Real Estate Roundup: Rising Home Sales and Prices Projected for 2017

Here’s a look at recent news of interest to homebuyers, home sellers, and the home-curious.

2017 FORECAST: STEADY RISE IN HOME SALES, PRICES 
Next year will see steady growth in existing-home sales and prices, with stronger growth in 2018, according to the latest forecast by real estate analysts — boosted by a greater number of millennials entering their prime homebuying years, rising household formation, and continued job growth.

Forecasts for the coming year were a highlight of the National Association of Realtors’ annual Conference & Expo, held last week in Orlando, Florida. NAR analysts expect sales to grow  by 2 percent to 5.46 million in 2017, followed by 4 percent growth in 2018. The national median existing-home price is expected to rise by 4 percent next year.

NAR Chief Economist Lawrence Yun said that tight supply and affordability problems currently facing buyers in many markets will gradually ease next year.

“NAR surveys from both current renters and recent buyers prove that there’s an overwhelmingly strong desire among the younger generation to own a home of their own,” Yun said in a statement. “The housing market over the next couple of years should get a big lift in demand from these new buyers. The one caveat is it’s essential that there’s enough new and existing supply at entry-level prices for them to reach the market.”

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SAN JOSE, SAN FRANCISCO SELLERS LEAD U.S. IN HOME PRICE GAINS 
U.S. homes sold for an average of 23 percent above their purchase prices in the third quarter of 2016, the highest gain in nine years. And the news is even better in the Bay Area, where homes in the San Jose area sold for 68 percent above their purchase prices and 67 percent in the San Francisco area.

San Jose and San Francisco once again led the nation in home price gains, according to data compiled by ATTOM Data Solutions. They were followed by Portland, Oregon and Seattle (tied at 51 percent) and Los Angeles (49 percent).

The company’s Q3 Home Sales Report also showed that distressed sales nationwide fell to a nine-year low of 12.9 percent of all sales. All-cash purchases also fell to a nine-year low, to 25.9 percent of all sales, down from a peak of 44.8 in 2011.

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MILLENNIAL HOMEBUYERS TURN TO REFINANCING
Millennial homebuyers are growing in number, and they’re increasingly choosing to refinance their homes, too. That’s the news from mortgage software provider Ellie Mae, which released its monthly Millennial Tracker report last week.

Refinances accounted for 20 percent of all closed loans by millennial borrowers in September, up from 17 percent in August, the company said. Eighty percent of millennial loans were for home purchases, compared with 54 percent overall for U.S. borrowers.

Other findings from the September Millennial Tracker report:

• The average FICO score for millennial borrowers rose to 726 in September.
• The average interest rate on home loans continued declining, to 3.728 percent.
• The average loan amount increased to $184,179, up from an average of $181,326 in August.

“As the average rate on home loans continues to decline, we are seeing millennials with more purchase power, indicated by the average loan amount increase,” Joe Tyrrell, executive vice president of corporate strategy at Ellie Mae said. “We’re also seeing a slight uptick in the number of refinances in September, indicating maturity among those millennials who previously purchased a home and are looking for an opportunity to lower the cost on their existing mortgage.”

(Photo: Flickr/SoulRider.222)

Article and images sourced from http://blog.pacificunion.com/real-estate-roundup-rising-home-sales-prices-in-2017/

Closed Home Loan Activity Is Among Nation’s Lowest for Bay Area Millennials

Sky-high real estate prices are keeping the vast majority of young buyers on the sidelines of the Bay Area housing market in 2016, with the San Francisco metro area posting one of the smallest percentages of closed home loans for that demographic.

Mortgage-processing company Ellie Mae’s Millennial Tracker tool, which compiles data on closed home loans for buyers born between 1980 and 1999, says that 17 percent of applicants for mortgages in the San Francisco-Oakland-Hayward metro area were millennials between January and August of 2016. The numbers dovetail with recent data from San Francisco-based lender Earnest, which found that less than 10 percent of under-35 residents in the Bay Area’s two largest metro areas own homes.

The analysis again illustrates the importance of having an above-average credit score for Bay Area homebuyers, regardless of their age. It also shows how dual incomes affect young buyers in the region, with roughly two-thirds of successful applicants classified as married across all local regions.

The following is Ellie Mae’s breakdown of closed loans so far this year in Bay Area metropolitan statistical areas (the company lacks data for Napa County):

San Francisco-Oakland Hayward: Millennials accounted for 17 percent of closed loan applications in the San Francisco metro area so far this year, the second lowest rate among the country’s 25 most populous cities and only slightly higher than Los Angeles. The average young buyer borrowed $464,392 to purchase a home appraised at $672,438. The average FICO score stands at 751, and 59 percent are married.

San Jose-Santa-Clara-Sunnyvale: Silicon Valley’s income growth has given millennials slightly more buying power, with a 19 percent closed-loan rate so far this year. San Jose millennials require the best credit score in the Bay Area in order to finalize a loan — 754 — and 63 percent are married. The average successful lender borrowed $527,704 to buy the average home appraised at $814,469.

Santa-Cruz-Watsonville: There have been even fewer millennial borrowers in Santa Cruz than in the Bay Area proper this year, with that demographic accounting for just 12 percent of activity. Those who were successful have FICO scores of 754, identical to their Silicon Valley neighbors. Sixty-six percent are married, and the average loaner borrowed $460,393 to buy a $626,053 home.

Santa Rosa: Through August, millennial buyers have represented 15 percent of closed home loans in Sonoma County in 2016, with 57 percent classified as married. The average FICO score is 740, with lenders typically issuing a $374,089 loan to purchase a home appraised at $494,200.

Vallejo-Fairfield: Millennials have accounted for 22 percent of all successful 2016 loan applicants in the Solano County suburbs, more than anywhere else in the Bay Area, and also seal the deal with lower average FICO scores of 727. The Vallejo-Fairfield area has the region’s least expensive homes — appraised at an average of $375,913 — which translates to an average loan of $300,482. Fifty-seven percent of young buyers in Solano County are married.

(Photo: Flickr/Lucas)

Article and images sourced from http://blog.pacificunion.com/closed-home-loan-rates-among-nations-lowest-for-bay-area-millennials/