May 18, 2018
The yield on the 10-year Treasury reached a 7-year high of 3.069% by midday Tuesday, which caused a sharp sell-off in the bond market. Mortgage rates responded by reaching their highest level in nearly 7 years (July 2011).
The Fed is set to raise interest rates two more times this year, and the market is increasingly pricing in a third hike. However, after years of very low mortgage rates, the symbolic risk of a 5% mortgage, on top of higher gas prices, may reduce homebuyer demand, but with supply and demand so far out of whack, that is unlikely to happen in the near term.
Housing Starts dropped 3.7% to 1.287 million units in April, reversing March’s rise. Starts fell in the Northeast, West and Midwest, but rose in the South. Single-family homebuilding edged up 0.1% to a rate of 894,000 units last month.
Building Permits fell 1.8% to a rate of 1.352 million units in April. Last month, permits for the construction of single-family homes rose 0.9% to a rate of 859,000 units in April.
The number of single-family units completed fell 4.0% in April. Single-family units under construction increased 1.0% to the highest level since June 2008.
Standard residential purchase forms often contain language about fixtures, with buyers generally keep anything permanently attached to the house. Some of the most common house fixtures that stay are built-ins and major custom pieces attached to the home—like window seats, built-in bookshelves, and plantation shutters. Other items that stay include certain hardware such as drawer pulls and knobs, landscaping, light fixtures attached to the home, smoke and carbon monoxide detectors, and some kitchen appliances. Washers and dryers typically go with sellers, unless otherwise stated.
But anything is negotiable. For example, some home security systems can easily be moved, while others are permanently installed but could be a negotiated. If the buyer loves the dining room table, they can decide on a fair market value and have their real estate agent try to negotiate for it.
To avoid a fixture feud or a closing delay, ask the sellers if they are planning to leave anything with the home, and make sure buyers are clear on what is staying and what is going.
Helping buyers photograph their home closing is a golden marketing opportunity for your business.
• Facebook has an algorithm that recognizes milestones, like buying housing and having a child. These posts tend to get a lot of likes and comments, so they reach more people, which is an opportunity for you to be referred to their friends who are interested in buying, too. Always ask permission before you post and tag the homebuyers on any social media channel.
• Provide your buyers with a prop, such as an oversize key emblazoned with your contact info for the homebuyers to hold in the photo to get your name, logo and website into your buyer’s newsfeed.
• While younger homebuyers will want to share the photos on social media, giving them printed photographs in a frame as a closing gift will be something they can share with their children one day.
The NAHB Chairman attributed the increase to a growing consumer demand for single-family homes. However, the record-high cost of land, labor, lumber and other materials are hurting builders’ bottom lines and making it more difficult to produce competitively priced houses for first-time home buyers.
Of the NAHB index’s three components, current sales conditions increased 2 points to 76 in May. Buyer traffic and sales expectations in the next six months remained unchanged at 51 and 77, respectively.
A new Bank of America Merrill Lynch report Who Builds the House 2018 subjects both the new residential and remodeling market places to a fascinating market “sizing” research exercise, aggregating and averaging data in such a way as to show a model for materials and products input costs.
The report estimates that the value of content in an average US single-family new home has grown at a compounded annual growth rate of 3.6% from $23,073 in 1982 to $80,566 in 2017. Further, the report sizes market share for the building products and materials supplier leaders in each of its 14 separate component categories.