We’re now seeing some of the best housing news of the summer.
For more on this and other economic developments to watch, see highlights of my weekly economic analysis below, followed by a link to the full U.S. Outlook report, delivered on Aug. 22.
- The buyer-traffic index jumped 3 points this month, the highest reading so far in 2014.
- Home purchase applications should recover through the end of this year.
- Housing starts are the second highest since February 2008.
- Declining mortgage rates have so far failed to launch a mortgage purchase or refinance applications recovery.
Numbers count. They matter to bankers and to prospective homebuyers, sellers, and real estate professionals. Here’s my take on the key numbers on the housing market this week.
The numbers: Cash is king; is the king dead?
All-cash sales made up 38% of the single-family property sales in the second quarter, a fall from 42% in the first quarter, which marked a three-year high for cash sales. Despite the drop, cash sales in the second quarter were still above 2013′s second quarter, when 36% of all sales were in cash, according to the Q2 2014 U.S. Institutional Investor & Cash Sales Report from RealtyTrac. They still made up a hefty 61% of purchases of homes in foreclosure, compared to 36% of non-distressed properties, but the report indicates that cash purchases have slowed amid rising home prices and last year’s rise in interest rates have. On average, between 2001 and 2011, cash purchases represented 30% of purchases, according to the report released Aug. 19, 2014.
What counts: Roughly four out of 10 homes are being purchased with cash! That’s a lot, but RealtyTrac says the latest data suggests cash’s reign may be in decline. That should be reassuring for prospective buyers prepared to put 20% down or less.
Just a couple weeks ago I heard of a friend whose strong offer on a condo in the Bay Area was trumped by a stronger offer — a higher price and all cash. All you can do is present your strongest offer, right? That includes, first, working with a reputable real estate agent who can advise you on the market and having a prequalification from a lender demonstrating you have your financing in the works.
It may also mean crafting a letter to submit with your offer introducing yourself and why you like the property or the neighborhood. Not that an emotional appeal will trump cold hard cash, but some buyers overlook the value of a well-thought-out letter. Sellers who are long-time homeowners often want to pass the baton to new owners who resonate with them. Maybe you lived in the area previously, or maybe you want that big backyard for your kids to grow up in. Little details about you and your interest in the property can help round out your financial offer.
The numbers: Millennials are getting current
Millennials have the lowest mortgage delinquency rate of all age groups and have seen the steepest decline in delinquencies in the past year, according to a survey out Aug. 20 from credit service TransUnion. While the overall percent of mortgages 60 days past due fell just under 20% from a year ago in Q2 to 3.46%, the survey found that mortgage borrowers below the age of 30 led the way with a steep decline of 28.6% from a year ago to a delinquency rate of 2.34% in Q2.
What counts: Despite reports that millennials are hobbled with student loan debt and the aftereffects of the Great Recession, this data seems to suggest they are a generation of responsible homeowners.
Whenever I read reports on delinquencies, I like to remind borrowers who might be struggling to make mortgage payments that they should consider contacting their lenders early to seek assistance. Sometimes borrowers avoid alerting their lenders to financial difficulties and fall far behind on their loan payments, which can make it more difficult for the lender to work with them to get back on track. Lenders don’t want to own foreclosed property, and they often have a range of options to help borrowers avoid foreclosure, depending on the circumstances.