Foreign Home Buying Dries Up, Easing the Way for Domestic Buyers

| Jul 3, 2020

Foreign buying of U.S. homes was a driving factor in markets from California to Florida, helping prices reach new highs. Now, the pandemic, reduced travel and immigration restrictions are further undermining already weakening international demand.

Overseas residential real-estate purchases climbed steadily between 2011 and 2017, peaking at $153 billion in the year ended March 2017, according to the National Association of Realtors. About 60% of foreign buyers are recent immigrants or foreigners who live in the U.S., while others buy U.S. homes as investment properties or vacation homes, according to NAR.

Foreigners represent a tiny percentage of overall buyers. But because they have tended to cluster in coastal cities like New York, Miami and the Los Angeles area, they sometimes have had an exaggerated influence in these markets, especially at the higher-price end. Foreigners also were more likely to pay cash, making their offers more attractive to sellers.

Foreign appetite fell sharply in 2018 and 2019, according to NAR. Much of the buying came from China. It slowed in 2019 after the Chinese government implemented new controls over foreign currency purchases and as the country’s trade dispute with the U.S. heated up. A stronger dollar, which makes U.S. homes more expensive in foreign currencies, and concerns about global economic growth slowed overseas buying more broadly.

This year, demand looks likely to be even weaker, real-estate agents say.

Limited travel between the U.S. and other countries, worries about virus transmission and new restrictions on immigration could weigh on international investment in U.S. housing this year.

In the latest setback for foreign homeownership in the U.S., President Trump signed an order June 22 temporarily barring new immigrants on certain employment-based visas through the end of the year.

While the lack of overseas demand may disappoint homeowners in major coastal cities that attracted much of the foreign demand, local buyers who have lost out in bidding wars to deep-pocketed foreigners might be relieved.

“Some decline in international buying activity I don’t think necessarily harms the U.S. housing market,” said Lawrence Yun, NAR’s chief economist. “If anything, it doesn’t put any additional upward pressure on home prices, which have been a major concern for buyers on the affordability front.”

Home prices have continued to rise during the pandemic, even as the rate of home sales has dropped. The supply of homes for sale remains limited in many markets, and demand from buyers has increased in recent weeks as business activity has opened up in many states and mortgage rates have stayed low.

Foreign investment in U.S. housing can push up local home prices in select markets, according to a working paper released last monthby Caitlin Gorback and Benjamin Keys of the University of Pennsylvania.

The paper found that in ZIP Codes with a high proportion of foreign-born Chinese, house prices between 2012 and 2018 grew by 8 percentage points more than in comparable ZIP Codes. These areas, which in many cases also attracted strong local demand, could be vulnerable to price erosion as both domestic and foreign buying pulls back.

“The neighborhoods that are highly exposed to foreign investment on the upside are also exposed on the downside,” Mr. Keys said.

Many foreign investors buy homes for their children to live in while attending school in the U.S., and those purchases are on hold while families wait to see whether schools will be open in the fall, said Vicky Silvano, broker at Baird & Warner in Chicago.

“Because of the pandemic, the people that I work with are just on a ‘wait and see’ right now,” Ms. Silvano said. For foreign investors who own homes in the U.S., “I think there’s going to be more selling if the kids don’t come back to school” this year, she said.

Indiana University has drawn many foreign buyers to Bloomington, Ind., in the past decade, said Tracee Lutes, broker owner at Re/Max Acclaimed Properties.

“I think we will have a lot fewer foreign investment buyers here this year…with the uncertainty in the university plans and the uncertainty in the Covid situation,” she said.

Indiana University said in May that it plans to open in the fall for a mix of in-person and online classes.

Housing demand is strong in Bloomington, and a decline in foreign investment could be a boon to local shoppers, Ms. Lutes said: “I think you would see more in-state people, local people, that would take advantage of the ability to buy.”

Still, some see foreign buying picking up once normal travel resumes. In New Jersey and New York, Grace Tan of Prominent Properties Sotheby’s International Realty said her international clients in countries like China are already planning to shop for homes in the U.S. once international travel picks up.

“These clients are still not comfortable buying virtually,” she said. “They will come back. I already get the phone calls.”


Posted on July 4, 2020 at 12:46 am
Renuka Getchell | Posted in Real Estate News | Tagged , , , , ,

How the Coronavirus Is Reshaping Home Design: 10 Crucial Features a House Should Have Today

 | Apr 21, 2020

Life as we know it has changed dramatically in the coronavirus era, affecting work, school, travel, and more. And it’s shed light on the way we live at home, underscoring the fact that there’s nothing more important than safe shelter for our family.

To that end, COVID-19 is influencing what people want to see in home design.

“After the pandemic, our homes are going to reflect the lessons learned during this painful period, such as ways to disinfect ourselves and our possessions,” says Jamie Gold, a wellness design consultant and author of “Wellness by Design.”

In a postvirus world, we won’t soon forget our shelter-at-home memories. Going forward, if there’s even the slightest chance (god forbid) that we’ll need to repeat this awful practice, homeowners may want to prepare by buying or renovating a house with amenities that’ll make it just a bit more bearable.

To help, here are 10 features to look for in a new home—or demand in your current one—once we’ve bid the coronavirus adieu.

1. More bathrooms

Photo by Excel Builders

A family member who’s caught a virus needs his own loo to keep germs in one place, so the addition of a second (or third or fourth) bathroom in homes will be important.

“This option used to be about convenience, but in the age of quarantines, sharing a bathroom could be dangerous,” says David Sipp, owner of two Mr.Handyman franchises in Indiana.

And since hand-washing is a constant nowadays, a half-bathroom or even just a sink right by a home’s entrance may become fairly standard.

“There’s renewed focus on [sinks near front entrances] in an attempt to get people to wash before entering the home,” says architect Kobi Karpof the eponymous firm.

2. Better mudrooms

Photo by Michael Robert Construction

Taking off your shoes before entering the house has long been recommended to cut back on grime and germs. But now that a recent study found that the novel coronavirus can cling to shoes’ soles and then get tracked inside, even more people may start removing their shoes right as they enter a house. This could make the presence of mudrooms—including larger, souped-up versions with seating areas and cubbies—more appealing than ever.

3. Bigger pantries

Photo by Closet Factory

You probably weren’t alone if you found your food storage was lacking in the early days of the coronavirus—and the fix will be bigger and better pantries. Room for nonperishables is key so you can cut back on the number of grocery store trips you make.

No room for a dedicated pantry? Sipp anticipates a need for more food storage like shelving and cabinets in other parts of the home, like the garage and basement.

“And larger pantries won’t necessarily live in the kitchen area, but will instead be more of an add-on in the laundry room or entryway,” says Gold. The reason: Deliveries can be made contact-free, away from living areas, and trips into the house will be reduced.

4. More freezer space

Photo by Perlick

Remember the old-fashioned chest freezer your grandmother had? Look for it again, along with more built-in freezer drawers, in future home design. Panicky pandemic shoppers are snapping up all manner of foods, and the result has been a sold-out stock of freezer units.

5. Bathroom bidets

Photo by Murphy’s Design

The French know a thing or two about healthy bathroom design—and we’re finally taking notice. Bidet use was already on the rise before the coronavirus, and since toilet paper shortages have hit hard, more and more folks are looking to install this amenity.

Bidets are gentle and hygienic, and even when TP is back on store shelves, these devices will still be in demand, says Gold.

Want something cheaper than installing a whole new appliance? Consider the washlet, which is a seat fitted to an existing toilet that’s equipped with a spray nozzle.

“There’s less need for tissue with a washlet,” says Melanie Turner, an architect at Perkins & Will.

6. Closed-off spaces

By Marie Burgos Design New York

“COVID-19 has brought to light a heightened desire for discrete areas, no matter how small, and convertible spaces like guest rooms that can be used for playtime or as a homework spot,” says Turner. But open floor plans probably won’t disappear—instead, a better balance between private, semiprivate, and public spaces is coming.

“The reason is the need for homes to multitask better, which means if you have two partners suddenly working from home and a couple of kids home schooling, you’ll have more quiet, separate spaces for everyone to function effectively,” says Gold.

7. Brass and copper fixtures

Photo by AFT Construction

Adapting to a new, more germ-conscious way of living starts with a return to copper and brass (a copper-zinc combo) for doorknobs and fixtures. In fact, brass kills bacteria more effectively than stainless steel, according to research.

Brass and copper are excellent metals for the home because both are naturally antimicrobial and corrosion-resistant.

“Copper is one of the best for its antimicrobial properties and has been used for decades in plumbing—and brass and bronze are also very popular because of their inherent ability to kill germs, plus over time they give a desirable rustic look,” said Karp.

8. Hands-free light switches, faucets, and more

Photo by Broedell Plumbing Supply, Inc.

“We already have hands-free faucets, light switches, and voice-control features to operate windows, showers, thermostats, and sound systems. Plus there’s a hands-free door opener that’s being introduced for homes,” points out Gold, who anticipates seeing them in homes now more than ever.

“We’ve had touchless entry and infrared detection systems in place for years in hotels, so I expect to see these technologies applied for opening home cabinets, fridges, and drawers in the near future,” adds Karp.

9. Closed HVAC systems

Photo by Global Source Lighting/San Ramon Lighting

For people with allergies, asthma, or other respiratory issues, more sophisticated HVAC systems, including those that can be closed from the outside world for limited amounts of time, might become more common.

“We have to weigh the benefits of fresh air with the desire to temper or limit intake at very specific times,” says Turner.

10. Nicer home offices

Photo by Mast & Co. Builders

This one’s obvious, and it runs the gamut from a fully equipped workspace in a separate room to smaller iterations like nooks under the stairs or a retrofitted closet.

Having a quiet area in which to work will be a must-have, and if you can include the ability to work while standing up or moving, your wellness will be enhanced, says Gold.

“As people video chat and Zoom more with colleagues from home, they’re becoming hyperaware of the changes they’d like to see in a home office, including better lighting and more storage. And since a return to the workplace will be gradual, high demand will continue for an office that’s comfortable and functional,” says Sipp.

Jennifer Kelly Geddes creates content for Livestrong.com, the National Sleep Foundation, American Airlines Vacations, Oxo, and Mastercard.

Posted on July 3, 2020 at 9:56 am
Renuka Getchell | Posted in Real Estate News | Tagged , , , , ,

Mortgage Impact from COVID-19

Image Source: Shutterstock

 

For some homeowners who have been financially impacted by the COVID-19 pandemic, there is a high level of concern about paying their mortgage. Fortunately, there are options to aid struggling homeowners from governments, financial institutions, and loan providers. The following information is intended to provide clarity on which financial relief options are available to you during this time.

 

What are my mortgage relief options?

Newly placed into law, the Coronavirus Aid, Relief and Economic Security (CARES) Act, provides two protections for homeowners with federally backed mortgages:

 

  1. Your lender or loan servicer may not foreclose on you for 60 days following March 18, 2020. The CARES Act prohibits lenders and/or servicers from beginning a non-judicial foreclosure, or finalizing a foreclosure sale, against you within this time period. While 60 days has passed since this was put into place, it is still important to be aware of in the event that any of these actions were taken against you.
  2. You have a right to request a forbearance for up to 180 days if you experience financial hardship due to the COVID-19 pandemic. You can also apply for a 180-day extension beyond the forbearance period. This does not require submitting additional documentation beyond your claim, nor will you incur additional fees, penalties or interest beyond what has already been scheduled.

 

Forbearance is…

  • With forbearance, mortgage servicers and lenders allow you to pause or reduce your mortgage payments for a period of time while you get back on your feet financially.
  • Different types of loans beget different forbearance options, understanding the differences and which options apply to your loan is key to navigating the forbearance landscape.
  • Once your income is back to a normal level, contact your loan servicer and resume your payments.

 

Forbearance is not…

  • Forbearance is not a means to forgive or erase your payments. Any missed or reduced payments still require payment in the future.

 

Which relief options do I qualify for?

The first step in discovering your mortgage assistance qualifications is to contact your mortgage provider. If you are unsure of how to get in touch with them, look at your mortgage statement for contact information or see what contact options are available online.

After you have successfully made contact, find out if your mortgage is federally backed. To be eligible for assistance under the CARES act, your mortgage must either be backed federally, or by one of the entities in the list below. These links show the agencies’ current advise and related loan information:

 

For non-federally backed loans, contact your lender or servicer to learn more about their forbearance repayment options.

 

Today’s financial landscape can be stressful for homeowners, especially those that are struggling to keep up financially. Fortunately, these entities, institutions, and servicers have provided options to help lessen the burden. Knowing which options apply to you and your household will help you navigate through hardship as your finances recover.

Posted in Buying by Sandy Dodge


Posted on July 1, 2020 at 8:55 pm
Renuka Getchell | Posted in Real Estate News | Tagged , , , , ,

Mortgage Forbearance, and the effects we will see.

Mondays with Matthew: Mortgage Forbearance Update

On this week’s episode of “Mondays with Matthew”, Matthew Gardner provides an update on the mortgage forbearance program and what type of effect we can expect it to have on the US housing market.

Economics + Market Trends,

+2

Posted on June 16, 2020 at 10:15 am
Renuka Getchell | Posted in Real Estate News, Renuka's Residential Report |

Home Prices Now, and What to expect for the rest of 2020

Matthew Gardner’s Weekly housing talk.

Twelve weeks into the COVID-19 pandemic and we are certainly seeing the impact it has had on the housing market. Today’s episode of “Mondays with Matthew” covers home prices now, and what to expect for the rest of 2020.

 


Posted on June 9, 2020 at 7:26 am
Renuka Getchell | Posted in Real Estate News, Renuka's Residential Report | Tagged , , , ,

Mortgage Rates. Will they go below 3%?

Posted in Market News by Matthew Gardner, Chief Economist, Windermere Real Estate

This week on “Mondays with Matthew”: Now that things have settled down somewhat following the initial impact of COVID-19, Matthew dives into the topic of mortgage rates. Will they go below 3%? Matthew discusses this and the factors that have formed his updated 2020 and 2021 mortgage rate forecast. 

 


Posted on June 7, 2020 at 2:05 am
Renuka Getchell | Posted in Real Estate News, Renuka's Residential Report | Tagged , , , , ,

Questions to Ask During Your Virtual Home Tour

This is a relevant post from Windermere, during this time.

Posted in Buying by Sandy Dodge

Eastside homes, Renuka Getchell, Virtual Tours,

Image Source: Canva

 

Thanks to COVID-19, the new reality is that many open houses and home tours are being conducted virtually. For prospective home buyers, this new territory brings an added element to prepare for in the home buying process. Some of the questions that should be asked in a virtual home tour parallel those of in-person tours, but others are unique to today’s virtual world.

 

Could you zoom in?

  • Sometimes it can be difficult to get a true glimpse at what you want to see in a room. Asking the agent to zoom in on specific features is commonplace in virtual home tours, and they understand this is part of the viewer experience. Don’t hesitate to ask multiple times. Getting a better look at everything you want to see will help you feel like you’ve gotten the most out of your virtual tour.

 

How many square feet are in this room?

  • Virtual tours can slightly distort space, making it tough to gauge the size. The room-to-room square footage is information the agent is sure to have handy. Since you can’t be there in person, it will help you piece together the virtual visuals with the sense of physical space that we’re all accustomed to feeling in the places we live.

 

What color is that?

  • In the smartphone era, and computer era at large, we have come to understand that digital representations of color are not always true to the eye. Ask the agent to confirm specific colors so you can plan accordingly. Have a color swatch on hand or look the colors up online as you go through the tour.

 

When were the appliances last updated?

  • The importance of this question rings true in past, present, and future. Knowing the state of the home’s appliances, and the likelihood and timing of when they will need replacement, is vital information for both assessing the move-in readiness of the home and understanding what costs might lie ahead.

 

Has the seller provided an inspection?

  • This is another example of a critical question, whether your home tour is virtual or physical. If the seller has already done an inspection, ask the agent to lead you to any areas of concern based on the inspector’s findings. If there is anything that has not yet been addressed by the seller, have your agent ask what their plan is for making the necessary repairs/updates.

 

When is the offer review date?

  • Understanding the seller’s timeline for reviewing and accepting offers will help guide your decision-making process and allow you to strategize based on the timeline.

 

Whether your home tour is physical or virtual, getting the information you need to make an informed decision remains paramount. Although there is no substitute for physically being in the home you are looking to buy, keeping these questions in mind will position you well as you progress through the home buying journey.


Posted on May 29, 2020 at 8:13 pm
Renuka Getchell | Posted in Real Estate News, Renuka's Residential Report | Tagged , , , , ,

Forecast 2019 housing market


Posted on January 26, 2019 at 7:50 pm
Renuka Getchell | Posted in Real Estate News, Uncategorized | Tagged , , ,

Interest Rates Across Time, It’s All Relative

The Cost Across Time

The Cost Across Time [INFOGRAPHIC] | MyKCM

Some Highlights:

  • With interest rates still around 4.5%, now is a great time to look back at where rates have been over the last 40 years.
  • Rates are projected to climb according to Freddie Mac.
  • The impact your interest rate makes on your monthly mortgage cost is significant!
  • Lock in a low rate now while you can!

Posted on January 14, 2019 at 3:47 am
Renuka Getchell | Posted in Real Estate News | Tagged , , , , , , ,

2019 Economic and Housing Forecast

What a year it has been for both the U.S. economy and the national housing market. After several years of above-average economic and home price growth, 2018 marked the start of a slowdown in the residential real estate market. As the year comes to a close, it’s time for me to dust off my crystal ball to see what we can expect in 2019.

The U.S. Economy

Despite the turbulence that the ongoing trade wars with China are causing, I still expect the U.S. economy to have one more year of relatively solid growth before we likely enter a recession in 2020. Yes, it’s the dreaded “R” word, but before you panic, there are some things to bear in mind.

Firstly, any cyclical downturn will not be driven by housing.  Although it is almost impossible to predict exactly what will be the “straw that breaks the camel’s back”, I believe it will likely be caused by one of the following three things: an ongoing trade war, the Federal Reserve raising interest rates too quickly, or excessive corporate debt levels. That said, we still have another year of solid growth ahead of us, so I think it’s more important to focus on 2019 for now.

The U.S. Housing Market

Existing Home Sales

This paper is being written well before the year-end numbers come out, but I expect 2018 home sales will be about 3.5% lower than the prior year. Sales started to slow last spring as we breached affordability limits and more homes came on the market.  In 2019, I anticipate that home sales will rebound modestly and rise by 1.9% to a little over 5.4 million units.

Existing Home Prices

We will likely end 2018 with a median home price of about $260,000 – up 5.4% from 2017.  In 2019 I expect prices to continue rising, but at a slower rate as we move toward a more balanced housing market. I’m forecasting the median home price to increase by 4.4% as rising mortgage rates continue to act as a headwind to home price growth.

New Home Sales

In a somewhat similar manner to existing home sales, new home sales started to slow in the spring of 2018, but the overall trend has been positive since 2011. I expect that to continue in 2019 with sales increasing by 6.9% to 695,000 units – the highest level seen since 2007.

That being said, the level of new construction remains well below the long-term average. Builders continue to struggle with land, labor, and material costs, and this is an issue that is not likely to be solved in 2019. Furthermore, these constraints are forcing developers to primarily build higher-priced homes, which does little to meet the substantial demand by first-time buyers.

Mortgage Rates

In last year’s forecast, I suggested that 5% interest rates would be a 2019 story, not a 2018 story. This prediction has proven accurate with the average 30-year conforming rates measured at 4.87% in November, and highly unlikely to breach the 5% barrier before the end of the year.

In 2019, I expect interest rates to continue trending higher, but we may see periods of modest contraction or levelling.  We will likely end the year with the 30-year fixed rate at around 5.7%, which means that 6% interest rates are more apt to be a 2020 story.

I also believe that non-conforming (or jumbo) rates will remain remarkably competitive. Banks appear to be comfortable with the risk and ultimately, the return, that this product offers, so expect jumbo loan yields to track conforming loans quite closely.

Conclusions

There are still voices out there that seem to suggest the housing market is headed for calamity and that another housing bubble is forming, or in some cases, is already deflating.  In all the data that I review, I just don’t see this happening. Credit quality for new mortgage holders remains very high and the median down payment (as a percentage of home price) is at its highest level since 2004.

That is not to say that there aren’t several markets around the country that are overpriced, but just because a market is overvalued, does not mean that a bubble is in place. It simply means that forward price growth in these markets will be lower to allow income levels to rise sufficiently.

Finally, if there is a big story for 2019, I believe it will be the ongoing resurgence of first-time buyers. While these buyers face challenges regarding student debt and the ability to save for a down payment, they are definitely on the comeback and likely to purchase more homes next year than any other buyer demographic.

Originally published on Inman News.

Posted December 18 2018, 9:15 AM PST by Matthew Gardner, Chief Economist, Windermere Real Estate


Posted on January 9, 2019 at 10:39 pm
Renuka Getchell | Posted in Real Estate News | Tagged , ,