“What Do Homeowners Really Want?”

In a word, BIG. According to the U.S.Census Bureau, the average size of a new single-family home built in 2013 is 2,598 feet. And, the larger more luxurious homes, catering to the upper income group, are really coming into their own. “Sale of the priciest 1% of homes are up 21%” so far THIS year. In 2013 the gain was 35.7%. Because of a low supply of lots, and the correlative increase in price because of scarcity, buyers can expect prices to continue to rise. “Builders price homes based on what they are going to have to pay for all the ingredients. If they are starting to pay more for lots, they are going to have to pass that on right away,” reports David Crowe, chief economist at the National Association of Home Builders.

All Cash Deals for Retiring Boomers

Since the beginning of the real estate recovery in 2012, $3.8 trillion of value has been restored to homeowners through gains in U.S. home prices, according to the Federal Reserve. That equity is being used by Americans to pay cash for properties, thereby avoiding the oftentimes onerous lending process. According to Bloomberg, 29% of “non-investment homebuyers used cash, the highest on record for the period…” It makes sense that the majority of the all-cash deals are being put together by baby boomers – America’s largest-ever generation, in the throes of retirement. “In 2012, there were a record 61.8 million Americans over the age of 60″, compared to 46.6 million in 2000. Chief economist of the National Association of Realtors, Lawrence Yun reports: “Cash purchases are on the rise because older homeowners who have decades of home-equity accumulation don’t want the hassle of a mortgage. With the economy improving and the stock market at record highs, boomers are the ones driving the market.”
Source: Bloomberg

Realtors to FHA: Your Mortgage Insurance Rates Drive Buyers Away

Realtors to FHA: Your Mortgage Insurance Rates Drive Buyers Away
Source: HousingWire

The Federal Housing Administration’s (FHA) mortgage insurance requirement is facing criticism from real estate professionals who argue that home purchases are becoming increasingly out of reach for many qualified borrowers who rely on FHA financing but are hindered by mortgage insurance rules. Steve Brown, president of the NATIONAL ASSOCIATION OF REALTORS® (NAR), called on the FHA to relax its mortgage insurance rules due to concerns about high annual mortgage insurance premiums and mortgage insurance required for the life of a loan.
Making sense of the story:

• NAR posits as many as 125,000 to 375,000 prospective buyers were priced out of the market in 2013 by the FHA’s high insurance premiums and mortgage insurance requirement.

• In 2014, FHA fees make up nearly 25 percent of a monthly mortgage payment.

• On a $150,000 loan, at 4.5 percent, the mortgage payment is 13 percent higher today than it was in 2008.

• In 2014, the mortgage insurance premium of 1.35 percent is 80 basis points higher than the rate of 0.55 percent in 2010. The 80 additional basis points pushed an estimated 1.45 million to 1.65 million renters over a sustainable debt-to-income level for the purchase of a home in 2013.

• Many first-time home buyers, who are priced out of FHA and unable to migrate to private mortgage insurance, are likely under the age of 44. Since 2008, income growth has been slowest among Millennials, ages 33 and younger, and Generation Xers, ages 34-44.

• Many of the potential home buyers who are priced out of FHA cannot migrate to private mortgage insurance. Combined with the higher funding cost of roughly 25 basis points for a GSE execution, only borrowers with the highest credit could afford to migrate to GSE financing.

Coronado Flower Show Spring Fling

The Coronado Spring Fling is doing something new this year – scrumptious food samplings from Coronado and San Diego County Restaurants as well as a variety of craft beers from local brewers, regional fine wines, and live entertainment. Participants include Alexander’s Pizza, Tartine, Ganosh Gourmet, Saiko Sushi, The Brig, Miguels, Vigalucci’s and many others. Chefs will be creating a classic menu item or something new to delight their guests. Coronado Brewing Company, Wine-a-Bit, Zilaro Cellar and Magnifico Giormeta will be providing alcoholic beverages. Tickets cost $45 and can be purchased through the Coronado Floral Association website and through purplepass.com. Tickets include admission, food and drink tastings, drink tickets for wine and beer, a Spring Fling souvenir glas, entry into grand prize drawings, live music, and transportation. Also included is admission to the after party which will be held at McP’s Irish Pub from 9:30 – 11:30. For more information:
Source: Anne Covington Morse