The Markets. Rates eased again in the past week. For the week ending May 4, 30-year rates fell to 6.39% from 6.43% the week before. In addition, 15-year loans increased to 5.76%. A year ago, 30-year fixed rates averaged 5.27%, slightly more than 1.0% lower than today. Attributed to Sam Khater, Chief Economist, Freddie Mac, “This week, mortgage rates inched down slightly amid recent volatility in the banking sector and commentary from the Federal Reserve on its policy outlook. Spring is typically the busiest season for the residential housing market and, despite rates hovering in the mid-six percent range, this year is no different. Interested homebuyers are acclimating to the current rate environment, but the lack of inventory remains a primary obstacle to affordability.” Note: Rates indicated do not include fees and points and are provided for evidence of trends only. They should not be used for comparison purposes.

Real Estate News

When interest rates rise, buyers are often forced to make hard choices about the cost of housing. Higher rates, coupled with the significant rise in home values over the last few years, have forced many buyers out of the homebuying market entirely. However, one segment of the real estate market—the mortgage assumption market—has the potential to outperform the rest. A mortgage assumption takes place when the buyer takes over the seller’s existing mortgage at closing in lieu of getting a new loan. Currently, the only loans in the market with a standard qualifying assumption clause are VA, FHA and USDA loans. Deborah Baisden, CRS, GRI, a sales associate with Berkshire Hathaway Home Services in Lynnhaven, Va., has seen an uptick in VA assumptions in her market. “About 22% of our population is military,” she says. “Many of these loans were originated or refinanced after March 2020 and carry extremely low interest rates and payments,” says Craig O’Boyle, broker-owner of O’Boyle Real Estate Group in Colorado Springs, Colo. For most real estate professionals, there’s an education gap regarding mortgage assumptions, says O’Boyle. That’s understandable considering assumptions haven’t been common since the 1980s, a decade when interest rates averaged 12.7%. O’Boyle says agents should know these important points about mortgage assumptions:

VA, FHA and USDA mortgages all carry a qualifying assumable clause, which means any owner-occupant buyer can qualify using the same standard the loan was issued under with the existing mortgage servicer. Investors cannot assume these loans.
VA loans can be assumed by both veterans and non-veterans. Veteran-to-veteran assumptions allow the buyer to substitute their VA entitlement onto the loan and release the seller’s entitlement for use on a future VA loan. Veterans who allow an assumption by a non-veteran leave their entitlement behind until the loan is paid off—while others will only sell veteran-to-veteran. Source: Realtor Magazine

A Zillow study has shown that listings that have chef-friendly amenities, such as steam ovens, pizza ovens and professional-grade appliances, can sell for as much as 5.3% more than similar homes without them. That adds up to about $17,400 on a typical U.S. home. Trendy statement features such as terrazzo and she sheds — the female equivalent of the man cave — can contribute to a an estimated 2.5% sale premium when mentioned in a listing description. Homes that sell faster than expected — signaling more competing homebuyers — boast more practical features, such as doorbell cameras, heat pumps and fenced backyards. A doorbell camera and open shelving are relatively affordable upgrades that can improve a home’s functionality and boost sale speed by five days and three days. Zillow looked at 271 features and design terms mentioned in listing descriptions across nearly 2 million home sales in 2022. While there are many factors that contribute to a home selling faster or for more than expected, these features reflect what today’s buyers are looking for in a home. “Not every buyer will appreciate a chef’s kitchen or a putting green in their backyard, but those who do are willing to pay more for these personalized amenities,” said Amanda Pendleton, Zillow’s home trends expert. “Post-pandemic homebuyers who had plenty of time for self-reflection now have a greater sense of what they want and need in a home.” Source: MReport

Amid cooling inflation and rising housing costs, many first-time homebuyers feel more certain about their financial situations, according to a recent study from TD Bank. TD’s First-Time Homebuyer Pulse found that 54% of respondents indicate they are now better off financially than they were two years ago. And while homebuyers’ perception of the economy and affordability continue to draw concern, rising rent may be driving homeownership interest. Among those looking to purchase a home for the first time in 2023, 39% believe now is a good time to buy. Many who have begun their process are also showing signs of preparedness with 48% starting to save for a downpayment. Additionally, some 85% of respondents indicated buying a home was a good long-term investment. Though first-time homebuyers are looking more optimistically toward the homebuying season, reservations remain, with a majority (69%) concerned about the economy, and 64% concerned about their ability to afford a home with rising interest rates. That worry persists for six in ten respondents when considering the ability to afford a home combined with other expenses. “Although typically overlooked when beginning the search for a home, meeting with a lender can help first-time buyers better understand the additional costs and opportunities associated with homeownership,” said Steve Kaminski, Head of U.S. Residential Lending at TD Bank. “Against the backdrop of higher rates, continued inflation, and low housing inventory, it is especially important for consumers to speak with mortgage professionals and realtors early in the process to create a well-adjusted budget and identify a comfortable price range for their homebuying search, better positioning them to compete and make an offer on the home that meets their unique goals.” Source: DSNews