April New Home Sales Decline

By Amy Connolly

New home sales in the United States fell in April by 4.7% compared to the previous month. The average sale price nationally was $505,700.

WASHINGTON – New home purchases dropped in April as buyers continued to be deterred by high mortgage rates and prices and a short supply.

Sales of new single-family houses were at a seasonally adjusted annual rate of 634,000, according to estimates released by the U.S. Census Bureau and the Department of Housing and Urban Development (HUD). This is 4.7% below the revised March rate of 665,000 and is 7.7% below the April 2023 estimate of 687,000.  The median sales price of new houses sold in April 2024 was $433,500. The average sales price was $505,700, the Census Bureau said.

The National Association of Home Builders (NAHB) said housing affordability continues to be problematic across the country.

The NAHB/Wells Fargo Cost of Housing Index found in the first quarter of 2024, 38% of a typical family’s income was needed to make a mortgage payment on a median priced new single-family home. Low-income families, defined as those earning only 50% of the area’s median income, would have to spend 77% of their earnings to pay for the same new home.

The figures track closely for the purchase of existing homes in the U.S. as well, the NAHB said.

A typical family would have to pay 36% of their income for a median-priced existing home while a low-income family would need to pay 71% of their earnings to make the same mortgage payment.

NAHB/Wells Fargo data found the Naples-Marco Island area to be among the top 5 most severely cost-burdened markets in the country. HUD defines cost-burdened families as those that pay more than 30% of their income for housing and a severe cost burden is defined as paying more than 50% of a household income on housing. The Naples-Marco Island area comes in at 71%, the NAHB said.

“With a nationwide shortage of roughly 1.5 million homes, the lack of housing units is the primary cause of growing housing affordability challenges,” said NAHB Chief Economist Robert Dietz. “Policymakers at all levels of government need to enact policy changes that will allow builders to construct more homes, such as speeding up permit approval times, providing resources for skilled labor training and fixing building material supply chains.”


Long-Term Mortgage Rates Decline for a Third Week

By Alex Veiga

The average rate on a 30-year mortgage fell to 6.94% from 7.02% last week and borrowing costs on 15-year fixed-rate mortgages dipped 6.24% from 6.28%.

LOS ANGELES — The average rate on a 30-year mortgage dipped this week to just below 7% for the first time since mid-April, a modest boost for home shoppers navigating a housing market dampened by rising prices and relatively few available properties.

The rate fell to 6.94% from 7.02% last week, mortgage buyer Freddie Mac said Thursday. A year ago, the rate averaged 6.57%.

This is the third straight weekly decline in the average rate. The recent pullbacks follow a five-week string of increases that pushed the average rate to its highest level since November 30. Higher mortgage rates can add hundreds of dollars a month in costs for borrowers, limiting homebuyers’ purchasing options.

Borrowing costs on 15-year fixed-rate mortgages, popular with homeowners refinancing their home loans, also declined this week, trimming the average rate to 6.24% from 6.28% last week. A year ago, it averaged 5.97%, Freddie Mac said.

Mortgage rates are influenced by several factors, including how the bond market reacts to the Federal Reserve’s interest rate policy and the moves in the 10-year Treasury yield, which lenders use as a guide to pricing home loans.

Treasury yields have largely been easing since Federal Reserve Chair Jerome Powell said earlier this month that the central bank remains closer to cutting its main interest rate than hiking it.

Still, the Fed has maintained it doesn’t plan to cut interest rates until it has greater confidence that price increases are slowing sustainably to its 2% target.

Until then, mortgage rates are unlikely to ease significantly, economists say.

After climbing to a 23-year high of 7.79% in October, the average rate on a 30-year mortgage stayed below 7% this year until last month. Even with the recent declines, the rate remains well above where it was just two years ago at 5.25%.

Last month’s rise in rates were an unwelcome development for prospective homebuyers in the midst of what’s traditionally the busiest time of the year for home sales. On average, more than one-third of all homes sold in a given year are purchased between March and June.

Sales of previously occupied U.S. homes fell in March and April as home shoppers contended with rising mortgage rates and prices. 

This month’s pullback in mortgage rates has spurred a pickup in home loan applications, which rose last week by 1.9% from a week earlier, according to the Mortgage Bankers Association.

“May has been a better month for the mortgage market, with the last three weeks showing declining mortgage rates and increasing applications,” said MBA CEO Bob Broeksmit. “Rates below 7% are good news for prospective buyers, and MBA expects them to continue to inch lower this summer.”

Born

Queen Victoria (British monarch) – 1819
George Grey Barnard (sculptor) – 1863
Bob Dylan (musician) – 1941
Gary Burghoff (actor) – 1943
Patti LaBelle (singer) – 1944
Priscilla Presley (actress) – 1945
Jim Broadbent (actor) – 1949
Kristin Scott Thomas (actress) – 1960
John C. Reilly (actor) – 1965
Billy Gilman (country singer) – 1988

The Rise of the ‘Rentvester’: Why Renting in One City and Buying in Another May Be the New American Dream

By Janet Siroto

The American dream might be to own your own home, but that doesn’t mean you necessarily have to live in it.

Increasingly, Americans are renting in one (often pricey) location and then buying an investment property in a more affordable place. Dubbed “rentvesting,” this practice is taking off across the country.

“I had a young couple as clients who lived and worked in Springboro where the real estate market is prohibitively expensive for many first-time homebuyers,” says Mike Wall, a real estate agent in Ohio with eXp Realty/EZ Sell Homebuyers. “Despite their high earnings, they could not afford to buy a home in the city without significantly compromising on size or location.”

"With rents continuing to fall and the cost of buying a home remaining high, exacerbated by the rise in mortgage rates in the later half of 2023, renting a home is now a more cost-effective option in all major U.S. markets," said Danielle Hale, Chief Economist at Realtor.com®. "Deciding whether to rent or buy often goes beyond a financial advantage though, and likely depends on a consumer's circumstances. Renters often prize flexibility while the biggest reasons homebuyers cite are that they want a place of their own and to be closer to family and friends. The financial scales have tipped monthly costs in favor of renting over buying, but it does not bring the benefit of housing wealth gains over time that owning does and movers should consider their long-term housing plans and personal situation as they make this decision."

Instead, the couple purchased an investment property in the rapidly growing suburb of Kettering. This allowed them to officially become homeowners—and start building equity—and also to plan for future income through rental yields.

Similarly, Chantay Clark Bridges, a real estate agent with eXp Realty of California, in San Ramon, sees this happening on the West Coast.“I have one client renting in Holmby Hills, but they own a huge investment property in Big Bear Lake that they secured for under $300,000,” she says

“I have another client renting in Calabasas and owning an investment property in Palm Springs, which they snagged for a similar price. Their draw was to catch Coachella-bound and other vacationers.”

Why ‘rentvesting’ is on the rise now
“Rentvesting” was coined by Mynd, a real estate technology company, which found in a 2022 study that 43% of millennials and Gen Z were considering buying an investment property. Two-thirds of them said they believed this was a smart financial move. Of those surveyed, 72% said they would buy a property in a different state than the one they live in.

Why the willingness to purchase far afield? Not surprisingly, it’s mostly about the money.

The national median list price rings in at $424,900, according to the latest Realtor.com® data. Mortgage rates remain high, as well, hovering around 7%—a far cry from the historic lows of 2.65% in January 2021.

“For younger residents of big cities where real estate is particularly pricey, buying an investment or vacation property in a nearby but much more affordable area can be a way to begin to build equity without sacrificing big-city living,” notes Danielle Hale, chief economist of Realtor.com.

For example, “buying the typical home in the New York City metro area requires more than $200,000 in income,” she continues, citing a recent housing trends report. “Home prices in Buffalo and Rochester are considerably lower. Purchasing a typical listing in these areas, which are less than six hours from the city, requires less than $100,000 in annual income.”

That cost comparison can reveal why rentvesting is so appealing.

“Everyone is looking for affordability,” says Cara Ameer, a real estate agent with Coldwell Banker, licensed in California and Florida. “Many buyers are totally shut out of the immediate areas where they live and work. They have money saved up and qualify for a loan, but can’t afford to buy where they live, so they look elsewhere.”

Another reason rentvesting is rising could stem from the many renovation reality TV shows focused on house flipping and home design, from “Home Town” to “The Flipping El Moussas.”

“Millions are watching these shows,” says Bridges. “Many showcase alternative ways to be a part of the real estate game. It makes the average person want to play, too. Rentvesting gives them an avenue.

”The future of rentvesting

It’s hard to say whether the practice of rentvesting will grow or dwindle in the years ahead. If the cost of buying a primary residence in major cities stays high, frustrated potential buyers might continue to look elsewhere for alternatives, says Hale.

In fact, according to real estate pundits, the practice could expand.

“We very well may see this trend rise in the coming years,” says Ameer, “even to where people own a home in another state versus a different neighborhood and rent that out. Some are already doing this now.”

Indeed, the staying power of rentvesting might prove to be strong.


Mark Hoeft ~ 850-525-2765 ~ Mark@TheFloridaCoast.com ~ The Florida Coast Realty Pensacola

Welcome to TheFloridaCoast.com; I would like to introduce myself, my name is Mark Hoeft I am a Florida Real Estate Broker & Owner of The Florida Coast Realty Pensacola LLC in Pensacola, Pensacola Beach, & Gulf Breeze Florida, I also the proud owner of The Florida Coast Realty West Palm & The Florida Coast Realty Destin Florida. It would be my honor to help you find your slice of Florida's beautiful Emerald Coast that you've been searching for. Whether you are looking for your primary home, a second home, or investment property for your Real Estate portfolio on Florida's beautiful Gulf Coast. I specializing in Beach Homes, Condos, and Townhouses. I use my 20 years of knowledge and dedication to hard work to make your real estate transaction as smooth as possible. I've become a leader in buying and selling Pensacola Real Estate, Scenic Gulf Breeze Homes, and Pensacola Beach Condos & Homes. I pride myself in my professionalism and expertise. I've closed over 350 real estate transactions and have totaled more than $40,000,000.00 in sales during the past 20 years.

friDAY, may 24, 2024

Died

Nicolaus Copernicus (astronomer) – 1543
William Lloyd Garrison (writer) – 1879
Duke Ellington (jazz composer, pianist, & bandleader) – 1974
Milton Shedd (co-founder of Sea World) – 2002
Dick Martin (comedian) – 2008
Tina Turner (singer) – 2023

Advice of the DaY

Collars around seedlings will help keep cutworms at bay.

EVENTS

Canada’s first medical graduate, William Logie, awarded degree by McGill University– 1833
Samuel Morse transmitted the first telegraphic message from the Supreme Court room, Washington, D.C., to Baltimore. What hath God wrought– 1844
The steamer, Victoria, sank in Thames River near London, Ontario– 1881
Ohio Anti-Saloon League founded, Oberlin, Ohio– 1893
First major league baseball night game was played in Cincinnati, Ohio– 1935
Aurora 7 took flight. It was the second U.S. manned orbital space flight– 1962
United States and USSR agreed to cooperate in space exploration– 1972
Crop circle discovered in Haysville, Kansas– 2003
Canada’s famous clock on the Peace Tower of the Parliament Buildings in Ottawa stopped for the first time– 2006

Mark Hoeft Broker/Owner

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Specializing in Pensacola Florida luxury homes & Pensacola Beach Florida luxury condo for 

buyers &  Sellers