July 13, 2018
Homebuyers responded to more listings coming on the market with a 7% increase in mortgage applications to purchase a home this week, which is 8% higher than the same week one year ago.
Mortgage rates have stayed fairly steady this summer, although they remain elevated after the jump at the beginning of the year. However, analysts are expecting to see rates in the 5% range by next year so your home buyers should maintain momentum for their house search this year.
While purchase applications are up, the same cannot be said for new construction mortgage applications, which fell by 12% in June from May and by nearly 9% from a year ago. The MBAattributed the fall to builders being constrained by the tight job market for construction labor and rising input costs, particularly lumber costs.
The HPSI was down 1.6 points to 90.7 in June; the drop attributed to four of the six components that go into its calculation. However, the Index is still 2.4 points higher than in June 2017.
June 2018* Change Since Last Month Change Since Last Year June 2018 HPSI 90.7 -1.6 +2.4 Good time to Buy 28 0 -2 Good time to Sell 47 +1 +8 Home Prices will go up (next 12 months) 46 -3 0 Mortgage Rates will go down (next 12 months) -53 -4 -4 Confidence about not losing Job (next 12 months) 76 -2 +10 Household Income is significantly higher (past 12 months) 19 -2 +2
*Net percentages of the component questions used to calculate HPSI, e.g. (Percent Good Time to Buy – Percent Bad Time to Buy) = 28
Knowing in advance what to expect regarding market trends for the real estate industry will not only give you an edge over your competition but can help you serve your customers better.
These are the real estate trends or market shifts the Forbes Real Estate Council has been most surprised to see so far this year.
- Technology innovation in the real estate industry has been changing rapidly and all agents should adapt to maximize exposure for their listings.
- Blockchain-based applications are changing the way buyers, sellers and investors interact with each other and the properties they have interests in.
- Home prices are still rising in major
- Struggling retail locations provide excellent opportunities for multifamily redevelopment.
- Millennials homeownership is on the rise
- Agents should try to improve inventory by explaining the current seller’s market to homeowners.
- Real-time management of your online presence
- Texas is exploding with investment opportunities.
- Significant profits have been gained by investors and homeowners in several key markets.
- Agents using professionals for all their visual marketing needs — virtual staging, drone video and photography, virtual tours, interactive floor plans, etc.
People prefer to do business with companies they know, trust and have community impact. One way to maximize the impact for you as an agent or broker is to develop marketing strategies that utilize the 3 Pillars of Cause Marketing:
- Congruence of Interest – Choose a nonprofit that aligns with your company’s target audience, brand, and core values so clients will be able to see the clear connection between your business and the nonprofit.
- Impact Investing – Create a campaign centered on specific goals to provide a clear understanding of why you are using cause marketing and its effects.
- Meaningful Marketing – Enhance clients’ experience by weaving the story of the cause and its relationship to your brand into established communications efforts such as newsletters and websites.
Certainty Home Loans demonstrates our commitment to the communities we serve through our Community Connection program. Over the years, thousands of homebuyers have responded positively to the program which gives borrowers, who finance their home through us, the opportunity to have a $250 donation made in their name to their favorite charity after their loan is funded.
Home improvement reality shows often misguide consumers about the renovation process, resulting in a misunderstanding about the amount of time and effort required to undergo renovations. Four of the most common renovation myths are:
- The answer to creating more space is always to knock down walls. Removing walls isn’t always necessary to create more space. In 1900s-era homes that were usually built quickly and inexpensively, the walls can’t be ripped out. It’s more important to have a home with good bones.
- A well-done remodeling project can be completed in a day. Homeowners may falsely believe renovation work can be completed quickly, forgetting that fitting an entire narrative into a 30-60 minute show requires editing out some of the processes.
- The permit process is a simple, insignificant part of the equation. Home improvement projects that involve additions to the home often require securing building permits from the local government, which can drastically extend the timeline of a project. Waiting for permit approval can increase time and budget by up to 50%.
- For higher ROI, go bigger with renovations. Renovation reality shows prefer to feature flips with full kitchens and bathrooms because the before-and-after shots appeal more to viewers. However, homeowners aspiring to renovate their homes might be better off doing small-scale renovations that just need carpet, paint, and some freshening up.
Many single-family home builders have started to offer new models, which may qualify as entry-level homeownership, but marginally fit the definition due to pricing being too high to serve as a starter home. The question many small-to-medium sized home building firms have is how can they move from higher-priced construction toward the $200,000-$250,000 marketplace?
In 2017, Destiny Homes built and delivered a total of 120 homes. So far in 2018, they have more than doubled that amount and are up 128% in an overall market that is down 14% in the same time period. So what’s their secret to success? Figuring out how to profit from selling homes at almost $100,000 below the average selling price for new homes and $80,000 lower than their own average selling prices from just two years ago.
Destiny Homes’ answer to unlocking the code to get to affordability includes several components, and they started with the land basis. They co-ventured with local partners to secure land, then focused on density and orientation by clustering more homes on a grid and building homes deeper on the lots. They repeatedly used a 36’ by 36’ footprint to get trades quickly over the learning curve, so profitability increased each time. Their goal was to be the best and most profitable place for their trades. Successful in their efforts, Destiny Homes was able to bring down the cost of their entry-level offerings from the high $200,000s to $200,000-$250,000.
Destiny Homes attribute their success to the education process instead of sales. Their sales process focuses on educating buyers on the affordability of living in one of their homes, compared to what many of them pay to rent. Despite local regulations, the Department of Natural Resources, and development costs, Destiny Homes has found that municipalities in their city now look to them for ways to introduce more affordable new home communities.