MORTGAGE RATES MOVE HIGHER
Bankrate pegs benchmark 30-year loan at 4.18%.
Mortgage rates inched higher, rising for a seventh consecutive week, with the benchmark 30-year fixed mortgage rate rising to 4.18%, according to Bankrate.com’s weekly national survey released Thursday. The 30-year fixed mortgage has an average of 0.21 discount and origination points.
The larger jumbo 30-year fixed inched to 4.18%, while the average 15-year fixed mortgage rate climbed upward to 3.42%. Adjustable mortgage rates were mostly unchanged, with the 5-year ARM remaining at 3.45% and the 7-year ARM holding steady at 3.69%.
Mortgage rates continue to climb, reaching the highest levels since July 2015. While the run-up in mortgage rates was driven largely by the expectation of government stimulus and more government borrowing with the new administration, the Federal Reserve’s upward estimate of economic growth and projection of three interest rate hikes in the new year are continuing to drive mortgage rates upward. Inflation will be another variable to keep an eye on as any upside surprises would force the hand of the Fed into raising interest rates even faster.
At the current average 30-year fixed mortgage rate of 4.18%, the monthly payment for a $200,000 loan is $975.70.
SURVEY RESULTS:
30-year fixed: 4.18% — up from 4.15% last week (avg. points: 0.21)
15-year fixed: 3.42% — up from 3.40% last week (avg. points: 0.19)
5/1 ARM: 3.45% — unchanged from 3.45% last week (avg. points: 0.30)
Bankrate’s national weekly mortgage survey is conducted each Wednesday from data provided by the top 10 banks and thrifts in 10 top markets. For a full analysis of this week’s move in mortgage rates, go to http://www.bankrate.com/finance/mortgages/mortgage-analysis-121416.aspx.
New Report Sheds Light on the Need for Accessible Housing and Policy Improvements
As baby boomers age, so will the increased demand for housing units with universal design, according to a new report from Harvard’s Joint Center for Housing Studies.
For remodelers, 2035 might be the year that aging-in-place remodeling will be front and center. A new report from Harvard’s Joint Center for Housing Studies says that by 2035 the number of households with a disability will increase by 76% to reach 31.2 million.
Over the next 20 years, the population of those 65 and older is expected to increase from 48 million to 79 million. And many of those 79 million will want to stay right where they are, or move in with family. The report goes on to say that by 2035, “17 million older adult households will have at least one person with a mobility disability, for whom stairs, narrow corridors and doorways, and traditional bathroom layouts will pose challenges to safety and independence.”
Many of these older adults will not only need a place to stay, but may need long-term care over the next two decades. And Importantly for remodelers, JCHS’s report finds that with the uptake in the number of people aging, the home will increasingly become a site for long-term care. According to the report, nearly 70% of older adults require some form of long-term care in later life, with the majority provided in the home. And importantly for remodelers, the trend of in-home care is likely to increase over the coming years.
This growth means there will be an increased demand for housing units with universal design elements such as zero-step entrances, single-floor living, and wide hallways and doorways–features that aren’t included in the majority of today’s housing stock.
From JCHS:
Housing design features that increase accessibility can allow those with mobility disabilities much more independence in the home, while assistive devices and technologies are increasingly able to improve safety and make it easier to conduct household activities. Universal design elements such as zero-step entrances into the home, single-floor living, and wide halls and doorways that can accommodate a wheelchair are particularly important, as are electrical controls reachable from a wheelchair and lever-style handles on faucets and doors. However, only 1% of the current housing stock offers all five of these features.
However, the comfort of staying in one’s home might be an out-of-reach luxury for many. The report also concluded that long-term care in the home is beyond the reach of middle-and-moderate-income homeowners as well as most renters. “Right now, more than 19 million older adults live in unaffordable or inadequate housing, and that problem will only grow worse in the next two decades as our population ages,” says Lisa Marsh Ryerson, president of AARP Foundation, which provided funding for the report.
The report continues,
Paying for just two months of a home health aide or assisted living would exhaust the savings of a typical older renter (whose median assets are $6,150). With non-housing assets of $103,200, the median older owner could afford over 2 years of a home health aide or assisted living care without dipping into home equity. Yet more than 9 million older homeowners have less than $50,000 in non-housing assets.
This poses a qunadry for remodelers, as many older adults can’t afford the vital work needed on their homes. The report concluded that it is the public sector that must provide tax credits and other financial incentives that will help homeowners and landlords pay for these modifications as the baby boomer generation ages into retirement.
ABOUT THE AUTHOR
Helena Okolicsanyi is a staff writer and content producer for Remodeling Magazine. She has previously had her work featured on Mic.com and the Huffington Post. She holds a degree from George Mason University where she studied international relations and journalism.
ABOUT THE AUTHOR
Laura McNulty is senior managing editor for Remodeling and ProSales magazines. She formerly served as an associate editor for Hanley Wood’s residential construction group. Contact her at lmcnulty@hanleywood.com.
ZILLOW’S TOP DESIGN TREND PREDICTIONS FOR 2017
The latest Zillow Digs Home Trend Forecast predicts velvet, jewel tones, white marble and built-in bars will top buyers’ list of must-have home features.
Is velvet about to make a comeback? According to the latest Zillow Digs Home Trend Forecast, it may be one of the hottest design trends for home interiors in the upcoming year.
The forecast, which analyzes data from a survey of interior design experts and an analysis of popular photos on Zillow Digs, predicts that velvet, jewel tones, white marble and built-in bars will be the biggest home design trends of 2017.
“Interior design in 2017 will be about bringing warmth and comfort into the home,” says Kerrie Kelly, Zillow Digs home design expert in a news release. “Homeowners will start to shy away from overly industrial designs that feel stiff or cold. Instead, they will incorporate plush fabrics like velvet and rich jewel tones into their home to make it feel more approachable and welcoming.”
Here’s what’s hot and what’s not for 2017.
Top Four Trends:
1. Velvet
Velvet is expected to make a big splash in interior design next year, especially in fabrics and textures for throw pillows, upholstered couches, and curtains.
2. Jewel Colors
Bright, saturated colors such as emerald green or sapphire blue will appear in artwork and furniture, bringing richness to the home.
3. Marble Surfaces
White and light gray marble will be one of 2017’s biggest design trends, and will be a popular choice for countertops, flooring and tabletops.
4. Built-in Bars
Homeowners will want a built-in solution for craft cocktail fixings and small bar seating areas, especially those who enjoy decorating and hosting more classic parties. For some, the built-in bar will be the focus of the home.
What’s Out:
1. Industrial Furniture
While Zillow says that aspects of the industrial design trend like exposed brick will still be present in 2017, home owners will start to shy away from its sometimes uncomfortable or impractical furniture. Instead, the 2017 design aesthetic will shift towards “steampunk,” described as “a unique hybrid of Victorian-inspired elegance boasting rich leather and plush fabrics, like velvet, combined with machine-like accents for a modern twist.”
2. Cool Grays
Experts predict homeowners to be more experimental and welcoming of brighter pops of colors in an effort to make their space feel more individualized.
3. Quote Art
The quote art trend is a fad that will be forgotten quickly. Rather than decorating with words or cliché sayings, homeowners will start to incorporate artwork reminiscent of the colors and textures found in nature.
About the Author
Lauren is the Products Editor for Hanley Wood’s residential construction group. She holds two bachelor’s degrees in English Writing and Communications from Clemson University.
Prices of Most Building Materials Increase in November
Prices received for ready-mix concrete and gypsum products increased by 1.0% and 0.4%, respectively. After declining in October, OSB prices also increased, rising 1.5% to reach the highest level seen since June 2013. The commodity has become 26% more expensive since February of this year.
The U.S. dollar (USD) appreciated steeply against the Canadian dollar today when the Federal Reserve Federal Open Markets Committee announced that it would raise the benchmark interest rate target by 0.25 percentage points (for more on the rate hike, see NAHB’s Federal Open Markets Committee December Meeting–Step Two). The 1.2% spike (shown below) occurred at 2:01pm today when the interest rate move was made public. A strengthening U.S. dollar makes Canadian softwood lumber cheaper to import, which will prove increasingly important as softwood lumber litigation picks up and the tariff environment becomes increasingly uncertain.
Canadian Dollar per One U.S. Dollar: 12/14/2016
The economy-wide PPI increased 0.4% in November. Over 80% of the increase resulted from a 0.5% jump in prices for services with prices for final demand goods rose by 0.2%. A 0.2% increase in the final demand prices for core goods (i.e. goods excluding food and energy) more than offset October’s 0.1% decline, and prices for core goods less trade services climbed 1.8% over the 12 months ended in November, representing the largest 12-month increase since August 2014.
Most of the rise in prices for goods—the third straight increase—was due to the increase in prices of core goods. Energy prices reversed course after a 2.5% rise in October, falling 0.3%. In contrast to last month, energy prices were suppressed by a 2.9% decline in gasoline prices. The increase in prices for final demand services was led by margins for apparel, jewelry, footwear, and accessories retailing, which advanced 4.2%.
HOME OWNER EQUITY ON THE RISE
Housing market adds $227 billion to home value in third quarter.
CoreLogic® (NYSE: CLGX) on Thursday released a new analysis showing that U.S. home owners with mortgages (roughly 63% of all homeowners) saw their equity increase by a total of $227 billion in Q3 2016 compared with the previous quarter, an increase of 3.1%. Additionally, 384,000 borrowers moved out of negative equity, increasing the percentage of homes with positive equity to 93.7% of all mortgaged properties, or approximately 47.9 million homes. Year over year, home equity grew by $726 billion, representing an increase of 10.8% in Q3 2016 compared with Q3 2015.
In Q3 2016, the total number of mortgaged residential properties with negative equity stood at 3.2 million, or 6.3% of all homes with a mortgage. This is a decrease of 10.7% quarter over quarter from 3.6 million homes, or 7.1% of mortgaged properties, in Q2 2016 and a decrease of 24.1% year over year from 4.2 million homes, or 8.4% of mortgaged properties, in Q3 2015.
Negative equity peaked at 26% of mortgaged residential properties in Q4 2009, based on CoreLogic negative equity data, which goes back to Q3 2009.
The national aggregate value of negative equity was about $282 billion at the end of Q3 2016, decreasing approximately $2.1 billion, or 0.8%, from $284 billion in Q2 2016, and decreasing year over year about $25 billion, or 8.2%, from nearly $307 billion in Q3 2015.
“Home equity rose by $12,500 for the average homeowner over the last four quarters,” said Dr. Frank Nothaft, chief economist for CoreLogic. “There was wide geographic variation with homeowners in California, Oregon and Washington gaining an average of at least $25,000 in home equity wealth, while owners in Alaska, North Dakota and Connecticut had small declines, on average.”
“Price appreciation is the main ingredient for home equity wealth creation, and home prices rose 5.8% in the year ending September 2016 according to the CoreLogic Home Price Index,” said Anand Nallathambi, president and CEO of CoreLogic. “Paydown of principal is the second key component of equity building. Many homeowners have refinanced into shorter-term loans, such as a 15-year loan, and by doing so, they have significantly fewer mortgage payments and are able to build equity wealth faster.”
Other findings of the analysis include:
- Texas had the highest percentage of homes with positive equity at 98.4%, followed by Alaska (98.1%), Colorado(97.9%), Utah (97.9%) and Washington (97.9%).
- On average, homeowner equity increased about $13,000, from Q3 2015 to Q3 2016 (for mortgaged properties). California, Oregon and Washington had increases of $25,000 to $30,000, while Alaska, Connecticut, and North Dakota experienced small declines.
- Nevada had the highest percentage of mortgaged properties in negative equity at 14.2%, followed by Florida (12.5%), Illinois (10.6%), Arizona (10.6%) and Rhode Island (10%). These top five states combined accounted for 30.6% of negative equity mortgages in the U.S., but only 16.3% of outstanding mortgages.
- Of the 10 largest metropolitan areas by population, San Francisco-Redwood City-South San Francisco, CA had the highest percentage of mortgaged properties in a positive equity position at 99.4%, followed by Houston-The Woodlands-Sugar Land, TX (98.5%), Denver-Aurora-Lakewood, CO (98.4%), Los Angeles-Long Beach-Glendale, CA (96.9%) and Boston, MA (95.3%).
- Of the same 10 largest metropolitan areas, Miami-Miami Beach-Kendall, FL had the highest percentage of mortgaged properties in negative equity at 17%, followed by Las Vegas-Henderson-Paradise, NV (16.2%), Chicago-Naperville-Arlington Heights, IL (12.2%), Washington-Arlington-Alexandria, DC-VA-MD-WV (8.7%) and New York-Jersey City-White Plains, NY-NJ (5.1%).
- The bulk of home equity for mortgaged properties is concentrated at the high end of the housing market. For example, 96% of homes valued at greater than $200,000 have equity compared with 90% of homes valued at less than $200,000.
AN AGING HOUSING STOCK CALLS FOR MORE NEW HOMES
Homes six years or younger make up just 2% of the current owner-occupied housing stock.
One consequence of the reduced level of single-family construction since the Great Recession has been an aging of the country’s housing stock. According to NAHB analysis of the most recent edition of the American Housing Survey (2013), the typical owner-occupied home is 37 years old. This represents a significant increase since 1993, when the typical home was 27 years old.
Looking at the underlying distribution, four out of 10 homes in the U.S. were built before 1970. The aging impact is clear: The share of homes that are 35 years or older is 57%, compared with 41% in 1993 and 46% in 2003. Currently, homes six years or younger make up just 2% of the owner-occupied housing stock, compared with 6% in both 1993 and 2003.
There is significant geographic variation with respect to the age of homes, with clear regional clustering. New York has the oldest homes among states, with a median age of 55 years. Massachusetts has a median age of 52. And the District of Columbia, as a concentrated urban area, has a median age of 74. Younger homes were located in the West and the South, in areas with more robust population growth. The median age of owner-occupied homes in Nevada was just 18, with Arizona at 23.
The aging housing stock means additional demand for home building in the years ahead. Older homes must be replaced. NAHB estimates that tear-down construction housing starts totaled 55,000 in 2015, making up just over 7% of all single-family construction. Older housing also means more remodeling activity as demand rises for improvements like aging in place and energy efficiency. An aging housing stock also offers opportunities for multifamily builders to add density and new housing with amenities in aging markets.
The challenge for businesses and policymakers is that lower income households tend to own the homes most in need of improvement. In 2013, the average income of those who owned homes built after 2010 was more than $110,000, compared with the slightly higher than $81,000 average household income for owners of homes built before 1969.
Connecting the underlying need for residential improvement and construction with spending power and financing is yet another illustration of the importance of ensuring a healthy housing finance system. Whether redevelopment means accessing residential acquisition, development and construction financing for builders, home equity loans for homeowners with tax-deductible interest, or tax-exempt bond and tax credits for multifamily rehabilitation, addressing an aging housing stock in the years ahead will be a significant source of economic growth.
About the Author
Robert Dietz, Ph.D., is chief economist and senior vice president for Economics and Housing Policy for NAHB, where his responsibilities include housing market analysis, economic forecasting and industry surveys, and housing policy research.