible for any refund of the up-front fee paid at closing or added to the mortgage.

If a borrower has a low credit score, FHA may be the better choice because conventional underwriters may have a higher minimum score.

FHA loans also tend to be more lenient than conventional loans when a borrower’s total monthly debt exceeds 45% of their monthly income.  FHA tends to allow borrowers a shorter time frame after foreclosures and bankruptcies.

The decision-making factor is which mortgage will provide the lowest cost of housing including payment and all loan fees.  A lot of information is necessary to make a good decision and typically, the borrower isn’t able to acquire it on his/her own.

A trusted mortgage professional is very valuable in not only providing the information but guiding the borrower through the entire process.  Your real estate professional is uniquely qualified to make such a recommendation.

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There are many reasons people want a home with the most frequent responses being a place of their own, to raise their family, share with their friends and feel safe and secure.  These are all strong motivations fueling the American Dream of owning your own home.

The motivation is so dominant that buyers are willing to make sacrifices to have their dream come true.  According to the 2014 National Association of REALTORS® Home Buyers and Sellers Survey, 72% of first-time buyers cut spending on luxury or non-essential items.  They also cut spending on entertainment, clothes and even cancelled vacation plans.

The value of getting their own home is more important than the immediate gratification of things that are considered less important.  While qualifying guidelines were increased last year, there are still more buyers purchasing homes at near record-low mortgage rates.

As we finish 2014, it appears the real estate market is once again on solid footing and ready to advance forward over the next few years. The strength of the market can be viewed using two metrics: projected home values and projected house sales.

We recently reported that the Home Price Expectation Survey revealed future home values will continue to appreciate nicely. Today we want to look at projections on the number of home sales (existing and new construction) we will see over the next two years. We researched what the National Association of Realtors (NAR), Freddie Mac and the Mortgage Bankers’ Association (MBA) are projecting for the housing industry going forward.

Here is what we found:

The North Carolina Museum of Art will construct a 164-acre campus, with $13 million for the first phase from an anonymous donor.

Bicycle trails, walkways, new art and a connection to the Capital Area Greenway are some of the new features being added to the re-imagined space, which NCMA Director Larry Wheeler says allows the museum “to be a catalyst of change.”

The first phase will begin in spring 2015, but the museum’s planning director Dan Gottlieb says the vision began in the late ’80s.

“The museum had commissioned an artist and design team to imagine what the museum could be beyond its walls and they came up with ‘Imperfect Utopia,'” he says. “It didn’t go very far. When I started here in 1990, I took an immediate interest in the idea.”

Since then, the prison, which sat on Blue Ridge Road, has come down, but Gottlieb says he intentionally had the smokestack left intact.

“It can become this kind of beacon for the museum, for Raleigh, and for the emerging Blue Ridge Corridor,” says Gottlieb. “With this momentum moving forward with this big landscape plan, we have engaged Jim Hodges to work with us to re-imagine the smokestack as exactly that. There’s a concept being developed for that. I can’t give an exact date for when it will be revealed, but it should be within a few months.”

Jim Hodges is an artist, and he’s been commissioned for the work. Urban planning and design firm Civitas, Inc. of Denver, Colorado, is also on the team to develop the plan to “recreate the museum’s identity along the street front, to connect what people perceive as the building to beautiful landscape and a great walkway,” says Gottlieb.

Dawn Wallace  Staff Writer- Triangle Business Journal

When a homeowner decides to sell their house, they obviously want the best possible price with the least amount of hassles. However, for the vast majority of sellers, the most important result is to actually get the home sold.

In order to accomplish all three goals, a seller should realize the importance of using a real estate professional. We realize that technology has changed the purchaser’s behavior during the home buying process. For the past two years, 92% of all buyers have used the internet in their home search according to the National Association of Realtors’ 2014 Profile of Home Buyers & Sellers.

However, the report also revealed that for the second year in a row 96% percent of buyers that used the internet when searching for a home purchased their home through either a real estate agent/broker or from a builder or builder’s agent. Only 2% purchased their home directly from a seller whom the buyer didn’t know.

Buyers search for a home online but then depend on an agent to find the actual home they will buy (53%) or negotiate the terms of the sale & price (31%) or understand the process (63%).

Stephen Phillips, the Chief Operating Officer for HSF Affiliates LLC, put it best:

“Home buyers are more informed than ever with their Internet searches and ongoing research; however, there’s a critical need to transform that information into analysis and advice that helps consumers make the best home-buying and selling decisions.”

The plethora of information now available has resulted in an increase in the percentage of buyers that reach out to real estate professionals to “connect the dots”. This is obvious as the percentage of overall buyers who used an agent to buy their home has steadily increased from 69% in 2001. 

Bottom Line

If you are thinking of selling your home, don’t underestimate the role a real estate professional can play in the process.

Big homes are a big deal on the national housing market, according to a recent article in USA Today.

Evidently, a growing number of home buyers are looking for larger homes to accommodate their every need and desire.

In fact, of the 569,000 homes built last year in the US, about 33 percent (or 188,000 homes) had three or more bathrooms. That’s the largest share since tracking of new construction homes started in 1987.

Meanwhile, 44 percent of last year’s total new homes (or 251,000 homes) featured four or more bedrooms – which is the largest share it’s been since 1973.

These homes also tend to come with a lot more amenities:

• 53 percent of the homes built last year (301,000) had a patio
• 63 percent (361,000) had a porch
• And 22 percent (127,000) had a deck

It’s quite an interesting trend, especially given that at the same time, home ownership rates are remaining stable and the size of families and households is actually decreasing.

Let’s Take a Closer Look At This Recent U.S. Trend

Here are some recent real estate market statistics that will provide additional context on this trend:

• The average square footage of new single-family homes in the United States jumped almost 57 percent to 2,598 in 2013, compared with 1,660 in 1973.
• The Northeast boasts the second-highest average square footage, with that number jumping from 1,959 to 2,636 during that same time period. That’s an increase of 65 percent!
• Meanwhile, the number of people actually living in these homes has continued to decrease. In fact, the average number of people per household in the US decreased from 3.01 in 1973 to 2.54 in 2013.
• Specifically, families have decreased from 3.48 to 3.12 during that same time period.
• As one might expect, bigger homes have caused a rise in the average sales price of new construction homes. In fact, that figure skyrocketed from $62,500 in 1978 to $324,000 in 2013.
• The Northeast has the highest average sales price, which exploded from $63,000 in 1978 to $469,000 in 2013 – an increase of 646 percent.
• Even within the short time frame of 2012 to 2013, sales prices still showed huge increases. For instance, the average sales price of newly built single-family homes jumped 20 percent – from $292,000 in 2012 to $324,000 in 2013.

Yet the income levels of individuals are not keeping pace with these bigger (and more expensive) homes. For instance, the median income in the US increased by 9 percent from 1978 to 2012 – from $56,975 to $62,241.

And the home ownership rate continued to decrease – from 65.4 percent during the fourth quarter of 2012 to 65.2 percent during the fourth quarter of 2013.

Experts say that those people in the higher income levels that are more active on the housing market. Maybe that’s why all-cash sales accounted for 42.7 percent of all U.S. residential property sales during the first quarter of 2014, up from 20 percent during the first quarter of 2011.

What Do You Make of This Recent Real Estate Trend?

We would love to hear your thoughts!

We certainly think that all of this market activity will have an overall positive impact on the U.S. real estate market.

For now, be sure to check back here soon for more valuable and up-to-date information that may impact you as a buyer or seller.

It’s always a good sign on the national housing market when sales activity is better than even the experts predicted!

And that’s exactly what happened recently when the latest market activity report was released by the National Association of Realtors in July.

Evidently, contracts to purchase previously-owned properties increased more than expected during the month of July, signaling that there truly is renewed momentum on the national housing market.

Let’s Take a Closer Look at The Numbers

According to a report from the National Association of Realtors, the pending home sales index increased 3.3 percent after a 1.3 percent decrease during the month of June.

That increase is much higher than previously expected. In fact, the median projection according to a Bloomberg survey of economists called for the index to increase about 0.5 percent. Specifically, estimates from 37 economists ranged from a decrease of 0.5 percent to an increase of 3 percent.

So why did the number of home sales do significantly better than previously predicted?

Experts credit the increase to a lot of factors, including:

• Increased hiring
• Rising property values
• Historically low interest rates

Not only are these factors increasing home sales but they’re also encouraging builders to break more ground.

Other factors encouraging a more robust housing market include a gross domestic product that grew at a 4.2 percent pace during the second quarter as well as the fact that unemployment claims decreased to 298,000 last week.

Experts add that faster wage growth as well as easier access to credit would also help boost the local economy

More Housing Market Data That Will Help Provide Context

Still, not all of the news from the national housing market has been completely positive.

Here are some other highlights of the National Association of Realtors’ latest report:

• Purchase contracts decreased 2.7 percent in the 12 months ending in July, which followed a 4.7 percent year-over-year decline in June.
• July marked the 10th month of year-over-year declines
• The pending sales index was 105.9 on a seasonally-adjusted basis.
• Pending sales increased in three of four regions. Specifically, sales were up 6.2 percent in the Northeast, 4.2 percent in the South and 4 percent in the West. Purchase contracts decreased 0.4 percent in the Midwest.
• Resales increased to a 5.15 million pace, which is the best they’ve been since September.
• Construction also rebounded, with starts climbing 15.7 percent to a 1.09 million annualized rate
• Meanwhile, contracts on new homes dropped unexpectedly during the month of July to a 412,000 annualized pace, which is the weakest it’s been since March.
• The average rate for a 30-year, fixed mortgage was 4.10 percent in late August, down from 4.53 percent at the start of the year

Let’s Start Discussing Your Personal Real Estate Dream!s

Are you interested in listing your property soon and getting a great price for it? Or perhaps you want to find the home of your dreams but just don’t know where to start.

Regardless of what your real estate needs are, we’re here to help!

And please make sure to check back here next month as we continue to provide you with valuable information that will help you navigate the local housing market!